tv Bloomberg Markets European Close Bloomberg May 30, 2018 11:00am-12:00pm EDT
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.
. euro area confidence extending, -- buddingnomic political uncertainty. index of sentiment slipping. the decline was less than economist forecasts. the fifth monthly drop after optimism reached a 17 month high in december. strong bid out of germany. unexpectedly resigning. they scramble to find a replacement. he had been there four years. and a possible replacement for the chief executive officer. saying he had credibility after his commendable stewardship at bank during unprecedented restructuring. rbs looking for a cfo.
penalty but pay a now the cfo is leaving. shares are down 1.6%. vivendi in the news, down 4%. the pay television channel canal+ losing its three decade old on the broadcasting rights to french football. major upset for the media company, a chinese company, spanish television and film producer, winning the rights for three of the main packages for four seasons. starting in mid-2020. how is it looking and the u.s.? julie: the rebound is strengthening. all three major averages higher and the russell 3000 outpacing the major averages and resetting a record. small caps doing better.
this as we get financial stress rising. if you look at the bloomberg, bank of america merrill lynch measure of the stress and the system. market risk. we have been seeing signs of risk go higher, particularly after italy yesterday. we are watching the canadian banks. capcentral bank of canada interest rates on hold for a third straight decision. ,owever, key language changes including an up beat assessment of the economy and removing cautious language. that indicates potential willingness to return to a future hiking cycle. u.s. dollar versus the canadian dollar, the canadian central bank made the decision. as we see the dollar weakness, oil is being assisted, higher for the first day in six just
above $68 per barrel. concerns whether opec will change its production cuts in the second half of the year. also russia and other countries involved. oil up 2%. oil majors up and energy one of the best-performing groups today. mark: a successful bond auction in his life. -- in italy. the latest from rome. take away. -- take it away. market starting to bring down angst in the market, a strong demand. they call it not a disaster but not super spectacular. a litmus test. after yesterday, the model market doing better. all but five stars are rising. the one thing we do not have clarity on is a statement from
the president about what is next. we know that carlo met with the president but they did not have a statement. the local newspaper is saying that two options are on the government, they can go either red, -- road. one would be a political government, that would mean the winners of the march vote. the other government would be a technocratic government and it would be for the summer with elections in september. the idea of a july election as for now been put off the table. possibly, the elections would be in september. today, someone said they broke apart and did not want to form a government a lot republic of said -- we are waiting for an announcement from the president. mark: thank you. great job.
a busy 24 hours in rome. vonnie: joining us with more on italy and the markets is our opinion columnists in london. and michael regan, our live blog team leader. the s&p 500 down 1.2% yesterday. fair to blame it all on italy? >> the u.s. stock market did not react directly to the anti-in politics but it reacted -- i nell you politics -- italia politics but the ripple effect. last week, two traits investors in the u.s. -- traders -- two trades investors fellow level it in the u.s., oil prices would continue to go higher. the data shows how investors and speculators were short treasuries and long loyal. and the fed -- long oil. the fed said they would likely
tolerate and inflation overshoot. and the news out of saudi arabia suggesting they would increase output in reaction to president trump's angry tweets about opec. , someeek, it started damage to the popular trades with oil coming down progressively. friday, rates started to drop after the fed minutes and the 10 year yield dipped below 3%. the market came back from the holiday on tuesday and the italian throws and accelerant on those issues. the drastic drop in the euro the italian bond yields blew out. a rash to havens -- rush to havens. the market leaders in the u.s. yesterday were banks. insurance companies. reacting to the crash in treasury yields. yes, related to italy but a few
steps away from italy when you factor in the dominoes that fell between italy and the u.s. stock market. vonnie: fantastic. paul donovan said that bond market moves do not recall monetary unions. -- break off monetary unions, true or false? >> false. in the context of in between. it is not the rattling and the european central banks said we will not react to crisis. that is a mistake. they have play this poorly. yields are rising to the 3.4 level which upheld and they went higher. that is just in the 10 year. crisis.a preventable if the european central bank as
they have acted -- if they would have acted as they did in the past. mark: you get the blame of being accused of delving into politics , it does not want to be associated with that. >> you can argue it is in politics by not doing much. that is their line which i respect to a degree. do not respect they pay less than 4.6 trillion euros of taxpayers money to get yields driven into the ground and massively negative. why you should read his opinion pieces, because you get the truth. you get the honest opinion. this was not good enough. that was his verdict on the italian auction. five and 10 year auction. big test of appetite. you did not great at highly
that's great it highly -- grade it highly? >> should have been fantastic to cover shorts, a lot of money coming into the market. the advantage of a huge jump in yields the last you days. , they cut the size from what they would recently do and cutting down 24 billion on friday. not great cover. 10:00, the deadline at the price of the auction was $.25 lower. it shows that people are not rushing to buy. too much volatility. prices are moving around way too much to say it is over. vonnie: what is happening today? italian sovereign debt crisis still looming.
more seems to be becoming frictionful. no certainty on whether the north koreans will go ahead and indices up? >> yesterday was most likely an overreaction on the downside of stocks and yields. there is a knee-jerk bounce back. right that all of these issues, including the italian one are settled. u.s., drivers i talked about before, major drop in yields. strength of the dollar is reversing. oil is back up. it is normal services resuming. any of these issues i think the crop up at anytime. , looking attaly world markets from a global macro perspective, people are reeling from the argentina and
turkey issues. em, concern about em. i think there is a lot of tension right now. we will have to see how we finished the day. vonnie: italy to yield at 1.39%. down 83 basis points. thank you mike regan and marcus ashworth. let's get the first word news. >> president trump is going after his own attorney general. the president said he wished he had take someone other than jeff sessions. the president has frequently expressed his unhappiness that jeff sessions recused himself from overseeing the russian investigation. china and the u.s. going in different directions on tariffs, the day after president trump said he would move forward with additional tariffs on chinese product. china said it will reduce duties on a wide range of imported consumer goods and the cuts could help the country's reach consensus at trade talks for
this weekend. the french president said he hopes the u.s. and europe can work out there fight on tariffs. from a forum in paris. >> always very helpful. -- hopeful. i do my best. u.s. commerce secretary wilbur ross called the wto outdated and said the amount of time it takes to results disputes is a joke and the deputy a mindset is that anything and exporter chooses to do -- global news 24 hours a day, on air and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney donohoe. this is bloomberg. vonnie: coming up, the latest trade tensions between the u.s. and china. we will talk with megan greene,
quinn. china hitting back at donald trump's plans for tariffs, saying it damages america's standing 10 days after a joint statement by the u.s. and china saying the trade talks were on hold. kevin cirilli is live at the white house. kevin: i hear china is trying to coalesce countries to push back against president trump's trade policies. the president earlier proposed a 25% tariff on $50 billion worth of goods, including imports from industrial significant technology. the final list will be published by june 15 and investment restrictions could be announced by june 30. i spoke with a sorts who talk to the white house -- source that talked to the white house and he said this is part of a broader push for the administration to take and more aggressive stance against china. wilbur ross set to visit china
this weekend. the chinese do not like this. a quote from their foreign affairs minister said, "every flip-flopped in international relations the police a country's credibility -- depletes a countries credibility." vonnie: parts of the united states disagreeing with the united states. kevin: the fighting between steven mnuchin who wants a more global trade policy versus peter navarro, the president's chief economic advisor who had this to say to npr this morning. >> an unfortunate soundbite. we are having with china, a trade dispute. they engage in a range of not fair trade practices. $370 billion trade surplus with us, which costs us over one million factory jobs
every year. kevin: peter navarro's speaking about steven mnuchin saying betrayed were was on hold. the u.s. is trade -- having trade pressure on six fronts. all of this comes as the president is finalizing the june 12 summit in singapore with kim jong-un. vonnie: exactly. plenty of things -- not calling them distractions but president trump saying he did not -- he wished he did not make jeff sessions the attorney general. kevin: it looks there is divide among republicans a month the president's assertion that there is spike it. -- spygate. and gowdy broke with him says the president has gone too
far with the spygate claim. vonnie: kim kardashian has been visiting the white house. kevin: harder to keep up with donald trump. kim kardashian will be with jared kushner and talking about a very important issue, social justice reform and criminal justice reform. a bipartisan bill and republicans and democrats agree you have to get something done on criminal justice reform, even kim kardashian agrees. vonnie: kevin cirilli come our chief washington correspondent. mark: coming up, megan greene talks about the italian political crisis and what it could mean for central banks around the world. ♪ ound the world. ♪
mark barton with the european close minutes away. rbs, their cfo has resigned. your veteran who piloted -- four year veteran left the company. why? >> a strange time to announce it. rbs seems to be coming out of the woods after the crisis and the government can sell down its 70% stake in the company. and pay a dividend. you can only imagine he got a good offer. maybe in australia. he is from new zealand. maybe he had a good offer from a bank in that region. mark: the lure of succeeding his new zealand born ceo was not enough, or maybe he read the tea leaves and he would not get the job? >> he was an internal candidate to succeed ross mcewan.
rose,her woman is alison head of the resale unit and has a good reputation and has been profiled -- profiled in bloomberg. she is the front runner after this departure. interesting to see what happens and how quickly. whichthe 70% stake sale many hoped would be hurried along after the toxic loan issues may be not so much because of the italian prices. >> exactly -- crisis. >> exactly. the departing guy said he would be surprised if the stake sale came soon. partly down to the turmoil in europe, the italian banking system, and his departure as he had a great reputation with investors and his peers in the industry. rbslid pair of hands to see
through this and they will want his replacement in place before a sale. mark: stephen morris, thank you. vonnie: time for the bloomberg business flash. before he steps down at fiat chrysler, their see is -- ceo wants to bet there future on suvs. and others. he has a plan to end sales of the at in china. unveil the strategy on friday. walmart is taking another step at reducing staff turnover and countering criticism of how it treats employees. walmart will fund college degrees for its u.s. workers. at certain colleges. they can study for degrees in business or supply chain management at three nonprofit schools for one dollar per day.
that is her bloomberg business flash. mark: check out european equities four minutes and 10 seconds from the finish of the wednesday session. a different color to the equity indexes. ftse up by .5%. cac is lower. italian political uncertainty is not affecting markets like yesterday. currency board, euro rising. 1%.hree quarters of ♪
let's get to italy. what a couple of days it has been. yesterday surge in the two-year yield was the most since the euro came into existence. it was an incredible 16 standard deviations away from the average move. it rose yesterday by 186 basis points to 2.77%. that by 74 basis points today. -- down by 74 basis points yesterday. -- today. this month, -30 is where we started the month. an interesting couple of days. a big auction today, italy successful selling five and tenure debt. helping -- 10 year debt. a note -- a meltdown in the bonds. the banking industry has been in
-- interesting. the price of italian banks relative to their peers through this year and the last year or so, trading at a premium, not discount,ng at a lower since february of last year. the industry has been hammered in recent weeks, down 23% in two weeks. banks in the spotlight because of the new government proposals that -- or potential government proposals that could reverse years of efforts to strengthen the banking system. we look at the europe to highlight a risk on feel about today. euro slumped yesterday and up .8% today. it closed yesterday at the month level -- the worst since january of 2015.
on track for the worst quarter since the fourth quarter of 2016 according to a strategist. resistance is at 116.08. the euro is rebounding today. 116.62. that is a look at european markets. vonnie: as we heard earlier, a lot of asset classes reversed what happened yesterday. oversold, getting back now. we see that with 10 year yield. interesting to look at the chinese yuan. above 642 yesterday. a little stronger today. i think china is waiting to see what happens with the tariffs. , aadian dollar is different much stronger canadian dollar after the bank of canada decided to hold rates steady for a third time in a row but took away some
language which changes the view to hawkish for the next meeting or two. 68.23.il is back above movers, things are heated in brazil right now. italy is calmer. the commodity context, hydrocarbons, stronger today. the head of the organization for economic cooperation and development and warning against knee-jerk reaction to the political turmoil in italy. onwe cannot react fundamentals structural policy issues to the day-to-day ups and downs to the markets. downs ofo-day ups and
the political situation which changes from one moment to the next. you cannot make policy based on that. you need things to settle down and then you take a more definitive solution. vonnie: today, the italian officials arethat there. here is megan greene from manulife asset management. what is the danger this picks up again? relative calm now but if there is another announcement, will the bond market go haywire? >> it seems likely we will have a new election in italy, where the july or september. the populist i think would do quite well. the next day development will be what kind of pre-election coalition are formed.
whether they will be partnerships. over the negotiations, relationships have degraded. berlusconi will be the moderating factor on a coalition with his party. five-star pre-electionberluscone moderating coalition , not a bad thing for the italian fiscal dynamic. ecb's role? is the they can save western liberal democracy. if populism is gaining a foothold and there would be crisis in country after country, what can the ecb do? >> they are the only actor. 2011, they sent a letter to rome saying to your fiscal house in order.
berlusconi stepped down a couple of days later. ecb got rid of him. on the back of that, berlin gave the ok to italy to go fire up the printing presses for qe. time, the ecb cannot replay that performance. if they undermined politics in they, it would embolden populist and increase their support in the next election. ecb's hands are tied. italy would be right to remember the rules someone said and the ecb i think we'll just and by and let the markets impact things. mark: what about berlin, brussels, what can the eu do to eu win outthe anti-
of the populist sales? >> direct responses, berlin and brussels, their hands are tied. if they speak out against internal politicians in italy, that theist will say stooges in berlin are trying to control our domestic politics. can throw a bone to the migration crisis and come up with immigration policy at the upcoming eu summit at the end of june. eu is so far away from a migration policy that they will not have anything to unveil. they may show solidarity and provide funding for italy which history and the brunt of immigrants coming from north africa. the rest of europe could show solidarity. that would take the wind out of the populist sales. specifically the party running with a racist platform. mark: does this blowup to be a
major european prices? are we looking at the nomination risk -- redenomination risk? >> i think possible and that is why we saw the market response yesterday. three choices for italy, if they have a populist government, one, they fall in line quickly. with what berlin and frankfurt and russells are demanding. the second is they fall in line slowly. the third is that a populist government decides we do not want to be part of this and take italy often economic lift by suggesting that italy leave europe. set to get worse before better and there is market turmoil to come. vonnie: what about the u.s.? three handle with unemployment and things doing well. pause.onomists have >> some economists think a
traditional business -- we are due for a recession and the economy is overheating the pending on the stimulus this late in the business cycle. , thenot that worried business cycle i think this time is longer than in the past and he no signs of a leg cycle surge of -- late cycle surge of inflation. the debt is a concern, particularly nonfinancial corporate debt. figures aggregate in the u.s., a debt issuing bonanza for the last year. i grit -- aggregate, the figures are fine. thecash rich companies, remainder are overleveraged in a rate hiking cycle. vonnie: phenomenal how cash rich some are and more so with the tax cuts. megan greene, chief economist at manulife, thank you for joining us in the studio. president trump taking aim at bob iger and abc after the cancellation of roseann.
he just said this, bob iger called valerie jarrett to let her know that abc does not tolerate comments like those made by roseanne barr. he never called donald trump to apologize for the horrible statements made and said about me on abc. maybe i just did not get the call? let's look at disney shares. up .1%. let's get the first word news. >> secretary of state mike pompeo will discuss summit preparations the next two days with the top eight to north korea. the former spy chief will be in new york, 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 meeting with mike pompeo. and belgium, a federal magistrate called the three killings in a city terrorist murder.
the magistrate says the attacker and was killed.ac they say he was serving a prison sentence on off the time of the attack. this story sounds like a movie plot, ukraine says it fake the murder of a russian journalist critical of the kremlin because it was trying to get people trying to plot to kill him. officials say the reveal for the end. the journalist showed up at the news conference in kiev. ukrainian authorities said they caught the real would be murderer. global news 24 hours a day, on air and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney donohoe. this is bloomberg. mark: thank you. battle of the chart, can italian bonds take on euro strength? look at italian markets.
mark: battle of the charts. you can see them on the bloomberg by running g tv . dani burger is starting things. two-year sold yesterday as extreme as they did. all about liquidity. bid ask spread for the italian two year. as of headlines of the italy exit hitting the wire. market makers stepped back and do not want to provide liquidity in this market. bid ask spreads and that
ballooned with the tumbling two-year bond in italy. looking to see whether the changes today will last, check out that bid ask spread. showing there is still hesitation in the market. maybe now is not the time to trust the moves we see. see this chart at g tv . mark: a great chart. vonnie: that is all about italy. a given. [laughter] i am talking about interest. it looks like interest is stalling but not by that much. given the market moves yesterday. at one point, the market started to price in one more fed
interest rate increase. between one and two. well off of the three being priced in by fed on futures. i thought that chart was eye-popping. not as much of a reaction in certain markets yesterday. see that chart as well on gtv. mark: a brilliant chart. i have been dwelling on that today. vonnie: pin drop. won, wee reason dani have never voted two subjects two days running. we did the two-year yields yesterday but she talked about the lack of liquidity. she gets the victory. two fantastic charts. this is bloomberg. ♪
live from new york, i am vonnie quinn. mark: i am mark barton in london and this is the european close on bloomberg markets on bloomberg television. let's have a look at something else. we will get to wpp in a second. vonnie: talking to julie hyman with the stock of the hour. goods is moving good. julie: they came out with earnings and a big positive reaction to that. -- numbers onany the face do not look great, comparable sales down 0.9%. i have a chart on the bloomberg looking at the recent comparable sales performance, not very strong and the third straight decline. better than the drop of 1.4% estimated. a couple things going on.
something specific to the company, back in february, they banned the sale of assault style rifle's at his stores which got media attention. there was some concern of analysts that that would stop customers from coming in. and the more industrywide elements affecting the company. colder weather. not good for some retailers. and the inventory issues that have been plaguing the athletic apparel industry in particular. all of those things seem to have turned out better perhaps than expected. for example, they said that they gained some customers who liked their new policy on guns. , givens perhaps a wash the customers they may have lost. in terms of overall in the athletic apparel industry, some of these cycles have been improving, product cycles have been improving. that has been helping the
company. vonnie: short interest chart. definitely short interest. i have seen higher. julie: short interest between 10% and 15%, that is likely one element of the big increase we see in the shares today. the gross margins also have been improving. fax but some of the fundamental businesses improving. someone at bloomberg intelligence says the inventory clear up is something helping dick's sporting goods and giving more space to private brands which have a higher margin for the company as their in-house brands. vonnie: fascinating to look at the top shareholders. julie hyman, thank you. dick's up more than a quarter today. , over sixin sorrell
weeks after his resignation from wpp, he will lead a capita group . let's bring in rebecca. reservations, given the way martin-- or the sorrell he departed? >> what you just said answer the question, largely this is an endeavor started by martin sorrell. is company eating acquired being backed with his money. we have indications he has financial backers should he declined a big acquisition. largely his endeavor. mark: should he find a big acquisition he wants to make, any idea what he will spend the money on? willlot of speculation he do it in the ad agency. the one analysts speculate the
item,a pretty big ticket a unit of wpp that he was fond of. it would cost him 4 billion. not clear he has the ammo to go after something that large but communication services as a broad category. vonnie: whatever about how he left, we do not know details, he has a massive reputation as a builder of huge conglomerations of communications and advertising companies. he wants to continue that. can he pick off some more wpp assets and rebuild wpp? >> a good question. he has the opportunity with wpp reviewing their assets. they are taking a broad look at the company and trying to sort out -- do they want to be in every area they are in, public relations, digital advertising, all sorts of different ad -- areas.
he may have opportunities at wpp. a question people need to ask is, martin sorrell says he was ousted from wpp. does he still have the know it all to make a big deal in the industry? vonnie: the ratings agencies will at some point talk about this risk. will it mean anything to the company, its ability to raise cash or capital? >> a good question and i do not think we know that at this point. has in mind that wpp itself agm in two weeks. martin sorrell coming two weeks before that, we do not have the product advisories coming up. makepect iss to recommendations to shareholders and their under pressure to reveal the nature of the allegations. mark: could there be questions to the rights of french
football? how much of a blow to canal+? >> a big blow. they have these rights since the creation of the league in 1984 and it is a key part of their proposition to retain subscribers, they want to watch french soccer. they will probably be able to do a sublicense deal with mediapro, the company that won most of these rights but at what cost? mediapro is paying 60% more. it could be quite expensive for canal+. mark: thank you. the lateste for bloomberg business flash. women's will sell it health antibiotic division, they will focus on for existing areas and conduct a strategic review of its business. they are best known for its botox.
shares are down 32% in the last year. mcdonald's says it will fight for market share in the u.s. and renew its focus on breakfast. their ceo spoke at an investor conference and said mcdonald's needs to boost customer count in the united states. they will invest $1.5 billion in u.s. store remodels this year. of calm element returned to european markets today. italian political uncertainty ever present but stocks rose, stoxx 600 gain and the ftse and caroline hyde is lower. -- cac is lower.
shery: trade show that in the white house as peter navarro says steven mnuchin was wrong about a trade war quote with china. mike pompeo meets with his north korean counterpart in new york. the groundwork for the summit being laid. the organization of american states says venezuela government has committed crimes against humanity. what will it mean for sanctions? an interview coming up. david: whether or not there ever was a trade war with china, the truce is over. this is according to peter navarro who went on npr to declare steven mnuchin's