tv Bloomberg Markets European Close Bloomberg June 7, 2018 11:00am-12:00pm EDT
this is the european close on "bloomberg markets." mark: here are the top stories around the world. showdown at the g7. france and germany may refuse to sign the traditional joint statement without major concessions from president trump. expectations from the north korea summit. we will talk with the former new mexico governor, bill richardson , who has been in negotiations with the north since the early 1990's. ubs cuts jobs and deutsche bank falls for another quarter with falling revenue. happening, at what's equities losing momentum in the afternoon session. austria and norway higher. these other benchmarks lower
today. the euro rising for a poor consecutive day against the dollar. highest level since mid-may. -- the euro rising for a fourth consecutive day against the dollar. let's look at the bond market. rising,eeing yields peripheral yields declining, core yields rising from the ecb chief economist comments. the ending of qa is back on the table when the ecb discusses matters next week. let's talk about this big piece of economic data, euro area exports falling for the first time in five years, dragging on economic growth. we had gdp .4% lower than .7% in the prior quarter. policymakers preparing for the pivotal meeting next week to discuss the future of the bond buying program. is now the time to discuss the future of the bond buying
program? is the economy stabilizing or will it continue to slow? from theata on germany euro region's biggest economy providing some reason for concern. this sets us up for next week's ecb meeting on thursday. political risks across emerging markets moderating somewhat. the big spike and political risk we saw in march in the context of the trade war seems to have gone away somewhat. turkey political risk, the blue -- brazil is the red line. turkey is still rising in the surpriseoday's interest rate hike from the turkish central bank. the political risk is above their counterparts. the general em space isn't so
bad. italy's new prime ministers seeking to reassure investors on a fiscal plan for gradually reducing the country's massive debt burden. 90 minutes into the session in the u.s. how's it looking? julie: mixed picture in the united states. nasdaq losses deepening as we get further into the session. the nasdaq has been the upper former over the past several days, setting records as the s&p and dow haven't managed to retain their records. today, the dow is the standout. interesting note from jpmorgan. we've made a chart that mimics what he's looking at here. yes, we have seen markets climbing down in reaction to trade headlines recently. aboutr, he says this talk a trade war has wiped $1.25 trillion off global equity markets. he says derivative analysts at
jpmorgan devised a technique to plot the approximate impact of news flow. you see up here in the various global indices, the s&p 500, the shins 300 and the msci asia specifically -- we see the effect there. we look at how many headlines per day are coming on these. this is an approximation of what street.oking at on wall in today's session, it is not an overwhelmingly negative impact. here are some stocks that are rising. chevron getting a boost of 2.7% as we see oil prices on the rise here. mcdonald's is rising as the company's restructuring. the company is planning a fresh round of layoffs.
with telecomsse as we see rates on the decline in today's session. we have consumer staples weakening today. smucker out with its numbers. full-year guidance failing to beat analyst estimates, missing analyst estimates in fact. these companies have been under pressure as we've seen increasing -- united natural foods down as well. it was a less than stellar conference call causing those shares to sink. vonnie: thank you. rising trade tensions ahead of the g7 summit set to impact the summit set to kick off tomorrow in canada. the canadian prime minister in french president -- and french president spoke earlier today. >> i have consistently stood up for canadian interests, consistently demonstrated where
we disagree, but done so in a polite and cordial context. what canadians have always expected of me and that's what were going to do. vonnie: we are joined by kevin cirilli at the white house and -- what are the expectations for the g7 summit? kevin: from the european perspective, they are not going to sign a joint statement with the united states unless there are some concessions made on the issue of tariffs and trade as well as the president's decision to withdraw from two agreents. that's a long shot. the second issue comes on the president dealing directly with nafta. he has signaled their his -- through hisrs economic advisers that he's
considering ripping up this deal and going a bilateral route with mexico and canada. we've heard the rhetoric from justin trudeau with regards to how that would actually work. the president would have to get six months of warning in order to do that. then, he would have to renegotiate a bilateral deal that already exists with canada. trade tensions have never been more tense heading into the g7 plus one. vonnie: let me ask you, president macron was very tough with his words yesterday saying no president is eternal. it's not working, though. will macron changes tune at some point -- change his tune at some point? >> macron was asked about that. he was very chummy with trump during the visits during bastille day.
spoke very chummy and about his ability to speak with trump and talk to him and get him to change his policy. it hasn't worked. trump has gone his own way. a chronic gets asked about that all the time in france. -- macron gets asked about that all the time in france. don't blame me for trying. france and america are allies. we are temporary occupants of these offices. -- macron oncey concession on tariffs and iran and the paris climate accord. that is a big ask, isn't it? >> i wouldn't call it concessions. those are the treaties that trump pulled out of. it's asking the americans to rethink. probably not. he has pulled out of iran, he's not coming back. how are the secondary sanctions going to impact european companies? so far, all the statements from
the u.s. have taken a hard line. same thing for climate. on trade, probably a bit more leeway there. macron did point out that europeans aren't isolated. there's a lot of americans who agree with them, a lot with an trump's own party who agree with them. there's more chance to see more movement from trump on the trade issue than iran and climate. mark: isn't the purpose really to rally support behind putting up a fight behind addressing china's unfair trade practices by penalizing france and canada, you are missing the point? to what extent does trump
jeopardize that ability to tackle the big issue that is china? kevin: the administration would say not that much. larry kudlow describing the relationship with the u.s. and the rest of the g7 countries as a family quarrel. most notably, emmanuel macron has just said within the past week and criticized the chinese for their wto part and how they've been able to -- that is something president trump has tweeted about consistently. there appears to be common ground between the french and the united states on that particular point. that may be some pressure for xi jinping. i spoke with sources who are much more protectionist, nationalistic economic worldview in terms of advising this president.
they argue the president might have the leverage on june president isat undergoing a restructuring of his own government and would like to see allies in various sectors. that restructuring could be a bit more complex than some of his political enemies as they negotiate these types of deals. cirilli and greg viscusi in paris. the u.s. has reached an agreement with the chinese telecom maker that was shut down after being banned from using american suppliers. bpe will pay a $1 billion fine. u.s. complains team will monitor the company. cte was originally penalized for breaking a sanctions agreement.
to increaseling imports from the u.s. if the trump administration meets them halfway in trade talks. the two sides have had deep and detailed talks on foreign energy products. is ansing imports established strategy. theresa may has moved ahead on the cabinet rebellion over brexit. may made changes in the backstop agreement. in plan should end december of 2021. japan's prime minister has his own agenda when he meets president trump today at the white house. to wants the president present north korea next week on the state of 12 japanese citizens kidnapped four decades ago. he has made their return a key political issue. global news 24 hours a day, powered by more than 2700 journalists and analysts in more
than 120 countries. i'm kailey leinz. this is bloomberg. vonnie: thank you. lots more ahead on bloomberg. next, we will speak with bill richardson. he's been involved in negotiations with north korea since the 1990's. later, we will speak with senator john thune at 2:00 p.m. eastern. live coverage of that joint news bloomberg.-- this is ♪
shinzo abe is due to arrive at the white house in less than an hour. a long listith him of issues including the u.s. north korea summit in singapore. we are joined by bill richardson , former energy secretary and former u.s. ambassador to the united nations. he's been involved in negotiations with north korea since the early 1990's. he joins us from massachusetts. what will have changed by the time we actually get to this summit? you've been involved in negotiations with north korea for decades now. this time really does seem different. bill richardson: it is different. it's the first time presidents have gotten together on important issues relating to the very sour u.s.-north korea relationship over the years. in the past, it's been from the bottom up. we are talking about the most important issue facing the
international community. the korean peninsula, missiles threatening the united states, korea north korea south battles. it's most different because we have two leaders that are very similar. theyare unpredictable, don't go by the norms of traditional foreign policy. it should be a very interesting summit that has wide repercussions throughout the world. vonnie: what would be considered a success? the north koreans aren't going to just given to all the u.s. the man's. in to all the u.s. demands. bill richardson: first, nuclear free korean peninsula. secondly, phased unique lori's asian -- phased denuclearization.
the north koreans are not going to totally denuclearize. dismantling of their 60 nuclear weapons, ensuring their missile tests, the american mainland to japan and south korea are either don't thinkailed, i they would be destroyed but there are a lot of positive steps that can come. the administration is going for broke, a total denuclearization. that's not going to happen. there are other human rights steps like family reunification between north and south, economic development of north korea, the poorest nation on earth, and the return of remains of american serviceman from the korean war. the north koreans have 5000 of those. there are a lot of positive
steps that can happen. vonnie: what would give you confidence that any kind of agreement that could happen would hold? this is another problem. can the word of the north koreans be believed? past,ichardson: in the the north koreans have cheated with the clinton administration and bush administration. they've enriched uranium after saying they wouldn't do it. there has to be strong international inspections by the international economic agency -- timeline as short as possible, maybe two years, in which they are committed to destroying or curbing their use of missiles and nuclear facilities. inventory of where they have these nuclear missile sites. many of them are underground. the north koreans are very tricky on their location. thed also just
legitimization of the north korean leadership and have tangible agreements, but find a way for kim jong-un and president trump to build some personal trust. this is not going to be one summit that decides everything you want a negotiating you want a negotiating process important and positive agreement. mark: should president trump offer any concessions? kevin: yes -- bill richardson: yes. some of the concessions might be in the reduction of american military exercises with south korea, may be a number of troops reduction, we have 28,000. the north koreans will want a peace agreement.
you do that at the end. depending on north korean performance, they will want security guarantees where we basically say we are not going to try to have regime change, knock kim jong-un off. paide north koreans really significant steps -- take significant steps to denuclearize and put freezes on their nuclear missile tests -- they have 60, destroy some of them, many of them. this is why it is a tricky negotiation but one that sets the pace for a long-range process that involves significant reductions of their nuclear arsenal. if that happens, the korean peninsula, japan, south korea, china will all benefit. mark: the process fascinates me. can you give us an idea of the
process, the briefing that president trump would have been given the head of such a unique meeting -- ahead of such a unique meeting? bill richardson: i was worried the president was not prepared. i see that he doesn't want to go becauseummit in canada he wants to prepare for the north korea summit. that is somewhat good. it has to be very intensive. he should lead the technical details -- leave the technical details to the secretary of state, who is doing a good job with negotiating. the vice president, rudy theyani, john bolton, should step aside and let the secretary of state, the traditional arbiter of american diplomacy, the man who knows the north koreans best, to negotiate. there's too much at stake.
let me ask you a question on something slightly different. what are your expectations, your hopes for the midterms at this point? bill richardson: i believe if you look at what happened at the it's going tuesday, to be a good year for democrats. but i believeve, we will win the house of representatives by a few seats. my state of new mexico, california, the west is very strong with the democrats. i don't think we will take the senate. president trump, his domestic foreign policy -- domestic and foreign policy will be tested. win thes will do well, house, but not win the senate, but i'm hopeful. vonnie: our thanks to governor bill richardson.
mark: take a look at where european markets are trading. we are heading towards the close. losing a bit of momentum towards the end of the day. ftse marginally higher, the dax down by the smallest of amounts. cac 40 similarly little changed. the euro continuing its dissent. next thursday, game on. it's a live meeting. they will at least this gust the end of the qe program. i will leave you with the bond board today. this is bloomberg. ♪
lots to chat about today. deutsche bank in the news once again. the news came out just before the close yesterday, shares up .9%. it will record another quarter of declining revenue for the three months through june. it is cutting thousands of jobs. that forecast unlikely to take many investors by surprise. they envision their major businesses would see declines or little change in revenue this year amidst the cost cuts. shares up by .9%. they felt a record close last week. earnings rose at the fastest pace in six years on accelerated cognac sales in the u.s. and china.
we run says it was a quite makes they did rise to a record yesterday. remy concentrating on bottles that cost $50 or so and up. shares jumping 24% in the last 12 months. the turkish lira rising 2% today. central bank raised rates for the third time in as many months, signaling it is willing to stand up against political pressure and fight double-digit inflation. 17.75% -- three days after this inflation report showed consumer prices rose 12.15% in may. we had the emergency rate hike a couple of weeks ago by 300 basis points. we had the central bank just after that, simplifying its monetary policy framework. we have this.
vonnie: a little weakness in the dollar today. we have the dollar index and 93.33, down .3%. to mexican peso back up 20.44. the 10 year yield briefly touched 2.98 earlier, back down to 2.96 now. wti still more than $10 a barrel between the -- the spread with brent still more than $10 a barrel. brazil is off today. the central bank had to intervene because of brazilian reality weakness -- brazilian real weakness. the indian rupee and rand fell today. we are seeing tremors and
, talkingank divergence about tightening and markets having trouble with their currencies. mark: geopolitical gyrations have been a rude awakening for complacent financial markets. that's according to our next guest, gene frieda from pimco. -- iins us with our latest want to question you about the turkish lira. -- has it stopped around today's rate hike? gene: it is sufficient to stabilize the situation. when you look across emerging markets and look at the countries with weak balance sheets, turkey is front and center. this is way overdue. given that the central bank needed sanctioning from the president, it is still not clear whether that policy stance will
continue beyond the election in july. yr.: 2017, another good it's all happening. is there something in the air? should we take away too much from this? companies weual wouldn't cast a wider dispersion to again against. gene: up to today, that's probably been right. it has been a traditional response to a stronger dollar. there have been a couple of countries where you have weak balance sheets like turkey and argentina and mexico and not result. we never thought this would happen all at the same time. most,ing that concerns us investors are a bit complacent. we would be short certainty because it seems that is what market separately priced in the
u.s. fixed income market. this notion that 3% long into the future. vonnie: what are you doing, then? it's the most uncertain we've been for a long time. are you doing anything today ahead of the g7 and the north korean summit? gene: i don't think we tend to be reactive to short-term events. we have been playing defense for some time. stance has probably heightened as we go into the second half of the year in part because global growth has become much less balanced then we assumed it would be over the course of the year. war is -- more and more is riding on this notion of fixed income volatility. -- have dice version dispersion across asset classes and with an asset classes. you can capitalize on differences in quality. once that dispersion starts to go away and volatility goes up,
suddenly everything becomes highly correlated and it's a very different ballgame. vonnie: what is happening with central banks around the world? some of them having real trouble with currencies at the moment and having to raise interest rates. is this turning into something we need to watch? gene: any time the fed goes into a hiking cycle and starts shaking the tree, there's overripe fruit that tends to fallout. something tends to break in every fed cycle. we don't think it will be the emerging markets this time around. it's not the area of the world that has major imbalances. that said, obviously, there are some that are more vulnerable. the general tendency is when the -- starts to get which are fed cycle starts to get mature, markets respond. that's probably part for the
course. the concern going into the second half of the year is the market will start to be more concerned about overheating, concerned about weakness in other paof the world. that could cause central banks and emerging markets to have to be more proactive than they've been today. mark: your cautious in our positioning. you will play offense when rude awakening presents itself. what rude awakening could be in store? gene: it's always challenging to come up with specific events. by definition, rude awakenings are surprises. first and foremost, we get a lot of questions about trade friction. they are incredibly difficult to model. it's hard to price them in until you see it happen, particularly because they act more through confidence. what is most sensitive to confidence? equity markets.
it naturally makes you more careful about equity markets. one reason we are not so bearish on fixed income. it still offers pretty reasonable insurance properties. populism.pect is just we tend to throw everything populist in the same bucket. there are 50 shades of grey was a man and they are very different in terms of the immediacy of their impact on -- there are 50 shades and they are very different in terms of the immediacy of their impact on pricing. mark: thank you for joining us, gene frieda of pimco. kailey leinz: russia's president says he's confident that the country's prospect for long-term -- he answered questions on a tv call in show.
he says russia is moving in the right direction. he's of the country would not introduce a sales tax. it's his first live tv programs and he was reelected in march. -- since he was reelected in march. 99 people were killed in a guatemalan earthquake. 200 are missing. the volcanic material makes it dangerous for rescuers. the latest sign of a strong u.s. labor market. first-time filings front and plymouth fell slightly to a --r-week low last week first-time filings for unemployment fell slightly to a four-week low last week. job openings exceeded the number of unemployed workers for the first time in 17 years. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg.. has avoideda may
a crisis for now. saying the backstop should end in december of 2021. m arrasus now, thomas. the eu response is -- >> encouraging. we've been talking to eu diplomats and the overall message is needs to be based in , it's even backtracking compared to what was agreed in december, so not terribly good. the problem is twofold. negates of time limit the concept of a backstop from the eu. the eu says it has to be open-ended because otherwise, it doesn't do its job. the fight this morning was over that time limited aspect.
this backstop is only about the customs aspect. mark: not the regulatory side. >> exactly. the most important thing on a border is the regulatory alignment. the regulation that means a cow on one side can't roam free across the border. that's a really important piece of the puzzle, which isn't included in the document today. we will have to talk about this. they have acknowledged it, but they haven't addressed any -- mark: they don't seem to be walking away. that is a result for the prime minister, chaos avoided for another day. >> if you think of theresa may's strategy, some people argue her strategy is basically staggering to brexit -- she must deliver brexit and survive to do that. had davis gone, that would have
created a much bigger crisis. more resignations, possible leadership challenge. that would have been quite catastrophic. what may has given davis is not that much. she has written into the text a date, but also surrounded that date with very sloppy wording. we will see this fight again. she pushed the fight tax number x number of months down the road. mark: emma ross thomas. vonnie: time for botc. china willing to boost imports, but the u.s. has to meet them halfway. what does this mean for the yuan? this is bloomberg. ♪
mark: time for battle of the charts. you can see them on the bloomberg. kicking things off today, the reigning botc champion. his last battle from london, mr. edward ludlow. >> things in china are quite calm at the moment, particularly with regards to the currency. yuan volatility coming down to its lowest level this year. at the same time we have trade wars, talk about trade and a lot of concern around emerging markets. look at upward global currencies, that is on the rise there's a calm this -- calmness from the investor perspective. that's interesting because it shows that perhaps policymakers are just letting go. they are not interfering in the
currency. sayingeague pointed out that could be evidence that the yuan is not a trade weapon for china. we saw china saying we will meet you halfway, usa. really interesting, c almness around china. china is dierent from the rest of those assets we've been talking about today. mark: edward ludlow going out with a bang. vonnie: i have a very simple chart. the companies that have been spun off outperformed the s&p 500, the s&p 500 in the blue line and the bloomberg u.s. spinoff index is the white line. a massive difference there. you can see that chart on the bloomberg. mark: you always bring something new to the party, which i like. the spinoff index.
vonnie: live from new york, i'm vonnie quinn. mark: i'm mark barton in london. this is the european close on "bloomberg markets." deutsche bank projecting another quarter of falling revenue. they are in a transition period, scaling down american operations and cutting 7000 jobs. the bank's forecast is correct, this would be sixth consecutive quarter of revenue declines.
we have a german banking reporter -- shares are rising. this isn't a big surprise, is it? >> no, people were expecting this. the bank has made it clear they are going through a difficult period now, they are cutting and they will lose revenue. it was expected. it isn't good, obviously. this is the sixth consecutive quarter of revenue decline. shares already at record lows. mark: the words that stood out from the cfo were vicious circle and virtuous circle. how does he move or how does deutsche bank move from the to the virtuous circle? >> that is the question everyone at deutsche bank is trying to answer. they were hoping for some kind of positive momentum to break out of the vicious cycle they
see. each time they think they got a bit of tailwind, something bad happens like the s&p downgrade last week. it is really hard for them. they willooking like break that vicious cycle anytime soon. they are hoping to turn it around. cuts to unprofitable parts of the business will continue. vonnie: how close are we to an actual crisis? the stock was trading around $20 in january. almost half that now. would another two dollars cause investors to flee? >> the share price reflects the lack of faith in the turnaround plan. i don't think we can call it an actual crisis just yet. it's clear that people are still liquidity deutsche
bank has in place. the credit spread to them go up as much as it did in 2016 -- it didn't go up as much as it did in 2016? each time they achieved something, something more negative happens. that slow erosion must be stopped and turned around. that's not happening at the moment. mark: great to see you. thanks a lot. steven arons in frank for. vonnie: our stock of the hour is nxp semiconductors. the chinese government says it's likely to sign up on a deal with qualcomm soon. emma chandra is here. what has changed? >> it's a bit of if you scratch my back, i will scratch yours. a quid pro quo between the u.s.
and china. both an xp and qualcomm stocks doing pretty well this morning. the background is that early this morning, we heard the u.s. made a deal to let chinese telecom in a fracture his resume their purchases from american suppliers. back in april, they were blocked. they were said to have violated sanctions on north korea and iran. they thought then that the index nxp deal would get blocked. , as soon as we heard of the zte deal, china is likely to approve the nxp qualcomm deal soon. a bit of a quid pro quo seems to be happening. suppliers in the
u.s. falling back today. of 18% of the revenue from nxp -- we have a graph that shows that. zte's rivals in device making are not doing so well. it seems like zte is back in business. vonnie: that is our stock of the hour. mark: time for the bloomberg business flash. biggesticial -- the farm chemicals maker in the world. they closed their acquisition of monsanto. integration will begin in bayeronths after the
completes the sale of agricultural units. -- americanropean tech giant to get a large foothold in european soccer -- amazon will show 20 matches a season for three years starting in 2019. the games will be available on amazon prime. . lufthansa having a record summer -- a record load and share not concerned about rising feel prices. we spoke to lufthansa's chief executive in berlin. >> short-term, we think we will be hedged in a better way than our competitors. seeing higher oil prices will mean more -- mark: that's the latest bloomberg business flash. theie: we are awaiting
japanese prime minister at the white house. anticipating he should arrive in just a little bit for a press conference later on at 2:00 p.m. eastern. on can watch all of this live . waiting for shinzo abe ahead of week.sy next the s&p down .1%, the nasdaq down .7%. very different performances among the indices today. this is bloomberg. ♪ retail.
every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. >> it is noon in washington and midnight in hong kong. i'm shery ahn. david: i'm david westin. welcome to "bloomberg markets: balance of power."
japanese prime minister shinzo abe due to arrive at the white house in moments. trump'sc, president summit with kim jong-un and trade. the administration strikes a deal to allow zte to get back in business. does this set a bad precedent? we will speak to senator john the senator wants more answers from facebook and their data sharing practices. u.s. stocks mixed at the moment. let's get a check on markets. abigail: we are looking at a mixed trading picture for the major averages on this thursday. the dow once again