tv Whatd You Miss Bloomberg June 8, 2016 4:00pm-5:01pm EDT
u.s. stocks closing higher this afternoon, edging toward that all-time high. oil rising above $50 a barrel. emily: the question is "what'd you miss?" the central bank -- is it the right move? emily: and could contagion spread across the eu question mark we speak to experts about alarming new findings. job openings rose in april to the most on record. we have the three charts to explain what is happening in the labor market. we begin with our market minutes -- an update for u.s. stocks with the s&p 500 holding near its best levels since july. if you look at the different industry groups, it was an across-the-board rally. almost every industry group
higher except for two of them. industrials & -- industrials and materials the best performers. inching closer to that all-time high. a little off the high today but another one of those stages where everything seems to rise on little volatility. it was a divergence between energy stocks. this doesn't make any sense to me. they both attract each other until about 11 or 11:30. that big inventory draw but the energy stocks on the s&p dumped along neutral. you have range resources and devon leading on the downside. i wouldtern energy -- have thought with oil prices at $51 that that would help oil stocks. joe: you can see the split early on the morning, so that is a striking diversions to watch.
one thing that people liked is bonds. today was the start of the ecb corporate bond buying program. that's incredibly low. that better of the ecb looking to snatch up corporate grade bonds. below 1.7%. that has been seen as a psychological level. bonds even though there's not much yield. in foreign currencies, the dollar is weakening again today. yen,ig gainer is the stronger for the sixth time in seven days and at its best level for more than a month.
rand. big gainer is the the catalyst is fitch of forming south africa's investor grade rating. , it is not outsk of line with its peers. this came after the economy was shown to contract in the fourth order. the oil story,m it was all about the stocks in commodities. when you look at the rally in coffee, it is at its highest level and this is where the weather winds up getting interesting. hot weather in the midwest helping soybeans. la niña could be on the way in the summer and that's playing out in the commodity markets. scarlet: let's take a deep dive into the bloomberg. alix: i had to talk a little more about oil. this is the other part of the
data we got today. this is u.s. oil production. look what happened last week. we saw production rise by 100 barrels a day, the first rise in 13 weeks. one second -- hold with me. increase initely an production. when we had the oil rally, the conversation started to become when do we add risk? how quickly is that reaction function in the energy market? if last week is any kind of comparison, it could be quick. most people say five to nine months or even two years. we will have to see how this plays out. joe: a lot of the oil bears have then worried about recycling that.
that's something to keep our eyes on. now that it is crystal clear what is going to be our november matchup, this is the philly fed reserve partisan conflict index, which i have never seen before. news an index that tracks stories that relate to partisan conflict and i tend to be skeptical of these charts but i think this one is pretty good because if you look over various key moments that relate to politics, you see a spike at the 1995 shut down and you see partisan conflict plunge and inn you see this increase 2009 after the rancor of the last several years in the debt ceiling standoff and the government shut down. way toan interesting track the political moves -- the philly fed partisan conflict
index. i think it does a decent job capturing the mood. it is amazing the difference between the shutdowns. such a lowert level than the post crisis era. scarlet: this is totally the new normal. you talked about how everyone loves bonds and yields and how it keeps going down. let's look at the term premium. amount ofe compensation people demand to own a long-term bond rather than a series of shorter ones. they don't demand much of anything at all. many bond professionals the a sub zero. we are below that redline and they see that as a signaling the debt is theoretically
overvalued, going all the way back to the lower 60's and that means there's plenty of demand for our fat, juicy yields even if it doesn't feel like it. joe: all of these charts are just stunning. scarlet: you can see all of these charts and more on twitter. alix: stocks ended higher today. above 18,000 for the first time since the end of april. but they're still so much bearishness. what do you make of that? guest: climbing the wall of worry -- you are starting to see certain parts of the market come into play. funds got long s&p futures. you saw a little turnaround
one thing people look at is the survey of the bulls versus bears. that's basically getting and i into the retail investors. au have to take this with grain of salt because to be recorded in this survey, you have to elect to fill out a form and send it in, so there are all kinds of statistical biases here. this is a ratio between the bulls and the bears, so when you are getting a lower tier, that means you are bearish. is like the 20 week moving lowage, so you can see this , it has been trending lower. we remain in this environment where when you look at positioning, that is what is
driving a lot of what is happening in the market when you have the breakdown in economic numbers from a couple of solid weeks. there has not been a lot of big switch is one way or the other. think that's because people don't know what else to buy. scarlet: the context is the stock market does not trade in a vacuum. alex and i were talking earlier about how people in the bond market are looking to the stock market for some kind of return because they cannot get anything in the bond market. guest: i recommend bringing up the world war bond index page. it shows what you guys are looking at. starting with australia all the u.s., you might
get a better perspective. wet blue dot there is where are now and the oranges the average yield. , buty across the board that is the bottom line. talk about speculation but when you have money to put the work -- to put to work and there's nowhere to put it, you might as well just go to u.s. stocks because there's no place offering a return on your assets at the moment. they'll mind paying for stocks that are really expensive. joe: speaking of volatility, there is none. if you went long volatility this summer, make that call. guest: you are seeing a lot of interesting things pop up with volatility where you were
getting strangely -- you had a vix curve that was very steep and that's becoming expensive to hold on to those long positions because as they roll from month to month, you are essentially losing money. this is the vix level this past weekend this is cropping up -- basically monday and tuesday were both up. when you have a market that is rallying, some people freak out if the vix is rising while they are supposed to move inversely. scarlet: we should mention that the dow closed above 18,000 for the first time since april. does that make any difference psychologically? guest: they do in the sense that we talk about them.
mark: i'm mark crumpton. let's get to first word news. israeli police say three people are dead and several others wounded when at least two gunmen opened fire in central tel aviv. a spokeswoman said there were reports of shootings in two locations close to the city's market. some of the wounded are being treated at local hospitals.
two gunmen have been neutralized. in an extensive interview, donald trump is distancing himself from his own fund-raising estimate of a billion dollars. the presumptive republican presidential nominee says his campaign doesn't need much money to win the white house and plans to rely on his star power is a former reality tv personality. as far as a search for a running mate, he says he has narrowed his choice to four or five politicians, including former rivals. ruled out anyone with wall street experience. a top surrogate for bernie sanders is the battle for the nomination is over. in an interview, he said the democratic party has its nominee and that the twin goals of securing a majority of the vote and majority of pledged delegates was achieved last night.
congratulations to secretary clinton. demandlans to build a deep-sea platform that would let it run for minerals in the south china sea. it is a project that could also serve military purposes. south china's claims over the sea have raised tensions in both the and amen the philippines. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. i'm mark crumpton. back to you. scarlet: "what'd you miss?" the european central bank is entering uncharted territory as it tries to boost the european economy. tracy alloway joins us on the phone from dubai. after this one day, what was your big take away? it has been interesting to watch how they have chosen to undertake the bond buying
program. we know they are buying investment rate bonds. don't know exactly how much. they came in exactly with a big splash today and made sure people were talking about it. they also bought some bonds issued by companies in the peripheral eurozone countries, not just france and germany. boughtso, fascinatingly noninvestment grade bonds. that sounds counterintuitive. if a company is has at least one investment-grade rating, they are eligible to have their debt bought. seen this huge rally in investment grade debt.
everybody knew this bond buying program was coming. what has been the impact and might it mean there is more juice than investors expected? : i think that's the question on everyone's mind now. when you think back to previous bond buying programs, the two relevant ones would be asset act securities and the covered bond purchase program. those started really well and we saw spreads tighten as soon as the ecb said they would start buying that stuff. then the effects just kind of petered out. costse seen borrowing come down sharply just from the ecb saying it's going to buy this debt. now the question is they are doing it, is that impact going
to continue? we will have to see. we don't know how much they are going to be buying. that can be difficult. a step back's take because with these bond purchases, the ecb will be poised to break its own record. we have a chart that illustrates it nicely and the total is going to go back to one trillion euros. some initiatives include the government on buying program in two stages. aggressiveuch more one. you had years of super cheap long-term loans. alix: the idea of can they sustain that pace -- can they keep doing the 5 billion euro a month corporate on earnings and what do they do?
how do they move down the risk scale? tracy: the strange thing about this old thing is investment-grade bonds in the eurozone have been reasonably well bid. there has been a lot of demand and a search for yield. of european a lot investors migrate to get healed but it's not like people are avoiding eurozone bonds. the difficulty is the market is crowded, everyone wants new bonds and the primary issuance. are they going to crowd out other investors question mark they cannot go to the secondary market because of liquidity problems. what are they trying to achieve given that borrowing costs are already at record lows? joe: i want to follow-up on that point. it's great all of these companies can borrow a little cheaper.
this is about trying to help the ecb get to its inflation target. what's the product -- what's the chance of that happening? tracy: the textbook argument is into riskierestors assets. say what difficult to problem they are trying to solve here. if you look at when the fed undertook qe, you could see investment-grade bonds actually moved in lockstep with the trend down in the u.s. treasury yield. when the ecb started buying eurozone government bonds, that did not happen. way.s went a different the nearest i can figure out is
they are trying to get rid of that discrepancy and force costs lower to our current costs are, but the problem with that is we have a dynamic global capital market and if investors are not eating the yield they want in the eurozone, they can migrate to the u.s.. we already see analysts talking about that now. alix: thank you very much. good to talk to you. tracy alloway joining us from dubai. scarlet: yes, there's a terrible may jobs report but job openings increase and a hope to match the highest point on record. ♪
alix: i'm alix steel. "what'd you miss?" after the may disappointing jobs report, there are lots of questions about what the labor market is doing an angel provided a little clarity and a little confusion. i'm looking at the overall number which was by and large the awesome. job openings rose to five point
78 million in april, the highest levels 2000. it basically points to strong demand in the labor market. trade, transportation, things like hospitality did not see a lot of openings. if you dig into the guts, it was a little less positive. people like to look at quits because when people are feeling good, they quit their job with confidence. tos is a chart going back 2007. last fewm in just the was downhat white line to 2.7% and this blue line is construction quits.
the industry specific one is a lot noisier. not a terrible thing. but you want to watch these internals a little bit. scarlet: let's look at manufacturing. the number of manufacturing job shot up in april. that it's now at 3.3%. that's the highest going back to 2000. so this is pretty rod basin signals managers may be having a hard time winding all a fight workers. they just cannot find what they need. alix: which you think, you have to pay the workers to do that. joe: we just want to see it take off. scarlet: portuguese sovereign yields are sending messages that
mark: i'm mark crumpton. let's get to first word news. vice president biden says it is a two bernie sanders went to decide to end his bid for the white house. asked today if it was time for him to quit, the vice president said let him make that decision and give him time. sanders has come under pressure to end his race of the party can unite against donald trump. an fbi investigation has reportedly found david petraeus shared highly classified information with journalists according to a court document. and as the eye agent reportedly
told a federal magistrate that the agency had to audio recordings where the four star army general spoke with reporters about matters viewed as top secret. the italian coast guard rescued 223 refugees on board a wooden wishing vessel off the libyan coast. the captain said the vote -- the boat was overloaded and tilting and a took action because they feared the boat would capsize. with 62 taurus crashed off the coast of southern thailand. at least two people were killed and 20 others were injured. authorities were investigating how the two boats crashed in broad daylight but suspect that the -- that speed was a factor. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. crumpton. back to you. recap oflet's get a today's market action. a rally pushing the s&p 500 closer to a record high.
-- to 18,000ing 4 for the first time since april. few people expect the fed to raise interest rates in june. you have to love breaking round numbers. alix: "what'd you miss?" peripheral problems in europe -- you article, italy and spain all showing some signs of weakness. portugal is the only bond market losing money for investors this year. and yieldk at this difference between them and similar maturities. highlighting the diverging political fortunes. joining me is the global head of currency strategy at brown brothers herrmann. joe: thanks for joining us. all of this talk of a brexit is
overshadowing some other interesting things in europe, particularly in portugal. seenasn't portuguese debt the rally we have seen everywhere else? mark: i think you are right -- the short and on the two-year yield in italy and spain is negative. portugal has elected a left of center government pushing back against austerity any coupon clippers do not like that. rating by thedit three main agencies is at a low investment-grade. there's only one grade the s&p accepts. and that is why they have underperformed. , we sawe for yields
german 10 year yields at record lows. somenk there could be catch-up but the brexit issue is not separate. is goinge asking who to get hurt, and u.k. comes under pressure, the euro might come under pressure but peripheral countries, people are afraid that exit is a canary in a coal mine. torture d brs affirmed goal's credit rating not long ago. isn't it a done deal? mark: it is a done deal but it is only one agency. many institutional investors do not use db rs. because of that, they buy their own charter cannot buy it. it is not an agency they give credence to right now. alix: the other issue has to do with italian banks and nonperforming loans. they did come out with a
nonperforming fund. there is an upcoming ipo that will issue in the next couple of days trying to raise $1.1 billion but the concern is they have to put a lot of money into that. how much money will they really have four other banks? like they are going to have to buy a lot of stocks just like they did a couple of weeks ago. this is how italy has delayed the game. other countries have made measures, greece, portugal, ireland, all got in her national eight. italy did not get this aid. it's much more difficult for the italian government to support the system, but i am not so negative. people look at the size of the bad loan situation and only look
at one side of the equation. it's not like italian banks don't know what's going on. many have been putting up loan-loss reserves which is why you have these ipos and new bond issuance. some people say is the policy working? it is driving down interest rates and making it easier for banks to rebuild their balance sheets. there's a lot of pessimism around italy. it's a weak attempt at is the only attempt they have to rebuild the banking system. aix: is are going to be second option? i think there are other ways to recapitalize the atlas fund. big think these are the ones for this year and hopefully a little growth and low interest rates will help italy address
these problems. spain is grappling with its own political issues. you have a new for party system where no one can govern on their own and an election coming up. if you look at the ibex 35, the stock market is trailing behind broadly and we have seen the impact on spanish stocks and bonds. will it move the euro? not. so far has it matters where you want to tell your story from. and the italian stock market has underperformed but i would say they outperformed last year. return to me a kind of thing. spain had the election in december and here we are, they could not put together a government. we are not sure if spain is
ungovernable. mentioned earlier in the conversation that perhaps the vote could be seen as a canary in the coal mine. where would you expect to see that contagion next if the u.k. votes to leave? mark: that's a good question. if the u.k. were to vote to leave, he would see it not only in the stirring -- in the sterling, i'm thinking about poland, the czech republic and hungary and slovakia as well. when the berlin wall fell and communism ended, these companies hurried to join the eu. now they don't like it so much ,nd if the u.k. were to leave this might scare on others, other anti-eu forces. exposed because
the euro is protected by germany and france. alix: are you watching credit default swaps? what is your trigger? but: i watch the currency, the way investors behave is reducing exposure to the fixed income market. typically foreigners invest in fixed income while americans invest in fixed equities. alix: thank you very much. scarlet: we are going to stay with the theme of euro skepticism and talk about brexit . ♪
currency crunch is forcing more international airlines out of the country. american airlines is its last flight is june 30. most foreign airlines have stopped accepting the local currency after the government limited access last year. the sec has hit morgan stanley with a million dollar fine to settle allegations morgan stanley failed to protect consumer information taken by former advisor. they say the bank failed to adopt written policies and procedures designed to protect customer data. suzuki's long serving ceo is exiting his post over the testing gamble. the company's executive vice president is also resigning. directors will waive their bonuses while senior managing officers will see there's cut in half. the resignations will take place
later this month. that is the bloomberg business flash. "what'd you miss?" it's not just about brexit. opposition to the european union is growing across the region. votes across the region have lost faith in the eu alix:. what is behind this dip in support? our guest joins us now from washington. you have a staggering chart that shows a deterioration of pro-eu sentiment. all across the board, whether it is greece or another country, what was the most striking part of your survey? i think what was very striking is we have seen a slow, minor recovery in the last two years, but it kind of autumn doubt in 2012 and 2013. it began to recover slowly and
we have seen a double-dip. support is down 17 points and and based on spain other questions we ask, the data part ofsuggest this is a negative judgment on their handling of the eu crisis and how they have been handling the ongoing economic situation in europe. do these seem like the kinds of trends that can be reversed or is this posing annexes essential problem for europe that would mean a brexit vote would be just the start? guest: i do think another question we ask goes to that question. the underlying debate around brexit is do you want an ever closer union or do you want less euro? want to people do you
get more power to brussels, do you want to keep things the same or would you like to take back things to your capital. you have majorities and pluralities say that we would like to take more powerback from brussels. in no country where people likely to say they wanted to give more power to brussels. however the british vote on june 23, the european union faces a challenge in the sense that the idea of an ever closer europe going forward is not widely supported by public's all over europe. scarlet: detractors are there and you mentioned skepticism is strongest in france and spain. having said that, what the findings tell you when you break it down by age group? guest: what is interesting is young people are far more supportive of the eu than people in a
number of other countries. we find this all over the world. young people tend to be more open to the world than older people. we see this around trade issues. it is a generational thing. i suppose one could draw you are a brussels bureaucrats, you could draw some solace from that but you see this double-dip in support for the eu. scarlet: the online polls aimed at younger people, what did they indicate? joe: tell us more about the methodology. how did you conduct this poll and this question of online versus telephone, how do you factor that in? guest: we conducted telephone interviews in seven of the 10 countries. and to face interviews places like poland and greece.
these are methodologically ones we have tested in the past. we stand behind the results. there have been questions about the way polls are done in the u.k. but we think our data is justified based on the rigor we apply to the methodology. use i want to go back to support for the eu. one of the stories we talk about is extraordinary high levels of youth unemployment and this feeling that there is a lack of a future. it doesn't necessarily seem intuitive that the youth would be most enthused about the status quo. i agree and i suppose there could have been another storyline that said young people are against this because there are less job prospects. say, george gallup used to you ask people to question and they give you an answer.
we have to report the answer and we have found consistently all over the world that young people seem to be more open to the world than older people and that is the case in europe as well. scarlet: fascinating survey findings. alix: coming up, an exclusive interview with u.k. prime minister tony blair and his thoughts on the exit vote. why he says greece is years behind where it should be. ♪
brexit referendum and spoke about the rise of radical politics and how you change the clinical environment from when he was prime minister. blair: i think it has lost the debate and what i find is a sense among people is they are frustrated with the system, they don't feel the system is responding to their anxieties and concerns and it is about rattling the cage, saying you have got to listen. what you find when you dig a little deeper is what's the consequence? if you take a brexit vote or elect donald trump, people -- it's about shaking
anthe system and is insurgent movement of revolt and rebellion. it gives you the ability to mount those insurgent movements at speed and at scale. they are very fast and can reach an impact. you get a dismissive attitude. time and it is almost a revolt against that whole strain of local thinking. in the end, if you take these actions, they do have consequences and the only country in the western world that has this populism left or right and put it in government,
the only country that has actually done that in the western developed world is greece. with consequences that are very obvious -- in the end, the leadership that came in split the between those people who then had to come to terms with reality and the people who refused to come to terms with reality. the country has lost several years and the bailout program is now more severe than the program that was put out on the basis that this one was too severe. responsed, that's one to this. the other response is you have to get a radical centrist agenda. you have to be the change makers not the guardians of the status quo. john: where should the radical center push now? mr. blair: you have to push on
how do you make globalization work? thinking globalization is a policy of government -- it's not a policy of government. it's driven by people, by the internet, my -- by migration. the world is coming closer together. it difficult to explain to people who have lost their jobs are gone through things that they have two way. it has a cruel magic, globalization. : if you simply say you have to wait until he gets better, that is not a response they are going to accept. if you say there is a way through it, but it is around education, infrastructure, making sure we reduce the cost of government through the use of technology but are able to do it in different ways, it is about reshaping the way the government works. if you say it is about as a country, we reform our public
services in a way that allows you ways to access better quality education and better quality care. you could make this worse for people but what doesn't work is that it's very difficult and you have to trust us. that's not going to work. let's be clear that the answers are not what the populace. the populism of the left and right, they come together in this anti-globalization drive. it is not going to work. unemployedwho are and some of the seaside towns in the u.k. is not the answer they are giving. the answer is better education, better infrastructure, linking the country up in a more productive way. this is the answer. alix: that was former u.k. prime minister tony blair. scarlet: coming up, what you need to know to gear up for tomorrow's trading day. ♪
scarlet: in just minutes, new zealand's central bank will report on its interest rate decision. i'm going right back to my computer right after this. --x: don't miss this tonight at 9:30, china cpi. what's happening to inflation is commodity prices keep rising? joe: i will be looking at initial jobless claims tomorrow. you really want to pay attention because with that week jobs report, the question of whether it is a blip or the side of something slowing down might show up first in that initial claims data.