tv Bloomberg Markets Americas Bloomberg April 24, 2017 12:00pm-1:01pm EDT
from bloomberg world headquarters in new york, we will take you from paris to berlin and washington this hour. here are the top stories. rallykets, so cold relief following this weakens first round of the french election easing concerns the country will exit the common currency. u.s. stocks are rallying with the nasdaq hitting an all-time high. suntrust independence, macron will face marine le pen and a second round of the french election. the run up round is on may 7 and macron is heavily favored though he is never held elected office and has yet to show if he can assemble a parliamentary majority. goldman sachs'fixed income revenue missed him has wall street buzzing over what happened.
part of the answer is merging and it has to do with sour that's - bets. julie hyman joins us with the latest. a little are seeing backing off from the highs of the session. the relief rally is intact following the results of the french election. the expectation of the second round of investors will be that emmanuel macron will be victorious. let's take a look at the bloomberg. we have the daily percentage change in the s&p 500, specifically the dotted lines are 1% moves. we have still been relatively rare. to have any moves of 1%. it was much more common last year of that magnitude so we have not seen the 1% gain going back to march 1 which was the
last time all three major averages were at records. we will see today if it ends up being the best session since then given that we have had some other rallies over the past couple of months. in terms of what's working today, the focus to some degree is back on earnings since we got earnings winners. illinois tool works raised its forecast with earnings beating estimates. providence sales topped estimates with revenue up a the seven straight quarter and saw a weakening of demand compared with recent demand for star wars and marble products -- marvel products. there was a boost in board games. halliburton boosted sales in north america. it's a rapidly rising count in shale. but thesep as much are some of the earnings winners we are watching. helpingr thing that is
in the financials is that we are seeing celery in the treasury market as part of the risk on reaction to the outcome of the first round of the french election. this is a two day chart of the 10 year yield. the trend has been a falling 10 year yield. we are seeing an increase of four basis points is not huge in the grand scheme of things but the fact that it represents a reversal in the short-term trend, it's positive for the financials. it is negative for real estate. and retail real estate, they are weakening, sears announced another round of restructuring. the company is losing its second cfo in the last two years or so, rieker will and rob be the new gfi oh.
one reiterated its equal group on shopping centers looking at slower organic growth and weaker tenant credit outlooks. vonnie: thank you. the first round results of the french presidential election showed centrist independent emmanuel macron facing off against national front leader marine le pen next month. nowother parties are endorsing macron. talk to us about the difference. . it seems like the south and west all went to macron but the industrial northeast went for le pen? right, it's interesting to remind everyone
that the unique outcome of the first round is the fact that we have no mainstream parties in the runoff. the socialist party was eliminated as well as the republicans. macron did better in the west of france, regions like brittany where he had the support from the current regional head and also in paris. more than 35% for him in the french capital. marine le pen did better in regions that went for nicolas sarkozy in 2012. also the southeast of france where she did very well. high unemployment there
and she did well in some major cities like marseille and nice. she will have a thursday night rally. vonnie: what should the strategy be for both candidates? should they go for the undecided people? do they look for more endorsements? what with their advisors tell them? the advisor i spoke to was an economic advisor of marine le pen and said that marine le pen will try to extend her base by counting on the votes of the who didan candidate about 19% and also appealing to the far left candidate. he also did about 19%. surprising but even though the far left and the far right have very different approaches on things like
immigration, their programs on economic policies and anti-establishment are similar for some of the voters of the far left. also, i want to bring you information that came out about the republican candidate. i have to interrupt you. we have to go to the president of the united states. is the first time for the white house so it's a great honor. statesknow, the united holds the presidency of the security council this month. i am glad we are continuing the tradition of hosting the council's ambassadors in our nation's capital. it's a great honor, believe me. i want to thank him bassett or nikki haley for her outstanding leadership and her acting is my personal envoy on the security
council. she is doing a good job. does everybody like her? [laughter] otherwise, [indiscernible] want do that. i promise. she is doing a fantastic job. before,we took pictures you of all developed a friendship together and that is really telling. the mission of the united nations of the un security council is to maintain international peace and security. ande are important aims shared interests. as we look around the world, it's clear that there is much work for you to achieve. you will be that does very busy people in the coming months and years. our nation faces serious and growing threats and many of them stand for problems -- stem from problems that have been unaddressed for far too long. does not likeions taking on certain problems but i feel the people in this room and i know for a fact that nikki
haley feel strongly about taking on problems that people have steered away from. i encourage the security council to come together and take action to counter all of these many threats. on syria, the council failed again this month to respond to the syrian use of chemical weapons. that was a great disappointment. i was very disappointed by that. the status quo in north korea is also unacceptable and the council must be prepared to impose additional and stronger sanctions for the north korea nuclear and ballistic missile programs. this is a real threat to the to talkether we want about it or not. it's a big world problem and it's a problem with have to finally solved. . people of put blindfolds on for decades and outs time to stop the problem. for the united nations to play in effective role in solving these and other security challenges, big reforms will be required. we must also take a closer look
at the yuan budget. -- at the un's budget. if we do a great job, i care much less about the budget. it is peanuts compared to the important work you are doing. you are talking about the most important things ever. i'm a budget person. i talk about nato the same way. if you do a great job of the united nations, i feel differently about it. we're talking pennies compared money that youd will be saving. the united states is one of 193 countries in the u.n. it pays for 22% of the budget and almost 30% of the united nations peacekeepers which is unfair. we need the member states to come together to eliminate inefficiency and bloat and ensure that no one nation
shoulders a disproportionate share of the burden militarily or financially. fair to our taxpayers. i look forward to a productive discussion about our shared role in keeping the peace, advancing reforms, and getting everyone to do their fair share. i also want to say to you that i have long found the united underperformer it has to mend his potential. there are those people that think it's an underperformer and will never perform. i am so happy with the job nikki haley is doing and their representatives. i see the relationship she has already developed. i think the united nations has from his potential. potential,endous far greater than any other candidate in the last 30 years
would've thought to say. i know it has not lived up to the potential. i see a day when there is a conflict and the united nations gets together to solve the conflict. he don't see the united nations solving conflicts. i think that will start happening now. i can see it and the united nations will get together and solve problems. it won't be two countries. it will be the united nations arbitrating with those countries. i see the potential and fantastic things i had for the united nations. it's a tremendous honor to know you and meet you and nikki haley has given me a briefing on each everyone of you. if she didn't like you, i would tell you right now. she gets along with everybody and respects everybody in this room. unless you would rather not do it, we have an office in the white house that you may have heard of called the oval office. we will all go down as a group and take some pictures in the oval office. i know you have never seen it.
no one sees a very much but we will show it to you. we will go down and take some pictures and the oval office and have a good lunch and and talk about the united nations. thank you all very much for being here. it's a great honor and pleasure. [applause] the president of the united states talking about the u.n. and the u.n. ambassador and he says the yuan is an underperformer and it has tremendous potential but has not lived up to it. he says that will change and he mentioned the u.s. secured -- the un security council failed to respond on syria. the ap is reporting that the trump administration will issue new syrian sanctions. let's check in with bloomberg first word news. french president francois
hollande is urging voters to choose centrist candidate emmanuelle macron in the may 7 presidential runoff to keep out leaderht -- far right marine le pen. he said her platform of pulling out of the euro would devastate the country's economy and threatened french liberty. macron was francois hollands top for two years. british prime minister theresa may has hired former obama campaign manager jim mussina for her election campaign. teamreunites the winning behind david cameron's unexpected victory two years ago. she has also hired the political strategist and pollster who worked on mr. cameron's election. president trump says the border wall with mexico will be an important tool for stopping the flow of drugs into the united states. that heident tweeted
continues to pressure congressional democrats to pay for a wall on the u.s.-mexico border. he said mexico will be paying in some form for the wall eventually but that he wants congressional funding now so construction of the wall can begin. global news, 24 hours a day, powered by more than 2600 journalists and analysts in over 120 countries. this is bloomberg. vonnie: thank you. stay tuned, more markets straight ahead. this is bloomberg. ♪
news, we haveical had a thrifty market weather comes to treasuries or equities. what is the market looking towards? start up isow to priscilla hancock from jpmorgan. a 10 year yield at 2.26% had been as low as 20 -- at two 2.21%. what does it say to you? been atnk there have least three things keeping yields somewhat depressed and risk off. geopolitical risk is one of them and the french election was the most immediate. we have traded up a little on the news that the centrist should move through to the presidency. we still have some weakness in u.s. numbers and the hard data.
we expect to see that turning around in may. we still have the indecision washington and we have not seen the politics out of washington yet so we need to take rates higher from here. that would be tax reform, regulatory form, and spending. some of the risk is out of the market in the short run but we still have to see other things to move to the next level. vonnie: we are going to get a broad overview or something on wednesday. we know from the omb director that we will get some kind of figure on taxes. might that have any impact on taxes? >> i think that will go part of the way toward helping the market say the next phase to move to higher rates but part of the issue is getting something past. it's going to be the reaction to the proposal and whether or not
we feel something can get enacted and that's what the market wants to see, the markets want to see something happen. it has been intimated that it will be next year before any tax reform gets actually done. should american markets be looking at the french election or german or italian elections? what is next? >> i think all of that is wrapped in an even if we don't get something and acted next year, the markets don't wait. a price those things in earlier. we have had some weakness in first-quarter gdp may be around 1% but we already see that pushing forward. by the second quarter, we will see some firming of the gdp. inflation should move back toward 2%.
if you look at that in isolation, you would not say we have a 10 year at 2.26%. we have above trend growth in europe and japan and china. all of that suggests that the central banks of the world will stop moving away from monetary accommodation. i think you can expect to see a 3% 10 year yield by the end of this year. fascinating, what would happen to breakevens in the meantime? 1.86.are at we think that's a little underpriced. we expect to see inflation moving back toward 2%. our forecast for oil is higher. we should see a $60 crude price for oil. shouldthat suggests we have inflation breaks moving back from here. vonnie: i want to bring this up.
rates, the neutral fed model of the neutral rate fell back to zero. what should the neutral rate for the economy? >> it should not be zero. we may not get back to what we have seen historically. maybe not in the near-term. you cannot fight the weight of the central allen's sheet. i think it will be hard to move back there. we do not need a 0% neutral rate at this point. people talk about the fed tightening. what they are going through now is not tightening. it's a removal of extraordinary accommodations. gdp moving back toward two and inflation at two, we are still too accommodative and that's what the fed needs to take back. vonnie: all right, the global income strategist at
this is bloomberg markets. panera bread says it's adding 10,000 new jobs to its delivery service by the end of the year. this will include cafe workers and delivery drivers and they of theirmployed at 35% 2000 stores. earlier this month, jab agreed to buy panera for 7.5 billion dollars. ceo 33 million dollars pay
package is up for debate at the shareholders meeting tomorrow. found her compensation may be understated by half. big blue has had five years of falling revenue with a total return of less than 1/10 of 1%. that is your latest bloomberg business flash. hathaway willry join me. the first round of french elections and president's first 100 days in office coming to an end. this is bloomberg. ♪
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holding on to most of the games. the dow is the only one breaking moment.arket the moment. the s&p 500 is up almost 23 points, nearly 1%. the nasdaq is up 1.1%. let's go to abigail doolittle, who has details for us. abigail: needless to say, what a risk on day. major averages having the best day since march 1. these are the haven assets plus the "fear gauge" or the vix. it's a risk on day as the havens selloff. the vix down 23%, the worst drop since the election. we also have gold declining and the dollar climbing against the yen. bonds are up by two basis points. that tells us those haven bonds are selling off. the trigger for all of this was the first round of the french presidential election with a gap up in the euro. we look at g #btv 8020.
this chart shows absolutely the massive gap higher, the biggest move from friday's close to sunday's open ever on record. that is how enthusiastic and frenzied investors were over the french election results, sending the currency higher. this has sent risk on gaps right across the asset classes. it is the s&p 500 over the last year in relation to its 50 day moving average in blue and its 200 day moving average in orange. around the time of the brexit leave thethe vote to euro, the s&p 500 sliced that 50 day moving average and moved down to the 200 day moving average for a 6% drop. we saw something similar to the u.s. election and that we have the s&p 500 flirting with that moving average, gapping above it. when we take a look at the other periods around the 50 day moving average, an they may suggest
the s&p 500 gets choppy and want to get dropped down to that 200 day moving average, which would equate a 6-7% drop from the high on march 1. one last chart that may suggest something could happen -- something you don't see very often. 8025.s g #btv we see this range of consolidation and we see a massive gap but in the opposite direction because it's a risk on gap, telling us investors are moving away from the volatility options. on that gap down, look at how it has caught support perfectly. if that support holds for the vix, it may suggest that the fear gauge will rise back up and go back toward the top of the range and maybe come in turn, the s&p 500 may drop. there may be reverses in volatility. vonnie: looks like we may need background music for that. time now for limited markets
deals report. on analysis with the biggest players behind the deals. today stock reached an all-time high after a takeover proposal now with $29 billion. alex chernin joins us now. it is considering the offer, but it's of massive upping of the previous offer. why are they not grabbing it with both hands? alex: this is the second massive offering. there have been three bits now, 96 and change. they are not jumping at it yet, although they are going to review the deal. it is a 50% premium depending on how you value the bid. there is a weird dividend part of the bid. the reason they have not jumped at it yet, i think, and part has to do with the structure of the company.
it's odd to maybe americans, but it's really normal to dutch companies. something called the shifting. basically the structure of the company is that a certain foundation of owners of the company that control the vote so those tender shares, basically the offer, is for shares that have no voting control. even if the company were to go hostile on this, and my colleague at hammond just got the phone with the ppg ceo, said if this offer is not accepted, he will go forward and make a hostile bid if there's no discussion by june 1. they don't really need to accept the deal unless it's so good that they really feel like the company cannot get there on a standalone basis. from a leveraged standpoint here, i feel like akzonobel feels like they have the leverage. there's no reason to say, yes, good, done.
you do duell let diligence and the final offer might be higher. vonnie: are we getting past the point of this being a good deal for ppg? alex: ppg obviously doesn't think so/ . vonnie: i'm sorry, akzonobel. alex: they probably feel like they can get even more and that is why we have not seen a friendly deal reached at this point. you have to wonder how far ppg is willing to push this thing again from 83 originally to 96 and change. a 50% premium is pretty significant. we are probably getting to the end of the line here in terms of the frequency of raises and that is sort of what the ceo was indicating, which was if you do not engage here, we will go straight to shareholders. they think that they will eventually agreement shareholders because they have a fiduciary agreement. vonnie: what is president in
dutch company history? by the way, it sounds like a cultish group within the company. alex: it does, or a european vandamme perhaps. vonnie: it's not. it's just a part of the ownership. a poisonoperates as pill defense and historically has been a good defense from hostile takeovers. that's the whole purpose of it, so companies cannot go in with a nationalism thing and keep these companies in-house and keep them running in holland. that said, there is certainly precedent to say this offer is sweet enough that we decide it is in the best interest of shareholders of the company. vonnie: when will we know about the hostile bid? how long do they have to decide? happenf no discussions until june 1, at that point, the ceo says expect us to move forward to a hostile bid. vonnie: how many of them are
really just phone carriers anymore? sprint using wall street in a story today on the bloomberg. they are betting that sprint and t-mobile will revise talks on a blockbuster merger. seriously? alex: we don't know, but that's most likely the scenario. the world of telecommunications companies has been waiting for april 27 because finally telecom companies that have been participating in a wireless spectrum option, which is basically the airwaves used to send signals from one place to another, either voice or data, finally this auction has ended. iod is over and now companies can talk to each other without getting by this anti-collusion think. anotherany could say to do not bid in this auction because i will buy you two months from now so i raise the price? come april 27, sprint, t-mobile, verizon, comcast, others who
participated in the auction can finally speak to each other. the number one thing investors are looking at is -- will t-mobile and sprint merge? how quickly will they start talking to each other? is it possible dish network may be involved? vonnie: have got airwaves, but what else do they have? alex: they have a dying satellite tv business, but at&t bought directv, so it's not out of the realm of possibility. it's probably not sprint, but it's possible with t-mobile at&tse we think of this and directv merger where you're able to get wireless video accents. maybe we should get spectrum and merge the companies together. i still feel like most investors think sprint and t-mobile is the most likely combination to happen, but there's a lot of regulatory concerns. vonnie: what will lowell mcadam to? do? alex: he can do anything. he says the door is open and he will take anyone's phone call. vonnie: i will do it after we
get off air. alex sherman, thank you for that. the headlines on the bloomberg first word news now. here's mark crumpton. mark: more problems for america's most expensive weapons system ever. the government accountability office says that testing delays for lockheed's f-35 jet may add more than a billion dollars to the program's cost. agency says another 12 months of testing are needed. the f-35 program estimated it only needs five more months. the supreme court has turned away and appeal seeking to force the cia to release the full 2014 report about the agencies use of harsh interrogation tactics. let stand an appeals court ruling today that said the nearly 7000 page report prepared by the senate intelligence committee was not subject to freedom of information laws. releasedttee has
a summary of the report, but the aclu had sued to obtain a full version. nikki haley, the u.s. ambassador to u.n., has not ruled out a strike to north korea if pyongyang tests another nuclear device. in several interviews today, ambassador hailey praised china's involvement in trying to pressure north korea to sees c smith still testing. swedish police have arrested a second person in the april 2 truck attack that killed four people and injured 15 others in stockholm. the suspect has not been identified. and it was batman has already played guilty to a terrorist crime after running into a crowd of pedestrians on a main q globalstreet in the news 24 hours a day powered by more than 2400 journalists and analysts in more than 120 countries, this is bloomberg. vonnie: his take on the first
vonnie: this is "bloomberg markets." i am vonnie quinn. continuing with one of today's big stories, it's a risk on rally after france's victory with emmanuel macron and marine le pen in the first round of the presidential election in france. the two candidates will face off in a may 7 runoff. for more on this market friendly outcome and what is to come, i want to bring in larry hathaway. of alls the best outcome
possible worlds and will that sentiment continued? larry: it was one of the best. i suppose an outcome that did not have marine le pen in the second round would have been more cheered by the market, but her boat show was lower than expected. many people thought she might get as much as 25%, but she fell margin. that macron seems to be pulling in endorsements from candidates who did not make it through the second round. it is looking as though a pretty sure thing as macron being the next president of france. it tends to mitigate the tell risk out there. vonnie: we know the spread is down under 50 basis points, which means relatively little of a difference between german yields and french yields. what do we know about how macron would steer the french economy in europe? would he be willing to to like helping the rest of the mix around the euro area get better and so forth
g? larry: he tried to be a centrist to appeal to different parts of french society. he talked about throwing out some of the old baggage of french politics. he tries to represent change and yet he tries to represent moderation. how that translates into economic policy remains to be seen. i think that what we can see from someone like macron appealing to the voters is a desire to try to run new france, i desire to try -- a desire to try to add reforms that will spur growth, but at the same time income distribution as well as try to mitigate the effects of competition like globalization. it will be a mixed bag and it's not clear exactly what the concrete proposals will look like. annie: i be looking at potentially divided world now in terms of free trade? are we looking at a britain that's more protectionist an america that's more protectionist and little areas
where a portion of europe and not even all of europe and may places like canada are more open to trade? larry: rhetorically the baton seems to have passed from the united states and maybe even from great britain in terms of defenders of free trade and open markets to europe as well stephen china. china picked that up. it's too early to see whether europe will really be the guiding light for freer trade and for immigration policy. vonnie: we stop ago through germany's and italy's elections. views even with liberal toward trade, it is hard to see those advocated forcibly at this time. my sense is that europe is probably going to be the area that promotes more openness and trade than the united states will. ?onnie: what is the view then a viewe there has to be of among investment managers
about whether it's a good time to buy into some of the more battered european companies are not. your view on the economy -- maybe that differs. europe is the opportunity. many have been citing this opportunity for a long time but have been wary to get in, maybe in part because of the french elections and other political obstacles. europe is likely to demonstrate that are potential in the next one to two years over the united states over the next sectors. that should improve to operating leverage. cyclicals will probably leave the way there. in terms of other markets, i think there's also potential. i think the euro is moving back up and will probably retrace back toward the 115 level. the euro-dollar is an example of that. i do think however one of the things we have to be aware of is that with political risk now subsiding in europe and the improved growth performance becoming manifest, the ecb will have to walk back from where
mario draghi recently took them and to consider its move to neutrality. vonnie: when does the fed start unwinding the balance sheet and perhaps giving us another tweak? larry: i think we will know more in september and october about the balance sheet intentions, but it could
happen by the end of the year. the ecb probably around the same time with a move toward neutral. vonnie: larry hathaway, thank you very much. coming up, bank of america vice chair will be meeting with german chancellor angela merkel and ivanka trump for a women's economic empowerment summit. we ask what's at the top of her agenda. this is bloomberg. ♪
berlin to attend a summit on gender and diversity. they will speak alongside the bake of america -- bank of america vice chair. earlier she spoke with mac miller and said she would be looking forward to working with a vodka trump. they are interested in working with women and small business and i think that banks will look for a partner. each administration, we work on this as well and before that in the bush administration. this is a fairly consistent post. when you have had this acceleration of women businesses and there has been an acceleration of women businesses in the last couple of years, our idea is to move forward. we are happy to meet and see if we can come to some agreement with all the administration. matt: outside of banking, you will be on a panel with them tomorrow, so i will ask you.
what do you think about this meeting between the vodka trump and angela -- i vodkvanka and angela merckel? will be hopeful to the global economy? or more specifically to u.s.-german relations? anne: any discussion about access to capital, diversity, gender parity is a good thing. matt: i guess is outside of your pervy and you will be sitting in the midst of it. back to your realm, the fiduciary rule has been a big talking point in the news lately. there is a chance of deregulation. what do you think about that possibility with this administration? the important thing for the financial institutions is the concept of
working in the best interest of your clients and that is what we're focused on. we accept and have embraced the rule. in terms of working with our clients, that is our best interest. matt: what about a look at a new take on dodd-frank and less regulation, which has been part of the trump administration's campaign promises and now what they are trained to do in office? anne: repealing dodd-frank would be quite a feat. that would be difficult to do given the construct of the senate as it is today. what i think is possible is with the new regulators taking a look at some of the regulations so that they would perhaps be a bit easier to adapt to in terms of capital levels, so there's confusion around some of the rules that have hundreds of pages to one role. ule. there are more than 300 rules and many of them' have
hundreds of pages to one role. a simplification of the rules would be helpful. otherwise, i think the banks have adopted and adapted don frank and any help we can get from the regulators in terms of simple dictation of the rules, more capital into this system, therefore more lending is a good thing. matt: do you think congress understands that? i remember talking to a bank ceo at a conference who said their strategy is compliance. that is a problem when your whole strategy is based around compliance regular since. regulations. anne: that is a strategy, and i think we are all complying. we are all trying to meet and exceed what the rules are. why would we do otherwise? the point is if the regulations are somewhat simplified, again certain rules are just really complicated. that would be a good thing. frankly, i think the authors of senator dodd and
congressman frank, would not object to some simplification of some of the rules that when they were finally written were a bit confusing. matt: you are preparing finally for your shareholder meeting on wednesday. what do you want -- what message do you want to give to shareholders when it comes to corporate governance? shareholder meetings are very hot right now, especially with the wells fargo meeting also coming up. what does bank of america want to say about corporate governance? anne: the whole strategy that was set up by our ceo and that we have embraced is this idea of responsible growth. right away you get the sense of transparency and behavior. i think that is the important thing. we are looking to have shared success. we have success. our clients have success. shareholders fear that -- feel there is transparency. we have to stick with that. we have succeeded the last
couple of years and that is where our focus is. vonnie: that was bank of america mattchair with bloomberg's miller earlier today in berlin, germany. let's get a quick data check as we head toward 1:00, halfway into the trading day. the vix is really down a good bit from before the french elections, about 11.5. the dollar index was around 99 earlier and almost broke the level. still much weaker than a was last week. yen has well -- the subsided a little bit and the 10 year yield is at 2.27%. equities higher to. dauy. catch all of our interviews on .
congress has until friday to pass a health -- a bill to prevent a government shutdown that would coincide with president trump 100th day in office. he has a dealbreaker that means money -- for a wall among the u.s. mexico border. mick mulvaney tums -- tells bloomberg, the white house will offer a dollar per dollar trade for democrats in return obamacare subsidies. democrats called the offer, a non-starter. a relief rally around the world today on the french election results. u.s. stocks having the best day since march 1 with the nasdaq hitting all-time highs. attention will shift to the looming government shutdown, might not be terrible for markets. ♪