tv Bloomberg Daybreak Europe Bloomberg June 9, 2022 1:00am-2:00am EDT
across asset calls after a day of losses asset calls after a dy of losses on wall street and in the u.s.. futures in your appointing lower by around five heads of a percent. futures stateside also pointing lower. between the 10th of a percent for the s&p e mayonnaise and nasdaq as well. when it comes to currencies base, euro-dollar firmly in focus given the decision from the european central bank. currently at 1.07, gaining just .1%. we are keeping and i on the commodity space. 123 is what you are getting on
brent. the u.s. 10 year at 3.03. concessions for the u.s. benchmark. as we look ahead to the cpi print on friday to inform what happens next, how hard and fast they go, and whether september is still in play given the markets are baking in june and july. >> between that cpi report and the ecb today, you get that feeling for the bond market it is a settle now, ask questions later mentality. he mentioned some of the losses, msci asia pacific down a quarter of a percent. those losses led by hong kong tech, concerns about shanghai having to do a mini lockdown, reminding us that covid zero is still with china.
some of the losses easing a little after a trade report was better than expected. s&p 500 futures treading water, nasdaq leading losses and aunt yields go higher. an update on credit suisse, it is a swiss-listed stock but also has a u.s. adr. it is down 1%. in the european session chairs were down 7% after a swiss bloc reported that state street could take it over. but i have to wonder if there is doubt about whether that actually will happen. >> there is a lack of clarity from state street. it was based on one source. jeffries is saying this is highly unlikely that state street would like to take over.
based on their pending deal for harriman's, and a plethora of legal and business challenges . >> we are confident on the other acquisition that we are trying to do. but again, recall this negative story came less than 24 hours after there was credit suisse's top banker breaking in an interview that we are back. they have outflows from asia, concerns of deleveraging as well. is this a banking-wide problem, or just a credit suisse problem? >> some others out there as well. the asset management part of credit suisse could be attractive for the likes of state street, they have about $4 trillion under management, may be one of these asset management
companies could digest. but certainly, this is a story we continue to watch. >> let's get to our other top stories. we will talk about the ecb, we also have andrew james on the latest with the oil market. >> and enda curran with china trade data, and the latest market moves in asia. oil prices are nowhere near their peak according to the uae energy minister. he says the pending rebound in chinese demand threatens to strain a market already pinched by tight supplies. >> let's bring in our energy and commodities editor in singapore, andrew, walk us through this move higher $220 a barrel. -- to $120 a barrel. >> we are seeing continued drops in stockpiles.
they are at the lowest seasonal level in 80 years. a lot of additional fraud in the market we are seeing right now is because of expectations china is going to jump back. the general expectation is that demand is going to rise in the next two months. >> the details around this fire at the export terminal in texas. how potentially damaging is this for the export of u.s. energy? >> this is a big terminal. a very important facility. almost a fifth of u.s. lng exports go out through this terminal. it looks like it is off-line for at least three weeks. this is going to have a big
impact globally on prices, potentially in europe. europe is trying to wean itself off of russian gas in the longer-term, but still dependent in the shorter term. >> you have natural gas down another 5.3% this morning. andrew, thanks so much. it is decision day for the ecb and christine lagarde and her colleagues could mark a major shift in euro area monetary policy. let's get to our european correspondent maria tadeo from amsterdam where that european governing council middle is occurring. highly anticipated meeting today, is this is just about laying down the path of future rate hikes? >> you are right.
we are not in frankfurt. i'm sure you've noticed behind us this is amsterdam, feet away from home meeting the central bank does every year. but the focus is on inflation and today marks the end of an era in many ways. in terms of rate hikes, we are not expecting andy action. but there are two things to watch out for. we are going to get confirmation that this will end within weeks, and that will pave the way for the future july moved. the market is well calibrated for that. for me, the key will be the press. well christine lagarde stay on the 20 five basis point narrative, or are we going to see a more hawkish pipit perhaps pointing to something that looks like 50 basis points. what's also interesting here will be the gradual, what does that mean when they refer to a
gradual path? and talking about a fragmentation we are seeing. is the ecb ready to provide some buffer as they normalize policy and what does it look like? >> bloomberg's maria tadeo in amsterdam in case you haven't noticed there. a preview for the ecb decision. let's have a look at china where shanghai is putting one district back into lockdown to conduct a mass testing drive, that's as the general trend is toward using covid restrictions that helped exports rebound strongly in may. but the outlook for china's exports. let's bring in our chief asia economics correspondent. improvement in may numbers, but clouds on the horizon for china's traders. >> exports up 17%, imports around 4%.
total experts are on 308 u.s. dollars, the most since january. like you mentioned the devil is in the details. it reflects the pent-up demand and the reopening of shanghai after brutal two months lockdowns. factories are able to get going again. i key takeaway was there will be probably good numbers in june and july, but it may go south because customers in the west are dealing with high inflation, rising interest and are starting to spend more on services rather than merchandise goods. an important number for china's exports, and suggests a rebound, but question marks where the china trade story goes later in the year. >> and occur in their, our chief asia economics correspondent. intel is warning that a weaker economy will affect demand for cheats -- chips.
let's get to bloomberg's juliette saly with the details. >> denney, this is not what you want to hear. we heard from the cfo speaking to a bank of america conference saying it is getting noisier and adding to sentiment that as you start to see impact to china's lockdowns, consumers and businesses not spending, there is going to be less demand. intel shares got by 5.3% after this morning, the lowest since october 2017. let's flip the board and see how this is plain through to asian chipmakers. this is aggressive, analysts had thought that earlier projections in april were pretty strong. morgan stanley with a target of $460. interestingly we had csmc's
general shareholder meeting where the chairman indicated revenue is increasing 30% in 2022, as they continue on aggressive capex spend. >> ok, let's take a look at some other key things we are watching out for today. at 12:30 p.m. u.k. time, the ecb unveils its latest rate decision at a press conference with president christine lagarde. at 1:30 p.m. we get data from the u.s. including initial jobless claims. later today, the bank of canada gives an assessment of risks and vulnerabilities in their financial system. the united nations food outlook is also released, salient to what is happening in russia and ukraine. the house january 6 committee
meeting on u.s. capitol rides gets underway. we dive into the markets with the deputy cio of jameson cootes. >> we will also talk about wall street's top regulators sending out his vision, taking aim at payment for order flow. we are going to have more on that story later this hour. this is bloomberg. ♪
secular deflation story is very powerful. >> cathie wood saying that investors have been gripped by the fear of inflation, but it is deflation which is the bigger risk. our next guest shares that point of view, joining us is the deputy cio at jamieson coote bonds. ark is down more than 50% this year really driven by interest rate sweeping higher. but does she have a point, does height inventory at target and the like point to a potential unwind of inflation? >> we have a tale of two economies right now. we have excess savings, whereas
people are spending less. so, i think it takes a little bit longer to work through the inflation. however we have to go through this journey of killing inflation first before we worry about inflation later. >> where are we in addressing that inflation and the tightening of economic conditions as we look ahead to the ecb, is 25, 50 basis points going to be in up to address the top line plus 8% inflation? >> inflation of 8% in the euro zone, but that is no reason the path of rates can be negative right now. they can do 50, i think they can do two more. they can rush to get to positive rates, and they can hikes lower after getting into positive rates. >> probably worth clarifying,
the ecb 1245 today in london, but we want people to be prepared, we said 12:30. i'm sure you have been prepping all day for this, the ecb could move 50, should they be shocking and awing the market right now? >> they did not prepare the market for 50. not shocking the market, they prefer to prepare the market beforehand. that is one communication we will look for today in the press conference. >> what is the vulnerability of european peripheries, as we look at the potential of rates getting back to positive territory by year-end? >> we often look at italian bond
spreads as an indicator, right now it is sitting at 200. they are unwinding eight years of real [indiscernible] oil prices are surging back to new highs. we have fiscal spending, we don't have fiscal security anymore. btp's yields [indiscernible] however, i don't think the ecb would prepare the situation to get out of hand. >> before i let you go, above 3% for much of the curve in the u.s., is this an opportunity to jump in and get some income back from fixed income? >> if you believe the fed can rein in inflation, then 3% as a goodbye right now. -- is a good buy right now.
if inflation stays sticky, it will be a problem. >> looking ahead to the cpi data out of the u.s. on friday, what is the number you would need to see for the fed to log in another 50 basis points in september? >> i think anything higher than .3 would warrant a 50 basis point pace. the fed really needs to see a month on month 0.3% lower to feel comfortable that inflation is really falling. >> kate, thank you for joining us this morning. the deputy cio at jamieson coote bonds. the securities chair lays out his vision for payment for order
>> this is bloomberg daybreak: europe, i'm tom mackenzie alongside dani burger in london. the securities and exchange commission is previewing changes, gary gensler has asked the agency staff to weigh an overhaul of payment for order flow. making the equities market more transparent and fair. for more, we are joined by senior crypto reporter joanna ossinger. what is gansler trying to accomplish here, what is his rationale? >> hey, tom. he is looking at the way the stockmarket functions and saying
i want to make sure particularly retail investors are getting their pricing for what they are doing in the market. he is looking at changes to things that have been around for decades. the industry is saying well, we want to see if this will actually be valuable. but it does look like he is looking at a lot of things that would create a lot of changes to the business model for those wall street firms. >> this of course going back to the whole game stock saga, a lot of retail investors were angry about the payment for order flow to begin with. what has the industry's reaction to this been so far? >> so, the industry has been somewhat cautious saying we want to see whether this is going to be effective. citadel had said the process currently cost some money, and
the way things are currently has allowed them to stop charging commission for retail consumers. firms like robin hood do benefit from the way this is done. so, it could really affect firms like robin hood, for instance. >> bloomberg's cross asset editor on potential proposed changes by the sec chair. let's get the first word news with juliette saly in singapore. >> u.s. natural gas prices tumbled after a fire broke out at a texas export terminal, threatening to delay stranded gas supplies in the domestic market. the blaze has been brought under control, and there were no injuries. it is one of seven terminals that exports natural gas by c. -- by sea. a jump of almost 17% from a year earlier, with more than double
the figure expected by economists. imports also smashed expectations growing 4.1%, but left a trade surplus of almost $79 billion. the u.s. house has passed a package of gun legislation, a mostly symbolic action, ahead of whatever compromise plan emerges from bipartisan negotiations in the senate. it includes raising the minimum age to purchase many semiautomatic rifles, restrictions on sales of large capacity magazines and other measures. ace out says his company is -- the uber ceo says his company is recession resistant. he says he does not see any need for job cuts. >> we don't think they are necessary at all, however with
the uncertain environment we should be more cautious. there is much more to look forward to in the next six to 12 months. our message is we are going to be careful. we are going to listen to the trends, but let's not get carried away. global news, 24 hours a day, on air, and on bloomberg quicktake. powered by more than 2700 journalists and analysts in more than 120 countries. >> jules in singapore, thank you indeed. a new era of monetary policy for the euro area may be ahead as the ecb confronts the threat of an ablation. we look ahead to that next. this is bloomberg. ♪ psst. girl. you can do better. ok. wow. i'm right here. and you can do better, too. at least with your big name wireless carrier. with xfinity mobile, you can get unlimited for $30 per month on the nation's most reliable 5g network. they can even save you hundreds a year
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dani: this is bloomberg daybreak: americas. -- bloomberg daybreak: americas. these are the stories that set your agenda. tom: the ecb will pave the way prince first rate hike in over a decade. state street slides after refusing to comment on a plant does report it plans to buy credit suisse. shares jumped. trade rebounds, china's export surge as covid disruptions ease. inflation concerns still way on asia stocks -- still weigh on asia stocks. dani: that to get a bit of reprieve this morning. that trade coming in stronger than expected. asia stocks down .25%. hong kong tech done more than
one point 4%. it has done better in recent days given hopefulness around regulation. s&p 500 futures, not too much to talk about here. same goes for nasdaq futures, which are underperforming. inflation is going to turn to inventories building up. following through to the european future session. tom: currently down .4% after two days of losses. looking ahead to that key decision for the ecb. expected to end the purchase program. we will leave it there for now. in terms of what is happening on asset classes, euros up a 10th of a percent,. close to do basis points higher
this morning. watching those euros on peripherals today on the back of that decision. brent 124, gaining .4%. china and that demand from china as the restrictions continue to ease, it is clearly going to be a factor in terms of demand for brent. dani: let's get back to the top stories of the ecb, the president looking to end asset purchases. exiting eight years of negative interest rates at today's policy meeting. let's get to our european correspondent, who is in amsterdam, the ecb government council meeting is happening there. what is the book is going to be?
maria: is there anything here that gave it away? tom: the clock. maria: very sharp eyes. the location changes, the focus remains the same. it is all about inflation, inflation, inflation. almost triple or quadruple that targeted 2% that the ecb set out. in terms of today's decision, we know that the european central bank is coming to the end of an era. today that confirmation that asset purchases will come to an end in the next few weeks. that will pave the way for that first rate hike. today what really matters is the choreography they will set out. why five basis points, that was the narrative until a few weeks
ago, we are actually in line -- is she going to make more hawkish move. there been more including judge appoints -- deutsche bank saying we are headed for a 50 basis point hike. tom: the scrutiny on her words today, that debate is around the 25 basis points versus 50 basis points, why are you looking for my come so that rhetoric? maria: every time where here, i always say something different. this one truly is, she hasn't set the rate -- from the european central bank until now, there has been that debate somehow hawkish will she go, the 50 or the 25? the other thing, moving away to
july, i think the big issue to date will be fragmentation. as you normalize policy, that triggers volatility. we've seen that play out in the bond market. there are two key words, gradual, and when you look at the fragmentation, is the ecb ready to provide some buffer, especially for -- is this something they're willing or ready to put to work? is this an abstract concept or something they really have clearly -- looking to that july meeting and that rate hike. tom: great stuff. maria tadeo in amsterdam, let's go to simon french now, chief economist. seeing 75 basis points by the end of the year, can the
european economy stomach at this point? simon: the threats now of inflation across a broad range of -- within consumer prices. if you look at some of the underlying real economy metrics, compared to a decade ago, it was 12 or 13%. by about 2.5% today. i think we have progress, does that mean the pathway can follow the same pathway set up by the federal reserve, bank of canada. it is going to have those deflection come through, i think it can. dani: economy should absorb 75, you write about how investors become conditioned to ecb maintaining highly accommodative monetary policy stance, can
investors stomach it? how much of a surprise will this be? the shift of not getting not just neutral, but positive rates? simon: in terms of the importance here of -- going through this process, managing the risk, we have seen some movement. back to the averages we've seen over the previous three years. to try and answer the question, [indiscernible] those indicators which will worry investors, i think the ecb will use discretion to make adjustments in their investment portfolio. tom: rather than having a formal program? simon: i think a formal program will become quite difficult.
agreeing discretion of governing council, talk about financial stability. and keep it out of the headlines. that is an important function of making the transition away. it is so going to be a very accommodative policy. dani: you talk about discussion here. when they pop up blog post, the conversation was she is laying this out quickly. does that fly in the face of this idea of discretion? having a team saying we are look -- moving in july. simon: she is trying to move -- what she can do having no economists coming along -- you asked me about a pathway, there are lots of ends, the war in
ukraine, movement in the commodity markets, you simply don't know. i think she would be naive or foolish if she is going to set the pathway to not build and agree -- a degree of flexibility. tom: you talk about changing inflation, and that potential demand structure is about restoring to see that yet? amid the higher energy prices? [indiscernible] simon: pmi's are starting to lag . consumers are taking a much more cautious view. other metaphorically or specifically, there are landing on doormats across the euro zone, you are seeing some pullback in consumer spending. it is a difficult trade-off by
central banks around the world. deflating a domestic economy in terms of trade, no central bank wants to be there, i'm afraid that is the kicker they've got to deal with. uncomfortable trade-offs need to be embraced. dani: the cure for higher prices is higher prices? you talked about being a medium-term deflationary impact. talk about that. simon: i've no problem with that. the principles of what she is saying, the big structural deflation, it has been talked about for many years on this program. they are still prevalent around the world. when it comes to the rescue to change the path of near-term policy, nor should it given risk, which -- i think the costs
of making the policy now is too great. that shift took place earlier. tom: u.s. dollar down just under 6%. remains under pressure, is that your outlook? simon: i do think that is my outlook. rates from the u.s. are going to have to go further. it's a different dynamic. i think all central banks have it. there's more evidence there is a considerable demand, monetary policy becomes more effective, more sustained tool, though spread widening euro-dollar i expect to continue. tom: exporters benefit, in terms of energy imports, what is the more salient one.
simon: there's always a tolerance range, isn't there? you're talking about the ecb, they will be comfortable at the current level, that is where the monetary policy -- tom: thank you for joining us, looking ahead to that crucial ecb decision. rising interest rates and the cost of living prices are taking a toll on the property market in the u.k.. the story next. this is bloomberg. ♪
what we are seeing, we move accommodation, we cannot signal what they're doing and in those countries where there is demand, the rate hike policy should be tighter. tom: reiterating that some monetary policy accommodations will address supply-chain shocks. in u.k. growth, we were talking yesterday. homes for the first time, an early sign that rising interest rates in the u.k. are taking a toll on the property market, according to well institution -- the royal institution. it is now at a turning point,
with state agents claiming the buyers are tightening their belts. how realistic are the warnings that they could finally be a slowdown in the u.k. housing market? >> a keeps on coming. last week we had the deputy governor saying he is starting to see straws in the wind. the survey today might be one of those. you've also got boris johnson speaking today at 1:00 london time on the housing market, another attempt to show he is moving on, sticking to the agenda. he is said to announce more rates for first-time buyers, you have to ask about how it's going to sink inflation more. dani: it's a strange time for u.k. politics.
at that time, we have the oecd, that the u.k. economy is going to grind to a halt next year. does this continue to put pressure on politics? >> the oecd claimed the premature consolidation in the u.k.. there speculation that johnson's press secretary insists a reshuffle isn't on the cards. for me, this harkens back to the bank of england predicated on the assumption there will be no more physical support this year. -- physical support this year. dani: thank you, lizzie borden, our government correspondent. -- lizzie burden, our government correspondent.
that conversation is run 9:30. shaun white, ceo of virgin atlantic had harsh words for his london counterpart. he calls them more doom over a suggestion that recovery in u.k. travel won't be until the end of next year. he calls it ridiculous and a significant -- elsewhere in the travel spaces, the ceo of expedia is inclined to agree. he sees consumers enjoying a strong travel season is the pandemic wanes. >> everyone is going to trouble somehow. i think there will be disruptions, we are seeing in europe, u.s.. shortages of staff created a problem. we love to see hotels open to full capacity. in the meantime, people are funding options were of the go. -- funding options wherever they go.
-- we're seeing everything filling up. i think it is going to be a busy time either way. >> elon musk had a bad feeling about the economy, what do you think? >> i definitely don't tweet about anything. i would say from what we can see of the u.s. market in the western markets, there are so markets were people can't travel. but there's tons of pent-up demand, we see people wanting to travel, they were buying lots of stuff, they understand travel. and saved a lot of money. we are seeing that rebound to spending on travel. that looks robust trust. how the economy lance, who knows? we are in a multitrillion dollar market, we are a tiny fraction
they declined to comment on the report. credit suisse ended the day almost 4% up in your. after warning of a third straight quarterly loss. we are joined by our investment editor, russell. this potential purpose -- purchased by state street, will walk us through how we got here? >> it's been a busy new cycle for credit suisse this week. first we had the morning, -- profit warning. we had the bloomberg report on the first round of job caps. and then this report that state street could make a bid for the bank. the offer could come within days, credit suisse dropped more than 7% earlier in the day. state street can't after the u.s. feel the speculation by
declining to comment on the report. tom: state street may be looking at in particular when it comes to credit suisse, what is attractive within that business? >> it sounds like an unlikely fit. which is an asset manager, it is not in the business of commercial and investment banking. some analysts say state street might make an acquisition, we know the ceo of credit suisse said last year, -- it was supported late last month that the bank is considering boosting capital. that would make asset sales may be one way to do that. we will be tracking this closely going forward. dani: fair enough. i do wonder, when we look at the
big -- bigger picture of credit suisse, saying what is affecting us as the war in ukraine, is tightening monetary policy, these are macro issues. to what degree are we going to see these things reflected amongst other banks versus idiosyncratic issue for credit suisse? >> it's a challenge for the entire sector. some banks saying they been creek -- the increased volatility is in some ways a good thing. credit suisse on the other hand, there owning the increase in volatility. some banks have exposure to the russian assets and issues. there are a lot of complicated vectors, going both ways. tom: bloomberg's asia investment editor, thank you for bringing
that down. in the report of state street looking into that. let's check in on the futures as we had to the end of the hour. futures are lower, down -- two straight days of losses across european equities. president madame lagarde with the decision for the ecb later today. dani: we are looking at european futures also following this morning i had of the decision. euro-dollar's, where getting -- waiting our hands for this decision. we had the new zealand central bank coming out with the decision. we will see the same for europe today. we will find out later. this is bloomberg. ♪
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