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tv   Bloomberg Markets European Close  Bloomberg  June 9, 2022 11:00am-12:00pm EDT

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away. but i realize the impact it was having, it comes up all the time but is never challenged. my guess is now, making it so public, they will have to do something otherwise they will look silly. but if they can't use payment for order flow, [inaudible] there is no good reason. if we do that, we will see a setback. what i worry, what they're trying to take care of, they will have adverse impacts. alix:>> if i morgan stanley andn e*trade what my thinking right now? joe: as well as all these
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others, they recognize this is something they talk about every year when they're chewing -- when they are doing their plan. if i own e*trade i don't want to spend too much time worrying about something i don't know. but i've got the ability to be able to adjust. if i get hit with something i should be able to adjust. alix: we appreciate your patience, we will make sure the audio is good time we have you on. joe moglia, thank you very much. over to you for market checks. guy: 30 minutes until the end of trade in europe. let me talk you through the price action and show you what's going on. the next 30 minutes or so talking about what comes next
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from the ecb. stocks down by around 1.2%. i think by and large concentrated elsewhere. the italian 10 year yield is up, spreads are widening out, christine lagarde spent a lot of the conference talking about the risk of fragmentation and how the ecb will deal with it. incredibly vague. what we got was peripheral yields blowing out and we got the currency going down. that's probably not the combination she was looking for. trading euro-dollar, down by around 6/10 of 1%. up by a whopping 24 basis points. the euro zone debt crisis, it could go significant further than this and people will be watching carefully what happens here. spreads are widening out. what can be used if we were to see them going further?
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alix: here in the u.s. we are along for the ride today. it's about u.s. cpi tomorrow. what kind of handle will they get. within the market we seeing s&p software. barely anything, yields are up 3%. one, a carnival down, the whole cruise line got some downgrades over to morgan stanley. they have been with the action around the reopening trade. on the flipside, i find this interesting because you at intel warning earlier this week on demand in a tough macroenvironment which raises the question art chips still cyclical and will prices come down, nxp said something very differently at the conference. the senior vice president spoke earlier saying demand is really strong.
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demand is in excess of supply. i think that the state of the semi industry is one to watch. certain prices can come down. >> different chips in different markets. what we are focusing on right now is what happens today with the ecb. the ecb on the road today. today in amsterdam. a four point increase next month. apparently the whole idea, we thrown that one out the window. then there's the idea we could get a 25 hike in december. -- september. here is president lagarde. >> the new projections for the annual inflation at 6.8% and 22 before it is projected to decline to 3.5% in 23 and two
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.1% in 24. -- 2.1% in 20 four. higher than march projections. headline inflation at the end of the projection horizon is projected to be slightly above our target. guy: let's go to amsterdam, joining our european correspondent who is there with christine lagarde in amsterdam. we know we will get 25 basis points at the next meeting. how much clarity do we have beyond that? maria: you heard it there. she said that was a guidance to the market. something we all knew was going to happen coming to an end within the next few weeks for the european central bank. also put on paper but they said verbally in the press conference that there will be another hike in september. the focus should actually
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between five basis points, we are actually bigger than that. particular in light of the new inflation data we have. to me it was striking that that question came up time and again, not push back the 50 basis points. that's can be the debate of markets. alix: really appreciate it, maria tadeo joining us. for a deeper look, former ecb economists. i think the question is 2024 we are looking at inflation, when and how can they get inflation down to 2%. >> the projection figure of 2.1% , you're seeing the range of forecasting errors, the
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projection, the use is basically the market different here on future rates and so you could argue basically announced today is she endorses market prices for the curve. so a series of hikes or rates, around 175. it will very likely be 50 basis points, a very important but beyond september there will be further increase, so all in all this is a press conference, not a big surprise but what really annoys me is the communication first, christine lagarde
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deviated from what she said weeks ago. the interest rates for demand, it was very clear, what you're trying to achieve with the interest rate hikes and what access demand are you dealing with. the other thing is the more hawkish you are on rates, of the more you clarify the transmission on the spread. that's to the point of think the markets. guy: there was a lot in there. let's deal with it in its various parts. we get 25 this time in july and then it looks a kid done deal. let's see what that desolate steel with that.
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monaco 50 in july if you can go 50 in september. peter: the could of done that. you have to be careful, this is a big change in monetary policy. i think the logic, christine lagarde explained that in so they started with 25, of think they could've done more. i think the main problem is to explain what they are trying to achieve. i think it is optimistic because essentially when you look at the current amount of this year, gdp will be basically -- and in the situation you try to do 25, the
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surprise of 50 basis points for september are more hawkish members of the consulate would push for that. that's not the way it was decided. alix: i'm looking at 10 year btp. really not that far away anymore. i'm wondering what you think the ecb should announce. there clearly talking about it, what should they announced to help support? peter: the argument to do with small increases has more optionality, it's the consequence of these moves on the whole financial condition. it's not only this bread, but it's the whole financial conditions. the sovereign spread is part of this and what you see today is
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more hawkish signals, you have the results telling how they want to deal with these issues. there were arguing recently 25 and give the signal 25 for september and keeping the option of course open for 50. but the signal was inverted, it's going to be 50 and if they improve then it may be lower than 50. but the sequence beyond which you could've left open by saying by september we have the situation. in the u.s. we expect inflationary conditions in the area. it's not the same situation as the united states. i think the signal of 50 basis
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points made markets nervous. and there was no answer. i don't think the ecb is ready, set so i would've been more careful in terms of the signal. the 50 basis points we mentioned for september our expectations. the don't five basis points for july is the attention of the ecb. for september, but it's optionality on the hawkish side. >> btp's are up by 20 basis points today. we were up earlier on. if we look at what's happening in the market, up by 30 basis points. if we see the periphery behaving
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as such, how does the ecb react. if they behave country by country in a different way, i.e. italy has a problem with the breast -- with the rest of the periphery. increasingly it will be stepping into political territory. >> you are absolutely right. to look, how bad the situation on growth because we have risk to grow. i would be more careful about the signal. here with the signal 50 basis points and the increase you see market traders to sell some of these in the ecb didn't have an answer. so indeed the situation, there is an evolution with ecb
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communicating. that the policy stands gets to 50. in the standard sort of an aggregated form of the conditions. also the credit spread and all that. so the look of the communications on financial conditions. if the conditions tightening too much it will change their communication. alix: part of that will be what the neutral rate is as a to measure their policy. christine lagarde punted on that also. do you have an idea what the appropriate range will be? >> i don't think it's useful for policy decision-making now. frankly i think it's a bit ridiculous. i think when you signal
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something, anything, whatever you are signaling, you have to look at the financial conditions in general and then you have to see what's the impact on the economy and inflation. if not, you recalibrate and correct. it's very vague, it's not very useful. so what you need ours -- is one of the financial conditions i need. and that's why i see the separation between the rate and on the other hand the spread is not a good approach. you have to see what's the impact on conditions and the impact on inflation and growth. when there was a question to take to christine lagarde, or do you expect to achieve in terms
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of defense, on the economy and inflation. i think central bankers in general should have the courage to say we think you're aggregate is too strong and we want to deal with that and we want to -- aggregate demand. i think in europe you have to be consistent and say what you trying to achieve. as we just discussed if you look at the rates in italy, there are tight conditions. these are not accommodative conditions. so this is not a very good situation. i think the ecb should of been more careful in the more your aggressive on rates, you have to
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come up with financial conditions in europe. you get some reassurance, but the markets expect a bit more than that. guy: vague is a word i've heard a lot during the ecb discussion. thank you as ever for joining us. former ecb
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guy: can central banks get inflation back to 2% or will they tolerate something higher
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to avoid a slowdown. tatiana, portfolio manager and cohead joining us now on this onset. we seem to be in sort of a new paradigm. ecb will be raising interest rates, we are tightening policy and reducing aggregate demand in the euro zone. if we are changing all of that head i rethink my portfolio. >> -- how do i rethink my portfolio. we think in the view that this is not transitory and that's in the u.s. and europe, you cannot say this is all supply-side driven. the ecb should just stand back. if you go long enough the ecb will react. what we've done over the last probably seven or eight months or so was to have interest rate
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hedges, but also to move petroleum steadily out of the euro zone into the u.s.. out of europe and no longer being close to the euro markets because what we've seen is the u.s. rate market is now more destabilizing for the time being and we have to go further. we take that volatility away. and also higher up the credit. guy: let's talk about the fragmentation issue. how wide -- how big a problem do think we will have? >> that is sort of the problem in itself, nobody knows where it will go but it is so clear that the market has been waiting for the app meaning clearly the use of volatility and it's now
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really testing where they have to be and it's been said all along we are well aware the ecb has been thinking about fragmentation early in the year so they clearly are aware of the problem. but what to do about it practically. so i think the problem is they haven't really figured out how to go with this practically so they are now set out to do this reactively and now we need to see where is this going to be paid the ecb says it doesn't matter what politics are saying. we need to make sure monetary policies are actually transmitted in a proper way in the fragmentation is not allowing and i think this is how they take the power back.
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we are there for monetary policy and the transmission mechanism works. and if there's too much fragmentation, we can operate. alix: i'm curious how the u.s. will operate safely. you don't want to be in european assets, you want to be in u.s. assets. the u.s. has its own problems. why do you want to be here? >> of course you have your own problems. i do think the fed has been ahead of the ecb. so we are not as worried as were interest rates are going and what impact they may have on credit spreads and generally on equities. i think they stabilized a bit more. the other thing is the u.s. is further away from what it mentioned, the war in ukraine and how it impacts the european union, so we are giving away --
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getting away from those issues. some of this -- when you see oil prices rising because of tensions in europe, than the u.s. is also impacted by it. but we feel the equal compensation, we have -- guy: what do i want to own in this environment? >> short duration still. bonds are now trading below 100. even if the market is still weak it has to go back to 100. in going higher because we do feel those volatilities are exposed. alix: we appreciate it. joining us there in london. this is bloomberg. ♪
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guy: european equity markets look a little bit like this heading into the close. this is bloomberg. ♪
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guy: wrapping up the thursday session. the ecb certainly a factor. we talked about the moves happening in the peripheral bond market in the currency. all being factored in as well. broadly equities are off the page. we are seeing some of the biggest coming through italy. it's not a consistent story on the ecb, but there's certainly some crossover.
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progressing from the get-go go this morning. basically early on, we are anticipating the deal they will get from amsterdam. we do see something of rollover. were off the lows but not by much. stoxx 600 through the close. every single sector is inaccurate -- is in negative territory. euro-dollar down by half of 1%. you would've thought by raising rates and upping the ante when it comes to rates, we will only get 25 basis points in july. don't know what we will get in september and we don't know how this story will work. all of that coming together, they are doing yields up in italy. up by 25 basis points. it's interesting is that btp's are much wider.
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the spread between btp's, if you want to pay attention -- is one you want to pay attention to. we are not that far away from 1.5 on the german 10. indicating slowly moving on the day. we see that developing and continuing to develop. let's see how that translates to what we are seeing here. we are seeing this in terms of lockdown impacts. technology is down, luxuries are down. every single sector negative territory. telecoms and utilities having a relatively good day. some really good numbers early on. the consumer product company. it's up by 2.8%. the trading house may be ditching its dividends and saying it's going to invest.
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this is interesting, we are seeing this across financial services, a look at the reaction down by 21% today and then we have credit suisse, talk yesterday of a takeover. today, coldwater being poured on that. alix: you had the ceo talking at a financial conference and said when he was asked about m&a he said for really stupid questions i would rather not comment at all. he said he hopes things turn around for the big banks as well. tom metcalf joins us, he leads the team covering finance in the u.k. and the middle east. is he in a position to call that a really stupid question? >> i think that's the point me in my talley -- colleagues were talking about. this is coming from state
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street. they will know unless they've made the formal approach. an interesting response. it doesn't add too much more clarity. despite yesterday's profit warning there's still hope they will eke out a profit. it doesn't seem investors have seen that. as soon as this has happened it will be on. guy: everybody's getting the slide rule out. is it that good of a target. there's a lot of risk that comes with this business, understanding what happens in terms of the swiss regulatory front. how difficult a takeover could it be. tom: cross-border financial, and day is notoriously hard. so what is more likely and to be fair it wasn't really clear
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whether they were buying all of it or part of it, but even that would be very complicated. to be frank we are at the start of the process. the end is not insight and it may require that part. alix: how long does thomas have to show some real substantial improvement? tom: he's been in post about two years. the excuse of i inherited all of this is starting to wear thin with investors. perpetual rumors, do they need change the top of credit suisse. he is in a tough position. he came out very strong saying he's not going anywhere. so right now it's almost like a slightly weird holding pattern,
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awaiting more from state street. where does it go from here. guy: what does state street need? do they need anything? >> i was not expecting the name to pop up as a lead candidate. it's clear it's still not absolutely clear. not a denial. i think that's why a lot of people say at the whole farm it doesn't really make sense. it's not huge. it would be a slightly weird acquisition. so maybe they are looking for something to bite off. >> part of what we were saying at the financial conference is he said i haven't given up on a positive number for this move.
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we wanted to be appropriately prudent on this. they are saying the m&a is holding up relatively well. that doesn't sound like a lot of conviction, its own sake hope and a prayer for a macroenvironment. tom: communication out of credit suisse is not great. saying we are going to hire people, 24 hours later we have a separate warning and then the surprise about state street. quite confused messaging and i think what he was saying was trying to point out it's not all doom and gloom. we don't want to hear these you'll probably take it as pessimistically as possible. guy: does that act as a catalyst
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elsewhere within the euro? tom: obviously the business is more profitable and that perhaps makes acquisitions easier. the main thing really is on -- and on credit suisse in particular is europe. the market has been slowing down. there wondering why should i buy it. guy: we will find out. very rarely -- tom metcalf, thank you very much. these are the final numbers as we had in. certainly negative numbers being posted by european equity today. we will be transitioning to radio in a few moments. in the podcast will be available later on. alix: coming up, the electric
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car company that once positioned itself as the anti-tesla will be joining us. the ceo will talk about the latest all electric suv. this is bloomberg. ♪
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>>'s is bloomberg markets: the european close. coming up, charles schwab key investment strategist joining. check it out, this is bloomberg. guy: we welcome our bloomberg television audience and radio listeners to a conversation about the next generation of automobiles.
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they are announcing its latest electric suv. it's new electric suv. joining us now along with the bloomberg cohost and president gearhead matt miller. thomas, thanks for joining matt and i. getting an suv, what are you expecting, what should we be expecting, what is it going to look like. >> for what it looks like, you can have a look because we let a picture go. people were curious and it's out there, it's an aerodynamic looking suv, it's an entry into the premium suv market for us and of course we are very excited about it.
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we very strongly believe it will be a benchmark in the field. and you see here we have the clip from what was the concept car and now the flip to our three which we will show in october. matt: we are looking at it and more than i think any other brand, you have positioned yourself as an anti-tesla. am i wrong about that or are you doing that on purpose and is that part of the strategy. thomas: the truth is we are the one ev global brand delivering globally, producing in the united states and europe and
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china and i think that is certainly strong parallel between tesla and us and of course launching the competitor to the model three, all that brought it to this direct competition and comparison. long-term our ambition is the premium luxury segment, the three cars we are launching and certainly on the premium and the ambition tesla is dealing with. matt: i have had the opportunity to drive the polestar one. i was instantly impressed by especially the suspension, used swedish suspenders. polestar two, i've seen it out there on the road.
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you are breaking really apart from volvo with two end with three. how are sales going and what kind of sales expectations you have for three? thomas: 50 or 65,000 sen. grassley: -- polestar twos are on the road. we have a very strong intake. this is 32,000 so far which is 290% up from the year before. so we are happy with the uptake. and we know we would rather run after getting each and every car chasing customers. we are happy with the demand and definitely on track with our promise to actually go all the way up to the 290,000 by 2025.
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guy: who is behind the two and who do you think will be buying the three? this is just anecdotal, but company after company i talk to now seems to be offering in eeev of some sort as some sort of a bonus, employees can buy cars from companies, get a tax advantage. certainly if you're a business owner you can get tax advantage by buying an electric vehicle. we are also ceilinged -- seeing the deal with hertz. what will this be aimed at and he was going to be buying it. thomas: to start with, electrification is a reality. the european parliament made the official end state of the combustion engine starting 2035
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it will stop. so everybody will be driving ev's. our customers, it's a mixed bag. we have customers that had other electric experiences, but there's a big amount of people who come from bmw mercedes, so it's a mixture there. guy: in terms of the deal with hertz, how many threes will be going to hertz? thomas: the deal is over five years, 65,000 cars and it will be a mixed bag. it will be not only the two which was the prime talks, but the three as well, we will also launch the four in our range and
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definitely 3, 4 and five will be part of this as well. and hertz for us is an opportunity to bring polestar two people for the first time driving an electric car and it will enable us to build brand awareness. >> it will build brand awareness where people can buy and trade your shares, are you planning on -- you are planning on going public through a reverse merger spac. forcing guggenheim to close this month i believe after the shareholder meeting you have scheduled at the end of june. how is that going? is that on track. do you expect this to happen because we've seen deals fall through. thomas: this is on track and now really that's the goal in front of us. we will indeed by the end of the month -- by the end of the this we will be on the nasdaq.
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we look forward to run the company like that. matt: i bring this up again, are you to be exploring that partnership further because they are just like shocks. >> it's definitely the great spice in our recipe we love to cook with. we definitely will continue. we just launched the special edition with even more exquisite -- and the polestar three will have their special corner. guy: fellows we are going to wrap things up. he talks so knowledgeably about the ev's and the love for them. yet i think what you got to look at is not what he says, but what he does. he just bought a new house, have you bought a new car and is it
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an eeev? just in terms -- matt: in terms of full disclosure yes i have just bought a chevy silverado, 22 liter gas v-8 but i also bought a volvo with a hybrid powertrain. it's got the electric battery as well as a supercharged turbocharged two liter four-cylinder engine. so we are going both ways. thomas: i definitely will send you the invite for the three test drive. i'm sure there is some opportunity for you. guy: i think matt's wife could be the target market there. matt on the other hand i'm not quite sure. we really appreciate the time, the ceo of polestar. ♪
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matt: one big event -- alix: one big event in prime time is the january 6 hearing on capitol hill. they are promising a few surprises tonight. the attack on capitol hill happened january of last year. this will be televised on prime time. joining us is david westin. with the target audience for this. we saw this in real time. we saw this go down. who will be watching? david: the democrats have to be hoping for a fairly modest audience. as we know, fair amount of the country decided he's innocent and guilty. this is the first of six of
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these we will have and they have over 1000 witnesses and produce 140,000 documents. we will see what they can get out of it. guy: how far away from watergate is this? david: one way it's different is there were three networks then. i wonder whether the question of whether this has the effect the democrats want will be determined after the fact on social media. certainly we have our popcorn ready. alix: is the hearing really about the role president trump played in this versus what actually happened, who's to blame, etc.. david: what they are going to try and show the american people is this was not just something that happens suddenly, that this was largely orchestrated as part of an effort to overturn the election and president trump is behind it and he had a
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conspiracy. guy: does that mean they are worried about president trump, is that what this is all about. david: if you are a democrat and not worried about trump, you are a big mistake. you cannot rule him out. we see in primaries in the midterm elections. alix: david, thank you very much here. looking forward to the coverage on the show. in the next hour, i represented of texas will join him on balance of power. you and i are headed to radio we will talk about the ecb. guy johnson -- guy: boris johnson tried to reboot his government. i think the analysis thus far seems to suggest maybe not as focused as it could have been.
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we will be on dab digital radio next. as well as all in your -- as well as on your bloomberg devices. still analyzing and digesting what happened with the ecb. this is bloomberg. ♪
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>> from the world of politics, new and >> i don't support gun-control control politics, i control -- i support school safety. the democrats don't. >> russia aggression against ukraine ways on the economy and europe by beyond. these will weigh on confidence and debit growth in the near term. >> this is balance of power with david westin. ♪


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