tv Bloomberg Markets Americas Bloomberg March 29, 2017 12:00pm-1:01pm EDT
we are going to take you this hour from london to detroit and new york and san francisco, here are your top stories on bloomberg and around the world. the separation begins. the u.k. prime minister formally triggered two years of negotiations that will end with britain breaking ties with the european union. with a request for a sweeping free-trade deal, covering industry such as banking and technology. in markets the pound sterling weakening. u.k. stocks are fluctuating, as our u.s. stocks. oil extending gains as inventory grows less than forecast. blackrock is betting big on france after years of gains. the world's biggest money manager is replacing people with machines. moves byows similar
hedge funds looking for a high-tech fix to their investment woes. we are halfway into the trading day. as julie hyman joins us with the latest, what is going on? too.ntas are people they are programs made by people at least. we are seeing a mixed session. it is driving in on the plus side. we have whole sales coming in higher than estimated. that has been helping stocks. the dow is still down about 60 points and the s&p a little changed. the nasdaq is up. the nasdaq touched a closing record. the 10 year yield has some buying in the treasury markets, yields down three basis points. we had eric rosengren of the federal reserve saying that the interest rate increase is the base rate of this year. we did not see much market reaction. we continue to still watch the vix which is languishing.
we are seeing the inverse correlation between the volatility index and the s&p 500 is weakening as both of them are kind of going sideways. on the top, we have the vix in white which flat lines the s&p 500. it goes higher but has more stable lines. on the bottom is the correlation. the inverse correlation tends to be relatively strong, sort of arranged between 0.8 and 0.9. tohas recently weakened 0.65, the weakest it has been in more than a decade. back to today's session, we are going to be watching oil prices strengthen. now up 2%. barrel, smaller than the estimated crude inventory. reportedly a drawdown that was relatively large in gasoline inventories. natural gas as well, we are
watching today. that gas is also gaining up one and a half percent. it is at its highest since february 9. that is on the predicted drop in stockpile. the energy information administration reports that tomorrow. a lot of natural gas producers are driving -- are arriving today. patsy along with oil producers. we are seeing that energy grow back to the strongest in the s&p 500. vonnie: staying with the big story of the day, the u.k. prime minister, theresa may, triggering article 50. kicking off the formal process of negotiations with the , andean union, historic emotional for the leaders of the united kingdom and the european union. but what could come over the next two years? running us now is nejra cehic from westminster. is it negotiations about the negotiations?
nejra: the next step is certainly on the u.k. side. we are standing outside of westminster. tomorrow, the government is going to publish its paper outlining the great repeal bill, which involves the u.k. making that transition. .t puts eu laws into u.k. loss theresa may deliver that letter to the eu's donald tusk earlier today, outlining what britain wants to get out of these negotiations and kicking off two years of negotiation before britain's exit. already, we are only on day one. we are seeing where some of the battle lines might be drawn. theresa may made it clear that what she wants is for negotiation to happen in tandem with negotiations on any free-trade deal. we are already getting comments from the eu side that this is unlikely to happen.
vonnie: speaking of the eu side, let me play you a soundbite from former ecb chief. have a listen. much, i have to say, that the hard brexit has been chosen by the british side. it is a mistake for the united fordom and certainly bad the european and global economy. vonnie: that is all very well that his role as ecb president is different from some of the other leaders in europe. they didn't give theresa may as much leeway as he might have. she'll most had to go for a hard brexit, right? nejra: she certainly says in her letter, as she says a lot leading up to it, that she wants out of the single market. but in terms of this hard brexit, another way you could interpret it is that the u.k. will come to the end of the two years with no deal at all. and they will have to revert to wto rules on trade.
in terms of this, what theresa may has said is a bad deal is worse than no deal at all. but she kind of softened that stance today, saying she did want to find a deal of some kind. are we going to see a full on hard brexit? theresa may in her speech to the house of commons seemed positive that these negotiations could happen within the two-year timeframe. we are hearing from other members of the eu that it has proven more difficult than she thinks. vonnie: nejra cehic, thanks to you. i am sure you will be back many times over the next few months. p.m. ag today at 4:00 deeper look at brexit and the rise of populism with experts from around the world. those include former ecb trichetnt jean-claude
and tina for them. -- tina fordham. speaking of political risk and the rise of populism, the next guest i am seeing is tied to both the u.s. and europe that in opposite directions. for tiaa investments, he joins us now. what do you mean, opposite directions? >> it has been positive in the u.s., there has been optimism about the economy, optimism that one of his policies and what they could mean this year and next year, whereas in europe it seems like a lot of the political risk seems to be priced in the negative. we are worried about the dutch election and the french election and the german election. we are more likely to see that risk come down where in the u.s. we will be here talking about tax reform and infrastructure in things that may not have happened yet. vonnie: talking to deutsche bank earlier today, he says something
similar. when you think about it, everything that could have happened catastrophically ended up being not catastrophic or didn't happen or the market ignored it. is that a philosophy you are running on? >> last year a lot of us were wrong twice but ended up being right. we were wrong about the outcome of these elections but also the market reactions, so the reaction to brexit was after a few days as it and after donald trump selection it was a few hours positive as well. we have seen this in play before. we have seen regimes come to power, they are skeptical about the europe project, the euro itself. if it happened to france, the fragility is a little bit different than we saw with brexit. i am more concerned about something like marine le pen and what the market reaction to her election would be. i am also less concerned that the market is mispricing the outcome.
i think the market seems to be giving too great a chance to her coming out ahead in the second round. >> for europe's stocks -- >> our eurozone is our favorite place to be right now in terms of the global equity market and specifically, the largest country is france. i think you could make a case that french bonds look attractive. you have seen low interest rates across europe including france. but the spread appears to be pricing in, something akin to the printed -- the credit we saw during the financial crisis. a chance ine is both equity and fixed income markets. vonnie: in the 10 year yield, it is at 93 basis points. it is a lot when you're talking negative yield. >> it is going to come back down to germany's level following the election. that is the rather short term. doesn'twhat if le pen
win but the national front gains a lot of seats? >> another five years of relatively centrist reforms. when yough to know have the nationalist and populist movement continuing to gain support and momentum. you could potentially see that as well. but at least you know, there is going to be a rather centrist regime in charge, maybe something more enormous than what we have seen before. potentially adding some upside political risk. vonnie: stick with us. brian nick is a cia a investment strategist. now on first word news, we are going to go. >> as we have been reporting the united kingdom has filed for divorce from the european union, triggering a two-year countdown to the final split. here is theresa may speaking in the house of commons. moment is a historic from which there can be no turning back.
britain is leaving the european union. we are going to make our own decisions and our own laws. we are going to take control of the things that matter most to us. we are going to take this opportunity to build a stronger, fairer britain, a country our children and grandchildren are proud to call home. >> a senior european union eu will nots the seek to punish britain for leaving the block. there has been speculation in the british press since last year's referendum that the eu would take steps in order to discourage others from leaving. stay with bloomberg throughout the day for continued coverage. in washington, a driver rammed a police car near the capital and tried to run over officers on foot but authorities say it was not terrorism. they described the suspect as a woman who was a "erratic and aggressive driver." officers fired shots but no one was wounded.
president trump wealthy backers munching a 10 state media blitz. they want to pressure democratic senators to support the president or if not to make them think twice before piling on. in nonprofit run by a from supporter will spend a million dollars on a tv campaign that begins today. the group is sending $3000 -- $300,000 for digital advertising. inasia, a research group japan's ruling party will propose that the country armed itself with its first offensive weapons since world war ii. that is according to a member of prime ministers shinzo abe's liberal democratic party. they recommend that japan improve its missile defense system over growing concerns of north korea's recent missile tests. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. vonnie: thank you. breaking news now on web m.d..
exchange that would have created europe's biggest exchange. the commissioner says in brussels today, it's brexit. it was not a factor in the reduction. >> the u.k. is part of the european union until it is not anymore. it means that it is part and and inof the legislation any other member of the european union. triggering negotiations today, that is not the end of the procedure. that is the beginning. vonnie: regulators determined the deal would have harmed companies by creating a de facto monopoly. samsung wants to regain its part of the global smartphone market with the debut of the samsung local s eight next month. the new device represents the biggest prospect for a turnaround after samsung's note 7 debacle last year. prices -- crisis cost
samsung $6 billion. samsung faces stiff competition in china. the world's biggest phone market. that is your bloomberg business flash update. nick, back with brian chief asset strategist, a member of cia a's asset allocation committee. let's touch on brexit, article 50 triggering today. is there a reason to celebrate that? do you anticipate the negotiations having any impact on stocks in europe? we were talking a little bit about banks. >> so far, the main story about brexit has been a drop in the pound and what that has done to earnings estimates in the u.k. that is not a replicable story. the pound is only going to drop massively once and as we go through this process the only thing we can be certain of is there is a lot of uncertainty with regards to what the economic makeup is going to look
like between the eu and the u.k.. you have deals with other countries like the united states, so right now that is not the first place we would be looking. vonnie: so you are avoiding britain for the most part. in france, tell us about the banks. is suddenly everything fine with banks in euros again? i think >> probably far from fine but you have to ask yourself how much risk i am being paid to take at this point. a lot of these french banks if young italy are -- compare current price to peak earnings in 2007 and early 2008 we are talking about the three times, five times earnings. this is the reason we are talking about the european banks at all. the u.s. market has become much more expensive relative to europe. i have been telling many investors to listen. it is probably time to look outside the united states if you want to maintain the same level
of expected returns. vonnie: what about em? >> that is the one area where estimates have continued to be revised up. they are facing the same trade valuations from a year ago, ups extreme percent. we are seeing higher prices but also aggressively better fundamentals. we continue to think that is a desirable place to add money. we are adding more in places that have been underperformed for many years, places like latin america and brazil and argentina. vonnie: now, the other question return ofabout assumptions. what are they? what are you looking for? >> we just have a chance coming up on q2 to look at our s&p 500 target, coming through the year. that means we have very little in terms of price appreciation between now and the end of the year. we will see multiples come back down and political risk is going to be with us in the united states for the rest of the year. look reasonable
to me for 2017, 2018, but it is the risk that they come down a bit if they have any sort of benefit from tax reform being priced in for q3 or q4. that will be pushed back to 2018. vonnie: so you are factoring nothing happening in washington, d.c. >> assume nothing happens and if anything does happen it will be to your benefit. based on how the affordable care act reform met, we need to be cautious when it comes to expecting too much at washington, d.c. vonnie: so you are not looking at any kind of correction? >> i am keeping my eye on spending in the u.s. because we can look at what has been propelling the market higher, but the main source of those expectations being beat have come from survey data. consumer confidence through the roof, business confidence, ceo confidence. bloombergk just at
surprise index, the household and personal spending, that has actually been negative. since the election on the business cycle, i want to see all these confident consumers go out in search of spending money. i want to see personal spending expectations and i will be more confident. >> thanks for your contribution. that is brian nick, chief investment strategist. blackrock betting big. world's biggest money manager is replacing people with machines. this is bloomberg. ♪
lowering fees. we want to bring in sabrina willmer, joining us from boston. acquiring more than 30 people at its act with -- active equity portfolioincludes managers. is this a move for quantitative strategies or is this an excuse to reorganize and maybe get rid of a couple of underperformers? >> this is more of an acknowledgment that certain stock taking strategies cannot justify the fees they are charging. they are moving a number of fee paying lower vehicles. some of those funds have already had some quant screens on them. is -- you will need less people. i think they are trying to improve returns. it will help drive assets into their asset business. they saw a record 20 billion in
outflows last year from their asset business. money is flowing into their , the etfrategies strategies. prices are going down near zero. active is very important for them because the chart goes for higher prices. upfront, ithey say would like to be part of the quant group? how does somebody, given a bunch allocate itk you to to quantitative strategies? are think the fees basically lower. some of the cuts that have happened are almost half. in the advantage series, which is going to take less risk, it will be a lower return. there will be a cut tonight.
like i said, i think this is an effort by them to drive, to kind of attract some of the assets because that is where the market is going. a lot of these strategies, like a large cap series, they have got tons of funds in that area to basically do similar things. they need to figure a way to cut that down. and there is no way you can really outperform. vonnie: this is moving about 6 billion of 201 billion, according to the person familiar with the movement. sabrina willmer, bloomberg's asset management report out of boston, thank you. coming up, willem buiter says brexit will lead to a decade-long slowdown. this is bloomberg. ♪ live-stream your favorite sport
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live from bloomberg headquarters . i am by gwen in this is bloomberg market. quick check on stocks. the dow continues to push her down to it or. the nasdaq is up a quarter of 1%. let's get the story behind the story from abigail. >> despite the major averages, we have the s&p 500 index hitting an all-time high. this is a five-time chart to show the pop. we see that especially in the context of last week's volatility. index, it is up seven and a half percent, a lot of strength this year. there are lots of movers including rh with shares being up 13%.
that is since the middle of february since the company preannounced. intelligence agent says they are up-to-date. on way fair, there did raise its estimates above consensus. strength,urce of perhaps for the retailing sector, is pending home sales. for the month of february it was up 5% versus the estimate of 2.2%. versus a decline in the month of january. g #btv.pop into the
rates were rising initially on a month by month basis, but, with rates dropping a little bit, ending home sales are up a little bit. perhaps helping retailing as investors think people buying homes will have to furnish those homes with goods. vonnie: and they will. very much.hank you how long will this take? we asked a cheap economist earlier today. >> we can talk probabilities. they'll be long and protected. even the divorce negotiations may not be finished in the two-year horizon. it might crash out without the formal the horse. renegotiating the new trade , across corporations and
people, that will take many, many years. a decade or more after the divorce is complete. it's going to be of. of protected uncertainty, which can only be bad for the village economy. and for the rest of the eu. >> if the u.k. crashes out of the landscape is for the economy look like. >> everything that's find. best eans low terrorist the trade barriers that matter have nothing to do with the status. it is administered rules, regulations, zero constraints, rules of origin.
health and safety standards, human rights standards, and you can have zero quotas and still be able to take. >> you begin your academic path at the university of answered him ending up at a small dutch town called new haven and yale university. you studied equilibrium. help me with the new british equilibrium. this is a huge deal. i have seen it an article after article. the social economic makes of stability for a nation. do you believe and equilibrium for the united nation -- the united kingdom? >> there are many kinds of equilibrium. u.k. willve that the go through a long protected. of uncertainty. arrangements of trade for people, until border
relations are worked out. this will take a decade or more, thein the meantime, potential hypergrowth of the u.k. will be adversely reflected because of low investment. labor haspply of benefited the country greatly. and will have an impact on the dawning of realization, and it will be tough. this will lead to a short-term slowdown on top of this low potential. a dampen in the gdp growth in europe and in the united kingdom because of the note negotiation's -- because of these negotiations?
migration,s travel, passports, or we talked to matt miller earlier about auto dynamics. >> it will be material, the slowdown. in the u.k.. it will be minor, because the to the eu, is a small fish. the impact on the eu 37 will be there and specific. it will be much less significant economically than the slowdown in the u.k.. not the same order of magnitude. >> there is still a divide between the people that think the u.k. will do economically better because they voted for brexit and the people that want to remain. they think it is the end of the
world for the u.k.. >> it is not the end of the world from an economic perspective. it just will be a cyclical low to the u.k.. it will be a slightly weaker path. this might be the end of the world politically for europe. is a global union own, it is a its member of the league of insignificant nations. the real damage is political. the economic damage, we can live with. >> very quickly, we have of you are asking why do you think it'll do just find as being independent. we have free movement with the european union. they tried to stop that and resend that and do the
referendum in a hurry. years, we have negotiated hundreds of treaties in respect to trade with the european union. we don't have free market access , passporting and all that is not part of it, they had 60 years to sort this out and have free movement. vonnie: that was a cheap economist earlier today. note, as partng of the special, what did you miss, populism and the global economy. at 4 p.m. and 9 p.m. london time. sean spicer is holding a daily press briefing at the white house worried a couple of the headlines have to do with brexit . he talks about wanting the u.k. to remain a strong word leader and says we will respect the wills of the british.
matters, they are talking about funding and saying that the spending bill is a negotiation. haven'to say that they calculated out any cost related to the budget or tax reform. we will bring you more as we get them from sean spicer in the white house. here's first word news. with mark. democrats some senate . judge gorsuch need 60 votes to be confirmed. republicans could use the nuclear option and change the rules so only a simple majority vote is required. police officers and civilians gathered on westminster bridge today in london to pager to be to the four victims of the victims that took place there.
-- four victims of the attack that took place there. the police constable was one of those killed after observing a moment of silence. they urged to go onto the bridge and talk with londoners about the incident. in south africa, they told break of -- jacob zuma -- tot person said zuma plant fire gordon because he was trying to under mind the president while speaking to overseas investors. he was pressure to appoint gordon in 2015. the winner of the 2016 nobel prize literature, bob dylan will get his metal this weekend in sweden. he didn't attend the ceremony and september saying he had other commitments. 26 al news,
by with more on how is doing. >> samsung did unveil its galaxy it s8. of 7/10 of 1%.ck of -- .7%. though, of course, score fromg take apple? these are iphone sales over the last year. more than one year. last year, revenues declined in a big way and that came when iphone sales declined as well. they went down the last time that samsung's phones were blowing up on planes. not,er this hurt apple or
we will see. as for what apple and their stock says, we take a look at another chart. this is g #btv 7224. the chameleon indicator that combined locks of indicators and makes it super simple, bearish showsred, makes uncertainty. we see lots of green from apple. it has been very bullish, accurate over the last five years. one exception was back in 2012 the strength could continue as samsung's bone comes out. samsung's phone comes out. vonnie: i love that. we will have a look at it because it is not an camouflage there. thank you.
samsung has unveiled its next smartphone. the tech giant was forced to recall its last device over fire. on the is betting features and slick new design to take back the number one spot and sales. , sell its now is mark to us. the price point is between $700 and $800. why should we pay that much for it? mark: this is a big deal. it's a big deal for the phone industry and a samsung. we are seeing designs that focus on taller displays, sharpness of oled displays. there is a lot of technology packed with something with no bezels. we will see more of this throughout the year. other makers will put out there devices. vonnie: yeah i'm an apple user
theuse i'm waiting for eight to come out. do i just buy one of these and try it out? mark: i have been following apple since the first iphone, and i have seen other companies that don't exist anymore, like blackberry, come out with cool new phones ahead of apple's new iphones. apple has never been hit so hard that the next iphone wasn't that big of a deal. this next iphone will be a big deal. this isn't going to take much away from it. .e are going into a six-month where samsung is going to be all the talk with this cool new design. once apple lands on their phone, it will all go away. it really gets others to stick to the platform.
apple is keeping the people involved with the iphone. i don't think there is going to be too many people, certainly everyday iphone users, that will switch to this s8. vonnie: let's get back to the8 -- the s8 eight again. it is not a replacement for the note 7, obviously it is a bigger phone. will this be able to save samsung? here ise technology advanced and the prices are in line with an iphone. a lot of the carriers are having specials going on right now. some of the carriers say you will get this new vr gear free if you order it out of the april 21 release date. to your point, it is a big over samsung because the note 7 was very well reviewed until it started exploding and being banned by the faa. it was really an embarrassment for them. if this phone lacks those issues, i think it will be a hit.
today: someone unveiled that it was purely about this phone? new yearre is also the vr headset and a controller that comes with it. it is also about the ecosystem. they are trying new things on software and hardware systems to expand their reach. -- havee new home help new home and help apps. control,o -- you can samsung devices in your home. samsung in aour stock and it would open up a bigger screen. if you want to do a microsoft powerpoint document, you put it in the dock and you'll see a bigger view. it is pretty cool. vonnie: since they waterproofed i notice, tell us about bigsby. mark: bigsby is interesting.
with siri, you launch the app and do voice commands. with bigsby, you can use the entire phone in a hands-free way. this is something that apple is working on. it is called invisible hand. we will see samsung ahead in this regard for a bit. you will see apple catch up. bigsby is a big deal for now. vonnie: all right mark, thanks for that. shuts downa ceo another investor challenge. it may not be the last one. that's next. this is bloomberg.
markets. i'm vonnie quinn. shares of general motors are up today after their projection from greenlight capital. they're going to split their stock into two classes. for more details, let's bring in david welsh. of a there, there is a bit tailwind from president trump the environmental regulations going away, david reed nevertheless, the stock is higher. david. nevertheless, the stock is higher. david: gm was up more than ford was. , theym's perspective don't see any evidence that is putting the stock in this way that is really going to pop the stock. that can actually hurt their credit rating because it will
guarantee a dividend. gm is susceptible to this thing because -- more than other cars are because this could be stonewalled. old white 20% owned by the asked -- of wallace also, is this for short-term gain? what would be the alternate motive of a split stock. it is trading within three or four dollars of its all-time high. david: the feet this -- the thesis is that some people buy gm for the earnings stream. some people buy for the dividend. he considers it a depressed stock. why not give investors a choice to buy a dividend stock or by a rate was stock and capture the earnings stream?
these twoave different instruments, you will have greater value on lock because people can buy what they want. they counter argument is there are too many things that would hurt the company's like guaranteeing a dividend will and the problem is we don't know if it would create this kind of value where to stock separately are worth greater than the whole is worth today. the two debate points on whether this would work or not is uncharted territory. 74.4 million shares. it is worth noting. the other automakers, will they have to face anything like this? mark: -- david: we don't have a track record of this can of thing. a lot of the other stocks, fort
has a secondary stock. that is different than the common stock that most people buy. we don't have a great track record on this thing working. perspective, they are always going to be susceptible to these kind of suggestions. harry wilson, the former , did something. sergio marchionne try to do something a couple years ago, and that didn't work out either. vonnie: that's david welsh, stay .uned this is bloomberg.
toald trump is reporting meet with someone to discuss tax reform. the president will he briefed on the gop's plan. i will discuss this later this hour. the separation begins, the u.k. prime minister has triggered the process that will ultimately end four decades of membership in the european union. it will be a rocky road for divorce. later this hour, kathleen speaks for an rosengren exclusive interview. you don't want to miss out. president trump will be briefed tomorrow o