In some ways. The dax is rejoining the fray. The stoxx 600 up by 9 10 of 1 . Iron ore higher, steel higher as well. Auto stocks trading stronger as a result of germany coming back. The swiss market is into record territory. Some of haven bid and these properties doing really well, lifting that market. Pound is actually getting something of a lift. Vonnie on trade, no response from china to President Trumps warning that he will impose tariffs of 25 or higher on those 300 billion of chinese goods if presidency does not meet with him at the upcoming if president xi does not meet with him at the upcoming g20 summit. How serious is this threat . What will president xi and his of visors and his advisors be talking about . Guest the key to watch is whether this meeting between president s trump and xi takes place. We have seen President Trump signaling that he is very much wanting to meet with xi and that huawei remains an issue that could be placed on the table in exchange for some kind of trade deal. The is notable for us is silence coming from beijing. Toldng has essentially washington we are not interested in dealing with trade until the huawei issue on the u. S. Entity list is resolved. Understanding our beijing is waiting for washington to make that first move, and thus we are in this current standoff. Vonnie if President Trump doesnt do something about that thing of law way and the g20, will president xi still be present to meet still be pressured to meet with President Trump . Hesith he has made, that willing to move forward on chinese exports, and so far xi has not engaged the president on this. If we dont see any confirmation or see signs for a meeting, i think late this week or early next it will be difficult for anything substantial to come from that meeting. If there is a meeting between so, there is a 30 probability that there will not be a truce and how contentious the relationship has become since the most recent u. S. Escalation. That means we are certainly likely to see President Trump move for writs on portion move forward with some prussian, with some portion, if not all of the proposed tariffs, this summer. Guy even if there is a truce, the Market Perception will be that it will not last. Is that the correct perception . Meredith it certainly would be a fragile truce. All sides were looking for what kind of deal the leaders would agree to. Is huawei part of that deal . Will the u. S. Move forward with thatnforcement mechanism is absolutely fundamental to any deal getting through. It signals that washington is not confident, that even if there is an agreement reached, beijing will adhere to that agreement to the degree that there could be a deal. Allowing up, there is likelihood that washington will find fault with beijings adherence to the deal and therefore, with a u. S. President who looks at the use of tariffs as the ultimate measure, the is eventuallyffs rolled back. Guy im confused. Where does the administration in washington lie when it comes to the dollar . The president yesterday talking about china and its used of the yuan as a mechanism for its economy. Today hes had a go at the european union. Does the Administration Want a strong dollar or weak dollar. Sure. Esident, i am not so [laughter] meredith you certainly have nailed it. The president has made sure hes not interested in a strong u. S. Dollar, although some other. Arts of his administration the way that we actually read this confrontation playing out, we expect beijing is going to have a managed appreciation of the renminbi. This is not intentional. It is not meant to stoke u. S. Consternation as a weapon in this trade confrontation at all rather. At all. Rather, it is seeing the slowing economy, seeing that the universe is getting more uncertain as the trait confrontation continues, so you see the pboc and other chinese icials looking for always looking for ways to allow the room be to dashed allow the remember to depreciate. Vonnie the longer this goes on, the longer we are stagnant, the apple companies such as abde get proactive such as apple get proactive and move their companies elsewhere. Are they helping donald trump in this trade war . Meredith Corporate America is looking for more strategies to vey to president data what howonvey to the president they think. This is not about a trade deal. It is really about industrial policy. It is going to be a long confrontation, multiple years in. Rogress, as two different vonnie thank you. You will be sticking with us. File antes are set to antitrust suit to block the tmobile sprint deal. Or reaction, download lets check in now on the first word news. Heres kailey leinz. Kailey they spent months jabbing at each other from a distance. Now President Trump and Democratic Front run or joe biden will spend the day in iowa , a state critical to their political futures he needs a win there next year. President wants toshore iowa to winore up with the midwest again. A Record Number of conservatives are in the race to replace british Prime Minister theresa may. They are all in agreement that the u. K. Has to leave the european union, but so far there are few other specific. And here in manhattan, a helicopter pilot warned he had a problem moments before he crash landed on a highway building. The pilot was killed in the crash. It was foggy and raining. The helicopter was owned by a company linked to american continental properties. Global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im kailey leinz. This is bloomberg. Vonnie thank you. I want to reiterate that news now, several state attorneys general have filed an antitrust lawsuit to block the tmobile sprint deal. We knew several attorneys general had many concerns about the impact it would have on consumers and said publicly it. Ould raise prices the transaction was being investigate a buy several state attorneys general, and several have joined together to block the deal. This is bloomberg. Guy from london, im guy johnson. Vonnie from new york, im vonnie quinn. This is bloomberg markets. Lets get a check on markets now with abigail doolittle. Abigail we have a rebound rally in continued play from the month of may, which was the worst month for the year, the worst down month and only down month of the year. But look at the reboot we continue to see in the u. S. Last week the best week for the year, so investors really uncertain whether they should be buying or not, but clearly not where they u. S. As will support these markets. The dow up 2. 6 . We will get one of the drivers of the strength for the china market. But we do have the breaking news of sprint and tmobile come both sprint and tmobile, state attorneys general filing an antitrust lawsuit to block this merger. Have a rally in china for iron and some of the steelmakers. Has been an ongoing theme for the year. Following big gains this year, this potential trade war could increase prices. That really for steel really ,tarting in australia finally this bedroom goes back to 2017. Comingthis nice rally out of 2017 into last years volatility. We had an alltime high not so long ago, going back above resistance. If we look at the technical indicators on bottom, it does suggest there could be more upside ahead. Guy it is interesting to see what the main driver of this market will be. Abigail, thank you very much indeed. Investors basically looking for inside what the chinese are planning. You might be wise to Pay Attention to a key source of information, the global times. Its editorinchief had been using his twitter feed to accurately forecast several and thent moves official warning from the chinese authorities in terms of them traveling to the United States. One tweet last month about a potential drop in boeing orders sent shares in that company to their lowest close in four months. He told us exclusively what kind of accident hes getting with beijing, and crucially what china might do next. Access to some Accurate Information for the the nature of for my job, but i cant say i am authorized by government to release the information. It is fair to say officials will be passing you information, passing you tips in the knowledge that you are very likely to tweet about them. To be honest, i dont know. The officials and i have a tacit understanding. I think some of them know i i publicize i would it would publicize the information. Verye Economic Data clearly shows we are facing a significant slowdown in the u. S. Economy. The loss is bearable for china. People believe it doesnt matter to have some losses. We dont have any negative growth. , and ourill advancing growth is still remarkable in the world. Reporter if trump goes ahead on on all on all the u. The imports to the u. S. , what tools is beijing most likely to reach for in terms of retaliation . China may target the u. S. Services sector operating here. Trading services is not the same as trading goods. The u. S. Has barely talked about services, but china knows this is a fastgrowing area for the american side. For the american side. Global timese editorinchief talking to tom mackenzie. Lets get back to meredith sumter out of washington. We are still trying to understand the nature of the chinese response. I guess it is probably contingent on what we get from the g20 meeting. What is your understanding of the shape of that response . We are getting it piecemeal at the moment. This morning it was local authorities with more ability to investigate their areas. How are you putting it all together . Meredith beijing is taking steps to shore up its domestic economy for what it sees as a longterm economic competition with the United States. You also your elements of the Chinese Government talking about on meansto double down to protect its own domestic economy. Ultimately, beijing understands t in order to be with in order to be able to withstand the pressure, it needs a better economy. Beijing will have to take steps they flow into china. Signaluld send the wrong , and could result in those companies accelerating plans to move their investments or stall their investments outside of china, which would be the opposite of what beijing wants. I would also say it is not what happens just at the g20. It is also to what extent is aswei allowed to continue chinas preeminent domestic champion. Here, if huawei ceases to exist as a chinese company, the gloves from the chinese side are going to start to come off, and they will be more hardline. Vonnie meredith, thank you for joining us this morning. For more on the tmobile sprint breaking news, we have Dave Mclaughlin joining us in new york. Federal state attorneys general set to file an antitrust suit. How many, and what is anticipated . Been state ags have investigating this for over a year now, and we have theyve had a number of concerns that combining these two characters competition. About 10 democratic ags , and they will file in new york today. Guy in terms of how it has , walk usthe timeline through what this means in terms of being able to get this deal over the line. Dave there will be a. Ignificant delay the department of justice is still investigating this deal, but now they have a lawsuit in new york that could dry out for many months if it goes to trial and they are unable to settle. Vonnie sprint taking a little hit, down 4. 5 right now. Tmobile is doing a little better, though still lower. Still ahead, apples iphone backup. How the smartphone maker plans to short tariffs on chinese goods rod into the u. S. This is bloomberg. Guy apple apparently has an iphone backup plan should trade tensions with china continue to escalate. Manufacturing partner hon Hai Precision says it is able to make all u. S. Iphones outside of china is necessary. Intelligence Senior Analyst john butler joins us now. Is the country to pulling the singer on this potentially. Aporter apple really needed backup plan here. This is very good news for them. Im happy to hear they have a on haigency plan, and h said they could use all u. S. Based production out of china. Guy what is the likelihood vonnie what is the likelihood they stick to these new plans even if the trade wars go away from apple . Might they start implementing it anyway . Suspect migration is going to begin. I think we highlight the risk of not doing that, so i suspect is already in motion. Guy is india the big beneficiary here . Reporter they could be. Here was mention from hon hai they are building up business and investment in the region, so india is the obvious candidate. Guy great to get your take. Starting to have an effect this trade war, isnt it . Still ahead to come a what are we going to be talking about . U. S. Stocks continued to surge. The s p 500 is rebounding. We are going to talk about what is driving stocks, next, and what could keep them going. You can find all of these charts at gtv on your bloomberg. Vonnie live from new york, im vonnie quinn. From london, im guy johnson. This is bloomberg markets. Lets get a bloomberg first word news update. Here with the details, kailey leinz. Kailey President Trump attacking a familiar target today, saying the Federal Reserve Interest Rate is too high, adding, they dont have a clue. The president complained that the fed doesnt listen to him. Meanwhile, the latest figures on inflation could add pressure on the fed to cut rates. Is National Security advisor john bolton says another summits with north korea is entirely possible. He said the u. S. Is ready when north korea is, but the campaign of maximum pressure will stay in un agrees tokim give up nuclear weapons. There is concerned that exploiting protectionism will. Urt german exports global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im kailey leinz. This is bloomberg. Vonnie u. S. Stocks continuing to grind higher each day this week, joining a global rally in riskier assets and optimism on trade talks and supportive monetary policy. Here to discuss is bloombergs dave wilson. We had china with stimulus overnight, and that helped fundamentals couple witches todays reason for a bit of a rally. There has been a reason every day this week in spite of the lack of major headlines. Reporter right. It is a market that is kind of predisposed rebound at this point. Especially when you see that the record of the past few months are getting closer and closer, and investors are willing to take risk. Look at what its going on with the technology stocks. The s p 500 Technology Index up Something Like 10 over that stretch. Thats since 2011, so they are like the old favorite. They are carrying the market higher at this point. Guy im really struggling. Ive got a Market Pricing and a whole bunch of fed rate cuts. Market is going higher and higher. How can we be cutting rates if we believe the fed is going to be cutting . How then we do this . The relationship between the bed and the stock market just seems odd. Anchor it has been a tricky. Uestion, no doubt there are questions about where the economy is headed to suggest maybe they would want to do preemptive at this point, or at stage ton it set the do something preemptive. Clearly there are a lot of expectations. Determines what reality weve been seeing, whether it can continue. Vonnie it looks amazing because we came from a low, but the high this year alone is 2954 on the s p. Dave absolutely. This has been bouncing around for the better part of nine months now. Go back to the First Quarter of last year, stocks tumbling. The First Quarter of this year, they make back the losses. Then they come back down and move back up again. But it is not like you are really seeing a whole lot of overall direction you have to consider what needs to happen for there to be a meaningful what happensiously on the earnings front counts because you have a lot of into the patient starting in the Fourth Quarter. You see a pickup in profit. That has to happen and it has to the background of not getting to that point. I dont see many targets for 3000 for the s p right now. What will get them to change their mind . What drives us through that number and gets everybody convinced we can go further from here. Oil prices coming down the way they have the past few weeks, you have to wonder whether that group is going to rebound. But beyond that, it is interesting. Then you get to the Fourth Quarter ended who makes year, and you see a real pickup. Numbers for 2020, you get back to 10 plus Earnings Growth if the analysts are right, so it may take that kind of recovery to push stocks higher here. Vonnie it seems like there has been broad participation. What does that tell us about what investors are doing . Are they being haphazard or planning this carefully . Dave it is like one day you have a concern crop up about trade or whatever, and entities utilities and real estate, and lets face it. When you look at the s p 500 you can understand why that would happen. Then you get days like today where people have a bit more sicklynce, so these so these cyclically oriented stocks to better. Guy we get a read on cpi. Does that lock in a fed rate cut . Dave i dont know if anything gets locked in up over one set of data, but that said, if there is nothing to suggest inflation is really front and center issue. It is more perhaps a concern about what kind of Economic Growth can we expect from here, especially with the tariffs still in place. How does that affect the economy Going Forward . That may well be more of a front and center issue as policymakers get together. Vonnie dave wilson, always illuminating. Dave wilson has our chart of the day around 3 00 every day, i believe. Thank you so much. Much appreciated. Lets talk Central Banks now. Who is the most dovish of them all . That is the question as Central Bank Governors across the globe signal a shift to looser on a terry policy looser monetary policy. We will act as appropriate to maintain the expansion. Central banks around the world have moved to an accommodative stance. I think it is fair to say we have in easing bias. We will certainly act. You have been talking about rate cuts so much, so rate cuts get into your system. Like mario draghi, i think we can do these things as necessary. The room for adjustment is tremendous. Vonnie lets welcome now bloomberg intelligences u. S. Rate strategist ira jersey from princeton. Has anything materially changed in the macro landscape to warrant these moves in yields . Rates marketthe and where yields are right now are pricing for some very bad news. Get that news, we will have to wait and see come up at the current data doesnt look as bad as the market is pricing. I think a lot of the reason why we are here is things like geopolitical tension, slowing and some of the economic environment that has helped, but you still have inflation running plus or 2 . Jurisdiction it has come off a bit. Cpi number will be a very important number for how dovish the fed is going to be next week. Guy what are the things we are watching quite carefully . It is whether or not we get a bleed from the manufacturing center, whether data around the world is slowing into the Services Sector. Draghi has talked about this. Other Central Banks have talked about this as well. Ira the Services Sector of the United States is really the driver of the economy overall. We wind up looking at retail sales numbers, and that will be important. Our retail sales continuing to stay higher . Does the consumer continue to confidence . With all of the date of the came around and all of the geopolitical news, we missed the fact that Consumer Confidence was the highest in over year in may. The u. S. Economy, while slower, might not fall off the cliff that the market is pricing at the moment. Vonnie confidence is one thing. Actual spending turns out to be quite different sometimes. Market misreading the situation . Ira i think that if the real risk. If you look at the Options Market on things like eurodollar , they are already pricing for three cuts this year. Even if you only get one or the Federal Reserve doesnt deliver that, there could be some pretty big volatility in the race market the rates market. I suspect that the market will be disappointed. You had a couple of comments who think the fed is on hold this year. , that willthe case hold with shortterm instruments. Guy the bank of england is still talking about rate hikes. Are you surprised any Major Central Bank anywhere in the world is still considering the option of a rate hike . Ends up beingthat idiosyncratic. What is going on with inflation in your home home there is. Ction mario draghi was very dovish, as we saw going into this segment. We think the fed next week is going to get incrementally more ovish. It is surprising that the boe is as hawkish as they are. Guy thank you for joining us. Ira jersey joining us out of princeton. Tomorrow on bloomberg tv, u. S. Commerce secretary wilbur ross will join us. You do not want to miss that conversation. Plenty of moving parts around u. S. Policy right now. Coming up here on this program, Deutsche Bank is an investment bank. Amid a growing number of employees, the top are being investigated. We will have more on that story. That is next. This is bloomberg. Guy from london, im guy johnson. Vonnie from new york, im vonnie quinn. This is bloomberg markets. Guy more woes for Deutsche Bank. About 80 current and former employees are being investigated by german prosecutors, accused of being part of an alleged tax fraud. Joining us from frankfurt is steven arons. 80 sounds like a big number. How many of these people are at risk of prosecution . I am wondering how many of these to find their eyes under german prosecutors. What Deutsche Bank has said about the probe is probably very true. They named everyone basically in the probe. Anyone named in any document they have, so it is very hard to fit any of the people who will actually end up adding their verdict. We dont know yet, but it is interesting and an important developing for the bank, showing how much it still continues to suffer from all of the legal woes. Allegedlyese frauds took place between 2011 and 12 yearsch was now ago. Is it a stretch to suggest there might be political reasons behind this . Guy it is a tricky legal situation. Were deals at the time claiming tax refunds from states , you only paid one, and he prosecutors now argue everyone involved in the deal should have known it is not legal to do such a thing because you are basically taking money from the state, but no one has been convicted yet. Too. R banks are involved, g it took them a long time to work on this. Guy one final question on Deutsche Bank. Theres a nice story today talking about the fact that deutsche is going to focus on its areas of strength. Head andt stretch your scratchhy you cannot your head and wonder why they werent doing this before. N for the past five years they have been looking at their strengths, investing in places where it is performing has not seent success. They have always tried to optimize the equities business even though it has been underperforming. Now they are facing more constant equities and a d equity. It is a bit of a mess. Guy we should note that Deutsche Banks investment head says, i am confident the investigation will show no personal wrongdoing by me. Time now for a Bloomberg Business flash, a look at some of the biggest business stories in the news right now. Lets kick off with the ceo of uber, who says the ridehailing company wont be focused on profits right away. Inspoke in washington today, the first report since going public, reporting an 8 billion loss. We think it is time to lean forward. The business itself can be quite profitable. We are confident of that. But the next two to four years are going to be about growth. More allegations of Sexual Harassment involving lloyds of london. Have resigned following accusations of inappropriate behavior. S were said to have. Ad at a house party the manufacturer of apples at hon hai says up to 2000 workers will be at the foxconn plant by next year. They plan to make networking and server equipment at the facility. That is your Bloomberg Business flash. Vonnie. Vonnie we want to take a look at the markets now. We have been moderating gains throughout the session. Weyou look at the s p 500, are now at 2 10 of 1 . It has been a pretty steady line downward since the open. The Dow Jones Industrial average the s p is well below 2900 once again. This is bloomberg. Guy fromguy london, im guy johnson. Vonnie from new york, im vonnie quinn. This is bloomberg markets. Guy lets go to chicago. Its time for futures in focus. Scott is with us. Do you have any faith that this rally has any longevity . How far can we go . I like the longterm prospects, but near term we have to be very cautious. I am watching volatility. It is not going down with the market rally in, and that is usually a good indicator. I think there are too many things right in front of us. Tariffs still with mexico, which still are not settled. Opec, the fed next week. I think it is very cautionary out there right now. 53 debit ti is trading at wti is trading at 53. Buyer or seller . Guest i think the market is really taking into account the fact that opec is not going to cut back, not going to come off of the restraints here. For 51 inmake a run the cards. Guy thank you so much. Vonnie time for our stock of the hour, and that is ted bakers, down 59 over the last 12 months, 30 alone this year. The u. K. High street retailer having its worst day on record. Shares plunging as much as 30 . Tooourse, this is a me story as well as everything else. Emma it is, the founder was ousted earlier this year of this company. They cut their forecast for the third time this year. Take a look at the bloomberg. This is the first warning that came this year, followed by a sales warning, the first profit warning. Be 30 Million Pounds less than what they anticipated. They will have to mark down to try and clear, and that hits margins and messes with profits, and impacts the brand as customers become used to lower prices. These. Drop means that the market cap has fallen to some 450 Million Pounds that stock drop means that the market cap has fallen to some 450 Million Pounds. Guy its come a long way from a few years back. Is it just basically company miss execution . He consumer is still there there is still spending going on. Emma that is true. If you take a look at the performance over the last few years, its worst recent high was back in november 2015, trading at more than 350 pounds a share, now down to less than 10 pounds a share. This year has really been tough for ted baker. It has been one of the uks more. Esilient features it took the company into asia, where it has been doing pretty well, but it is bordered by the retail environment affecting a number of retailers at the moment. We saw that heat wave in the u. K. Which boosted retail margins, and retail sales ling to the lowest falling to the lowest on record. Vonnie emma chandra with our stock of the hour, thank you. We have been moderating gains, still up about 2 10 of 1 for the major averages. The data stack is leading the 4 10 of 1 . At this is bloomberg. Guy 30 minutes left in the European Equity trading day. From london, im guy johnson. Vonnie from new york, im vonnie quinn. This is the european close on bloomberg markets. Guy a little bit of a fade on the rally on u. S. Equities. European equities still relatively boy at relatively buoyant relatively today. The dax is having a pretty solid day. A morealso seeing positive print when it comes to the pound today, up i 3 10 of 1 . The dollar is not doing very much, but the pound is trading higher. We saw some slightly better data out of the u. K. Earlier on. It is hard to believe any central bank
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