European equities into the close. We have been seeing broadbased gains in european equities. The stoxx 600 rebounding between two weeks of declines. Cac40 not only apple forming the stoxx 600 today and not only since the French Election, but also in 2017. 40 up more than 90, while the stoxx 600 up some 8 . That is more pronounced since the French Election, something we will talk about in a moment. Here is the stoxx 600. I have shown you the imap, so you can see how various markets are performing. We have seen gains in industrial metals. Andstrials and Energy Financials and i. T. Stocks more than 1 . We have seen the rebound in tech stocks globally. We have been seeing yields push higher pay that was kicked off by the trend by the 10 yea treasury yieldollowing comments by William Dudley. If we look at the euro, we were seeing it study earlier. We are seeing we were seeing it steady earlier. William dudleys comments saying imperil thei would economy. Look set to break out. What is key is leverage funds are net along with the euro for the First Time Since 2014. This is g btv 185 on the bloomberg. This is volatility on cable, one month volatility. Ever soseen it tick up slightly. Look at it compared to where it was in brexit. Julile julie the nasdaq gaining steam as the day has gone on. We see this rebound in tech stocks on relatively heavy volume. Tech shares are the main reason the s p 500 is higher. Both tothe dow and s p records. Also seeing strengthen the financials as the rates rise. You heard nejra mentioned the comments from bill dudley. He said he is confident the u. S. Expansion has a long way to go. The dollar bouncing almost one quarter of a percent. What is interesting is even with are stille, rates relatively suppressed, considering we have seen a full point increase in Interest Rates in the u. S. Bloomberg. The fed just raised Interest Rates another 25 basis points. Here are the four Interest Rate increases we have seen. Here is the level of the 10 year when we first. The increase, yet we are below that level. We still got yields below where they wear when rates went up for the first time in the first increments of this one percentage point increase. It is helping banks. If you look at regional banks, they have been sensitive to rate changes. They are all trading higher. We are watching steelmakers. Longbow research confident on the sector, raising recommendations on a number of them. Coilsts optimistic on prices and Government Support for steelmakers. Wilbur ross saying that the president intends to take bold action, rhetoric we have heard before. He is reiterating and saying it will be coming. Vonnie julie hyman, thank you for that update. Time to check in on the first word news. Courtney in london, the Prime Minister has visited a mosque hours after a van rammed into a crowd of worshipers standing outside. One man died and others were injured. May condemned the attack. As i said two weeks ago, there has been far too much tolerance of extremism in our country over the past two years. That means extremism of any kind, including islamophobia. Courtney may says the attacker alone. In london, Authorities Say the death toll in the highrise Apartment Fire is likely to be at least 79. It is based on resident reports of who was in the building last wednesday when the fire broke out. Government is now investigating similar buildings. A warning from russia after the u. S. Shot down a Syrian Air Force jet. The Russian Defense military track u. S. Planes west of the euphrates and treat them as targets. It was the first time the u. S. Has shot down a manned aircraft in almostman combat two decades. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am courtney donohoe. Vonnie thanks. The french president gained a historic majority in the french legislature, winning 350 of 577 seats. But most french voters stayed home, making the turn at the lowest ever. Caroline kanaan joins us with t it all means for macron Caroline Connan joins us with what it means for macron. Is hoping for the businesses, the companies who have been wanting labor reform for the past 10 or 15 years. We willt labor reform see in terms of details is going to happen june 28, in about 10 dayes. In 10 days. The Prime Minister will Ask Parliament to allow him to bypass some of the extensive debate we have seen in the past in parliament. With this majority, the prime toister is hoping to be able push for the end of the summer to implement labor reform by september. It is very urgent, because france still has doubled the rates of germany or the u. K. Nejra the lowest turnout ever means the macron party cannot really celebrate this win, in a way. We also need to talk about the gains in seats for in seats for Marine Le Pen and socialists. If macron were to fail, this does this mean we could see a rise in popularity for these extremist parties . Caroline absolutely. The government is very aware of this. It is the first thing the Prime Minister said last night. , 57 ,d with this majority the highest ever on record in a legislative election in france, that means the government has the obligation to succeed. That means macron cannot fail. As you are mentioning, the other thing we can know is that the extremes, even though they are not gaining so many seats in parliament, Marine Le Pen, the National Front leader, is, for the first time, gaining seats in the national assembly, after failing four times in the past to get elected. And is Jeanluc Melenchon was also elected in marseille. He says there is still an antielite and antiestablishment feeling among the french people. And his party, representing the far left wing, will offer resistance against this total majority by micron. Vonnie has macron said anything hampselysee . Believe we do not have any reaction from the president yet, but the police it has beenhat reopened, which means that this incident could be considered a terrorist incident. A car rammed into a police van ysee about anel hour and a half ago. The driver is probably dead, whichng to the police we heard about 10 minutes ago. Police have said to avoid the area. Also, in two days from now, the cabinet is supposed to present new antiterrorism measures and to extend the state of emergency france has been living under until november. Nejra Caroline Connan reporting. Macrons victory comes as the facesminister of the u. K. Pressure to soften her stance. For more, lets bring in M G Investments manager Eric Lonergan. Thank you for coming in. I want to ask about france first. We have been hearing about emmanuel macrons policies. Positive will this be for equities, negative four french bonds . For french bonds . Eric possibly. I think the French Election fits into the narrative which Mainstream Technology does not motivate voters. It fits in with corbyn, trump, u kip. Nationalism motivates. Labor market reform does not. This is, in a sense, the mainstream win is when people do not show up to vote. I think we have a structural challenge with democratic regimes that is not going away, which is policies are ultimately about detail. They can be donald they can be dull. At the current juncture in the context of europe, it is a downside better for everybody that we are dealing with micron rather than le pen that we are dealing with macron rather than le pen, for sure. Nejra are you thinking that france is, perhaps, somewhere more stable to invest at the moment . Or do you still see uncertainty around that as well . Or is it the case that since we have seen such a rally we have seen how much the cac 40 has outperformed the stoxx 600, but that was already priced in. To makewould be loathe frenchspecific bets. Most of what is driving this is still sectorial. Re seeing i still think year has some pretty huge fundamental structural i still think europe has huge fundamental structural issues. The challenge is we still have not resolved whether there is a backstop to the sovereign bond market. The conditional guarantees from the ecb. Macron is trying to challenge that, but i think we all realize his possibility of success is still low. Andie where in europe, lets add the u. K. , our bonds correctly priced . Eric i think the entire Government Bond market is very , globally. Rrently there are interesting opportunities in parts of emerging markets. You might argue there is some valuable data in a 30 year treasuries, where you are getting a positive return. But the experience of Bond Investors have been fantastic the last five years ago. But if you look at the perspective real return, the best you can hope for is not to lose too much money. Because you are getting negative implied real returns. That is absolutely a finite game. If you look at the five year real return, it is negative. Nejra we will talk about treasuries in a second. I want to show you this chart. Growth inflation and the boe, talking about the u. K. We are looking at 10year gilts 1. 03 . At should that be higher . Personallyld not worry too much about stagflation. I think the growth rate is actually reasonable. There has been some deceleration, but this is a far better outcome for gdp growth in the u. K. Then people were anticipating 12 months ago. I think you could see rates normalizing in the u. K. Ts market isgil priced to deliver you negative real returns. I think we could see higher rates than people currently anticipate. Nejra Eric Lonergan is staying with us to give us his outlook on u. S. Markets and more. This is bloomberg. Nejra investors are digesting decisions from Central Banks. Eric lonergan is still with us. I want to turn to the fed. We had comments from William Dudley that have pushed the dollar higher, but we have been talking about how 10 year yield has been coming down. We have this great chart g btv 121. This goes against economics 101. Since the fed has tightened, we ,ave seen gains in the s p 500 yields are down. You have talked about the negative real returns in bonds. Is this impetus coming from the bond market, number one . And when will it change, if it does . Is very reminiscent of a conundrum under greenspan, when the fed was raising rates. Bonds rallied in the face of rising u. S. Interest rates. That chart,at particularly in the 10 year yield, it is a story of two halves. The bondlast year, market rallies considerably. That is because the bank of japan cut Interest Rates and the bank of england cut interest shock about a supposed that was supposed to come from brexit. This is not just about u. S. Interest rate expectations, it is also about global phenomena. Then you have a reversion where you have extreme levels of yield and the bond market were prices reprices. To move materially higher from here, either you need a big change, so people one, decision want compensation for owning bonds, or you get a shock from policymakers. I think on markets are vulnerable to both of those. Nejra interesting. Someone commented whether the questioned whether the bonds were a riskfree return or not . Vonnie exactly. About emerging markets. You mentioned there are pockets of value. Where . Some of the emerging markets have definitely decoupled from the fed. Eric if you look an fx space, there is value in emerging markets. E. M. Started ton discount Interest Rates rising if you go back to tapering. So you have three or four years of extreme e. M. Weakness. If you look at brazilian bonds, where you have political shocks, mexican bonds, where you have the trump episode, those are our fruitful areas, in addition to parts of asia. If you look in equity space markets like korea, some of the areheast asian markets attractive as well. And we have a great chart talking about that. Thank you so much to Eric Lonergan, M G Investment funds manager. Vonnie still ahead, Bruce Fairholme funds is still confident about his bets. He will be on the show, next. This is bloomberg. Nejra live from london, i am nejra cehic, with the european close minutes away. Vonnie and do in new york, i am vonnie quinn. Erik schatzker sat down with bruce berkowitz. Toce it does not make sense me, but i am not a gross investor, not a visionary. I am the guy looking to buy a dollar for . 50. If i am wrong, i will get my . 50 back. If i am right, i will do better than the dollar over time. Erik you are underperforming, but you are hardly alone. Why do you think it is so difficult for active managers to beat their benchmarks . Bruce the big problem is when you are it an investor in public security, people have to agree with you. In other words, i can be right, but until others agreed i am right, i will look very wrong. What it takes for me to be right is for a the companies i invest in to fix the problems that are fixable. Erik but you are a values investor. There are lots of other active managers who are not values investors, but they are underperforming as well. It is like a disease. Why. i do not know i do not pay a lot of attention to other people. I just go by the math. I basically follow the cash. I stick to that process. As long as i still think the value is there, i stay with the investment. Normally what happens is the investment declines tremendously in value during my investment process. Eventually, the problems and issues are resolved, and the cloud disperses, and people get a better look at the assets and liabilities within the company. And if things work out well. Well. Things work out erik when you look at the must stock, facebook, amazon, apple, netflix, google, or other high flyers like tesla, who do you see . Bruce i see companies that are priced for a very rosy future. And if it is a great rosy future, we will do well. What a couple of problems, and it is going to be difficult for investors to recover over a period of time. Vonnie Fairholme Capital founder bruce berkowitz, speaking with erik schatzker. Close ise european minutes away. The stoxx 600 have rebounded has rebounded from two weeks of declines. This is bloomberg. Live from london, this is the european clues the european close. Day, lets take you through all the market action. I have the function of year, broad gains across european equities. Theria, sweden, finland, dax in germany, gaining as well. The stoxx 600 bounding from two weeks of decline. In the fx space you are seeing broad dollar gains off the back of comments from the fed. Sterling weaker now by 4 10 of 1 . The euro is down 3 10 of 1 . Williammments from dudley have pushed the 10 year treasury yields higher and we have seen core yields in europe move up along with that. In the periphery we have Seen Movement downwards. Portugal 10 year yields bound down more than four basis points there. If we take a look at stoxx 600 here, the Industry Groups how are they performing, material stocks leaning the gates leading the gains. Some of those yields moving higher in the sovereign bond market. Youre seeing Energy Stocks performing strongly too, most Energy Groups of higher today. Up 9 10 of a percent. One i have been watching in ardo, one of the bestperforming stocks on the stoxx 600 or it this comes after the amazon deal to buy whole foods. That acquisition provides extra reason for grocers to some to provide extra agreements with the cargo. O. It has been double upgraded, there are talks that it could be a takeover target from other analysts. Finally, taking a look here, we have been talking a lot about we have, it was weaker, been talking about repricing in terms of expectation from the oe, this is the b looking at the september 2018 contracts. What it is showing is investors are not yet convinced that the boe split decision was a Decisive Game changer. Bonnie . Vonnie . Vonnie some more hawkish statements from the fed last week. The u. S. Back in below 45 a barrel. Earlier saying was in the 55 range. It does not look like we are breaking out of it. This is an interesting one. 12. 93 the rand. Graft is suggesting the central bank in south africa that ismandates tied to currency levels as opposed to a price stability mandate. That is one to watch. Has more thanso changed directions since the november elections. It has now reversed all of those losses. 17. 93. Gmm having a look at emerging markets. Interesting to see the south african main benchmark up 2 . The rubles weaker as well. More on the fallout from the amazonwhole foods deal. Indeed we had that big story on friday. Amazon is buying whole foods for 13. 7 billion in cash. We see for both the acquired Company Whole Foods and amazon the acquirer, were still looking at gains. It is worth noting that the stock is about one dollar above the bid of 42 per share that mace that may suggest that investors will come out ahead. Activistthink that investor jenna partners, the thirdlargest shareholder of whole foods could push for a higher price. Amazon higher for the second day in a row having spent two day since the beginning of january. You do not see that all the time. Investors are positive. Thinking they will be a disruptor in the space. He saw a huge selling and retail space overall. Amazon pound gorilla of gets into the grocery space. As take a look at other names. Kroger is up 1. 5 . Attractive,e and theyre also saying that the stock is trading at a 50 discount. Grubhub is up. This could be the next acquisition target for amazon. Look at costco. Down 2. 3 . Earlier we were talking about the degree of selloff in the space and it not making sense.