Equities are trading now. Just under 13 minutes to the close. Here, im looking at the guilt yield curve. Whatcommentary about the flattening of the curve means. We are looking at the flattening. Is it a question of the market mispricing the event of brexit . Lt money moving into gi markets . Off the comments of mark carney saying he is worried about the impact of brexit on the economy. Not be rushing to raise Interest Rates anytime soon. Here, i have a trend channel chart for sterling. We had been seeing sterling extend its losses. It has gone below 127. 126. 17 right now. The pound might extend. It has dropped for the longterm support. On the one hand eight dovish boe, on the other hand a hawkish fed. Sterling below is more than a week in todays session. If we look at what else i have here, i want to show you european stocks. The charts are not coming up, but we are watching the stoxx 600 trade lower. Posting losses after two days of gains. The dax hit a record coming off of those highs. We are seeing the losses on the stoxx 600 on the oil and gas stocks. Julie in the u. S. , we are seeing decline in sales, but they are smaller than they were. Oil helping drag down the major averages. Also interesting trading in the bond market. The perception is that the red is hawkish. How hawkish . In, in increase december. We are thinking of buying in treasuries with yields going back down after bouncing yesterday. Now 2. 17 . The yield curve is once again flattening, or narrowing. We are now seeing the narrowest since the recession began in 2007. On the one hand, yes, the fed is expected by many traders to raise rates perhaps in december, but at the same time inflation looks to be contained. That is causing the narrowing, or flattening, we are seeing. , a sneakyar to date trend that has been a little unnoticed. Andnology has been outperform her. The second is health care. 15 year to date. It is the standout in todays session. If you look at the intraday action, it is the best performing group in the s p 500. There are a couple of standout movers. The S P Health Care index is higher. Par xl looks to be taking 4. 5 billion. You can see the stock is up 4 healing pressure from starboard values to sell itself. 8810 is the price on that deal. Interesting, regeneron is higher, which is unexpected. No hardest day a potential blockbuster it is developing to loss. Vision that would provide an advantage over regeneron. Concerns aret weighing on the market area and mark carney sounded the alarm on the upcoming risks of the european union. I would like to see the extent to which growth is offset by other components of demand. Ande wages begin to frim, generally how the economy reacts to the prospect of tighter financial conditions and the reality of brexit negotiations. Nejra he is warning the pound sliding for the second day. For more, lets bring in christine pitino. Through the various factors causing this selloff in pushing the guilt yield lower. Christine he pushed back quite dovish late. Risks. Longterm, brexit we have been talking about this for some time. The outcome of those are unknown. Do not like uncertainty or betting on unknown outcomes. That is something that will hang over investors heads for at least two years. In terms of expectations from a rate hike from the bank of england, which heavily seen. Even before mark carneys comments, the market did not seem convinced we would see that tightening even though we had the split decision at the meeting. Kristine markets get overexcited when there is a hand int of policy movement. Shift thathere was a 2018 was a possibility. Now we have 3 dissenters. One is about to leave this month. You are left with a boe that is unbalanced. It still favors more prudent monetary policy. Now, it might have to be a 2019 story in terms of rate hikes. snnie we heard in hammond speech as well it might be baked in yet because we dont know what the next government will look like. Kristine the s p is warning today that they may act on the u. K. Credit rating before brexit talks are over. That is an attest on how closely people are watching this and anticipating the outcomes and per min tatians on the u. K. Credit rating, what that means for the economy, current account deficit. There is a lot of variables. That is why groups like s p, and investors, are watching the developments closely. Skin in the game so it is in his interest to speak the way he does, but listen to what he said about britain. I will read it. Sustainable economic developments. Brexit is a lose lose proposition harmful to britain and the european union. It cannot be undone. Turn of take a missive fortune to exit andriy intervu or not fully e fortune to reenter or not exit. Kristine right after brexit, the Economic Data was not looking that bad. Investors have come to realize log and how data response. In the past month, we have seen data, wetch in u. K. When brexitup to and bric have started brexit. People are realizing it has a massive impact on what the u. K. Economy does form hrere on. Nejra i show the yield curve in my market check and the 10 year e. Lt curv is there a miss pricing in this market in the sense that, for one thing, are investors underestimating inflation . Kristine there is a fair question to be aked there but it is balancing shortterm motivations. Because of mark carneys comments they are focused on the fact that the boe will not be pulling the punch bowl away sin. The longer term away soon. The longerterm implementations are more borrowing. Investors are not really on their radar at the moment. Nejra thank you so much for joining us. Word news, first here is courtney donohoe. Courtney the chancellor Philip Hammond is putting Financial Services at the heart of brexit. In his annual speech, he spoke against breaking up Services Like derivatives and lending. The financial ecosystem that this is large and complex. Critical mass is important. Let me be clear, fragmentation of Financial Services will higherin poor quality, priced products for everyone concerned. Shiftey in mark dayton migration. Lling an f16 has been shot down by the prosyrian regime. The Central Command said the drug was making an advance toward coalition forces. In georgia, the most expensive rate for the house of representatives. Voters in suburban atlanta will decide between karen handel and john also off in a race that could be a preview of the midterm elections. She has maintained distance from president trump. The campaign could cost more than 50 million. The man accused in the London Mosque attack is accused by his mother as disturbed. Offensesng held on including attempted murder. She said her son was no terrorist. He has been on medication for until health problems. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. I am courtney donohoe. This is bloomberg. Coming up, swedens redhot ipo market getting ready to set a new record. We are joined next to break down what is fueling the boom in europe. This is bloomberg. Vonnie live from bloomberg World Headquarters in new york, i am vonnie quinn. Nejra from london, i am nejra cehic. Mastec stockholm will set a record tomorrow as five companies will be lifted in a single day setting a new record for europe. We are joined from stockholm. You on the to have program. Is swedensk, why ipo market so red hot right now is t . Adam have a Strong Equity culture, government culture in terms of the country being well prepared. We have a strong ecosystem supporting the companies. These are Companies Leveraging the Capital Markets and benefits of raising capital through the exchange. The momentum we have seen 2012 the momentum we have seen since 2012 has been tremendous. Nejra you talk about a culmination. Any that mean there is bubble territory and we could see risks ahead . Adam i dont see that. We have many parameters playing into the equity markets with low Interest Rates and volatility. Well, and weform see a strong appetite for investors, a strong appetite from companies to access the market. From that perspective it is not a culmination. From this perspective, we have an ipo window before midsummer , which is a religious holiday in sweden, so they are trying to come out before the holidays. We will continue to see an active market after the holidays into the fall. Vonnie in the nordic countries or the United States, it seems to be driving listings in the u. S. And elsewhere. You do that sometimes by sacrificing margins, or that is part of the outcome. Is it the best strategy . Adam to support listings . Butie not to support them, encourage them by helping companies with investor relations, your whole strategy is focused on not forcing ipos, but being aggressive about them . Adam no. Our coulter is to make sure Companies Leverage the markets in the best way. We work proactively to work with companies to evaluate the option of going public. Our Business Model is geared to support the companies when they are public and preparing them for going into the public market. The business we have which provides services to companies that are public, whether on our markets or other markets, we are providing the best possible solutions to leverage markets. What we are encouraging, and u. S. , is a the revitalization program launched by our ceo which focuses on making the markets more accessible for companies. This is something missing in other markets and what we see active in the nordic market. Vonnie even with the listings boom, laststings year was 97 and you may be on track to beat that, is that enough for nasdaq investors when it comes to revenue and margin growth . From our perspective, Companies Leveraging the ipo market is one more alternative capital. If you dont have that in the ecosystem, you are missing a fundamental piece of the ecosystem. Companies leveraging the Public Markets to increase visibility, access capital, create liquidity, increase awareness, grow their commercial models. Iswant to make sure this ipo for companies that are well prepared that can manage the market. We are focusing on quality, not quantity. The way the markets are driving now, we see a great demand. That is beneficial for investors. Nejra you are seeing demand in the nordics, but elsewhere in europe, we have political risk, not to mention the prospect of central bank tapering, even if not in the immediate future. Where is the next nordic for ipos, if you can pinpoint anywhere . From our perspective the nordic market has a unique equity culture which means retailers invest. They are interested in ipos and equity. We have an Advisor Community geared towards the ipl and supporting the smaller ipos. 50 of our pipeline, more is nordics,om outside the trying to leverage this market as well. Equity culture is missing elsewhere in europe. We see a strong one here. That means more funds and advisers leveraging the alternative. Nejra thank you. Nasdaq head of european listings as we look ahead to a Record Number of listings on the nasdaq stock home tomorrow. Thank you so much. Vonnie we have the former u. S. Trade secretary to tell about post for Climate Change. This is bloomberg. Nejra live from london i am nejra cehic for european close minutes away. Vonnie live from the bloomberg headquarters in new york, i am vonnie quinn. Climate change has split washington and caused a number of businesses to speak out against Donald Trumps policies. I think it is in everyones interest. The idea is by using prices rather than heavyhanded regulation we address Climate Change in a way better for business. Taxesn a proposal that bysil fuels and is endorsed exxon and British Petroleum possibly be doing great damage to the Energy Economy . Help the Energy Economy by moving away from the kind of command and control regulation we relied on for too long. At the same time, this builds in a constituency because every equalan will share an proportion of the revenue and receive a kind of dividend, much like the citizens in alaska receive a dividend as a result of alaskas oil well. By creating the dividend, it is providing an entitlement for all americans and removing the regulation that has been most worrisome for business. It seems like this is a winwin approach. Crucially, unlike the current stands up for u. S. Interest through a border adjustment that makes sure u. S. Producers will not be at a competitive disadvantage because of the step we are taking. For those who may not have ce, the basicd pie theory is you have a tax per ton of coal. 40. That would be distributed to the populace overall. Is this progressive or regressive . It is progressive because it is the same amount for everyone of every income hear it if your income is 40,000, the rebate will be a higher fraction then if your income is 80,000, high isby more if your income 200,000. This is the most progressive approach, you can take to Climate Policy while the same time being good for business. The regulations will be removed. And being good for competitiveness because of the border adjustment. As an economist are you worried about the border adjustment notion . You say this will help us competitively around the world. I understand never has there been a border adjustment tax imposed anywhere. Are you worried we are going somewhere we have never been before . I dont think so. It is progress to go where you have never been before. I have talked to a number of experts. The basic idea of putting taxes on things that come through an International Border goes back to before our constitution. Se, taxes at the border are the oldest and more traditional kind of tax. Most of the energy embodied in what the United States imports is in a relatively limited number of products. Todays world with whatever Information Technology makes is people who dont want this for other reasons to suggest this is infeasible. Vonnie Larry Summers on bloomberg earlier. Nejra European Equity markets close, stoxx the 600 lower after two days of gains. The dax falling from a record high. This is bloomberg. Live from london and new york, this is the european close with but that for the vonnie quinn. With vonnie quinn. We have two days of gains for the stoxx 600 here the dax hidden record highs yesterday. The ftses up ftse 100 up by. 1 . Bearishas moved above a ceiling, we see the stock as well. Keeping a close life close eye on sterling. Down 1 now. After comments from the bank of , that he wontr be raising a just rates anytime soon. We have seen cable hit the lowest level in more than a week. Income space, we see the yields move lower along with sterling. Down for basis points. Look at the stoxx 600, break down the groups and see where the new where the movement is, it is the Energy Stocks underperforming. We have seen the oil and gas index hits the lowest since november 2016 and we are down almost 2 as wti and brent are heading submit can be lower. Stocks following closely behind. Commodity stocks getting pummeled in particular. Much more red than green across the wheel today. 4 . Enchmark down i was talking about the 10 year yield to we see the struggle a 1 today. 99 basis points. See the trend and it has been steadily downward since january when we were above 1. 5 on the tenure yield. Something particularly interesting, at its flattest this year. To whetherlook ahead it will include china in its benchmark, offshore stocks the priciest level relative to shanghai share since 2014. Vonnie the dollar continues to strengthen as the commodity weakness narrows. We are seeing it approach the mostly,ndex, the yen other currencies i want to mention, a couple of interesting one. The central bank basically saying it will ardently defend its mandate. The mandate should be different, it should be tied to currency and them say no thanks, we are seeing it weaken today back above 13. The secondbest carry of american currencies at the moment. Interesting to watch. U. S. , the spread back at 81 basis points. Bit butrrower a little not at its low. Developed markets you mentioned has to do with commodities. The Canadian Dollar is there as well, suffering a little bit. Lets get to abigail doolittle, at why some of those currencies are lower. In dp or it one of the big stories is certainly oil. Last down for out of the five days new session lows down about 3 . Down about 13 over the last year. Noays plunge in oil, we are at levels seen last august. Watching a range between 45 and 75. Global securities, it earlier told me he thinks with this break, we could go down to 38 and that would be pretty bearish. Supplys on global concerns. Something they were talking about in europe, energy, these are some of the worst performers theus to have transocean, driller down about 4 , a big loser for the s p 500. Year, so really a lot of bearish action. Question is whether or not it will drag on overall. He thinks it could. Lets take a look at we watched it before. In the 50cently put Day Moving Average moving below the 200 Day Moving Average. That happened recently. Sellers are taking control. The last crossed back here in. 014, usually bearish into oil it may suggest we could see something potentially bearish. We just look at the technicals. Lets take a look at the fundamentals of what traders are worried about. In blue, we have the opec supply production. We see even though opec supply has come down, it is offset by the fact the drillers Companies Continue to drill. Not helping that supply situation at all. Thanks. Sticking with the market, a big win in the french election. Brexit talks underway. Politicalall this drama mean for the status of into europe . Joining me now is wisdom tree investor dave. And Asset Management company that focuses it is the 10th ongest in the world based assets under management. Great to have you on that program on the program. I will start with it chart of one of your competitors p are money rolling into europe. Let me start by asking, are you seeing the same trend and which assets in particular . Your chart is a great proxy for the overall industry. Are seeing is once again record growth. If i look at european etfs, more than 50 billion have flowed into the funds across year. Already this it outpaced outpaces last year. We are on track to outpaced the 77 billion raised in 2017 p are we are on target for 500 billion in the etf this year in the u. S. , another record. Year, we see continuing and we in asset flows see increases, a speed of increases. And why is this . We just talked but the fact there has been all this political risk. What do you think is driving the inflows . Investors are starting to want lower fees, they want transparency, they want ease of access, and they modern wrapper for their investments. Im glad you mentioned fees. In europe as far as i understand, they are higher versus the u. S. His europe being limited in any way . Is not. I would not think of fees in europe being higher. I would think of it as, first of all, there is an education delay. I see from investors in europe that they know less about the products, and we could do a long segment on why that is. There is also a lack of transparency in the markets here which make it tougher for investors to understand the benefits. The fact that there is no printer tape rule in europe, or everything will be print to the tape, it will enable people to see flows of trading volumes and it will be important for investors. Yousparency rules where have to declare all of the fees being charged and fee arrangements between parties, also great for investors. They will benefit a lot from this. That will cause a speed up in the etf segment. I want to talk about fixed income. Really,eing on markets in a bowl bull period, really. It is one third the size of the u. S. Blackrock dominated with a 67 share. Of competition bad for investors . What is no. The fixed income market is being disrupted. , wisdom tree is making great gains in the u. S. In fixed income. We are doing things in fixed income. It has been so opaque for so many years, it was a phone callbased market. Phones toe using trade and makes no sense. The market is being completely revolutionized and investors also get more benefits from the etf fixed income than they do in equities. How much of a growth priority is fixed income for you . . This. 450 billion in equities. Maybe 20 billion in commodities, much smaller. If you look at the fixed income out, iive or 10 years would not be surprised if it is equal with equities. If you look at the fixed income markets in general, it is much bigger. I would not be surprised to see growth. What are you seeing leveraged etf despite some of the risks they pose . In europe, wisdom tree has put we call strategic products, and we have a tactical trading products and that is our leveraged range. We see those products being used by sophisticated traders. It is a 10 billion market in europe and used by a segment of investors. You asked about the risk. They posed no risk to the industry. Atee the segment will grow the expense of the industry for sure. For investors to tactically portray their portfolios and the most important component is education. Understand what the impacts of the investment will be. Thank you so much, wisdom trees head of europe, giving a first interview today to bloomberg tv p are will be back later to give third catch that a 12 30 p. M. Eastern. Vonnie lets check in on the first word news. Ryan sayspeaker paul occurred this year to get the economy going. Later he will give his first major speech on tax reform. The Wisconsin Republican will call for a plan that does more than just tax rate. The death of the American College student who died less they returnafter from north korea. The parents did not set a specific cause of death and a torturous mistreatment with north korea. He spent more than a year in a north korean prison and returned home with severe brain damage. Globalest investors are pessimistic about talks. The majority expect negotiations that involve a series of delays. It will diminish the value of u. K. Access. News 24 hours a day 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. A chief economist is here. Ultralong bonds in the United States. This is bloomberg. Vonnie i am vonnie quinn and this is the european close on bloomberg markets. Thee mnuchin says government would issue ultralong bonds only if there is a market for you. Here is your take. Is a total the government should strongly consider. We are reaching out through investors to see what the demand this. We want to see if it would be an important part of borrowing capabilities. Classy formed a working group to study 50 and 100 years. On ultralonge now bonds. Alix steel is on goldman sachs. In california, alix. Alix who else was you it is a useful tool, what would it be used for . How is it useful . It increased the size, more points on the yield curve. It would of course be potentially over the longer term. I think it is still uncertain ultimately over the long haul, it would help the u. S. Treasury it would take a Duration Risk with the 10 year bond. We have not really model doubt what the numbers would be pure the yield curve is flat between tens and 30s. In some cases, the yield curve bends back down again at very long majorities. Is estion lets talk about spreads. Sincethe lowest year seen 2007 p are 20 look at the spread, how do you interpret that . The holdings of longterm bonds, obviously overtime probably starting in september and october, i think it is still an important factor. Is the premiumr accounted for most of the appreciate since appreciations in the 1990 and 1990s, that is an important factor and maybe a final factor, the ecb and the somere running in degrees, pushing investors in those markets. Alix low inflation targets continue at low rates. They ruled off the table in terms of discussions, what you think about that . You have to decide between a a 3 . Lation target and you can make a good case that 3 inflation target would be better. You could say it does not really add that much to the potential price setting. It does not lead to the deterioration. Same time, it gives a little more leeway to cut rates in the economic downturn. It can make the case from scratch whether you would want to go from a 2 target to a 3 target at this point in time, it is harder to say. I would be nervous about trying to let the economy overshoot longterm employment by a lot and order to get inflation up to at this time. Im not sure it is a great idea now, but it is clearly a question for Academic Research and that was the point. Alix right. And where Financial Stability really a spirit we talked about financial conditions, they have been easier despite the fact the fed hike twice this year so far, where you expect that to show up in the economy . Consumer spending, tighter credit spreads . Will it show up . It has in three things in 2017 on that. Weakeres, a somewhat dollar, and higher stock prices. Credit spreads have come a lot from where they were in 2016, though they have not move much in 2017. Where that will show up in the the transitionk for stock prices would mainly be through consumption. This is something that would probably support consumption, a weaker dollar should support the export side to some degree and lower rates, i would say, the probably housing and mortgages. In all of these houses, there is a lot of things going on. Changing conditions. It seems that the case after the fed meeting was come you have a Balance Sheet announcement unwind, september and october, next hike in december. The market totally skeptical. Options futures looking more like maybe a december rate hike. Make the case for me of still straight hikes when you wind up having inflation rolling over and real rate inching higher. That september is very likely a Balance Sheet announcement and then december is the time to take the next step. Case is two things. One, while inflation has been lower, the labor market is improved by more than expected the on implement rate down over the last three months. Ahead of what most people including the fed had expected. Tool mandates. Look at the ways in which you normally tradeoff inflation against unemployment through these things are roughly offsetting. In the second point we talked about, easing and financial. Onditions despite the fact to see you. Thank you for joining us. Back to you. Vonnie thank you for that. , Investment Banking john and on the commodities front, jeff curry with his perspective on barrel crude. This is bloomberg. Vonnie the dollar index strengthening once again today. It looks as you read really starting with a four dollars per barrel. Jeff curry joins us with his perspective. Oil down 2. 7 today. A barrel of wti. This is bloomberg. Vonnie welcome to bloomberg markets. Here are the top stories from bloomberg around the world. Steve mnuchin says the Administration Remains focused on getting a tax overhaul plan done. This year. Later this afternoon, now included in the index. Africastruggle. We are pretty much at the halfway stage of the trading day. We got a pullback today. Downg back
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