Speaker 1: Global business news twenty four hours a day. If Bloomberg
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Speaker 1: This is a Bloomberg business flag from Bloomberg World Headquarters.
Speaker 1: I'm Charlie Public forty three minutes to go. Ahead of
Speaker 1: the clothes here mixed picture for US equities. Let us
Speaker 1: head right over to the first word breaking news desk
Speaker 1: for today's afternoon call. Here he is Bill Maloney. Good afternoons, Charlie.
Speaker 1: That's right. In the US, averages are trading mix today.
Speaker 1: That Dow currently down forty five point says it Bees
Speaker 1: dropped two and Azack is trading higher by eight. The
Speaker 1: small cap six under games three points, and the US
Speaker 1: ten yield at one point five six percent. Half of
Speaker 1: the S and P sectors are lower, led by lasses
Speaker 1: in telecom, utilities and consumer staples. Materials, industrials and technology
Speaker 1: lead down. Transports outperformed gains seventy one as a biotech
Speaker 1: fall twenty, utilities drop seven, and the VIX is higher
Speaker 1: by one point three percent. Down leaders to the downside,
Speaker 1: including McDonald's, Verizon and free M, while Caterpillar, ut X
Speaker 1: and Boeing led to the upside and dealing new shares
Speaker 1: of analog devices and linear technology are currently halted, and
Speaker 1: alot of devices is said in advanced talks to buy
Speaker 1: linear technology. Following some of your names or the bigger
Speaker 1: names set report after the Belts and I include ACAM, I, Panera, Bread, Twitter, June,
Speaker 1: Ber Networks, US Steel and Apple. Live from the first
Speaker 1: Breaking news desk on Bill Maloney. Charlie, all right, hey,
Speaker 1: thank you very much. We'll be all over Apple and
Speaker 1: Twitter as those numbers break and to hear live breaking
Speaker 1: news over your Bloomberg tipe squawk s q U a
Speaker 1: K s q u a w K on your terminal.
Speaker 1: I'm Charlie Pelton. Dat's some Bloomberg business flash. This is
Speaker 1: taking stock with Kathleen Hayes and Pim Fox on Bloomberg Radio.
Speaker 1: Central Banks and focuses data that the Reserve started it's
Speaker 1: two day policy meeting. No rate hike expected at the
Speaker 1: end of that meeting, however, maybe some signals that they
Speaker 1: could be in the future. Meanwhile, the Bank of Japan
Speaker 1: starts it's to day policy meeting on Thursday. By right,
Speaker 1: it is expected to announce some more stimulus. The question
Speaker 1: now is how much. Meanwhile, the yen surging the most
Speaker 1: is Britain voted to leave the European Unions as traders
Speaker 1: scaled back expectations for further aggressive monetary and physical stimulus
Speaker 1: before UH. They meet later this week at the Bank
Speaker 1: of Japan. Joining US now to put it all together
Speaker 1: for US is Doug worth Quick. He's managing director, head
Speaker 1: of f X Foreign Exchange at Chapter Lane and Co. Doug,
Speaker 1: welcome back, Thank you very much. So first of all,
Speaker 1: you know what's interesting? Um? In an interview, UH did Dan?
Speaker 1: I believe it was Bloomberview contributing Muhammaduarrian was talking about
Speaker 1: how the maybe the markets too complacent about the FED
Speaker 1: raising rates once maybe even twice this year, and he
Speaker 1: also mentioned how he thought that right now that you're
Speaker 1: not going to see the volatility around central banks so
Speaker 1: much in stocks and bonds. The currency market is where
Speaker 1: we're going to be seeing all the big movers. I
Speaker 1: think it's correct there. I think that you're you're seeing
Speaker 1: central banks involved pretty much across the board, and that's
Speaker 1: really pushing down in volatility right now. But the currency
Speaker 1: markets still have a little bit of freedom, is still
Speaker 1: not as much as we'd expect. Doli En certainly is
Speaker 1: trading up and down based upon the expectations for guidance,
Speaker 1: and the Japanese press has certainly been fueling this fire,
Speaker 1: with the NICK saying that fiscal spending would double to
Speaker 1: six trillion yen at the same time overnight. Yet Taro Aso,
Speaker 1: the Finance Minister, coming out and saying regarding fiscal stimulus,
Speaker 1: we've yet to decide on the size of the economic stimulus.
Speaker 1: So the market here's one thing, gets excited, buys doll
Speaker 1: an here's something else, and then sells off again. At
Speaker 1: the same time, as you said, we've bet a b
Speaker 1: o J two day metings starting on Thursday ending on Friday,
Speaker 1: there's a question of whether to expand montrely stimulus. Further,
Speaker 1: I think that that actually maybe unlikely. I think what
Speaker 1: maybe more likely is on Friday we'll find out they
Speaker 1: start talking about forward guidance for the first time, and
Speaker 1: that means maybe talking about maintaining the size of their
Speaker 1: balance sheet going forward, which would give people some comfort,
Speaker 1: and staying long dollar yen at that time being. But
Speaker 1: then again, I think that any sort of position right
Speaker 1: now long dollar yen is sort of like pushing on
Speaker 1: a string. Given I believe there are other actors right
Speaker 1: now that are selling dollars buying end that would include
Speaker 1: central banks like like China, Dog Borthwick. What's long term
Speaker 1: in the mind of a currency trader, but that the
Speaker 1: bands long term normally is you get in the one
Speaker 1: spot and you get a long term once you once
Speaker 1: it goes your way. So if I'm right with Dolly,
Speaker 1: and like the last time I think we had a discussion,
Speaker 1: I said, we go through a hundred. Obviously we dipped
Speaker 1: down past that hundred level after the Brexit. Certainly that
Speaker 1: long term and I've been taking profits around that time.
Speaker 1: I think nowadays, if I have to think long term here,
Speaker 1: and I'm thinking maybe we could go up to one
Speaker 1: ten on some sort of surprise, and at the same time,
Speaker 1: I think it much more likely to go down to
Speaker 1: I'd say that's within the next month or so. Okay.
Speaker 1: The reason I asked that is because I'm wondering whether
Speaker 1: moves in currency markets are leading or lagging indicators for
Speaker 1: investors that may not be in currency markets but are
Speaker 1: in bonds and stocks. Well, I think you can think
Speaker 1: of currency markets as being sort of the tip of
Speaker 1: the spear, and the currency markets when a piece of
Speaker 1: news comes out or we see something hitting the tapes,
Speaker 1: people would trade the currency first because it could be
Speaker 1: that the equity market is closed or the bond market
Speaker 1: is closed, but the currency markets are always open, as
Speaker 1: you know, and so I think that certainly there is
Speaker 1: a little a bit of a leap there in that respect.
Speaker 1: But also people when they buy the currencyre they sell
Speaker 1: the currency. You find that macro investors get on board
Speaker 1: on that before they start thinking about what to do
Speaker 1: with the currency once they bought it or so that's
Speaker 1: a very important question then for the Bank of England
Speaker 1: and uh, you know, to get into the weeds here
Speaker 1: a bit, but it's it's big news today. Bank of
Speaker 1: England policymaker Martin wheel who had been somewhat you know,
Speaker 1: dragging his feet on immediate and big interest rate cuts
Speaker 1: in in the UK, now say he favors immediate stimulus
Speaker 1: for the UK economy. Recent indicators on manufacturing looking much
Speaker 1: worse than he was looking. So you've got the pound
Speaker 1: hit by that, and then weak economic data in the
Speaker 1: US kind of moving the pound in the other direction.
Speaker 1: If it's the pounds a tip of the spear for
Speaker 1: people looking at those UK markets, what's what's the takeaway now.
Speaker 1: I think that the Sterling as soon as that happened.
Speaker 1: I think the most market participants believe that there would
Speaker 1: be a rate cut coming forward. I think there's a
Speaker 1: little bit of a surprise that they didn't cut last month,
Speaker 1: but certainly August fourth that looks like they'll cut from
Speaker 1: zero point five percent to around I think that's certainly
Speaker 1: an expectation. I think that's already priced into Sterling. I
Speaker 1: think if anything, what Sterling has done over the past
Speaker 1: week is or the past couple of weeks since Brexit
Speaker 1: is it's it's it's managed to find a foundation or
Speaker 1: a floor, and people have realized that this isn't going
Speaker 1: to be a full blown Brexit, but it's looking more
Speaker 1: like Brexit light. And I think that with with materials
Speaker 1: Amain there, I think that what you're gonna find out
Speaker 1: is you're gonna find out that she actually starts pushing
Speaker 1: things down in the line. They won't trigger Article fifty
Speaker 1: until the end of the year at least. I think
Speaker 1: before that you're going to find some sort of stabilization
Speaker 1: in Sterling. And maybe I pushed back up to that
Speaker 1: one for two level because people understand that it's not
Speaker 1: going to be quite as catastrophic as everyone was expecting.
Speaker 1: Dog Bothwick, just quickly, dollar Euro currently one oh nine,
Speaker 1: give you about twenty seconds. Well, I think the year
Speaker 1: at all with this one or nine level is still
Speaker 1: very much below it's fair value. I believe that there
Speaker 1: are buyers of the year dollars that are moving their
Speaker 1: reserves into the euro and out of the dollar. I
Speaker 1: think that we're have an expectation to see run one
Speaker 1: fifteen certainly by the end of the year. And even
Speaker 1: though you see the basis moving out in the euro.
Speaker 1: The last time we were at these levels in the
Speaker 1: three year basis wall the euros at one twenty. Thanks
Speaker 1: very much, Douglas Borthwick, Managing director ahead of FX at Chaplin,
Speaker 1: Dame and Company. Right now Euro at one oh nine
Speaker 1: versus the dollar, pounds, sterling one one and the Japanese
Speaker 1: gen trades at one oh four sixty two. This is
Speaker 1: taking Stock. I'm pim Fox my co host Kathleen Hayes.
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