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Speaker 1: Broadcasting live to New York Cloomberg eleventh, Rio to Washington,

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Speaker 1: d C, Bloomberg nine and nine, Walk to Boston, Bloomberg twelve,

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Speaker 1: unders to San Francisco, Bloomberg nine sixteen to the country

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Speaker 1: suis Exam Channel one nineteen and around the globe the

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Speaker 1: Bloomberg Radio Plus Athen Bloomberg dot com. This is Bloomberg Surveillance. Hey,

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Speaker 1: good morning. I'm kerin Moscow along with Tom Keene and

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Speaker 1: Michael McKee on the opening valve back to you by

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Speaker 1: s C. I imagine when asset management servicing is unconstrained

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Speaker 1: by infrastructure. See how I see has global operating platform

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Speaker 1: can be your catalyst for a business expansion at se

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Speaker 1: i C dot com slash imagine and stocks are lower

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Speaker 1: at the open. The S and P five hundred is

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Speaker 1: down two tenths per center four points to two, Downtown's

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Speaker 1: industrial average down to tens per center, thirty one points

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Speaker 1: to seventeen thousand, four hundred ninety eight, and then azdacs

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Speaker 1: down to tens per center nine points to forty seven

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Speaker 1: oh six ten. Your treasury down six thirty seconds. The

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Speaker 1: yield one point seven nine percent yielled on the two

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Speaker 1: year five percent. Nimex crude oil up about a tenth

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Speaker 1: of upper cent or three cents to a barrel. Comex

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Speaker 1: s gold down half percent or six dollars forty cents

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Speaker 1: to twelve seventy sixty ounce the euro at other twelve

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Speaker 1: seventy five The end one oh nine point five four

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Speaker 1: and Tom and Mike Karen thanks so much Bloomberg's of

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Speaker 1: angles this morning, folks, much to my Interactive Brokers and

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Speaker 1: seem Group. If you're looking for global futures contracts with

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Speaker 1: low trading costs, look no further. Interactive Brokers is the

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Speaker 1: industry leader. Learned more at Interactive brokers dot com, slash

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Speaker 1: seem Group. UM. I was sort of stumbled there, David Wilson,

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Speaker 1: because I'm looking at retail America. It's one thing for

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Speaker 1: a luxury goods type like Berberitas stumble or this that

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Speaker 1: or other story when when Target in Walmart stumbled, that's

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Speaker 1: something it's it's it's ugly out there. Yeah, we'll see

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Speaker 1: if Walmart stumbles there. Results are out tomorrow, but targets

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Speaker 1: are out and they are not being well received at all.

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Speaker 1: Stocks down eight and a half percent sales for the

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Speaker 1: fiscal first quarter trail the average Alas Testment and Blueberg

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Speaker 1: Survey Targets profit forecast for the second quarter also missed projections.

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Speaker 1: Chief executive Brian Cornell said, consumer to man has become

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Speaker 1: more vulnerable. As I mentioned, Walmart out with Ernie tomorrow.

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Speaker 1: Those shares are down three percent. We're seeing other retailers

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Speaker 1: fall in the wake up targets results as well. Cost

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Speaker 1: Call Wholesale down two point four percent, Dollar General down

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Speaker 1: two percent. Both those companies due to report results next.

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Speaker 1: Just what caused the market turnaround here in the last

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Speaker 1: three hours. Green on the screen tow under red and

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Speaker 1: negative right now, certainly a big reason for it, no question.

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Speaker 1: I mean, the game that you're seeing in lows only

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Speaker 1: get you so far. That stock up two percent in

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Speaker 1: early trading. The Home improvement retailer posts of first quarter

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Speaker 1: ornies and sales. It surpass projections and raise its profit

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Speaker 1: forecast for the year. Then you've got Staples, which is

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Speaker 1: bouncing around at lower levels, down just the quarter of

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Speaker 1: percent at the moment. The largest US office supply retailer

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Speaker 1: forecast fiscal second quarter revenue will drop from a year ago.

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Speaker 1: First quarter sales at Stories over more than a year

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Speaker 1: fell more than analysts expected. The revenue and ernies beat

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Speaker 1: us this course, the results coming out on the heels

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Speaker 1: of the Staples failure to go ahead and buy office depot. UH,

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Speaker 1: you got a couple of cable stocks lower. Discovery Communications

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Speaker 1: down three percent, Scripts Network Interactive down three and a

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Speaker 1: half percent. Both cut the cell from neutral at City Group.

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Speaker 1: The call reflected the prospect that the online video service

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Speaker 1: Hulu will start a new sports centered version next year

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Speaker 1: that omits Discovery and Scripts channels. And you got some

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Speaker 1: takeovers in the works here, one of them involving the Anderson's.

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Speaker 1: This is a grain and ethanol company. It's up twenty

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Speaker 1: eight percent. The Anderson's rejected to takeover offers from former

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Speaker 1: headsbriand manager Phil Falcon's HC two partners UH the understand

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Speaker 1: one listened proposals. The closed after H two one second

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Speaker 1: one public like yesterday van at one point four billion dollars,

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Speaker 1: and I'll give you in contact, which is UP that's

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Speaker 1: a provider of internet based customer service software. They accepted

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Speaker 1: a ninety million dollar offer from Israel's Nice Systems and

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Speaker 1: Nice up two in US trading. David Wilson, thank you

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Speaker 1: so much. Greatly appreciated UM on the gyrations of the moment.

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Speaker 1: Wells Fargo, with the leadership of John Sylvia and Economics

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Speaker 1: UM has provided a steady hand on the tiller. Eric

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Speaker 1: Valoria UH works in the undisciplined area of foreign exchange

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Speaker 1: at Wells Fargo. What do you do every day for

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Speaker 1: Wells Fargo clients? Is it talking about earnings adjustments due

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Speaker 1: to currency? Is it the hedge trade or is it

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Speaker 1: the outright speculation of where to make money? UM, it's

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Speaker 1: mostly I would say hedging. You know, a large portion

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Speaker 1: of the clients we talked to our corporate so we

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Speaker 1: look at markets on a daily basis. We look at

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Speaker 1: what's driving currency movement, whether it's the fundamentals, the positioning, UM,

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Speaker 1: you know, to a lesser extent, the technicals as well.

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Speaker 1: So there there's a lot that goes into our our

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Speaker 1: currency forecast right now. Probably the main drivers of currency

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Speaker 1: movements is monetary policy, and that's been consistent throughout UM.

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Speaker 1: Not monetary policy action at the moment, but monetary policy,

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Speaker 1: monetary policy expectations. Well, we saw the dollar rise significantly

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Speaker 1: into the December FED meeting, go up a little bit

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Speaker 1: after that, and then go back down again. It's gained

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Speaker 1: a little bit of altitude. But you're suggesting is the

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Speaker 1: trend is not going to continue that, But we are

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Speaker 1: about where we're going to be. Well, we think that

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Speaker 1: the dollar could weaken a little bit further in the

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Speaker 1: new yor tweaking, yes, and that would be consistent with

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Speaker 1: currency market behavior surrounding the initial rate hike and the

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Speaker 1: FED tightening cycle. So when we've looked at the past

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Speaker 1: three FED tightening cycles, what we notice is that in

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Speaker 1: the weeks and months ahead of that first initial increase,

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Speaker 1: the dollar strengthenings somewhere around two to five and then

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Speaker 1: in the about roughly six months following, we see weakness

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Speaker 1: in the US dollar. And this is looking at the

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Speaker 1: fed's major currency index, and those declines are anywhere from

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Speaker 1: about three and a half to nine percent. Right now,

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Speaker 1: the dollar is down roughly five percent from the peak there.

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Speaker 1: And this is consistent with overall currency market behavior following

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Speaker 1: the FED. So that when we read a minute to

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Speaker 1: the Fed today, we should expect the FED officials to

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Speaker 1: understand that and to not be telling us they're wringing

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Speaker 1: their hands over the value of the dollar. Well, I

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Speaker 1: would say that the dollar is probably one of the

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Speaker 1: lesser considerations for Federal Reserve policy. You know, we know

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Speaker 1: that they have a dual mandate of achieving maximum employment

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Speaker 1: and price stability. And it looks like there is steady progress,

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Speaker 1: at least on the labor front. Um signs of inflation

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Speaker 1: are starting to pick up a little bit. We think

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Speaker 1: the Fed raises interest rates later this year, once in

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Speaker 1: the third quarter and then possibly again in the fourth quarter.

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Speaker 1: We think that as markets adjust to the repricing of

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Speaker 1: the expectations of the Federal Reserve, that the dollar would

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Speaker 1: regain its strength. And you do, well, you we're gaining

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Speaker 1: in Well's far ago is the bet? Where's the bet

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Speaker 1: right now? Where is consensus just on all big one

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Speaker 1: side of a trade? Uh? Well, consensus right now is

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Speaker 1: we think that the dollar um again. We think the

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Speaker 1: dollar could display further corrective weakness. We would be buying

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Speaker 1: dollars on dips. We think eventually the dollar turns around.

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Speaker 1: We we would expect it to regain some, if not all,

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Speaker 1: of the losses it's seen from earlier this year, primarily

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Speaker 1: due to you monetary policy expectations, eventual resumption of fat

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Speaker 1: interest rate hikes, as well as some strengthening in US

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Speaker 1: economic data, which we start to see a little bit

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Speaker 1: of recently, with the economic activity, retail sales, and industrial

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Speaker 1: output performing well recently. What are people betting on in Europe?

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Speaker 1: I mean at this point, um, the numbers that the

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Speaker 1: data aren't great, but it doesn't seem to be an

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Speaker 1: expectation that the European Central Bank is coming back soon, right,

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Speaker 1: And that's because the European Central Bank is implementing ask measures.

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Speaker 1: So we know that they have recently adjusted their quantitative

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Speaker 1: easing program to include more purchases UH, broadening UH composition

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Speaker 1: of purchases. We also know that the next t L

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Speaker 1: t r O program has yet to be implemented. So

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Speaker 1: while the European Central Bank is in the process of

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Speaker 1: implementing these measures, it's unlikely that they would announce any

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Speaker 1: new measures unless there's a significant deterioration in the inflation.

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Speaker 1: You have fair value in euro quickly here, Um, we

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Speaker 1: we would expect the euro probably should be a little

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Speaker 1: bit weaker than where it is right now. UM. Overall,

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Speaker 1: we think that it could strengthen somewhat. And you know

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Speaker 1: there are other market UH inter related market dynamics at

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Speaker 1: place such as you know if Euro being a funding currency,

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Speaker 1: tends to strengthen when there's periods of equity market volatility.

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Speaker 1: But overall, we think the euro is closer to the

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Speaker 1: top end of its range and we would expect it

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Speaker 1: to to weaken over the medium term. Eric Floria Wills

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Speaker 1: Fargo with us this morning. The down negative vics fifteen

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Speaker 1: point eight three, the yield higher. This has become important

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Speaker 1: now even the tenuere or the lift one point seven

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Speaker 1: two stents spread widens out fractionally. Uh this morning oil

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Speaker 1: not to fifty dollars a barrel this morning. This hour

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Speaker 1: churveillance brought you by BMW mon Kisco. Visit BMW Kissco

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Speaker 1: dot com. Here's Michael bar with the latest news headline,

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Speaker 1: Thank you very much. Mind. Bernie Sanders as one Oregon's

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Speaker 1: Democratic presidential primary. While rival Hillary Clinton has declared victory

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Speaker 1: by a razor thin margin in Kentucky, it is still

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Speaker 1: officially too close to call. In the Bluegrass state, Sanders

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Speaker 1: is vowing to stay in the race until the end.

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Speaker 1: Cybersecurity experts are warning that hackers are becoming more sophisticated.

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Speaker 1: Speaking at a forum today in Washington, d C. James Clapper,

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Speaker 1: the Director of National Intelligence says there are several groups

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Speaker 1: that pose threats to the US. Criminal's activists collective was

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Speaker 1: like anonymous are all thrown in together with aggressors like

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Speaker 1: North Korea and Iran, and with the Russians in the

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Speaker 1: Chinese or a much more sophisticated and could do real

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Speaker 1: damage if they were so inclined. The UK opinion polls

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Speaker 1: shows the biggest lead in three months for remaining in

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Speaker 1: the European Union. The survey for London's Evening Standard newspaper

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Speaker 1: shows of those polls say the vote to stay in

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Speaker 1: the twenty eight nation block when the referendum comes June,

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Speaker 1: back the so called Brexit. We're on Decided Global News

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Speaker 1: twenty four hours a day, powered by our two hundred

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Speaker 1: journalists more than a hundred fifty news bureaus around the

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Speaker 1: world at MICHAELA bar and Michael, thanks so much, Procter

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Speaker 1: and Gamble, Church and Droy Would they make huge move

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Speaker 1: in Church and Dright c h D. This morning's given

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Speaker 1: back stern a g out with his terse note PNG,

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Speaker 1: Church and Right, potential deal unlikely from New York. This

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Speaker 1: is Bloomberg, This is survalance. Bloomberg surveillance is brought to

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Speaker 1: you by National Realty Returns on cash in rented real Estate.

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Speaker 1: Find them at n R i A dot them. Global

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Speaker 1: business news twenty four hours a day at Bloomberg dot com,

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Speaker 1: the Radio plus mobile lact and on your radio. This

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Speaker 1: is a Bloomberg Business Flash and I'm Terro at Moscow.

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Speaker 1: This updates brought to you by American Arbitration Association. Business

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Speaker 1: Financial markets reawakening to the risk of the Federal Reserve

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Speaker 1: expediting interest rate increases, lifting the dollar while crimping emerging

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Speaker 1: markets and commodities. US stocks are sliding for the fifth

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Speaker 1: time in six days. We check the markets every fifteen

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Speaker 1: minutes throughout the trading day on bloomberg S and P

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Speaker 1: five hundred down two tenths per cent or three points

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Speaker 1: to three down, John's Industrial Average down three ten percent

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Speaker 1: or fifty points to seventeen thousand, four hundred seventy nine,

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Speaker 1: and then as Deck up a tenth of a per

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Speaker 1: center five points to forty seven twenty ten year Treasury

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Speaker 1: down nine thirty seconds. The yield one point eight zero

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Speaker 1: percent yield on the two year point eight four percent.

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Speaker 1: NIMEX s crude oil up four ten percent or seventeen

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Speaker 1: cents to forty eight forty eight of arrow Comex School

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Speaker 1: down a tenth of a percent or a dollar forty

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Speaker 1: to twelve seventy five fifty announced the euro a dollar

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Speaker 1: twelve seventy three. The end one oh nine point five

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Speaker 1: four target down almost ten percent at sixty six dollars

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Speaker 1: fifty cents of share is after reporting quarterly sales at

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Speaker 1: missed analysts estimates and it delivered a disappointing forecast. Lows

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Speaker 1: is up two and a half percent. It posted first

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Speaker 1: quarter profit that beat analyst projections, reinforcing the notion that

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Speaker 1: Americans are still willing to spend on their homes. And

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Speaker 1: that's a Bloomberg business flash, Tom and Mike Karenough thanks

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Speaker 1: so much. I'll put the chart out on Bloomberg Radio Plus.

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Speaker 1: That's a good place to see it. It's down, it's ugly.

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Speaker 1: It's basically back to its peak of two thousand seven

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Speaker 1: pre ugliness. So the bullmark has given it back to

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Speaker 1: the peak of two thousand seven sixty six for sure. Nevertheless,

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Speaker 1: a very difficult months for target. Eric Valoria with US

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Speaker 1: with Wills Fargo. I'm gonna rip up the script here.

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Speaker 1: I want to talk philosophy first and then apply it. Eric, Um,

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Speaker 1: how do you use technical analysis working? For some would

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Speaker 1: say the arch fundamental shop of John Sylvia. If you

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Speaker 1: start talking momentum or moving averages to Sylvia throw his

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Speaker 1: Red Sox baseball at you. Well, you know, I would

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Speaker 1: say that technicals are are probably one of the elements

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Speaker 1: of of analysis that we um look at, but to

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Speaker 1: a lesser extent than say fundamentals, the positioning um, you know,

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Speaker 1: other intermarket relationships, um. But technical still do provide value

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Speaker 1: and that you know, when you're looking at you know,

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Speaker 1: overall trends or looking at you know ranges, you know,

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Speaker 1: then you can get some sense as to um, you know,

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Speaker 1: what the overall market sentiment is doing in addition to

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Speaker 1: the positioning data. Uh, and you can get a sense

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Speaker 1: of you know where potentially the turning points. Okay, the

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Speaker 1: turning point for Aussie was late April rolls over strong

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Speaker 1: US dollar weak Australia And I'm gonna call it well contained.

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Speaker 1: I don't know if I'm loading the boat strong US

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Speaker 1: week Australia. But all of a sudden, looking at the

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Speaker 1: screen and up with this out folks on Bloomberg Radio Plus.

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Speaker 1: I have a lovely and beautiful, elegant chart lining up

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Speaker 1: beautifully with moving averages. Less beautiful with something called a

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Speaker 1: d X d M I. But it's a pretty good chart.

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Speaker 1: Tell me about weak Australia. Well, in addition to the technicals,

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Speaker 1: most of that was driven by fundamentals. So in the

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Speaker 1: first quarter we saw weaker than expected inflation data. This

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Speaker 1: led the Reserve Bank of Australia to cut interest rates.

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Speaker 1: Their expectations at the Reserve Bank of Australia could continue

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Speaker 1: to cut interest rates later this year. So you know

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Speaker 1: that all points to a weakening Australian dollar and when

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Speaker 1: the technicals match up with that, then it's just it

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Speaker 1: is a better picture of it. And so within what

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Speaker 1: you just said, can you get a conviction or belief

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Speaker 1: or institute a trade given how the known world is

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Speaker 1: so range bound? Uh? Well, you know, with regards to

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Speaker 1: the trade, we would expect the Australian dollar to remain vulnerable,

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Speaker 1: especially if the Reserve Bank of Australia could ease policy further,

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Speaker 1: and that is a distinct possibility, especially if commodity prices

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Speaker 1: UH remain contained. You know, there has been some recovery,

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Speaker 1: some rebounding commodity prices. We think that's probably gonna be

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Speaker 1: limited going further. UH And because of this, you know,

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Speaker 1: this could then lead to some softening and economic fundamentals

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Speaker 1: in Australia. If China continues to soften as we've seen recently,

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Speaker 1: that's also going to put some downwards pressure on the

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Speaker 1: Australia end dollar. So overall we would expect some further

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Speaker 1: weakness in the Australian dollar. UH. Then, you know, bringing

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Speaker 1: it back to the technicals, you know, we will look

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Speaker 1: at the charts to see where support wars resistance UM

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Speaker 1: and and use that to determine potentially, you know, some

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Speaker 1: points where where we could go to help me. And

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Speaker 1: there can't be a well's furgo discussion without the New

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Speaker 1: Zealand dollar. Mr Bennenbrook, who I believe your deaths about

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Speaker 1: each other is the acclaimed foreign exchange strategists from down Under?

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Speaker 1: Down Under? Do you guys talk about the New Zealand

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Speaker 1: dollar all day? Even if you don't mention it the clients,

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Speaker 1: I wouldn't say all day, but we do talk about

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Speaker 1: it and is it's true he wears all black like

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Speaker 1: four out of five days, not at all. But um,

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Speaker 1: you know, with regards to New Zealand, we have seen

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Speaker 1: some easing as well from the Reserve Bank of New

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Speaker 1: Zealand UH this year. Now they help policy at the

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Speaker 1: last meeting. UM there is some scope for further easing there.

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Speaker 1: So we think there could be some further downside in

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Speaker 1: the New Zealand dollar as well, maybe to a lesser

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Speaker 1: extent than the Australian dollar. But if you were to

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Speaker 1: look at the other side of you know, the Australian

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Speaker 1: dollar U S dollar than New Zealand dollar US dollar

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Speaker 1: currency pairs, you know most of what's driven driving that

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Speaker 1: is also the U S side of things and US

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Speaker 1: monetary policy and economic fundamentals in the US. So in

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Speaker 1: that context, you know, FED rate rate hike expectations are

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Speaker 1: low right now, they're rising a little bit. We think

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Speaker 1: they could rise further and if the market expectations start

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Speaker 1: to more closely align with what we've been hearing from

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Speaker 1: FED officials recently saying that they could go maybe two

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Speaker 1: times this year, then we would expect the dollar to

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Speaker 1: regain some of the strength that it's lost since the

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Speaker 1: initial rate hike in December. How do you use a

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Speaker 1: basket of currencies at Will's far Ago? People love to

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Speaker 1: say by these four pairs, six pairs whatever to blend

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Speaker 1: things out. Well, to me, that seems awfully expensive. Yes, So,

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Speaker 1: so with regards to the baskets, I mean, we we

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Speaker 1: look at the U. S. Dollar broadly, We look at

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Speaker 1: the FEDS Major Currency Index UM. You know, the Fed

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Speaker 1: has three dollar indussies UM. Primarily we're looking at the

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Speaker 1: Major Currency Index UH and its behavior around you know,

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Speaker 1: some of these policy moves and its behavior around some

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Speaker 1: of the some of the data and the trends UM.

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Speaker 1: You know. So with regards to that, you know, most

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Speaker 1: of most of that UH FED Major Currency indexes Europe, Canada, Japan,

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Speaker 1: and you know that represents a large portion of of

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Speaker 1: you know, trade that that goes on. Eric, thank you

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Speaker 1: so much, greatly appreciated. Eric Valoria works with Mr Stump

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Speaker 1: for Mr Sylvia over Wells Fargo. Do you guys take

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Speaker 1: down the all black paraphernalia? When John Stump shows up

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Speaker 1: and I'm trying to do tool. He hasn't he hasn't

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Speaker 1: come through the office yet. My experiences, most executive officers

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Speaker 1: avoid foreign exchange like the plague. There could be no

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Speaker 1: good being done within that criminal activity or Valoria Wells Fargo.

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Speaker 1: Thank you so much to have you back. Um So,

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Speaker 1: John Tucker, we have what what's great is a report

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Speaker 1: from people that really have a pulse. Joe Feldman over

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Speaker 1: a Telsey advisory group just publishes on Target softer consumer

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Speaker 1: trends into the next quarter. He makes it clear there's

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Speaker 1: no surprise the sites of Macy's North, some coals gap

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Speaker 1: with their slowdown, and of course it folds over the target.

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Speaker 1: Listen to this, John. We maintain our view that several

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Speaker 1: structural initiatives a target could fuel future improvement the Their

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Speaker 1: price targets are under review for the conference call, which

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Speaker 1: happens in thirty three minutes. Anything that I can get Target,

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Speaker 1: I can get at Amazon exactly, and I bring it

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Speaker 1: on us. I've got a huge regard for Telsea and

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Speaker 1: Dana Telsey and Joe Feldman and the rest. I'm absolutely

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Speaker 1: dumb founded how you and I live this and others,

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Speaker 1: and yet in most south Side reports they never mentioned

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Speaker 1: the A word in retail. I don't mean to pick

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Speaker 1: on Joe, but but it's as if Amazon doesn't exist

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Speaker 1: within the quick analysis and a very professional analysis that

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Speaker 1: you see from some of these people. And I would

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Speaker 1: suggest that particularly my area where there is a target,

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Speaker 1: that they're really targeting that area, so to speak, Amazon,

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Speaker 1: Amazon is targeting no pun intended. Yeah, I mean it's

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Speaker 1: a free fall, folks. It's a sixty six seventy three down.

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Speaker 1: I don't have a percentage in front of me, but

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Speaker 1: it's it's about eleven percent on my ball. Excuse me,

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Speaker 1: I'm gasking a gas figure from the top April twenty.

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Speaker 1: It's only it's old little bear market down in the

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Speaker 1: top on target and it's back now breaching loads of

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Speaker 1: January as well. And then comes that question is that cyclical?

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Speaker 1: Who wards it's something else or with the retailer. I

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Speaker 1: think most of our listeners would say it's the A word,

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Speaker 1: because you know, one of the new you know, homeowners

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Speaker 1: policies at Nationwide is tripping over the Amazon boxes. It's

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Speaker 1: like on your liability. I don't know where they come.

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Speaker 1: I didn't order them, but I noticed that my credit

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Speaker 1: card bills going up and if your kids also discovered

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Speaker 1: Amazon movies you're looking at hopefully they're not listening, so yeah,

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Speaker 1: but but you get these little three dollar six dollar

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Speaker 1: love notes that I should have quote on when Bailey

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Speaker 1: asked me, Dad, what's the security code on your credit card?

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Speaker 1: What's three digit thing on the back? That is the

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Speaker 1: kiss of death? John Tucker with us as you look

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Speaker 1: at uh Target, Joseph Felban, thank you so much for

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Speaker 1: sending along that report with Telsey Advisor Group and Mr

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Speaker 1: Feldman and I'm sure his colleague in crime, Dana Telsey

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Speaker 1: will look towards at Target press conference. Bloomberg will cover

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Speaker 1: that indeed, tail look for our coverage through the morning

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Speaker 1: and in the afternoon on a most tough retail section

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Speaker 1: at the down negative vics fifteen point seven three. The

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Speaker 1: yield higher now by a full five basis points one

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Speaker 1: point eight two. That's been the shift of the week

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Speaker 1: so far, higher yields, dollar churning in the market. We

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Speaker 1: are produced by y U n Ken Folio, our global

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Speaker 1: technical director. It's Bloomberg Surveillance