unicredit is blowing past the highest expectations. bank is boring ahead. -- is roaring ahead. it was raining on my way to work this morning. it is now sunny. next, the british retailer really benefiting, despite we tell not looking that good this morning. next trading up by 6.25%. a decent day with the market sector out of the u.k. we are joined by tom keene later on in the morning. i am going to join of mark radio.on bab digital that is next. this is bloomberg. ♪ mom you called? oh hi sweetie, i just want to show you something. xfinity mobile: find my phone. [ phone rings ] look at you. this tech stuff is easy. [ whirring sound ] you want a cookie? it's a drone! i know. find your phone easily with the xfinity voice remote. one more way comcast is working to fit into your life, not the other way around. retail. under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent

interviewxclusive with unicredit ceo. markets and not draw a parallel between now and the european sovereign debt crisis, but is that a view shared by analysts today? clearly bond markets have gotten jittery. certainly not by investors. his comments were appreciated probably by the bank of italy governor who made his annual address today at the general meeting. some of his counterparties, for example the -- have made similar comments. , butundamentals are ok italy is still lagging its peers in terms of growth. the consumer sentiment numbers that came out this morning were not terrific. corporate clients are happy, but at the end of the day, it is difficult to argue that this political uncertainty is going to stop in 24 hours. we still do not have a what is appearing more likely is that there will be an election in 60 days roughly with that outcome very similar to what worried investors just to what worried investors on march 4. deficit isht now the only 2.3% of italy gdp. is it something like what's the next prime ministe

we saw a bit of a recovery unicredit is up 1% banco bpm up 2%. enel down 0.53 telecom italia also having a relatively negative start to the day. let's talk italian bonds we've seen so much activity there. you can see the pricing there is improving in terms of the bonds selling off early in the week. the two-year there is now yielding 1.99. the ten-year is at 2.698 in terms of italian politics driving that, italy prime minister designate is allowing more time for the parties to form a government. cottarelli said new possibilities for the birth of a political government have emerged, this is an indication that a compromise between mat really and the two parties may be reached and louis dimaio had ridge naturally vetoed sivona's role on sunday night, but now says he may have a cabinet role. >> we have a cabinet lined up. we have a candidate for prime minister in goo siuseppe conte. i'm making this proposal publicly because citizens have to know first. let's see if we can resolve the situation, but not with someone who is friends with ratings agencie

you are looking at five to 10 points, depending on currency down for a name like unicredit.t does not seem like you are unicredit. -- it does not seem like you are seeing enough selling pressure yet. you have to to start looking at when you start scaling into a position. jonathan: everybody is sticking with me, henry peabody, matt brill, and lisa abramowicz. coming up, the auction block. vodafone, holding the second largest corporate bond sale this year. that conversation is next. this is "bloomberg: real yield." ♪ jonathan: i am jonathan ferro. this is "bloomberg: real yield." i want to head to the auction block now. the united states treasury auctioned more than $270 billion of bonds this week. i want to highlight the two-year auction, 2.95%, the highest level since july 2008. the share for primary dealers was the highest since december. on the corporate side, vodafone selling $11.5 billion of bonds to help fund the acquisition in the second-largest u.s. corporate bond sale this year. this year, a 30-year security yield, 2.15 percentage points on the treasury. $300 million

you are looking at five to 10 points, depending on currency down for a name like unicredit.t does not seem like you are unicredit. -- it does not seem like you are seeing enough selling pressure yet. you have to to start looking at when you start scaling into a position. jonathan: everybody is sticking with me, henry peabody, matt brill, and lisa abramowicz. coming up, the auction block. vodafone, holding the second largest corporate bond sale this year. that conversation is next. this is "bloomberg: real yield." ♪ jonathan: i am jonathan ferro. this is "bloomberg: real yield." i want to head to the auction block now. the united states treasury auctioned more than $270 billion of bonds this week. i want to highlight the two-year auction, 2.95%, the highest level since july 2008. the share for primary dealers was the highest since december. on the corporate side, vodafone selling $11.5 billion of bonds to help fund the acquisition in the second-largest u.s. corporate bond sale this year. this year, a 30-year security yield, 2.15 percentage points on the treasury. $300 million

erik nielsen of unicredit still with us.en it comes to construction, may be because of the snow factor p the pmi numbers today, does it change the storytelling? is there something more worrying in the trajectory of u.k. growth? erik: i think there is. we do not know what share of underperformance was part of the weather come up but it was part of it. it was an awful number. almost at a standstill whereas the rest of the world was doing well. -- a lotot the numbers of volatility in these type of numbers. it is impossible to escape the conclusion that something is not going well in the u.k. economy now. francine: what does it mean for the boe? we were at the world bank imf meeting. it was clear that mark carney, after the market was 90% pricing in a right height, wanted to talk the market down. does he lose credibility if he hikes? erik: he cannot hike now. he would evidently lose credibility. his problem is whether he could come almost like a cliche, where you hike or you should not have hiked in the past. we work surprised,

unicredit the bounceback after a big drop. concern initially mounted. seemed to alleviate with the collapse of this populist government. some a tie-in stocks up. the ftse as well as are some of the biggest gainers. here are the biggest losers on the stoxx 600. max dropped 20%. ab dropped 20%, a fifth of its value. buyer -- bayer going dividend as well which is why you see the red on the screen. thank you -- juliette: populist leaders pull the plug in their attempt to form a government after the president on ated their choice germany bashing candidate as finance minister. the five-star movement said it would consider impeachment. anti-immigrant league leader hinted at a conspiracy and made a thinly veiled call for fresh elections. the euro has rallied against the dollar. trump hasdent donald appeared to confirm that his summit with kim jong-un is back on. he tweeted that a united states team has arrived in north korea to make arrangements. i truly believe north korea has brilliant potential and will be a brilliant economic and financial nation one day. i

a serious sea of red a lot of banks taking a pounding unicredit down more than 4%. even fiat chrysler down. intesa sanpaolo is down also some staggering number there's in terms of trade. looking at one of the biggest falls eurozone bank stocks generally at the lowest level since january of 2017. in terms of the yield knitly, the yield on the two-year hit the highest level since 2013 that's at 1.968 on the two-year. ten-year at 2.25 those are some numbers to watch over the course of the coming days that's because president sergio mat really has appointed carlo cottarelli as an interim prime minister speaking after his appointment, cottarelli said elections would be held in the autumn or early next year and sought to reassure the public and investors about the finances >> a dialogue of europe in defense of our interest is essential and we can do better than before, but it must be a constructive dialogue and as italy is a founding member of the european union, our role in the union remains essential. >> andrea cabrini is in rome this morning you're outside the bank of

we spoke to the unicredit ceo. he said he is comfortable with his btp exposure. >> his message was very telling, in a sea of uncertainty. ks, theue is the ban reason why they are so sensitive to what is happening in the bond is because they own around $350 billion of italian sovereign bonds. around 10% of their total assets. this is a large exposure, and any movement in the bond market is going to affect them. that willtwo things affect italian banks. one is the impact on capital. equity tier one ratio is linked to the market of the bonds. when italian banks are still cleaning out their balance sheet, this impact on capital is not welcome. somehow, the valuation has reflected this impact. there is also a further, more longer term impact, the cost of funding. these banks will have to come back to market again, in a normal fashion, wholesale funding. this is an ongoing issue. the sovereign situation -- manus: can i ask you -- one of the things the market wants to understand, you talk about the market to market valuat

banks are relative to europe's, deutsche bank's trouble, now in unicredit, and when this all settles,vides no collapse, u.s. banks, again, look stronger than the european banks, and yet jp morgan stays up, and likes of goldman sachs, this volatility should ultimately help them, and they are not as tied to the interest rate curve as retail banks, and yet they are up sharply, so, again, provided we do not see calamity in the next month or two, not the base case, we might see trading revenues pick up, and, certainly, reason for the banks to play catch-up >> the vix popped above 18 to your point mike, thank you. >>> how are investors handling the moves? we have shannon from boston private wealth, doug, and jeff, welcome to all of you. doug, starting with you. >> thank you >> are you a buyer of the u.s. banks on this selloff? >> yeah, i mean, i think ultimately the banks are well-positioned. i think they are clearly down, rates drops from 3.1 to 2.8 it's about loan growth, credit quality, how long is the next recession out, and our feeling is that's well down the road, so things remain che

coming up in the next hour, unicredite mustier of joins us at 7:00 in new york. am scarlet who with francine lacqua. across bearishness global oil markets. longesthe losing streak since february. ianning us is jul lee. even with this change from saudi arabia and russia to start boosting supplies later this year, have goldman sachs maintaining their bullish view. the demand picture is still very robust is that out of consensus? at then't think it is moment, nobody really knows what size this output increase is going to be. total sees it as being a abandoning of the output deal. we are already losing half a million barrels a day venezuelan output. more expected. the sanctions on iran could take another half a million by the end of this year. that is one million barrels a day less production than the world was expecting. we still have white request oil demand growth -- quite robust oil demand growth. there is a strong argument that this is just taking back or replacing some of the oil that is lost. francine: should we be targeting a price? is there an optimal rise t

you are looking at five to 10 points depending on currency down for a name like unicredit. it does not seem like you are seeing enough selling pressure, yet. jonathan: everybody is sticking with me, henry peabody, matt brill, and lisa abramowicz. coming up, the auction block. the second largest corporate bond sale this year. that conversation is next. ♪ the united states treasury auctioned more than $270 billion of bonds this week. i want to highlight the highest level since july 2008. the share for primary dealers was the highest since december. on the corporate side, bonds to help fund the acquisition in the second-largest u.s. corporate bond sale this year. this week, hungary supply stopped junk-bond investors. triple c rated five-year-old they arelding 5% and trading above the issue price. outside of europe, the em crisis in turkey. take a listen. >> this is serious. i do not know that by itself, the central bank of turkey is going to be able to withstand this. >> when you have the administration saying they are going to take over the central bank, this is a country tha

unicredit up almost 2%. has raised some 5.6 billion euros in a bond sale. the cost of borrowing was significantly higher than the last time the country sold debt on the markets. this as investors fear of another election which could strengthen italy's populist and eurosceptic parties. investors are concerned about mr. cottarelli's ability to govern effectively. the head of environment of cooperation and of element says -- transitions in hase economies, the world, a tendency to spill over to the rest of the world economy. this is what we are seeing now. is competent, experienced, a seasoned financial and economic operator. so the government is going to be incompetent, safe hands. and of course it will be up to the italians to decide when it is that they would like to have new elections. genie: the uncertainty in italy is having an impact on other countries. stephen: increase, they are watching closely. itscountry is set to enter bailout prprogram and august off this year. the greek economy has been improving, but there are challenges for the people and the g

we spoke with the unicredit ceo who said markets are overreacting.ving the eurozone is something which is overdone and this is what has prompted the selloff. we should go back to reality. italy were not leave the eurozone. we need to look at that. joining us is dan dimicco, nucor president. today, do you look at it as an opportunity in italy or capitulation? dan: one of the things that folks look at is they can free write off market prices. that is telling me this is pretty significant. that is the biggest move we have seen in years. will it bubble over? it is hard to say. we should respect the force of the market price moving. inould take the other side saying that it is an overreaction. the starting point was a distorted central bank and impose negative yields. italy weeks ago had a negative two-year. i step back and i say, what are the banks doing? they are down a tremendous amount. yields have spiraled higher very as i read it and get caught up on a situation, it seems to me that as of september this could be more populous oriented. skepticism se

he over cut after the referendum, checking in way too much stimulus, and as a consequence, and unicreditumped, inflation has risen, and the economy has done well, but now he is in a situation where he is at tuned. take -- two lower rates they could be comfortable with after brexit. now he has talked us into a rate last year,eptember when they hiked in november, and said they would not do anything for a year effectively, and then again in february. they changed their mind again. vonnie: we have to leave it there, we have to go to the rose d.c. atn washington, the white house. president trump is about to make some remarks on the national day of prayer. [applause] president trump: we are truly a vice blessed to have president and a second lady who believe in the power of prayer and the glory of god, and they do believe. i am with them a lot. they believe. thank you, mike. thank you also to the members of the cabinet who have joined us today, along with so many amazing faith leaders from across the country, including my good friend paul a white, who has done such an incredible job. stand up.

they had of unicredit was on bloomberg tv today and he said the markets are being driven by fear, not by fundamentals. if calling words that some people are trying to issue. on the other hand, investors are zynga at markets are being driven by political uncertainty. vonnie: if the markets are being driven by political uncertainty, what are they saying? i they saying they want fresh elections soon? do they want to be rid of cargo color to rally -- carlo cardarelli who should technically be well able to handle this? four are they saying something else? kevin: they want stability. they see these elections as happily the populist parties may gain support. there's the issue of the a china president. for decades he was seen as the figure of stability, and soda who makes -- somebody who makes things run on an even keel. he will be challenged by street demonstrations. that kind of thing is making investors worried. caroline: talking about and investors staying worried, i brought up at shot i was trying to -- brought up a chart i was time to reference earlier. kevin, what are you talking to ab

unicredit down almost 1% similar moves from intesa sanpaolo >>> italian bond yields have marked their biggest one-day surge since march 2017 after the leaders of the five-star movement and lega spooked markets with a defiant response to concerns around a draft proposal jitters around the plans to negotiate sovereign debt repayments and rules underpinning the euro overshadowed announce the mentsm officials from both parties signaling a joint program has been finished. mateo salvini dismissed the market reaction. >> the spread is rising. do you remember what the spread means? it's the game of finance, who sells, who buys. do you remember how the last democratically elected government was dismissed berlusconi's government that lega was part of the spread is rising, stocks is down europe is worried. washington is worried. berlin is worried, paris is worried. if the officials need to live in fic fear and worry, it means we're doing the right thing. >> among the policies expected to be sought by both parties is a reassessment of eu treaties, and there has been speculation around a potential

unicredit shares up by almost 2%. vonnie: it is fascinating, u.s. digesting a lot today from a geopolitical event to economic event and you can see those buying in stocks and treasuries, the 10 year yield holding steady at 2.97%. cpi disappointing a little bit this morning. the two-year yield at 2.52%, so 2-1010 spread is at -- the spread. the dollar is weakening at a stronger yuan on the idea we have a date and a place on the summit between the u.s. and north korea, june 12 in singapore. i thought i would throw in the vix just above 14, really tamping down on the vix. in spite of lots of geopolitical events and things happening around the world, the volatility index is not reflecting all the changes. italy inching towards forming populist government. kevin castillo, editor of the western european economy team joins us. how close are we to this much touted, but many thought low probability given disagreements in certain months. how close are we to a populist-led government? >> the two populist parties involved say they want to report back to the ita

create a business unit, and it's not only a fantastic deal from the deleveraging point of view >> unicreditd higher after reporting its best first quarter results since way back in 2007 net profit beat expectations, while revenues rose 44%. that w 4%. loan losses helped to boost performance for the first three months of the year >>> banco bpm shares are under pressure they cite an asset sale and rising interest income for the strong performance banco bpm added that its debt recovery business attracted interest from buyers >>> rbs shares are rising after the bank agreed to a smaller than expected settlement with the u.s. department of justice the deal mafshg marks the longg investigation into the sale of its securities it could clear the way for the british government to sell its 71% stake in the bank. any sale would represent as a loss to the british taxpayer of more than 20 billion pounds. >>> 21st century fox posted better than expected third quarter earnings the murdochs faced several questions during the call on the pending sale of the film and tv julia boorstin breaks down the numbers.

unicredit down 22% all in the month of may. how is that done comparatively to the other big european banks? one thing to look at is that, the eufn, the ishares european bank etf it had a lousy month, down 10% compared to what's behind us on the wall, you can see by comparison it's been a month to forget for european banks but in some cases doubly bad for the big banks in italy at least one guest says this downturn could ab buyibe a buyi opportunity. joining us is the editor of the bear traps report, and larry knows bad banks. i mean that with love and affection. yesterday you put out everything is terrible, maybe now is the time to buy. what are you recommending? >> you have to remember, we have an index of our 21 systemic risk indicators we built the index in 2010 they're rising at the fastest level in seven years the stress has been building deutsche bank has been in extreme stress for months now. so the ecb has some high awareness as to what is going on so the probability of some action out of the ecb, if you think about it,

we have coupled this on top of the deutsche bank issues, which adds to it you can see unicredit, monteei paschi is down 6%. intesa sanpaolo is down 5% these are banks we don't talk about much, if we are talking about them it's because they're important. as we mention, the euro hitting the lowest levels of the year against the dollar joining us to talk about this and everything else have doing with your money is jeff hirsch, chief market strategist at probabilities fund management. i know you're by no means a european political expert. what's the italian political section. >> they all follow the four-year cycle. >> with italy it feels more like the four-month cycle do you worry generally that what's happening in italy, what's happening with deutsche bank, there's a feeling that europe has got a bit of a contagion that could trickle over to our money? >> it used to be when france sneezes, europe catches a cold this is another thing where we're having more uncertainty out there. it's amazing this is happening in this may through october period and i do worry that it will affect the market

stocks are down almost 3%, just this week, dragged down by the banks, including ubi, banco bpm, unicreditaschi it still remains a top performer in europe of about 7% so far this year. that's the bigger story. let's also talk luxury very interesting story here. richemont, home of the cartier brand, down sharpry on disappointed earnings of excess inventory. that's become a big challenge for the company. kpt is buying back more than $200 billion euros of unsold watches from jewelers. swatch, you can see, down in sympathy as well an unprecedented challenge there. guys, back to you. >> that is a lot of inventory. >> it is they should send them my way. >> i'll join you in that. >> yes. >> seema mody back at hq, thank you. >>> churchill downs stock after a ruling to legalize sports betting. golden nugget casino in atlantic city to get into the gaming market joining us now for more in a cnbc exclusive churchill downs ceo bill karstanjen. >> what are the details of that partnership and are you speaking to other companies about similar collaborations >> the case in new jersey, brick and mortar lice

[indiscernible] unicredit, there's always consolidation rumors. very hard to the future is a struggle. that that hard to see would be allowed to happen. francine: do you like financials? please predict the future. andrew: i think it is a sector that still trades at a very deep discount. it also does have a growth story. long growth in europe is rising. cost inyou are seeing terms of default still being quite low. yields are higher this year. that is going to be a small boost. francine: thank you all for joining us. stephen morris, our u.k. banking reporter. ali and andrew sheets from morgan stanley. bloomberg users can interact with charts using g tv . andh up on key analysis save charts. take them, use them. this is bloomberg. ♪ economics, finance, and politics. this is "bloomberg surveillance ." let's get to the bloomberg business flash. here's nejra cehic. nejra: apple shares jumped after second-quarter revenue rose 16% on the year. the company sold more than 52 million iphones and announced a new $100 billion stock repurchase plan. the tec

a solid start at unicredit. much in the for with midnight -- malaysian elections. will get those latest results shortly but this is the picture on the asian markets. in thea markets not open main today but up by .5%. geopolitics in the focus. focusing on the mood music around the release of those north korean prisoners. nymexinutes up by 71% -- up 71% for the first time since 2014. on the risee dollar against the new zealand dollar, the kiwi falling today. central bank leaving the door open to a drop in interest rates as inflation remains fairly contained. oil,: investors are buying but not gold as much in relation to oil. i'm looking at the gold-oil ratio, the lowest since 2014. favor, falling out of part of it due to global growth and rising u.s. interest rates or at least the prospect of them. and a stronger dollar playing into this as well, overshadowing geopolitical tensions. where is the safe haven? it doesn't seem to be gold at the moment. tore was talk of it going up $1400. that perhaps scenes further way. this the lowest ratio since 2014. it does beg the q

exclusives an interview with the ceo of unicredit.eeting between north korea and the united states is back on. we will have more on that next. this is bloomberg. ♪ >> what you miss? hopefully the summit between north korea and the united states, trump has confirmed that he has sent his right hand man to north korea to talk. -- north korea is sending his right hand man to u.s. to talk. bill, from washington, great to have you with us. is this following a normal direction in the lead up to this momentous meeting if it does go ahead on june 12? >> we are only 14 days out from june 12. normally, we would have a lot better sense of what the deliverables would be from this meeting. and what both sides are really itching for. side thathe positive the representative is coming to new york to meet with mike pompeo, they will be trying to iron out the key differences over issues such as, oh d nuclear's asia and of -- of what clearization of what north korea looks like. the think after we were at end of last week wondering if this was going to ha

the best part of unicredit, which exemplifies what happened with many european financials yesterday and in this still tough time for value investing in 2018 is that stocks very -- vary. tangible book value, there is significant u.s. bank anywhere near that valuation. to get a good business recapitalized, raising payout for investors, well-positioned, operating across europe. and it is cheap. note, the charts on the g tv library show plummeting, also -- deeply in oversold territory. what happens if the ecb bond buying conclusion gets delayed because of these uncertainties in italy and spain? may not just be the other way around. we think the european central draghi, willrio likely want to leave having curtailed this negative short-term rate policy and stabilizing the euro zone. part of what is happening now in response to the concern about italy is the weakening of the concern -- weakening of the euro versus the dollar, which helps the central bank. -- we havecelerate two major central banks, the u.s. in a tightening mode and the european central bank tapering its monetary expansion

we welcome the unicredit cohead of strategy research.ith the governor of the bank of france about european growth. this is what he has to say about europe. the eurozone is robust. the last quarter of 2017 had a growth of 0.7% which was especially high. some type of stabilization at this stage, we think temporary factors are at work. agree with the governor of the bank of france? is growth robust at this point. >> i would tend to agree. inre are two it gradients this year -- there are does going gradients in this eurozone -- there -- there are two ingredients in the eurozone recovery. it has been sink resides -- it has been synchronized across all the members of the european union and we have had a rotation to higher investment. this is important. debt crisis, we have had a plummeting investment as a percent of gdp in the eurozone. back,now it is coming which means we are getting a robust recovery and at the same time it is still below 2007, 2008 levels. this means there is room for it to go higher. that is why we have gone through a soft

banks in europe, so that is -- >> that's saying a lot >> some of the swiss banks which are opaque unicreditaly is a bank where you can leave money overnight. >> at least one night. >> yeah. one night. the other ones are tougher. >> got it. >> because you have to be worried that the fbi see over in europe is not as good as their fdic. >> no, it isn't. as we pointed out many times they did not take the markdowns that they needed to, and they didn't have the stress test that people believed in, and any number of reasons and we did do things better than they did and they capitalized in the banking sector and took the hits >> it's hard to slam wells fargo in italy because wells doesn't have -- pnc was pushed hard and pnc's quarter wasn't that good >> why do we have to move one? this is an interesting discussion. >> we have people in our ear to tell us to move on >> no. i didn't go to college to -- >> we have to get to carl. he's in rancho palos verdes and he woke up very early and we have auto news coming up from a pair of billionaires, $2.25 million they'll invest in gm cruise. warren buffett c

we had the ceo of unicredit who says the markets are overreacting.g back today but do you believe the markets are overreacting to what happened? luigi: yes, i think of it in the short-term. why? over long on over long on italn the basis of reaching for yield. it is hard to get any yield in europe. italy is clearly one of the highest yielding securities, among government securities. that is a way that people are long on the italian bonds, not because they believe so strongly in italian fundamentals, but because in the short-term this was very convenient. toy were there but ready jump out at the first sign of a problem. when the first sign of problems came out, they rushed for the door. this might not be in the short-term and existential theis for the euro but italian situation is long-term problematic, is a problem that needs to be dealt. you cannot just kick the can down the road. the strategy for 10 years has been to kick the can down the road. eventually you have no more road to kick the can to. interim government forms over the summer and they cal

pronounced than need for the interest rate hikes so profitable at the moment and that's why you see unicredit10% yesterday because people are thinking, we're really kicking the can down the credit for when they'll make decent returns >> certainly that may be good news for the markets which are addicted to qe and love the stimulus but there's a difference between the -- the ecb is fairly limited on what it can do in terms of extra tools if this crisis does flare up it's already been buying boatloads of italian debt. >> the percentage of total issuance that the ecb has bought in its qe process is far higher than for japan and for the u.s so they don't have any tools left to reignite something like this if they need to i don't think there's the political will in germany. merkel doesn't have the power to hold back the afd or freedom party who are more right leaning and don't want the bailouts. she doesn't have the power to do that if we got to disaster scenario, the disaster would be severe we're not there yet. >> thank you michelle, see you a bit later. >>> joining us, former institute of intern