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The First Look - Andy Cinko, Bloomberg News

Jun 29, 2012|

Bloomberg's Andy Cinko from Bloomberg News gives us The First Look into the market.

Transcript - Not for consumer use. Robot overlords only. Will not be accurate.

Good morning and welcome to the financial exchange barrier during June night with you. On a date where you can say to yourself. Boy I'm glad I didn't sell all my stocks I'm glad I'm still invested. Because the futures. I I can't remember the last time June that I saw the Dow futures up 200 points if it then our. Really long time -- -- -- party like it's like 2099. And a half court 2007 or 2006 they. That's we've got going on also S&P is up Tony won NASDAQ up 41 oil trading. Up three dollars eight cents to 87. 310. To 1593 -- senior US treasury gets up slightly to one point 659. Why lie somebody tell us well it's all about Europe and argued -- DC goes gonna bring us up to speed in the holy -- we got we got kind of a Smith that this yesterday didn't we have 3 o'clock. Yeah we yeah we did indeed it it was in that there had been some sort of breakthrough at at the summit and yeah added that it would it would looking like. We definitely good news out of out of Europe the level of let's call it cautious optimism and he. -- about it unit that needed no the last time out each rep 200 points well it really wasn't that long ago due fourteenth. Europe that 206 point. June 12 200 points and if you remember that Beijing next it was up as much as 257. Point so we had a bunch of these days. Recently what if that's Wednesday. Yeah let's see if it has legs now let's explain to our audience because you know it's it's a I don't know that it's if it's not something that you talk about it a cocktail party typically don't know what the Europeans. Agreed to last night. Yet the key here is this European bail out on so they're gonna do two different things with this bailout fund at least what they'd like to deal. First of all -- let banks in Europe are directly on this bail -- -- so this is new and different and good because. Prior to this agreement the banks would have had to go to Spain the Spanish government what the Italian government. And -- those government would have had to go and borrow from the bail -- fund. That eliminates that middleman that's good because direct funding into it definitely down. On the deficit of those countries though. Upon the face Spain or Italy now look much more attractive. Because the bond investors are not suddenly going to be. Dumped on a lot more debt the second key thing. With this bailout fund is that the and and both by the way the ballot on did not up and running yet. Is that they will apply for a banking license and if they get up banking license that means they can all that the bailout fund can also borrowed directly from the European Central Bank now the European Central Bank like that that can just print as much money is it like -- And because they can do that this bailout plan and I certainly goes from paying a at least 500 billion Euro -- you know like trillion or two trillion dollars which makes it look much more likely. Now there's now enough money. Around to bail out the European banks directly. You know the sovereign will still be in trouble. And -- have a lot of work to do but at least the banks won't be loaded down on top of the bombs that say against Spain or Italy. And this is really Angola Merkel caving -- cheap cheap caved. To a lot of pressure. From other countries including the United States. In order to get this deal done and we are seeing this morning as I understand it Indian Eaton gives some quote if he can. But the Spanish and Italian bond yields are declining rapidly. Huge rally I mean just enormous here and it it is it is again good news sports Spain. -- yields are. Down to -- had such -- big thing yes six point corporate. Percent you know that's down 42 basis points the that was above 7% yesterday now what six and a half and at seven with a Q level that were a lot of bail out have been instituted. In Italy same thing we're down 33 basis point now yielding five point 83% on a ten year Italian bond. Yet as to what seemed occurred cable little bit here she is not however giving in on what's known as eurobond -- joint European bond. And same thing now I know this is the same thing goes and. Are the things. Different businesses are the bailout fund -- answer the bailout fund has been set up by contributions from heat to the EU members you know intuit then and again the banking license. Would let that spell out on the you know essentially a bank and borrow lots and lots of money but B. And it's if you will from any individual European country. The thing I didn't understand is why the Euro was rallying in value of the Euro up to a dollar 26. Gold is also rallying at 43 dollars up 43 dollars an ounce. He put that together for -- at above your anger at the fact that -- -- -- one. It is that didn't the you know -- have been pretty much more like a risk accidentally call about all -- it -- much more. In line with stocks and and the Euro. Lately than than anything else and so we're seeing rallying with gas that stocks commodities the Euro and about has gold at the morning but let let let that caution about the Euro. A lot of headlines have been out about. You know a huge rally at one point seven. You know the Euro was hired two weeks ago -- currently is -- and it is still very much stuck in the middle of really bad bear market you know the Euro was worth. 150 in the summer of last year -- now 127 and it has just been a straight line down your Barry. And that frankly it doesn't make it above say 130. It is still stuck in -- and the grinding bear market though it is not an all clear sign here it's just kind of a better day a place that. Cautious optimism seems to be be afraid that around -- summit. Well it may be cautious optimism but I'll tell you Wall Street certainly not cautious and this is a quiet trading day to the gators a lot of guys that are already out on the Hamptons so the at the end stocks are trading up a whole lot so yeah I get -- -- -- I I -- I look at this as at least there's a light at the end of the tunnel I'm optimistic. -- it it has that feeling to Italy we had somewhat of a road map but you know we've been here before so. Let's not count our chickens before they. All right Andy thanks for joining us. Folks I was into -- joining us from Bloomberg TV in new York and June I at a -- that isn't. What happened last night was huge days AG in Germany had been holding out opposed to this. For a long time they -- last night this is big for the eurozone and the proof that it is that. -- -- you've got these bond yields coming down the other thing that I'll be very curious to see is this is where JPMorgan lost -- -- this is it was on this trade. That JPMorgan lost all their money and yesterday we were reporting that their losses could be as much as nine billion dollars. This trade if it was going on right now is -- Jamie diamonds rear end right out of the fire with a little bit. Definitely vision that --