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tv   Bloomberg Markets European Open  Bloomberg  November 4, 2016 3:30am-5:00am EDT

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guy: welcome to bloomberg markets: the european union. we have your first trade of the day. ,hat are we watching today aretions and the greenbacks looking at their first weekly decline since september and the global stock selloff continues. this is of course as we wait for the last piece of data before the election. the u.s. jobs figures are out later today. will today's number of affect the feds rate schedule?
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restructuring losses. could it be worse? new plan management's deliver a pickup and profitability? we are less than half an hour from the european equity market. it does not seem to be abating. let us see where the fair value is. in the red once again. negative numbers. being posted here in europe this morning. the stock selloff shows no sign of abating. that is the fair value calculation. that is what it is telling me. let us walk around the board. turkish lira under pressure this as the president continues to crack down. that is having an effect. the yen is getting back a little bit of ground. the dollar is up. it is likely to be down for the week but it is trading up 0.1%.
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tell us continuing around the world. to mexico, to japan, to the ftse 100. the markets have been coming under pressure. the ftse 100 was up yesterday because of the court case and what carney said. let us get you everything you need to know with the bloomberg first word news. five days from the u.s. presidential election and a new poll shows the race narrowing. hillary clinton holding onto a slim lead to. in new york times-cbs poll found muchon ahead 45% to 42%, tighter than her nine point lead in october. a washington post tracking poll found clinton ahead with a , 45in of error, 47% percent. having lost ground to donald trump since last week. commerzbank swung to a loss.
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that is after the ceo unveiled the german lender's biggest overhaul since the global financial crisis. korea's president says she is willing to be questioned by prosecutors over her role in the influence peddling scandal. she has apologized to the nation again in a televised address. takeaid she would responsibility if any wrongdoing was found by investigators. yesterday, her close friend was arrested over allegations that she meddled in state affairs. turkish president erdogan has extended his crackdown on the opposition following the july following the july coup. the turkish lira has hit its lowest record on level. out from baseball
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could fetch as much as $3 million. according to the founder of the golden options in new jersey. the ball was pocketed by the chicago cubs first baseman anthony rizzo. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. this is bloomberg. u.s. but data from the probably more important to the spin doctors than it is to the federal reserve. another piece of data will be arriving before we get that december decision out of the fed. this is where the expectations lie at the moment. it will be interesting to see what the employment level comes in at. are we still sucking in people but maintaining a steady draw -- jobs level. will people hunkered down or clean up?
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that could affect the number in terms of what comes through. let us get a word on what is happening here. cohave the goldman sachs head. is the payroll important today? >> i think so. there is still some chance we will not see a hike in december and the payroll needs to be ok for that chance to diminish further. when i look at goldman sachs forecast for q4 16. it says 2%. >> 10-15 basis points is what is needed. guy: that much? that is not much. >> we have done the easy part of the selloff. we are in a super stretch environment. 180 would be the zone where we
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have to think harder with the election coming up. people do not want to put out risk. there is room to increase further. as we see actual inflation picking up. 2% does not look like that magic of a number to me. we were there in february-march. i think the global risks seem lower. so, it is a level that in my view is quite obtainable. guy: what has been going on in the last few days? stocks have sold off. the dollar has had a trip but not a huge one. how are people repositioning in advance of the elections? stocks are down. what do the correlations look like and how to they fit together in your mind? >> the election gap between the two candidates has closed and people are reducing risk. there is little appetite to spoil a year.
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the last two months have been a happy period for the market participants. the selloff has been well captured by many in fixed income and stocks in general held up nicely. emerging markets have not done terribly well. where the money has gone to my people have made money. and now with this uncertainty coming up next week, we are seeing a reduction of overall risk taking. guy: protect the books towards your end. -- if i look at a distribution curve of outcomes on treasuries regarding what happens next week, what do the tales look like? >> the tail is still to the downside. we could see the first move on a surprise from the election being that rates rally because the market will think, equities are going to suffer, and rates will rally.
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yield curve.of the i think that will be the wrong economy isecause the the economy and ultimately will take over but the initial reaction i think will be that on a surprise outcome next week. guy: what are your expectations regarding inflation? >> headline inflation we expect to do a big lead from here to next spring partly due to base fx but the underlying pace of inflation is growing. 2.5%, better than what we have seen for a while. core services, the more persistent part of cpi has a three handle in the u.s. we expect that to continue and we should see core pc closer to 2% at the end of 2017.
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guy: i am still struggling with how much of slack there is in the u.s. economy. ice hills the these numbers coming through and get the unemployment rate looks steady. people are being brought into the labor market. i am wondering when this process diminishes. and things become more punchy. will that happen? >> in our forecast, it happens. already today, we see the unemployment rate inching below 5%. and wages accelerating .3 on the month. of datathe sequence will point in that direction but it will be a sequence. the market will keep on trying to understand what is structural play in the label -- in the labor market for quite a while. guy: we will carry on our conversation. what do we have coming up for you? stick toay pledges to her brexit plan despite
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yesterday's ruling but is another general election in store? swinging to a loss, commerzbank posted a loss in the third quarter. we are in the middle of a management change it around, quite a big one. where do the prophet start to come through because of that? and later, a week from hell for the south african president. we will get the latest on the politics and the market action in joe berg. this is bloomberg. ♪
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guy: 70 minutes until the market open. let us get a bloomberg business flash. third-quarter profits rose as demands for its sports utility vehicles propelled sales in europe and china offsetting a slump in the u.s. earnings before interest climbed 1.1% to 2.3 8 billion euros. the company repeated that sales in its automated if -- automotive unit will/increases this year. a decline in first-half profit. sagey cfo will replace
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while the executive chairman will remain. this comes as the luxury goods , a 43%eported a profit fall from a year earlier. inro shares plunge after-hours trading after saying it expects a bleak holiday season. the camera taking company lowered its forecast for full-year sales and missed analyst estimates for revenue in the third quarter. it follows fitbit which lost to a third of its value after reducing its holiday forecast late wednesday. wonder has purchased dick clark productions. it has purchased the golden globe award and the pageant. the latest addition to the growing entertainment empire. that is your bloomberg business flash. the british government has
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said it would appeal yesterday's high court ruling on parliamentary approval to start the brexit negotiation triggering article 50, the supreme court hearing will be next month. we could get a result in early january. some analysts see more political upheaval ahead including the possibility of a general election. the odds on that have narrowed. let us walk you through a few charts. let us get an idea of what is going on. i want to start with guilt -- gilt. them august, we have seen rally. what is interesting is that to call gilt you have to call sterling. we subsequently have seen it going lower. -sterling -- this is an absolute return basis. gilts really being affected in
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their performance. it was hard to call gilts right now. how hard is it to call sterling? >> hard. what we have in mind is that we are going to stabilize between the 122-130 range which has been prevailing since the conservative congress. we have 126 in the near term as a place where the markets will take a risk. as you said, there is a lot of uncertainty, a general election may come up in 2017 to the market will want to see that unfolding before taking a view. fundamentally, we think it will go to 120. we believe the economy will slow. we have not seen that yet but we think it is coming. --also still have a forecast a lot of other houses on the street have and they believe
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that the bank will cut rates again in february. guy: listening to governor carney yesterday, he has pushed out point pain. rather than adown short-term slowdown. need to accompany this slowdown in the economy. we do not know what the fiscal authorities will do. maybe it is more powerful than we think and will take some pressure off of the bank. but i think they will want to cement the idea that rates will stay low and get the policy stimulus as much as possible through the banks into consumer waiting to that is happen in 2017. we have not seen that yet. guy: sterling is heavily shorted right now. is the market over doing it? in thes to be pricing
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worst-case scenario. am i wrong or right? ,f you look at all of the data it all points to a very undervalued sterling. is it just that the market is not prepared to take its foot off the break until it believe something is going to change? and if so, what would that be? >> think of it this way. spending remains strong. mainhe euro area is the export partner of the u.k. and demand is not that strong. this puts the external position of the u.k. in a precarious situation. the current account is still 6%. it needs to come off. either we have a slowdown which is more pronounced or demand in the euro area picks up. neither of those are happening. we do not see scope fundamentally speaking for it to go much higher. guy: it stays here for a long
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time. resting spot. 120 is a reasonable target particularly considering that the fed may hike rates starting in december and onwards. curious -- we are are trying to understand how companies domestically are going to invest. in the argument there is that they probably will not. what about foreign investors? seen one say he is going to turn around and invest. investors seeign in the u.k. right now? >> they will see uncertainty because of the brexit negotiations which will affect tradables. we are in services so we care more about that but there are many sectors that will be affected. isomobile manufacturing
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tricky because the u.k. imports a lot of cars. the proposition is that there will be a better balance proposition when it comes to trading that part of the economy. but for other investments, it is more difficult. goes, is a currency think people will want to see it remaining a cheap currency rather than moving around in a random way. guy: what will it take -- and the politics gets interesting. what will it take to change the dial? how coiled is the spring? thehere was a view that u.k. was going to go for a softer brexit, i do not know what the model would be --how coiled is that spring? on the currency, on the investment story, on everything? >> look, you are asking if this will all go away and the uncertainty reduces -- guy: let us say brexit happens
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but it is not the extreme where we go back to the wto rules. that side of the distribution story. singlend up with a more market access kind of outcome and it is a spectrum, what will that do best how will the market respond to that -- what will that do and how will the market respond to that? >> there are a lot of moving parts. -- i am area, the fed not trying to evade your question but there are moving parts and the exchange rate is a cross by definition. say, you mentioned how coiled it is i think referring to the short position of sterling. i think those make him off and we will have a rebound from here. 126 to pick the number in the
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range. fundamentally speaking, if you have a current account deficit of the size of the u.k. and you are blowing it up further by fiscal expansions and your private sector is not saving, you're not making the situation better. you are making it worse. it does not look like a great recipe for the currency to strengthen in my opinion. guy: thank you very much indeed. you will stay with us. we are seven minutes away from the european equity market open. we are going to take a look at what is likely to be moving. luxury goods has a shakeup. the move as well. deutsche bank is talking to bond holders today. i think we could see some news from that. seven minutes away. stocks to watch is next. that is the story next. this is bloomberg. ♪
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guy: minutes away from the cash open here in europe. which is stocks to we need to talk about? commerzbank is one we need to talk about. isis going for a friend -- it never did shift in its structure. costs are manifesting themselves on the bottom line. the market was expecting this and analyst calls were more gloomy. they have done ok this morning. watch what happens with the deutsche bank later today.
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another stock to pay attention to is the luxury producer. we will see how these stocks open. european equities open softer. the open is next. ♪
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guy: good morning. welcome back. i'm guy johnson at bloomberg's european headquarters here in london. caroline hyde is off today. we are moments away from the start of european trading. the greenback looking at its sinceweekly decline september. big as we wait for the last pieces of data before the election. u.s. jobs figures. will today's numbers affect the fed's hiking schedule?
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reorganization hits the bottom line. could have been worse. that is what the analysts are saying. we will address that a little bit later on. the european open a couple seconds away. we're expecting it slightly negative. let's take you into what is happening. this was the selloff we saw coming into the close yesterday. looks like we are accelerating back now. pushing lower, so the ftse is now down by 0.3%. now trading at 6766 and softening up to the tune of 34 points this morning. the cac 40 is also soft this morning. i'll wait to see what happens with the german markets. commerzbank and deutsche bank both firmly in focus. let's get some more details. here's nejra cehic. nejra: i'm going to start with the gilt market. we saw yields spike yesterday. mark carney said the boe has a
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neutral bias going forward. the fact that they also said they were going to be less tolerant to above bucket cpi, the market interpreted that as a hawkish signal. basis point.one we are generally seeing money move into bonds with those election jitters and a move toward saint havens. no surprise that we are seeing stocks ran pretty much across the board. looking at industry groups on the stoxx 600, down 0.5%. health care stocks leading the losses, down 1.3%, followed by financials. commerzbank and bmw year-to-date , these are two of the worst-performing stocks on the dax this year. commerzbank down 37%. bmw down 23%. i am focusing on these as well as richemont. let's see how richemont is doing.
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it unveiled a sweeping overhaul of top management and its board as it grapples with plunging sales of luxury goods. taking a look at commerzbank, it expects to post a full-year profit after costs tied to the the germanaul pushed lender into a third-quarter loss. still waiting for bmw to open. third-quarter profit rose as demand for its suvs propelled sales for europe and china. there it is, down 2%. guy: thanks very much indeed. let's talk about what's happening in europe. bond sales are soaring under the ecb's asset purchase program. issuers have been reluctant. they are using the proceeds to fund m&a and refinance debt. francesco garzarelli is still with us. francesco, is policy the way it
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is designed to work working? francesco: tough question. in europe you mean. i agree with your previous statement. capital budgets are not increasing. people are trying to arbitrage the risk premium the ecb has removed. this is by and large sensible. does it have some real side effects? probably. people will get bored of just shifting the capital structure. changes in market structure are possible as people consolidate their industries. that has some real side effects. think more practically, we are seeing fiscally economists call fiscal space opening up. interest rates are low and people can run bigger primary deficits. rollover is taken care of by the financial bank. -- the central bank.
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fiscal spending is helping economies recover. we calculated goldman sachs at thatt half of the growth we've seen in place this year. the growth rate is down to change in fiscal balances. >> it makes you wonder, what the hell would happen if that was in there? -- wasn't there? ecb policy going forward, unsustainable in its current form. you talk about it being a jigsaw puzzle. walk me through how you think it's going to revolve, the changes that need to be made, how long it's going to last, and what tapering looks like. francesco: i'm going to oversimplify. why do we need to continue this policy? because inflation is very low. i like looking at the forward in the asian market -- the forward inflation market. next five years, when we
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have some clue of what will happen. that thedd distribution around that 1% is heavily skewed to a lower outcome. the ecb needs to fix this. how do they fix it? continuing qe is one possibility. if they continue under the current parameters they set themselves, they will be able to buy german securities and other core markets only up to the spring of next year. then they will hit hard constraints on their parameters. they need to change the allocation. the big discussion is stop versus flow. there is a trade-off between announcing to the market that they will continue for six months, 12 months, year-and-a-half, and changing the monthly pace of these purchases. we think about the flows more than the stop. we tend to use very high
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discount factors of something happening far into the future. that 80a lot that million flow is going to be maintained for at least the next six months. we think the ecb is going to do just that, maintain at least for the first six months of 2017 at 80 million pace, which will mean 60 billion in the government domain. the question about germany, i think there's an analogy with japan. what the ecb could do is be a bit more tactical around the deployment of the german quota. here is how it works. germany gets roughly 13 billion oney.b m there's a floor which is the deposit rate. they can't buy below -40 basis points. all that 13 billion gets allocated further out of the
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yield curve. the market thinks they are going to relax at a floor. that would double the amount of boones available for the ecb to buy, roughly speaking. guy: in terms of the curve. francesco: within bonds yielding below the deposit rate. we think that is a bit too much. it will price the yields even further and create problems for the banks. what we think will happen is the bundesbank will say, i've got 13 billion. i will then decide how to deploy this 13 billion according to market decisions. i could do it all in a month or spread it out over a couple of experience -- couple months. what i don't use i could give back to the mothership, which could reallocate the unused quota. guy: basically, say the bundesbank has a month where it can only spend six out of the 13 and it gives the rest across town.
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it gets spent on btp's. that's going to be politically palatable in germany, yeah? francesco: announcing it the way you just did, probably not. but if it is announced away in the way we think, meaning they're not going to tell us exactly how much they spend, they will keep us guessing. the german curve will go higher, therefore they can buy more. what goes into the other central banks will be allocated on a g basis. there will be no official breach of that concept. guy: right. wow. [laughter] the opacity in this program, they can work around it. guy: we are testing the rules to the absolute limits, aren't we? francesco: the rules set themselves. guy: the depot rule, why stick
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with that? francesco: there's some legal aspects. guy: and it's going to affect the way the banks operate as well. francesco: correct. btp's, whichefly, am i buying? francesco: one of the things i watch is the ratio between the 10-year rates. if you take a chart back to 2008, the ratio has topped at .3, 1.4. we've had a sequence of things happening in the two economies. growth better in spain, politics more stable, and the opposite happening in italy, that has created this date wage between the two markets. that sprint should come back in. guy: thank you very much indeed. great to see you, francesco
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garzarelli from goldman sachs. still to come, bmw beat estimates for third-quarter earnings and said it is on track for a slight increase in 2016. then, picking a winner. we will talk election that's on the united states. we are joined by william hill. and, job done. we look at rate to the u.s. jobs number that could cement a december rate hike. there's more data still to come. could be more down to the spin doctors. all that is to come. you are watching the open. this is bloomberg. ♪
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guy: welcome back. you're watching the european open on bloomberg. let's talk about the markets. friday before the u.s. election, payrolls data coming out later on. you could be excused for hunkering down and not doing much. commerzbank is down 1.75%. this bank is in a state of flux. bmw is down as well. it is more on the outlook. bmw down by 1.78%. let's get you caught up on what you need to know. here's sebastian selleck. sebastian: new polls show the race is narrowing with hillary
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clinton holding onto a slim lead over donald trump. a poll found clinton ahead by 45% to 42% among likely voters, much higher than her lead in october. our poll found clinton ahead within the margin of error by 47% to 45%. south korea's president says she is to be questioned by prosecutors as our good day has apologized to the nation again. she said she would take responsibility for any was found by she investigators. yesterday her close friend was arrested over allegations she meddled in state affairs. hasish president erdogan extended his crackdown on the opposition following july's coup attempt with police rounding up lawmakers in midnight raids. the cochairs of the peoples democratic party were among those detained.
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the turkish lira in the lowest level on record. day i news 24 hours a would buy more than 2600 analysts and analysts. guy: commerzbank troubles. saw them post a quarterly loss this morning. the german bank expects a positive net result for the year. alyssa martinuzzi here to talk us through what we're seeing. this is an institution in a state of flux. it is trying to fix itself. that could take a wild. >> that is right. they are restructuring. they are looking at the model and thinking, this doesn't work. there's too much pressure on revenues. they are in the very early stages of combining various parts of businesses and leaving some of the capital markets that weren't serving the clients in
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germany. i think the outlook is somewhat positive. they talk about profit for the year. they see capital profit strengthening. it's also early days. it will be quarters. guy: the market is having to operate on faith at the moment. >> correct. a lot of these restructuring programs will depend on how quickly the banks are able to execute. it's one thing to announce job cuts and reductions. through inh those places such as germany. guy: the conference hall looks like it's just starting now. commerzbankwhere goes from here. can i extrapolate from what they're doing now into consolidation in the german banking sector?
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is there a lesson that john cryan is learning from this? what can i learn from this? >> they had been in talks. they had a discussion with deutsche earlier on. i think this shows that the banks really have to rethink their model in a tough way and be realistic about what is going to work, what isn't going to work. a lot of banks are chasing the same businesses, commission based income, asset management, and they can't all pile into the same areas and keep the margins up to my as we saw with credit suisse yesterday. a lot of the margins are coming down in asia where there's a lot of competition. everybody piling in is not the solution. guy: thank you very much indeed. elisa martinuzzi. let's stay with germany. bmws third-quarter profit rose with demand for suvs driving
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sales in europe and china. that's offsetting a slump in the united states. earning before interest tax climbed to 2.38 billion euros. let's go to munich. our european autos reporter, elizabeth, what are we seeking here? the numbers look pretty much in line, but sales in the u.s. are down. is that why the stock is doing what it's doing this morning? >> i think the u.s. is certainly a concern. the first 10 months, sales slumped 9%, where key competitors were flat or even slightly better. what the market is paying more attention to is the fact that the slight gain in the operating result was due to currencies and hedging. it's nothing to do with the operating result. on a second line, the operating result for the automating unit was actually lower in that's to
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do with increased spending pressures on new technology. that's what the market is focusing on, i believe. guy: where is bmw in the product cycle? it does have a meaningful impact and we've seen that with mercedes. >> good point. they are very much at a weaker point in their product cycle compared to mercedes. their expectations for the automating margin, taking that into account was some 8.8%. they came in at 8.5% return on sales. they were perhaps slightly below expectations. guy: this is clearly an industry that is changing rapidly. is going to e.v. happen probably more quickly than we thought it was. how much will it cost? it's going to cost many billions. none of the carmakers have put
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exact numbers around it. in bmw's case, they say they were the first movers, and that 8, bute with the i3, i there's a sense they are being plantsen by some other that mercedes outlined. they had a concept vehicle that looked great and they said they're going to bring out some 20 models to 2025. bmw said, we have an suv and a mini and they haven't given much more detail. guy: interesting stuff. elizabeth, thank you very much indeed. up next, a close race being closely watched in china. we had to beijing for more what -- more on what a trump or clinton white house could mean. this is bloomberg. ♪
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>> the remain campaign in britain, it was a terrible campaign. it was, we are the experts. we are the establishment. trust us. people said no. that is not at all the way clinton is campaigning. >> we have the u.s. election in a few days. we have the italian election next year. it's going to be a time when eventsch the political
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will have a major impact on the behavior of investors. we are in a very cautious stance. of course, ready and able to take advantage of any opportunity, but a very cautious stance. >> look at the way we monitored the brexit and the surprise which came out of the vote. limit as much as possible the market risk. we know that if there's a surprise, the market can react. we've seen that in the longer term. the markets stabilize. same policy for the coming elections. we try to limit our market risk. the socgen ceo wrapping up that series of conversations. chiming in ahead of the big day next week. getting quite interesting, the race to the white house is certainly tight, with the
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outcome of the election set to have a substantial impact for the rest of the world. china is going to feel the effect. in america it feels like a very domestic story, but the implications are massive. bloomberg intelligence's chief analyst joins us. what are the differences in what these two candidates are saying in terms of the implications for china? tom: at one level, there's a core similarity. are goingon and trump into this election with a protectionist message. they are both opposing the transpacific partnership, which was obama's attempt to ram trade with asia. if you go beyond that surface similarity, this election could represent a fork in the road for the economic relationship
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between the u.s. and china. clinton represents a very much status quo. trump, if he follows through on promises to impose very steep tariffs on chinese goods, could have a very significant impact on the economic relationship, could see a big drop in chinese exports to the u.s. if china responds, that could also result in trade frictions which are no good by the country. will,ery briefly, if you some notes i've read suggest china will change the way it invests, pull money out of the united states and invest in europe. that that is the reality of the situation? risk which has been flagged by some hysterical voices for a number of years. -- i think the negative consequences for china would
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also be extreme and that is an unlikely outcome. guy: tom, thank you very much indeed. tom orlik joining us out of beijing. more on the elections next. this is bloomberg. ♪ seeing is believing, and that's why
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you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. guy: welcome back. we 30 minutes into the trading day. let's take a look at the picture for the markets. this is the equity story across europe. the selloff in cities carries on and on as we head toward the tuesday poll in the united states. could be a fascinating day. equities continue to sell off. plenty of stories in the market this morning. let's delve into the details with nejra cehic. for stocks day overall, but a good day for the luxury sector. richemont 6% at the moment. although it has been struggling
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with plunging sales of watches and other goods, it has unveiled a sweeping overhaul of top management. the owner of cartier's to lose its ceo, cfo, and eight board members next year. the heads of another brand are going to get new board seats as well. one analyst called it a generational change. l'oreal also up 3.3%. shares soaring the most in almost seven months after revenue beat analyst estimates on rising demand for high-end brands in north america. l'oreal maintained its outlook for a stronger second half. one of the worst performers today is jc did go. this is partly on it having third-quarter adjusted organic revenue growth at 1.5%. it was also on the outlook. it sees fourth-quarter organic revenue growth around -2%.
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guy: equities are down, risk is off. people are about the u.s. election. yesterday, a busy one on the campaign trail as hillary clinton and donald trump and a dozen surrogates barnstormed several battleground states with a final pitch to voters. florida, we've got five more days. days, we going to win the great state of florida. >> love for this country is something we shared when i met donald. he loves this country and he knows how to get things done, not just talk. he certainly knows how to fix things up -- shake things up, doesn't he? >> this is a guy who spent 70 years, his whole life, born with a silver spoon, showing no respect for working people.
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>> why isn't he back in the office, sometimes referred to as the oval office? why isn't he back in the white house, bringing our jobs back? helping our veterans? >> you even have a republican senator saying you cannot afford to give the nuclear codes to somebody so erratic. and as hillary points out, anybody that you can bait with a tweet is not someone you can trust with nuclear weapons. >> someone who always puts himself first and doesn't care who gets hurt along the way, a president with a very thin skin who lashes out at anyone who challenges him, who praises adversaries like vladimir putin and picks fights with our allies, and even attacked the pope. >> thank you very much, everybody. god bless you. guy: nothing if not interesting.
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still, people are watching the polls narrow. they are watching to find out whether donald trump has a real path to the white house. a handful of surveys look pretty positive over the last few days. a national survey by cbs and the new york times has clinton up three points. that same poll had clinton up by nine just a couple weeks ago. what are we seeing? where is the money going? the latest state of the race is interesting. william hill says 70% of individual pets have been placed on a trump win. graeme sharpe joins us now. what is going on? give us a point by point, minute by minute, as we approach this. how is the betting changing? graeme: on october 15, i thought probably this is all over. 1-9, andoint we were somebody came in and had 183,000
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pounds. normally that signals the end. since october, we have seen 10 changes of price, all in favor of trump. he's now down a short 13-8. hillary has come down from that 90% to 69%. last night, somebody walked into one of our shops in nottingham, 15,000 pounds on donald trump, came back an hour later and had another 22,000 pounds. the impetus is certainly with donald trump betting wise. so are the individual pets. it is similar to brexit. the odds were against brexit. the percentage of individual means that you've got as many votes as somebody that has a bet 100 times bigger than yours -- guy: in brexit, we saw smaller
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bets for brexit, bigger bets for remain. graeme: the favorite is obviously of less appeal to somebody with a modest amount of money to invest. to: is an election different a referendum in terms of the way people place money? graeme: i don't think so. this has become already the biggest u.s. election for us. we will take in 3 million pounds on it. not the biggest we've ever seen. that was the scottish referendum. one person had 900,000 pounds riding on the outcome and got it right. the biggest that we've taken is 550,000 euros for hillary clinton. guy: did the brexit change anything? the big money got it wrong. did that change anybody's thinking? graeme: brexit came along,
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general election, pundits called it wrong. jeremy corbyn to be the next labor leader. he was 200 to one when it started. donald trump was 150 to one when it started. if you had a pound on a trump-corbyn double, he would be waiting on 350,000 pounds. guy: general election in the u.k., did the odds change yesterday? graeme: we were 6-4 for a general election in 2017. we shortened that the 6-5, which meant we lengthened what should be the date by statute in 2020. that is 10-11 at the moment, almost even money. that looks like a good bet. but of course the unexpected, as
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we've just mentioned, keeps happening in politics. guy: when you think about what's happening in the u.k., the volatility surrounding all this is massive. do you just expected to carry on? is this now normal, the kind of political volatility we are seeing? guy: look at -- graeme: look at soccer. it just proves that however unlikely your bet seems when you place it, you've still got a chance until the fat lady sings. guy: thank you for coming and seeing us. graeme sharpe from william hill. germany's deputy economy minister is going to be joining us in an exclusive interview. he's life out of hong kong. he will be joining us to discuss the relationship with china which has become increasingly strained as the germans have decided that china coming in
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buying all their technology companies might not be the way forward.
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guy: welcome back. we are 41 minutes into the cache train. let's talk about what's happening around europe. let's break down the stoxx 600. let me show you the mrr on my bloomberg. you be soft up 10%.
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6.7%, as it 6.6%, reorganizes, restructures. the market seems to like what it is hearing. swatch is up 2.9%. dethe advertising side, jc caux, the big loser. leonardo in italy is trading down as well. the stocks this morning are interesting. to quickly show you what's happening with gmm, back to the turkish lira. still very much under pressure as we see the political purge continue under erdogan. that's something to keep an eye on. watch for that next week. watch for south africa as well. here's sebastian salek with the bloomberg business flash. profit rose as
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demand propelled sales in europe and china. earnings before interest and taxes climbed 1.1%. the company repeated that sales and pretax profit at its automotive unit will post slight increases this year. richemont has said the cfo and ceo will retire next year as it reported a decline in profit. thedeputy ceo will replace ceo as the luxury goods maker reported operating profit of 790 million euros, a fall from earlier. aftershares plunged saying it expects a bleak holiday season. the company lowered its forecast for full-year sales amid analyst estimates for revenue in the first quarter. fitbit lost one third of its value wednesday. takata shares are down, having been suspended earlier after the
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nikkei said the company was to file for bankruptcy protection. the company began seeking buyers in may after regulators in the u.s. and japan ordered expansions of recalls. bought dicknder has clark productions. the purchase of the producer of televised events such as the golden globe awards and miss america pageant marks wonders -- wanda's entry into the broadcast market. that is your bloomberg business flash. guy: thanks so much indeed. south africa president jacob zuma's chances of serving a second term have dimmed. that could tip the race to succeed him. for more, our african government reporter joins us from
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johannesburg. my sense is this story seems to be accelerating. what are we going to learn next week? amogelang: the african national congress will be meeting next week to discuss the allegations that were raised not only against resident jacob zuma, but three other ministers in the report that the court ordered to be released this week. potentials that could possibly take up the presidency if president jacob zuma is recalled or asked to step down. we've seen calls not only from public people, but from business, calling for the president to step down. it's no longer deniable that president jacob zuma is scandal prone. is there a likely candidate to succeed him if he were to step down? amogelang: analysts have said
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that beating the deputy president of the african national congress and the placed, he is the best candidate. he has a good starting point. another candidate that has stepped into the frame is the chairperson. that she is also the ex-wife of current president jacob zuma. president jacob zuma is in zimbabwe. said anything not about the allegations were the dimensions made about him in the report released this week. we have yet to see what the ruling party decides. guy: thank you very much indeed. can't wait to see what next week brings. let's turn to some data out of europe. the italian data now crossing. we have pmi data, italian services and composite number.
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the numbers are fairly stable. we have a composite number of 51.1, exactly where it was last time around. the survey was a little stronger. we have not matched expectations on what is coming out of italy at the moment. the service sector looks to be where we are seeing that. the survey again a little bit stronger. we will deliver some more pmi data as we work our way through the morning. the italian data reasonably fresh. let's go to germany now. commerzbank has a loss in the third quarter a day after fitch placed deutsche bank on rating watch negative. in these difficult times, the top business leaders are meeting in hong kong for the asia-pacific german business conference. joining us now is the german deputy economy minister, matthias machnig.
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good morning to you, minister. thank you for taking the time. one thing that we have been noting is that germany is becoming concern about china buying its technology companies. on where theview correct balance is here? mr. machnig: germany is one of the most open economies in the world and we want to stay a very open economy. we welcome investments from all over the world, china, the u.s., and other parts. what we have to look at, if there are any kind of security instions or military aspects mergers and acquisitions. that's what we're doing at the moment. of course we have to talk about a couple other questions. there are huge over capacities on the chinese market. so we have talks here in hong
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, trying to china find a balance, how to find a marketplace -- a market aced approach -- a market-based approach and build a level playing field for companies on the chinese market. we want reciprocity. the same rules that chinese companies have on the german market, we want them also for german companies and european companies on the chinese market. guy: are the people you are talking to receptive to that? concerns thatr surround some of their acquisitions? the first approach was a kind of new protectionism. that that isclear not the view of the german
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government. companies in mergers and acquisitions from chinese companies in the last year. two of three are now discussed because of security reasons and military questions, so this shows this is not a political question or something like this. this is a legal question, a security question, and therefore, we are not going to change. but what we want is also the same freedom for german companies on the chinese market because that's very important. we don't want any kind of joint venture need for german companies. we want to be part also of public procurement procedures in china. joiningthe openness for in a projecties
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financed by the state. clear in thevery talks with the chinese government. what kind of progress are you making when it comes to steal? do you get a sense we are making progress or that it is going to be difficult to make progress on this issue? there's a little progress. when you think about the joint declaration of g-20 leaders in gzhou, the chinese authorities agree that over capacities are named in the summit and they agreed that we're going to have a forum discussing within the g-20 and with china how to reduce over capacities on the steel market. capacities in china
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are huge. 439 millionout tons. big as theble as whole production capacity on steel in europe. this shows that we have a big job to do and that we need a market-based structural change in a chinese economy, not only in the steel sector, but also in the steel sector. guy: one final question. are we doing enough at a european level or do you think be much more done? do you think we need a more thought-out approach? mr. machnig: yes. discussions about the market economy status of china. we have to take these decisions this year.
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oure have to strengthen trade defense instruments? there will be decisions this year. we will have discussions in .ovember we also have to look at legislation in the dumping system, the legislation on the european union, to make also anti-dumping measures really doable, workable, so they have if there is dumping from whosoever. that is the discussion we have an we're going to take decisions this year. guy: minister, thank you very much indeed. a great pleasure to speak with you. matthias machnig, the german deputy economy minister. what have we got coming up? it's a busy one. 12:30 p.m., we get nonfarm
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payrolls from the u.s. later, the opening of the various party conventions. the first time during chancellor merkel's leadership she has not addressed the event. there seems to be a rift over her immigration policy. 8:00 p.m., a debate between french presidential hopefuls. we're going to get german data in a few minutes time. the jobs number, front and center today. should it be? is it more for the spin had rate of the presidential election or will it impact the fed's thinking? that's what we are now going to discuss. let's join mark out of singapore on what we are seeing here. how meaningful is this number going to be today? to the ahink it needs real surprise to have any impact at all. for once, i'm thankful we are
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not saying it is the most important jobs data ever. it really is irrelevant unless it is a big shock. guy: what are we seeing in terms of the wider unemployment numbers? we think we are reaching the inflection point, where actually the labor market is so tight that it is going to drive wages in a meaningful way, yet more people seem to be sucked into the labor market and that appears to be ongoing. what is your read of that situation? mark: the labor participation rate fell such a long way post crisis. the job situation in the u.s. is good. they've been adding a lot of jobs for a long time. the unexpected -- the unemployment rate is expected to dip down. we're not going to see it come much lower because more people will join. that is going to delay some of the wage inflation pressure we might have seen otherwise. guy: how does this read into the
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u.s. elections? mark: probably not much at all. for a singlelate data point to swing it massively. if it is a big shock, the candidates will use it for rhetoric. i doubt it is going to change anyone's mind at this late stage. guy: always a pleasure. thank you very much indeed. the u.s. election clearly dominating what is coming up next. german data is what we've got now. the markets pmi services data coming through at 54.2. the data, a little stronger than expected out of germany, but not by much, but much stronger than the rest of europe. coming up next, it is "surveillance." francine lacqua in london, tom keene in new york. what are they looking at? we're going to be talking about what's happening with the u.s. election, plus also, how does
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the jobs number for it into these figures and how does the data effect the poll numbers? that's coming up next. this is bloomberg. ♪
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♪ francine: waiting for jobs nonfarm payrolls in just a few
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hours. five days to vote. clinton maintains a narrow lead over donald trump. investors swap to safe havens. the brexit vote in parliament. this is "bloomberg surveillance." i am francine lacqua in london. tom keene in new york. it is all about the pound. we look at currency. and the treasury. tom: brexit followed from yesterday. there is still a lot on out from that court ruling. ellen zentner will join us in the next hour. francine: we are also getting a little bit of data out of europe. in terms of what this means for theation, overall pmi for euro area rising 50.08.

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