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tv   Bloomberg Markets European Open  Bloomberg  November 7, 2016 2:30am-4:00am EST

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guy: good morning. you are watching a special edition of "bloomberg markets -- the european open." i am guy johnson in new york this week, alongside jonathan ferro. caroline manning the desk in london. what are we watching? we all know -- 24 hours until election day. the fbi has cleared hillary .linton is the damage already done to the clinton camp?
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the dollar jumps, the peso surges, work is bullish on hillary, but is there a deep dollar downside? we asked the world's best -- the best fx forecaster. in hong kongumped trade as europe's biggest bank viewsstimates with new from u.k. regulators freeing up billions of dollars. what does this mean for investors? jon: for investors, the story over the last couple of days has reviewed fbi on hillary clinton, that is no longer an issue. a stronger mexican peso. lasturies bid over the week, not on offer today. gold, caroline, down by over one full percentage point on this session. caroline: jonathan, it is risk on. check out the futures market. we have not seen for a few weeks any gains on the stoxx 600.
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this could be the first time in 11 days we see significant move higher. 1.3% higher on the euro stoxx 50. you have the longest losing streak -- you were talking about u.s. stocks -- the longest losing streak on the s&p 500 since 1980. today, that could be put to bed. risk on as we expect maybe, just maybe, some of those bets that it could be a trump when start to push to the backseat. to the euro. and how hsbc opens on the market in united kingdom. let's get to the bloomberg first word news. >> it is a third quarter beat for hsbc. adjusted profit which excludes one-time items rose 7% from a year earlier, to $5.59 billion, ahead of estimates at $5.29 billion. it was helped by the ceo's cost-cutting plan. u.k. prime minister theresa may is in india to lay the
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groundwork for a post-brexit trade deal. the following pictures contain flash photography. to smooth thed path to the u.k. for india's wealthiest investors, arriving in new delhi last night. the premier unveiled what her office called a bespoke fasttrack visa service for high net worth indians and their families. she also promised quicker border checks for business travelers from the country to britain. in london, the house of commons holds its first full-scale debate on brexit later. the attorney general will appear in front of lawmakers to ask questions about last week's high court ruling that the government must hold a vote in parliament before triggering article 50 of the lisbon treaty. china has ruled that anyone who independence for hong kong cannot hold public office. the decision by the national people's congress standing committee was only its second unilateral interpretation of hong kong law since the former
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british colony's return to china in 1997. police scuffle with protesters in the run-up to the decision as thousands of people took to the streets in support of two pro-independence legislators. chen has replaced the finance minister. according to the chemung news a new topere is finance official who has worked for three years as vice secretary-general of the state council and an important aid to the premier. local news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries -- this is bloomberg. guy: a bit of breaking news for you. we have nissan numbers hitting the tape. the operating profit is ahead of operations -- ahead of expectations. the sales line is a little bit light. the company is saying basically they had adverse headwinds on the fx side. on theseeing a big move yen this morning. we will come back to that story later.
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operating numbers, it looks like the sun is slightly ahead. the sales line, a little behind. let's get back to what is happening in the countdown to the u.s. election. the big day tomorrow. no shortage of drama, with the fbi hillary clinton once more, saying she did not commit a crime in her handling of e-mails as secretary of state. we heard pleas from both candidates over the weekend. right now, she is being protected by a rigged system. you cannot review 650,000 e-mails in eight days. you can't do it, folks. clinton is guilty. she knows it. the fbi knows it. the people -- the people know it. and now it is up to the american people to deliver justice at the ballot. mrs. clinton: i want us to have an ongoing discussion about how we are all going to contribute
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to making our country all it should be. 'sreally believe that america best years are still ahead of us. if we all do our part -- [applause] and i think it is fair to say, after all the months of this campaign, my opponent has a very dark and divisive view of our country. jon: i have got to say, what a month it has been, the month of october. phones -- full's widened on the back of the hot mike story with donald trump, and then tightened over the last week. it is hard to say definitively whether the last week impacted this election. that it is even more difficult to say it did not, going on what the polls have done, on what the markets have done. you would say based on the events of yesterday this might help hillary clinton on the margin. the contrarian view, listening to donald trump over the weekend, of the back of the drop in the campaign against hillary clinton, the message from trump
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seems to be, can you really solve this in eight days? can you really open a case and do with it in eight days? he has to play in people's minds as they go to the booth. is, what he is also saying what could happen in a hillary presidency? could we end up in a situation where she is constantly pulled back in the story and every few days we end up with this revelation?nd that that could hamstring the presidency. do you want that to be part of your life for the next four years? that is also very difficult to figure out, in terms of the way the market needs to price all this. into bring another voice the conversation, a chief executive who joins us now in london. -- read theead and last 24 hours? look at the market reaction, duncan. the peso move massively. the essential has to be that this is an incredibly difficult election to call, on a knife
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edge, and this will make a difference. is that your view? duncan: it must make something of a difference. the last nine days has been truly extraordinary. we have seen a huge amount of skittishness in the market, trying to accommodate what we really think all this means. the thing i think is slightly peculiar -- and i am not a real expert in the electoral system milliontates -- but 40 u.s. voters have already placed their votes, armed with the information that the fbi investigation was already ongoing. .learly, this will help clinton exactly how much it will help clinton is not at all clear, because she has a very significant trust deficit, as we know. jon: that is the question over the next 24 hours. look at the market. we have a short squeeze this market. given the action over the last week, approaching these markets, sitting around a table with your colleagues, is this the right
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time to take the hedges off that you put on over the last couple of weeks? duncan: i think what we saw in the last week was a lot of people put those hedges on. thursday and friday, the end of last week, people have started sitting on their hands. the rally we have seen in asia this morning has been fairly modest. i think there is a mild confidence returning. what you normally expect under these circumstances is, once the election result is more visible, you have a sort of sigh of relief and a gentle rally. that has pretty much been the pattern over the last several elections. the difficulty this time is, the gentle rally you would expect after the election is over is because there is an increase in confidence about what is going to happen next. when -- wininton would still have an outbreak of confidence and a mild rally. the question is what happens next with clinton, with a very likely adverse house and senate.
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the real question is, if it is a win, you go into another phase of uncertainty. marcus dislike that. you would see a lot of volatility returned. there is a volatility risk associated with that. let's assume that hillary clinton wins for the moments. -- for the moment. quo, nock to a status government in the united states, with the two parts of the system canceling each other out. the judiciarybout later on. does that mean we refocus on the fed? we saw the payroll number come through on friday. clearly, there is wage pressure coming through. we assume we get through this and have no politics for four years? the fed gets back in focus? how does the situation change since friday? duncan: i certainly do not think we will have no politics for the
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next four years. i think what you would probably get is a mild rally and then a little bit of contemplation as everybody thought about what it means to have, as i say, a likely very adverse congress. mixed results in terms of the underlying macro data last week, and the fed still trying to assess what it is going to do in terms of potential rate rises in december. i think there is also a more fundamental issue behind this entire election debate, which is the very fact we have even been talking about or are still talking about trump as a potential winner means that the political dialogue has changed. and the political narrative will change. a lot of the counter trade rhetoric of trump has actually had to be echoed by clinton. so i think there is quite a lot of uncertainty that would come with the politics. perhaps less uncertainty with the economics. jon: you say no politics. i would say no policies. guy: that is what i mean.
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everybody is going to cancel each other out. jon: if you assume the status quo and you do not get much initiative from congress or the government over the next few years -- where we are is, gdp softening. ,he trajectory going into this the story of consumption holding up everything else. -- fueled byl but exports -- just by soybean exports from the united states, believe it or not -- has consumption starting to soften. toconsumption does start soften, i think the government and the federal reserve has a big problem. they are finally starting to tighten again at a time when gdp is starting to do this, to roll over. a time when actually things have started to heat up in the labor market as well. guy: wages start to pick up and the labor market is high. i listened to stand fisher over the weekend, talking about the labor market. does that produce a wage game? if the economy is slowing down, that would work against that.
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maybe the conception story goes on a little longer. if you say the wage figure was solid, i will not debate that, because that is what it was. the fed cases and asymmetric problem. there is upset risk of inflation when it is down at 2%. the idea that they guard against wage growth when it is still sell for 3%, the idea they may face a recession over the next three or four years and only have rates of 50 basis points, maybe 75? i would say the federal reserve has a big problem. whoever inherits the economy, things look ok, but only ok. i do not know where they go from here. guy: we will see how the parties react, whether we see stifling of any economic push. interesting to see how the house works on this one. what what happened with mr. ryan in wisconsin. that will be a big element to that. can wells will stay with us as we work -- duncan wales will stay with us. hsbc topping estimates.
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shares jumping and hong kong as regulator from a u.k. frees up billions. what does this mean for investors? we are moments away from the european open. how will markets digest data u.s. election? the story is going to be fascinating. how big of a pop are we going to see? politics -- the latest from the fbi on the race for the white house. we continue our special coverage of the u.s. election. we talked to that page -- we talked to the ceo of ipsos. ♪
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jon: from new york city, with the world's attention on d.c. for the rest of this week, the fbi absolving clinton once again. the story in the market is futures rallying and treasuries on offer, yield up for basis points to 1.82. for now, let's get the bloomberg business flash. here is juliette saly. the opeculiette: secretary-general has told bloomberg that the organization remains committed to an accord reached in september to stabilize the oil market. a home in the candor was -- ckinder was speaking
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in other dobby. >> as opec, we remain committed to the algiers accord. jurorsit together in all -- in algiers and remain committed to its implantation. ryan air says second-quarter earnings rose 8%. profit over tax increase to 912 million euros in the three months since september. it served a record number of passengers during the summer. the volkswagen supervisory board chairman has been added to a german probe of the company's emissions standard -- scandal. the prosecutor's office had extended its investigation for market manipulation. meanwhile, a newspaper has reported that u.s. testers found software to cheat air-quality tests in audi cars. an audi spokesman declined to
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comment. that is your bloomberg business flash. vw 12 keep an eye on in the open, but it will be hsbc , posting a beat for the third quarter, as pretax profit rose 7% from a year ago. shares have jumped for the most in two months in hong kong, trailing a new view from the u.k. regulator as it frees up billions which increase the bank's capital ratio. we are joined live from hong kong. stephen, the costco's we have the cost cuts we have seen, how much does that help the bottom line? ceo, was gulliver, the a -- embarked a few years ago on a global cost-cutting plan, cutting about $5 billion from global operations. that continues. they have been cutting some jobs. there also moving jobs to master
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growing parts of the world, like in asia. the numbers were pretty good if you look at the adjusted pretax profits, excluding one-time items. an increase of about 7% for the profits. the cost savings plan, there was a one-time loss associated, about $1.7 billion, that shifts .retax profits down 86% not the adjustment figure -- the pretax figure of $843 million. that is 86% down. you can look at these earnings results a couple different ways. yes, shaving off some of these non-core assets is hurting at least temporarily. 's plan to shave more money is continuing. caroline: interestingly, it is the risk have been weighted assets they managed to also reduce. this all comes out with the u.k. regulators saying you can assess your holding of a chinese asset
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in a different way. this has really helped the capital ratio, hasn't it? absolutely. basically, the new categorization cleared up or u.s. up about $5.6 billion that is from its investment in the chinese bank, bank of communications, bocom. i believe hsbc has about a 20% stake in it. a were able to use that money and that free up to boost its to 13.9%ear one ratio from 12.1%. investors a bit of a smile. he said the stock was up. if you boost that capital ratio, less likely they will cut the dividend. caroline: maybe even more stock buybacks. stephen engle and hong kong outside hsbc, minutes away from the open. next, we take a look at the
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movers in today's trading. hsbc will be one of them. ryan near as well has seen a rise in profit. it has announced it is lifting its passenger targets. this is a beautiful london. this is bloomberg. ♪
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guy: welcome back. five minutes to go until the european cash open.
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we are expecting a big bounce in terms of what the european markets are expected to do, up by over a percent. similar story in the u.s. and asia. what stocks are we watching? let's get a take on what is happening with hsbc. your view on what this is as morning? is this more about the buybacks or the beat? think it is to do with the hopes that dividends will remain stable. the risk-weighted assets coming down for hsbc. there is more hope that dividends will be supported. by that could once again be on the agenda. the stock is rallying in hong kong. we sealed likely to bounce on the open as we open in united kingdom. this is a third quarter beat. market shares also being boosted in europe. are managing to steal fixed income business away from the other rivals. we seeing them when out in the way that the other u.s. banking counterparts have done. it is about banking regulators saying the asset you hold in china -- you can measure it in a different way. up morets, and free
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cash. look at the equity tier one ratio, up to 13.9%. keep an eye on ryanair and some backe future calls on the of the clinton news. coming up, the market open. ♪
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guy: good morning. you are watching a special edition of "bloomberg markets -- the european open." i am guy johnson at bloomberg headquarters in new york city. i have the pleasure of sitting alongside this man. what an honor. jon ferro in new york. fahrenheit still in london. -- caroline still in london. jon: 24 hours until election day, the fbi clears clinton. is the damage already done to the clinton camp? the peso surges. markets grow bullish on hillary. but is there a deep dollar downside? we asked the world's best fx down chester.
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hsbc shares jump in hong kong from u.k. new view regulators frees up billions. what does it mean for investors? guy: we are counting down to the european cash open. we are expecting a solid bounce this morning. the markets are opening in europe. let's show you what is going on. this is the pick her. europe -- this is the picture. the market makers pricing the ftse 100 to a sharp upside move. we are up by 0.7%. continental markets are expected to open firmer as well. let's see what happens. could take the market makers on the continent a little longer to get things going this morning. london leaving out to the date this morning. a really sharp move to the upside. are we watching? let's talk about market details. let's show you what is going on. nejra cehic standing by with caroline. on!line: risk
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we willme in two weeks be seeing the stoxx 600 actually in the brain. let's have a look. 10 straight days of declines or zero moves for the stoxx 600. the longest losing streak in the u.s. since 1980. i will show you an imap almost up 0.1%. we are safe telecoms on the upside, 1.2%. as oil gets higher, we see oil and energy stocks up. moving along with me, let's check on u.k. guilt. the we see the selloff we are seeing in the u.s.? a pickup in yields. movement out of those so-called havens. you see a selloff in u.s. treasuries, and a similar selloff in the u.k. in terms of tenure guilts. let's check in on the currency markets. big move in the mexican peso.
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these are the are performers. for the rest of the world, it is dollar strength. a search for safety at the end of last week. coming off. euro bullish bets -- they left to a record on friday. i want you to look at one week risk reversal rates. it comes down a little bit today , 2.13. but you still see the euro the big mover on this week of elections. that's look at the stock movers. nejra: i have starting with hsbc. it was a beat for third quarter profit. we saw the shares jump by the most in two months in hong kong, rising up 3%. revenue rose as costs fell, leading to the pro to beat. -- the profit beat.
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today.s rallying ryanair also gaining, up 4.2%. profit rising 8%. third quarter earnings a beat as lower fares helped europe's biggest discount airliners. a record number of passengers during the summer. also, it plans to offer a share buyback. all this leading to a rally for ryanair this morning. i want to show the stoxx 600 health care index. the companies in europe will come under some pressure in the win, with clinton those price pressures in the u.s.. with what happened over the weekend and more of a prospect for clinton to win the presidency, i thought we might see some of these health care companies trade a little lower. but it seems the overall risk on sentiment has taken over. the stoxx 600 health care index of 0.7%. guy: the european equities popping this morning. is that the right trade? i have seen this movie before. jon: i saw it on june 22, around
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that time. guy: the market is making a narrative. they are looking at it and saying, we can get back to what we thought we wanted the outcome to be. jon: he reminds have a line i heard the last couple of months, and in the u.k. several months ago. the traders in the press are in london, in d.c., in new york, in california. trump voters, where are they? they are -- wisconsin, like new hampshire, the rust belt. we are watching that carefully. are they watching the financial markets? jon: exactly. there has always been this discount between the electorate and market participants. to try to get those things to reconcile is difficult. what we are seeing this morning is a squeeze. we saw a 3% correction as markets the risk. would you go into the markets question for is a investors. would you go into this market today with any conviction as to
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what is going to happen in the next 48 hours? absolutely not. if you have learned one thing from brexit, that is the story. let's bring back in duncan wales. is the market making the same mistake it made with brexit? it is quite difficult to say that it is not, because it is a complex piece of political news on a sunday. it is encouraging to a little bit of market confidence to come back into cash equities. but that is only one component of the one or market. i think everybody is still broadly waiting to see what will happen on tuesday, and even wednesday morning. to: let's fast-forward wednesday morning. let's say you wake up with the status quo. there is clearly a repositioning we need to acknowledge. the positionnow based on the bank of america merrill lynch survey. where's the cash go ultimately? a good question.
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it will be interesting to see how much goes back into safe haven assets, u.s. treasuries, because there is still a lot of uncertainty out there. there is positive upside for the u.s. dollar. there are questions about global trade. noton herself has made some very positive remarks about tpp, the transpacific partnership, and even nafta in its current shape. few slightly longer-term questions, including the fact that she is going to find it very difficult to spend any new money at the central government level without a compliant congress. guy: do it wake up on wednesday onning -- do we wake up wednesday morning and make a trade, short-term, long-term, or do we watch what the political noise is going to be? we are waking up in europe on wednesday morning. we still do not know how donald would react to a clinton victory. how cautious does the market need to be in the immediate
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aftermath of what we are going to see? i and sensing there are not just one or two outcomes, but a series of outcomes. do not know what the days after the election are going to bring. duncan: i think the reality is that if clinton one -- won, unless there was a very difficult contested state like florida, as we have seen in the -- even would really the political noise and smoke, it would be business as usual. i think risk would not be put on in any decisive way. i think you would see a rally in the markets that move quickly, such as cash equities and maybe futures, and maybe a slight release of some of the safe haven assets. jon: what we have seen in the last week or so is a short-term and a long-term issue. you have seen aggressive de-risking in the market. nothing mental. the dynamic i have spied in the last week or so is that we are still pricing 80% on to the move
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in december. the markets have been looking into this event, and arguably through this event, but there are near-term hedges. you have received pick up in the fx market and elsewhere. it has alwaysm, been looking towards another rate hike. you wonder how that debate changes in the next 48 hours. guy: it will be difficult to call that one. the market -- what is neutral? is a neutral position at the moment? the cash balances are very high. is not neutral right now. it is slightly out of kilter. if you invest in the money today, it is a short squeeze going on. as we go into this, how asymmetric is the market in terms of its positioning? we work our way through this story in europe this morning. europe already opening in a very punchy form this morning. it feels like a short squeeze. wells -- duncan wales, thank you for joining us, chief executive of exotic partners.
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what a morning already. clinton again. will it provide a next her boost in the final stretch? we see how this plays out in the fx market. we have a great guest for you 8:20 u.k. time. ryanair with a tailwind. we have ceo michael o'leary on that profit rise. plus, crude makes a comeback. we speak to the ceo of nigeria's biggest oil refiner. that story coming up. the oil market in focus as well. ♪
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jon: from new york city, a warm welcome back to the european open. we are 12 minutes into the session with the u.s. presidential election on the mind of participants. a squeeze, a rally -- call it what you will, stocks are up across the board. a similar move on the dax. me take you across assets. look at the risk trade. the havens have been bid over the last week. they are not today. it is a softer yen story. a stronger peso story. treasuries on offer as well. and gold down by 1.3%. caroline? caroline: stoxx 600 up more than a percentage point. this is the first time in two weeks we are seeing any significant gains in the stocks 600. -- the stoxx 600. function.our mrr
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on the upside. a bit of an m&a monday. why? it looks as though a belgian anotherght be eyeing company, prepared to buy it, providing the talks put to bed in may of this year. consolidation is the name of the game when it comes to personal delivery. post nl your winner, as is ryanair. buyback. do a share on the downside, check this out, down three percentage points. clearly, the gold miners are feeling the pain. gold out of vogue, it would seem, with a little bit less of a search for a haven today. gold is lower. let's look at the bloomberg first world news with sebastian salek. seb: the third quarter beat,
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adjusted pretax profit rose 7% from a year earlier, to $5.59 billion. europe's largest lender was helped by ceo stuart gulliver's cost-cutting plans. the house of commons hold its first debate on brexit later. attorney general jeremy white will appear in front of lawmakers and answer questions about last week's high court ruling that the government must hold a vote in parliament before triggering article 50 of the lisbon treaty. in china, they have replaced the finance minister. official.finance the 59-year-old has worked for three years as my secretary general on the state council and an important aid to the premier. premier.o the this is bloomberg. jon: think you very much. let's take you to the fx market, where the u.s. dollars/pound would immediately dropped if trump was elected resident.
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it appreciated against the yen. this is according to the number one for faster of bloomberg third quarter rankings. currencyin the head of research. he joins us live from frankfurt. a bit, i have switched the argument and put it on its head. hold true ifsite secretary clinton becomes the next president? is, whene thing clinton really wins, i think the policy impact on the fx markets will weigh in pretty quickly. we are back to what drives the fx market. this is the fed decision which comes in december. really, policy impact under clinton will be very liberal in a desk in the fx market. we have to focus on not only that the fed will hike rates in december, but how much they will hike and continue to hike rates in the next year. this would be very supported for the u.s. dollar. talk about what the big
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holders of fx reserves around the world will do if donald trump wins. how will the chinese react, for instance, if we were to see that victory coming through? .hey hold huge dollar holdings how would they be repositioned? david: i would not expect they really change from day one there holdings of u.s. dollars per se. what we see already, no matter if donald trump wins the treasury or not -- is that the chinese are trying to shift these fx reserves to treasuries, trying to shift in more of a , foreign direct investment holdings. every other country has that. we have that reserve in china. the treasury holdings are melting down. but this is a gradual process. i would be very surprised if the chinese would come into panic, selling that to a bad price. jon: i want to scratch my head just a little bit. you could expect the carry trade to unwind if we get a risk event
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in the 48 hours. that would imply a stronger euro, a stronger yen. beyond that, typically in a risk off event, you expect the dollar to be really well bid. why is this so different? david: there is a difference actually how the market behaves in this very short-term sale, in the one week after the election. we are more guessing than really forecasting. we basically use the pattern we have seen so far, all the times when the risk is rising of donald trump to become president. we have seen this process were the dollar is weakening. for us, this is not in line with fundamentals. president means more fiscal reflation and probably higher inflation. that means more action from the fed. this is all dollar supporting. but we have to really expect that to play out only over three months or one month. this is very similar, actually, to the year 2013, when the
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government shutdown. first, it was negative for the u.s. dollar, that over the longer and medium term it was supportive for the dollar. they goes hand in hand. guy: is brexit in any way a benchmark for what could happen over the next 38 hours? david: definitely, in terms of surprise, but not so much looking at the fx market. there could be an opportunity where the dollar really sells off after a surprise result. but i would concentrate much more on the equity market, where he saw after the brexit a very good price. a sharp selloff and then a rebound. jon: donald called come -- donald kohl staying with us. this is everything. pretty much everything a currency pair is going to see something off the back of it. guy: what your point is well made. the dollar is a reserve
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currency. with a bad price, normally you run into the dollar. this time, it is going to be interesting to work through. we bring up the brexit. next, we continue the conversation. brexit headwind or tailwind? we have our interview with the ceo of ryanair, michael o'leary. he was very much on the remain side of things. he will listen to what he had to say. ♪
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caroline: welcome back to the open. 22 minutes into your trading day, ryanair a stock to keep an eye on, raising passenger targets on the seats hold in the first half of 2016. this is despite fierce the brexit vote would have adverse affects. it is the best performer on the stoxx 600. we spoke to ride her chief executive michael o'leary, saying however the u.k. is missing out on growth. michael: we said we would pivot the growth away from the u.k. we had planned to grow in the u.k., our capacity in 2017, by 12%. we have cut that by more than 50%. there are meaningful decisions. the u.k. is losing out on significant growth. is moving into germany,
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italy, and spain, where the costs are lower and we have political certainty. guy: michael o'leary, the boss of ryanair. let's bring back david kohl, head of currency research, number one forecaster, the guy to talk to as we work our way into this u.s. election and try to figure out what is happening with brexit. in my mind, i am watching two stories play out in similar fashion. in the u.k., checks and balances are starting to work. you are seeing what is happening with the high court ruling on whether or not parliament needs playinger article 50, out. it is a similar story in the united states, checks and balances. are the extremes we have priced in -- was that the wrong call? checks and balances in politics, maybe they do work. david: they do work and this can help. i think this is also the reason -- 20 concentrate on the u.s. election, and donald trump might become president, we think it is
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important to focus on what this guy will do for the economy in the end. you might not like his program, but what matters is that he is -- his agenda is very much into reflecting the economy, doing more on the fiscal side, and all this protectionism and immigration policy -- what does it mean for the economy? it means higher inflation. going in this direction, it is getting much more easy to translate that into a financial market performance than just to say it is panic, it is negative for all risky assets. going forward, we think this could very much help the u.s. economy with higher inflation, higher growth. it means a higher profit for companies. in the end, the more room for the fed to hike rates. checks andntioned balances. let's talk about the united kingdom currently. you have to have a vote in
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parliament to trigger article 50. that is done and dusted. the people within parliament might have a bias toward the e.u.. they also have an electorate and a constituency they have to account for. i would say arguably the checks and balances in the united states, where we are, are probably a lot stronger than what we are experiencing with the brexit decision. guy: maybe. the politicians are going to throw brexit out. that is not going to happen. but maybe we do not end up with the extreme, the hard brexit. we end up with brexit, but a softer version of it. the tail risk of either side of the distribution curve is what i really messingt, the world and a big way. that is where the checks and balances draghi back to the middle of the -- drag you back to the middle of the curve. often talk about donald trump in extremes. but on the other side of the aisle, secretary clinton has had to go closer toward the view of the likes of a bernie sanders,
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with a very socialist outlook for the economy. these think in some ways we are overlooking that? that this is a democratic party that maybe has shifted to the left? shifted to the left. you are perfectly right. the question is, does it matter, going forward? even when hillary clinton becomes president, these checks and balances will be much stronger for her than for president donald trump, simply because the house of representatives will have a majority of republicans. circumstances, probably the economic impact or the impact from the presidency of hillary clinton should be much should and should be -- be put into perspective. that is why we do not focus that much on that. the impact for the economy, after all, and probably for capital markets overall, is not so -- it is not so important. guy: david, we will leave it there. david kohl, head of ethics
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research and julius baer. we saw what happened with the flash crash surrounding the dow. what will it be the day after the polls close in the united states? ♪
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the fbi absolving hillary clinton once again, two days ahead of the u.s. election. this is how the market reacts in europe. over a full percentage point on the ftse. 600 doing well. it's a market that is de-risked as the polls between clinton and trump began to tighten. cross-asset, haven asset, on offer. dollar-yen up by 1.3%. the peso rallying.
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treasury down, yields up. fulline, goals down by 1 percentage point. caroline: it really is a bit of a risk on day. let's look at potential appetite for buying. there's an appetite for house buying, more than anticipated. they accounted for 1.4% in the month of october due to the month on month move. the market has seen just .2%, a three-month basis of 5.2% uptick. that's still slower than the previous month, which was the slowest since august, 2013. still not as poor as the market was expecting. let's have a look at what has been going on in terms of stock movers. on the upside, post-nl, it's m&a monday. up 6.5% because a fighting right -- a belgian rival could be
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eyeing up -- remember, they broke off talks in a. -- in may. market not wholly buying it. it, too, beats in terms of its numbers, third-quarter market shares improving in fixed income, but from the best sent -- from the banking side, they're remeasured by the u.k. regulators. the china bank of communicators being reassessed. and keep an eye on tesco, the worst performer on the ftse. up. over the course of the weekend there was suspicious activity, reports of a freeze of online transactions. guy: another one of these cases. countdown to the u.s. election. no may have noticed -- shortage of drama.
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the fbi over the weekend clearing hillary clinton once again, back to where we were in the summer, that she did not commit a crime. both candidates making their case over the weekend for the presidency, the last weekend of the campaign. >> right now, she's being protected by a rigged system. you can't review 650,000 e-mails in eight days, you can to do it, folks. hillary clinton is guilty. she knows it. the fbi knows it. the people, the people know it. the americanup to people to deliver justice at the ballot. >> i want us to have an ongoing discussion about how we are all to makingontribute our country all it should be. i really believe that america's
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best years are still ahead of us. if to mang we all do our part. and i think it is fair to say, after all the months in this campaign, my opponent has a very dark and devices you of our country. guy: we all do our hillary cline lead, 44%. 40% of likely voters supported trump. that's an interesting phrase, who are the likely voters? ben paige, ceo of ipsos mori joins us. ben, we all know what we have been through with the polls over the last few years and the concerns people have about them. convinced me, please, that these polls are actually going to be delivering what they say this time around. i well, american polls, and hate to say this as a brit, they have tended to be more accurate
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than the ones in britain, and passed that, it's the amount of money involved in american elections. in britain, we do it shoestring. in north america, they are spending hundreds of thousands, millions of dollars on pulling. are many more polls, all direction. one if there is a systematic bias, as there appeared to be in brexit, there will be a massive upset. but if you look at the accuracy of american presidential polls over the last few decades, they have gotten more and more accurate. it should be a clinton directio. if there is a systematic bias, as there appeared to be in win, but the victory is narrow, and the american system means it is not just about pure votes, but actually about the electoral college, and which states fall for which candidate. jonathan: more money spent -- just to be clear, what does money by? in the u.k., i assume if you got to do more polls, they would have come out with the same thing, and would have been wrong. what are they doing with the
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money? >> well, they have a lot more detail, a lot more granular detail. one of the challenges in national polls, of course, is that they tell you what voters are doing at the country level. if you've got very large samples, or state-level samples, you get much more granularity about races like florida or ohio these states that have to go one way or the other in order for one of the candidates to get a clear victory. with brexit, some of the polls were right. the average error was 4%, and that's the challenge. if all the american polls are only as good as brexit polls, it could easily be a trump victory, but the probability is still very clearly of clinton, which is what pundits like nate silver are also showing. it's the granularity that they have. guy: one of the things that we have been watching carefully is how turnout is going to affect
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this. how is the pulling trying to capture people who may not have voted in the last election cycle, the election cycle before that, before that? will people feel that washington has let them down and will not participate? how is the only system trying to pick that up? >> one of the challenges for pollsters is that what we are doing is a mixture of art and science. we ask people how likely they are to vote. we asked people, are the regiered? generally, there is a relationship between that. between what people say and what they do, which is a great relief. in britain, consistently in the past, the voters tend to overstate their likely turnout by 20%. the challenge in this election is that 58% of people bothered to vote in the 2012 election, slightly down on the 2008 election. but there are millions of people
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who don't bother voting normally. normally they will still say they are likely to vote, but we then have to make judgment calls about whether they will. fthat's what did us in with brexit. those who came out and voted -- we hadn't really believe them when they said they would. pollsters are constantly trying to learn from the last election, and on balance, they are more right than wrong. jonathan: i will give the whole industry of polling a break and say, once you have captured the story, that is one thing. capturing true intentions, maybe something completely different. one of the challenges of brexit, ben, is that people would say they would vote one way, and the stigma completely disappeared when they walked into the ballot box and ticked the box. do you see the same thing? is that one of the parallels we need to think about in the united states, as people go to the ballot box? the stigma the media might put
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on them, without the stigma, they go into the polls and do something different? >> i don't think -- we don't but what we doe, have is lots of people making up their mind at the last moment. one challenge for pollsters is that we can poll people up until the night before, but about 13% of the american electorate say they are going to decide on the day. i'm not there with them at that point. if it does break in one particular direction, the polls will be picking it up. but let's wait and see. polarized in the united states, they are set in their views. the revelations about trump have a particularly dented his lead. many other elections, some of those things would put you down and out. buffer trump supporters, they are so angry, they don't care.
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many hillary supporters similarly. guy: ben, we are trying to analyze an understanding of how the financial markets are pricing in the risk of various outcomes. this is more of an anecdotal thing. when you talk to people who work in the financial markets, and i'm sure you do, do you get a sense of the moment that those people are trying to create a narrative that that's what they think? we certainly saw this in brexit. what is your sense of how financial markets are positioning? >> well, i think a trump victory is clearly more unexpected than a clinton victory. it's a lower level of probability. i'm assuming people have modeled that. what surprised everybody with brexit in britain was what is called confirmation bias. people are looking for evidence of the thing they want to happen. most of the financial markets,
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most people in the city, most of ae political elite, beliveeve brexit was going to be bad for the economy, so it's almost as though people look at things that concern their print -- that confirm their prejudice. hopefully we have learned something from that, about trying to put expectations aside and look at the raw numbers, but it will be an unexpected upset if trump wins, which is a lower level of probability. you've got a 1 in 3 chance of trump winning, and if i told you there was a 1 in 3 chance of tha something that happened when you leave the building, you should leave. guy: always a pleasure. ben page, ipsos mori. up next, we will talk about crude rebounding ahead of the u.s. election. more on that story. this is bloomberg. ♪
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guy: look at what is happening with cable, we're going to rename cable. we'll call it the martini index. jonathan: i call it the jonathan ferro cross. heathrow, you're at 120. 118, maybe?
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i will get the drinks this week. based purely on the johnson/ferro cross. guy: right. let's get the bloomberg business flash with sebastian. inastian: theresa may is india to lay the groundwork for a post-brexit trade deal, a warning that it could contain flash photography. india's wealthiest investors are arriving in new delhi, where they -- she wants quicker border checks. profitdjusted pretax raised 7% for year earlier. that's ahead of estimates of 5.2 9 billion. it was helped by the ceos cost-cutting plan.
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ryanair says second-quarter earnings rose 8% and that it plans to offer a share buyback. ryanairthe tax increased in thre months through september, beating analyst estimates. europe's biggest discount airline serves a record number of passengers. an improvementde proposal.f alien euro the dutch company investors will receive 50% proposal. in stock. it's an effort to revive talks that broke off in may as they shift the parcel delivery from letter. volkswagen's chairman has been added to a probe of the emissions scandal. the carmaker said yesterday that the prosecutor's office extended its investigation for allegedly committed galician. meanwhile, u.s. testers found software in audi cars. an audi spokesman declined to comment. that is your bloomberg business flash.
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caroline: thank you. oil rebounded amid a broader market rally ahead of the u.s. election. waitsile, the instry for more clarity about opec production quarter. we were told it stands by the deal struck in september. >> we, as opec, we remain committed to the algiers accord that we painstakingly put together in algiers. remain committed to its and limitation. -- its implementation. caroline: manus cranny is at the abu dhabi convention. what are the big scenes? caroline, this is almost like posh opec. the great and the good. the producers, suppliers, opec
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and non-opec, all coagulating. a couple big things that came to pass -- i have been chatting with a ceo about capital expenditures which will not rise materially. saying, thehe was top line for him is the ability to move to $55 per barrel could be done. take a listen. >> we are working really hard to balance sources and funds between $50 and $55. i think it will get there next year depending on the oil price. >> [indiscernible] >> well, given that the world is generally balanced today, there are a lot of stocks to drain out. i think it could easily be 55 next year. manus: [indiscernible] generally, yes. demand is up and production is dropping. i think we are pretty much on a
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daily basis in balance right now, within a few hundred thousand barrels per day. manus: [indiscernible] io3.ertainly isn't hte the i think it is the gulf states, russia and iran. those are the ones who will need to reach an agreement. but i have no special insight. manus: [indiscernible] >> well, i certainly think they produce 11 million barrels per day so they are absolutely key. manus: by the way, he did catch up with me earlier and said clearly that the russians he has on high assurance that they will join in on the cut. capital expenditures aren't going to run away. when they say has come down, they need oil above $50 per barrel.
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$55,eard him talking about easily achievable. the issue is this. the opec producers and non-opec producers -- i caught up with the omani oil president, and of course, he said the world's getting rather testy of low oil. hasn'tan minister actually come through, but he said that the world is getting fed up with low oil. jonathan: i'm really jealous i didn't get a ticket to posh opec. i didn't know it was a thing. [laughter] jonathan: what we have seen is an interesting dynamic in this market. the dollar-crude story, additionally you expect a stronger dollar, crude it down. we have had two very separate
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narratives over the last month or so. who was going to be better for the energy sector, who was going to deliver, trump or clinton? how will those two actually affect the energy market? this is one of the areas in which you could the probably the biggest divide in terms of the policy formulation. hillary clinton very much favoring the gas story. it will be interesting to see what trump would do on coal. there are really big things in the mix that could change pointing to the gimli. a busy week ahead. jonathan: they said it was so boring for a couple weeks. where with the traits? it is happening now. a busy week.let's break down how the market is positioned , 24 hours away from the election. the band is back together for one week only. bloomberg this is bloomberg. ♪
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caroline: welcome back to the market open. 54 minutes into the trading day. a beautiful sunny london morning, ftse looking sunny. check out ryanair, earnings doing well. 5.5% after we see 8% pickup and earnings, but nothing like the smash earnings we saw last year. a record number of passengers during the summer are helping it perform. and it's not quite as painful as it could be in the post-brexit
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world. bhp billiton up. miners the best-performing industry group, but every industry group is climbing in a risk on environment. metals surge, bhp billiton outperforms. and 37.37. i have to keep an eye on these german stocks, down by one euro on the back of a double downgrade by ubs. it's all about concerns of amazon competition. let's talk about how these markets are going to trade there the next few days. we have a wholly good trying to figure out exactly what this election means. jon, my sense is that the market really doesn't have a grip on the situation. jonathan: i remember a couple days for the brexit decision, i came back down to where my family lived, and everyone was saying we will vote for brexit. rallying, and i
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remember the disconnect between the market positioning and the performance of markets, the tone of the electorate. it was very disconnected leading up to the vote. guy: it does feel like brexit, it really does. this is a standard election cycle. it shouldn't be like this. brexit was once in a generation, this shouldn't be once in generation, but maybe it is. maybe this is a huge pivot that we don't understand. jonathan: i remember the conversation you and i had, just after the vote. when the vote is done for brexit, even if the u.k. votes to leave, thinks will go back to normal in this country, given the political earthquake we have seen. jonathanguy: at it is interestiw different asset classes reacted. we saw happened with sterling, but the data held up, and that is what you need to bear in mind when we look at the fed. the data didn't actually shift massively. jonathan: with caroline hyde,
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myself, for the rest of this week, equity, it's a squeeze. the havens on offer from new york. good morning. up next, "surveillance." ♪
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trump's. the fbi feeds by clearing clinton's handling of e-mails. global stocks rise as campaigning enters the final days. hsbc beats. europe's biggest bank jumps as rising revenue, delivered through a tweet, boosts profits. i am pressing like right in london, getting you started on election week. we have a great show lined up for you this week. hi

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