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tv   Bloomberg Markets European Open  Bloomberg  November 21, 2016 2:30am-4:01am EST

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♪ >> willem buiter -- welcome to bloomberg markets. we bring you the first trade of the day. we are alongside matt miller. in with the old. the former prime minister leads the field in france and angela merkel will run for chancellor. does the establishment have a chance? trump recruit from wall street? trade promo.
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japanese imports and exports plunge but a weaker yen pushes stocks higher. does japan's bull market have legs? matt: we are less than a half-hour to the european open. let us take a look at where the futures and indexes are pointing. you can see here that we are looking at green air rose across the board for european futures. this follows gains in the asian cash trade being lifted up by oil as we see some real optimism for an opec agreement. will showyour gmm that as well. nejra: if you look at commodities at the end, wti up more than 1%. point 19. after comments from iraq and iran feeding into the optimism that there will be a deal reached on the output cut when opec meets indiana later this
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month. i wanted to show you what is happening in the equity session. the nikkei is up 0.8 percent. it entered a bull market last week. the topix is 20% higher from a february low, it is in bull market territory as well. intoeaker yen feeding that. dollar-yen is a key to look at today. perhaps a little lift here in terms of what we have heard out of european angela merkel to run for the fourth term as chancellor. the bond space -- important things happening here. --year yield jumped 20 pages 20 basis points last week. the 10 year yields in japan are slightly lower. in the u.s., they come down a little as well. let us get the first word news.
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good morning. juliette: thank you. topld trump has interviewed executives for the role of treasury secretary. three candidates have wall street experience. including the billionaire investor wilbur ross and jonathan gray, the global head of real estate at blackstone group. president barack obama says he intends to give donald trump space to lead the u.s. and set his own agenda but he is reserving the right to reinsert himself into the public debate if he thinks core american values are at stake. if obama remains involved, it would mark a departure from his recent predecessor bush and clinton. japanese exports fell further than expected in october. shipments dropped 10.3% from a year earlier against a .5% fall. imports plunged 16.5% leaving a
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trade surplus. exports to china were down over 9% all u.s. shipments fell more than 11%. may prime minister theresa will today urge businesses to work with the government to ensure the benefits of capitalism are shared more equally. confederation the for british industry's annual conference, she will underline her place that a vote for brexit was the people's call for a fairer economy. global news 24 hours a day powered by our 2600 journalists and analysts more than 120 countries. this is bloomberg. matt: thank you. the continuity candidate, german chancellor angela merkel has announced that she seeks a fourth term bringing the prospect of political continuity in the euro area after upsets in the u.s. and the u.k. over in france, the republican primary is seeing a rush of support for a former prime minister, an outsider.
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only weeks ago, he took 44% of the vote. the republican candidate is expected to face a close contest against a national front party leader, marine le pen for the presidency. for more, we are joint by tony here in berlin. a lot going on. thank you for joining us. the main headline, angela merkel finally saying that she will seek a fourth term. course, that was priced in if you like that she would run again. not least because there is no obvious successor to her right now in her christian democratic union but it would have been a shock. this basically unanimously by economists and analysts that it would have been a shock if she had now at this juncture had decided to throw in the towel. matt: we see the outsider in
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france has a strong showing. angela merkel is the opposite of an outsider. is there establishment hubris considering donald trump, brexit, all of these populist candidates getting some for in -- getting some foot in. tony: it is a risk. why is she running again? why would she want to do this again after being vilified partly why parts of her own political camp for letting in too many refugees. what she said is that -- my goal is to provide not only continuity but some kind of cohesiveness. cohesion keeping the german society together. that will be her argument. and it is a strong one in germany, you have to say. matt: maybe germany is different
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from the rest of the world. thank you, tony. our european politics reporter. nejra: joining us now is then richie -- ben ritchie. we were just talking about how it seems as if we have the possibility of the establishment remaining in europe. you has said that markets in europe are primed or more volatility. to the weekend developments change anything? >> i don't think so. they are part of the picture we have seen in the last few years. we have had a lot of volatility and change. you could characterize this as a political crisis. i think investors in european equities are pretty used to some challenging markets. we will just watch and see how things develop. nejra: what will be the asset class to watch the most closely? i have the dax index. it hit a record in 2015, down
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some 40% since then. some say we will see a short-term top on the back of this announcement from germany. ultimately though we could see it fall further. should we be watching the euro? some are saying we should be looking there. >> i think the euro is a better barometer then the dax. the dax is being driven by what is happening in international markets. i think you would look elsewhere from your headline. you thats it surprise we continue to see yen weakness? i understand that people come out of that safe haven trade a little bit because of optimism for an infrastructure stimulus from donald trump but really,
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111 yen, that is a serious weakness. not just yen weakness, we have seen assets responding in dramatic ways in the last you weeks when you look at the move in bond yields and commodity movements we have seen in copper and iron ore for example. these have been substantial moves and investors are moving aggressively out of trades and into more optimistic views on how they see the global economy and other areas developing. matt: is it too soon? we have seen the baltic dry index continue to rise on this optimism for infrastructure stimulus. but it cannot happen right away. even if he gets a trillion dollars soon, it has to be organized with the states. no one will run out with the ship and fill it up with copper next week, right? >> you see investors reacted quickly to events and price and
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things extremely quickly even if those events may take a significant amount of time to affect the market. firstly, we do not know what donald trump's plans are and even if they were executed tomorrow, they may not take effect for a few years. markets are always looking for the next thing. you have seen a consensual positioning underway in terms of scenarios in the market. you have seen a huge bond rally for a significant timeframe. i think that is what we have seen and it is driving the shark move because of the consensual positioning in the marketplace. nejra: i'm glad you mentioned the bonds. the worst two weeks in bonds. i have hr showing the french 10 year yield comparably over german debt. when you look at the european do youace, how high think yields are going to go before we get some move from the
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ecb to say it is going to increase stulus to avoid that? >> to have to be quite careful. it is quite logical to some degree. you can build a case around donald trump and high yields in the u.s. higher inflation. and perhaps you could make the case for higher rates. it is a completely different ballgame when you look at the european economy. no one should read anything into the fact that donald trump has been elected. what you have seen is that bond yields are low. they rise in certain markets. investors are asking if that makes sense. they are really only back to where they were at the beginning of the year. and used to have german bunds at 30 basis points. i think we need to bear that in mind. we are not looking at the prospects for italy and france. stocks trading in 19 minutes in europe and the u.k. our guestay with us,
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through the open. coming up in the show, japan's trade slump. exports and imports feel the pain but a weaker yen boost stock. how hard can japan's now bull market and equities run? how will markets react to the latest medical developments in two of europe's biggest economies and building donald trump's cabinet. with inauguration less than two months away, crucial role remain open. aims from wall street surface for treasury secretary. ♪
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nejra: you are watching the european market open. let us get the bloomberg business flash. here is juliette saly. juliette: sever security giant symantec is buying lifelock 42 $.3 billion. lifelock was also being pursued g and evergreen] a. it has a market value of almost $2 billion. incoming u.s. senate minority leader chuck schumer says he has the votes to stop president-elect donald trump from repealing the dodd frank act. he told nbc's meet the press that the senate democratic minority would get help from republicans in any such fight. donald trump has said he will
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fight -- scrap the act. employees ofian crown resorts have been detained in china for a month and are now being normally arrested according to the australian financial review citing a source it did not identify. it said the fourth was trillion and 13 other chinese-based staff are all third -- are also in custody. was trillion as foreign minister has said her department is trying to get official confirmation of this goddess of the crown employees. that is your bloomberg business flash. matt: thank you. trade data out of japan overnight showing continued weakness in the world's third biggest economy. exports fell by more than 10% while imports plunged over 60%. this is a chart of exports. everyhing below here,
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column on the chart with the exception of this one is below zero. a big drop there for exports in japan. the picture does not look good and yet, stocks into new to rally. nejra: a lot of that is down to the weaker yen. japanese shares extending their longest winning streak since august 2015 when you talk about the topix. holding losses after dipping to its lowest against the dollar in more than five months. very much in bold territory. bull territory. ben ritchie is still with us. i want to draw your attention to this charge. here, i was obsessed with this last week. the yield premium on treasury jgb's.gbg's -- versus it has been moving in tandem. the dollar is going to rip
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higher. merrill lynch sees the yen falling to 120 per dollar. does this portend more yen weakness and is that been a case for being more bullish on japanese equities? ofit is more indicative moving into a risk on phase. yen, japanese equities would be one of them and they are looking around to see where are the opportunities and that is one of them and we have seen that play out in the past. if it continues over the middle -- medium-term, it it will be driven by what is happening in fundamentals with company performance. in the short run that could continue. nejra: the other reason of course to look at this yield differential is that it can tell us a lot about at what point do you see japanese investors
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wanting to move back into treasuries. how are you looking at that dynamic? >> it is that broad brush view of the financial markets at this time. you have seen literally a physical charge in certain areas deemed to been risk on activities. investors would be wise to step back and let some of these dynamics play out. i don't think there will be much buying of japanese equities because of what is going on with the dynamics in the short-term. ultimately, what will really drive that is a performance of the japanese companies and their profit potential, not just the differentials between the dollar and the yen. matt: i would how much this divergence is important. they will8% chance raise on december 8 and the bank
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of japan leads on december 20. they have just come out with this want buying bazooka affectively last month saying they will keep the yield curve where they want it. continue orvergence does japan have to turn around? >> i think we will continue to gence for some period of time. i don't think one should look at what is happening and the u.s. and say that needs we should see the same kinds of effects across global bond markets. i don't think that is the right conclusion. we could look at what is happening in the u.s. and say -- what are the consequences for global markets but we may not see central bankers do the same thing everything else. -- everywhere else. nejra: our guest will stay with us on the european market open. we are minutes away from that
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open. up next, we take a look at the movers in today's trading including the energy sector as opec officials gather in hopes of finalizing a deal. this is bloomberg. ♪
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of claritytle bit over the german capital after angela merkel over the weekend revealed that she will indeed
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run for a fourth term as the chancellor of germany. six minutes now until the open. welcome back to the european open. on stocks your check to watch. energy stocks. keep an eye on those as sentiment does a 180. both iraq and iran say they may have plans to keep production limits down and as a result you could see energy stocks up across the board. i am taking a look at minors. at the end of last week, we saw those commodity producers dragged down the stoxx 600. metals are seeing rallying today. copper up 2.8%. nickel, up 2.9%. it will be interesting to see how those miners open. we have seen them track the metal prices ready closely in the last couple of weeks. also looking at novartis.
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it says it will need pharmaceuticals. it may pay up to $665 million. another stop we are watching at the open. quicklywanted to mention mighty. do we want to talk about that because it could get whacked at the open today. first half revenue, down 2.6%. the full-year outlook, below what analysts were looking for. downyou see mighty group 31% in the last 12 months. it could lose more ground today and fall into the low that we saw in september. nejra: we are seeing cause for it to fall as much as 50% at the open. definitely want to watch. coming up, it is the market open. keep an eye on european futures. we saw a rally in asia overnight. it could be that european markets open higher as well. your stocks futures up 0.4%.
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the open is next. this is bloomberg. ♪
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nejra: good morning and welcome to "bloomberg markets: the alongside matt miller in berlin. we are moments away from the start of trading. matt has your morning brief. matt: thanks very much. in with the old. former prime minister. leon -- a former prime minister leaves the field in france as angela merkel runs for chancellor. but does the establishment stand a chance? and trump's cabinet building. soon merge for the treasury pick. will donald trump recruit from wall street?
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trade trauma. japanese exports and imports plunging, but a weaker yen pushes stocks higher. does japan's bull market, its new equities bull market, actually have some legs? nejra: european markets just , bang -- just opening up on 8:00. the ftse 100 in white. the dax in blue. the cac 40 in purple. futures were pointing higher. we were expecting a little bit of a move higher in european markets. it looks like that is indeed happening. the cac 40 pretty much unchanged at the moment. we had the announcement from leaders that he is the in the republican side in france. waiting for the dax to move. tell us how the sectors are doing on the stoxx 600. the benchmark up. >> this is how it is currently
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spread out. you are seeing industry sectors at relative flaggers are consumer staples and real estate. let's cross to the bond market and see how that is playing out. gilts at 1.15. that is slightly higher. more importantly, as we look ahead to what is coming this week, we are seeing a lot of activity in the oil space with this chart over here. it really shows you the total position that the hedgers are taking both because of longs and shorts. that has reached a new high, the highest level in nine years. they are trying to protect to the upside and downside, and uncertainty is being driven by opec. what are some of the stocks we are watching this morning.
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we are watching what is happening with novartis, off the back of the announcement that selexare acquiring pharma. total $655tion could million. milestone payments -- novartis down 0.7%. we are seeing how the higher commodity price is feeding through to the stoxx 600. oil and gas up 0.8%. , i'm when to pick it up, because you mentioned oil. i want to show you a quick chart. the u.s. dollar and oil are normally negatively for -- negatively correlated. that makes a logical sense. a stronger greenback should be able to buy more crude, pushing prices lower. the relationship has turned positive with factors including a potential opec deal and donald trump entering the white house soon.
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,ou can see from this chart 37.15 -- 3715 on your bloomberg, the correlation has turned positive right here at the end. that is very interesting. still with this is been reggie from aberdeen asset management. of what we normally expect been turned on its head wavethis populist politically? has he carried over into the markets? ben: if you look at the market reaction to trump's election, certainly turning it on its head is the right way to put it. i am not sure it is about populism so much. we have seen a stronger dollar, stronger commodities. have seen commodities working in different directions to that which they have done in recent years. if you look at what has happened with iron ore and copper over the last two weeks, it you have seen a stronger dollar. that is not a correlation we have seen at any point in the last few years. we have certainly seen quite a
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lot of those dynamics really changing over the last couple of weeks. it has been an incredibly volatile time. i just want to talk to you about the prospect of opec actually cutting production. we are seeing oil rally today, just on signals from iraq and iran that that might happen. we do see the price sensitive to any big comments that come out on a daily basis. what do you think of some of the risks this might not happen? ben: over the last 2.5 years, we have failed to see accommodation from from opec. we have seen loose agreements, but we have not seen anything happening. it could happen, but equally, maybe not. i do t think there is a huge degree of confidence that a deal will be reached. i think there are logical conclusions that would make you think it is unlikely they will achieve a deal. but given everything that has
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happened over the last year or so, i think investors are still pretty cautious. view onnd what is your where oil could go in the event that we do or do not see a deal? what is the potential upside and downside? ben: over the medium-term, two to three years, we are constructive on where the oil price might go as we see supply decline and more expensive sources brought on stream. an opaque deal could accelerate that process by cutting the excess supply out of the market. if a deal does not happen, you probably see oil test the $40 level, maybe below that. wethe deal comes through, are likely to see oil move higher and above $50. but over the medium-term, something in the range of $60-60 five dollars makes ants. how we get there is anyone's guess. matt: one of the charts i love to look at for a great, quick snapshot on the bloomberg is opec go.
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this shows you a number of different key data points for opec. obviously, saudi arabia has a more than 30% market share as far as production is concerned. they can change the game with one move. ,ince they are about to ipo doesn't this lead you to believe they are willing and ready to do that? ben: i think saudi arabia, when you listen to the commentary coming out of opec, some of their representatives, is certainly the constructive party in all this. but end of the day, you are trying to put together an agreement with a disparate group of individuals who all have different ambitions. it is hard to put together production cuts when people want to grow production. you have many members of opec that want to see higher prices at the same time. it is a challenging situation to put together that kind of deal when you have really disparate ambitions from the various parties. trying to reach some kind of compromise has been challenging.
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we will see what happens over the next week or so. saudi arabia has sounded to be, in recent times, conciliatory partner in opec and has a significant stake there. but on its own, i don't think it can change the game. nejra: ben ritchie is staying with us on the european market open. we are seeing oil companies rallying on the sticks -- the stoxx 600 about seven minutes into the open. commodity producers leading the gains right now. a from wall street to washington -- who will donald trump pick for the treasury top spot? time, brexit negotiations. we have more from our exclusive interview with the president of poland. plus, knocked out at the first hurdle. nicolas sarkozy is out of the residential race, but what do the remaining candidates mean for political risk in france?
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matt: welcome back to bloomberg. we are taking you to the european open. looking at a shot of new york city as it went up out there. here in berlin and over in london, we have nejra cehic, matt miller. the markets in full swing.
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we are looking at green arrows across the board for european stocks, at least as far as the national indexes are concerned. the ftse of 0.25%. the dax and the cac both up of about 0.1%. energy and mining stocks lead the way. just a littledown bit, but the national indexes gaining across the board. measure? bit of subdued trade on the stoxx 600. i am looking at how some the industry groups are performing using the gr function on the bloomberg. we are seeing commodity producers leading the games, up 1.4%. all metals on the london metal exchange rallying today, resuming those games. commodity producers a bit of a drag on friday. on the gas up 0.8% higher oil price today, with comments from iran and iraq boosting speculation we might
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see that deal when opec meets. we have got health care on the .ownside novartis is actually one of the worst performers after it announced it is going to buy c elexa pharmaceuticals. here is how the industries are shaping up. let's get the first world news -- first word news with sebastian salek. seb: japanese exports fell further than expected against estimates of a zero point -- of an 8.5% fall. down over china were 9% while u.s. shipments fell more than 11%. aberdeen asset management ceo says he is more positive than some about a donald trump presidency. gilbert spoke to bloomberg this morning. >> he is a good businessman. he is pragmatic. i think he will -- he will deal with the issues that confront him. and to a certain degree, a
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certain degree, i agree with what president obama was saying, which is, the reality of the office will make him adapt. and i think he will adapt. seb: u.k. prime minister will today urged businesses to work make sure thek to benefits of capitalism are shared more equally. she will underline her believe that the vote for brexit was a call for a fairer economy. global news 24 hours a day, powered by more than 2600 journalists and analysts for more than hundred 20 countries. all right, yousef -- sorry. thanks so much, sebastian salek. as the president-elect's cabinet gradually takes shape, we await news on some of the most crucial roles here. a big question for politicians and for the public as well as investors -- who will run
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trump's treasury department? at least three more potential candidates have emerged. they include billionaire investor wilbur ross, jonathan gray who is head of real estate at like stone, and david mccormick who is president of bridgewater associates. with us is ben ritchie from aberdeen asset management. -- --d steve managing fortune, who made his in hollywood but comes from global -- from goldman sachs. do you have to have some of the with financial markets, wall street experience, in the position of treasury secretary? ben: i don't think you have to have that, but it is certainly helpful having someone who aserstands markets as well someone who understands economics. it is probably a helpful position to have in that role. do you think trump has to have his cabinet put together sooner rather than later before the markets start to get a little bit worried? will the uncertainty start to
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bother equities markets if we wait too long? ben: i think he has a certain degree of time, to be honest, to put together the right people in the right places. i think these things are never simple and he has got to be able to put together a complex set of individuals and make them work as well. a difficult job to be able to put this together. it is something that has to happen every four years. some timeis certainly for trump to be able to put together the right people. orther that takes a few days weeks longer, i don't know if it makes a big difference to markets. nejra: as a trump presidency slowly begins to take shape. -- to take shape, a bout to scrap dodd-frank. incoming senate minority leader chuck schumer blasted the proposal. senator schumer: we are not going to roll back dodd-frank. they should forget about that. we have 60 votes to block him. i am interested to know
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your view on banks, u.s. banks, european banks, whether you take a differential view to them based on what we have heard from trump so far. ben: i think absolutely. when you look at the prognosis for banks exposed to the european markets -- the u.s. market, you have a yield curve, a strengthening dollar, and a potential for loosening and regulation. that is in more attractive picture than two or three weeks ago. when you look at european banks as opposed to europe, that steeper yield curve without the dollar exposure, maybe they do not have to pay bit but benefit from looser levels of regulation, it is more difficult to be enthusiastic about those types of operations as you might be about some of the others. matt: we pick up on the soundbite of chuck schumer saying he has the votes to fight the president, because the contention makes the story better, that i think the more interesting piece of what he was saying on the sunday shows yesterday is that he has places
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where he can work together with trump. t looks like gridlock will not be the case for the first time in a long time in washington. typically, that scares markets. but are you happy to see democrats work with republicans when it comes to things like stimulus, infrastructure spending, reducing regulations? ben: i guess we have been through an extended time where we have had gridlock in congress , in the senate, very difficult to pass meaningful legislation. on that point alone, we will get to a position where we see some consensus and agreement being built across the aisle. that would be a positive thing. matt: do you think we are going to see anything like this spread out of the u.s.? europe seems to still be embracing austerity. meanwhile, in the u.s., we are talking about a trillion dollars of infrastructure spending,
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cutting taxes, reducing regulation. can any of that find its way across the pond and start working over here? or there? ben: i guess when you look at the u.s., it is in a slightly different position too much of europe. unemployment is in the single digits. the output gap is relatively modest. of are seeing high levels inflation. and you are seeing a unitary government which can make decisions, to some extent, on its own. europe is a fragmented place of small nations who need to decide their own fiscal policy on their own. there is the ecb, but there is a more difficult picture. they are also more constrained by agreements they have to stick to within the fiscal frameworks. that makes it more difficult. we will see the statement on wednesday. the u.k. might be looking to build something of a halfway house between what is happening in the u.s. and in continental europe. i do not think investors should get too excited about what will be said on wednesday. nejra: i want to bring the conversation back to what we
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started the program with, talking about perhaps the establishment remaining in europe with merkel and francois --lande -- france off be on francois fillon. hatit likely that can -- t lepen can do well? influencerrand, his as a semi-independent, could perhaps allow le pen to make it through to the final round. but a credible centerleft candidate might be successful, even against le pen. francois fillon has the advantage of being an outsider instead of a pure establishment can -- candidate. coming acrossts the bloomberg from goldman sachs, raising their wti price forecast in the first quarter two $55. the be case, they say, is for
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an opec oil cut being announced next week in vienna, and for russia to freeze oil production. i have brent crude up here, but i will go ahead and put up wti just to show you a two day chart of that as well. wti up about 2% over the past two trading sessions. oil is something you want to keep your eye on in today's trade. ben is going to stay with us all along are. we appreciate your staying with us on this monday. up next, a glass of cold water to cool emotions. that is what the polish leader says is needed in brexit negotiations. we have more from that exclusive interview. ♪
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matt: 23 minutes into trading. welcome back into the european open. u.k. prime minister theresa may will today urged businesses to work with the government to ensure the benefits of capitalism are shared were equally. in a speech to the confederation for british industry's annual will underline
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that the vote for price it the people's call for a fairer economy. nejra: meanwhile, the polish president has expressed concern that inflammatory remarks around brexit will lead to looser cooperation between the european union and the u.k., something which could hurt both sides. andrzej duda spoke to bloomberg in an exclusive interview. we want ties between europe and the u.k. to be kept, even if brexit does go into force. the u.k. is a strong economy, and it would be a great loss for the e.u. if it was cut on the the ties of, and good, open cooperation between the two were severed. this: i want to pick up on point first about the businesses and the impact from brexit. it, our business is really going to be holding back on investment until they get any certainty from article 50 being triggered? the logical that is
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assumption. you have to assume major deferredts could be until we see more clarity around what the terms of trade might be for those investors. that is what we are going to see. nejra: chancellor of the exchequer philip hammond said yesterday that businesses may uncertainty,s of and public finances face a sharp challenge. what are you expecting out of the statement in two days? ben: i think it is a difficult situation. on one hand, mark carney has already come under political pressure for agreeing to preemptively loosen monetary policy in advance, perhaps, of a weakening economy, signaling we might see a weakening economy. that has gone badly with some inxit years -- brexiteers the government. this will not necessarily be taken well by some in his own party. the other issue that have
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politically is managing that position against the labor party. they are never going to be to the labor party if they get into a bidding war about how much they are going to spend. will betical argument more toward being sensible with the public finances. i am not sure there is room for philip hammond to do much on wednesday. matt: speaking of crude, i can understand other businesses waiting for businesses to play out. won't banks, as soon as they see movele 50 trigger, want to immediately to dublin or frankfurt, because they have to assume the worst case scenario? banks think actually probably have more flexibility in terms of their ability to be able to move. they can move relatively quickly. you are talking about i.t. investment and people. those things can happen fast. i think banks will wait to see what the terms of trade are that are available for them. for longer cycle investments in manufacturing and
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industry -- those companies will be more nejra: wait and see. -- will be more wait and see. nejra: thank you for joining us, ben ritchie. up next, not out at the first hurdle. we look at france. ♪ 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. matt: half an hour into your european trading day, welcome back to "bloomberg markets." games acrossg at the board for the four european countries. the dax sanlondon, fran for, and the cac in paris all showing gains. the stoxx 600 is not. the reason is, you have swedish and swiss companies that are weighing down the bigger, broader index. nejra: after two weeks of gains, we are not seeing the stoxx 600 in green. edging into negative territory. we are seeing gains in commodity
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producers because of the rally in metals across the london metal exchange today. take a look at my emaar are -- at my mrr function for the bloomberg. anglo american up 2.9%. 2.3%.lliton up the rallying commodity producers is failing to lift the entire benchmark. seehe downside, you can this down more than -- you can down more than 20%. and novartis is weighing down health-care stocks after an announcement of an m&a deal. former french president nicolas sarkozy has been knocked out of the presidential race at the first hurdle. support for francois fillon saw him take up the vote.
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the longtime front runner had 28% according to election officials. they will face off in the runoff next sunday. caroline kanaan in paris, standing by with a guest. caroline: this is a political analyst in paris. bruno, thank you for being on bloomberg tv this morning. what surprised you the most in this primary? bruno: two things surprised me the most. the first is the turnout. we were expecting a big turnout, but the polling stations yesterday -- it is amazingly surprising. in france, where people are saying france does not trust politics any longer, a huge turnout for us. the second thing is the big gap between francois fillon and alan juppe. such a big, with gap, more than 15 points, ahead
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of francois fillon. francois fillon is certainly going to win the primary election. caroline: you have said francois fillon is sarkozy minus the show. why would you say that? francois fillon used to be the prime minister of sarkozy. he has about the same lines on the economy. he wants less tax, less public sector, less state intervention. he is basically the same as sarkozy, but minus what makes the voters dislike sarkozy, which is too much political fallout, too much affairs, and too much provocation. it is the provocation that finally the right wing do not see why to take the risk of sarkozy when you have francois fillon. there used to be another front runner. do you see any chance? bruno: i do not see how we can see a big gap in this week, --en to pay -- and lng pay
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and juppe seems to be in good position. francois fillon, i cannot speak to what would [indiscernible] caroline: was sarkozy too moderate? bruno: he went to cool. the right are expecting that in particular on the economy issues and lngpublic sector, juppe said he would like to moderate that with a soft reform and govern with the center. the center for the right is not what they want. they want a really right-wing on--- a really right-wing economic issues.
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caroline: we have seen brexit with donald trump. in this primary, pull failed to predict these outcomes. what went wrong this time in the opinion polls showing that alan juppe was going to be the front runner? bruno: since two weeks, it was clear that francois fillon was gaining and gaining. sayhe second side, i would the pollsters had political difficulties, because in particular in a primary election, the vote is quite fluid. you have few candidates. not think they are betraying the candidate if they vote for a second one. the votes are volatile, extremely fluid, and extremely difficult to predict. caroline: what are the chances of emmanuelle? how does it impact this election? int is this going to change
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the election next year? bruno: it changes many things, in particular for emanuel marquand. this opens a big avenue for emanuel marquand. if emanuel marquand wants, he can clearly attract the center. but it is likely that the republican leader is obviously going to declare that he is candidate next week. caroline: has this killed the chance of emmanuel macron? bruno: this is going to polarize the election, left versus right. there is very little space for emanuel marquand. francois fillon the best candidate to face marine le pen next year? bruno: francois fillon will attract the right wing. the right are not going to play
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in voting marine le pen in the first round. they are going to support francois fillon. in the second round, marine le it could rise up. caroline: thank you very much, bruno. nejra: thanks so much. i want to draw your attention to a chart. we brought it up earlier. it shows that after the u.s. election what happened to the french 10 year yield over comparable german debt. you saw a sharp spike as investors wanted to price in the risk of a wave of populism from trump, moving over to france as well. it came down and we have seen it head up again. this will be important to watch eurourse, as well as the map that our guest was talking about, a real gauge of risk of what is happening in terms of wave populism. matt: maybe that spike means le
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pen has a chance in france if trump had a chance in the u.s. does merkel have a chance here in germany? she is major establishment. vogue in europe? we will discuss, next. ♪
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nejra: this is the european market open. 40 minutes into the session, we are seeing the ftse 100 up 0.3%. the dax pretty much unchanged. the stoxx 600 pretty much unchanged. two basisd yields up points, going in a different direction to the 10 year treasury yield, which is down for basis points -- four basis points. matt: i know that you and guy like to use the mrr function to look at movers. but i like to use mov. the reason is, you can go into this drop-down box and change to index points rather than percentage changes. then you can really see what is moving the index. in this case, the stoxx 600, you can see novartis, roche, novo nordisk. it is swedish and swiss names that are waiting on the stoxx
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600, which is why you see the ftse, the cac, and the dax gaming while the stoxx 600 falls down. it has those non-core elements on the on -- weighing index. interesting that you are saying the pharmaceuticals dragging down also. novartis wanting to buy celexa. matt: you have some there, but they are not as heavy european wide. the lodget down, year. it is really the swiss and swedish movers that are the drag on the stoxx 600. let's get to the bloomberg business flash with sebastian salek. seb: thanks, matt. cyber security giant symantec is buying identity theft company lifelock. lifelock was being sued. by 45 percent up this year, giving it a market
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value of almost $2 billion. facebook plans to take on another 500 workers in britain. the move would expand the social network presence in the u.k. by 50%. that is when the company opens a london headquarters next year. we will be talking to the facebook vice president at 9:20 u.k. time. u.k. senate minority leader chuck schumer says he has the votes to stop president-elect donald trump from repealing the dodd frank act. schumer told meet the press that the senate's democratic minority we get help from republicans in any such fight. countdown said he would scrap the act, which attends to prevent a repeat of the 2008 financial crisis. that is your bloomberg business flash. matt: thanks very much. angela merkel may be seen as germany's continuity candidate, but a lot has changed since her first election in 2005. the chancellor leads an increasingly divided germany
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after enforcing a policy to admit over a million refugees from all over northern africa and eastern europe. she acknowledged that in a meeting with reporters. she said, "we will be grappling with challenges from all sides. from the right as never before, and from a strong polarization of our society." isning us to discuss merkel the senior program director at the german marshall fund of the u.s. thanks for coming in this morning. is there a popular -- a right-wing populist chance here in germany, as there was in the u.k. and the u.s.? or is germany still so solidified in the sort of centerleft? almost a reaction to the loss of world war ii >>. -- world war ii. >> germany has a solid center, and the mainstream covered by the establishment parties. 80% in west germany and 60% in
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east germany. there is a fairly solid center. what complicates matters for a right-wing challenge, if you isl, in a moment like this, obviously the system that we have. it is a coalition system, a multiparty system. it is not a winner take all situation as we had with the u.s. election or a brexit referendum. matt: globally, it is not all right wing. we all know donald trump and the brexit leaders, and the le pen family, but you have left wing parties like put a most in spain and syriza in greece -- like inemos in spain and syriza greece. is there a chance of a populist defeat in germany from either side? >> i think we don't see it. on the left, we have long seen a fringe party that comes in at around 10% in federal elections. on the right, we have about a therating at the moment for
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new front alternative for germany. they do not sort of act together, as it were. they do squeeze the center from both sides. matt: in the u.s., we had the left and the right both going after trade. there is a potential problem former goal. real immigrant a or refugee problem since the scandal in cologne last new year's, but there is still 10 months until the election. if you get some sort of refugee problem -- god forbid a terrorism attack for example in the next few months -- that could hurt merkel's chances. >> absolutely. if we see the political dynamic calm over recent months, that is because there were no disruptive events. 10 months until the election, there is a good chance something will happen, with some form of relationship to migrants or refugees. that could be any form of
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islamist attack in the country, another incident of the kind we saw new year's eve last year, which fueled a dynamic in favor of the right-wing populist party received here. nejra: i want to know if anything will change for the way angela merkel approaches relations outside germany, now that trump has been elected u.s. president, donald trump. for example, if we look at russia, merkel has been the main conduit for diplomacy with putin, but has also been pushing for sanctions. you see that relationship changing at all under a trump presidency? joerg: not necessarily. i think angela merkel will be very pragmatic with any partner outside of the country. she will try to build a working relationship with donald trump, as she had with previous u.s. presidents. i also don't see her changing her line on russia, because she does that out of conviction. she sees russia as a threat to a
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system of international cooperation, integration that we have built for many decades, and she is certainly not going to divert from the course. should investors or political watchers looking at europe just feel generally more optimistic about the state of the union, as it were, now that we have had this announcement from merkel? in the first place, it is the announcement for her candidacy. that still does not mean she will win the elections and remain chancellor. there is still obviously an ultimate decision to come next year with the federal elections in september. but yes, this is certainly a calming influence. this is a signal toward stability, toward predictability . so in that sense, i do think this should have a positive influence. matt: who are her allies here in germany, in the cdu and csu, the center-right governing parties
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here? joerg: her support, broadly, has obviously weakened. there is many people who criticized her much more openly than they would have in the past. there are big question marks among people in her own party. there are obviously big question marks among her bavarian sister party. in that sense, she is not in the same overwhelmingly strong position she was in the past. but at the same time, i think many people in this country -- and this cuts across parties -- acknowledge that at this point in time, she is the ideal person for this job in germany. matt: she also does not seem to have as much opposition from the s kv, the centerleft party here in germany, as cdu candidates have had in the past. mart as is the coalition working better together even if she does not have much support from her own party? joerg: i would say there is more
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tension in the coalition now that they have to paint about. 's appointment of president in this country has something to do with keeping the option open of that coalition with the social democrats that we have seen in place for the last years. and i think the same question emerges for the social democrats. what is their alternative option, if they want to remain in government? at a moment, it does not look like there is much of an option. so both the christian and social democrats need to keep the option open of continuing to govern together after the next elections. matt: thanks a lot. really appreciate your time this morning. a lot of interesting stuff going on here politically. the news over the weekend mething we have all been waiting for. that is the senior program director at the german marshall fund of the u.s. measure -- nejra? nejra: nigerian third-quarter gdp contracting 2.24 percent
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from a year earlier. next, facebook continues to like the u.k.'s prospects. more on why the social media firm is bullish on british business. ♪
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matt: welcome back to the european open. i am matt miller in berlin alongside measure che pitch in london. let's look at what is going --
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alongside measure change -- a ceich.e nejra with euro gaining ground again. we saw it dropped to 1.05 and change in the last trading session on friday. the yen, you see right now, at 1.10, so gaining a little bit more strength. it has been down to 1.11 against the dollar. so a lot of real weakness in the yen, turning around a little bit. finally, you see the south african rand, 14.25 to the dollar. on theinteresting rebound because more than half of economists surveyed by bloomberg think that s&p will strip south africa of its investment level rating. it will be cut to junk. you look at cds, investors see
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south africa as more risky than russia. u.k. prime minister theresa may will urge businesses to work with the government to ensure the benefits of capitalism are shared more equally. anna edwards is standing by at the confederation for british industry's annual conference. good morning. what else is theresa may expected to say in her cbi speech? good morning. she is going to be speaking this morning about spreading the benefits of capitalism a little further. this is very much in keeping with the messages we have heard from prime minister may since she first came to lead the conservative party, whether that was outside running street on the day she took leadership of the party, or at the conference speech where she wild markets a little bit with some of the things she had to say. viewin keeping with her that she wants a capitalism that works for everyone. expect more of that rhetoric. we understand she also wants to build a you bridges with business, perhaps with a commitment to the lowest corporation tax of the biggest
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20 economies. that is a line "the telegraph" is running with. a statement we saw yesterday, and industrial strategy, what exactly that means. some firms are still investing in the u.k., despite the brexit vote, including the social media firm. tell us about those glimpses of optimism. anna: we are going to be bossing to facebook's u.k. later this morning. 9:20 u.k. time. they are going to be increasing their headcount in the u.k. despite the brexit vote. 500 jobs have been created, a 60% increase in the staffing levels. lots of those will be engineering jobs. google announcing last week and increase in their headcount. a lot of questions remain over this kind of announcement. how set in stone is it? if we see a brexit vote these companies do not like, how much hinges on free access to talent globally?
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that could be important. we will get more details this morning. youa: anna edwards, thank so much. you have been watching the european market open. the stoxx 600 down 0.2%. the ftse 1 -- the ftse is still in positive territory. ♪
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francine: former prime minister leads the race to take on marine le pen's national front. trump brings in wall street. the president-elect interviews top investment players in his search for a treasury secretary. and a kinder capitalism. the u.k. prime minister is due to address the business lobby. she will urge corporates to work toward a fairer economy. this is "bloomberg surveillance ."


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