tv Bloomberg Daybreak Europe Bloomberg December 13, 2016 1:00am-2:31am EST
size oftors await the the shares which are said to be as much as 13 billion euros. we look forward to a strategic update this morning. secretary in waiting. donald trump closes in on appointing rex tillerson as the nation's top diplomat as lawmakers continue to express concerns over his ties to vladimir putin. and data deluge. china stints resilient after november saw a pickup in retail and factory data. attention turns to property prices in the world's second biggest economy. ♪
anna: a very warm welcome to bloomberg. it is a break: europe. i am anna edwards in london. manus cranny is over in dubai. this time yesterday we were watching the 10 year yields trying to get up to 2.5%. it is currently at 2.469. we need to focus in on the options yesterday. was $44 billion of paper brought to the market yesterday. we traded up to 2.5%. if the dollar continuing to march higher? pausing the bond market -- will the bond market pause? the demand for three-year paper was the lowest since 2009 but
the demand for 10 year paper -- that jumped up a little bit. 2.39%. you are seeing the complexion of the buyers and the seller straight the big question is -- has the bond market selloff run its course? look at the japanese government bonds this morning. 30 year government bonds in japan. at .80%. up the marches -- the highest since march 2014. are there sufficient buyers out there? trade been reflation placed in? riced in?ace let -- anna: let us put up the risk radar.
equitytouch on the story. msci asia-pacific is up by 0.2%. shocks in shanghai are down. even as we got the better than as to made it industrial output and retail space dated -- retail sees data. the yen. a little bit of weakness. the dollar rally faltering a little bit. the dollar was down by 0.6% yesterday. a fairly substantial move. you mentioned inflation. loftyi coming off the levels from yesterday. hovering around the 52 mark. the the weekend and post euphoria of yesterday. inflation is a big theme the cause of what is happening in the saudi arabian conversation. year.e u.s. 10
we will put that in there to round out the conversation. hike andnce for a rate a two in three chance for another hike in june. stabilization held in november with industrial production climbing 6.2% from a year ago. slightly above estimates. retail sales advanced 10.8%. this gives policymakers more well to switch from stimulus towards curbing financial debt. donald trump will announce that he plans to nominate exxon ceo wrecks tillerson as his secretary of state according to a person familiar with the decision. if he is confirmed by the senate it would hand the job to the nations top -- it would hand the .ations job as top diplomat
topwhile, the two republicans in congress, image and paul ryan have offered strong support for the intelligence community. that comes in sharp contrast to donald trump's attack on the cia after reports that the agency found that the russian government tried to help him win the presidency. >> it defies belief that republicans in the senate are reluctant to review russian tactics or ignore them. let me say that i have the highest confidence in the intelligence nudity and especially the central intake should -- the central intelligence agencies. anna: >> -- >>the u.k. opposition labor party's brexit spokesman used a quitting the year would put the british economy and jobs at risk. we will bring you an interview
with him in our european close show this afternoon. christine lagarde has told a an imaginaryhat plot has led to her charges on negligence. she rejected the charge that she acted in the general interest. the hearing continues today. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. matt: -- manus: i'm looking at dollar-yen. it looks like that trade is still very much in play. the momentum seems to be building for a flurry at year end. juliette: on the japanese equity front we are seeing some
positive movement coming through in the nikkei and late trade. despite a fairly negative start to the day's trade. we have also seen a bit of a turnaround on the shanghai market. yesterday, it had its biggest fall in six months but more kind -- more buying coming through turned that negative trend of around. there is still a lot of concern about liquidity in the market and be overall housing market in china. that has also been weighing on the hang seng in hong kong. hong kong city borrowing costs -- funding costs rising for a 10th consecutive session. strong support from the energy players in hong kong. all of this on the back of the opec fueled rally. the australian market and underperformer today. we did have some disappointing
around the we test and -- the weakest in three years. despiteing to note that that data dump from china which was better than expected, it did not live the aussie -- it did not lift the aussie dollar. quickly, if you stocks we have been watching. worth noting this stock in tokyo. there has been a report that it will buy as a be miller for 900 billion yen, $8 billion. the company has not commented on that. and health care is where you saw most of the buying. anna: thank you very much. let us turn to the european banking scene. -- italian banking store story shifted its focus today. 13 lender could offer billion euros of new shares in a bid to boost capital levels.
slimmest had the capital buffer on the so-called systemic important lenders. shares and the group have fallen 50% in the past year. joining as now onset to discuss the specifics run unicredit in the broader european story is jeremy dressed. analyst.enior credit thank you so much for getting up early to see us. what do you expect? we look to hear from unicredit early this morning with further details of their restructuring and capital raising is an issue. >> we will be looking at bigger capital raising. the news this morning is 13 billion euros.
the disposal of the entire stake into the largest bank in poland. in quite a lot. unicrediton is will ?ncrease the cash coverage that will have repercussions for the italian banking system. if someone like unicredit increases the cash coverage on the bad loans and are unlikely to pay 60% it will put pressure on the other italian banks which are lagging behind unicredit. anna: you mentioned some of the highlights we should be looking
for. what about the nonperforming loan at story? -- what about the nonperforming loan story? we have a graphic we can put up which emphasizes just how bad the nonperforming loans are. unicredit, like many in italy is battling with this problem. on the is a reflection subpar performance of the italian economy in the last 10-15 years. bank took at the legalistic approach to a nonperforming loan as opposed to a more commercial one. role ind to change the terms of the possibility of working out the loans.
the last government introduced the measure but should speed up the process in italy and hopefully reduce the foreclosure -- reduce the time for foreclosure. manus, come in here. manus: if you look at the ftse, there comes a point where you have to believe that the italians will get the nonperforming loans sorted out but these are the laggards. 70%, and 80% underperformance. at what point do you shift or regain the believe that italian bank equities can rally? >> that is what this chart is telling us. the market does not believe what the government has been doing.
more of the beginning that the end of the story. 2016 andeen throughout somewhat in 2015, to be an italian bank is not a blessing because the market is focused on nonperforming loans. there is no magic wand. it will take time to work out all of the stocks of nonperforming loans. there is no magic solution and it will take time. ecb: that is something the is very aware of. the italian banking sector has been the focus of concerns about the banking sector although there are other parts of europe to worry about also. ecb has a role to play here away from their -- monetary policy.
jeremy: we have to remember that the ecb under the single supervisory mechanism is the guardianship of the banking system. and the weakness of the banks has been one of the concerns as they think about the euro and the perception of their performance of the euro. it was notable that when you looked to those ecb decision's week about the adoption or the desire to get -- about the the banking system across europe is exceptionally weak. provide some impetus to the banking system and a boost to the balance sheet. manus: looking at what is on track for the balance sheet. the ecb is going to use -- is in termsusurp the fed of the size of the balance sheet by the middle of next week. the ecb is very much in participation mode despite the debate last week about paper.
what does that do to the euro? does that make euro the funding currency of 2070? --2017? scaleking at the size and of the balance sheets, it has been something we have been talking about as a key influence on this euro performance. the bond buying extending through calendar year year 2017, we will see that expansion. becomes looking at yield spreads. an important variable. and also the brexit growth of story -- the brexit growth story. considering the funding currency, we have to remember the continued net influence of -- we areecause of
not seeing a capitulation presumption in terms of the euro through calendar year 2017. it remains week for the first half of the year. it will go higher for the second half. let us pick up on another banking specific story around deutsche bank. the head of the investment interview.e an he was talking about things that need to be done before any kind of merger could be undertaken at deutsche bank. is a merger likely? is that the way we fix the problem? >> an interesting question. both the italian and german banking sectors are very fragmented. pillars. two
i would agree or -- i would agree with jeremy. if it does not come out of the steepening yield curve, it forces you to cut costs. he will cut costs to the bonds and will damage the franchise. paschi will dei return to the retail investors. a fair opportunity or a desperate measure to convert equity holders into the -- bondholders into the equity side? the last chance to revive the private share sale. time is running out. not give these guys more time into the new year. we know that it precautionary capital line from the government is ready.
we will see if the retail bond come to accept the exchange before them. thank you very much. great to get your thoughts. jeremy stretch will stay with us. here are some highlights of your day ahead. the fed as it looms large. the hotly anticipated tuesday meeting. 7:00 a.m. london time, we get inflation data out of germany. atn it is the uk's turn and 2:30 p.m., opec's general speaks in washington. up, secretary in waiting -- donald trump closes
in on naming exxon mobil ceo rex tillerson as the nation's top diplomat. taking a long. day lotion makes positive reading on china's economy. how do they tackle the issue of a red-hot property market. a transitional brexit. british lawmakers say theresa may must strike a temporary deal with the eu. we discuss the outlook for sterling. this is bloomberg. ♪
trump has given his first clues as to how he will step away from his businesses. in a series of tweets he said he charge his two sons in by inauguration day. he will also make no new business deals during his time in the white house. a group has reportedly reached a broad agreement to acquire sab miller's east european brands according to the nikkei newspaper. a spokesperson declined to comment. apple has held talks about investing in a $100 billion aimed to launch next year. the person said the iphone maker may contribute as much as $1 billion to the fund. an open -- an apple spokesperson declined to comment.
that is your bloomberg business flash. manus: juliet, thank you. president-elect donald trump will announce today that he plans to nominate exxon mobil ceo rexx tillerson as his secretary of state. confirmed by the senate, it would hand the job to diplomat to a man whose ties with vladimir putin go back almost two decades at a time when possible russian influence in the u.s. election is under scrutiny. startsll this as the fed its pivotal today meeting today. the market expects the first rate hike of the year. jeremy stretch is still here. let us put his thoughts on the u.s. into the mix. i have a charge. this is the unemployment rate in the united states and how it has come down quite stunningly since
the highs of 2009 and 2000 10. it stands at 4.6 percent. a lot of focus on what the fed will change in their expectations next year. donald trump is not even in the white house yet. could they bring down their expectations about unemployment? chartt is a fascinating to show how the labor market has recovered from the downturn we saw in the post-2009 world getting back to precrisis levels. if we look at the underemployment rate which is another key metric which janet yellen looks like -- that has also improved markedly. the labor market is consistently regaining ground. mandate,as a twin employment and the inflation outlook. it is fascinating to think this would be the first rate hike of the year. december was the same scenario last year. we came out of that meeting with the fed putting the market on watch for many hikes in 2016.
they were forced to pull back. it is interesting to see how the fed will position the market in 2017. because we have the additional uncertainty of the donald trump residency. manus: this is the hedge fund position. the longest since january of this year. is it stretched? >> i think that is probably the case. one of the points we have been making for some time in terms of parallels between 2015 and 2016 when we had the fed passing september last year and this year is that we did see investors building dollar long positions are aggressively into that -- into those fed positions. it is a classic case of buy the rumor and sell the facts. that we areity likely to see the dollar easing
manus: it has just gone 3:30 p.m. in tokyo. there is a shot of the imperial palace. dollar yen moving lower. 115 .28. who said that the dollar run was done. there is a new edition of daybreak. it is on your bloomberg. take a look. i love it. the little piggy with the italian flag. we are poised like damp there is the cover story. the cash call -- ring a bell for unicredit.
the sale follows to vest assures and they have been fortunate in this. wenter at money management off the books and has been quite successful. cutting the costs and getting ready to raise capital. story byove that cover the daybreak team. looking nonthreatening ranking crisis depicted by the small page. -- by the small pig. barclays, j.p. morgan and citigroup are cooperating to provide evidence of conspiracy. lessanks will be fined than federal guidelines at the sentencing hearing this week. manus: focusing on donald trump's cabinet picks. he has appointed reqs tillerson
as secretary of state. hasman sachs gary cohen been confirmed as chief economic policy adviser. tweeting took aim at the pentagon most expensive weapons system. saying the f-35 program is out of control. you can look at the stock price to see the power of one tweet. anna: let us get the details on where the market is going. rally we saw the u.s. lose some steam yesterday with the s&p 500 being knocked him its record high. a mixed picture in the asian session. the msci asia-pacific pacific index eking out some modest gains but chinese stocks extending their worst losses in six months. despite the better than expected industrial output and retail space data. investors are focusing on the impact of the pboc's monetary tightening.
this is the shanghai composite giving below the 55 day moving average. a technical charts here for you and another one looking at japan. sixthpix is on its straight day of gains. it entered the bull market last month along with the nikkei. this signals perhaps the topix has risen too far too fast. part of the gains in japanese stocks have been down to a weaker yen. the yen resuming its decline versus the dollar. if you look at the chart here we are seeing a pause in the dollar and treasuries off the 10 year yield. it had to 2.5% yesterday for the first time since september 2000 14. it did not rise above that resistance. we are at two point for the --
2.47% right now. going into the fed meeting, will we see a correction and treasuries? anna: it is a question that has been well asked. u.k.-based banks. -- areuropean financial trying to lure them away. joining us now from paris for an exclusive interview is the chairman of the paris euro plast. thank you for coming to speak with us today on daybreak. put forward your pitch. what is it you think you can attracted to paris? what do you want to attract to paris? good morning. i consider that there is momentum today in europe and in
france in particular. attractiveness of the paris financial center. brexit, by the ,ay, we were against the brexit we have seen in france the kind government,ween the the mayor of paris in order to of -- in order to improve their a attractiveness. measures have already been taken and announced in paris on the twotion of our gathering weeks after the referendum. the measure was positive already taxerms of the corporate and reduction of several taxes and the creation of the one stop
shop for companies willing to come to paris. but we want to go beyond that -- especiallythe in light of the french presidential election. we have declared and improvement which are approvals that we will present to all of the candidates. we will do that today. improvementa strong in the attractiveness of paris and france. especially -- manus: good morning. i am in dubai. tax is a bad word in this part of the world. you touched on that in your pitch. how serious is it that france really would roll back on some of the income tax levels they have and on the corporate taxes? who will be your friendliest
president to get what you want? is tax really on the agenda to roll back? >> oh yes, it is. already today, the corporate tax is 33%. exactly the level of germany. already today, this government an effort to reduce the inporate tax from 33% to 28% 2020. and this will be the maximum for any new political majority. and so we consider that it would be possible to go beyond this level. and perhaps to reduce the at the endax to 25% of the five-year period of the term of the presidential term. i consider that. serious. anna: -- i consider that very
serious. anna: interesting that you mentioned germany because this is the danger in fighting or the spoils that london loses, paris fights frankfurt and dublin and other european capitals and then new york and hong kong and up winning. -- end up winning. >> we consider that we are in competition with other european financial centers like frankfurt and amsterdam. we are also in competition worldwide with new york and hong kong. issue.re is a special coming from the fact that with the elimination of the financial passport after the brexit, the u.s. banks, chinese banks, asian
banks which are in london and which are making their business is they will want to have access to the continental business and continental markets. and so they will have to cross over the channel and calm somewhere -- paris, we hope so or frankfurt. of course, there will be a worldwide competition. there are many people that say that it has taken decades for the city of london if not centuries to create this flow or confluence of conversation doing deals and that kind of momentum is .ifficult to replicate you may have to move some of your bankers overseas but the transactions, the heart of business and insurance and real investment banking is in london.
can paris really rival that in the near term? >> london will of course remain a very large international financial center. people french is this will continue to work with london. with new are working york and shanghai and hong kong. and singapore. no problem. this will continue. the worldization of will continue especially in the financial field. nevertheless, we have in europe a big market for banks. and to have access to this market, it will be necessary to be present there and you will not make business simply from new york. elimination of the financial passport which had , you the right to banks
will have access to all of the european market. that will continue after the brexit. anna: we were listening yesterday to philip hammond talking about the need for a transitional arrangement. particularly with regard to financial services to guarantee financial stability. do you see a need to have a transitional brexit arrangement to try to avoid financial instability? no, we, we can -- consider that things have to be clear as soon as possible. winbusiness has nothing to in the long transition period which will be a period of uncertainty. quick are pushing for a
decision on the roles of the game. a quick clarification on the roles of the game. that is what we are asking the french government after the elections. that is exactly what we are asking. europeanthe consequences, we need that as soon as possible. manus: clarification is something we all urine for in the brexit debate. fors something we all yearn in the brexit debate. now, turning to china. industrial production climbed to 6.2% from a year earlier. compared to the median estimate of 6.1%. retail sales came in with the december.in since
partly driven by modi's countdown on cash. let us bring jeremy stretch back into the rotation. all is well for china. stabilization is the word. what i am hearing is that this works at vix .5%-7%. what does this need for the pboc? i think we have seen some degree of stabilization. in that camp that we anticipated a sharp slowdown in the chinese economy. the stimulus has been working through the system relatively well. that does provide some pboc toities for the pull back a little bit in 2017. it is a case of steady as she goes as far as china is concerned. we are still seeing growing pains in terms of the
reorientation of the economy away from the previous model into something much more akin to withe balanced approach more impetus from the service sector and the burgeoning middle class. it will be awe are still scenart will take the chinese concern off the table. anna: i have a chart here. china's fx stash is falling nearly $1 trillion from its 2014 peak. they have a sizable pile of reserves to draw on when it comes to spending them to smooth the path of their currency. how long do they keep doing that and what happens to the chinese currency? >> one hesitates to use the word dwindling when you talk about $3 trillion in reserves but we have seen them reducing overtime. capitale concerns about
leakage and the rebalance of the economy. there are also concerns nonperforming loans and the banking sector. what we can say is that unlike the economies of the west when they were going through structural reforms and imperfections, the government was talking about borrowing money to fix the problem. the chinese still have money to utilize in order to facilitate a smooth their landing. thisnk we will see downtrend continuing. what we long way from would call a danger zone. manus: a cracking chart for you. this is taiwan. --wan in the white line is that is there trade surplus. they should perhaps be the manipulator of all.
we have a line on unicredit coming through. jeremy, excuse us. 13 billion, the number we were looking for. 13 billion euros of a share sale. this is the plan for the ceo coming to the market in the eye of the storm. a have been selling assets. monday was off the block. also off the is blood. they have raised the equivalent sellingasis point by these assets. anna: we have heard a lot about the asset sales. they are talking about their target of there'd tier one -- of their tier one. fully loaded. above 12.5%. that is what they are going for in 2019. you were mentioning the asset
sales. that has been part of the story up until now with pioneer investments and the polish bank units. there were other assets to be discussed as well. it agreed to the polish exit and the pioneer deal. a number of challenges for this business six months after the ceo took over the helm. still burdened by the pile of that loans. profit is being squeezed. italy is in the midst of its longest recession since the second world war. manus: the other coming through. we talk about these offers of capital. this is about a quarter equity tier one capital. the target for unicredit is 12.5% white 2090. the ecb in their report ratio of attier one
least 8.75% over the next year. this is a bank that is already in substantial changing mode. sale -- if you have your bloomberg, pop onto top live go. everything is there. the stock sale is going to come through. subject to customary conditions. unicredit woodhead 17 billion in cost savings. they are talking about cost savings of 17 billion euros. these are new numbers coming through on a strategy plan. anna: the big overarching headline -- planning to raise up to 13 billion in an offer. and the risk assessment -- 49 basis points. versus 40 basis point
2015. let us talk about the task at hand. we are also looking for more details around the structure of the company. the task of turning around the business has been complicated by the bank across many countries. that is partly why we are seeing some of these sales taking place. and the impact of all of this. euro one office in including loan loss. isking of gross bad loans. manus: this is the key. it is about the de-risking of nonperforming loans.
let us bring jeremy into the conversation. these are pieces of information about ulster in the italian story. this is critically important for preventing any kind of contagion coming from italy. this is one of the most critical pieces on the european chest toward over the next 4-6 weeks. before the elections begin to kick in. >> the political risk is obvious. for theous headline eurozone going into 2017. the weakness of the banking system has been an ongoing story to the euro outlook. if we think about the changes we saw and the u.s. banking system in the post crisis world where we saw the recapitalization of the banks which has allowed them to move into a more stable footing. that has been lacking in europe. we have not seen the fixing of the balance sheets in order to
facilitate a much better lending environment. of the yieldg curve from the ecb has helped provide a more stable outlook that we need to see more of these banking sectors fixing themselves and we need to see the capitalization and the tier one ratio's improve markedly and that would help investor confidence. -- foror the movement the moment. what they are now targeting in terms of returning money to shareholders. jeremy, we are really enjoying your thoughts on china before the news happened and we had to pivot to italy. transition talks. u.k. labour party lays out its hard sale on a soft brexit. boosting the coffers. we get the latest on unicredit 13 billion euros share sale and bonding exercise after a torrid debt market for the fourth quarter.
1:54 a.m. in new york. the city that does not sleep virtually flat. talk about the u.k. and the opposition labor party right fit spokesman will use a speech at bloomberg's hq in london to lay out his parties opposition against a hard brexit. leading to higher trade areas is a concern. with anna and is i on daybreak euro. a lot to consume in the u.k.. cpi data. hard brexit. when i look at sterling, i am wondering have we overreached in terms of the relief rally? we have not gotten to
the end yet's. if you look at the positioning data we still have excess of sterling shorts out there. i think it may be the case that there is a little bit of staleness about those positions. i would not be surprised if we saw more sterling recovery and the dollar tends to underperform at your end as well. a little bit further to go in terms of the sterling bounce. we still have inherent economic uncertainty in the u.k. which will be written large going into 2000 17. if today shows an uptick in terms of the inflationary pressures, perhaps not just at the consumer level but at the factory gate level and the margin squeeze is being reflected then that underlines the issue that workers are going to have in terms of falling disposable incomes in 2017 and that will be a factor that will compromise the growth story. anna: thank you so much for joining as.
♪ manus: financial overhaul at unicredit. italy's biggest bank to raise up to 13 billion euros in a writes author. secretary in waiting. the president-elect donald trump closes in on appointing exxon mobil ceo rex tillerson has the nation's top diplomat. this has lawmakers continue to express concerns over his ties to vladimir putin. data daily. soft stays resilient after retail and factory data. attention turns to reining in the surging property prices in the world's second-biggest economy.
welcome to bloomberg daybreak: europe. i'm manus cranny off the redeye in dubai. joined by anna edwards in london. anna: absolutely. i probably had a little more sleep than you. breaking news coming through. loop largestthe provider of digital wallets. jin goes to anthony the board of the company, attempting to persuade the wire transfer company to adopt technology for transactions. that is what they are saying this morning. they want to move -- it has come from being a small start up based out of york in the u.k., old york, not the new one. two pillars in the sector, they
need to go to the next stage of growth, what they would like to see. mass adoption of their technology. with that in mind, they have recruited the former ceo of jenkins, wetony will have an interview with the former barclays ceo and the block chain ceo. manus, let's get to the futures. we are still digesting this new news about the italian banking sector. manus: it will be fascinating to see how this plays up and how the market takes it. -- thefutures in paris rest of europe is opening a little stronger as you can see. london up by 2/10 of 1%. the ftse is going to be where the action comes into play. 30 billion for a rights issue coming from union credit -- unicredit.
the equal and opposite affect their is going to be one to watch on the open. cuts, 2019 --ob by 2019. they will reduce their overall cost burden as well. these are the lines. if you have your bloomberg, jump on, you can understand what the data and details mean. they're offloading bad loans and raising capital right in the eye of the italian banking storm. will wait to hear what comes from bank and the monte dei paschi to greg -- give some sustenance. anna: just to make the point -- 600-5000 -- 14,000 to 2019.
shanghai looked a little weaker. fed, -- thes the dollar against the yen, upward move in the dollar as the end is down 2/10 of a percent here. the dollar rally faltering a little bit. thedollar was down on bloomberg dollar spot, down by 0.6% in yesterday's session. perhaps a notable move. crude, 15.82 is where we trade. moves we saw in the oil price inflation. that is why we have been focusing on what is happening to the 10 year u.s. yield as well.
2.476 eight is where2.476 eight. the yield is below that 2.5% level. touching the highest since september 2014 but retreated low it during the session yesterday. let's get the first word news. china's stabilization held in november with industrial production climbing 6.6% from a year earlier. retail sales advanced 10.8% last month while investment increased 8.3%. it gives policy makers more room to switch from stimulus towards curbing financial threats. president-elect donald trump will announce today that he plans to nominate exxon mobil hisrex tillerson as secretary of state, according to a person familiar with the decision. if he is confirmed by the senate, it would have the job -- hand the job of the top diplomat to a man whose ties go back two decades with vladimir putin, at a time when possible russian interference in the u.s. election is under scrutiny. anna: the two top republicans in
congress, mitch mcconnell and ryan -- paul ryan have offered support for the intelligence community. at the the agency found russian government tried to help him win the presidency. >> it defies belief that somehow republicans in the senate are reluctant to either of you them.n tactics or ignore so last, let me say i have the highest confidence in the intelligence community, especially the central intelligence and sees -- agencies. those who risk their lives for the american people. manus: global news 24 hours a day, powered by more than 2600 journalists and analysts in more , you can findries more of those stories on the bloomberg at top . let's get into markets. juliet, it started so terribly well. a bit like your average night out. it is not looking so frisky for the equity market, is it? goodow, but everything
happens after midnight. i think it is after midnight in new york. we have seen good movement in asian trade. you're seeing a turnaround on the closing shanghai, heavily sold off in the early part of the session following the 2.6% down yesterday. -- you have figures seen a lot of buying in consumer related stocks in the latter part of the session and also, we are seeing an output in energy players once again in china and mainland china and hong kong. lastang seng fell in its hour -- half hour of trade. fixed movement across southeast asia, another session of and topicson nikkei both at 2016 highs. they are playing into the game of half of 1%. costs seem to be moving against the dollar. the dollar ahead of the third meeting. korea up for tenths of a percent
ahead of its close, but not so great in new zealand restaurant a stress you, both closing weaker. also worth looking at reports a billion dollars and they closed down by 4.6%. some more lines coming through on the bloomberg to acquire miller europe assets to 7.3 billion euros. anna: thank you very much. unicredit is one of our themes. italy's biggest banks has announced plans to raise up to 13 billion euros in a rights aner in what is cost -- additional 600,000 jobs by 2019. what other news came out of this strategic statement? why does the bank need to do
this? we have been tracking the words of the italian banking sector quite extensively. >> we are seeing a large comprehensive, strategic plans to de-risk the banks. unicreditsales with for about 3.5 billion euros. that is the asset sales front. they will also try to write a lot of the nonperforming loans, increase ratios on these loans. letting go of positions in the bank, which adds to an already 14,000 that jobs to be terminated. this is a comprehensive plan to try and make the banks leaner and maybe meaner. manus: and something that is coming through on the bloomberg, unicredit will him for 1.7 billion euros in net annual recurring cost savings by 2019.
the job cuts that have come through our a total -- an additional 6500 will be cut in the total by 2019. we have an annual savings number of 1.7 billion by 2019. dividends join the great barren land, dividend being passed over. they're promising the future, but this is in the -- a disappointment, isn't it? >> it is. to hear a stockholder in unicredit, you don't want to hear that. they are taking the long view. accompaniedfeels it -- incumbent upon him to streamline a bank that is emblematic of what we have seen across the italian banking sector and they haven't followed the path as quickly as some of their peers and other countries in europe. they have held off on the
painful decisions and restructuring that we have seen in other sectors. and now, the timing is quite unfortunate for them as they try to do this amidst political instability. mentioned the country and this comes in the context of the italian banking sector. is there a link to what we are seeing it monte dei paschi? a lot of italian banks raising money at the same time? >> unicredit would like to separate itself from monte dei paschi, italy's third-largest bank and it has been troubled for years now. unicredit is the biggest bank in italy. it is in a much stronger position insofar as monte dei paschi. they appear to be headed to some sort of endgame here as they await state intervention. the both banks are emblematic of this deeper systemic problem. a structural problem we have seen across the italian commercial banking sector and the fact they are both going out on these massive capital raises at this time really shows --
they are not desperate, but it feels it needs to make a bold move to reestablish itself. manus: let's bring our coast cohost in. i've got volatility in the euro behind me,'s backing last week ahead of the ecb. in the italian story, what are people talking about on trading floors in terms of contagion and the risk to the euro? the contamination per pet -- potential propensity for the euro? with respect to unicredit, none at all. but there is broader need to loanss the nonperforming and the restructuring of the italian financial system. that is a concern. we have yet to notice specifics with respect to monte dei paschi. he will have to wait and see how that works out. speaking,ng, broadly
is a positive step in terms of trying to address that situation. at it will take time and there is lots of work to do. that means growth -- the outlook for italy remains subdued. that's an ongoing concern, particularly against the political backdrop just mentioned. anna: all of that, in light of this political backdrop, how does that complicate matters? and you got the political chaos taking place in italy? elections on the cards for a little while. >> we don't know. simply from the point of view that they extended qe, but at a slower pace. you're looking at an economy that is really starting to look almost -- a special case within the eurozone, somewhere like much-- spain, showing better growth, dynamics.
italy isn't. if you don't fix the problem, they come back to bite you. that means the ecb will still have to be there for some time just to keep that going. we have seen a lot of moves in these bond markets, give us your take. it looks like their balance sheet is going to trump the fed's by the end of next year. what is the consequence of that in the rates market for you in terms of curves? charles: i mean, in response to the first ecb move we saw quite because ofakening the move to shortened available pool of bonds meant there was more demand. but equally, you have an environment where they are extending for a whole year, a global backdrop where people are focused on the reflation seen and potential inflation threat coming from the u.s.. we saw the china data this morning. looking relatively robust.
the mindset of the world has changed very much towards reflation and how much we are going to see a recovery and a backup in bond yields. for the ecb to be buying, that is a counterbalancing force, but improvease continues to in europe, you have to be cautious in the long and you won't see high yields. anna: to circle back on the story, the stability we have been mentioning in europe -- italy, what is the impression about how this affects capital rakes? at a time when we have instability. one of the reasons monte dei paschi asked the ecb to have more time, that was turned down. >> political risk in italy right now is so high. any investor looking to jump in, you are looking at a discount in tor pricing and you have examine the strategic plan that
most ea has put forward. they could call a special election six months from now, maybe three months from now, you see the rise of the five-star movement, the populist movement that wants to hold a referendum on the leaving the eurozone. political risk. these are things investors will have to size up as they look at banking stocks. to be ones is going of those biggest issues of 2017. thank you very much. we have ed robertson side-by-side with johnny, who stays with us a little more. focus., said in the dollar stabilizes, the bond yields take a breather ahead of tomorrow's decision. the fed, the dollar. this is bloomberg. ♪
anna: welcome back to bloomberg a break: europe. a: 19 in berlin. a little dark out there. the euro against the dollar, 1.6. fairly stable. juliet has the business flash. juliet: president-elect donald trump has given his first clues as to how he will step away from his businesses. in a series of 27 -- he said he inld put his son-in-law charge by in operation day. he also said he would make no new business deals during his time in the white house. however, he offered no information about his role in the business. the largest provider of digital wallet bitcoins has added barclays ceo antony jenkins to its board. in an attempt to adopt open source technology to settle
transactions. we have an exclusive ceo with former barclays ceo jenkins. assets of 7.3an billion euros. the binding agreement covers businesses in romania and the czech republic. the deal is expected to close in the first half of next year. apple has held talks about investing in a technology fund launching next year. according to a person with knowledge of the discussions. the iphone maker may contribute as much as $1 billion to the spokeswoman apple declined to comment. that is your bloomberg business flash. thank you very much. bond markets have had a torrid fourth quarter due to macro outlook story in the u.s. and a surprise outcome of the u.s. election.
what is the story for 2017? and i were looking at the ratio. $44 billion worth of paper come to the market yesterday. i question is straightforward and simple. our yieldsper -- rich? is the market now at a point where it has topped out in terms of yield in the u.s.? for the timeink being -- you are heading into christmas. the reality is we have unwound a lot of the deflationary expectation and priced in what we know of the trump plan. that is taking yields where they are. obviously, the push -- the proof is in the pudding in the fiscal plan we get. how much wage push inflation we start to see in the u.s.. how much oil price goes up. all those factors play in from here. has the bond market finished in the short term? possibly. the risk is towards high yields and the short -- in the
medium-term, by the middle of next year we could be talking to 75 -- 2.75, 3%. anna: from the fed this week, apart from a hike, which is widely expected. ,ut tweaking their forecast telling us where unemployment goes next year -- what are your expectations? for many people, we talked about inflation since donald trump's victory. doubt, isd, no mindful it has to wait for the data. it can't go on a hunch. charles: absolutely. that is why there is speculation about a dovish hike in the market. they will take compared to market expectations will be relatively -- to use a phrase -- playing with a straight that. we're going to wait and see. as it stands, we will proceed cautiously. the market has moved much closer
back towards the. clause. start to move the dots back up again, they would be modifying their expectations. anna: we will see. let's talk about the reality. the white line i have for you is the personal consumption expenditure, it is the negative percent in years. all of this talk, all of this talk about reflation trade, , he hasn't spent the dollar. the reality is not there. can the fed afford to be egregious in the face of 2017 when you are looking at this kind of repression?
charles: the honest answer is no. a don't play very much by the book, particularly as yellen will be serving out her term and rolling off in 2018. the reality is you are starting to see some show through. sentiment --ive that is key at the moment. while for the plans that trump is talking about to be put through. but there is a level of positive sentiment going on. if you look at the how people .re feeling indexes they are turning more positive. gethat happens, you stronger which demands and that is key. if you see higher wages feeding through, the fed will be concerned they need to get their game face on and start raising rates. anna: charlie, thank you very much.
up-to-date with unicredit. the ceo of unicredit is speaking , nothing more cost to divisions -- moving more capital to divisions. on capital meeting raising to take place in january. manus: when you look at the details here, it is going out the business, an additional 6500 jobs to go by 2019. you are talking about adding to an aggressive plan. they managed to sell assets so far -- looks like they are balancing towards 13 billion rightsn equity and a issue. they have offloaded some more of those bad loans. int is the critical answer terms of these markets. equitiesoking for --
♪ >> good morning. you're watching bloomberg markets. your first trade of the session coming up. i am guy johnson. copenhagen, today in getting cozy. we will get to him in a moment. let's talk about the headlines and what we need to know this morning. raise 13 plans to billion euros in its deepest ever overhaul to boost capital. what price will investors demand?