Skip to main content

tv   Bloomberg Daybreak Europe  Bloomberg  January 11, 2017 1:00am-2:31am EST

1:00 am
anna: russia, trump's friend or foe? unconfirmed reports that russia has information on him. obama says farewell. the outgoing president makes an appeal to the american people to preserve his legacy before trump takes office. obama: if every economic issue is framed as a struggle between a hard-working white middle class and an , thenrving minority workers of all shades are going to be left fighting for scraps while the wealthy withdrawal
1:01 am
further into their private enclaves. may make aw settlement over its emissions seeking scandal at 4.3 will dollars, that would push vw over its current position. a very warm welcome to bloomberg daybreak: europe, our flagship show in london. back at the obama administration, looking ahead to what donald trump means with his relationship with russia. wishart -- start the show with this chart that puts it in context. the highs and lows of the obama administration, poverty with ted brents -- headwinds around gdp.
1:02 am
preserving he's legacy and the attention will be on donald trump and a confirmation hearings of some of his key appointments. but that in mind, the story around russia the very heart of rings today. what does russia know about donald trump and what did donald trump know that russia was collecting on him if anything? donald trump's news conference later on today. let's put up the risk radar. rookie keeping a close eye on what is happening to russian assets as result of this. how in from the cold is russia going to be under the new u.s. administration. 82 rubles to the dollar is where we start in 2016. the oil price had a lot to do with it. we've seen a little bit of ruble weakening again on oil since january 6.
1:03 am
the dollar gaining a little bit ahead of the donald trump press conference. will we get any clues on trade or fiscal policy? we have the pound for you as well. we will speak with david bloom of hsbc later on today. what is priced into the pound and what is not priced into the pound in terms of the hardness, the softness, the messiness of any brexit? that is something we will be talking about. foreign secretary saying the trade soon. deal on we have a lot to get through in the united states right now. u.s. futures, keep an eye on those as we have all these politics taking place in the united states today. sluggishing a little in the u.s. market, some of the u.s. markets went entirely unchanged yesterday. let's get the bloomberg first word news. >> russia poses a danger to the
1:04 am
u.s. and must be held accountable for its action. that's what president donald trump's nominee for secretary of state and the former ceo of exxon mobil will tell senators at his confirmation hearing later to do. rex tillerson's remarks are sharp departure from comments by who has called for friendlier relationship with russian president vladimir putin. it said the 10 year treasury yield topping 3% will signal the end of the three decade-long rally in bonds. in his annual webcasts, the ceo 2017,f we take out 3% in it is by five bond bull market, rest in peace. bill gross has a different threshold. he said in an investment outlook that benchmark treasuries involved 2.6% for the bond bull market. prosecutors have charged
1:05 am
three x traders at the heart of criminal investigation that has ensnared the world's biggest banks over the rigging of currency rates. the former jpmorgan citigroup and it -- barclays employees are accused of using an online chat tom called the cartel coordinate trading of u.s. dollars and euros and manipulate prices. they are all living in the u.k. will have to be extradited unless they surrender momentarily. the u.k. prime minister is facing calls to reveal who finances.r theresa may's office said she uses a well-established mechanism to manage her shareholdings in order to avoid any conflict of interest. liberal democratic leader says this is an opportunity for her to deliver on a pledge to have the world's most transparent government. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the
1:06 am
.loomberg at top this is bloomberg. for that newsu update. let's get the latest on what the markets are doing in the asian session. day fora pretty good the regional index with the exception of weakness coming through in china and we do have basic material players leading the rally. the big surge in iron ore deliver to china and oil and gold rally. that helped out the australian share market, closing higher by .2%. provider provides milk powder to china. he came back online and felt quite substantially as announced its ceo is leaving the company. down 20% on the close, giving a boost one of the other milk powder companies that delivers to china, which rose by 9%. we've seen the nikkei and focus
1:07 am
today, getting a boost after that weakness yesterday, up .3% as the yen started to snap the rally it's been on against the dollar. stocks in hong kong doing well, up for a fifth consecutive session. we are still seeing solid support for the hang seng index, up .7%. weakness in shanghai in late trade. we're seeing the index continue to sell down in the latter part of the session. else where all the southeast asian markets are looking good. looking at currencies, the again down about .3%. ofhave seen a little bit momentum coming through from some of those emerging-market currencies today. our top story this russian potential intelligence plot. u.s. officials are said to have received unverified reports that russia has compiled potentially damaging information on president elect donald trump.
1:08 am
we have this report. --u.s. intelligence for officials brief donald trump as well as president obama about an unsubstantiated report detailing potentially damaging information that the russian government had gathered on the president-elect. that report contained information about donald trump's activities in moscow, both personal as well as financial. e-verifyas not been a the allegations but they have been detailed by numerous media outlets including buzzfeed, the new york times, and cnn. donald trump took to twitter to denounce the report saying fake news, a total political witchhunt. he read tweeted an article run by a conservative national group that did announce it as well. --s comes as conditional congressional hearings ramp-up for his cabinet picks. rex tillerson goes before a senate hearing committee on his
1:09 am
dealings with russia as a former oilman which will likely be part of the questioning. al. do newsps et conference today at 4:00 p.m. u.k. time and we're expecting an update from his transition team -- donald trump is set to do a news conference today. the mall barack obama made his farewell address in chicago last night. the outgoing president made an appeal for americans to embrace inclusiveness and to preserve his legacy. president obama: if every economic issue is framed as a struggle between a hard-working white middle and an undeserving then workers of all shades are going to be left fighting for scraps while the wealthy withdrawal further into their private enclaves. if we are unwilling to invest in the children of immigrants just because they don't look like a, we will diminish the prospects
1:10 am
of our own children, because those brown kids will represent a larger and larger share of america's workforce. to power ine coming the middle of the worst deficit since the 1930's, obama presided over a reduction in the unemployment gap, where the best records in the past six decades. s&p 500 has rallied 170% since the first inauguration in 2009. great to see you this morning, thank you for joining us. it's a day of transition in u.s. politics, where it's tempting to look back and also to look ahead to what we will see from the u.s. administration under donald trump. -- if a chart all about you want to pull this up on your bloomberg, it puts in context
1:11 am
what we will see compared to the previous time. are expecting the russia story around donald trump, the noise around this to continue to rumble? this is something that gets into world with an impact on the dollar? >> definitely it's all about the dollar. there is a lot of uncertainty. in the recent election the markets have taken a positive view on the trump administration, that he will implement all the this school consolidation stimulus and he will not do any of the unfriendly policies. now it's time to see the reality. i would argue that is this point, you can still make a bullish edge on the dollar. fiscal policy in an economy that is already on full employment
1:12 am
could be positive for the dollar. the fed is hiking, but you can also make another case because there's a lot of uncertainty about fiscal policy. the discussions are likely to be long. there's a lot of uncertainty about trade policy and also the quarter.the first anna: so you think positioning is not stretch. some strategist saying it looks scary on long dollar positions on the dollar. if you could make a bull case, then you can make a better case around the u.s. dollar arteries question the bull case. how bullish are you? its long compared to a year ago. is above of the dollar the historical average by about 8%. the dollar was about 15% above the historical average. so there are mixed signals. projections, we've
1:13 am
seen about 80% of the moves we were expecting by the end of the year. the euro dollar as 1.02, so are not far from the projections. is real money not following where the hedge funds are going, given the publicity around what all trump has been saying and the impact we've seen is partly him and partly other factors. i have some of the underlying data here and you can tell us your thoughts, but this is more business betting on trump. the level of optimism with all coming out yesterday in expectations about the economy and where the line goes up from small businesses. regardless of what he actually delivers, he's having an impact on the economy already as president-elect.
1:14 am
>> alex len the difference, speculators -- there's a lot of euphoria about the impact on how the fed will react. actionney is waiting for evidence on the policies, they're waiting to see the fundamentals before positioning. when real money joins the trend, the trend become stronger. if we see 3% on 10 year yields in the treasury market in the u.s., that would be the end of the bull market. the with 3% mean for dollar? positioning in the bull market is not as desperate as it was a few months ago. you can argue that the market is depend -- thisl will affect directly what the fed will do. the fed is taking advantage of
1:15 am
the market euphoria to prepare the market for a hike. it does not mean we will hike three times this year. anna: thank you very much. --ll to calm on the show still to calm, bw closes in on a $4.3 billion deal to settle u.s. probe into the emissions scandal. then a ceo says treasuries above 3% signal the end of the bond bull market. we will break that down, and the pound pricing a hard brexit. we discuss that. this is bloomberg. ♪
1:16 am
1:17 am
1:18 am
anna: a warm welcome back. this is "bloomberg daybreak: europe." things looking little hazy over in hong kong.
1:19 am
the hang seng up by .7%. 6:18 here in london this wednesday. let's get the bloomberg business flash. >> volkswagen is closing in on a deal to pay $4.3 billion in criminal and civil penalties to settle u.s. probe into the rigging of diesel engine emissions. it will raise the cause of the scandal to more than $23 billion in the u.s. and canada, way above the $19.2 billion b dubya had set aside to resolve the vw had -- to set -- that set aside to solve the dispute. according to people of knowledge of the matter, the conglomerates main bank agreed to maintain financing through february even know recent credit downgrades may make it an eligible receive loans. said the main bank
1:20 am
will continue to offer support. the main a similar of apple's iphone's has recorded its first annual revenue decline since listing in 1991. as foxconn, they posted a 2.8% fall in 2016 sales is a global smartphone market went for its worst year on record, coming as foxconn's technology group prepares to invest billions of dollars after taking control of japan stop. -- stock. anna: a fiery exchange on central-bank policy are expected to resume in the bank of england governor repeat or -- appears before the committee today. mark carney announced before an accident -- before and after the brexit vote. the government has said it's considering a plan to allow
1:21 am
those living abroad to remain after that company -- after the country leaves the eu. >> there are large number of people both in the united the european union who will be naturally concerned about their continued position in their respective countries of residence. therefore it is important that the issue should be clarified at a very early stage. a lot to talk about on the brexit, as always. we also heard from forest found goodwill to resolve what fast trade deal between the u.s. and the u.k.. how much is that half of the story or how much is it just a distraction, the pound is fixated on the brexit. >> there is a lot of confusion because for using the technology
1:22 am
of soft brexit and hard brexit. once it became clear this week following the interview up theresa may, is not going to be the market is already pricing it. whether we will get a hard brexit depends on whether we will have a transition period. us what youd for think hard brexit means. we were talking yesterday to a how there's was a difference between a hard brexit that is well-planned with a long transition that means leaving a single market. there's a difference between that and just crashing out in a disorderly fashion. >> exactly. it will take longer for the negotiations are a brexit.
1:23 am
interim nothing for the period. you go dramatically off a cliff and this is the worst kind of brexit you could have. it is extremely important once the negotiation starts to see agreement,o get an and then i would argue that the effects of the actual brexit are much smaller, and from the markets point of view, this postpones brexit for a number of years. this would be very bullish for the pound. the outlook for the pound to a large extent depends on whether you will get that agreement. this chart puts in context what hsbc has been saying. quick cycle could
1:24 am
happen on a brexit outlook. give us your top in forecast for where the pound could head on these various brexit scenarios that we talked about. >> and most likely would weaken sterling further. later in the year we expect a gradual appreciation to 135. by the end of the year, 135. this is our baseline. if you don't get the transition, it could go below 110. rebound?t drives the you see it stronger by the year-end, so what drives that confidence? >> we will expect some progress in the negotiations. the debt has been very strong. that takes us to mark
1:25 am
carney, testifying at the treasury committee today. he faced a lot of criticism from certain parts of the conservative party around the predictions the bank of england made that many economists also made about how week the eu k economy would be. how strong is it and how we could it be, depending on these crucial brexit developments? >> he will argue that the part of the region that has performed well despite the brexit uncertainty is the policies of the bank of england. remainsif the debt strong because of the week stirring, the bank of england will be in a difficult spot and they will need to stop cutting rates and may even need to hike rates. anna: are they still neutral at the moment?
1:26 am
>> i think for now they will stop cutting rates indefinitely. you can argue the inflation is temporary and you can also argue that if there's not progress and we don't get a transition agreement, the data will weaken. but if it remains strong, you have to take it into account. you are sticking with what year inate contrarian short euro pound tray. what is driving that? >> this is a good position for political risk in europe this year. lookingzone starts worse, the u.k. will start looking better. it's a contrarian trade that's worth getting into this year. here you'll stay with us on "bloomberg daybreak: europe." some highlights of the day head.
1:27 am
theresa may faces her first prime minister's questions of 2017. and the bank of england governor mark carney will the quiz by mp's. then we have the news conference with donald trump. this is bloomberg. ♪
1:28 am
1:29 am
1:30 am
anna: welcome back. this is "bloomberg daybreak: europe." the dollar a little stronger against again. .99 on that particular currency market. 3:30 in the afternoon if you are in tokyo. that live shot of the imperial palace. the new edition of daybreak is available on your mobile and your bloomberg. let's look at the top stories that have made it into today's edition. the currency trade charged by the united states. three former employees were indicted for conspiring to fix the benchmark by sharing confidential customer information.
1:31 am
they are all outside the u.s. and will have to be extradited unless they surrender voluntarily. the next story is mark carney in the firing line. the bank of england governor says parliament treasury -- he admitted policymakers were too pessimistic about the >> it induced slowdown. the central bank board has said it's worried about its reputation and lawmakers announced a review of the effectiveness of policy loosening since the financial crisis. we focus on volkswagen, the carmaker dealing with the u.s. over in missions cheating last night. the settlement would include 4.3 billion dollars in fines, a guilty plea to some criminal charges and the appointment of an independent my actor. executives will review the plan which needs court approval and could force volkswagen to increase its provision for the scandal. we will watch shares at the open of course.
1:32 am
if you're wondering where manus cranny is, he is here. he will present the next program, which means he will join me briefly to take us through some interesting market trends in the chart. manus: i will be back just after 7:30 today. have a look at this, these are presidential yields when you presidents come to power, what happens to u.s. treasury yields? trigger point. litmusgoing to be the line in the sand for the bond market? a bear market will kick in according to one analyst. bill gross saying 2.6%. were now 2.375%. long bear a big
1:33 am
market in terms of yield? how do you position yourself in the european bond market? as europe have a growth propensity? have a look at this. if the put to call ratio is explosively wide and high, does that mean we should get ready for a bearish? market not necessarily. in the mid 2000 you saw been speaking with the call ratio, andthe stocks 50 rally almost doubled in terms of value. this is a market hedging itself. trump, is pervasive in terms of what it does. is -- what does it do to dollar-yen? with simonnversation
1:34 am
from ubs. he said you will see people come in, the bank of japan will come in and mend their position. they're going to be super easy. they will have to be super easy to defend themselves and keep their currency on the move. this is the differential in view. will that continue? rex tillerson goes for his hearing and anointment in from the senate. what is big oil facing? potentially a sweet spot that's what sanford bernstein says. these are the big beasts of the oil industry. they were produced the most since 2010. this has to do with taking advantage of money they spent before. chevron and shell we expect to up reduction by nearly 50%. they will almost double their production this year versus last year. that wee only one expect to drop in production.
1:35 am
there are still challenges there. its press conference day, rex tillerson going in front of the house. anna: manus cranny will be back in just under an hour with the european market open. market,about the energy let's stick with that from a different angle. news coming through from the , sayingonglomerate their share is at least 1.7 billion euros. a big red headline coming across the bloomberg in connection with development of this nuclear power plant. seems eds is sharing the spoils. we will watch whether it hasn't impact after the start of trade.
1:36 am
a short reprieve, the currency hit a new record low this morning. use of joins us with the chart of the hour. good morning to you. good morning, it's been a fascinating 24 hours for the turkish lira, a lot of downside pressure. the fact that it's just a short repeatedly -- short reprieve. the liraee what level is currently trading at. i spent some time in the early hours of the morning and put this up on the bloomberg to show that on a technical level, pretty much confirms the reality the lira is facing in terms of more potential weakness. ,'ve highlighted this for you that thea clear signal central bank is coming out with a statement in turkey saying volatility ing
1:37 am
markets. it pledged sacral unhealthy price formations with economic fundamentals. the market is telling us clearly in terms of brother currency is trading, it's nothing short of a higher interest rate that will ease the pressure of the turkish lira. have lowered the level of foreign exchange reserves it requires commercial lenders to hold by 0.5%. they limited their borrowing interbank money market's to 22 billion lira. that will be effective on wednesday. of course the critical point will be the ongoing standoff between the political establishment under erdogan and the central bank authorities. convince theg to central bank to keep easy monetary policies while the central bank is under pressure to hike. so that standoff is very much in focus. anna: thanks for joining us with
1:38 am
the latest on the turkey situation. let's bring in our guest who is still here with us on "bloomberg daybreak: europe." the standoff between the central bank and the government continues to weaken. >> there isn't much the central bank can do. they can lean against the wind, but they cannot stop it. politics are very messy. there's a lot of uncertainty. everybody in the market is short. this is a region that everybody is short. it's not correlated with anything else that is going on, it is simply domestic practice. anna: i have the racking up currency performers. not even sure if you can see the turkish lira. it's down by 21% against the dollar over six months.
1:39 am
last year in general was a pretty dreadful year for the turkish lira and this year doesn't look to do much better. tempting to buy it because of how cheap it is. point i would not try to catch a falling knife. rug --ou mentioned the russian ruble is right there at the top of the chart. there is a lot of the oil story in here of course. we have focused a lot at the start of the program on what the don't trump presidency will mean for the united states and the dollar. can we know yet what it will mean for russian assets? some people have been buying russian assets with this rapprochement in mind. >> there are number of factors that can support the ruble.
1:40 am
oil prices and gold prices were collapsing. now it's more friendly toward russia. the big question here is whether the u.s. will remove the sanctions for asia. you can argue that the market has started positioning on this. we don't know yet. perhaps even president-elect trump doesn't know yet, but this is the key question here. we expect oil prices to increase further this year. not to overshoot the oil price but the fundamental story for the ruble is more the politics of the state. anna: where do you think the oil price goes, and where are we now? , he was talking about where he expects oil to go. he said it will vacillate
1:41 am
between the mid 40's in the high 50's. he doesn't think it will be a year big moves in the oil price. do you think we will be stronger? >> we are still bullish oil. there is still some some fly constraints -- supply constraints. eventually high oil prices will bring more supplies to the market and we will see a slightly lower oil price by the end of this year or early next year. i think the trend that this point is still to the upside. are you favoring some of the commodity related currencies as a result of that battle? from the thing about the dollar, or their bullish currencies you are favoring? we believe it is still undervalued. emerging markets have been
1:42 am
negatively affected in the u.s. elections. this year they are doing slightly better what we believe that commodity prices will be falling for the major markets. at the end of the day, this should be good at least for some emerging markets. anna: i was reading a story and the headline said bearish signal for emerges -- emerging stocks. we will leave for another conversation. great to have you on the program. 6:42 here in london. some highlights for your day ahead. theresa may faces her first prime minister's questions of 2017. two hours later, the confirmation hearings for >> tillerson as u.s. secretary of state gets underway. governor mark carney will be
1:43 am
quizzed by mp's and u.s. president-elect donald trump gives his first news conference since the election. plenty will be discussed, no doubt. up, the deal of the divorce. how key will the new special relationship work out for britain? we discussed. volkswagen closes in on the deal to pay $4.3 billion in penalties to settle a u.s. probe into diesel gate. we will bring around about the stories to watch this morning. the pound is pricing in a hard brexit. david bloom joins us in the next hour. this is bloomberg. ♪
1:44 am
1:45 am
1:46 am
anna: welcome back.
1:47 am
this is "bloomberg daybreak: europe." a live shot of new york. the futures pulling themselves back a little bit from earlier weakness which could be of interest. 1:46 in the morning in new york and 6:46 here in london this is the morning. let's get the bloomberg business flash. >> volkswagen is closing in on the deal to pay $4.3 billion in criminal and civil penalties to settle a probe into the rigging of diesel emissions. the cost of the scandal more than $23 billion in the u.s. and 19.2a, way above the billion dollars volkswagen had set aside to resolve the dispute. toshiba shares rose in tokyo on signs lenders will support the company as it deals with potential losses in its u.s. nuclear business. the conglomerates main bank agreed to maintain financing
1:48 am
through february even though recent credit downgrades may make it ineligible to receive loans. as toshiba'said main bank, we will continue to offer support. the main assembler of apple's iphone says it recorded its first annual revenue decline since listing in 1991. also known as foxconn, eight posted at 2.8% fall in 2016 sales as the global smartphone market went through its worst year on record, coming as foxconn technology group prepares to invest billions in display making capacity after taking control of japan's shop. that is your bloomberg business flash. potentially damaging personal and financial information on president-elect donald trump is said to of been compiled by the russian government. a person familiar says u.s. intelligence informed the
1:49 am
incoming leader that they received the unverified report. donald trump posted on twitter saying fake news, a political which hot. he prepares to give his first political press conference today. president barack obama used his farewell address to present a vision of transcending politics. president obama: democracy does not require uniformity. our founders argued, they quarreled, and eventually day compromised. they expect us to do the same. but they knew that democracy sense ofire a basic solidarity. let's discuss president obama's legacy and what we can expect from president-elect donald trump. is an associate fellow of the u.s. american program.
1:50 am
great to have you on the program. thanks for joining us. aheadl look back and look . we will start by looking ahead because the most recent revelations, unsubstantiated reports around what information russia has been trying to collect on donald trump. something of enormous significance, do you think? certainly the relationship between russia and the u.s. is newsworthy lately. everyone's trying to get more information on this relationship. >> it's difficult to know because this is late breaking news. be of graveould concern. there are allegations that donald trump was aware of the attempt by the russians to hamper and metal with the u.s. elections and he had some sense they were looking at the dnc email. it is completely unsubstantiated so far.
1:51 am
some of what is coming out is deeply embarrassing, but it suggests there has been an ongoing effort by the government of russia to influence donald trump throughout the course of the campaign and since his election. this is sort of a wait and see but it's clearly very embarrassing and it's very worrying too donald trump personally. he does not derail the presidential handover process, close, but further down the line these questions will require a lot of investigation. >> that is exactly right. so many things now have come out, the recent report that theg clearly government of russia at the highest levels were attempting
1:52 am
to influence the u.s. election. it's very difficult for him to walk into office and talk about lifting sanctions or extending a hand. it's sort of pushes things in a different direction, and of planningx tillerson is to say today that we must hold russia accountable for its actions with spec to ukraine, crimea, and that part of europe. it's reported that is the tone he's going to adopt. how difficult is it going to be for donald trump and his closest colleagues take the rest of capitol hill and take his own past in trying to bring russia in from the cold? >> i think very difficult. there's a push for more sanctions, john mccain very strong on holding russia accountable. it's going to be a very difficult phase and inevitably an area in which donald trump will have to moderate.
1:53 am
this news i suspect it's going to be front and center for the first few weeks of his new administration. it will call her the first 100 days of his presidency, no doubt. lor his first 100 days. anna: we know what he said about nato, of course. we will way to find out what he really means with the russian conversation. is goingu think trump to behave when he takes office in that sense of leading the world role? on the campaign trail was a very different kind of trump. i think we can expect certain things to be consistent. the russia question will change, partly because of the intelligence and the politics surrounding that right now, but
1:54 am
think it will i work differently with the relationship with the united kingdom. theresa may is lining up her visit to see donald trump, so that relationship might be stronger than perhaps was initially expected. there's a question mark about the commitment to nato. themhe changing politics ethically in the u.s. surrounding russia would submit the commit -- suggest the commitment to nato would remain in place despite the rhetoric donald trump adopted in the campaign. there's a question of how predictable and how certain people can be a broad of the u.s. commitment to engaging internationally. the: you bring up relationship between the u.k. in the united states, and brexit is the predominant concern of the u.k. government right now. what role do you see for the u.s. and that?
1:55 am
does donald trump have the appetite to get involved in that process? the head of the foreign office said the appointment of donald trump does change the background around this story. do you see the u.s. getting involved? >> i expect the u.s. will be reluctant to get involved in the details of the negotiations over the terms of its exit from europe. i think donald trump will see it as an opportunity to cement a particular kind of relationship that's more focused on bilateral trade with the u.k.. the u.k. cannot enter into a trade relationship or formal trade agreement so it is a wait of c -- wait and see face. there will be an ongoing quiet conversation but i don't think donald trump will seek to really engage in the details of brexit. anna: follow trump is a
1:56 am
different communicator and debater from presidents that have gone before. of twitter, for example, to respond very quickly to news your ease and in his own inimitable style, how will that go down on the international stage? >> last night president obama was ang in chicago, it extraordinary speech in terms of the language in his ability to communicate to a very large audience very persuasively, to a new president who will rely heavily on twitter and whose language moves and shifts very quickly and is unpredictable. going to be a very different style and will create a lot of work for the people who are working with him. anna: thank you for joining us, leslie. trump's news conference
1:57 am
will be held at 4:00 p.m. u.k. time. frome expecting an update the transition team half hour before that. what is the pound pricing in right now on brexit? this is bloomberg. ♪
1:58 am
1:59 am
2:00 am
u.s. officials are said to have informed the president elect that russia has potentially damaging information on him. that comes before his first news conference today. obama says farewell. the outgoing president makes an appeal to the american people to present his legacy before trump takes office. obama: if every economic issue is framed as a struggle between a hard-working white middle-class and in thenerving minority, workers of all shades are going to be left fighting for scraps draw the wealthy will
2:01 am
further into their private enclaves. thecarmaker settling with government over the admissions cheating scandal. that would push bw over its current provision. a very warm welcome to bloomberg daybreak: europe. our flagship morning show. we were getting updates are a few u.k. corporis. retail sales up by 0.3%. third quarter comparable retail sales up a 0.1 percent excluding fuel. we have something that we can compare. up 0.1%.e retail sales the estimate was down 0.8%.
2:02 am
the number bedded than expected over the third quarter. zero point 8%. the estimate was for reduction of 0.9%, better than expected on the total and the comparable sales numbers. shows third-quarter sales up by 3%. are they buying ahead of expectations of further inflation? they sell home appliances and many other goods. this is a broader story, this is around retail in the u.k. and we saw numbers coming from more sins committed decent numbers from albee. the story seems to be supporting that. in early heads on decent numbers coming up. u.k. housebuilder
2:03 am
reporting good progress. they say and 2016 total home completions in 2016 up by 4%. is 13%.ellation rate they are giving an update on the spanish market. they're entering 2017 with 285 outlets. we have rivals struggling to complete as many houses as they had committed to in the month of december. the does not seem to be what they are talking about at least at the moment and we see taylor wimpey giving us a range of updates. up by 18.4%. a quick look at the futures. we have an asian equity session that was broadly positive. the japanese equity markets moving higher. the chinese market was a bit of an outlier. the hang seng set the stage for some positive buys but if we
2:04 am
look at europe but we are expecting in europe, you have seen some of that positive, maybe we factored in an already. the u.s. unchanged yesterday. we see some downward bias expected in the european start to trade. bureau stocks 50 down by a touch. the ftse 100 down a little bit -- the strong ftsermance coming from the 100. we talked a lot about russia. the ruble started 201682 to the dollar. it is around 60. watching that with the news conference with donald trump in mind, the big oil story. the dollar-yen is 150.96. will he give clues on trade or fiscal policy and the light question mark the pound at 121.56. what do they say about where the
2:05 am
pound could go on a hard brexit scenario and what pricing? we will discuss that shortly. we are expected soon see weaker at the start of trade. a lot going on politically in the united states of be aware of that. let's get you caught up on the first word news create russia poses a danger to the u.s. and must be held accountable for its actions, that is what president-elect donald trump's nominee for secretary of state will tell senators at his confirmation hearing later today. rex tillerson's omar remarks are a sharp departure from comments from trump. trevor -- treasury yields will signal the end of the three decade long rally. in his webcast the ceo of double line capital said "if we take a bullin 2017 it is market, rest in peace." bill gross has a different threshold. he says in an investment outlook
2:06 am
released earlier the treasury is above 6% and spells the end of the bond market. have chargedors three x traders at the heart of a criminal investigation. overs ensnared the banks the rigging of currency rates. they're accused of using an online chat room they call the cartel. they are living in the u.k. and will have to be expedited unless they surrender voluntarily. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . let's take a look at market action. juliette saly has all the details. has been a pretty good day here in asia. the regional index holding and its highest level since late october last year. a lot of this to do with the big
2:07 am
rally we have seen in commodities. we saw iron ore jump quite significantly. we are seeing upticks in gold and oil. .hanghai has close down lower the second session of weakness coming through for the mainland stocks. the hang seng china enterprises index has been up for the last 10 days in a row. the hang seng index is the top 50 at -- for the past five days in a row. higher by .7 of 1% with under an hour's trade to go. a pretty good day coming through in australia on the back of that yeny in commodities and the -- the weaker yen. coming back after that hefty day of selling during yesterday's trade. lifted the cosby index by 1.4%. samsung shares rising after they said airlines do not have to save -- [indiscernible]
2:08 am
they are still banned from flight. they also had an incredible day. -- 13,006 percent. bellamy is coming under pressure. this is the milk producer that provides no powder to china. announcing its eva. missing and its ceo leaving the company. quite a big few movers in the region today. anna: thank you. juliette saly with details of the asian trading session. a potential russian intelligence plot. u.s. officials are said to have reports thatrified claim russia has compiled damaging information on president-elect donald trump. let's get an update from our reporter who sent this report from new york. u.s. intelligence officials proved -- briefed donald trump
2:09 am
and president obama about a report containing information that the russian government had gathered on the president-elect. it contained information about trump activities in moscow personal as well as financial. to fbi has not been able verify the delegations but they have been detailed by numerous media outlets including buzzfeed and the new york times and cnn. twitter toook to denounce the report saying fake news, a total political witch hunt he retweeted an article run by conservative national radio host that did denounce the story. this reports come less than 10 days of mr. trump taking over the white house and as congressional hearings ramp for his crab -- cabinet picks. rex tillerson goes before a senate hearing committee. his dealings with russia as a former oilman are likely to be part of the line of questioning. is set told trump hold a news conference later
2:10 am
today, 4:00 p.m. u.k. time. set your watch is if you wear one. we are expecting an update from his transition team half an hour before that. barack obama made his farewell address in chicago last night. the outgoing president made an appeal for americans to embrace inclusiveness and to preserve his legacy. president obama: if every economic issue is framed as a struggle between a hard-working white middle-class and an thenerving minority, workers of all shades are going to be left fighting for scraps while the wealthy withdraw further into their club -- private enclaves. if we are unwilling to invest in the children of immigrants because they do not look like us, we will diminish the prospect of our own children because those brown kids will represent a larger and larger share of america's workforce. coming to power in
2:11 am
the middle of the worst recession since the 1930's, obama presided over a 5 million job reduction in the employment gap, one of the best records in the past six decades. the s&p 500 has rallied about 170% since his first inauguration in 2009. joining me now, david bloom. great to speak to you. let's type of thing together. that is important around the dollar. we are attempting to look back over obama and forward to trump. let's talk about if any of these revelations, unsubstantiated at the moment around russia, .hether any of that matters forward and leave it to the university's and phd students to act. the markets are looking forward to a fiscal package. you have to imminent -- eminent marketsaying the bull could be over. we do not believe that but for
2:12 am
now it is. in front of the trump train you're going to get smashed and run over. do not do it. doesn't matter what you believe. when architect momentum, when they have a believe system, you need to go with it during the time. it is much too early to fight all these ideas. hereow hanging fruit is and the momentum will be there. the market will get over exuberant and overstretched and you can go against it. time eighte -- the now. and at you do not believe necessarily in the strong dollar but the market does that you cannot stand in the way of it. guest: it is going to happen and it is happening. for the next six months we will have a strong dollar. justnd of the bull market, below 1.4%, bond yields are we have the dollar turning around. and get overstretched people will believe in two and
2:13 am
too big a fiscal package in the fed raising rates too many times in the whole believe that the bond market rally is completely over. you have to give them the oxygen now. i made the big mistake, we went 8220 five. it was no successful economic. no growth associated but the market believed. i got smashed. same mistakeng the again. it does not matter what you believe. you have to go with momentum as it stands today. you have to give those people, those bond bears the and smashed, this is their chance, give them some fun, give them the oxygen to push markets. if yields are better than 2%. anna: what turns things around, what stocks is the market thinking, what is it due to global trade into china and
2:14 am
questioning how strong the dollar gets. gett: the market will excited over this fiscal package. markets.hat we do in we get overexcited, overenthusiastic, we overshoot and then we get some reality coming back. we saw a very -- we still are very far away from that point. this is not the time to think negatively about the dollar or bond yields. this is the time when you have to let these people, the trump train role. the business betting on trump. expectations run the u.s. economy, optimism of small businesses here. that is animal spirit. guest: they will push the economy forward, will the improve things? the pmi is better than expected. things are happening. markets get overextended and they are not overextended now.
2:15 am
you should be buying the dollar. do not listen to the minor share flimflam. this is a chart that represents the animal spirits that have come back. either trump has unleashed them or he is lucky. it is better to be look even smart. he must be lucky has caught the economy on a upswing. if you want to fight the trump toin wait for it to be over britain. jump on board for the moment and go with it and make some money. fire ticket. thank you. and pointing to a hard brexit. we continue the conversation. this is bloomberg. ♪
2:16 am
2:17 am
2:18 am
anna: a warm welcome back. a little bit weaker at the start
2:19 am
of trading. the ftse 100 also seeing a little weaker at the start of the trading day. 7:18 a.m. here in london. let's get the business lash with juliette saly. juliette: volkswagen is closing on a deal to pay $4.3 billion in criminal and civil penalties to settle a u.s. probe into the rigging of diesel engine emissions tests for the agreement which will include a guilty plea raises the cost of the scandal to more than 23 billion dollars in the u.s. and canada, we're above the $19.2 billion b w set aside to resolve the dispute. and winning a construction contract. plant and that u.k.. the french company will work with them on the construction on the buildings that will house the nuclear reactors. the company dealt to similar plants in england and france that use the same technology for
2:20 am
their reactors. toshiba shares have risen on the company will deal with potential losses. the conglomerates mean ranks agreed to maintain financing through february him the recent credit downgrades may make it ineligible to receive loans. said "as toshiba's main bank, we will continue to offer support. mizuho declined to comment. that is your bloomberg business flash. anna: since the u.k. voted to leave the eu in june the pound has fallen almost 1%. acting asthe pound is a gauge of brexit harness and it is using the currency swing to create a brexometer. 100 is a hard brexit. david bloom is still with us in the studio and can explain all. what do you think is priced into
2:21 am
the pound at the moment? david: a relatively hard brexit is coming about. we argue that we would be if none of this happened. differentials are 155. we would still go if we trigger article 50 and head toward wto rules. it is 110 and it would be rapid. where are we between then? rather than asking what brexit has meant for the currency we can ask what the currency is telling us about brexit. it is a symbiotic relationship. crash thate flash backed off of it. may system -- spoke about sterling and expectations. what is sterling telling us about exit question mark -- brexit? anna: there is a difference between a hard brexit that has a hard -- long transition.
2:22 am
the difference between that and just crashing out. david: it has been a very long way. you could go further. i want to keep chasing it, that is what we do. eventually we get it wrong. this is where we -- what we said. if something dramatic happens it could go lower. 110 and we have the euro-dollar. a prettylready aggressive forecast. i am happy to be slightly contrary in on the euro sterling theyou saw i am going with consensus. it is not just about the consensus and what we believe. sterling needs to adjust. how quickly it adjusts, that is up to the politicians. call or thene can lower bound for where we might head on a hard brexit. what is the timing of that, is that the triggering of article 50, we get a bit more
2:23 am
information, the make -- market makes up its mind. 110 by the end of the year. we are not expecting it but it is possible. that is the main point and how quickly it goes down is up to the politicians. that is the relationship now between cable and the politicians. predicting politics is very difficult. enough.omy is bad the structural stuff is bad enough but having to forecast politics, it is a difficult world for us. your view on about euro-dollar. and what is underlying that. david: the maximum weakness of the euro is now. they are still doing qe and everyone is on the trump tree in -- train.
2:24 am
the politics are different. everything is in favor of the dollar right here, right now but that will turn. electedn does not get turninguro stocks is over. you start getting less worried about european politics and lessons is he a stick about u.s. politics. that turns over. the ecb starts thinking about tapering. it is not raising rates. does that -- as that turns over and that causes the euro-dollar to start drifting upward. the u.k. is caught up in brexit. anna: the risk around the eurozone -- there was the phrase that you used around the russian story but it was all noise basically. europe?apply in david: if the pen gets lifted the euro could be short stories and seven singles. it could be completely all over. that really worries me. and of course most people think le pen will not be elected
2:25 am
because the probability of her being elected is the same as it was for brexit and donald trump and we know those two things did not happen. wrong on the it so political side. we remain cautious. we have to wait for the french residential elections to be over. if it is not le pen that is the part where you should stop buying the euro. populist much of a threat is there to the euro project. they started about talking -- talking about replacing the euro in france. really this existential threat to be talked about? people like to talk about the break up of the euro. it is the u.k. that is leaving rather than the euro breaking up. i think the threat is france. without france there is no euro. the pen has said basically in a nutshell that the euro will not
2:26 am
possibly exist, re-denominate some of the bonds into local currency. it is all over. i do not think that will happen. weakest point during this quarter of the euro. i do not think it is breaking up and the euro rising, the u.k. got this brexit issue and that a unpopularto forecast. anna: there's anything that the to the pound?blow david: i do not think so. this whole trump train that is going on and that is not just about the pound, we have seen lots of things. we have had the mexican central bank in -- intervening. the reserveey, ratio. it is all happening in foreign exchange of the moment. day intoant the third week 2 and i am feeling completely browbeaten. anna: it is almost -- only 7:26
2:27 am
a.m. you are already working hard. thank you for joining us. joining us there from hsbc. that is it for daybreak europe. the european open is next. this is bloomberg. ♪
2:28 am
2:29 am
2:30 am
welcome to bloomberg markets, the european open. we bring you the first trade of the day. i am manus cranny alongside matt miller. he is in frankfurt for a special conference on strategy. here is what we are watching today. the russian enigma. said to be told of unverifiable reports that the russian government has compromising information on him. how well the president-elect address this in his first press conference?

77 Views

info Stream Only

Uploaded by TV Archive on