tv Bloomberg Daybreak Europe Bloomberg January 16, 2017 1:00am-2:31am EST
--a: -- >> abound reaches 120.ound reaches upending the world order. and calls made obsolete predicts other countries will leave the e.u.. manus: samsung bribery probe sites prosecutors are seeking a warned to arrest the company's vice-chairman. samsung shares dropped. we are live to seoul for the details.
you are welcome to "bloomberg flagship europe," our show in the city of london. i am manus cranny. hard brexit -- raising. and how itrling performs on various moments of rhetoric that are used. theresa may taking to power the reaction to her party conference speech. it dropped by over 1%. then we have her new year setting the scene for her brexit negotiations or the lack of detail vera. it dropped by nearly 1%. overnight, what you are seeing is a real move, sub 120. theresa may will announce taking control of
immigration is worth giving up participation in the european union. that is the information from the sunday times article. government officials said they expect may's speech to cause further market correction. 41, or below? ,hat we really want to know is is there enough momentum in this speech to take sterling lower? we understand. we have not seen this in many years. government officials are preparing to talk to the market. there is always bilateral conversation, but government officials preparing to talk to the market about what their speech might mean? that's all you something in terms of what we have got to be prepared for. how that is reflected in the risk rate are it in those u.k. assets. euro sterling, 8826. can you break 90 down below?
mitsubishi, you could have a violent rally in sterling if the supreme court finds against the government. it is not all a one-way trip. stockgendoubts -- doubts. of the companies on the ftse 100 gained their income from overseas. hence the reason you are seeing a flipside in terms of the future. the classic risk off perception and market. you are seeing a real risk rising. yet has rallied for the sixth -- yen has rallied for the sixth dan a row. gold is rising. what you have got is the longest run of gains and november. hedge funds boosting their bullish bets for the first time in nine weeks. if you wanted one phrase that
surmise is the market this morning. risk rising.exit shery ahn standing by with the first word news. shery ahn, good day. shery: donald trump has called nato obsolete and predicted that other european members would follow the u.k. in leaving the block. in a joint interview with the times, he threatened to bmw with import duties over plans in mexico. drum signaled a major shift in transatlantic relations including an interest in lifting u.s. sanctions on russia as part of a nuclear weapons reduction deal. the global elite are preparing to gather in davos this week. ahead of the event getting underway tomorrow, the world economic forum's founder told bloomberg that he may invite trump in the future. >> i saw him, but it would have
to be completely illusory. i am not a dreamer to ask him to join us now. maybe in one of the next years. vietnam's-- shery: prime minister is holding out hope donald trump will reconsider his position on the transpacific partnership deal. he said he would withdraw from the trade pact once he takes office. comment from officials said to make up trump's cabinet have given the leader reason to be optimistic. >> i have had a meeting with u.s. business leaders and also met with secretary kerry of the united states, and the message that i see is i believe the new administration of the united states will reconsider its perspective on the tpp, but i see that the newly appointed members of the new cabinet, many of them are in favor of the tpp. i think that they might
reconsider. shery: south korean prosecutors are seeking a warrant to arrest samsung's jye. jay y. lee.-- it is a stunning turn for the countries richest family. agreed --f has exotica as agreed to merge with a french company. a combinedll create company with 15 billion euros in revenue. powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . i am shery ahn. this is bloomberg. manus. us get into those
markets now. juliette saly is standing by. yen is getting stronger and the chinese equity market is also under a bit of pressure. good to see you, juliette. juliette: it is a lot about what is happening in your part of the world. this is putting a lot of pressure into sentiment. there is not a lot to give investors a reason to buy into the equity market in asia today. you have also got the inauguration of donald trump later this week and concerns about a potential u.s. china trade risk, so we have seen the .7%.hai composite off this is the fifth session in a row markets have been in the red and this is the longest losing streak we have seen since august, 2015, when you will remember we had that crash and the depreciation of the you want -- the yuan. infrastructure is one of the
front-runners. recommended to shareholders. one of the best performers in australia. australia's market is actually outperforming the rest of the region on the rally we saw in deal prices. you mention -- steel prices. you mention the yen fluctuate against the dollar. the dollar higher for a sixth consecutive session. it is lower by 1%. some of the stocks we had been watching, samsung shares fell after news of an arrest warrant of jay y. lee. tokyo, substantially in but remember, it had been up 30% over the prior two sessions. we saw good movement coming through from minor players today. manus: great set up for the trading week. volatility is the byword.
the pound is suffering. it has reached its lowest level since october's crash, after the sunday times reported theresa may will prepare to withdraw from the e.u.'s single market in return for freedom to curb immigration. there is more turmoil ahead. the pound, three-month high, ahead of may's brexit speech. a supreme court ruling on whether the british leader or parliament carries the power to trigger the exit process. the managingke to director of the european stability mechanism about the possibility of a hard brexit. i think, economically, in the long run, it might the really a problem for the u.k. because it will reduce foreign direct investments. we have seen that already happening, that foreign investors go to the continent in that of the u.k. or they look at some shift of be
the financial service. politically, it is very bad for the you, so that is why i regret, like most people in the european union, regret the results of the referendum, but i think the economic will be on the u.k.. manus: joining us now, douglas morton. welcome to the show. it is amazing. china took the front pages all the way through last year and invokes the era of the markets. this year, it is undoubtedly brexit risk rising for the market. when you read the sunday times, when you read everything that is going on, it it sounds as if we are getting prepared for a harder form of brexit. douglas: potentially. it is interesting in the current environment when donald trump is aning in on and -- on policy.balism
certainly, risks are rising and this is on trump's hands. i think the concern for me is that it goes beyond just britain the currency impact. currencies are a huge risk at the moment. particularly at the moment, and we are running out of safe haven currencies, to be honest. the implications are large. potentially, we are running out of haven. it is interesting how the yen and the swiss and the classics to perform almost classically, but that is sterling and this is what theresa may manages to do every time she talks about the currency. if the traditional havens are lacking, do they lack liquidity, depth, what is it they lack? what are my alternatives? douglas: there are a couple of things. for the yen, for example, it goes against what the japanese are trying to do. they are keen for the yen to remain weak. theirs against what
economic goals are. at the moment, we have a significant lack of liquidity and the offshore u.s. dollar funding market, that is a risk people are not speaking about enough, we think, and there has been a huge amount of credit and, you know, one of the hangovers from the longer trade, the need for yield over the last five years, has been the bond theets which have climbed risk curve. that is u.s. dollar funding credit. the lack of u.s. dollars are around. the stronger the dollar gets, the higher the interest rate in the u.s. get, the more funding risk for the rest of the world, so we have to be careful about these moves. manus: when i look at cable and people are saying, is that price for a hard brexit, stockgen saying there is not enough mileage to sustain these moves above 120. the gilt market fascinates me because the 30 day volatility in
the gilt market is nowhere near as aggressive as it was during are bondimes, so markets as susceptible as that in the world that is changing for an inflation partition? douglas: that is really not my area of expertise, first of all, but i would suggest, we are at a fascinating period in global anket area we have come off historic period in qe. dse markets are reacting towar political news flow in a way that has never been the case other than the last five years, so i think there is a potential the second round and third round implications of a lot of the risk factors happening are opaque, so it is difficult to make a call on an individual basis at the moment. the potential volatility will spread across all asset classes, is it of just one. manus: a lot more volatility
across the asset classes? douglas: we are in a very risky environment, i think, particularly with this reflation rotation which has been priced in some asset classes and not others, so there is a huge implication there. without making a call into the outcome of trump's policies. manus: douglas morton stays with "daybreak." u.s. equity and bond markets closed today for martin luther king day, and the world economic forum kicks off in davos tomorrow. we will bring you a whole host of some of the biggest names in the world. wednesday, barack obama gives his final news conference as u.s. president. firstay, see the ecb's policy meeting of the year. we ran off the week with -- round off the week with the inauguration of donald trump, the 45th president of the united states of america. coming up, it is not over yet. the yuan's top forecaster sees
no end in sight for the currencies losses. we talked china and then the davos disconnect to break down the hot button topics as little uncertainty hangs over 2017 positive and. sterling fly the head of theresa may's big speech tomorrow. a hard brexit. will the pound feel this week headline? this is bloomberg. ♪
is no longer something merely contained to the splendid isolation that is british or european affair. the business flash, juliette. shery: -- juliette: a billionaire has agreed to buy a group. kongffer comes as the hong tycoon seeks to expand his infrastructure assets in australia to diversify away from europe. he gives asia's third richest of threes to an area times the size of hong kong as he faces uncertainties in europe. rket with a mars string of elections. facebook to update its platform to deal with so-called fake news and germany. it says it will cooperate with nonprofit organization "corrective." the member of anglo merkel's an organization welcomes the announcement.
that is your bloomberg business flash. manus. as the biggest names in the business world are descending on davos, we built up about sustainability and investing for the future. it could be the top of their agenda. there could be a potential there could be a potential return of 30 trillion is businesses invest to meet the world sustainable developing gi lts. davos, he sat down with francine lacqua for an exclusive interview. global time when governance is lacking to some extent, it is even more reason for the private sector to his cap up and more and more businesses have discovered that there clearly is not an enduring property. paul: -- francine: francine:
there is much less sympathetic view towards climate change. paul: i don't know that. the language might have changed, but the objective is the same. how do you create economic growth and jobs? increasingly, people are understanding that you have the top of climate change if you actually want to have job creation and economic growth. francine: even the new one understand some? paul: china yesterday announced they had invested money between now and then. movinge the industry rapidly to green energy in the u.s.. they see people like elon musk doing extremely well with very much a car. they see more people in the u.s. are inclined in the green energy sector than the also feel sector -- fossil fuel sector. the movement for domestic turn the financial sector, the market cost onn, the internal
carbon, -- when the global wealth said we are going to deke harmonize -- carbonize the economy, it makes economic sense. the current administration may have talked more about climate change and the new administration might talk about the economics lori of it. -- economic story of it. francine: does it go hand-in-hand? paul: something can be solved without regulation. policyings you need frameworks. a very important. it would help if you have a price on carbon. we might not see that directly in the u.s. right now, but many places have moved forward on the agenda without the price on carbon. for example, one of the major talks in the u.s. is to invest $1 trillion in and the structure to bring the u.s. up to standards. itself not a bad idea in for job creation and economic
growth and increasingly, we can say, why not do that sustainably so we can do that for a long term without having the economic externalities that we deal with? the language might change, but a lot of the things we do might not. al haske coal, but col become economically unviable. no new coal plants are being built in the u.s.. it is a function of the economic forces more so than climate change. unileveranus: ceo of sitting down with francine lacqua. want to bring you a quick correction. what i meant to say it was 12 trillion is businesses were to invest by 2030. fronting a call sitting down lacquaul -- francine talking about the whole conversation in regards to trump, climate change.
douglas, when he listened to that conversation from paul, it is interesting that climate change is something donald trump has made clear he is rather skeptical about and seems to be returning on the obama -- the last administration talked a lot about it. how important is this conversation around climate change? douglas: it is a big indicator of the convergence between u.s. policy and chinese policy we alluded to in the first segment. it is fascinating now that you know, the climate change in particular, and some of these new energy type of solutions, are coming to the fore in china. if you look at the history of post the gsc, they are investing very hard in these types of policy, that they see it in their intranet but -- their economic interests. they became the largest manufacturer of solar wafers in the world. they have a history of getting
behind these policies. this vehicle is leading the surge toward big data and a huge increase towards the velocity of money. china can rebalance their economy if they fully invested in that verse is a donald trump that is trying to do almost the a donald trump that is trying to do the opposite. xi jinping is the most powerful leader china has seen in 40 years. if he gets behind these kind of reforms, which we are seeing moves that he is, there are huge implications for china. manus: is this a silent war which the west, we have been so looking at our own navels about quantitative easing, sorting banks, that the chinese have yet again stolen a march on a much bigger global stage? douglas: we have been talking about the fact that it is kind a moral hazard for china. they have the fastest aging
population on the planet and they have driven their economy through credit means, which is unsustainable. they only have certain things they can do. donald trump exacerbated that, sped it up. they can only devalue their currency or speed up the pace of reform. it is inevitable. manus: you would say the supply chain is perhaps the biggest risk here? trump's policies and china are contradictory, and and destabilizing. it has much more of an impact on the supply chain, which quid pro quo has more negative impact on the u.s.? gsc, it hasce the remained 64%. in china since 2009, the trade as a portion of gdp from china has reduced to 35%. the impact of trade sanctions is a less than otherwise would have been. the other point to note is -- manus: hold that thought. we will get there, douglas
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only xfinity gives you more to stream to any screen. download the xfinity tv app today. is afternoon on a beautiful day. here is a look at a shot of the dollar yen on the bottom of your screen. the brexit speech tomorrow ahead of douglas. there is a new addition of daybreak available on bloomberg. there you go. there are a variety of ways to
.hink about this every time she speaks, she is a wrecking ball. that is my conclusion. that is what we can expect. maye went down and theresa hard exit from the european union. the minister will strike a harsher town than the one that was on saturday. and demanded an agreement get readye court will for the violent repricing of sterling. is donaldtory up
trump, the busy man. this is the top line. nato is obsolete. a treaty and they connect the president elect to russia. on mergers focusing and acquisitions in this sector. the ray van's have agreed to merge. the market value -- it is probably about to get a little more expensive. let's tell you about one more
area under pressure. it is a stock index. it is the most since july. is aost accurate predictor currency break with capital control running through. we will discuss the state of play with my guest host this morning. chair.settled into his good morning. >> good morning. first off, i want to take a look it dropped down over the last two trading days at some points earlier and, over
the last six months, we have basically seen a drop in this trade. you take a look at this and you is six brexit and this or seven other major trading partners. this is an interesting index to check out. the yenu just showed gaining some real strength and it has been building with safe haven trading's and a bit of an havening into the safe assets. and we haves down seen some games -- gains earlier
in the year. finally, aboard the asian stocks, there are take drops and you are seeing the hang saying boardith drops across the for asian equities. >> thank you very much. up the heatare more -- upbeat on the earnings of russia. we are down there with the chart. go, russia. >> there are two key factors driving this. oil outlook, after the agreement, this is what it is doing and you can pull it up on
this. this is what i am talking about and i have highlighted this and circled it for you. here you see this spread with the estimated earnings and you can see this and look at how it jumps. it is important to note that citigroup is overweight on russian stocks. you are looking at a gain on this index and you recall that the real carry was generous. he said to go for russian credit. he did not even mention this equation. from dubai, the beautiful
slopes of jobless. the populist is probably not on top of the invite list. the chairman of the economic form says that leaders will be listened to this year. areas ofone of the movement here and we have other companies and we want to listen to the concerns and how leaders respond to those. >> joining us live to talk more about this and the political forecasting is andrew. it is great to see you. hope you are ready for a ride.
never thought we would be looking forward to the inauguration of trump on friday. the question for you is that the world has upended from last year. canhere anybody who countenance political predictions this year? >> i don't. it is a bit of a cliche to say davos consensus is wrong. kennedy has a hilarious story at alles back and looks of the predictions made last year that were wrong and i thought it would be funny to set that goes with the consensus and against and let
them roll. prevailing view is often not the case. with trump, that was never more true. >> what do you think the risk is ? i love the jumper. risk? top where to start? votes and of those they are playing out this year and it will be a big focus for the year with a lot of the andern leaders staying away pulled.e the difference is the chinese contingent and the president stepping in to the limelight as others pull away. vos, none oft of da
the big populist leaders are here. as toet a question whether they are part of the problem or if this is a feedback loop. they will talk about all of the big shifts going on. up with you for getting us. that was andrew barton. now, the predictions. we have the head of asia research. this is everything that enters just talk to out -- talked about. intellectualative feedback loop? >> is a difficult one. i think that we are in a time of
ifx and the question is back on theoming back of this and there is a i we have ton and manage it carefully. and donald rising trump is not there. shape of nato and the relationship with russia, you statethe world is in a and try to get their hand on a global currency. getting your money out of onshore china and putting it into hong kong seems to be a last gateway.
this is a big full circle for you. >> it is. when will be speculation they remove areas with specular pressure and we do think that money will try to find other areas to get other assets classes and we think the pressure will manifest through a bank flow. withnk it is interesting currency and we think a lot of that is dollar-driven. you look at the last six months or so and it has not been reflected and it has been a very riskfic trade and a major
in china is this funding argument we spoke about. >> this could be a year were china cleans up metaphorically. china will be pressured and the implications are coming up in the congress. time is crushing us, like the market is crushing sterling. supply isk the positive and the commodity andes is driven by demand
we think supply will be there. >> i want to know why you went the longestthis is and you areovember moderately bullish. >> you think it from the risk and we are probably thinking about the implication of trump covers.nd it >> we got a lot in. my thanks to douglas morton. thank you for giving us your time. there is something to look out at ahead. the highlights this year and the
future of finance. our guest includes john. that is coming up tomorrow. the crisis of the middle class with francine. treasuryhe former u.s. secretary. up, brexit and banking. to city lenders and we will bring you an interview. then, a murder and we break down the ore deal. in ank at where to invest uncertain economic world. this is bloomberg.
with the arrest and the prosecutor presenting their case for arrest. >> this seems to have shifted gears in the past days. do we understand the depth of the allegations? prosecutors believe that there were payments to the foundations controlled by the longtime friend of the president and the special prosecutor alleges that he did this in exchange for favorable political decisions and the allegation is that the government national pension service has a huge stake
in the affiliates that emerged and they basically signed off on by theth payments made friend of the president. >> as you said, this is a story that has really escalated. thank you very much. brexit is dominating the headlines. speechf theresa may's and there is a bid to retain assets when the country leaves the european union. the u.k. -- putting it into context is mark. welcome to the show.
a little bit of latitude there. understandants to that you talk about a relationship and what is the clarity position? arguedave consistently our position and we have argued for a bespoke deal with the european union and, at our summary statement made it clear that we want mutual market access and this is a problem that is hard to summarize. we expect that we will try to close as something as
possible for the current rights that we enjoy at the moment with the mutual market access. and themarket access wait to see what theresa may says tomorrow has me radically rethinking how we will do business here. does this rhetoric put your members at risk of not achieving the deal you referred to? complex andces are to have thisy ways relationship and it has almost over themestic market decades, if not the centuries. this is in the interest of
companies and countries to ensure we continue to play a role and provide economic success and job creation. >> mark carney says that this will hurt europe more than the united kingdom. there is talk about special londonwith the city of and he went on to say that he corrected his sources. do you get a sense that the europeans will say they need access to the european union? i never thought they would capitulate. >> as i said, the industry has been a strategic asset and it has been for the european union, helping to drive growth.
position off of the coast has new york and london and it is in their interest to make sure there is this relationship. capital that access to and the want to enhance the current level of supervision. it is clear that the europeans have no intention of letting the currenttly in form. this is the battleground. >> it is a consideration. the economic considerations will always be incredibly important. having this clearing, it is don'tult to see how you
ban others from doing this. and younk about europe talk about theresa may in these accusations of muddled thinking with preparations for tomorrow's speech. >> we have had a positive and constructive dialogue and we have had no concerns that there isn't a sense of government missing and we have spent a in theres in brussels is a real desire and interest to understand what is at stake and how to get through this to get the best possible deal that works for everyone.
welcome to daybreak. i am manus cranny. a lot toes market has deal with. equity markets are deciding which to trade in. what somee from people thought could be contained to global equity implications. shifting dollars are this morning. the dax is down. the -- is getting battered. will we make it to the flash crash low? ironic moment where thehave ftse futures up and
momentum is shifting lower. estimates at 9.1% the next are the numbers that are guided lower and it is ourresting how this is beside of the hard street and we have better than estimated numbers with a good christmas time. risk, it is the brexit risk. the markets protagonists would there is not enough
word news. nato.donald trump and he says that he hopes that other european union members would leave the block. the discussion, trump signaled a change in transatlantic relations as part of a nuclear weapon reduction. the global elites are planning to gather in. posts. the event is getting underway tomorrow. bloomberg was told that he may invite donald trump in the future. would be him joining
us now. >> the prime minister holds out all reconsider his position on the transpacific partnership. trump says he will was trauma from the trade pact when he takes office. optimistic.e >> i have had a meeting with his this leaders and secretary kerry. see is that iat i believe the new administration will reconsider the perspective on the transpacific partnership, but i think the new members of the cabinet are in favor of the transpacific partnership and will reconsider.
prosecutors are looking for a warrant to arrest the defective ahead of the group. in exchange for government support, samsung has responded by saying they are trying to understand the decision and that they did not provide any financial support for failure. global news power by 2600 journalists and you can find more on these stories by going to bloomberg. money going into the yen. some interesting moves are coming. set up the week for us. close and you the
can look at the composite finishing out and this is thishing off the lows and is the longest losing streak we have seen from the chinese equities and we have the crash coming through and the depreciation. it is a little bit worrying with throughrsions coming and the infrastructure and the board saying they should accept the takeover in australia and australia and new zealand are out performers in the region and strongernificantly with most of the weakness coming
through equity markets, which closed down. on this and aher lot of the currency fluctuation has to do with what is happening and therop coming emerging-market currencies against the dollar and dropping from the one-month high. there is a lot of nervousness. >> definitely. pervasiveis the market. they said they times reported that theresa may will prepare to withdraw for the market -- from the market.
they are saying there is more the plan ford brexit is set for tomorrow. also, a supreme court ruling for the british leader. we spoke to the managing director on the possibility of a hard brexit. >> in the long run, it will reduce foreign direct investment and we already see that at theng where they look financial services. politically, it is very bad and i regret the results of the referendum. i think possibilities will be
made of the u.k.. welcome. >> good morning. >> here we go. a resounding impact on the currency. this is the report. she may go for the hard exit town. it is very simple. going for hard brexit is currency. you see this reaction. what does it say about the currency? more difficult decision to make, whether going long or short.
six month or 12 month time frame. you do not want to expose your ambassadors to too much risk. the government is expected to lose that court case and it does not really change the path. >> you say you don't want to expose investors, but what are the most substantial alternatives to change your thinking? is to key thing to do take a longer time frame and build a number of positions. if you take a step back from the see the equities
values. interesting seen, 24 -- 12, 18, 24 months of donald trump making everything great again. the currenciesut , as you saidll and , there are pockets out there that can deliver value. how does the fed play into this proposition? fedhe adage is that the starts to raise rates. offerrket expectations
shouldn'tg up and it create headwinds. said, you have to try this and some say that these are similar. point of this is the great rotation. that? buy into are you preparing for a great rotation? saying to meeen that equity markets are flying. the inflationl, was already picking up before somethingon and it is
we have been exposed to in our election. since the there is a trajectory going higher. if you bear in mind the and you havegets been running the low 2% with the volumeu -- with the taken into account for the targets. >> it will be a moderate fed. stay with me. let's talk about eyewear. company with a
branding good value. that is the second-biggest luxury maker. let's get to dan. it is great to see you. is this driven out of necessity, vanity, power? >> all of those things. yes. this deal that sources are there is the world's and theeyewear maker french company is a lens maker deal and a complicated
london with theresa may. accessprepared to trade to europe. standing by. good morning. >> thank you. swedishis leaving the tank after running it for 11 years. a group as a managing partner. there is an and to secure a smooth transition. names inhe big economics are gathering for the economic forum this week. the ceo of unilever talked about result ainks this will
large return. >> it is relatively minor on the scale of the global economy. up toeople will estimate 30 trillion. so, why don't we do this. >> that is your bloomberg business flash. of 2017.the third week brexit and the chinese currency far taken me headlines so brexit.s trump and ande will be other names this caught my eye. i put this at the top left. and thishe volatility
has been ebbing lower. volatility?t more >> there needs to be more concerned with follett civility low, rather than high. violent in the other direction. view is lending money to the u.k. government. that is the argument that goes across all of the global government bond markets. is a detainment for 35 basis
against the dollar and it is just petering out. you argue that there is not a lot of compensation with the political risk that is willing -- brewing. shorted and there is euro-dollar for the with this being more difficult to see and it does not mean that are relativerkets to u.s. equities. >> we will come back and get your thoughts on the allocations to come.
juliette: welcome to bloomberg markets. this is the european open, your facts straight of the cash session coming up. matt miller is in berlin -- what are we watching? thepound has been smashed, pound crumbles as the prime minister signals plans for a hard brexit, but is it just managing expectations? president-elect trump hits out against bmw, saying they will face a duty if they continue with plans the gulf of mexico.