tv Bloomberg Markets European Open Bloomberg January 31, 2017 2:30am-4:01am EST
unchanged at the central bank seeks clarity on his policy. what that is being for the country currency? talking about the yen with mr yen! joining us a little later on in the program is eisuke sakakibara . killed, after a spike on the fringes of europe. is it too early to ring the alarm? less than a half-hour from the european open, let's take a look in futures. manus: 00 matt: matt: futures for europe looking like they turned around substantially. green across the board. future sub .2%. dax futures rising marginally. the arrows greene after the drop in u.s.. cash rate, asian cap straight, and indeed u.s. teachers are
down. this is interesting that we see this turnaround. could this be optimism on the banks this morning? we will do another on dodd-frank, that is what the president had to say today. a lot about the financials as we work our way through the program. another thing we are about is the periphery of europe. yesterday was a really big day in europe. kind of got buried in the news flow is running what is happening with donald trump you portuguese market down hard yesterday. italy down hard, greece down hard. really a spike in yields for the personal area. we are coming down the this morning. -- other thing to mention the ecb program looking at the front end. currency market stories come down as well. the currency general here, the japanese yen is not doing much.
-- clarity on that later on. trump haspresident hired the acting attorney general after she said she would not defend his controversial troubled man. sally yates was ousted hours -- it wassaid his inconsistent with the allegation to seek justice. tradeite house said she the department of justice by refusing to enforce a legal order to protect u.s. citizens. president trump also stepped up criticism relations, pledging to overhaul postcrisis banking rules. he said we are going to be doing a big number on dodd-frank. calling it a dead state -- a disaster. requiringorder government agencies to revoke to
-- and as decision for supreme court nominee at 8 p.m. washington time. deutsche bank will pay $425 million to settle allegations by new york that it helped what the russians wonder billion dollars. the investigations are the deutsche employees use a mirror trading scheme to help what the russians move tends billion dollars. the u.s. -- the u.k. conduct authority find the bank 163 million pounds over the laundering failures. japan kept stimulus unchanged and left inflation forecast untouched. the central bank is waiting to the impact of a recent decline in the yen and donald policies. the doj will continue to buy bonds at the same pace while leaving to key policy rates unchanged as forecast by all economist. theresa may's government will call on british lawmakers to
track the people who voted for brexit as it seeks to win their backing for a draft law to initiate the formal departure from the eu. begins twof commons days of initial debate on the law giving the prime minister the authority to trigger brexit. global news 24 hours a day powered by more than 2600 journalists and analysts in more .han 120 countries this is bloombeg. the s&p has had its best decline area futures are down, stateside gold is up as president trump's bombing of the u.s. attorney general salivates attorneyg of the u.s. g mark joins us from singapore. eneral sally yeates.
-- sally yeates. it is well off its november highs as we saw surrounding the election. if the market is concerned, confused or complacent? >> i think it shows the market is very complacent. equity markets have pulled off 1.5% but that is not much of a correction. the complete lack of volatility in the last few months but a few years ago a correction of several cents was normal behavior. trump could still deliver good news but at the moment he is delivering his most protectionist policies and showing worrying signs about how he and ask policy. guy: when you expect the market to react? you have been saying this for a couple of days. you think this is very bad news for the brand usa
but markets have not concerned. ark: the set off in the last few days, we have headed lower for the third day but it has been very steady and gradual. there is still trading very well. makes want toyen .5 it will spread panic. -- if the cash market can close that is the weighted average price so far which means the people are all -- postelection upward trend line which probably suggest technically it might be a good time for profit taking for those who have made money on the trade. i think that is what a lame watching for today. the market is still trending ok despite being weaker. .
guy: you could argue the president is delivering on what he said he would do. the early stages of the presidency he is focusing on immigration but heguy: has saide will spend money. he said he will deregulate. he said that will be a fiscal push. what? if we take him at his word? >> he is actually doing what he said he would do. that should not be totally a surprise for investors. guy: i think the market is trading in a relatively benign away because we should probably very strongly discriminate between our economic fundamentals with the fica coming back positively particularly in europe. with the surrounding political noise. jeanl: we are entering a. where the market was -- and risk off. now we are entering it. time for specificity of
countries and stocks becoming a stock picker market. the reaction in my view is perfectly rational. guying th yes i needed to be specific and focus a little moree risk on trade. jean: i don't think you buy it. investor, you can be selectively constructive provided you do homework and you focus on fundamentals. a turning point i believe, we will come back to that, is central banks are forced to drop a bazooka for a wide range of inflation environment. as an investor you need to look at things in a little more specific way. kind ofcks, what
macroeconomic environment rather than just trading on the liquidity or the political views. is your thesis that donald trump is risking the rule of the in of the u.s. and if so are you more concerned about the immigration executive order and you are about the removal of the chairman of the joint chief of staff in his permanent role on the security committee with the replacement of steve bannon? mar i do think that trump is integrity in the u.s.. he is not consulting stakeholders. the way he dismissed the attorney general because she disagreed with them and challenge the legality of his executive order was very worrying. national security council's overlooked entirely over the weekend amid the car --
fervor. he is delivering the worst parts of his promise and less of the stimulus side too. manus: do you share the worry that he has with the worry about the u.s. brand? does the removal of the joint chief of staff concern you when you invest in the u.s.? jean: i believe we are at a surning point and investor would be naive to think they can copy paste previous providence with the reagan years. with the donald trump we are definitely entering into uncharted territory and for this reason, investors would need to be prepared to act and invest in different uncharted territories. main point i would focus on
these overall policies being implemented by donald trump is that there is a grassroots of everything he is doing. list -- a veryo. agenda.list he will understand how the to call pieces come together -- you will understand how the jigsaw pieces come together. when you are looking at trade it is not a win-win situation. that againssumptions for someone is a loss for someone else and when you're dealing in terms of yournational relationships have strength and the strongest guy is the biggest guy who has to gain in the environment. therefore it is obviously for inconsistencies from smaller trading nations around the world.
guy: we will come back and carry on the conversation. pointing at the first couple of years of the regular ministration was not a rosy economic time. thank you very much. where you need to go for continuing coverage of what is happening on the markets. 20 more still coming up. what is happening in japan -- plenty more coming up. holding firm on stimulus and the yen continues to rise amid jump concerns -- trump concerns. elementary vote tomorrow. still to come we are live in a good be as oil is set for its first decline since october. this is bloombeg. this is the open. minutes away from the stock cash trading.
♪ guy: this is the european market open. you're getting continuing flow of economic data and now we have french consumer prices in. month over month, a drop of 0.2% but year over year a gain of 1.4%. thiscb will be watching closely, yesterday we were looking for german inflation to gain of 2% year on year. it actually only gained 1.9%.
only in error quotes because 1.9% is still pretty decent was not as much as the market had been looking for. he will beething looking to as he makes central-bank policy. the bank of japan has kept the stimulus unchanged. this as the japanese central bank waits to see the impact of the reasons the recent on and again and president donald trump's policy. has been gaining strength over the political fallout from trumps immigration clampdown. do make a has fallen the most since november this morning -- the nikkei has fallen the most morning.ember this former japan vice finance minister, i surely mispronounced a few words but they will be corrected in due time.
joining us to talk about his view on central-bank policy and let me first ask you what you think about tom policy for the bank of japan. hasn't been a gift to the bank of japan? jean: the bank of japan a is in a very sweet spot. the strongest visibility in terms of factoring the reflation trade and i would argue in particular japanese banks are very attractive cluster if you want to get a reflation trade due to their compelling, nation of sheep valuation and room to grow. definitely when the bank of japan did implement its control policy, there were a lot of question marks on this policy. it was a cyclical policy.
thatou need to understand that is a cycle on the inflationary and deflationary side. this way become a nation of the stimulus expected from the u.s. and the overall inflation acceleration worldwide is making this policy very relevant and very timely. helping for the bank of japan. this is the 10 year spread and the dollar-yen they correlated very well. it is about what the fed and trump does. that's will show how the japanese economy reforms and that we determined by what happens with the dollar-yen. is the japanese control their yield curve and freeze the rate, i would argue the future of japan is different from the situation of europe where we think in europe we
should see rates going higher, by this increasing spread between the u.s. and european yields. therefore there should be kind of a catch-up. the bank of japan is a back stop to prevent adjustments from happening. therefore the stimulus impact of the economy is all the greater because the spread is struggling to shrink because of this commitment of the bank of japan. m whatat do you think we will see from ecb policyt:? matt: what do you think we will see from ecb policy? jua you have heardn of the: president has said but i think that the ecb position is facing some dilemma.
removing too early with the consequences on the bond market and the eurozone convergence is a bit of an issue. on the other hand because we have got this inflationary pressure building up in europe thethe u.s., it is making leeway of central banks quite constrained. as i was saying before it is probably forcing the central banks to drop their bazooka. for this reason the central-bank policy going forward has a lot less leeway than it used to have over the last eight years. for this reason the economic momentum will be probably more important to guide investors ersisions than central-bank minds.
matt: kickoff of cash trading. that's get to stocks to watch. deutsche bank is going to be a main focus here in germany and across the consonant has it has cleared the way to continue operating without mirror trade allegations over its head. money laundering. it settled the investigation with the fda and u.k.. 163 million pounds. 425 million in the us. a key part of the strategy to move the bank forward. coming up we have the
matt: trading trump. u.s. equities fall and bold gains as investors divest the firing of acting attorney general in the u.s.. the fix has spiked. well below november highs. our traders concerned or complacent? wait and see. the boj keeps stimulus unchanged at the central bank seeks clarity on trump policies. what does this mean for the country's currency? we are watching it and will ask mr. yen. the former japan vice finance
minister. mirror fines. deutsche bank settles a laundering probe with regulators on both side of the atlantic. is $600 million a small price to pay to settle allegations of $10 billion in money laundering? let's talk about how markets are trading. we are into the session. what is going on. this is the picture. london is firming up a little bit. not by much, but we are up. let's take it. 71.26 is where we are tweeting on the ftse 100 read -- ftse 100. let me talk about where the u.s. is right now. i have the fair value appear. the u.s. is still priced negatively. it is too early to engage on what futures are indicating about where the u.s. session will go today.
europe will be interesting. we will see where we go, but at the moment, still priced negatively in the united states. we now have the ftse 100 up 2/10 of 1%. fascinated to see how deutsche bank is going to open this morning on the back of that story coming out. one is on that in a moment. clarity is important and deutsche's not exactly been giving a lot of clarity. now beginning to get a little clarity from cryer. cpi numbers coming out from 3% versus a year earlier. i want to check on that. just to see exactly what is going on. data have very strong coming out from spain at the moment. let me bring these numbers up. the year on year harmonized number coming through. 3%. the prior, 1.4%. for mario number
draghi to pay attention to. let's find out which stocks are on the move. let's see what deutsche bank is doing. >> still waiting for deutsche bank to move here. shell also took a little while to find its footing but is firming up now. up over 3/10 of a percent. after it agreed to sell it package of oil and gas assets for as much as $3.8 billion to a private equity firm. in theficant step company's divestment program. are seeing stocks trade a little higher on that. h&m moving a little higher. it set a new annual growth target that includes results from the sweetest fashion retailer expanding online division. this is after reports higher than analysts estimates. the impact of the strong dollar on earnings is past its work.
h&m gets about 80% of its product from asia. the strong dollar has been an issue, though the question of if that dollar continues to rise or will abate. moving atank up 2%, the open. ed for been fin allegations that it helped wealthy russians moved billions of dollars out of the country. this, after deutsche bank settled a probe out of new york. this is about uncertainty, perhaps giving lift to the stock. matt: thanks for that. we are looking at some very interesting news at the open. spanishointed out, inflation has gone almost parabolic now. up 3%. we were only looking for a gain and it compares to the previous move of 1.4%.
spanish inflation really surprising today and something that mario draghi needs to look at. let's talk about banks. something the central bank also paid attention to. president donald trump turns his attention to the banking center yesterday, promising to do a number on dodd-frank. his remarks are most pointed on financial rules since he took office, michael moore joins us. the big number is his most pointed statement, i am guessing there is till uncertainty out there. haveel: i don't know if we a technical interpretation of do a big number yet, but talking to bankers earlier this month and the sense was that they don't expect a major legislative rollback of dodd-frank. what they expect more of is an easing of how it is interpreted, how it is enforced at the regulator level.
that could give banks some relief but trump would need some support from congress to really do a legislative rollback of dodd-frank. far, we have had to take him at his word, haven't we? this is what he has said he has done. it may not be the bit that the market likes, that he is basically living up to expectations in terms of what he said he is doing. he mentioned dodd-frank yesterday, said he would do a number. is substantial. why are we taking him at his word? michael: the devil is in the details. he said he would do a major tax initiative, we are still waiting on the details of that and a lot of it is how it looks in practice. this is an indication that he he hasen before that given focus on dodd-frank, previously it had been some of his advisers talking about it and not him. this is certainly a step towards him taking more direct action
but i think we need to see what it actually looks like. matt: let me bring it back here to european banks. when the market opens, how traders interpret what u.s. banks are going to do. we are seeing deutsche bank now move after settling allegations in the money laundering. twomove after fines totaling mon $600 million. how significant is this? michael: it was the biggest piece -- legal piece we expected in the near term. thebiggest piece is still doj, which they have yet to settle with. this is new york and the u.k.. they have gotten a piece of the russia issue out of the way but we still have to see what the number from boj is -- doj.
$600 million seems to be in line or perhaps of little lower than they were expecting so far. that is why you are seeing deutsche bank trade up. banks, bigan underperformers across the u.s. banks. goldman sachs, just to broaden this conversation up. goldman sachs sees europe outperforming 2017 versus the u.s.. banks like deutsche have got to outperform. our banks like deutsche going to outperform? >> we clearly like european banks. strategy is more of a long-term view. we would probably prefer invest on the fixed income side rather than the equity side. banks in europe are still in the resisting mode. i would argue that the main difference between european and japanese banks is not in
valuation the from the gross prospect. the main japanese institutions in the region of 66%. you obviously have a lot more leeway to expand your book and grow your earnings. are in thethey de-risking mood. nonperforming loans like in businesses like the asset management of deutsche. , you areoss front still a bit constrained. i would argue you have a much better risk reward if you want on thest medium-term corporate bond side been the equities side. guy: it is picture asset class. european curves have been steepening up fairly sharply. this is the portuguese ten-year. the german curve has been steepening up. peripherals have been steepening up more because of the ecb.
in the states, that has proved to be a positive story. what about europe? inflation is accelerating and the big question mark which will be the tipping point for what mario draghi decides to do is whether this is a transitory factor driven by the oil price and all the comments we are seeing everyday or if it is something which is more sustainable. we believe there is more in the oil price in terms of acceleration. we see some clear signs that europe -- u.s.e and in europe. we see it with spanish number this morning. it is not just a german issue. the spanish number will be a bit of a heyday because one of the rationale for maintaining this
policy of the ecb is, you are looking at inflation numbers for caneurozone overall, you accelerate to have some kind of periphery, even if it is accelerating at the same time. you will just have a little bit of a heyday. we think asset classes quite vulnerable. selectedasset segment german bund, is quite variable. we are short on these segments in a few months. matt: what do you think of gilt s? 3% would be insane in germany, but a lot of people expected in the u.k. as far as inflation numbers are concerned. but the government of the bank of england has pledged to look into it. at least we expect to continue that pledge this week. jean: we have seen a little bit
of change in the bank of england. post-brexit, we were in full support mood. now we are seeing a bank of england which has a much more balanced attitude with regards to interest rates and monetary policy. the reason is very simple. you are going to have a weaker currency, u.s. exports, to a certain extent making the acids in your country more attractive and helping to finance the current income. a vicious cycle where the currency keeps weakening and by weakening and , why would you invest in a country when you have a currency where you know you are going to make a sure loss? probably even more importantly, and we can learn from the
japanese experience a few years ago. if you have a lot of inflation, consumereezing the purchasing power. consumers can be the weakest link going into 2017 for countries facing significant weakening of the currency. that is why i think when you look at the u.k., we have now a much more balanced -- from the bank of england. now that we have a big weakening of the pound, when you need to have is a little bit of stability to avoid scaring foreign investors and squeezing too much, the u.k. consumers, who remain the main driving force for the growth of the you it -- u.k. economy. guy: thank you for coming to see us and sharing your thoughts. michael moore, thank you. we will be seeing a lot of michael throughout the morning. deutsche in focus. up next, where is japanese
♪ matt: welcome back to the european market open. guy johnson is with me. its checkout markets right now. seeing a bit of week is here in germany. the dax coming down just a weigh bit as volkswagen on the german index. the stoxx 600 also turning down a little weakness there. the ftse and the cac almost as little changed. very little movement among the european stocks, even as we had futures moving higher for a short while. what you see as the reasons for this imbalance question mark -- imbalance? guy: these are your point movers on the screen. the luxury sector coming in up. be a key adding pressure. downwarddit trading
after a big move down yesterday. wolfgang, writing a tweet this morning. return, 6%.rgeted unicredit has written down 800 euro investment -- 800 million euro investment. that is an interesting point of view. it may be a bit of house cleaning, a reflection of value. we will come back and talk about banks a little later in more detail. let's get a first word news. >> president trump has fired the attorney general after she said she wouldn't defend his travel ban. -- the white house says she betrayed the department of justice by refusing to enforce a legal order designed to protect u.s. citizens. theresa may's government will call him british lawmakers to trust the people who voted
pre-brexit as it seeks to win their backing to initiate the formal departure from the eu. two days of initial debate on the draft law, giving authority to trigger brexit. vote will be held tomorrow. a canadian university student has been charged following an attack on a canadian mosque. was charged with six counts of premeditated murder the and five counts of attempted murder. determined yet to be , global news -- global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. bank of japan has kept its stimulus unchanged and outlook untouched. the japanese currency has been gaining strength over the political fallout from trump's immigration plan. -- immigration ban. kathleen hays is joined by mr.
yen. kathleen? >> thank you much. yes, he is the former vice inister of finance in japan the late 1990's. he earned that nickname, mr. yen, or his powerful words that moved currency markets and today, we are looking forward to hearing what you have to say about the yen and where it is headed. conference, press there were a number of questions about donald trump. his impact on the global economy, japan, trade, currency. seemedcautious, but concerned, too. >> i am concerned as well. it has been abnormal. it will probably have an impact throughout the world. >> what kind of impact? is it going to hurt japanese economy in particular? there has been trump fever
until he took his position, and that was strengthened. now prices come down and it seemed -- dollar seems to be weakening a bit. the fever is over and now people policies thatith trump is going to implement. people are starting to worry about his policies. michael: -- kathleen: trump fever was the positive view the tax cuts would affect growth. the fever is breaking due to people's concern over donald trump, going to start a trade war? start some other -- >> his policies, vis-a-vis people be come -- people coming into the united states and his policies dealing with other countries. kathleen: in terms of the bank
of japan and their optimism ,oday, on reaching inflation that wage growth is set to grow in japan, do you share their optimism? >> well, i am a little bit biased. the secretary is a friend of mine. but i think he is satisfied the current state of the japanese economy. we are growing at 1%, reasonable for our country. deflationary stages over. i think there is reason for him to be somewhat optimistic. kathleen: besides donald trump, what are the drivers of a yen going back to 100 this year? what drives us there? >> the dollar has strengthened somewhat, yen has weakened. after the trump fever
that will probably , against that begin would appreciate. bank of japan and announced the size of its bond purchases, people waiting to see it there were any changes there. holding steady, no change in yield curve control, he is happy with it. what you think of yield curve control? is it working and does it appear the bank of japan will stick with this now? what does that mean for currency? >> he thinks it is working. that meanwhat does for currency? that will keep it week? >> i don't think his aim is to maintain weak yen. i think he knows yen will appreciate to 100.
100 is no problem to us. kathleen: the 2% inflation target, some would say the bank of japan should raise the white flag, say we can't get it there, lower the target. maybe say, we've done what we can on a monetary fiscal policy, it is up to mr. abe and his team to get us going. i think that he thinks he would never achieve that. he is reasonably happy with 1% inflation rate read -- rate. implies that the bank of japan policy may change. i spoke to the chief equity strategist at merrill lynch. , it isothers are saying going to go past 120. if it gets that weak is their
appointed starts hurting japan, would you see some kind of intervention? >> know, intervention wouldn't take place. it is only possible when you .gree market, at this moment is not possible. a donald trump doesn't want weak dollar, either. your friends term is up next year, a lot of people wondering if he should get reappointed. >> mr. abe appointed him. it is not unlikely that mr. abe would reappoint the secretary.
you are in favor of that? >> i am. miami biased. -- i am biased. kathleen: is there any chance the boj starts tapering this year? >> i don't think so. they will probably continue easing monetary policy as they have done. that the secretary is thinking about that at this moment. he will eventually do that, but not now. kathleen: he said that as the -- at the press conference, we too early to talk about it. consensus is three rate hikes this year. do you think they will do the three hikes? do they need to? and what does that mean for the yen question mark -- yen? >> you probably know more than i do about the fed action. but doing it three times seems
to a little bit too much. the u.s. economy probably would grow as people have expected. kathleen: big picture question. crisis, thatrency is when you got the nick of mr. yen. -- for 20 years, japan has barely been able to get an inflation rate above 0%. what is wrong, how can we expect that to change if there is such a mindset that has been ingrained in the japanese economy, in the japanese mind, how is this ever going to change? >> people say the last two for thewere hard japanese economy. i don't think so. this is reflection of the maturity of the japanese economy. a mature japanese economy, one person's growth rate is all right, people are
fairly happy. inflation between zero and 1% is all right. no problem. kathleen: so your friend, the governor will he's up? the more realistic? we will see. thank you so much for joining us. we hope you join us soon on bloomberg. former vice minister of finance in japan. have just finished with the bank of japan meeting. no change, but so many questions raised about the currency, the economy. we are very happy we could hear from mr. yen today. back to you. kathleen hays, thank you very much, indeed. let's change gears. oil set for its first monthly decline since october. signs that u.s. suppliers planning to offset the opec production cuts. crude trading about $50 a
barrel. let's get some analysis. tracy, how much could increased u.s. output ease or raise oil gains? tracy: that is the right question to be asking him a guy. if you recall that the wildcards in opec's attempts to boost prices by drawing down the have always been compliant, and how quickly the u.s. production can come back on stream. on that note, he have seen animal spirits returned to the u.s. oil patch. if you look at oil rigs, they are up above 700 for the first time since early 2015. the market can probably handle to 3000ase of 200,000 hundred -- 300,000. once we get to 500,000, it becomes a realistic possibility that the drawdown of global oil
stocks is going to be much slower than perhaps opec would desire. if you are looking for skepticism in the oil market, i have got to say, beyond the price per barrel, look at times spreads. the have seen the difference in prices between oil for delivery deliveryversus oil for in december. we have seen that narrow, suggests traders are pricing in more second this is an -- skepticism with opec oil cuts. matt: you have pointed out how donald trump's travel ban could possibly hurt the energy sector the most. how is that? explain it. let me give you a concrete example. yesterday, we had iraqi members of our limit voting to pass what would be essentially a on visas forn american citizens in iraq. it is a nonbinding measure, the government still has to decide,
but it gives you some indication of what could be at stake. bigre u.s. oil makers with presence in iraq. exxon mobil, a lot of employees go in and out of the country on a regular basis. not to mention, houston-based oil providers that will want to travel to iraq to check up on their local employees. you have got some sense of the strains that could begin to emerge as donald trump's executive order plays out. tracy alloway, joining us from abu dhabi. very interesting take on the executive order. we are 30 minutes into the trading day, let's see how things are shaping up in the markets. here in europe on the equities side, we are not seeing a lot of movement and hasx 600 opened up turned down. the ftse, the dax and the cap had very little change.
deutsche bank popped at the open and came back down. let's get over to marriage age -- she has more top stories. we are seeing significant moves in individual stocks, .tarting with a cargo it beat analyst estimates. we are talking about the world's biggest online grocery. over mored sales profitable nonfood items. that is what fed into this before profit and we have seen shares advance as much as 8%. this better than could provide some cheer for investors after years of slim returns. the company then he has been trying to sign a partner for over three years. as ceo said today that the company is busier than we have ever been and is more confident of signing a deal. we are seeing the stock rise on all of that. h&m gaining, as well.
fourth-quarter pretax profit beating analyst estimates. it also set a new annual growth target that includes results from the swedish fashion retails expanding online division and the ceo said, we are well positioned for can and you'd long-term and profitable growth. , h&mhing to their in mind suffers from a stronger dollar because it gets 80% of its products from asia. the stock is gaining today. unicredit, interesting turnaround in the move. 10 minutes ago, the stock was down, one of the worst performers on the stoxx 600 -- gaining now. it is italy's biggest bank, estimated a $12 billion net loss in 2016 after setting aside more money for bad loans and one-time charges. final results will come on february 9. perhaps that early release positioning market ahead of these results. firedresident trump has
the acting attorney general after she said she would defend his travel ban. sally yates was ousted hours after saying trump's directive was inconsistent with agency obligations. the white house said she betrayed the department of justice by refusing to enforce a legal order designed to protect u.s. citizens. goingre on how this is down, stephanie baker joins us. we are also joined by the head of strategy at merrill lynch. an interesting night, to say police. people are trying to understand how this translates into policy. businesses like consistency. they like to understand the lay of the land. they like to know and have some degree of understanding about how policy is formulated. was last night an example that policy is being made on the fly question mark >> -- on the fly fly?ion mark -- on the
>> the firing of her has in her lawyers and the justice department. there are some that say if she disagreed with the policy, perhaps she should have resigned in protest. however, it is clear from her memo that she put out that she thought the order was legally and even her successor would be in the same situation. law,ob is to defend u.s. so everyone is asking, where do we stand here? there are parts of this order that are clearly illegal and being challenged by federal judges in four states. we will have to see how that goes. the green card provisions appear to be illegal. we have been back and forth and a lot of mixed messages on the
status of green card holders under this executive order. most lawyers agree that the green card provision -- go ahead. matt: it does seem we are getting mixed messages, we got a mixed message from yates, as well. was it the legality that bothered her or she decided to not support this on moral grounds? her statement went both ways. >> yes, and some people said since she disagreed, she should have just resigned in protest. but it is clear from the memo that she thought before -- order west legally indefensible and did not feel comfortable sending justice department lawyers out to defend it. the reaction from the business community -- guy, jinx. what has been the reaction from the business community? he saw a massive reaction from the business community to the executive order. how about to this? >> i don't think we have seen
too much reaction to this in particular. we have seen a series of ceos come out and criticize the order. schultz,from howard who said he would hire 10,000 .efugees the uber founder who said he would raise the issue when he meets with trump on friday. he is a member of trump's economic panel of advisors. i think you are seeing increasing comfort among executives as more and more come out and criticize this order and are less fearful of trump attacking them on twitter. guy: stephanie, thank you much. -- thank you very much. let's carry on the conversation. how our markets digesting this. about theready talk fed spiking seems low.
the market remains short-term. allare not seeing a lot of until it he this. let's talk about what is happening with the dollar. talk a little about the dollar and get your take on what is going on. i got a chart appear. -- thecaution returning fed raised rates, this is into 2017, we hit the high at the end of the year. the rsi has come down sharply. i want to get a sense of how the market is positioned on the dollar. it is still long dollar, but this is far from strength. we have seen the selloff of the dollar in recent weeks, to a large extent because investors it is stillwere hoping presidep would do -- implement the business friendly policies. but not trade protection.
not upsetting the business partners -- trading partners of the u.s.. it seems, the opposite direction. i think the dip in the dollar we have seen is a buying opportunity. the main reason is the fundamental story in the u.s. is still positive. inflation hasn't been increasing, the fed will be hiking rates and resident trump is determined to follow up the of the-- the promises election, we will see a stimulus that will be beneficial to the u.s. economy. guy: take this as an opportunity is your advice? >> absolutely. especially yang, dollar-yen is the most sensitive differential. guy: yen is a bit of a safe haven. also, what is happening with the swiss, which continues to strengthen. down, is thatoing
a safe haven trade? is that a global story that people are safe in -- seeking safety in the swiss franc? if there is a trade war, swiss franc will appreciate. i don't take it will go that far. the swiss franc is its own story. he have seen selloff in recent for therticularly probability of early elections in italy increasing. we also have some headlines in greece that may affect markets, as well. i am don't we still -- i amng at another chart of looking at another chart of the dollar that shows from donald trump's election in november, we saw a 5% appreciation roughly. we have now seen roughly a 3% drop since the top. don't we still see a clear path
higher for u.s. interest rates this year, especially compared with the uncertainty we have seen in europe and japan? >> i think the fed's policy reaction here is important. the fed has not taken the view that there is too much uncertainty. inflationocusing on on the fact that fiscal stimulus third -- i think the fed would be tightening. ineffective terms, historically the dollar is strong but it has much -- been much stronger in the past. mac in early 2001 we had the strong dollar, it was overvalued by more than 20%. there's still more to go. matt: i want to quickly point on to bloomberg users, fedgo
the bloomberg terminal. you can get all of the information you need on central banks. obviously, we have got this meeting tomorrow. there is no move expected, but it is interesting that , without ameeting press conference. been a meeting with a press conference. is that kind of changing now? you think the fed this year could make a move when we don't have a press conference question mark -- press conference? >> they could. for this week, i think they will introduce some language, acknowledging the strength of the recent -- they want the option to hike in march. the market is pricing in low probability for the march hike. fed would like to have the option. even if they don't height much, i think what the fed wants to do
this year. by saving some language on the strong data. i can prepare the markets in case they need to hike in march. i think the fed will not hike if no reason to. but if they don't have an excuse, i don't see why they would hike. not only two, but three or even four times this year. call.all right, bold but something we have heard from a number of people. you are going to stay with us. up next, we have had a high court ruling in a supreme court appeal. now, u.k. parliament gets its moment as the bill to trigger brexit is debated in westminster. we are there live. this is bloomberg. ♪
♪ guy: you are watching the open. this is bloomberg. mcginn's two days of debate on the article 50 bell. if passed, it will give theresa may authority to trigger brexit. or the start of the process. anna edwards is in westminster. mps are expected to pass the bill, but will there be any amendments? anna: one of the big questions. bill, or the eu notification of withdrawal bill as it is technically known. theresaeme court said
may couldn't just trigger brexit by herself, she needed approval from parliament. bill only, keep it simple and you have less chance of debate and amendments. we know they s&p plans to table some 50 amendments. other parties, including labor, want to table some. labor doesn't want to stand in the way, the s&p likely to vote again. what we will know is a little more about the timing, how much of a smooth ride it will get. this is just the second of a 10 stage ross us. we will also and no more about how much of a freehand theresa may has to shape the brexit in the way she wants to. how soon could we actually see brexit triggered? how long do i have to wait? anna: well, they have always said -- theresa may said at the conservative party conference,
the end of march was the target. now we see reports that could triggered- brexit be before then? taking into account what the government said yesterday, they want to get this through the house of lords, unelected upper chamber by the end of the march. then to the summit just two days later. there is discussion that march the ninth could be the date article 50 is triggered. there's a lot to get through. she has a working majority in house of commons, she doesn't have that in the lord. when she gets there, she may have a few more headaches, a little more resistance. neither the elected mps or the lords want to be standing in the way of the people, and they did vote on june 23 for brexit. thank you very much. anna edwards in westminster as we start that debate. we are still joined on set. still don't know if once you have trickled article 50 --
triggered article 50, you are past the point of no return. but once it is, how do i position myself in the pound? >> definitely volatile. we will see a dip in the pound after 50 is triggered. not because the market does not expect it, we will see the opening bit for the negotiations. it should not be a surprise. most likely, the euro takes a hard stance. once we see this dip, that would be a buying opportunity for selling. negotiations will be volatile, a lot of headline risks, but on both sides, incentives to agree to something reasonable. thing is whether we have a transition period between the brexit agreement. this is extremely important.
i think both sides have incentive to an agreement. don't, it will weaken further. matt: are you not concerned about rising inflation and slowing economic growth in the u.s.? this will affect the its ownt the u.k. has dynamics. we expect the bank of england will stop qe this week. bethe data continues to strong and inflation increases, a possibility of rate hikes later this year. if policy in the usa is supported -- overall, there are many offsetting forces, but i believe the transition period is extremely important because if you don't have the transition. , you have the hardest possible brexit.
this is important. guy: plenty more to come. we need to talk about what is happening in europe. the other side of this when it comes to euro-sterling. german unemployment, we break down the data. spanish inflation coming through this morning at last 3%. we need to talk about all of this. as his bloomberg.
matt: welcome back to the european market open. i'm matt miller, guy johnson is in london. the imf warned that debt is on an unsustainable path. we are joined from taken america merrill lynch. let me ask about the brewing story here in germany. davose both came from last week and he said, if the imf doesn't get with the program, maybe this program isn't sustainable. do you think we will see people drop out? could be the -- this be the end for greece? >> every year, we are served the same story. programs that are supposed to last for three months going on for almost a year. this time, the market was hoping it would be different.
however, most likely, we will have an agreement at the last minute when greece runs out of money it is not all greece's fault. time, there is strong disagreement between the europeans and the imf. a lower fiscal target is being asked for and more debt relief. ahead of elections in france and germany, the germans are not willing to commit to something like that. they have been talking about this for months now and have not been able to -- this is why we have to go to the they have to decide, somehow they will find a compromise and some of these issues will kick the can down the road again. guy: i want to bring this spanish cpi chart up your. that is 3%. does europe happen inflation problem? >> yes and no. but wes a base effect,
have an inflation divergence problem. in a way, this is good and bad news. in order to meet the inflation target, sometimes we have inflation well above the target. in germany, for example. high inflation in the periphery because this creates it can -- competitive problem. guy: do we have an output gap? matt: unemployment data coming in a little bit low expectations. unemployment claims rates 5.9%. we were looking for 6% to unemployment a little bit better than the market had expected. unemployment fell 26,000 jobs compared to a drop of 5000 jobs which is what we're looking for. the picture looking ever more full in germany and as we saw yesterday, inflation at 1.9%
here as well. doesn't really compare to the 3% number in spain but still quite strong. does the ecb have to change policy? athanasios: they should not, because they are far from meeting their inflation target. however, we do believe draghi is facing challenges and most likely, we have to start qe by the end of the year. what we are seeing in the eurozone creates more problems or draghi. decemberwhat happened suggested that in order to continue qe, they are not -- guy: thank you very much. he will stick around with us. us from bank of america merrill lynch. he will come over with matt and i to dab digital radio. we will carry on the conversation and digest the data, we will look at what is happening with the periphery. that is what is in store for
francine: troubled by trump. gold games and global stocks drop. present firing the acting attorney general amid fears about his unpredictability. they wait for clarity. the latest from tokyo. and trust the people, back brexit. may's message to lawmakers as debate begins on article 50. this is "bloomberg surveillance." i am francine lacqua. first, let's check on the data, because it tells the biggest story,