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tv   Bloomberg Markets European Open  Bloomberg  June 2, 2017 2:30am-4:01am EDT

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one that keeps you connected to what matters most. >> welcome to bloomberg markets, the european open. we give you the first trade of the day, i met matt miller in london for the week. happy friday, by the way. here is what we are watching. is the climate agreement crumbling? president trump said he will withdraw from the paris accords drawing condemnation from world leaders and getting heat from corporate executives, as well. premiere pivoting east? li meets on the agenda.
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trademark -- traded migration and climate change. what will today's job number mean for the fed's rate pass? we get the figures at 1:30 u.k. time. fromthan a half hour away the european open, we are looking at positive moves for index futures as well. futures up a little more than half percent, tax future in paris up .4%. you will see some big moves in asia topping the list. the nikkei pushing through 20,000 right now, right now at 20,000 177 in japan. donald trump's decision to pull out of the paris climate accord. you will see some moves in currencies, as well, that go the other way of what we saw yesterday. the aussie dollar.
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ase a look at what we have far as a sovereign bonds and commodities. the commodities trade has been a big one and it's been pushing equities around. here you see brent crude and the beauty i crude both down about 1.5%, you are switching places there are so losses after gains yesterday, same is true for gas oil and then you see as far as moves in sovereign bonds, the denmark to eat are losing 7.5 basis points so investors crowding into that, that's a big move as i say when you see a black square in the middle of a panel. is a move of at least three standard deviations or more from the 30 day moving average. let's go to hong kong for first word news with soapy. hie: global leaders have vowed to move ahead with the paris accord after donald trump
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pulled out of the pack. they reject the u.s. president decision, saying the deal cannot be renegotiated. she expressed her disappointment to trouble when he called her. meanwhile, the trump administration has asked the supreme court to reinstate its travel ban. this puts a trump initiative before the court before the -- four theighest -- first time. they think he is abusing his authority. fbi director james comey will testify to the intelligence committee on june 8, as the russian investigation moves to the public stage. sessionappear in open in the morning, followed by a closed session. they want to know about trump's statements to comey about the russian investigation. before the president fired him last month. bonese premier lie
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will. the two sides want to recognize the importance of global state trade and investment. the ceremony is due to take place at 11:15 a.m. u.k. time. toemy corbyn has pledged great more than one million good quality jobs if his party wins next week's election. the plan would see the creation invest 250finance to billion pounds in infrastructure over 10 years. according to labor, that couples with a legion of banks will create new jobs. at least are six bodies have been reportedly found in a casino in manila after a shooting incident by a lone gunman. bbc, most ofthe the dead appeared to have suffered from smoke after the
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men set fire to casino tables. please say the gunman later killed himself by setting himself on fire. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. matt? matt: sophie, thank you so much. the business community has hit back at donald trump. they made the announcement yesterday saying that the agreement favors the other nations at the expense of american workers. >> it would undermine our economy, hamstring our workers, we can our sovereignty, impose unacceptable legal risk and put us at a permanent disadvantage to the other countries of the world. news, bobowing the iger and elon musk both quit the president's advisory council. lloyd blank finds
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to twitter for the first time ever to show his disapproval. he wrote, today's decision is a setback for the environment and the u.s. leadership position in the world. meanwhile, speaking to bloomberg founder, expressed his dismay. day for americans, a bad day for the world, a bad day for our grandchildren. and obviously as business people, we have to pick ourselves up on a global basis and get on an sort the problem out ourselves. matt: for more on the brakes reporter,mate change what does this mean for global talks on climate change? i know the president has said he would be willing to renegotiate the paris a court other world leaders have said is not going to happen. that he isestion
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going to renegotiate the accord seems like a red herring. he made a clear statement that he doesn't want to be a part of this noble climate change deal. kind of saying he doesn't want to be a part of the world in general. he doesn't want to be a part of globalization. other countries have not come forward and said they will follow suit. what this means really is that the u.s. is isolated in its tackleon of efforts to the energy, climate change, and embracing clean energy. againstis run globalization is part of his campaign. the interesting thing i think is that he spoke with world leaders yesterday, the u.s. is the cleanest country in the world energy.evoted to clean i look at this chart yesterday i'm going to show it again today. his 1945 in the bdg library if you want to access it. the white line here is the u.s.
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as far as carmen and missions and the blue line is china. so china as we know is the biggest polluter in the world. but if you break it down per noita, it's fascinating that other country pollutes more per capita, with the exception of australia, the united arab emirates, we are right up there with the worst offenders. as does this play out as far , richard branson was saying, our grandchildren are concerned? >> this is historically the u.s., the u.s. is the world's biggest emitter. you look at pollution dumped into the atmosphere, in all time, not just climate change reacts and take stock at eight of the year, the u.s. has gotten rich from polluting, going back talks between who is
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responsible for climate change. therefore who should pay for. china has said it remains committed to tackling climate change and recognizes its responsibility, both in country visions to climate change, it also it's going middle-class is unhappy with their smoggy cities. to bring it back to a bloomberg perspective, the u.s. gotten rich off a response to climate change, clean energy. germany has, as well. producing a look solar, wind power, ge, and siemens are very active in this. does the u.s. lose its spot at the table there? and is china going to jump and fill that gap? >> from 70 who writes about this every day, watching donald
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trump's speech was quite confusing. he was talking about paris killing jobs, but actually, china has got something like 5 million clear jobs, and the u.s. has thousands. it's going to fall behind it further. donald trump handed a gift to china in doing this. matt: thank you. we appreciate your work on renewable energy. jen shenkman in london. we will get reaction from the european commission. he is the european commission's vice president of the energy unit and he will be speaking at a quarter past nine u.k. time. program, it'she jobs day, speaking of clean energy, in the usa. what could a strong report mean for the fed rate pass? we will discuss that, plus a view of the dollar. we are live at the st. petersburg economic forum on the second day, speaking to ceo's from's agenda, this is
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bloomberg. the open is 90 minutes away. ♪
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matt: welcome back to bloomberg markets, the european open. we have a few minutes before the official start of the castrate in europe. let's get to the bloomberg business flash. sophie: president donald trump
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faces unlikely opposition. some of the world's biggest oil companies, exxon mobil and conoco phillips, have a reiterated your support for the global agreement, speaking to bloomberg before trump announced his decision to ditch the pact. >> we have to transition the world to a lower carbon forms of energy. i have no doubts it will happen. i think we need to make really clear, rather than walk away from it, what you put in play from that in the united states. hasie: germany's linde reached an agreement for a $35 billion combination of tax air in the united states. the deal will create the largest supplier of industrial esses, ending months of suspense about whether the deal would go through and it's opposition from german employees. europeans opposed to the deal
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feared job losses are in -- a job losses. that's her bloomberg business flash. the u.s. jobs report is due today at 1:30 u.k. time. the consensus estimate is for an increase in payrolls of 180 2000, although the whisper number has been a bit higher. what could this mean for the fed rate pass, let's recap some of the views this week on tightening. don'tthe rate it sell, i think we are far from an appropriate rate for the u.s. economy will keep inflation not too far from target and the labor market performing well. the ideasagree with is that we need to go to hundred basis points higher to get to some port of neutral rate. i don't think that's the environment we are in. >> it's been weak the last couple months. if you step further back, it's been gradually increasing from 14, 15, 216 now, 17.
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the thing that's giving people pause is over the last two months, particularly march come up for a number of idiosyncratic reasons, inflation dipped. >> my goal would be to see monetary policy become a more boring as we normalize interest rates. as the unconventional policies be so, that people won't caught up in will they or won't they come up that understand it's the basic strategy, we are responding to changing circumstances. we are not there yet, but maybe we will get there sometime. matt: joining us now is adam cole, global fx strategy at and reporterore, bloomberg wes goodman joins us. wes, the adp jobs number of 253 suggest we will get a strong report, possibly stronger than consensus. what are investors expecting? wes: just more of the same.
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more of what the fed wants, more of what they are expecting, which is healthy employment, good jobs, low unemployment. that will cement june 14. that will cement the move. the fed is raising an environment of economic expansion and some of your guests raised a couple red flags that we can talk about, but for the moment, this environment of economic expansion can encourage investors and ratify this rally we are seeing in stocks. matt: bonds are showing a different signal. stocks are doing great, but yields are creeping lower. wes: speaking of those red flags, bonds and stocks are sending a different message, stocks are at a record high. but bond yields are probing the low end of the range for this year. so why is that?
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that is a red flag and as some of your guests mentioned, bond investors are encouraged by the inflation is moving away, moving downward away from the central banks target. that's good for bonds, not so good for the fed, not so good for the economy. slowing, thateeps -- could keep the fed from tightening this pace and bring a positive later on. adam, bond yields, we are still up desk you saw a one-year chart, we are still up 12 months come november 8 last year, though we are creeping lower to the lowest end of the range of 2017 trade. what do you think that means? >> i think we are seeing a fairly typical pattern of the market struggling to look beyond the fed's immediate policy decision having got to the point
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where we are fully priced much for the june meetings, markets are struggling beyond that. ultimately, we think the hikes will come beyond that and if anything, the market is underpriced for the profile the fed rate takes. they immediate policy of june's decision. the market is struggling to price that in and until we see a good batch of second quarter hard data, that struggle will continue. oft: from a layman's point view, i'm not an expert on this, but if the fed is going to raise rates another two or three times, do they want to get out of the treasury you are holding now so you can buy the ones that yield more? fullthink the markets are -- forward-looking and the price will be a reflection of where the market expects the fed rates
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to be in the future. and a market will have that forward-looking aspect. the problem at the moment is that the markets are reticent of believing forward guidance. go, the, the high rates more convinced the money becomes that we are closer to a peak. the markets are forward looking and should be discounting the rate hikes we see beyond june and into the early part of next year, but the further we go into the cycle, the more difficult it becomes. matt: wes, what do you see when you look at flows, when you look at what people are holding? what is the market telling you about where it expects yields? i agree there is a debate over the fed past. just speaking from a bond market bowl point of view, for the last three fed rate hikes, treasuries have risen in yield and risen in
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price and follow in your, which is counterintuitive to what you think is going on. what you think should be happening. there is a school of thought that if you continue to raise rates and crunch the economy, that will limit growth and again, keep inflation from reaching the 2% goal. there is an argument to be made that even though they are raising, treasuries can still rally. matt: they's very much. -- thanks very much. go can follow him on lmi the i highly recommend you check out his macro view column where he argues that treasury yields to go back to a one handle, very interesting. not a complete outlier, something we heard from a couple strategists, but not very many. howard cole, he will say with , theinda, a gas company
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board agrees to a $35 billion industrial gas to tie up with tax here. we've got that and your stocks to watch. this is bloomberg, the open is eight minutes away. ♪
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matt: welcome back to bloomberg markets, the european open, there is a live shot of berlin, looks at they are taking down
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the tribune on which barack obama and angela merkel spoke last week. day ingorgeous looking my content, but it's nice here in london as well. we've got your stocks to watch, just about six minutes, five minutes from the open. we are watching very closely as they confirm about $35 billion tie up forming the world's largest industrial gases company. very interesting from a german perspective is ministers and labor leaders have been pushing back against this for quite a long time now. and it will make them fairly unhappy that it will happen air is known as one of the most efficient and some blind guess the companies in the world. a record low yesterday as investors started to worry about solvency practices. 1.5-$2s an additional billion according to expansion.
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take a look at futures. any gains today will push the ftse up to a gain for the week. the dax already up half a percent for the week, the cac needs to gain a third of a percent. this is bloomberg. ♪
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matt: welcome back to "bloomberg markets: european open." i'm matt miller in london. it has been a fantastic week. if you are long stocks, you may have a happy ending here. although the ftse and the cac so far are red for the week, if they open up or train up at these levels, you will be ok. we just need a barely to get a gain on the ftse for a positive end of the week. only down 0.05%. the cac is down about 0.3%. we need a little more action in paris.
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the dax is actually up about 0.5% for the week. the dax is good even if unchanged. looks like gains of 0.5% or more across the board. the european market open, right now, i have with us -- there you go. i have with us guy johnson's chart that he typically uses. i call it a spaghetti chart. i've changed it to make it a little easier to understand. the green is no england. typically that is england's racing color. france was typically blue for the old-school races. germany was either silver or white. i've made them a little bit silver here today. as we open, i will zoom in here to the first trade of the day. manus cranny kind of losing a little bit. the paris cac gaining. the london ftse gaining.
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the germans a little bit late to open but they could pick it up on the long straight here. manus, what do you think about my color idea? manus: you just send these subliminal messages to guy johnson that his spaghetti market opening chart is not up to snuff. you are right. i'm holding it together. it is friday. my gosh have these markets got a friday feeling. adp, set for a strong jobs report. does anybody care about the unemployment rate in the united states of america? global equities have added 10%. there a real backdrop story to italy and italian banks. are they putting their house really in order? industrials up 0.2%. rate hikes are coming in the united states. that seems to be the consensus mood in the market. i talked about global equities.
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this is the msci all world index, up 10% this year. the adp number, 253,000, that has added. topping 20,000 for the first time since 2015. that is adding to the momentum in equities. i caught up with my guest, and been sharing. he said, i don't want to buy volatility. i don't want to buy protection. i want to stay long equities. as for the impact of the united states withdrawing from the climate change agreement, edmund said it has a little, limited market impact. that may change if the world decides to slap tariffs back on non-carbon compliant american companies. shanghai composite, this is the close for the day. just the past five days, we
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added 1.35%. shanghai composite closing up 0.9%. matt, i'm off to radio. matt: you have a great time. i will see you in just about an hour. right now want to look at the individual stock movers on this gaining day. i'm looking at percentage changes. the reason i'm doing that is to see what i cope of a large is isng -- what banco popular doing. yesterday it touched an all-time low on concerns about liquidity. looks like some investors are taking a chance, betting that is not going to be a concern. i will click through to index points change to give you a better picture of who is moving markets. roche and novartis up there. hsbc, bank of santander, they are going to move markets the most. gains here are going to swing the stoxx 600 index to the plus
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side. interesting to see royal dutch ,hell and bp on the minus side taking index points away. you kind of want to think that has something to do with the u.s. leaving the paris climate accord, but it does not. i believe that is because we see crude oil and brent both falling. we did see bob dudley earlier saying he thinks climate change is still an important art of his business. it has been a volatile week for the pound. on wednesday the currency touched its lowest level in more than five weeks at the outcome of the june 8 snap election remains far from certain. with got some polls showing the possibility of conservatives losing their majority. most polls still put them firmly in the safety zone. let's bring back rbc's, from
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europe's headquarters, adam cole, the head of global fx strategy. -- all you think about the election, all the poll results, i'm not sure how much investors trust polls, but when you see a shock poll, it really hits the pound hard. adam: yes it does. i think there's no doubt that markets have gone from pricing a very large conservative majority to just a conservative majority. knowing where we are exactly is difficult. we can look at prediction markets. be betweenss would 80 and 100 seats from around double that a couple weeks ago. where do we go from here? i think the risk is that that comes down further. reasoning would point to a majority somewhat smaller than the market is
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currently priced four. sterling, having treated badly over the past couple weeks, trades badly for the remaining week headed into the election itself. matt: what is the time window on that kind of call? i see how you can relate pricing to the amount of seats the conservatives win in the near-term but is that also affecting a lookout over two years considering these people have to negotiate brexit? i, therethe market's is a very simple rule of thumb. the larger the conservative majority comes, the more positive is sterling. that is the market's real preference if you look at the way sterling has traded. longer-term, i think that is questionable. that aenerally perceived larger conservative majority makes a softer brexit process more likely.
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that is questionable itself. i think a stronger conservative government shifts the balance of policy towards tighter fiscal policy, looser monetary policy. isle the short-term dynamic stronger conservative government, stronger currency, longer-term i think that is questionable. even if we do come through with that large majority, not clear to me that is positive for the currency. matt: what is the best case scenario for brexit outcome with any degree of likelihood for the pound? adam: in terms of the negotiations, it's going to be tough whichever way you look at it. but a conservative government with a majority is probably the best case scenario, the worst-case scenario being the u.k. going into the brexit negotiations with a hung parliament and no majority for
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any party. that would be the nightmare scenario. thinkst case scenario i is probably about where we are priced at the moment, the conservatives come in with an increased majority but not a landslide move. matt: thanks very much for your time this morning. adam cole is the head of global fx strategy at rbc europe. natixis we speak to global asset management, jean raby, in his first ever interview as ceo. plus, how does syngenta expect to grow under chemchina? we speak to the ceo, erik fyrwald, live in st. petersburg. this is bloomberg. ♪
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welcome back. let's check in on the markets and see how things are shaping up for the day, for the week. we see the cac in paris up 0.6%. little bit of a gain. the dax up 0.7%, up more than 1% for the week. the ftse about 0.5% for the day and the week. gains across the board in europe. let's cross over to st. petersburg where erik schatzker
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is standing by with a guest. erik: thanks very much. i'm here with jean raby, the head of natixis little asset management, a firm with $900 billion in investment. good morning. happy to have you here. this is a challenging time for asset managers. there's compression. there's the shift from active to passive. there's underperformance. how does natixis respond? we are an actively managed firm that seeks to generate alpha for our investors. ando believe that in increasingly uncorrelated environment, where the tide is no longer rising for everybody, our strategy is going to make further inroads. we believe that performance will remain key, and increasingly key, and as a result, we continue to encourage our
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managers to think long-term, to think performance, and to not hug the benchmarks. that is what we believe will be the answer to the future challenges. erik: by active only? is there no room for a firm like the texas or do blackrock and vanguard own that market? jean: i'm not saying there is no place. it is here to stay. we want to stick to what we do best. scale and a game of low cost. we have a totally different strategy. we generate alpha. we charge fees that really demonstrate the value we bring. we try to have a long-term perspective. we build partnerships with our clients. that as customers shift to solutions that are
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designed to generate certain outcomes, the advisory part of our business will stay increasingly important. we don't want to be a product seller. we want to be a solutions provider. that is value for our investors. that is where we have a competitive advantage. erik: even in the active business, scale matters. it helps to fight fee compression. the is $900 billion enough or would more scale help you? jean: if you look at our probability right now, it demonstrates that we have a good business. we are not ignorant of the environment. we are adapting in certain cases to market pressure. we respond to our clients in terms of ability to tailor and properly price our product, but as we think about the future, we are not there for only scale. we are there first and foremost
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to provide performance to our clients, and performance does not necessarily need scale. erik: i guess what i'm getting at in part is, do you see opportunities to be a consolidator? jean: we are a consolidator. our business model is designed to integrate entrepreneurial investments that would benefit from our umbrella, from our workforce, to help them grow, and we are a natural partner for the alpha generating investment firms. by definition we are a consolidator. erik: on a team by team basis or on a firm by firm basis? do you see opportunities to participate in the consolidation with janice and henderson or standard life and aberdeen? jean: we are buying other firms. we bought dnca two years ago. it was a firm with an established brand name. we are constantly on the lookout
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for investment teams that can join our family. i mean investment firms. erik: you have an appetite for more. jean: it is part of our business model. france, it has been a tough time for your business and for asset management in general. are things turning around enough now that we will see significant inflows as soon as this year? jean: you are seeing some inflows. erik: that is why i used the word significant. jean: there was a period of status quo as the uncertainty around the election led people to take a pause. i think now the fundamentals are again coming back to the forefront as opposed to the political risk overlay we had the past few months. france is getting traction. increasingly the sentiment is positive. france is a bit on the bottom
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end of growth in terms of european countries. new president in office, things will change for the right results. erik: do you need to cut staff to improve profitability? jean: our model is not based on cutting staff or cutting cost to the core. we are an active manager. we want the best people. our model is not based on that. erik: what about rebranding? b.n.p. paribas rebranded its asset management business. jean: we have a model that is reliant on our brand, natixis global asset management, as well as our individual investment firms. that is our model. erik: do you share the view that equity markets, particularly the u.s., are getting frothy? jean: i would share the view that as we are today, the u.s. market is probably, on a relative term, more expensive
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than the european market. erik: that is undeniable. jean: that is where we think equilibrium may happen. erik: a shift in equilibrium how? two things could happen. let's say we are comparing the european market to the u.s. equity market. the european market stays where it is and the u.s. market corrects? jean: there's a fair amount of hope about tax reform and in theructure spending u.s. following the election of president trump. today there's a perception that those reforms are not happening as quickly as people would have liked. as a result, the market took a fall. you see that in many sectors of the u.s. market. in europe, what held back the markets was the political overlays, >> it, the dutch election, the french election. we may have another debate as to whether italy will create
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further turmoil from a political risk standpoint. in europe, there's a fair amount of political risk overlay that has kept the fundamentals from the forefront. we think that as these political risk overlays get subdued, the fundamentals will lead to significant growth. erik: good to have you on bloomberg television. jean raby, the head of natixis global asset management here with me at the st. petersburg economic forum. matt: erik schatzker there in st. petersburg with jean raby. coming up in the program, fair weather friends. china and the e.u. unite in criticism of trump's climate change decision at a summit in brussels. pun?ou get the i think it is pretty good. this is bloomberg. ♪
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matt: welcome back to "bloomberg markets: european open." i'm matt miller in london. we are seeing gains across the board on the equity indexes. capping the week with gains as well. let's dig deeper into the trade and get your may movers with nejra cehic. nejra: we're seeing moves off the back by analyst rewriting's. this develops cables for the energy and telecoms industries.
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raised to a buy at goldman from neutral. earlier this was gaining as much as 4%. now we are seeing it gaining by the most since mid-march. elektalso seeingelek gaining. &m,the downside, looking at b down almost 3.4%. this seems to be about the share placing. we are told the placing shares told at -- [indiscernible] courtshipe.u.-china ramps up today. they are joining forces in support of the paris climate accord, showing a unified front after donald trump withdrew yesterday. chinese premier li keqiang will host a summit in brussels with e.u. president donald tusk anti-e.u. commission president jean-claude juncker, who tweeted
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that he's deeply disappointed by trump's decision. how close is china becoming with europe? is this a summer fling or something longer-term? joining us is bloomberg's china correspondent, tom mackenzie in beijing, and jones hayden. jones, what has been the reaction in brussels or in europe at-large to donald trump's move? jones: it has basically been one of regret, like juncker said in his tweet, but also one of dismay. why trump understand and the u.s. is sort of abdicating what they see as a responsibility on the part of the u.s., the second biggest polluter in the world, a responsibility to take the lead in trying to combat climate change. matt: tom, the biggest polluter in the world obviously is china. when you look at it per capita,
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they don't even near the level the u.s. does. what has the reaction been in that country to donald trump's withdrawal, in a country that has so many smog-covered cities like beijing? tom: surprisingly clear day today, but normally pollution a big issue in beijing. we've seen from state media supporting what premier li keqiang had to say in brussels, affirmation and confirming they are going to stick to the paris climate accord. for china's leadership, this is another void they are looking to fill. they are trying to do that with trade. they've got their one belt, one road project. no they've got climate change. the reality doesn't always match the rhetoric -- matt: jones, can -- jones: there are real problems in china and economic
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opportunity. matt: what is going to be the difficulty of going forward without the u.s. on board? jones: there's a couple of problems. one is that the u.s. represents about 20% of the pledged cuts in emissions that the paris agreement solidifies. but in addition to that, there's also the risk that other members will now say, if the u.s. isn't in it, why should i be in it? this was an unprecedented pulling together of 190 countries to fight what is a global problem. the u.s. was on board. now that they are not, there's a feeling that there is less impetus behind it. this is something the e.u. and china are going to try to go strongly against in brussels. matt: jones, thanks very much. jones hayden in brussels, china correspondent tom mackenzie joining us from beijing.
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angela merkel rolled out the welcome mat for india and china this week. we'll trump's climate deal rejections cement a german pivot towards asia? this is bloomberg. ♪
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matt: is the climate agreement crumbling? president trump says he will withdraw from the paris accord, with condemnation from world leaders and heat from executives. plus, europe dividend east. mayor -- premier li meets. trade, migration, and trade on the agenda. is it tightening time? what will today's job numbers mean for the rate path? we will get the figures at 1:30 p.m. at u.k. time. i am matt miller. we are at bloomberg's european headquarters. we are 30 minutes into the
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trading day. let's see how things are shaping up. we have a green on the screen, with the dax gaining 1%. the ftse up 0.6%, and the cac up 0.9%. strong gains across the board. that brings us above the line for the week as well. especially the dax, which is up this week in a frankfurt. german chancellor angela merkel played host this week to india's prime minister and the chinese premier, li keqiang, two countries accounted for more than a third of the world's population. this came after the g7 exposed a rift between president trump and angela merkel, as he targeted contributions and trade deficit. now, he has pulled out of the paris accord that everyone urged him to stay in. how does germany move forward with asia?
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with europe, or with or without the u.s.? to answer some of those questions is michael wolffsohn, a professor of history with the german federal armed forces. thank you for joining us. let me ask you about the climate accord. the leaders of the g7 were trying to talk donald trump into staying in it, and angela merkel lasted the u.s. -- the motor-u.s. alliance in a rally in bavaria. do you think that pushed him over the edge? >> don't forget that we have election time in germany, and is attempting to do with the candidate did in 2002, where he distanced himself from then president bush. it is popular in german to be anti-american, and the true surprise is that angela merkel
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tried to go this way. it is a reaction to trump policies. , it isn modern times popular to be anti-american. there were a few decades when the americans were the only thing standing between germany and soviet rule. what do you think about donald insistenceistance -- that they contribute more to nato? >> frankly speaking, objectively speaking and taking donald trump's personality aside, the true issue is that president trump is right. the germans as well as most other nato partners had in fact send someo step up, burden and defense payments, and nothing happened. they reiterated the promises, and nothing happened. in a way, donald trump is the
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primitive reaction to limited -- to primitive anti-americanism. the germans were used to the americans to defend them when the chips were down. for the first time, this seems to be a new development. of course it was a cozy place here to rely on the americans, to have the americans pay, to have the americans fight all over the world and defend germany within europe. and they are somewhat upset. matt: when i speak to german -- the germaners defense minister, she says the germans are spending as much as they can on defense. you cannot create projects to spend money on, you need objective reasons to do so. do you buy that argument? the fact is the first
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minister of defense in germany who was able to increase the defense budget is right. and it is anplace, hasty reaction to the g7 summit that germany as well as europeans try to get closer to asian countries such as china and india. are important, but the u.s. is much more important. ands decisive for germany west europe. so, we have to fulfill our of does, with all criticism to donald trump, he has shown in a very drastic way, have promised and not delivered, full stop. matt: i want to ask about
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something different. you wrote a book about the deals-saudi arabian arms pre-world war ii. donald trump has received criticism for the arms deal he made in the middle east before he went to the vatican to see and then theisrael vatican. how do you see those arms deals in terms of striving toward a safer world, and are the germans still involved in that sort of thing? >> not anymore. the germans wanted to sell saudi arabia in 1981 under the social them a craddick chancellor, -- under the chancellor. they gave up because opposition is strong in germany. the second part of my answer is that for the time being, it was is arect step because iran
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stepping up their military efforts and gaining ground militarily speaking. we in the rest -- in the west need a strong saudi arabia. a volatile country internally, so i expect saudi arabia to be revolutionized in the near future, and we will have a saudi arabia with comparable development to libya after the fall of qaddafi. the weapons might get into the islamist revolutionaries, and this is not a very encouraging prospect. matt: fascinating stuff, though. it was a pleasure having you on. thank you for your time. michael wolffsohn, professor at the university of german federal armed forces. we cross back to sacred is -- st. petersburg. erik fyrwald,ith
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he is part of syngenta. this is the first of three megamergers in agricultural -- still to go through in the works. is that an advantage to you? >> it is because there will be remedies, and we will participate by looking at what needs to be taken out of those companies. we will inquire about what makes sense for us. >> what do you have your eye on? >> we are number one in tech theections, number three in seed business. we have gaps in our portfolio that we want to fill. >> you would be a willing buyer. how would you capitalize on the
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time advantage you have? >> these mergers are always distracting to some degree. with this behind us, we can focus on serving the customers and growing our business. we do not have to worry about the merger. >> there will be the vestiges as will theyout -- ensure that both mergers go through? >> likely. >> have we seen the end of consolidation? >> i think there will because validation across all industries -- there will be consolidation across all industries. i think companies will continue to look at consolidations as a way to increase earnings. it will happen across industries, it these are five of these aret -- but five of the biggest players. there will be minor
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consolidations. >> it is unlikely to see consolidations among those. that would be too big for regulators. what about a merger? i hesitate to use the word speculated, but it has been andested that chemchina zydeco could merge. this is due to the debt it had to take on because of the deal. is that practical? >> i am told there are no specific talks going on, but i have also heard the rumors. we will see how it develops. i can say that we have had a firm commitments to the investment grade balance sheet, and we are working with chemchina to make sure that happens. >> how do you get there? >> by attracting the right financing. >> equity financing could take care of leverage.
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i think that is what you're talking about, because leverage cannot take care of leverage. now that this deal is effectively done, kim china owns almost 90% of syngenta, what are your plans for expansion into asia? >> this is interesting to us, and there are two big changes with this merger. one is they will take the long view, they will be supportive of investments that take long periods to pay back, acquisitions we need to make, and other things to strengthen the company. but also china, helping us to work with chinese agriculture and step up chinese agriculture. globals well below standards in terms of yields. we have the technology, the knowledge on how to train farmers, and we will work to do that and make consolidation in
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the protection industry within china. >> do you need to hire more people? >> sure. withe the leading company protection in china. there is more opportunity. >> can you put a number on it? >> we will have hundreds more, but looking at live to 10 years, we will be multiple times of what we are today. >> because of the opportunity china presents? >> exactly. >> how about what you have versus what chemchina has in terms of product. rawt is looking at materials, and we will look at what they have and other opportunities to keep raising the quality and reducing the cost of our raw materials base. the new technologies we develop our proprietary, and -- are
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proprietary, and we will focus on that. >> you mention there are gaps in your seed portfolio. what else do you need to develop or buy? billion on $4.5 research. we have a great of products, but keeping the focus on that research pipeline and making sure we get it through. we're looking at collaborations with china to get additional products into our pipeline, but the digital space is opening up. we have a great digital platform expanding that and adding more functionality to help farmers improve their yields and manage their farms. is funded by cash flow, but adding technology or willcts from outside
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require expensive capital. given the leverage issue we discussed, how much flexibility do you have? how much do you spend? >> we have a great opportunity to spend what it takes. we have an aggressive growth strategy. we have communicated it with china, and i think we will get -- andpport for it area i think we will get full support for it. matt, we will send it back to you. excellent stuff in st. petersburg with the ceo of syngenta. if you are a bloomberg customer, you can watch the show watching tv . you can also follow the charts and functions. you can message us directly. if you click into the panels, you will see it in a blue link
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on the bottom of the screen. still to come, we have more from the st. petersburg international forum, including the ceo of bp and his take on the opec agreement. that is next. this is bloomberg. ♪ matt: welcome back to "bloomberg
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markets: european open." let's get over to nejra cehic
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for this top stories on stocks. nejra: we are starting with a record high. the drugmaker announcing a share buyback, proposing it will spend as much as $6.7 billion on that. we saw the stocks up by double digits, rising the most since 2006, up 8.3%, hitting a record high. popular rebounding today. we saw the stock up as much as 16%. this is over doubts of its rescue options. concern over whether us -- over whether this wonder will rescue itself. yesterday, we saw the shares extend a five-day palling street , rebounding today. not clear with the impetus is, but banks performing well following what was happening in the u.s. session as well. popular up 4.5%.
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also, white bread dropping. matt: you have to wonder how many of those banco popular investors are punters, because it is a three sent gain. nejra: if you look at the losses yesterday, no clear impetus. maybe some people seeing the opportunity after those five days of losses. that could be why we see those gains today. matt: thanks for that. i want to bring our viewers headlines on the eu-china summit going on in brussels right now. we have live shots of jean-claude juncker speaking about china and premier li is speaking there, i assume is standing next to him. is saying they are
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disagreements between the two nations. it is not all agreement. obviously, there are concerns on the european side as well about the reciprocity of the fair trade between the two nations. thatuncker is also saying the eu and china have to lead in global clean energy transition, and there is no black -- backsliding on the paris agreement. unless you consider the fact that the u.s. slid on that. let's get to the bloomberg first word news. let's get to sophie kamaruddin. sophie: on the paris agreement, aheads have vowed to push after president trump pulled out of the agreement. others, italy, and signed of letter saying they will not renegotiate. theresa may expressed her disappointment to trump. the trump administration has asked the u.s. supreme court to immediately reinstate its travel
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ban. the initiative is before the nation's highest court, bringing the justices into a claim that the president is abusing minorities. james comey will testify before the senate intelligence as theee on june 8 russia investigation moves onto the public stage. he will him. appear in an open session. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. thanks very much. let's get back to russia and the international forum where erik schatzker is standing by. he spoke with bob dudley about
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the impact of the opec deal to expand production cuts. >> it is an unprecedented agreement. the cuts could allow countries to get together. oilas stabilized the market. had they not come to the agreement, we would see higher oil prices. it is bringing demand back in the balance. opec wants to get it down to the lower average. it will take time. it is going in the right direction. >> it is just north of 50 bucks. if cuts were not extended, where would it be? >> there are a lot of factors. libyan production and other factors. keeping it equal, -- i think there are some $40's. there is much impact by libyan production and nigerian production. up of these things can go
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and down. shale production continues. i think getting these agreements and $60 istween $50 a healthy oil price. >> the futures curve suggests that oil is going to be trading in the $50's once these cuts expire. what reason is there to believe that is the case if the cuts were required to keep oil from dropping into the $40's right now? why wouldn't more cuts be required for future drops? >> when they get together, they look at the data and how the markets responded. to see if they would extend it. -- the factknow that the level of communication and cooperation is in precedent between countries -- is unprecedented between countries. >> there is some concern, at
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least interest, in the question of whether opec and the russians and others have trapped cut situation. you need to extend the cuts, or you end up with an oil price too low to set up eyes -- to satisfy your needs. is that a variable? >> there are a lot of variables. --mand levels are rise, command levels are rising, i -- thebout the state stability of venezuela. libya is up and down. if you go up or down either production -- it could go up or down either production. -- we have other share. it reduces production along with
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their share. we see that go down. commitment,aijan's and some of the commit -- concessions in abu dhabi. the production, you have to go for molly -- quality over volume. the higher price is leading to these reductions. it does not -- >> you see it the same way they do. >> i do, yes. >> have we reached a point where opec, again together with its partners, is beginning to take more control over global oil price, or is this a temporary situation? >> shale is the big one. arabia -- shale is the healthy one. ut i think this is not a
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question that can be answered by the markets. one decision can impact production very quickly and change the market. what i think, and you will have to talk to the opec producers, they don't want to shock. highlightsare some for your day ahead. at 11:15 u.k. time, china's li keqiang and jean-claude juncker are holding a signing ceremony in brussels. 45 minutes later, the russian president addresses the international economic forum. an hour and a half after that, it is the u.s. nonfarm payrolls. granddaddyime, the of all economic data points, at least as far as america is concerned. stay with us. up next, it is surveillance.
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or you can join me on bloomberg radio's daybreak live. this is bloomberg. ♪
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politicalthe global and business leaders express their dismay of trump's plan to pull america out of the paris agreement. >> i do respect this decision but i do think it is a mistake. both for the u.s. and for our planet. >> it's a very sad day. it's a sad day for the world. it's a sad day for our grandchildren. francine: jobs day usa. the


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