tv Bloomberg Markets European Open Bloomberg June 26, 2017 2:30am-4:01am EDT
♪ manus: welcome, you are watching the book market european first trade coming up on cash. mattguy johnson of it miller is not here, but he will be back next week. 17 billion euros of public money to wind down to fail banks. what does it say about the future of the banking union? theresa may will provide a conference of picture of her plan for eu citizens living in
the u.k. post exit. we will get an -- a reaction to the italian government. credit time for netflix. hedge funds for the world's biggest food company. this was giant will unload its holdings. we are less than half an hour away from the european and open, but let's take a look at what bloomberg is telling us. the fair value is a positive picture. what i think is interesting is, look at the ftse line. that is a bit of a head scratch because the pound is trading a little bit higher today. let me show you what is happening here. let's put over and take you to the gmm. we will see what's going on with the pound. it's up to 10th of 1%. what normally happens is the count goes up, ftse goes down. not happening this morning, which is quite interesting. elsewhere, chinese market seems
well. that's something to pay attention to. we are getting details that we are likely to see some announcements on the d you p story relating to theresa may's government. we are getting that news coming through. we will have more analysis on what is happening with the pound and it is politics. plus the italian banking story. let's catch up and put it all together with a first word news update with juliette saly. will commit as much as 70 billion euros to clean up to fail banks. include techion support for good assets. after an emergency cabinet meeting, the prime minister said it could tap 5.2 billion euros to take on some assets without hurting capital ratios. alternativea better
than this decree from the point of view of the supporting families, the two banks, the savers, the stability of the financial system? i wish the people who criticize me would tell me what a better alternative could be because, frankly, i do not see it. juliette: the u.k. parliament was hit by a cyber attack on saturday. lawmakers access to emails were disrupted. the house of commons is investigating the incident as well as the national security center. the gc hq. it came two days after the town reported passwords and russian hacking sites. said.s. secretary of state qatar will find it difficult to comply with some of the demands made by the saudi block to end the diplomatic crisis. but rex tillerson said there could be a basis to talks.
cutting back to the medic ties with iran and ending turkey's military presence in the country. than 150an come up people have been killed after a tanker exploded. rescue officials said dozens more are in critical condition. pick ups gathered to fuel after the company overturned. firefighters are battling tents latest in california. a car crashed on a freeway and insed invest -- evacuations nearby homes in santa clarita. better weather conditions have limited the growth of a wildfire in utah. spacex launched its ninth rocket of the year from vandenberg air base in california. it follows another lunch on friday. his carrying 10 satellite for communications.
it's the first time they have sent to rockets in to orbit in such a short. . global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. guy. guy: thank you very much indeed. if you are a bloomberg customer, you can watch the show with the tv function. you can get the tv stream, but also get what is happening here on the sidebar, which is all the breaking news, the great charts we use, all functionality as well. use this little box that here, tv . ask the guests a question. this is all incompetent of course. at what ise a look happening in the u.k. later in the program. what is your view on theresa may's opening position on citizens rights? we will get detailed from the premise or later today. we will ask the italian minister
juliette: investment and low $20e points 30 points his billion stake in l'oreal. tos to encourage management change with a greater sense of urgency by filling it stake in l'oreal and reviewing its portfolio. in figure $5ake million in the company. there were unable to a measly comment. takata,it airbag maker, filed for bankruptcy protection in the u.s. and japan. it listed more than $10 million in liabilities, including claims from automakers like honda and toyota and those who brought class action lawsuits. russian billionaire mikell friedman reached a deal to buy , one of the largest
hotel retail change in europe. they will pay 1.8 billion pounds, the brand is currently part of a bounty company. that is your bloomberg business flash. guy: thank you indeed juliette saly. the bloomberg l.a. the blog is saying analysts will turn their attention to the regional elections, the final round of municipal votes. the 80 plus year old former .rime minister joining us now, mark cudmore, bloomberg analysts. mark, we saw. you weeks ago that told us the five-star movement was maybe a retreat. what is this latest tell us about the nature of a telling optics and what does it mean in terms of how the market will
turn the election next year? guest: the most important to put it back on the radar is the investors. also on the fact that risk premium in the eurozone has solid. a good election result. we are being reminded that the biggest risk of the eurozone, which is italy, still has their -- early part of next year. the result is uncertain. we will press on. we apologize for the slight break up in works line. you are coming to london tomorrow, pound depreciation is part of what you are thinking about at the moment. walk us through what the charts are telling us. there is a couple nice ones based on the pound index and what is happening with the yen cross and what may be a different story coming out of there. guest: certainly the pound
depreciation trend that started may cap is still intact. it looks comfortable at the moment. it's important to note that -- starting to break it trend. this is important because sterling again led to a downturn in the broader sterling index when it -- is starting to break that down trend, does apply that maybe it will be in the base next week. it does not change the macro fundamentals for sterling, but it does mean there is a possibility for a positive environment for sterling as we start to trade a bit more and this idea they might hike rates. guy: looking forward to seeing you in london. the reality strategist. you can follow the whole team on the blog. follow tliv .
let's go to rome for nx was an interview. the minister of european affairs. good morning, sir. thank you for taking the time to join us. detail youe us what hope to hear from the british prime minister a little bit later on today, which he outlines a more conference of view of her approach to eu citizens living in the u.k.? what do you want to hear? we want the recognition of a full rights. we want reciprocity between u.k. residence in the union and the dissent in the u.k.. we would like to hear that all the rights of those in the u.k. are fully recognized because our people were invested and they built a like project in the u k, making confidence in the united kingdom and i think they're right should be fully recognized. that's what we hope to hear.
may dids far, theresa not get a great reaction from italy, from the rest of europe on what she had said. did that we can the prime minister? canthat we can the best we the u.k. position? that we needclear -- sorry for that -- it is clear that we need clarity and certainty for the parts the u.k. government wants to follow. theresa may, last week in brussels, told the european that she was to get out of the single market and get out of the union. to get out of the single market means we have to work a lot to of ourze the full rights citizens in the u.k. and eu
because when he to build a completely new legal scheme. we would like to hear more details from theresa may. and also, it's not the fact that it was a view form. that themed us negotiations passes through our chief negotiator, so we do not want to negotiate on the level of your opinion counsel. softto have a regular taking at the level of the european mitsubishi how the negotiations go on. i would not speculate too much about the viewpoint or the list lukewarm reaction of proposal i theresa may last week because that was an information moment, not in negotiation moment. guy: nevertheless, the fact that we have had reports in the press that it was not a great reaction tells you that in some ways, the single approach of going through
michelle party eight is not completely watertight. how clear is europe on the fact that it wants to negotiate just through the michelle bardier? at the moment, it feels like that. but i wonder in your view, how singular europe is in its voice. guest: you are very right thing go inet the the negotiation if you want to be realistic. we need to see when we start the negotiation, we were managed to keep this unity. there is danger in both because it ensures a smooth approach on our part of the negotiation, but of course it depends on the , on theof the u.k. land clarity to reach theresa may. we want to work. on ae speculating a lot
hard brexit or a soft brexit. at the moment, i see a week brexit. ico weakness in the position of the u.k. and a weakness in the approach to the negotiation. this is why we are interested into listening to the prime minister and interested in having a clear position. it's not up to us to choose for the brits, but it is up to us to encourage a deposition on both sides. guy: germany and france once again seem to be the driving force behind the direction which europe will take. angelo merkel and mr. macron. what does that leave italy? believe it is a necessary condition for europe, but it is not an official condition.
it's good berlin start again to take political responsibility. not only managing crisis, but to try and build up a new project for union around security, growth, around on implement. it's clear this union, but that is not enough and we are working very closely with both and italy will be the core group because we are ready to take on ever response ability to launch europe. i do believe that after the german election, we can enter into a new phase, which is very much necessary. someone14, there is like emmanuel macron in paris. we have hope it will happen starting from next fold. guy: one of the critical factors to make the eurozone work is
that we have a banking unit. that union is taking shape now. do you think that the deal that was done to wind down to it telling banks over this weekend adheres to the spirit of the direction that the banking union is taking? as i wass i do because saying, the two banks represent risks. it was an important look at a problem. we decided to implement national legislation and i think the plans the government has decided is a positive plan. we have taken away negotiating table the issue of the italian banks now and we hope that the banking union negotiation can speed up the game because they
had been a slow down and it is clear we cannot talk about the completion of the economic union without vastly deciding about the very necessary taking union. for us, the position is clear. it is not a matter of deciding on what you do first between risksharing and risk reduction. we have to work on a parallel line on a parallel track. why we are using the risk. we also have to build up a new risk. these are ever very clear positions and after the rescue we will see at the your opinion negotiation table on this approach. guy: the only question i would ask on the back of that, as you say minister, these are not systemic institutions. used totate a being rescue a non-systemic
institution in italy? table we have put on a money which can be used for guarantee and can be used for guarantee to a company's intervention banking and also to keep the level of employment and there is another important aspect. ofalso have the issue activity. it's important for public guarantee. we are talking about one of the most important part of our country organized around small and medium is this, which has an historical relationship with there were and before continued he in the daily with the business, but not only u.k. business. but the relationship between small and medium business and local banks. it's worthwhile to take this action. guy: a great pleasure.
guy: five minutes until cash opens here in europe, looks like european stocks are going to be good this morning that there are a couple of names to focus on. it's going to see exec we have the market reacts to the fact that tesla and paulo is central to the rescuing of two italian banks. it's taking on the good bits, but the liability being underwritten by the government and it will be interesting to see how the market purchase the numbers on how this will affect capital ratios or whether or not the coverage is good enough. the other stock worth mentioning is with nestle. i was wondering about what dan loeb was doing, his view is that the holding that has existed in l'oreal, this is a long-standing story, one that has done all right. could be sold and that would
♪ guy: welcome back, let's talk about with these markets are happening this morning. we did not see that into friday's close, but it looks like you're going to open on the front foot this morning. not by much, just a little bit. about 1.5%., 50's the dax is underperforming a little bit. but we are splitting hairs here. sustained is a different matter. keep an eye on how it will open. italian banks the this morning, the other story
worth paying attention to. expecting a are positive open. let's get bloomberg in the right place for that open. there are some key stocks to be watching for an a guilt open is about to happen, as well. let's take a look at how these numbers are crossing the bloomberg this morning. the ftse is opening in negative territory and then bouncing back up into positive territory. remember the pound is reasonably positive, which i would have thought would take steam out of the ftse 100. keep an eye on the minors as well. the cac is inspected to open up higher than the stoxx 600. it's up by 2/10 of 1%, which maybe a little more here. the cac will open half of 1%. your opinion market beginning to open up, the banks will take longer. while we wait, looking at you over to the capable manus cranny with what else is going on. manus: financials are up for
tenths of 1%. there was no alternative to do what i had to do. gilts are definitely in play. looking over $5.5 billion. paris, theholland in health food shop. you are looking at approximately $5.5 billion. what is the central bank speak? italy and issues in the bad nonperforming loan situation, the view from j.p. morgan morgan asset management. financials are up for tenths of 1%, slightly stronger as well. technology had a nice session in asia. tomorrow you have mario draghi hitting center, so where are we going to be on that? we are waiting for the opening print to come through.
what i had here is the price-to-earnings ratio. what we have here is nestle's premium. this is the forward pe. it's trading at 11% to its peers , that is compared to an average. the average differential is a premium price of 4%. loeb are many reasons and want to get into a more aggressive play with nestle and the new ceo, will they get on? will the new investor help the ceo put through some of those big agenda setting pieces that could send -- change the structure of nestle? that is the debate in the market. the quote was 1% higher on friday evening. the gilt market at the bottom of the screen, up 4.45%. the market likes the fact that dan loeb went in for shares of $3.5 billion. now guilt, the chamber of
commerce this morning, and the director general, they are putting forward their view on went the first rate hike will go through in the united kingdom. they say it will be in the first quarter of 2018. the market is live in august for a rate hike, but this is 3.96. we have a call here from blu-ray that u.k. will scrap austerity. withgoing to hit 2% average of about 1.08% in the past 12 months and we spent four months below 1%. we have not seen that since 1989, so they would say we will hit a 2% metal. is 1.72%berg consensus for the first quarter of next year. 18 months time, we are looking at 2%. we need to reprice guilt risk.
literature you what is happening in terms of individual stocks stories in europe. manus mentioned what is happening with nestle. we have an opening price on l'oreal, opening at a 2.53% price. some paulo is the lead gainer, the markets likes the underwriting detailed from the time government. we are looking at the rest of the italian taking section looking good. a whole bunch of them. they are all trading high. this is a positive for the italian banking center, so clearly not worried about what is happening with the political story, but what is happening the individual taking names and how they are being rescued. fascinating to watch how that is breaking down. on the downside, there is not much movement. this is a swedish company that
makes handkerchiefs and wet wipes and that kind of thing. it's trading down this morning. i cannot find any particular reason for that. as the is also trading down. .ut the upside is dominated state rescue, italy will commit 17 billion euros to clean up these banks. it's the country's biggest rescue on record. joining us is dan liefgreen. likes it. why does the market like this this morning do you think? guest: i think there are two issues. number one, white investors like it is because they are getting this very cheap. a token one euro, they managed to work a deal where the bad loan situation, that assets, are being split off. they are essentially buying a good bank, their capital ratios are protected, they said their
dividend policy will remain the same. so for them, it's potentially a winning deal. the other issue is, look, and talking to bankers recently, they were saying italy needs to do two things. result the venetian bank situation, and result multitasking. then substantial risk potential he will be eliminated. they got the first deal done. you can talk about whether it was proper in terms of banking regulations, the future of your opinion making regulations, but for italy, it is a big first step to resolving the situation with nonperforming loans. guy: just on that front, kind of the details of this, do we need to worry about the details? they are always important as they end up watching through, the nevertheless as you say, italy and the banking system has been one of those forms in the
side of the eurozone projects that move forward from here and people will get obsessed about the details. are they making a mistake? you details actually matter? we've done it come up we moved on, maybe six or seven years too late, but at least it's finally over. guest: exactly. that is the attitude the italian government officials are taking. the finance minister yesterday during the press conference said, i read the criticism regarding whether this was the proper use of your opinion banking rules. he says, what is the alternative? as far as they are concerned, they have resolved the situation -- these are not systemic banks, they were important banks in a very important region for italy. for them, there was no other alternative but to go down this route of some state intervention. they tried to get pregnant investors and that failed.
guy: thank you very much indeed. dan liefgreen joining us. does it matter about the details here? guest: details always matter. but if you look at the picture, they are breaking one of the deadlock regarding the restructuring of the banking sector in italy and that is quite positive. as you know, there has been before some rescue package which was financed by the private sector, including venetian banks, and it did not work. probably the private money was of it elected to commit more money and that's why it's helping to address this kind of setting and oblique now the way for product actuals like some paulo for consolidation to the sector, which is an important feature. the nonperforming loan issue, it's also addressing the
structural lack of profitability of the very fragmented italian banking sector. kind of banks the that lend to the italian middle step. and they are huge employers, this is a key sector in this part of italy. and i am just wondering therefore, once we have resolution for this, what the economic impact is? does it boost confidence? is there a sense of breathing out? a relaxing of the situation. it made was companies, but more importantly, it unlocks the capacity for the space to loan to those small and medium-sized companies. then when you are crippled with nonperforming loans and in the middle of continuous structuring, it's difficult for you to lend to them. also for intervention between the good risk and that risk every this is a step in the
right direction. coming at a good time for the banking sector because we are seeing credits for compressing dramatically over the past six to 12 months, which is also creating an element where probably you have a better market if you want to address the balance sheet structure and to therefore a more competitive banking sector. guy: it's a two-handed story. on what hand, you have the italian banking sector, we finally dealt with what is happening here. on the other hand, you have the italian political story, which is once again back on the front burner and or is it? it? we concerned about the italian political risk back on the agenda? i was recently traveling in italy meeting investors, companies, officials. and some people were arguing
that the combat was the bookcase for italy. the alternative was very strongly anti-euro, anti-e.u. party. it's a very different situation from france because it does not have a low that will instill a majority, so the political landscape will remain fragmented. i would not say it's a negative development, what we have seen this morning with the local elections. guy: i thought he was inside your opinion as well? maybe he is just pragmatic. guest: i think he is just pragmatic. it's more a question of striking a good deal with the eu. if you look at the political stability in italy, it's not such a bad development. guy: he will stick around. plenty more to discuss with them.
if you are a bloomberg customer, use this function, tv . it is fantastic. what you have here is a string of the video and you can spend back through that and you have this sidebar here which has all the functionality, you have bios of the people on air, it uses the functions come up the charts, you can pump these out. if you want to contribute, use this down here, this little blue button. twoou want to picture the the program, send us your best chart. we would be delighted to hear from you. up next, the brexit battle the u.k. is ready to fight. theeuropean union demands jet continents the way it holds sway. basically it's about the court battles and which court ultimately has response to the. those are some of the key stocks we will be watching this morning. look at nestle and look at l'oreal. the download story certainly acting as the catalyst for
interesting. maybe the cap is a slightly outperforming, but nevertheless, we have little difference between the markets. the euro will move as well. in terms of market moves, let's show you what is going on. this is an interesting stock story this morning. apparently deutsche has a note out by rating the best bet on the german housing shortage story and we have a joint fire on the story and as a result, it is rising fast this market. nestle up .2%. l'oreal is at an all-time high. it's up 3% this morning, so the market liking this story as well. the rest of the telling banks looking positive. credit up over 2%. let's move on to brexit. ukip prime minister you to meet ireland's dup this morning.
the government may be close. theresa may will post details on how she intended to protect the rights of 3.2 million european nationals living in britain what the u.k. leaves the block in 2019. meanwhile, the brexit secretary says that and will fight any demands that europe's judges continue to hold sway over britain once it leaves. >> when we are doing these deals on trade and other areas, there will be arbitration arrangements. there will be mutually agreed chairman and someone on both sides, the normal way. there may be other ways too. a --not going to be guy: what kind of brexit do you expect? >> let's hope for a good brexit is the discussions of hard brexit, i do not think it makes
sense. what you hope is to have a good brexit with an agreement. knows? is going to be a very lengthy discussion. what we have seen in the financial market is much more reactions relieved to the rebalancing of the u.k.. it's going to meet with the consumer sector and manufacturing and export sector. though we are seeing in terms of brexit, if you are ahead of us, -- guy: the market seems to be pricing in a heavy story. they areto people, like, situation has changed politically, it's hard to make that tangible and therefore i do not know how to prices. so what i will do is priced in what i can price in, which is a hard brexit. because the political uncertainty points me in that direction to a certain extent. do you think that is what's happening right now?
repricing in something that's harder than what people expect? guest: people are pricing uncertainty, but they are not rising an unfavorable outcome. what we have seen over the last u.s. where you look at the dollar, having some of the worst-performing asset of the last 12 months, guilt is down double digits. definitively, the rustic assets have been suffering. i would argue a big chunk of this adjustment is actually coming from the actual economic system of the u.k. right now rather than making any strong forecast in regards to brexit more like something like a wake-up call. the reale entering discussion, the real future, and we can still have a positive outcome and a negative outcome, but i would not say all the negative has been primed.
make a morey interesting scenario for british assets on the certain brexit scenarios where we are today. we are not pricing the worst. is interesting about the economic story right now. we have an economy where the data is slowing down and the data are reasonably convincing on this front, certainly the economy is slowing down. what we are getting from the pound is a reflationary story that the european union is worried about. without the and mistake for the bank to raise rates? guest: the economy is slowing down because of the inflationary story, which is an important inflation coming from a weaker currency. definitively, traditional textbook, if you want to have consumers in such an environment, it's not so much a question of giving them more leeway to go, it's actually a
question of the stabilizing the currency in order to avoid -- guy: you think what they are saying is, we can talk the pound up? definitively, this is where you have this line of thinking and the bank of england. people to understand that when you have a currency which is weakening and weakening, you are using it was very pressure that stabilizes the currency like we have seen in other countries when you look in india, brazil, russia. the textbook of the central bank is to stabilize the currency and then it's opening the door to receive -- that youdon't think currently allows the u.k. to adjust? it's a pressure valve and allows the country to adjust to work its way through -- thet: when you look at
numbers now, those are going up because they are responding well to the import price. what you need obviously is the impact to be a one off. once you have that benefit of this evaluation, you need to stabilize the currency and in particular for the customers, not to be continuously pinched by the continuously depreciating currency which is creating this thing that is squeezing customer demand. this is probably a debate in the bank of england. guy: stick around. more to come from you. up next, by brick, how to build the debt portfolio. this is bloomberg. ♪
but you got macro developers sitting behind that to work in your favor. that is what you believe. how much more have we got to run on this one? guest: i think we have a lot to run because i think investors in the market are feeling very strongly domestically highest. we are genetically biased because we think there is an element of section investing in the domestic market. i would argue that when you look at the emerging-market, not only you have better carry and then therefore better return, but there is also an element of diversification and risk management coming from the fact ist the central bank fighting your corner, especially the case of mexico for the last 12 months. when we had mexican currently going down and inflation creating in mexico, they were not afraid of raising rates. very different from the attitude of the bank of england.
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which is why comcast business delivers consistent network performance and speed across all your locations. fast connections everywhere. that's how you outmaneuver. guy: 70 billion euros to point out money to two failed banks. what does it say about future of the banking union? the italian banking sector loving it this morning. during this detail, theresa may it will provide a more conference of picture to what she plans to do with her citizens in the u.k. post-brexit. we had a reaction from the italian government come certainly looking for more detail. crunch time for nestle. the biggestestor in food company, download, hoping to persuade the team to unload l'oreal. it is trading really strongly
this morning. nestle and l'oreal, on the back of this news. good morning, welcome to bloomberg markets the european union. i'm guy johnson from bloomberg european headquarters. matt miller is not here this week. 30 minutes into the trading day, let's see how things are trading up. up being the operative word. we are up about half a percent. really -- story, the the two big stories, nestle and l'oreal bidding this morning. let's turn our attention to another story. let's go to washington. president donald trump has called it a two head of the trimester of india's visit to the white house. they allow that leaders to build a personal report. but they also discussed issues of immigration. mr. trump said they had
strategic issues to discuss as well. kathleen hunter is here as well. good morning. guest: good morning. guy: these guys are politicians, but they have the issue that troubles both of them in front of them today -- immigration. he has a problem with the way the visa structure is working moving forward in the united states. can they see i to i? guest: that is a big question. i do not think people will see a big policy break out of this meeting, this is the first face-to-face meeting between each other. hit the nail on the head with the high-tech visas. take are the ones india advantage of, a lot of those visas, and trump has come in with by american, higher american provisions and he has put that program under review, so that is a natural area for the two of them to class. .oth of them were tweeting
they seemed eager to meet each other and build that report, but the question is, there is the question of they are heading towards each other on this class of immigration and i would be surprised if we saw a lot of progress at of today's meeting. guy: what is the backup to the indian relationship with washington? when we come at this with a strategic point of view? what does donald trump need from india? guest: and some was from a policy standpoint, today's meeting is an opportunity for trump to distract from another narrative. there is the whole russia discussion that has been dominating washington. this is an opportunity for trump to have a meeting greek with another form later to show himself a head of state at the presidential and to distract from the russian narrative, which does threaten to take over everything else in his presidency. trump talking about immigration, even if you are its disagreeing
with moody, he is not talking about russia and that's progress. guy: what about health care? guest: this is a big week. there is a vote potentially by the end of the week. congress goes in before the july 4 recess at the end of the week, so senate republicans unveiled a proposal less week and now they are trying+++ not have it fail.
so we may see a vote. they'll be the thing to watch. we may see procedural votes starting wednesday and a final vote on thursday. at this point, there is not the simple majority needed to pass it and some republican minds will need to be changed and what we need to watch is how involved trump gets in trying to sway republican senators to support this bill. because revealing obamacare was a big campaign centerpiece of his. however, he was very involved in trying to get the house bill passed and now he has done nothing about how house bill is that since he did not pass. the devil is in the details and it's harder than it looks to come up with a good placement. the whole thing is harder than it looks. cap point, thank you. -- kathleen, thank you. as kathleen says, the devil is in the details, but we are not getting a lot of details right now. have we priced out too much and where do we go from here u.s. efforts? guest: i do not think we have priced out too much, but we have not priced out success. that probably the option value is actually on president trump to deliver something. the key question for him is, politics is a game of edition. he needs to go beyond his supporter base to deliver some successes and obviously momentum is very important, especially at
this stage of a new administration. for the time being, they are a bit stuck and obviously this is greating for having expectations of what to deliver. but the surprise would be for this administration to deliver something, especially in the economic front, rather than not delivering something. your impression on washington deliver something in spending? we talked about the slow down and what we will see here and how the government will respond and how the bank work around it. are there commonalities between what we are seeing on both sides of the atlantic? strongthere is a reluctance to have additional taxes, whether in the u.s. or the u.k.. but in the more traditional republican or conservative base, you need to spend more and tax more, how do you
fit the bill? it's probably by having additional debt. this is a topic of discussion around the corner. guy: sill around the corner. so you have the fed wending its balance sheet down. plus the additional supply that could come as a result of that what does that mean for yield? guest: is a complex question because definitely we are seeing real pressure on inflation numbers, but on the other hand, you have all these credit elements which are obviously calling for pricing gilts and treasuries hiring on top of yield. right now for investors, rather than making directional poll in terms of yield getting higher, you are much better in every position on volatility and alone volatility where everybody is complacent with regards to volatility outlook and to capture the fact -- belong treasury
volatility right now. haslinda: particularly in interesting feature which is along this bonds, this is where the spread between it implies volatility is lowest. the difficulty when you are capturing a volatility trade is to buy volatility at an attractive rice. on the boom side, this is where i would be getting right now. guy: great stuff. not quite done yet. done with bloomberg television, but he will be joining us on bloomberg radio as well on dab. look that conversation a little bit later. it will get a cup of coffee and regroup a little bit. let's talk about what is happening on bloomberg right now. customer, a bloomberg you can use this function, tv , which allows you to access the video stream, would you can see back to back here. let's take you back further so we don't end up with too much of me. you also get this sidebar here
what are we, 41 minutes into the market. they are just beginning to adjust. the upside is about to fade. you can see that on the charts up there. let's look at some of the movers we are watching this morning. we are watching tell low rising come up with a story of the morning, nestle, the third point download, download wants them to of -- unload the l'oreal holding and you can see lori l down here up by 2.82%. the other store is what is happening with the italian banks winding down of the two venetian and the best that seems to be working for investors this morning. 3.52, butt trading up the rest of the italian sector as well seems to the uptake step forward in terms of dealing with the risk the sector faces. that's what the markets are doing, let's see what the wider story is with bloomberg first
news update. the intervention at popular deep intense a includes state support for somehow look to acquire their good assets for a token amount. speaking after in emergency cabinet meeting, tesla could initially cap about 5.2 billion euros to take on some assets without hurting capital ratios. is there a better alternative than this decree on the point of families?e supporting the two families, the banks, the savers, the stability of the financial system. i wish the people who criticize me could tell me what a better alternative could be because frankly, i do not see it. >> the u.s. secretary of state said qatar will find it difficult to comply with some demands led by the saudi block to end the diplomatic crisis. rex tillerson did say there can the basis for talks.
the list of demands includes shutting the al jazeera tv network, and ending turkey's military resins in the country. the uk's prime minister is due to meet the northern islands -- today,n ireland's dup meeting a result and maybe close. how 3.2 also talk about million eu nations -- eu population will handle living in the u.k.. >> when we deal with trade and other areas, there were ours arbitration rates. there will be a mutually+++
powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. guy? guy: let's stay with britain business conferences. according to the latest britain report, reports show the stocks higher labor has hit a 10 year high. they have had difficulty getting skilled workers. joining us is the managing director of banking. good morning. guest: good morning. guy: let's start off with tommy. this was done prior to the election, this survey. haslinda: yes, and contact is important. this was taken after this isn't to have the auction was pronounced come up before the election was known. we have known the result, the situation appears to be slightly more politically unstable in the u.k.. was possessed just beginning to get its arms around or its head around what the next few years was going to bring, you think? there was stability to return
after the brexit vote. guest: certainly instilling confidence and we have seen concerns about economic uncertainty have decreased. context is important. ailst we have seen quite notable shift in confidence and it's twice the level it was just after the referendum, it's just fractionally above the average of the survey. guy: what are the biggest issues they face right now? guest: i think what we did see when i was here in general it time, there was a story we saw an increase in confidence of manufacturing, but a decrease in retail wholesalers and we put that down to an exchange rate story, the difference during importing and exporting. this time we are seeing a much so weroad-based report are seeing four out of six sectors showing an increase in confidence and in fact construction is the sector that is the most confident.
this is more likely about an increase in confidence around u.k. demand rather than issues in terms of the weakness of sterling. guy: the headline data, survey data, the pmi readings etc., there does seem to be evidence of the british consumers sector is certainly starting to feel the pinch. higher inflation, the weight story is putting the squeeze. it's that consistent with what you are seeing or are you seeing a different story? guest: what we see is that businesses -- there is not an increase in businesses looking to increase prices, but the number of businesses looking to increase prices is still very high. it indicates that there will continue to be a pressure on consumers and inflation. guy: let's talk about hiring. the issue of hiring is that
there is a problem of hiring skilled labor, but as you pointed out to me as you set down, that could be because british businesses is not prepared to pay for that skilled labor. guest: yes, so what we are seeing is there are businesses, a small increase in businesses looking to hire more. as we said, there is a difficulty in hiring skilled labor, but there is the only a cautious approach from businesses. most are not looking to increase their salary bill, so this cautious approach could have an impact on how easy it is for you to be able to get the right people. guy: which sectors are not feeling positive? guest: quite a big increase in confidence. we have seen a slight increase in manufacturing and a noticeable decrease in hospitality and hotels, -- guy: why is that because you would've thought the chief of pound -- and i can't remember
where i saw it, but there was data that 20 to the fact that more people are coming to the country and spending more. so why are you seeing that in the hospitality sector? is that a revenue story? guest: it's a comparison to where we were in jay wright. the exchange rate then was more favorable and we have seen that come back slightly. the sector is positive, but less positive than they were when we spoke in january. guy: d spec this trend to continue -- do you expect this trend to continue or do you expect the political uncertainty have a meaningful impact in the numbers you are getting? we had a significant event in terms of the political story. would you expect it to lead to a similar story in the data you get? guest: quite possibly. we have seen an increase from the last survey and quite obviously, the results of the election was not yet known.
there is also an awful lot of uncertainty out there. so it's a very mixed marketplace as you say. there is lots of data out there which could cause businesses some concern. we may find that when we talk again in six months, businesses will be slightly less confident. guy: we look forward to seeing you again. breaking news crossing the bloomberg right now. oft we had is a continuation this real coal as it sale story that is coming through. to make an offer for the real assets. this is effectively something glenn cole has been looking at. it's something we will watch to see -- they have an offer, we are waiting to see who ends up being successful on this one.
just for member women talk about glencore, the chairman of bloomberg lp is a independent. we will have more details and a moment. we'll provide more details with what is happening with nestle. what it says on the screen in front of me is a bitter taste for method. i am not sure the shareholders are feeling this way. they're putting pressure on the biggest food company to perform itself, but more importantly, offload its holdings in l'oreal. they are treading strongly as well, as is nestle. but stocks are up sharply. how do we feel about that? what pressure will they put on? we'll talk about that next. this is bloomberg. ♪
♪ welcome back, you are watching the opening, 54 minutes into the open. nestle is coming under pressure from dan loped to sell his stake in l'oreal. it comes from a wider plan to chair underperforming assets with the food company and seek assets in higher company. joining us now, bloomberg europe's managing editor. in it, we've got a new management team. why doesn't dan loeb give that new management team a little bit more time to sort itself out? guest: he probably wants to give them a gentle nudge to keep them
doing what they are already doing. the new ceo joins them from the medical side of the universe. noiseshe started making that they probably like. he started to get -- dispose of assets like the u.s. factory business. loeb it is looking at this business and saying, let's work with this guy and see what else he can do for us. you mentioned it already, the big stick he wants dispose of his the l'oreal state. that's something nestle has owned for many years, what north of $27 billion. so far they said its core holdings, so we will see if under the new management, that the changes. guy: i guess it's an issue of pace as well. nestle is a successful happening, produces decent numbers, but there was a line in what we heard, which was very rarely such a large company that presents some much opportunity for reform. does that make nestle target? guest: it's that, it's europe's
biggest company or market type, that it has this massive range of products from baby food two drinks to snacks and it probably sees a lot of assets there that could perform better. it interesting to see how this plays out because nestle is one of those long-term investors, and it can pull through for a long time. will that matchup still hold with loeb breathing down its neck? that's not clear. for many years, it was an underperforming asset. but they stuck with it and pulled it through and maybe patients would be waning now under new management to do the same thing. but there are certainly assets inside the company. we have seen it with the u.s. confectionery, frozen foods and other asset that is typically mentioned as something ready for disposal. we will see how that plays out. guy: great stuff, thank you very much indeed.