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

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guy: good morning, welcome. cash is about to open in europe, we will bring you the first trade of the equity session. i am guy johnson. reais quitting after north korea fires its longest missile yet. how will they respond at the g 20 summit? keeping calm down under. the rba sticks to its neutral stance. is the central bank done for the
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rest of 2017? with central banks, shifting into neutral. the sweetest central -- swedish central bank signaling the end sparkhree-year effort to inflation. we will get a decision at 8:30 a.m. london time. cash is about to open. we are half an hour away from the stock -- start of stock trading. we are getting an idea of where we will start the day and the fair value points to a negative start. .51%.y -- .5 of 1%. i want to move on, we will see what the yen's reaction to the news, he's of -- piece of north korea's missile they launched was an icbm.
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we will see what the experts have to say. but we have got is the yen down -- up by .5 of 1%. interesting to see how this works its way through the session, looks to be firming against the dollar. the aussie dollar is down, some people had anticipated the rba would follow a more hawkish stance. that has not -- been the case and the aussie's down. begins strengthening now, continuing to strengthen on the back of this news that north korea said it fired an icbm. the aussie stock market trading higher. yesterday close to the session with europe. italy of 2%, the stocks 50, the euro stocks is down. that starty unload we had yesterday. let's get a bloomberg first word news update. erroneousin the u.s., prices of some nasdaq stocks flooded traders''s dream --
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screens. wall street closed early for the fourth of july holiday. the exchange operator said the issue was caused right data providers and it was conducting a regular test of its pricing fee leading some providers including bloomberg lp, the parent of bloomberg news to show exaggerated moves that never occurred. microsoft said it is working with providers to resolve the issue. oil has how the gains after the longest winning streak this year. after data showed opec's crude production rose to the level of the highest level in june as members of the cartel boosted output by 260,000 barrels a day. half of the increase came from libya and meiji era -- nigeria. chair janet reserve yellen was hospitalized over the weekend in london for a minor infection but she has left and is heading home.
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she was admitted on friday and released yesterday. she is returning to washington and expects to resume her schedule is planned this week. the chinese president is in russia for talks with president putin. describing current relations between the countries as the best in history. to a chinese news agency, moscow and beijing oppose the deployment of missiles and agreed to settle the peninsula issues through dialogue. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. is number. guy: let's get back to the north korea story, north korea saying that it fired -- the missile it fired was a new variant and it was an icbm, capable of being intercontinental. angle you gethe further down range in terms of
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the way the ballistic curve works and the implication is they have more range than the 30 plus minutes the rocket fired for. the icbm caused no safety arm for a new bring nations. they may be a slightly different view being taken in some of those neighboring countries right now. probably a different view in the u.s. let's get a sense of what is happening here at how much further we are in the story. asia correspondent stephen engle joins us now. what does the announcement, the confirmation that this was an icbm mean for the larger north korea story? tephen: this is potentially a game changer. we have been waiting to see when they were going to develop an icbm. we had heard they developed engines that were capable all of .eing fitted into icbms
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it is equipped with a nuclear warhead, and can travel a minimum of 3500 kilometers. this test firing earlier this morning into the sea of japan on the way toward japan with less than 1000 kilometers. the key point was the trajectory as you mentioned and also the altitude. the altitude they are saying pyongyang went as high as 2800 limiters. columbus are's. that could give a range of 6000 kilometers. alaska is 5500 or 6000 pyongyang,away from from north korea. seattle is 8000 kilometers away. the continental u.s. about 10,000. not necessarily that far yet. potentially a game changer, something that tim johnson -- un jong-il and -- kim jong
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and his generals can beat their chests about. we have seen the tweets from the president of the u.s., what also we getting? stephen: this is before the confirmation from pyongyang. trump saying does this guy have anything better to do, maybe a little bit tongue-in-cheek and may be too much levity given the magnitude of this. perhaps china will put heavy moves on north korea to end this nonsense once and for all. we have heard from the south , saying theyent will urge north korea to stop his provocation. also shinzo abe said the threat obviously korea, is even this morning's test of the icbm is as gliding. the -- on the be
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minds of leaders as they gather for the g-20. we do not know what they can still do to rein in north korea. guy: thank you for the update. stephen engle joining us from hong kong. this --ets have ignore ignored this. to's turn our attention another story. the reserve inc. of a story has left benchmark interest rates low, the at a record decision comes a week after the bank of england, bank of japan at a signaling the time for starting to move in a different direction and hiking rates. janet yellen has said the finding is on track. in some ways not following through on what we have an
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seeing from other central banks, whether or not there was coordination or not. the rba does not seem to be part of it. bloomberg reporter james thornhill. james: there is little doubt the market was expecting slot -- a slightly more hawkish tone in line this sort of things we have been hearing from the bank of england and canada. what we got was a neutral statement. very little changed from the previous statement and the aussie dollar sold off accordingly down .75 of 1%. there is always a bit of misplaced optimism given the well documented concerned the rba has, they are anxious not to feel that strength in any way and perhaps stall and make a recovery in australia. for 2017, candone
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we all go home and look at something else or is there something that could still may be forced the rba's hand here? >> more likely they will be on .old they inserted a line on week growth. -- weaker growth and high levels of household debt. those are the things on the downside that the rba will have its eye on. the analysts who were looking -- who are isolated in this market, looking for a hike at the next move it not until the first half of next year. one in threeg in chance of a hike by next march and that seems to be the consensus right now. guy: great stuff, thank you very much indeed. james thornhill joining us on the rba's decision. not really going with the crowd.
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if you are a bloomberg customer you can watch this show using tv . i urge you to use this function. you can also select a regional video stream. you can also go and use this sidebar. a number ofyou with different aspects of what we offer. breaking news obviously, part and parcel of what we are looking at that there is the up its on the market. then there is the breakdown of who is on the air and then some of the charts we are using, the functionality that is available. it can pop the charts out into them withberg and use your conversation with clients. there's a bunch of stuff, the index stuff, gmm, who is on air. this bit of it is really fantastic, and it opens a channel to us so you can let us know what you think of what we are doing. we are missing
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and what we should be talking about. that is all there on tv . this is better. macron's vision for france. addressing a special joint session of parliament calling for a political revolution. we are live in paris with the details next. this is bloomberg. ♪
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guy: welcome back. we are paying attention to one of these ongoing stories. there is a lot of movements around that. qatar is a big supplier of gas to the uae and they are saying they will not cut off gas to their gulf neighbor. look to increase it further down the road. these economic linkages which exist within the gcc remain important despite what is happening in terms of the political story. i suspect the gas is for a much part of parcel of what is happening here and that is an increasing theory doing the rounds. in the gcc.saying here's juliette saly. juliette: banco santander said
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it still last month to take over banco espanol will have little effect for the year. it willest funder said sell 1.6 4 billion shares at 485 euros each. executives have told a london court they will plead not guilty to charges they conspired to commit fraud over 2008 hundred and with qatar. they are the most senior u.k. inc. executives to face criminal charges ends the financial crisis. case relates to fees and loans barkley made available to qatar in a deal that raised 12 the and pounds. the head of the italian banking association said the liquidation recapitalizingnd
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monte paschi was a turning point. they also discussed consolidation. >> will probably end up less groups0 banks or banking active in italy. and the consolidation of the sector is already in place. we cannot assume additional consolidation. consolidation at the european level could be welcome. that is your bloomberg business flash. guy: the french president emmanuel macron is working to place his country in the age of enlightenment. rebuilding the spirit of ambition across europe. a two france to take
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initiative and i want to do it. in the month to come thanks to the close relationship i have established in particular with the german chancellor, before the end of the year, everywhere in europe we will launch to credit attendant -- conventions conventions toc unite people. new age of enlightenment. he is raising the bar. caroline, the highlights, he is talking about a new age of -- and heent thought is raising expectations. it is about the vision of france. he talked about the new humanist project revolution that would restore confidence from the french people. its --mounts in announcements on the institution side area he gathered his 900 mps and versailles telling them
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he will cut their numbers by one third. he also wants to introduce representation in parliament instead of the system we are seeing now, something that could give a lot of votes to parties including the national far right party of marine le pen. one more announcement, he is going to end the state of emergency that france has been living in since the terrorist attack in 2015 by the end of the year. that hisinly intellectual and philosophical vision of france. guy: why did he choose to deliver the speech the way he did and in the location? this is a big step up in terms of no more protocol. caroline: yes, and the u.s. you have the state of the union every year and this is kind of
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the model that macron is trying to follow. the congress does not meet frequently only to revise the constitution. sarkozy did itt once in 2009 at the height of the financial crisis and france hollande- france will did it. he went to show he can also use the congress to reinforce his powers, reinforce the image of a powerful president. that means there are some dangers to this. for example, the far left wing decided not to attend this congress. press who was talking about macron as a jupiter, the king of gods, also parent -- comparing him to the sun king,
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with the monarch who may -- moved to versailles in the 17th century. guy: thank you. i want to recap what has been happening. north korea saying that it has missile with aa significant increase in range capable of hitting targets significantly further away. let's show you what the exchange market reaction has been. a little bit of volatility surrounding that event. this is something that is coming from one source which is north korea. i suspect there are rocket scientist who are going over what this looks like, though launch angle, etc., trying to produce what the capability of this device is. we'll continue to monitor it and bring you the latest news and we
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will leave you with a live shot of new york my it is independence day, u.s. markets are closed. atwill be sunday of things -- plenty of things to look at stateside including the boston pops. the market is closed. the open is seven minutes away. this is bloomberg. ♪
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guy: a few minutes to go until
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cash opens. the u.s. is closed for the holiday. u.s. investors concerned that the huntsman transaction which clarence is trying to push through under valance -- clariant.es of some of the activists. the top line looks i get is -- looks like it is delivering nicely. it does seem to be taking the idea that you could push prices through consumer a little harder and further. this topline story which speaks to that area the other stock to mention is santander is talking about its recent acquisition. it was part of the bank rescue. it does not think that will have a meaningful impact on its
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numbers going forward. that stock has had quite a run. the market is about to open. we think it will be a negative start down i .501%. this is bloomberg. ♪
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guy: catches about to open, but the u.s. is closed. on the fair value calculations around the world at the moment, bloomberg points to around a half-point drop. we are expecting maybe a little fade off, but not a big one. in some ways, today's session is a nonevent with the u.s. out. in terms of stocks to pay attention to, keep an eye on .larion, santander
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markets drop a little at the get-go. to figure out what some of the big events over the last few days actually mean in terms of central banks and the clearrd not giving us a steer on that. let's see how markets are opening. we expect open down by around .5%, the picture we will be seeing. london. london may do a little better, but not by that much. london down by .3%. i expect the cac will open a little softer than that when they come through in just a second. keep an eye on clarion. down third gilts are open, what else do we need to know? the same global issue to deal with. yes, a slow gradual recovery but they don't see it in wage inflation. centralre-settings of
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bank rhetoric, are you getting ready for one of the biggest policy missteps we have ever seen? by .5% despite the fact ubs is overhauling the european operation. deutsche bank expanding for the spanish operation. the markets are lower decidedly because of geopolitics and the missile launch from north korea. it was a ballistic missile. technology stocks have pressure in the asian session. financials down by .5%. industrials down by .4%. we need a war or a recession to remove us from this bandwidth in low volatility in markets. market, the german government bonds market, what is the reality that happened there? open interest crashed. interest crashed to 100,000
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contracts in three days. you are seeing an aggressive restructuring of derivatives market. story, note, look at the of writer quotes it 95% global duration derivatives are probably losing money. the u.s. bond market is out for the fourth of july. market put on 23 basis points last week. we will see what happens as the fiscal levers may have to deliver more latitude and leniency. that is the debate in the fiscal space. i'm off to digital radio. guy: enjoy yourself, manus cranny. this is your move screen, mov. -- anglo softer
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this morning, rio is off, glencore trading softer. if i make this an index point story, it is down by 1.33%, as well. hbc softening from yesterday. happening you what is for an index point of view, crh, , the clarion story popping to the top. clarion is trading higher on the back of act vests saying maybe its deal with huntsman undervalues the structure of the ratios -- undervalues the clarion stock and we think it may rethink the whole business going forward. up nearly 4% on the back of that. its talk about what else is going on. let's talk a little bit about the bond market.
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yields, ino, 10 year u.s., germany, the u.k., you can see this chart going here. that is no longer the case. as central banks think about normalizing policy -- let's debate that premise as well -- will they do that? should these yields converge? which one of these is wrong? the convergence coming through here and the divergence happening here. clear, separate line. germany white, u.s. blue, u.k. yellow and china in the purple. with us on set, the senior independent class advisor. mark cudmore is the author of that chart. he is an mliv macro strategist and joins us. we're nearly a week on from central banks coming through and appearing to coordinate policy. the question is, are we going to see a significant reconversion's of these lines.
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faulk, i will start with you. are any of those lines wrong? mark's line is that we -- don't say all of the mark. >> i could argue they are all wrong. is any longer than the other -- more wrong? we will say. the four bond markets you described, we have some issues at play as well. u.k. has a separate brexit story. china seems to be a different part of the cycle. wehink the u.s. yields -- are still trying to find out if the fed is making a mistake or not. inope -- last week, way back 2008, idiots like me said if you start qe, how do you get out? draghi, in one day, we saw the confusion.
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i meant that, no i didn't mean that. i think we will have to get used to that. guy: mark, is that a satisfactory answer? certainly --f all, i sympathize with the fact that you eu will be hard to unwind and i stand in the camp that i don't think any of these central banks will significantly unwind their balance sheets. they will start the process or grow slowly, but i will be interested if bob thinks bund yields are so much lower than treasury yields. growth, avery good slightly different story -- but the u.s. and european fundamentals are converging rapidly. and the asset prices are converging when it comes to bond. i wonder why he thinks the european bond yields are so low when it comes to german ones? bob: i think there is some element of a safe haven of
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belief in germany. .hat reflects there is an other element that reflects that perhaps structurally, a belief that the eurozone is a low growth area and a low nominal gdp area. i don't know if that is true, but these things are flowing through. in the u.s., part of the repricing of the bond market reflects that there is this a jewel fiscal tax reform hope which ultimately should lead to more supply, which may affect price going forward. europe, we're probably not at that point of significantly changing austerity. yet. mark: i agree we are in a different stage of the process. the u.s. has normalized, at least on rate. but to me, the one in europe is the most wrong. it feels like too many people
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are still laying for the eurocrisis basis trade. i have moved before that. we got through a political crisis, financial crisis. i think it has survived. euro onergue it is the that is the most wrong of those markets. i sympathize that all four could be wrong. that point. let's assume the euro one is bond -- wrong. bund prices bond. there are a whole number of factors why that could change and the ecb ability to buy this stuff, german paper, is going to get strained of late. if that price is wrong, how mispriced is the euro? all, i take issue with the fact the eurozone is fixed. i have had a lot post macron that the eurozone is a miracle,
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walk on water, much like obama promised us he would walk on water. that is what macron is doing. clearly, the banking resolution last week was partly designed to convince the people of italy that sticking around is a good ring. i think we do have an italian election on the agenda and in that election, five-star and northern league made appear to be stronger than they currently are. that may impact where bond prices are, but also shake a little of this idea that the ourzone is going to be savior. we have been here before. the last time we talked about the eurozone fixing everything was 27 -- 2007. guy: bob points out we are underpricing the italian election, i wonder if we are the germanng election. if we end up with them in
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government with merkel, you have a very anti-european maybe taking the point too far, but you have a less pro-european stance potentially coming out of berlin. that allied with the italian election starts maybe cause question around the politics of if mr. macron can deliver his vision. if that doesn't happen, the water -- walking on water story starts to get wet feet. mark: i don't think we are underpricing those risk. the eurozone is completely out is a bitoubles stretched. there are clear economic problems. views onize with the the banking system, etc. the reason i don't think the mispricedproblem is is we have companies that will be euro negative and the risk of shouldozone breaking up
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be fully priced out and it is not for the market. that is a big tell. we have been playing it from 2008 of the end of last year, and a lot of unwinding of that story, plus the fact that eurozone rose is better than the pessimistic views a year ago. the eurozone is not wonderful or won't save the world. but it is hard to say it is a problem case. guy: mark, thank you very much. smart analysis through the day. and mliv, mark leading the charge on that one with the rest of the team. bob is going to stick around and we will talk about what is happening in the u.k.. remember, if you are a bloomberg customer, hit the tv function and you end up with a landing page that looks a little like this. page, we willv
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focus on this a bit here, which is all you need to know about is what happening on air. all the breaking news. you can even click into the bio of bob. there you go. philip hammond calls for shared solutions to britain's breakup of the eu. this is bloomberg. ♪
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♪ 15 minutes past the hour. you are watching "the european moke and." european equities had a solid day yesterday. that.tting back all of the united states is closed seey, as a result you will a lack of liquidity as the session progresses. what do we need to know about the mid-caps? nejra: solid games for world pay, just crossing the bloomberg now. it has risen the most since 2015. it has hit a record high. this is the online payment processing website and it has been approached and appointed advisers. this is a wall street wise support on -- citing sources familiar with the matter.
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we are watching the stock gain on that. i was showing units gaining for a similar reason. we are seeing ghosts in worldpay -- boosts in worldpay. 22 point 13%. it is gaining after two u.s. investment managers disclosed a the companytake in and they are pushing the company to explore alternatives to its $6.4 billion takeover of huntsman thomas saying it will destroy shareholder value. a growing wave of shareholder activism targeting european companies from the u.s. and has's -- said they maintain an open dialogue. on the downside, i am looking at kindred, the online gambling 3.3%.e companies down
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european stocks beginning to fade this morning. let's focus on the political story. the hammond has talked to leaders about the government making the case to europe for a smooth brexit with a "shared solution" in a speech. he said we need you to make your believe in if you competitive tax rates, market economics and free trade and sound money. responded, we have tried to make that case for a time. bob is still with us. is the brexit story a distraction from what is happening in u.k. and a slowdown? bob: i don'tple? think the you k -- u.k. is any better or worse than the u.s.,
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brexit andkes for a in particular, i think the government we have. debatingend up his whether brexit will be soft. it is almost now impossible for theresa may to push through a hard brexit. markets are trying to figure out where we are. guy: his 130 the right price? bob: i like sterling. i think we end up with a pragmatic and soft brexit so most of us wake up and think, what was all that about? guy: how long does it take to get there? take years.d it could happen quickly. when we get no relief in the -- i don't know whether
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mr. corbyn thinks this way or not, so i am going to be hypothetical. if i was the opposition who was a reluctant editor. but i can see the country has changed from a year ago, particularly where our economy is struggling a bit more. at that point, depending on mr. corbyn, if he is a political for more opportunistic. guy: everyone seems to suggest bob: it wouldes context,to -- in that he could win the election. depending on the capitalists and if the country's mood has changed. perhaps it has for the first time since printed. we have more polls suggesting more people want to remain then
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leave. that wasn't the case before this general election. >> go back to the cable rate, we are around 130 right now. if we get the soft brexit you are talking about, is 130 the right price for that? you like sterling beyond here? bob: i think we could see sterling -- cable certainly. there is a dollar story to this as well. we could see it in the one 40's. i think intuitively, two is wrong, 1.20 is wrong. the real number is somewhere in middle. let's assume we have a euro optimism fading, macron fading, failing to deliver, perhaps. or pragmatism taking over in the u.k.. you could see sterling do ok against euro. we probably don't want to strong a currency, either. guy: where is the bank and all
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that? that is a deflationary impulse. bob: the bank of england here is no different. slightly more complicated, but no different than any other central bank. they don't have a clue. to this new way of dealing with problems. cutie. every textbook says once you open that pandora's box, how do you get out? every central bank is dealing with that. guy: markets have priced in the possibility of a rate hike in 2017, is that in your calculus? we get depends on what fiscally, but if we get little through fiscally, that might change. if we get little fiscally, i don't think banks go anywhere anytime soon. guy: does it change the macro stuff? bob: yes. i don't think it is about inflation. in terms of wages.
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we have figured at that the law of -- normal average worker has no pricing power. this is about financial instability, asset prices and central banks realizing they may be going down the wrong alley and may be to get out of that. guy: i want to talk about the fed's reaction, it seems to be the crux at the moment. bob janjuah, senior independent client advisor at nomura is going to stay with us. it is independence day, a reminder that u.s. markets are closed. tonight, matt miller from europe will be coast -- cohosting the boston fireworks spectacular live from boston. that is coming up. this is bloomberg. ♪
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♪ welcome back. a quick look at movers this morning. edf is one, trading down by -- by 3.4%. hbc says it -- shares have run too far too soon. markets reacting to that. let's roll it over and show you what is happening with some of the gainers. , the activist theme running hot in europe.
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activists saying that clariant neil is the wrong transaction and in terms of ratio, the wrong price for clariant stock. of next, we will bring you instant analysis and market reaction to that. member, we are likely to see a attention on it -- central banks feeling the need to change direction at this point. , we will -- he will be fascinating to see how that fits and the broader narrative. they understand what is happening? you have a good handle on it? we will discuss the federal reserve. is it reaction function starting to change? up next, the riksbank decision, that is up next. live shot of berlin. matt miller not there. looks like a lovely day. berlin continues to try out. this is bloomberg. ♪
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♪ guy: the escalating, north korea fired a ballistic missile. claims it cant hit anywhere in the world. the president of the u.s. says china should end this nonsense. howell he respond -- how will he respond at the summit? is the central bank done for the rest of 2017? neutral, the central bank is announcing its policy decision as we speak, leaving rates unchanged. minas 0.5%. it is the outlook on inflation
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that will be interesting from the riksbank on what it has to say. krone does not appreciate is trading down on the back of this decision. this is the "european open." riksbank has left things where they were. it is concerned the currency doesn't appreciate, that is the view of many central banks at the moment. when we hadn't heard earlier on from the rba. euro gaining a little traction against the krone as we can see. -- that moveesting , before the announcement came out. you can see it on the screens before that announcement face. riksbank says continuing into expansionary policy is needed. don't seem to be backing down
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that much. euro stock rising on the back of it -- or in front of it. take your choice. tomorrow, clues from the fed on monetary policy. gauge on the strength of the u.s. economy. friday, first friday of the month so payroll data. expecting rates to have held around a 16 year low. is that important anymore? we thought the labor market was the key to understanding exactly what the function that the fed was. many of us are understanding that may not be the case. bob janjuah, senior independent client advisor at nomura is still with us. what is the fed's reaction function? i don't write very often this days, but when i did, i suggested the fed's reaction function would have changed postelection.
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firstly, postelection, they would have assumed some fiscal coming in. the fiscal side of the story picking up with trump's election. that would have given them a clear reboot to tighten. but things are developing. in a more interesting way. all central banks increasingly, are beginning to realize wage inflation is not the issue here. globally with technology and globalization, hard to get a sign of your inflation -- real core inflation. issue is asset prices or asset bubbles and financial instability. i think they realized perhaps a little too late, they have gone down a path which was clearly providing some stability, but what it is done is all the inflation has shown up in asset prices and led to instability in the market. extrapolate that for us.
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if they are worried about a, how does that change policy? bob: with the fed, up until the election last year, the fed would have looked at any soft hyphen-ish state -- soft dish state. where we are now with the fed, they need to see really wake -- week data and they will see -- keep going. the number is about where it is forecast, they keep going. if we get a -2000 number, things are a little different. i think the fed's belief is they have done what they can for the economy, it is where it is. they are worried about something else now. as it prices, financial stability. jeremy used to talk about the fed's try mandate. inflation, jobs, financial stability.
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every central banker has that is part of their mandate. they can't ignore it. guy: let's try to understand what that means. 2429, high price? right price, wrong price. i think it is the wrong price is predicated on volatility. it will be low forever. becauseis there partly it reflects duration of that status. that is what policymakers make you do. because qely there has given a handful of corporations a lot of cash, which they used to buy bad stock. qe in the corporate world has been about financial engineering. and investing in your business. you can do that for a while, but if you keep investing in your financial engineering and not in your business, you end up with negative productivity trends,
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lower for longer, all of those things we are seeing. they know they need to break the and mynd -- the cycle personal view has been this fed is willing to take some risks, particularly in this current political environment and will keep it. i don't want to create an impression or deep recession, we u.s. is in a deep recession, congress will act. they only tend to do something in the u.s. in response to prices. absent a crisis, congress keeps being a sideshow. there are other people more clever than me that will tell you nine out of the 10 recessions in the u.s. caused by the fed. what why no. -- what do i know. guy: if i were setting on the s&p where would it be? bob: we have a scope over a
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quiet summer. over a quiet summer, and of the german election, we could 25.ably see on the upside, that is my level. i think we close above that on a weekly basis. on the way down, we are stuck in a range here. i would say that their target is somewhere down at 22 for now. 21.80. i don't think we see that right yet. that perhaps comes. guy: what would say to you this asset bubbles story is beginning to make me nervous? bob: i worked in june, one of the big triggers for me was the outlook for volatility. i saw for the first time in my career, the vix index close below 10 on a weekly basis for two consecutive weeks.
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that to me is a massive long-term red flag. their also got the closes -- it is not treating below 10, it is closing on a friday below 10. we got that in june. i saw the move index at all structural lows. to me, i think when we hit those levels as a longer-term investor, i am out. as a shorter-term investor, i still think there is a tactical upside available. guy: a lot of people say ignore these. bob: the debate around vix and move into these things, has the structure of the market changed vix and move our irrelevant? like meunch of old guys saying vix tells you about fear and greed. markets are driven by fear and greed and therefore, they are still relevant indicators. ,hey are not immediate triggers but indicators. younger people are saying, the
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structure of the market has changed. things move and all of these things, they are irrelevant. i think time will tell. my money is on vix. mark: bob sticks around. , senior independent client advisor at nomura. euro pushed higher against the sweetness current -- shui dish currency, the riksbank is turning around elevated currency. to cut the repo rate than before. i think we can classify that is a tweak in its currents guidance -- foreign guidance. bob: we talk about growth and recovery, the riksbank has no confidence in its economy. guy: and you wonder why that differs from the view we are hearing from mr. macron and mr. draghi. coming up, the fed liberation --
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vfl revolution. macron and his vision for france and europe. we don't get these joint sessions very often. fascinating to watch. details next. this is bloomberg. ♪
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♪ guy: 8:42 in london.
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let's check the open and see how we are 42 minutes into it. remember the backdrop, a solid .tart to q3 yesterday's session was positive for european equities. while we sold off initially, we are coming back at this point. the dax flat as we speak. ftse 100 down .3%. stoxx 600 down .2%. the cac in parents. -- in paris. here is nejra cehic. nejra: when we look at individual stocks, it is m&a news and speculation making waves. , may start with sharda look for permission from -- to renew their bid for stop the -- stada. andfer unrivaled last week now they are considering offering germany's financial
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regulator for an exemption from the one-year waiting. bank. assessing if it would agree. according to people familiar with the matter, the firms could make a new offer as soon as this month. we are seeing stada up 2.8%. looking at edp, this is up 3.2%. the spanish power and gas reportutor has denied a that it is in talks with edp about a potential merger. this had been a report from reuters that gas natural had said was inaccurate. the stock is up 3.2%. edf, lower. this is on summary rating, hsbc cutting it to reduce saying the shares have run too far too soon. guy: into very much, narrow. here is the bloomberg first word news with sebastian. >> north korea says it
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successfully testfired a ballistic missile, bringing it closer to a device capable of hitting the u.s. with a warhead. a newly developed icbm that reached 2800 kilometers in 39 minutes and hit its planned target, causing no risk to neighboring nations. has held gains after the longest winning streak. the highest level this year in june. members of the cartel boosted outflow 260,000 barrels a day. part of the increase came from libya and nigeria, exempt from cuts under the deal. u.s. federal reserve chair janet yellen was in london. she has been in chart -- discharged and sent home. she was released from the hospital. she is returning to washington
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and plans to resume her schedule this week. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. guy: the british prime minister -- the french prime minister is calling for a revolution. he asked parliamentarians to voice their criticism. he also talks about rebuilding the spirit of ambition across europe. france to take initiative and i want to do it. in the month to come, thanks to the close relationship i have established in particular with the german chancellor, before the end of the year, we will launch democratic conventions to relaunch europe with its core political project, its ambition to unite people. >> bob janjuah, senior independent client advisor at still with us. how high are expectations surrounding flagged -- france, and where is the reality?
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bob: the last time we saw anything like this was obama, where he convinced 50% of the american electorate that he could walk on water. maybe i was one of those at the time. deliver.y failed to you can link congress or whoever -- blame congress whoever. the u.s. are voting for -- i forget the guy's name. i think in france, expectations are high. i think people like merkel, draghi, others are squeezing this for every political tabloid you can get out of it. that is dangerous, as well. with france, the reality is if mr. macron is serious about changing the good life in france , it is going to have to be a dramatic change in the way people live and work there. i am not entirely sure whether people are ready for that. is, do we endide up with a significant political
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shift bigger than the one we have seen in france? why does he say he does? what is the right hand risk? if he is successful, the eurozone story should then follow a path it has to follow to be successful. getting the u.k. out of the way makes sense for everyone if you believe the longer -- long-term volatility of the eurozone is as the united states of europe. i think mr. draghi would say the same. it is not just monetary union, we need political, fiscal, banking union for this to work for the next 100 years. .hat is a big ask but if we can pull that off, that would be a fantastic outcome. guy: and the world is underinvested in that? bob: to some extent. there are other idiosyncratic
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issues that we need to figure out. geographical placing with north africa and the middle east is not going to way. it has approached the turkey and russia -- these are difficult things to figure out. the germans have a special relationship with russia, which the rest of europe doesn't share. europe gets its own energy deals with russia. tensions down the road, but for now, let's enjoy it. we are happy to let people get boldin to this story, -- >> when you see the change starting to become clear, and if it hasn't, at what point do you make a decision -- this isn't going to work and i have to rethink my optimism. german elections, if that goes wrong and we haven't got the big changes by the end of this summer? what are you looking for? bob: single event, i don't know but we get a sense of how unifying he is.
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i think it is much like the u.s. situation where you might be wrong, but you judge a president on his first 100 days. if they are going to get real stuff done, they tend to start there. we can kind of debate -- relative supporting facts that maybe trump is already a lame-duck. with macron, he has until the end of the year, perhaps, to deliver real change. to get the unions on board. of gdpce the state share or have a plan to reduce it from 60% to 50. these are significant things he has to do. playing at the edges is not going to wash. guy: 150 days. bob janjuah, senior independent client advisor at nomura, we have one more conversation with him. up next, north korea launched a ballistic issel successfully. what does that mean for relations and where we sit with
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our views on the chinese economy and what that means going forward. that is next. this is bloomberg. ♪
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♪ guy: we take to moscow, you are looking at live pictures of the tomb of the unknown soldier in moscow. the chinese president standing in front. , starting there.
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the next, he goes to visit angela merkel tomorrow. this ahead of the g-20. nevertheless, interest in politics taking place in moscow right now. -- the russians and chinese -- what has taken place in north korea. more korea risking provocation, raising tensions as the result of a firing of an icbm, and intercontinental ballistic missile. president trump has tweeted -- unsurprisingly -- and effectively said that he thinks china could do more. -- that is based on a number of different factors but north korea in the center of it. it is setting the tone ahead of the g-20 which is coming up. bob janjuah, senior independent client advisor at nomura is still with us. you pay attention to what is happening in north korea? should we be dwelling more on
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it? bob: the market tries to and every now and again, we get a little traction. i used to live and work in hong kong way back in the 1990's. geographically, we were closer. there were issues back then as well. the market responded more back then than it does now. clearly, there is some uncertainty. people try to figure out what china is getting out of this, what does it mean for japan? on top of all of that, there is a perception of trump on the other end. maybe he is less predictable than perhaps someone like obama was. why thatnderstand north korea story gets traction in markets every now and again. at the end of the day, there is an issue here. it is u.s.-china. guy: it seems there is a lot around at the moment. give me the view that risk in the world is quite high at the moment.
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central banks are trying to find their way forward. politics is a problem in a number of different spheres at the moment. yet the markets just absorb it all and march on. bob: a lot of the issues are echoes of policy-setting that we have. -- policy-setting we have is has created quality, and lack of inflation, a lack of momentum in economy. from the market perspective, there is that classic chart where you can overlay the fed's balance sheet with the s&p. that may be a coincident indicator. i don't think so. this is why i think the real -- it is markets central banks. i think the geopolitics plays away in the background but the real story for the next six months and next 12 months is going to be what central banks do, what they tried to do and the impact it has on asset prices. guy: bob, thank you very much.
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we are not quite done with bob just yet. he will join us on bloomberg radio. one must chart. it is independent state in the united states.
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francine: this nonsense. north korea says it has successfully launched an intercontinental missile. world leaders meet at the g-20 few days from now. the focus on central banks continues. and searching for a shared solution. the u.k. chancellor urges business leaders to help the government make the case. this is bloomberg "surveillance ." we're

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