tv Bloomberg Markets European Open Bloomberg July 24, 2017 2:30am-4:00am EDT
♪ anna: we bring you the first trade of the day. anna edwards alongside matt miller it was in berlin. here is what we are watching at this hour. in bloomberg surveys suggest the fed will make a symptom or balance sheet announcement. what will it take to get a dollar rebounds? the market needs more oil output from nigeria and libya to balance the market. we live in st. petersburg for the meeting.
bmw denies admissions test cheating. could merkel be forced to take a stand? matt: less than a half-hour to the european open. take a look at how futures are trading after a down week last week. we are seeing a slight gain for stocks, futures. you see gains on the ibex in spain. you see gains on futures in stockholm. the futures are all trading down right now. as far as what we can see right now, i have the three-day yield can on my terminal so you see we have come down over the last three days to your .515. we are looking at slight gains this morning. tradersould continue as selloff debt. >> we will wait for the trading
day. a snapshot of various asset classes. the standout compared to normal levels of trading. we saw stocks declined to the lowest levels in 10 days. carmakers to the worst in more than a year. i hope currencies with mixed performances get the u.s. dollar in there. the yen is up for a fifth day. riskse of a host of event over the united states, we have the fed amazing and we have -- fed meeting -- fed ne -- meeting. let's the first word news. the worldthe imf says is relying less on the u.s. to sustain the recovery. it left the global growth unchanged at 3.5%. the drivers are changing.
if the u.s. of the u.k. are now less crucial with china, eurozone, and canada play more rules. the u.k. trade secretary will meet with his u.s. counterpart in washington today area person seeks to -- today. they translating deal is possible after leaving the european union. it will be a difficult discussion and is expected to hold talks with robert rosshizer and wilbur before meeting members of congress during a two-day trip. >> about 167 billion pounds. we've done internal work that could be worked over another 40 billion by 2030. if we are able to remove the barriers to trade that we have. that will be a difficult escutcheon. -- discussion.
report from the united states and the demonstration as well as congress to push the agenda forward. anna: the trump administration -- juliette: he press secretary says it supports a bill to sanction russia for its actions during the 2016 election. become from sarah huckabee -- the comment from sarah huckabee sanders reached a tentative deal on the bill that would prevent the president from removing sanctions on russia. in poland, mass protests across the country extended to an eight straight night. theing legislation giving ruling party more control over the judiciary. protesters urge the president to veto the legislation which they said is a threat to problems democracy. poland's democracy.
global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. matt: a market minefield of weeks traders. a federal reserve in trade decision later this week. jared kushner appears before the senate intelligence committee behind closed doors. wednesday donald trump jr. and paul manafort give testimony as part of the investigation into russia meddling in the u.s. election. there is a lot going on to say the least. mliv on thefor bloomberg. let's talk about the dollar because it related to or determines the price of almost all financial assets. it has come down strikingly as of late. where do you see the dollar headed now? >> i think the dollar has a strong chance this week. the overall decline has been
justified. there are clear reasons for the decline. negative real yields, i know those have narrowed but they are -- they have narrowed. there was a reason for the decline especially it was skewed the other way. on fiscaleg has been reasons. one of the biggest lessons this year is that u.s. politics does not have a sustained impact on markets apart from the pricing at the stimulus which was priced months ago. this last leg is a political risk and that will probably stay by the end of the week. we have the potential catalyst of the meeting. ,nna: in the middle of the week good morning to you. if this is about political risk and the risk resides in the united states, where are they going to receive cover?
>> good question. is that thiseason political risk is probably not going to have a sustained impact on the dollar. for us to go another leg lower we have to go down the impeachment route. i do not think we are close to that. the dollar will be a safe haven this week. the market has done well with risk on trade. we are going into the summer season. the dollar is a haven in the short term. the structural downtrend in the dollar can remain. the dollar is down 10% in the last six months which is a shocking move for such an important currency.
the arguably most important currency. stocks have continued to hit record highs in the u.s.. saying our own out of trump is barreling down a road of no return. chuck schumer has said if there is a firing of mueller or pardons for family members that could be a tipping point. is there anything you think trump could really do to hurt the equity market? >> i am so sure. i think you will get a good of headlines. i think what we have gotten the equity market is the chance of fiscal stimulus coming anytime soon. therefore to get a sustained impact from trump we have to really be go down the route of trump ousted from power. we might get negative headlines and it scares but i don't think that is likely. equity markets will be more dependent on earnings and tech earnings will be the most important given that this rally has road the whole tech wave.
tech is becoming more important. we have big earnings to watch this week. anna: it is a full calendar. plenty of earnings there, we have the fed in play. we have another survey of economistsnd what are expecting this time around. expectations have been declining. in terms of tightening the monetary conditions in the u.s.. >> the market is coming around to the view that if either of a hike this year -- either of they hike this year. they are still saying they wanted balance sheet reduction but the market does not believe them. that 40% chance of a rate hike this year because there is a chance that seems slightly high. the market wants to see how the production goes. nobody knows how the market will take it. the expectation is there might
be market turmoil and that will take it the last chance this year. most likely reduction and that will be a -- prevent them again. inflation is not there. anna: thank you very much. you can follow light market insight -- live market insight at mliv . if your bloomberg customer and you want to watch the tv broadcast you can do it on a regular tv or was the tv function -- with the tv function. you also gets to follow along with the charts and options, guest conversations as well. all bets on the right-hand side of the screen. you can even send questions to our guests. theask -- up next on program, no caps on accrued. they will keep pumping before the joint and on cuts. this is bloomberg. ♪
themselves to install a quick and that was inadequate to do the job. the statement came in response to claims that it formed a cartel to hold down the prices of crucial technology. the first attempt at damage control since the european commission said it was investigating accusations of illegal collusion. plein air has reported a 55% gain in first for profit -- ryanair has reported 55% gain in the first profits. beating estimates, the biggest low cost airline say that pricing will be competitive for the remainder of the fiscal year. morgane bank and j.p. have agreed to pay $148 million to resolve claims they conspired to manipulative the benchmarks range. they said they will cooperate with investors. funds, andl master
the california state retirement through 21 banks and three brokerage firms. accusing them of many plaguing 2011 -- from 2006 7 2006-2011. largeststment is the ever venture fundraising for a tech company in the region. $500 million is expected from new backers. evaluation will climbed to more than $6 billion. japan, new images captured by a marina robot show what is thought to be melted nuclear fuel in one of the reactors at two good she me a. -- fukushima. number three reactor could maintain melted fuel. the scene is a critical step in
hastening the $72 billion cleanup of one of the worst atomic energy disasters in history. dunkirk hasr ii gone to the top spot on the weekend debut. directed by christopher nolan, they foam is already being talked about as an oscar contender. more than $50 million ahead of another debutante, girls trip from universal which took $30 million. that is your bloomberg business flash. anna: let's turn attention to the oil price. oil market will need more crude from the a and nigeria as it balances as a faster rate in the second half after a slow start. complaints with production cuts by opec exporting countries is quite excellent. >> both onshore and offshore.
sure theetty rebalancing process made the -- may be going on at a slower pace than we have projected. it is on course. accelerate to because of these numbers. speaking in st. petersburg, yousef gamal el-din. what can we expect today/ --today? they are rebalancing the oil market but slower than had been expected at this stage. yousef: a lot of skepticism going into this meeting about wavering commitment after ecuador basically walked out of the agreement about what is happening with compliance to the data. it may indicate that numbers are
not where they need to be with compliance levels. all that has been shrugged off by the secretary-general of opec rid this is the monitoring -- opec. leverage,a lot more they can make recommendations about how to move forward. what this state of play is with a --ia libya -- late jerry nigeria and libya. that is unlikely to be high on the agenda. that, again, is going to be something to watch for as to whether there is going to be any for the recommendation. a bit of further refinement. matt: let me jump in here. we see oil in a bear market in has been stuck there for a while. it has not been moving very much. what are analysts saying we can look forward to as far as price action? even as opec is trying to curb
its output, the u.s. crude inventory has continued to rise. frankly the output cut is not really that great coming from a all-time record high. exactly. that's what makes this very tricky. they have to take a lot into consideration. childan is on the bearish -- site. -- dsid -- side. they're saying there is a risk of a domino effect here at the next meeting. are expected to be built globally. we are seeing scale output growth by one million to barrels -- barrels. rebalancing is not happening as fast as expected.
there are other banks out there, research houses that are going to take the other side of this is a are seeing -- this. gain exposure here. the ball is now in opec's court in terms of moving forward. they have some ammunition in their war chest but not much arguably. the further the price rises, the more incentivizes u.s. sale and the more unbalanced global inventories become. think you very much. yousef gamal el-din in st. petersburg. minutes away from the open. we are taking a look at some of the stocks we expect to move in today's trading. german automakers are in focus as reports emerged about pollution -- allegedly collusion in the industry. shares tumbled friday and we will see if they continue today. this is bloomberg. the open is nine minutes away.
l,e story broke by der spiege on automakers were colluding certain things including the size of the containers to fight diesel pollution. bmw,f those automakers, has denied those talks were thet collusion to keep containers down but rather to provided the correct and proper infrastructure for european car putrs to get the liquid into those containers. we heard from the european commission over the weekend that they are looking into this as well. the story continues to -- i guess the story has legs going into today's trading. let's take a close look at those automakers here. anna: let's keep an eye on how it moves into the political sphere. how it impacts the general election.
stock, design software software/entity -- it student's right looks to disappoint investors. they saw a goodwill impairment charge, 420 million euros in the earlier part of the year. this is something that is led a number of brokerages to downgrade its stocks, cutting to sell. keep an eye on ryanair. ticket prices rose in the first quarter, boosting revenues. we saw earnings gaming 55%. they cautioned that easter has moved. it makes managing an airline tricky. that has an impact on the business. in terms of the european equity markets, if you minutes away
anna: welcome back, everybody. one minute to go until the start of the market open permit as an look at the future screen, it looks pretty mixed. we had a mixed performance in the asia sessions, as well. busy week ahead of us. the earnings board looks incredibly busy. it's all kinds of part of -- pharmaceutical performance is reporting. matt: it looks like we have a flat open. the ark in stocks have been down from their highs this year. contrary to u.s. stocks. i have a 35,000 foot look at
yields. treasuries and yellow, guilt include german bunds and white. this goes back to 1991. yields cominge down, but maybe turning around. that could be interesting for stocks. anna: we will keep an eye on that. wedding for markets. we are getting some movement on the 5100 best ftse 100. -- ftse 100. were $70 trillion. we are getting french breaking news. falling 55.9, the pmi. let's get some of the details that. nejra cehic has the details of what we are watching. nejra: matt, you were just showing what was happening to yields long-term. the gilt markets is opening.
we are looking at the 10 year yield. 1.18%. a bit of a different move to what is happening with the treasury yield which has been steady this session. the abundant yield has been edging higher. it's taking its cue from europe, 118% on the 10 year gilt yield. european equities is pretty much a flat open if you look at the stoxx 600. interesting to dig down into the sectors, energy underperforming again as it was on friday. of 4/10 of a percent on energy stocks. it is the tech stocks and financials on the upside, outperforming as we head into a week of bank earnings. the stoxx 600 did have its first weekly drop until june last week close down. the flat open with a positive bias looks good in comparison, but a couple of charts i wanted to draw your attention to. the is the stocks 50 and
world index. the euro stocks 50 had a good start to the year until about may and then the trend has been downward since then and these eurozone stocks are now lagging the most since nine months. how much of this is down to a stronger euro? the inverse is back. i have a chart on european financials as we head into a big week for bank earnings showing credit risk tumbling. it's dropping below 50 basis points for the first time since 2008 an interesting come at of the biggest drops have been among italian banks with cleanups in that sector. here andill pick it up take a look at the screen here on the stoxx 600 and we can see which shares are moving the most. moves,s of percentage of julius baer is the biggest gainer. anna, you spoke about it this morning, relatively always about
room for more growth in the u.k., saying that net growth exceeded the expectations. it's a big gainer in terms of percentage movers. if you take a look at the index points, which is really the best way to see. you can click the drop-down box and pull out index points to see what is moving the market as far as the equity index is concerned. ubs, the banks in general are going to be holding the market up a little bit today. bt,he downside, you see shall, and then you see gladstone and the drugmakers, the commodities producers and the utilities there on the downside as banks relate look to beat gainers today. anna: they do, don't they? the banking sector doing well. the tone with european bank earnings with this scene.
strong inflows from clients in areas where the bank has set up recruitment of private bankers. manus cranny has been speaking to them. let's go to manus now. fairlys a very -- bullish statement and he has been met with a bullish response from the share prices. manus: absolutely. the stocks are performing well as matt just said. they are hitting the upper end of what they promised in the market. in there at the top end of that ardi was bullish and he said he would not set an upper boundary for himself. for him, all lights are green. he hired 166 bankers last year and that is working. he will look at an inorganic tragic. when it comes to a cry from the clients, equities.
, equities, and equities obviously. , positions in fixed income are huge in the markets of people are sensitive to that. they are looking for performance on the purchase of the market all the way to private equity. nots: the countryside, everything in the statement is if use it. you have to look at the other side, which is the clients. the clients have engaged in the equities call and the imf reports said they have an ice stall for the world, ulcers sentiment. the question for every wealth manager is, will the market set up for mold -- more bull? >> volatility has been -- toocally to look ago low. sentiment, what
is the market sentiment? everywhere, clients are getting positive on average more than what we have ever seen in the past. manus: we have also heard callardi say the holy grail is china, reformation is a good piece of news in his view. i'm loving the new phrase, inorganic growth. inorganic acquisitions as well as 166 bankers. actually, i will take this. i was looking at the headlines earlier and boris seems bullish on written. how does he view brexit and the u.k. leading -- leaving the eu? to important facets. one, he is not making any major decisions. he says there is an opportunity to grab market share from those that are considering moving. taking capital away from the united kingdom. he sees that as an opportunity,
but he will not commit to anything. frank is coming out as a natural destination for the brexit talent of business. when it comes to printing business back to the united kingdom, if there is a more favorable brexit, and, matt, that is going to be a generational shift. ,nce they go, bankers are very very hard to bring back. that was the warning shot from callardi. you moved that many people, you are moving an entire entourage family. and it takes generations to reconsider bringing those back. that is the real economic exit. risk versus the opportunity and the reward that callardi sees for himself as he is able to knit and tuck market share. matt: manus cranny there with an
important interview from julius baer ceo boris callardi. there are plenty more earnings from banks coming up every we are going to get earnings from spain and that thursday, it's the turn of deutsche bank in germany as well as lloyd's and bbva. there is also a raft of earnings on friday including credit squeeze, ubs, and barclays. earnings coming from the entire european taking sector this week, definitely what to keep an eye on the financial. that's where we saw u.s. financials do quite well. let's take a look here at a function that over customers can access to help watch the program or watch the program on your terminal if you prefer. tv gets you to this screen. you can get a video stream there, see all the charts and functions we use, i also like to listen to bloomberg radio. on can do that by clicking radio go and any type of life coverage.
anna: this is bloomberg markets european open. let's have a quick check on the markets. this is how things look at the moment. this does the state of play, down by 18% on the stoxx 600. the ftse 100 and the dax are lack of us. lack of's. the cac keeping his head above water. let's take a look at some of the mid-cap movements. >> some interesting moves in the mid-caps this morning, starting with european retail value rising i percent in the session as walmart is considering a bid to the company. it's one of the best
performances on the stoxx 600. jack's group is also one of the better performers on the equity benchmark, up 3.3% come up upgraded to outperforming rbc from underperform. in terms of rereading, jim also has been dented to sell come up but the stock moving today on the earnings report on friday. this was the prelim. the toys urging outlook, the company having its got its permit it said is that it sees a charge on deteriorated prospects for the market. for 20 million euros in the first semester also giving a little bit of a profit warning. you are seeing shares sharply down to the session dropping the most since four months. matt: they scurry much. the dollar slumped to -- thanks very much. the daughter -- the dollar
slumped to the euro and the yen. oilr treasury yields and prices are selling in the greenback ahead of trump's son-in-law and advisory jared kushner's closed-door meeting with the senate committee. the federal reserve will unveil the timing of its ounce she in september and the economists we survey predict it will wait until december to raise rates again, 41 economists are in a bloomberg survey to determine that. decline to an almost 16 year low has been straining the fed outlook and that is the 1.7 percent outlook we have seen. max, there is a lot going on this week. mainly?you focus on is it really all about the earnings? guest: i don't think it is all
about the earnings. the most important part is the fed. as you said, the majority of your economists are looking for a rate hike in december. when you look at what is priced in the market, that is not priced at all. to an extent, the earnings season on the financial spit in europe, but from another's perspective, it's more important what the fed will say. anna: what do you expect them to say? this chart shows you is inflation well below the fed 2% goal. if the debate of the moment. not helped by the oil price. once again on a weakening path. what are you expecting from the fed this week? how does it set us up for september or december? guest: it is going to be very vague to have as much possibility as possible. the majority of the position for september and balance sheets the
majority is positioned for september. that is not priced in a market and i think the fed is a very much aware of this so they want to be as vague as possible not to shock the markets. you have to see the data this morning, you look at ultralong bonds. you have massive long positions there. that's a bit of a rattle for markets if we have this. anna: are you concerned about event at risk around these key testimonies? jared kushner and donald trump jr. are testifying today. this kind of event risk some people suggest to beat the thing that drives more volatility back to these markets. guest: i think the centered at the moment is that there is not going to be much potential for positive news at the moment. whatever way you want to spin it, there is not much potential for u.s. equities adding a massive was from politics were
all of a sudden -- anna: there has been a lot of play for equities. the market is $70 trillion globally. guest: that is globally. it is a global equity. it's not necessarily a swing into u.s. equities for the next six months because there might be relief from u.s. optics. i doubt that. -- u.s. politics. i doubt that. 70%, that is what you typically see on an average going back in my lifetime. have the numbers been stronger due to the increase in interest rates we have seen? guest: i think so. the expectations are low enough to beat. you mentioned the beach rates and we are always focused on the beach rates, but it is versus expectations and expectations have an low enough to be relatively easily beaten.
the same goes for financials when you look at expectations for europe here and next week. expectations are relatively low so it might be a good upset potential. so far, it has been due to the increase in interest rates. also due to an increase in yields. , weproblem is, from now on have volatility across the board whether it's fx volatility or equity volatility rates and so on. that will have a dampener on the hedging needs of clients. q3remains to be seen whether or q4 financials are that good. matt: we expect to start seeing an upswing in ecb policy and boe policy. is the trading going to play a factor in european take earnings? -- bank earnings? volatility is not always that, is trading as important for
european banks as it u.s. banks? itst: i think in u.s. banks, is much more important. it's much more important than the european part, but it does play a role. we look at q3 and q4 last year, much of what we have from the better numbers are driven by trading numbers, not by the retail numbers. anna: thank you for your thoughts so far. max scherzer. -- max kettner. up next, mr. fox goes to washington. just how much can be achieved? we will discuss that next. this is bloomberg. ♪
matt: welcome back, i am matt miller in rolet. and edwards: send me in london. we are looking at a mixed trade this morning. or a rather flat trade as the ftse and the cap show green arrows but they are just like green. the dax showing light. let's look at the sectors that are moving. goodthe imap here to get a snapshot of which industry groups are moving the equity indexes. we seek industrials that are the only gators here on the stoxx 600. most everything else is down.
, energy discretionary and health care, we really saw that the mov function. and i will pull that up. the oil producers especially, some of the drugmakers are moving on the downside, but we saw gators in financials earlier and now financials as a group at least, as an industry group, though you will still see numbers in julius baer, are actually moving down. the sectors in the crosshairs this monday, let's start with the stocks that are underperforming this morning on the stoxx 600. we cap gemalto going to a disappointment, 60.4 to percent -- 16.4% the eu is studying that a legit cartel activity. bmw ejecting these allegations, talking about refueling infrastructure. easyjet,armakers and
down by 4%. despite the fact that the show up in profits. maybe it was the outlook they didn't like. the company continues to guide profit after tax in a range from 1.4 billion to 1.45. but the guidance remains heavy in bookings and other factors. that is was taking the edge off the airline sector of this line. youhe upside, julius baer, mentioned the headlights increase in the focus on asia wealth management business. julius baer up 7.8%. they are no doubt pleased with that performance. 8:24 in london today. fox will meet in washington as britain seeks to prepare for a transatlantic trade deal after leaving the eu. fox said it will be a difficult discussion. travel to mexico and onto texas in search of post-brexit trade
partners. still with us, max kettner. let's talk a little bit about the trade seen their and brexit. , fox going out. in the world to discuss trade because there is note chance of signing trade deals while still in the eu. how it expectation do you have around this type of trade deal for the u.k.? guest: the expectations are more for a political deal. we heard comments from the british chamber of commercialism and they nailed it. ,hen you look at what they said basically saying, the global britain seeing an america first seen are not the natural allies. it looks like it is more of a political deal to please the electorate and tell the u.k. electorate we can make a deal before we go into negotiations. can talk are hoping he
more about financials and not too much about health care and agricultural topics. turning our attention to the your --at is the decisiveble is one. they are trading at 1.30. it's probably not going to hike in november, so that is not in the cards. cable ats, with all of 1.30, there is a lot driven by dollar weakness rather than sterling strength. once we see dollar coming back in the next coming weeks, when exhibitions not regarding politics, but regarding growth, you look at economic surprises and they have been down for three and a half months now. when that turns, you have optimism coming back into the market. we talked about a rate hike in december not being priced in. when that happens again, you have an environment where cable has a difficult time. you have 1.25.
matt: risk off. a new survey says the fed will make the balance sheet announcement the key here. are we about to see a dollar rebound? pump it up. the opec secretary-general says the market needs more oil output from nigeria and libya to balance the market. we are like it st. petersburg for the oil producers meeting. and the emissions scandal escalates. bmw issued a denial after its reports that they colluded in the size of commission control canisters. automaker shares are leading losses on the stoxx 600.
while deliberate markets the european open. i'm matt miller in berlin alongside anna edwards at bloomberg headquarters in london. anna: 30 minutes into the trading day, let's see how things are shaping up. breaking news from germany, the pmi falling to 58.3. it's coming in below estimates. to services pmi falling 53.5, also below estimates. the forecast was 54.3. we are looking at weakening in the sentiment across the eurozone because this follows the french numbers out earlier on the day. manufacturing was not so bad. but the services number falling 55.9 against the forecast that was higher. we are seeing a slightly negative picture on the stoxx 600 this hour. let's turn our attention to the growth story in asia because the hts see says india is making good progress with that loans but it's weighing down the
country. they also suggested long-term it valuations for the financial industry are set to improve with the resolution of the debt. this is some 9.2%. so 45% is 5.1 or 5.2, provincial, plus we have security. capital adequacy is 31%. and 30% of the system is owned by the government. the government has put in now various court measures that will lead to a resolution. inherit over a. of time. they brought in the insolvency act. they have forced banks to higher standards and at least the problem has been single out and
the banks are required to sort them out in the next six months or deliver them to banker to court. 12-18eve over the next months, the problem should not be much of an issue. the government is talking about consolidation, which will improve the capital adequacy and disposal of non-core assets and bringing services, common services for the banks together, and whatever in the balance, it will put in equity. to superimpose this after the demonetization because there was -- undermoney after the mattress that into the system, it will be about $50 million. if there is a shortage of money, i will be happy to provide a long in any, you once. i don't think that will be answered. private investment will require a lot of money as capital investment has been slow because a lot of capacity has been created.
that will happen over the next 12-18 months, by which time the banking system should be ready. >> to the financial industry here has had a dramatic increase in waiting over the past five years, something like 11 percentage points? is that likely to continue? toi think that is likely continue, it might increase of it because the risk in the market is based on to medicine under evaluation of banks. if they get the situation right, the violation should be what it was yesterday. i would say it will grow. >> what about growth? >> we are again fortunately position. if you take where we stand today, we probably have the best brand in the system. like the old-fashioned banking. i give you money, you give me my money back or you have a problem. so we don't have any asset
issues. we are in a country that is growing at 7.5% plus. time,e also, during this with the use of technology, taken our products to rural india. were 60% of india lives. previously, it did not make sense on a cost to revenue basis. now with the ability to deal with them on the mobile take photocopies and the messages with the ability to provide them a cup come up with the ability to train our people electronically, we have gone in there and that counts for 20% of the business and we are almost the market leader. financialost the only institution on the as it side of the business. so the country will grow. we will grow as accommodation of the chair and increased geographies. i do not think growth is an issue.
that was hts the ceo speaking with bloomberg. meanwhile, emerging markets stock valuations have risen from a six-year shadow cast by the euro area debt crisis and more recently, the fed tightening and 10 at stock elections. tner, this max ket chart is a great one, breaking free, emerging market stock violations jumping out of the channel, the range they were stuck in. does this story have more legs? is this something you can get more money to come at this trade -- money to, this trade? guest: the first part is more global risk aversion, the second part being more domestic yen stories. aversionobal risk
point of view, what you see and what you have seen in the first half of the year, the crucial point is that even though you have the fed raise rates to times, physically saw global risk aversion's and financial conditions of still ease. if that happens again and the fed at the second half and convince the market we are going for 2017d rate hike and we are going to finance -- announced the balance sheet unwind. despite that an easing of financial conditions, financing conditions will be really good. from that point of view, the yen story still has legs. more internal yen story, the crucial point is we see in asia this inflation across the board. when you look at the inflation
indices, it's not inflation per se, which is trading lower, but you see a crisis to the downside. inflation is already trending lower and even lower than consensus. not only does that support equities -- anna: some of the scenes pulled up. i noticed in your notes, overweight in latin america. concerns about china and the relationship there, that is not something that distracts you against their stocks. guest: know, and in mexico on the index side, it looks relatively attractive. overblown from six month ago. we are not really worried there. matt: we really appreciate your time today, great to get your insight on these issues. he will be joining us on bloomberg radio, daybreak europe live as well as london dab digital. be sure to tune in on bloomberg radio. up next, we are joined by a
anna: welcome back, this is the european open. let's take a look at some of the top stocks stories. eric k hit has -- nejra cehic has some of the stories. geta: lust of movers to through today. -- lots of movers to get through today. 6.1% to get -- through today. tv spoke, bloomberg with exhibits from all three of these countries, look to those on bloomberg.com or the terminal if you are interested. fellows rising second-quarter profits 50%. strong growth in western european and china. 1.5 plans to buy back
million euros in shares. on the downside, i am looking at ryanair. we did report a 55% gain in first-quarter drop it, strong summer bookings swelling revenues, but the stock moving lower on the caution that pricing will be competitive to the remainder of the parts -- of the fiscal year. let's move along to the next board. watching automakers closely, the worst performer on the stocks as it was on friday. denied diesel cheating, we are yet to see again on volkswagen. here is how they are performing in this section. anna: we will keep an eye on us. let's get the bloom at first word news with juliette saly. juliette: u.k. trade secretary will meet his u.k. counterpart in washington today as britain prepares for a transatlantic
trade deal as soon as possible after leaving the european union. fox says it will be difficult discussion. secretary wilbur ross will meet members of congress during a two-day trip. about 167de works at pounds. andave done internal work we will do more by 2030 if we are able to remove the barriers to trade we had. it will be a difficult discussion. all these discussions are to one extent or another, but we have great support from the nine states and the it ministration as those congress to push the agenda forward. juliette: in the u.s., the trump administration's new press secretary as it supports the torent section of the bill take on russia about the election. they have a tentative deal that
would prevent the president from acting unilaterally to remove sanctions on russia. in poland come mass protests across the country have extended to an eighth straight night after parliament defied allies including the u.s. and european union, passing legislation against the ruling party more control over judiciary committee. they proposed the president vetoes the bill. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. matt, anna. thanks very much, juliette saly with your top news. the euro area is going to grow one play 9% this year. up 2% points according to the ims updated global forecast. the boost in growth will be welcomed by angela merkel, running for her fourth term as
chancellor of germany. the growth story is not the only thing the germans have to worry about. joining us is judy dempsey. thank you for your time this point. i think growth must be the furthest thing from angela merkel's mind right now. this crisis has to be first and foremost. how is she doing in your estimation at pushing back against the behavior of erdogan while containing the effigy crisis heat sort of protect your against? guest: it is difficult balancing act for angela merkel. she has recently spoken out strongly against turkey. then she has been rather silent and hysterical when erdogan described germany's decision to prevent the referendum. that shifted the german assessment.
since then, merkel has been as spoken, she has left the running to the german foreign minister, who as you know, blunt to her junior coalition of democrats. she is more unspoken but not willing to break off relations because she cannot afford a fight. matt: how come? journalists jailed -- erdogan has jailed journalists. what does he have that she cannot afford to lose? guest: refugee card. of euros to give to the government in turkey to actually take back the refugees and give them the chance to live there and work there. this is a big deal. in some respects, it has extended to europe, but the refugee crisis is not over yet and the number of migrants and refugees approaching italy. matt: it's going to be a real
issue in italy. the germans have done well in absorbing one million refugees. to the surprise, i think, of everybody that lives here. marvin schulz, who will campaign against her, has brought this up. the refugee crisis. it's interesting because when he was running the european parliament, he was lauding her for her behavior. where does germany stand as far as the refugee crisis? guest: i think this is called electioneering. the gloves have been taken off the social democrats. they came to take over the leadership and run against merkel. their hopes have been decimated and they are trying to find an issue of it but raising the refugee issue, saying there will be more, it's fear mongering. the social democrats supported angela merkel in the refugees
and in opening the borders and it must be said, i have to check the statistics, but everything will refugee that came to germany got a roof over his or her head. they did not die from hunger, they got fed, the kids are going to school, and slowly, there are always pros and cons. they are slowly settling in. it's a huge cost, of course. anna: i want to ask you about another diplomat question involving the polish situation at the moment. what with the german stance be on poland? the u.s. has been critical of this government power grab. there is talks of sanctions midweek coming from russells. fairly unprecedented territory within the eu. guest: is unprecedented and the -- it is unprecedented territory and sometimes the sanctions are under angela
merkel's watch since two dozen five, she has improved relationships with warsaw despite anti-german sentiment from the government. and thebeen cautious social democrats have been more critical, but i think at this point, merkel would prefer brussels to the running. if it ever comes to a boarding, germany would be hard-pressed, but they would probably vote for sanctions. tokel does want to try defuse the situation, but i cannot see her pulling this off. anna: two months away from the election, what you expect to be the dominant scene? what you think germans will be voting on the core sector, the crisis that might or might not play a part in the election story? where the other things voters will go to the voting booths and be very mindful of? not beit certainly will
the cart emissions scandal, that's for sure. merkel's campaign is built on stability. europe givenvered as an macron one europe and that is hard to beat. for the moment. as the social democrats will be bigng, we have to go for tex overhaul, taxing bankers and so on. it will go for a radical taxation system and go for the socially disadvantaged. merkel will reach out and she is very adept at capturing the mood and get ahead of opposition, but her message will be stability. we are taking germany and europe forward. your will pay a role in this. pla a role in this. there aren't many disadvantaged people in germany
and there is not an outcry on the streets about the inheritance tax. they will have to find something media than that. guest: have to, but it will not be on on a climate. it's not going to be inflation or the economy. you cannot play the refugee crisis issue that much. you have to sell something special and have rabbits in the hat. it's getting into the summer break. the politicians will go away, merkel will go on a working to her and it will be short and intense campaign. wanting to watch is how russian interference might play. merkel and her intelligence services are aware of this. matt: things can turn on a dime. politically, things can change quickly because remember when it schulz wasn't the big new thing and he was a huge leader in the polls? tost: one thing you have
remove her, angela merkel take nothing for granted. she knows the polls are in her favor at the moment, but this is no time for complacency and you could get a different complexion of government if she does not take things carefully. matt: thank you for your time. judy dempsey. have goingat what we on in the oil sector because this has been an important market moving factor. anna: just as we were having this conversation, i was keeping a half an eye on the oil market. it has gone down in the last few minutes. opec and partners gathering in st. petersburg for a conference. the oil market will balance soon enough. there is no discussion of deeper opec cuts. perhaps that explains anybody who had an expectation to see service cuts have those expectations dashed in the last few minutes from the saudi government. matt: bmw has denied the german
carmakers agreed amongst himself to insult emissions equipment that was inadequate to do the job. to add those in their cars. to holde in response down the prices of crucial technology and decide the size of the commission control canisters. there have been a lot of damage to the carmakers since they are being mission said on saturday it was investigating accusations of illegal collusion from the cartel regulator in germany. for more, we are joined from munich. what is at stake here? anything anybody put a dollar figure on how important this is, maybe even more important than volkswagen cheating on emissions tests in california? guest: the allegations are really serious. i think what we need to remember
is that first and foremost, the dust has notened open formal proceedings yet and these can take a really long time. just reading this morning at talking to a few people, it was kind of between a few hundred million to two of a billion per carmaker. one thing that is important to her member is that in these allegations, there has been no allegation of price-fixing to consumers, which tends to get the biggest fine. anna: what happens next here? the european union is starting some of these allegations. guest: they will look into these allegations and will take the next steps. with these authorities, it can take months and during those processes, guys do not tend to comment unless forced to. that has been the case here.
the other front that carmakers credibilityt is the that they have got as a result of this. they are reeling from the diesel crisis. they are fighting potential diesel dance in several cities. -- bands in several cities -- bans in several cities, so this is the last thing they need. nna?: an anna: we are talking about the oil subject. the comments from novak, russia says the oil cuts is helping to stabilize the market. they will discuss ways to improve the oil cuts deal. those comments are not having too much of an impact, but oil prices could it.