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tv   Bloomberg Markets European Open  Bloomberg  August 14, 2017 2:30am-4:00am EDT

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♪ manus: you are watching bloomberg markets, this is the european open. castle open in europe for the first trade of the day. i guy johnson and matt miller is in berlin. what are we watching this monday morning? a u.s. president has backed to d.c. of it tensions home and abroad. nowwill the markets focus turn to the fed? japan's economy has expanded for the sixth straight quarter.
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his economics finally working? the diva blame game accelerates. as --x and campaign desk as election campaign gears up. matt: we are less than a half hour away from the start of european trading. take a look first off at where receipt futures after a down day on friday, we see up across the board gains for futures. we also see a recovery in risk rather, a selloff in a safe haven assets that we saw sort of buildup last week and i am concerned about the possibility of nuclear war, that tends to freak out investors a little bit so they were buying up bunds and treasury. take a look at the three day traits for example.
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they bought them up thursday and friday and pushed the yields 0.38, rather than a six handle at the beginning of the month. now that yield is coming back to zero spot for and the same is true for spot the death. -- spot debt. how does the water look? less riskyter looks than it did friday. we dialed down attention when it comes to north korea. it seems to be coming from the u.s. side. remember it is a national holiday out in north korea tomorrow. you could seek tension ratcheting up around that event. a little bitg easier this morning. trading, partly a reaction off what happened friday. remember the cpi number, it's an
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interesting one. the yen is coming off as part of the risk trade we are seeing this morning and i expect we will continue seeing throughout the day. let's show you what else is happening around the world. i want to highlight steel. it's interesting. market regulators and analysts are saying, you are getting over your skis here. it has been one of those traits that has really come off, partly what is happening in china. worth paying attention to consider the broader commodities trade we are watching. hole, building up jackson which will be an adjusting aspect to the week. lot of u.k. did it to think about plus some brexit details. here is the bloomberg first word news. trump will face more criticism after failing to
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personally announce white nationalists and neo-nazis who held a rally in virginia that ended with a deadly car ramming attack. following an uproar from lawmakers, the white house released a statement said the allident condemns quote," forms of violence and bigotry, which includes white supremacists, kkk, neo-nazis, and all other extremist troops. " thatese extremist groups need to be pushed out of public debate entirely and discredited for being the fringe groups that they are. >> the south korean professional hasresidential advisor criticized the north korean threats. abc news that trouble about to unleash fire and fury
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if the isolated nation continues its propagation. cameso said trumps comment jae-in hours after moon urged him to tone down the rhetoric. president met with a to diffuse military action in venezuela. he repeatedly told pence america would not consider military action while pence refused to rule out military action to resolve the humanitarian crisis in venezuela. judo santos thought that the u.s. would prefer a peaceable solution. lots of data to go through, the economy in japan going for us six straight forward extending. meanwhile in china, the economy
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showed further signs of entering its second half slow down. retail sales and also fixed asset investment slowed and that kurtz property, excess borrowing and industrial property begins to bite. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. guy? guy: thank you very much. worrying from escorting tensions of the united states and north korea showed signs of easing with u.s. futures, the yen weakened. imminent nuclear war with north korea. joining us from singapore is mark cudmore. it's going to be an interesting week's writing north korea. u.s. officials are trying to tamp down the risk around north korea but we have independent , how do ieration day
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trade the risk story over the next couple days? >> i think there are two different kinds of investors you need to think about. one is the short-term investors, the people driving this market at the moment. we saw a strong rally into the close on friday which and flight short-term market that wanted to be square. it means they were short. they wanted to get square ahead of the weekend when they did know which side this price might come. given the u.s. was positive and also given the fact there was no military action over the weekend. the age at risk of. it becomes harder from here. not only to european investors see that price action friday, but the chinese data this morning. the structural investor, there has been a pickup and volatility which will put pressure to reduce exposure. it can wait till tomorrow's
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close to see trading. that's where we stand at the moment. will waitterm guys for a turning point and chased the market back down. but a push it themselves. i'm not sure if you saw this morning, but i pull up a chart for you just in case of bitcoin. it is up over $4000, we are talking a $60 billion market cap now. i would have thought it was a safe haven bid, which is why we saw a gain so much strength, but it goes up even now that we are not concerned about nuclear war. what do you think about that incredible rise? >> is phenomenal. a coupleas done this of times now, this massive jump. i think bitcoin is a bubble, but that is not mean you should fight it. you should fight it. like any bubble, you don't know where it will go first.
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the acre value is close to zero but if it was 5000 dollars or $10,000 first, i don't know. be revolutionary in the world in so many areas. what you buy the currency, it doesn't qualify as a currency under the most basic tenets of a currency. it is not a great store of value given volatility or great for transactions. most retailers don't accept it. it doesn't work as a currency but it's a great technology. it's a crazy bubble. where will it stop? i don't know. guy: two quick questions, we have december priced at $35, is that the bottom of the range? 35%, that is. >> it probably is bottom of the range at the moment. i think we might get clarity after we see the balance sheet tapering. after they announced in
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september, i think at the moment there is probably greater risk reward to play for the banks in the yields but there is excitement either way. the cpi was disappointing. no inflation. as the fair value here at 35% until the next catalyst comes through. guy: can i draw a line anywhere between the markets and what happened in charlottesville over the weekend? no, it's aately depressing event, but i don't think there is any conclusion to be made for markets. someone might argue that it hurts the dollar at the margin, but i don't think so, unfortunately just a sad event. guy: thank you very much, mark. joining us out of singapore. you can get all of the analysis throughout the day, smart analysis on your bloomberg mliv go. that's the only function we should focus on. another good is
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one, too. if you have a bloomberg, you can access not only an interactive television tv , but you can get radio coverage, for example, guy and myself have already show on after this program. you can get live event coverage as well. any big events surrounding the markets or that touch the market will be here on this panel. you can click into any of those. more still to come, don't miss our weekly 30 minute germany decides show, starts today at a: 30 a.m. u.k. time. 9:30 a.m. german time. we'll bring you the next political analysis and the run-up to the election, six weeks from now. this is bloomberg. ♪
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♪ matt: welcome back to the bloomberg european open. i'm matt miller alongside guy johnson in london. an earnings miss this morning with the second quarter adjusting as a got lost from continuing operations of 43 million euros. joining us down the line from mannheim with an exquisite ceo, thomasth the
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blais. the restructuring costs. this. comes in lower than the market was looking for. how is that restructuring going now? >> just to make that clear, it was not on the basis of restructuring. ever restructuring is making good progress. if you read the numbers, all is stabilizing, programs are working. cash flows improving, we refinanced the credit lines, we initiated the share buyback. all those things are on track. the bottom line performance is actually due to 53 million provisions that we took from certain legacy products out of the u.s.. these are projects either in litigation in the courts and were being prudent and terms of x -- put it in terms of expected
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outcome, then there is one major program in the u.s. where we don't like the performance or risk profile. they were being prudent hence the 53 million provisions. it's not coming from additional restructuring charges. matt: you mentioned of the u.s., you are the biggest machine provider in the industry. you are very active internationally and we have seen incredible strength in the euro this year. it is up more than 12% against the dollar year to date. how is that affecting your business? >> for us, we are euro denominated so a stronger dollar means more euros at the end of the day, but having said that, we are balance. we generate business in the middle east, this is in south africa, so our portfolio is relatively well-balanced. i see the business sentiment despite the lower dollar in the
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u.s. is probably a little more bullish than the ones we are seeing in europe. london, justson in come back to restructuring. you are getting rid of businesses and reshaping the business. you currently where you expect to be in terms of some of those disposals? >> absolutely. when we unveiled the strategy in february we targeted 13 companies and we wanted to dispose of. companies,the companies that were having a negative effect on our bottom line. of those 13, 5 were actually sold and we have a sixth one that sold or closed at the end of the quarter so we are making good progress. guy: i'm just trying to do the math. where is the rest of the process underway? again, just to underline, it is a big ship we are trying to
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turn, a fragmented company. the plan we put out there in february was a three-year plan. 3, 4-year plan in three distinct phases. we are making progress on all fronts and part of that as you pointed out correctly, setting off these entities. of the 13, we have seven to go. you quickly ask about the german elections. i don't what you to pick a favorite obviously, but we are six weeks away and we don't have a clear idea of what kind of coalition we will see here. what are you looking for from the election and the next government? what are the top point you need this government to tackle? >> i think in a nutshell, it would be status quo. the government is doing relatively well, i would say.
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we don't need any large upsets or changes. where i would like to see more nuclear is in planning decommissioning, which has been on the agenda for a long time but no action as of yet. i think that is a topic that will come back to bite us if we don't take the bull by the horns a little bit sooner. matt: thanks so much for your time this morning. , blades there this morning. -- tom blades there this morning. guy? economy has grown for the sixth straight quarter. it grew at a rate of 4.0% in the second quarter, beating all forecasts by economists. a strong pickup in domestic demand for softer exports. bloomberg from tokyo. is this abenomics finally working? >> it is definitely having an
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effect on japan's economy. the government has come in, it has been 4.5 years since the power. stimulusicy of fiscal and monetary stimulus is having an effect and you can see that in a really good run of growth the economy has had. obviously, it hasn't had the effect on inflation that the bank of japan wanted to have. we are seeing good growth where the economy is growing about potential, but it is not getting close to their 2% target yet. their policy is helping the economy to grow faster, but there is still a long way to go to declare success and essay deflation is over. i want to share a chart with viewers that they can access on the bloomberg terminal.
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i think it is really interesting . it shows you each quarter of annualized real gdp in japan as well as the bloomberg survey median so you can see the white line on the survey and the most recent green bar just extends far past that. this was much better than had been anticipated. how do you think the expectations for inflation are going to go after this? are people going to start getting on board with his recovery? the data that cannot today was parliamentary and what we have seen from previous luminary data is that it gets device depending on how the economy is doing. revised 1.3is percentage points. 4% today is not going to be 4%
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then. that said, this long run of growth and this really good growth in the last couple quarters does mean people are starting to say inflation will pick up and this will be more of an impetus for inflation. be effect of the data might be mores is going to for inflation and wages are doing better than people think. otherwise, private consumption would not be as strong as it is. this might lead to better inflation throughout the year. guy: james maker joining us on the latest data out of japan. we are minutes away from the european cash open. let's take a look at some of the movers. including a german energy company missing sentiments this morning. we will have that and all the other news. this is bloomberg, the open
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seven minutes away. ♪
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♪ welcome back to the european elements, -- european open, just minutes away from the castrating open. the biggest electricity generator in germany missed analysts estimates with it adjusted net income was -- but was bank in line with operating
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profits. plus they know say they see their full-year profit at the upper end of the forecast. be prepared to watch this stock rise this morning. this is bloomberg. ♪ ♪
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>>
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there is a really serious jump on the back of that, even if that is a positive growth scenario. freddie, we will keep you with us because there is a lot to go through this morning with
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what we have seen at of japan. the readings there have been very strong. what we see in korea, it seems like things are calmer down. what we see ahead in germany, the election campaign kicking out. don't miss our weekly 30 minutes "germany decides" show. we bring you the latest political and market analysis in the run up to this election. arguably, the most important, and possibly, the least contested of the big european elections this year. "germany decides," coming up in 20 minutes. this is bloomberg. ♪ >> 12 minutes into the session,
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let's look at where catches trading. positive stuff today, it does feel like a risk on type of steam running to the markets. not feeling quite so concerned about nuclear war. maybe we are in a scenario where the fed is not pretty much most of thh. the dax, up by 0.9%. the ftse 100, up by 0.3%. the market is looking fairly favorable. let's talk about what is happening with the ecb. anyo draghi has shucked
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invitation to bemoan any appreciation of the euro. instead, he pointed to a stronger than anticipated recovery, suggesting he could tolerate the single currency. do you feel that way? does he now use jackson hole? does he use jackson hole to talk it down a little bit. ,reddie, if you were draghi would you be thinking about jumping up and down on this one? >> your point is the right one, that draghi is known for being one of the best at talking market and to where he wants it to be before it gets there. it is clear that ithis stock appreciation with the euro has had a rate rise affect across the country.
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it's very telling that, i think , he's switched narratives to say the strong euro is supporting our growth. european growth is a bit more correlated and possibly, more long-lasting. euron take the strong because it is the natural consequence of a strong economy. francine: will he hit his tar get? >> i don't think so. the only way you can tighten policy through the euro is through rates. matt: he does seem to be tightening policy just by job owning. he's not even job owning. the market is expecting it. take a look at this chart, which shows you the bloomberg eurzone financial conditions. this is just a one year chart. you can see financial conditions
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have been getting better and better. they are now getting worse and worse. is this the market anticipating the jackson hole speech, which is where he will start tapering down to zero, and maybe next year raise rates? >> i think that chart probably, normally come of financial conditions is spot currency and full currency rates. it hink -- i think that chart is saying, the euro has done his job, playing part of draghi's hand in tightening financial conditions. the market has had a great run. the economy is doing well across europe, generally. the banking sector is recovering. i think this is a positive for mario draghi and he continues to do the nonjob-owning. matt: if the euro -- i'm just thinking about this
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was messaginghe me the exact same thing. been getting stronger, but it has been getting stronger all year. is there a market that makes the market a little bit nervous, uncomfortable? hear it, i mean, we always it's the pace, not the actual level. but is there a level that bothers the market? >> think it is the pace of the appreciating, that impulse you get. it is the genuine effect of exporting companies and people you have hedged. if you move slowly, you can get two different rates. there are psychological levels with currency traders, but i think it is far more the sp eed. and the speed has been rapid. guy: these are the fed's dots, b asically. the fed is expecting to raise
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rates a few more times. let's say it doesn't. let's say the market does not rise and the market does not go anywhere for a long time. can draghi tighten into that? >> physically tighten rates, you mean? guy: is the fed is one and done or two and done from here, how does draghi deal with that? >> is that is the case, the euro will continue to appreciate against the dollar. if that happens, matt's financial conditions chart will continue to tighten anyway. i believe that will be an umbrella for draghi to push out that rise. he will therefore, have no mending to actually raise rates. i believe he will get slightly tighter financial conditions through currency alone and be able to not raise rates. bunds?e price of >> i think global that i --
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global debt is far too expensive. guy: and the global trade between the u.s. and germany. taht trades at 0.4 on bonds. if you look at the economic performances, that feels wrong. that's another driver for the euro going forward from here. and would draghi want to lean in on that? the price of money in germany is probably the wrong price, but for the rest of the eurozone, which is still not back on its feet, you have to assume they don't want it to get that much more expensive. have you trade core periphery in europe? >> that is not how i think about it when i am positioning my portfolio. we are buying individual companies. if you did think about it like that, i think you continue to have the problem you have had since the creation of the euro, which is without full unity, he will end up with a account
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deficit in the eurozone, and it will not get any better. you have to continue to pander to germany, which has tried to do more structural reform in the periphery. matt: thank you. if you are a bloomberg television customer, you can go back and watch freddie's comments from previously. tv ust tuned in on . you can also follow along with our charts and functions, which you see on the right side of the screen and on the bottom of the screen, you see a little, blue link. freddie will stick with us for one more block. if you have a question, write in to the production team and we look at that question to freddie lait. stay with us. this is the european open. ♪ francine: in guam we have a
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peace rally underway. this, as we see a ratcheting down of tensions between the u.s. and north korea over the weekend. it is a holiday in north korea
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tomorrow. i expect there are many tv crews in guam. we will continue to monitor that. reporter: chancellor angela merkel and martin schulz have taken aim at germany's carmakers as political damage looms over the diesel cheating scandal. the two leading candidates lays the blame squarely on executives of auto giants. the comments came as they began six weeks of campaigning before the the election in september. the "germany decides" special will start at 8:00 u.k. time. and an initial public offering as soon as next month. the move could value the maker of the angry birds game and movie at $2 billion. representatives from rvio declined -- from rovio declined
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to comment. guy: u.s. stocks recalled higher this morning as geopolitical tensions begin to abate surrounding north korea. the question is, how easy is it to find stocks to buy? do you buy the futures? freddie lait is the cio and founder of latitude investment management. we have already talked about the fact that you think stocks represent reasonable value going forward from here. the question is, which stocks? and how easy are they to find? >> they are incredibly difficult to find at the moment. we have been selling a few stocks that have reached the price target recently, and they are difficult to recycle. where we are looking is in the value sectors, which is oil, gas andning, cyclicals banks. we have been looking at turnaround stories, where they
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have reset the balance sheet and are working in a situation where the core price is not broken, there is a good management team in place. tesco is a good example. i continue to like the long-term future for that business, despite the headwins. i like investing in stocks at the moment, where people snicker when you mentioned them. because they are the ones where esotericind iss value. there is going to be a very uncertain future. it's nice to own stocks where you have a margin of safety and they are in control of their own destiny. matt: i do love u.k. supermarkets, but i wonder about the future of any company that has to look at a pound that is so uncertain. are you not concerned about that effect on tesco? >> in the shorter-term, obviously, i am, but in the
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longer-term, the pound has moved around in huge swings in the last 30 years. if you look at tesco's glory days, it does not seem to affect them in the long-term. can calles companies for that in the longer term. in the shorter-term, you end up with lower cash flow from hedging, but in the longer-term, it is not a big issue. matt: freddie, we are not quite done with you yet. we will carry on the conversation with freddie lait fedhe radio, on whether the has the ability to go on with many more rate hikes from here. matt: up next, it is our weekly 30 minute "germany decides" show. we will do this every monday between now and the election, which is on september 24. and theexpert guests
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latest market and political analysis. we are coming up on one of the biggest elections -- well, the election for the most powerful european country. this is bloomberg. ♪ got you outnumbered.
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the dinosaurs' extinction... don't listen to them. not appropriate. now i'm mashing these potatoes with my stick of butter... why don't you sit over here. find your awesome with the xfinity stream app. included with xfinity tv. more to stream to every screen. matt: welcome to our weekly 30
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minute "germany decides" show. i'm matt miller in berlin, alongside guy johnson in london. let's a roundup of the bloomberg german headlines. remember, the campaigning has just started. for that, we go to sebastian salek. reporter: chancellor angela merkel and martin schulz have attacked the german auto industry as they campaign for the election. seeking to avoid any political fallout, the leaders put the blame on volkwswagen and
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daimler. they described management as "irresponsible." angela merkel's chief rival martin schulz land donald trump -- slammed donald trump. he said he was responsible for selling chaos at home and abroad. in his second appearance yesterday, schulz says he lowers himself to the level of the north korean dictator with his rhetoric. has 30%, according to the latest polls. poll, published weekly. electionour german news roundup. matt: now let's get some thoughts on the weekend campaign kick off. this is from a member of angela merkel's own ranks. he's a cdu member.
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we are joined live on set in berlin. time this your morning. everyone thinks this is a done deal, that angela merkel has it in the bag, and very little could change it. is the diesel issue, the automakers issue, is that a weakness for the chancellor? >> we have seen that all governments have had the same policy. therefore, i think you cannot blame angela merkel alone for that. it is very clear that she has attacked the auto industry, but at the same time, defending the consumers. matt: the concern, i think, for a lot of market watchers is that this did not become an issue in
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germany until two years after the volkswagen cheating scandal in the u.s. and angela merkel's transport minister seems to a lot like he is in the pocket of these automaker executives. how would you explain that. this deal, to summon berlin, achieved almost nothing. -- this deal, to some in berlin, achieved almost nothing. >> first of all, it did that you something. it was not the diesel question. it was the question of the companies. then, it comes to a cartel. think, has made people more furious. we have to see these automobile makers, the bosses, have done big damage to german industry. here i think all major parties agree. matt: do they work as a cartel? legal services
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have to detect that. i think the corporation was not such a good thing. it might become very expensive for them, but it has brought a lot of credibility. so, that shows that after diesel, these people have not learned anything. and that makes people furious. guy: good morning, guy johnson in london. diesel, we have diesel as one subject, but can i ask you a straightforward question? what is this election about? what is it that germany is deciding upon? >> i think we have to see that the german situation is very good. we have the highest numbers of employed people in the history of our country. we have a relatively quiet situation in our country. the refugee question is under control. therefore, i think people think
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that in this time of disarray in the world, the quiet leader like angela merkel, with all her experience, would be the right person to lead our country the next four years. guy: is that stability the product of the grand coalition? and therefore, would germans be happy to see another grand coalition taking place? or does that stability let them bring the liberals back? or generate another sort of outcome when it comes to the coalition? >> i think the stability is very much combined with angela merkel. i think the majority of germans do not want to have the grand coalition again.
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+++ lead together. the greens or the liberals are both together. that would be better for all of democracy. we do not know the figures about that. there could be a very small margin at the moment. therefore, nobody can estimate what will be the rebuild. matt: i think it is very interesting to talk about this so-called jamaica coalition. the reason being of course that the cdu's tradition is black. well, you can take your best guess there. can they work together with the greens? fischer famously said, when hell freezes over those parties will work together. can it happen now? >> we have very well operating, black, green coalitions. -- we might have the main difficulty between the liberals and the greeks. i think he's the biggest problem
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for the coalition. would anybody why go into a coalition with angela merkel? it has not exactly been a great outcome for those that have? theook, it might be situation that ms. merkel made this successful. but on the other side, nobody working in the coalition said she was unfair to her partners. she was always fair. sometimes in our party people say that she should be stronger against the coalition party. she does not do that. supportnot a reason to angela merkel? perhaps it would be a possibility, but this could also give us a chance to have a red-red-green coalition. if the social democrats call for the publicly, they will lose
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even more. therefore, it is a situation that angela merkel has in her strategy. matt: as a member of the european parliament, you have served there for many years. the opponent to chancellor merkel, martin schulz, was the president of the european parliament and a lot of people think that not only would he be pro-europe, just as angela merkel is, but really there would not be much difference at all if martin schulz took over as chancellor of germany and then ran his own grand coalition. what do you say to that? >> i know martin schulz very well. he's a good friend of mine. we have to see if this leads to an election problem. there will be differences between angela merkel and martin schulz. in the german policy, there are differences.
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.e have a situation so, on these principal question, we have no principled disagreement. matt: elmar brok, thank you for your time. we appreciate you coming in to the berlin bureau. he's a cdu board member and a member of the european parliament. we have a look at how the markets are prized with a merk el victory. and what could rock her winning chances? we are live in frankfurt with a look at how this is affecting the market. this is bloomberg. ♪ guy: welcome back to "germany
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decides. andguy johnson in london matt miller is in berlin. the german election campaign is in full swing. our markets pricing the potential outcomes? -- how are markets pricing the potential outcomes? should the german election be a market moving event? how our markets positioned in a dvance of it? merkel hashat angela
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close to a 40% approval rate. markets and the pollsters seem to believe it will be a clear victory. tility is not outrageous. everybody seems to think angela merkel will run for a first term. we have a different situations him france and the netherlands, -skepticght-wing euro parties have a chance of winning. we don't have that much of a tail risk here. conversely, we don't have that much of a really potential, should angela merkel win. guy: so, everything is centered around the middle of the distribution curb. there must be tail risks, as you say. what are they? >> let me be clear, for the sake of the argument, let's assume the social democratic party, led by martin schulz, will gain
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steam again. if those guys are close to winning the election and if they team up with the left party and the green party, we would see a very extreme unlikely at this stage that could shock markets. that such ame government would also be more in line with greece and southern european countries. so, we would see a tightening of government bonds. verygain, this is a extreme scenario that nobody foresees. another extreme scenario would be angela merkel going again with a coalition partner. those two together would have a tight majority that could unsettle markets slightly because you never know, are those guys going to push through with reforms, or will they be paralyzed? guy: one question does occur to me. that is that the french are
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making noises that they would like a very significant push forward on europe and the euroz one and the structures that surround those two institutions. does the market price in post the criminal action? -- post the german election? i'm wondering how that gets priced in. is it simply a stronger euro going forward? >> that is a very interesting question and it depends with what parties angela merkel will govern. a very interesting question. let's look at three scenarios. the most likely outcome is angela merkel will engage in another grand coalition with the social democratic party and not much will change, unless the social democrats get good enough of a result to push for nominating the finance minister. and whoever their candidate would be, they would replace wolfgang schaeuble, who has had
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a tough stance on these issues, especially greece. if the social democratic party could nominate the finance minister, we would see some movement there and get a different outcome negotiations and how far the eurozone comes together. levy strengthened? -- will that be strengthened? another potential outcome could be angela merkel teaming up with the green party. it will be similar to the social democratic party, with the exemption of the auto industry. the green party would be tougher on the german auto industry, just to mention dieselgate. another potential outcome, and this is interesting for europe, would be angela merkel teaming up with the liberals. the liberals have a tough stance on greece. we would see a widening of the spread. the liberals seem to suggest that greece should leave the eurozone before getting debt relief.
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we certainly see some impact there. there are also signs that the liberals would like to curb the european bank rescue fund, which i don't want to be a bund investor in such a scenario. we would see impact on multiple levels. i've just read a research note from commerzbank analysts. they point out that liberals would push for more privatization and ironically, that could avoid commerzbank. remember, the german bank holds a 60% stake in commerzbank. if the liberals push for selling that stake, we could see the return of bank m&a. met with the prize investors, on the bright side. guy-- that would surprise investors, on the right side. guy: so, watch the finance ministry and the makeup the coalition. thank you, eyk henning. back to berlin. matt? now, angela merkel is
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pulling far ahead of martin schulz. questions around what coalition government might look like are still way open. our next guest says a potential game changer could be the leader of the liberal democrats. joining us is the deputy director of the german marshall fund here in berlin. let me ask you, first of all about the chances for a martin schulz comeback. it was not too long ago, that his lead evaporated, seemingly for no one solid reason. could angela merkel's lead do the same? >> thank you for having me. that is an interesting scenario because it is true. at the beginning of the year, martin schulz was neck and neck with angela merkel's cdu party. in the last few months, she has
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surged ahead in the polls. her popularity has dropped a bit, but the cdu is 12 points ahead. there are a couple things that factor into this. one would be the election of president trump. that was an antidote for angela merkel to help her gain popularity in the german electorate because she is seemingly a calm within the storm going on in europe. matt: germany is a very large and rich country, relative to other european nations, but the german mark are, the average income is not high, compared to other nations. isn't this the perfect country to talk about people who have been left behind by globalization? isn't this the perfect country victoryabout a populist
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? and it is seemingly one of the only things we are not worried about here. >> germany was a victim like the other democracies with a populist french movement. -- populist fringe movement. fad hase also -- the lost its lead and is down to now maybe 8%. thinkuld think so, but i all these issues are under the surface. right now her slogan is, let's not rock the boat, but there are some deep problems, whether it is demographic changes, integration of the refugees, as you mentioned, the salaries that are not on par with what other countries in the european union are at. theyis another chris is in -- this is another criticism the germans phase. guy: good morning.
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what does this election mean for the relationship that will develop between paris and berlin? what will that relationship due to the future of the european union? >> good morning, guy. that's a great question. for the last couple of years, germany has had this uncomfortable position of being the de facto leader in europe. many other people would scratch their heads and say, isn't it great to be the leader? but german politicians still feel uncomfortable being called the leader. with macron in charge in france, there is hope that france will drivingk its mantle in further european integration and work alongside germany to make the eu stronger. that macron can see would like to play an important
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roleon the international stage. one could say he is looking to maybe replace the role angela merkel has played for the last couple years. i think people here in berlin would actually welcome that. matt: thank you for joining us, sudha david-wilp. here in berlin, thank you so much and hope to see you again. we will continue this election special on really, the first monday in the campaign ahead of the september 24 election. this is bloomberg. ♪ matt: welcome back to "germany
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decides," our election special. there have been no accusations, no direct attacks. in fact, angela merkel even forgot to remind people to vote for her party at the cdu campaign rally. let's get reaction of the german press to the campaign kickoff. the to discuss is biographer of angela merkel, alan crawford. for those who don't know, this is the most widely read paper in germany, may be the most widely read paper in europe, actually. there is nothing about politics on the first page.
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there is some kind of celebrity drama going on with celebrities i have never heard of. is germany interested in this election? >> well, yes and no. probably largely no, not yet, because they are still on holiday. you notice the campaign is very much shorter than anywhere else i can think of. that said, the politicians are taking it seriously. angela merkel was out and her main challenger, martin schulz was out in force. matt: your book that you wrote, this election, is this the opposite, a chancellor forged in crisis? >> well, there have been quite a number of crises during her third term. certainly, she has tackled aspects of the refugee crisis. at the week end, with the both
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of the main candidates, martin schulz, tackling this diesel scandal, which could become some kind of crisis. matt: alan crawford, thank you much, author of "a chancellorship forged in crisis." ♪
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francine: korea calm. markets begin to settle. equities gain and heavens we can. america divided. trump feels the heat over his initial response to the charlottesville violence. take aiml and schulz at the german car industry at the kickoff their election campaign. this is "bloomberg surveillance ." 14,tart a new week, august still quite a lot going on.

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