tv Bloomberg Daybreak Europe Bloomberg September 27, 2017 1:00am-2:30am EDT
utility acquisition in five years. anna: a warm welcome to bloomberg a break europe. i am anna edwards. manus: i am manus cranny. we will be speaking to the fordham ceo. joining us for the first interview of the day. is it that friendly a deal, that buthe first question everything that glitters is not necessarily gold. we are talking about oil. but inner tech.v channeling the of splendor.ng mark barton will freeze this chart. trade above the 200 day moving average. inventories are dropping.
citi saysys -- and [inaudible] he closed hisn fund he said he -- he is converting, this could be a buy signal. anna: we have to talk about the dollar index. dollar, the the bloomberg dollar index at the highest in a month. janet yellen talking about increasing rates. trump tax plans very much at the heart of things. we will hear more about his 20% plans for corporation tax later. could we see the dollar going higher in the month of september, that is a questioned daily prophet is asking. could we see some strength coming back to the greenback and we have a 70% chance of a rate hike price for december.
manus: msci asia-pacific is down. you have a thousand companies in japan that have gone ex dividend. a little bit of a drag on msci. technology has had a rebound with the steeper selloff since november. that is one to watch. tencent and taiwan semiconductor manufacturing the biggest boost in those gauges. toa: we have a lot of data learn about from the u.s. and the eurozone's, plenty on the things are looking flat for the u.s. trading day. the first word news delivered to us by juliette saly. u.s. president donald trump and republican leaders will announce their long-awaited tax overhaul plan today. according to three people familiar the rate on corporations will be set at 20% and businesses would be allowed to write off capital spending for five years. they will propose a top
individual rate of 35% but laid congress -- let congress to decide to create a higher tax racket. not responduse did to a request for comment. him do essential most likely strategies continue raising burrowing not cost. the chair said the fomc should not be overcautious in its approach to tightening policy. approachesl appropriate in light of subdued inflation and a low neutral real interest rate which implies the fomc will have limited scope to cut the federal funds rate withd the economy be hit an adverse shock. but we should also be wary of moving to gradually. with an adverse shock. juliette: chinese industrial firms have extended the surge, increasing 24% from a year
earlier. and compared with the 16.5% pace, suggesting resilience in the world's second-largest economy is in your -- is enduring. saudi arabia will allow women to drive cars ending its status as the only country in the world to and half the population from getting behind the wheel. entitled toe driving licenses in june if your creative cluster many of the bid society.p saudi a counterpart to an ambitious program to modernize the economy that may see the kingdom holding the world biggest ipo. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. can find more stories on the bloomberg at top . manus was mentioning the drag we are seeing on japanese equities with more than a thousand equities trading without rights. you are asking the -- seeing the topics lower but if you look at the regional index, it is a
touch higher by about .1 of 1%. the first gain in five sessions and that is thanks to that momentum. you are saying apple suppliers in taiwan and hong kong. we are seeing chinese developers also rise, goldman coming andugh with a few upgrades saying the sector could rise 19% of from 17%. it could rise 9% in 2018 and through inming back the electric vehicle stocks. byd leading the rally. beijing could issue guidelines to boost development of that sector. to the downside, qb a has been cut to show -- sell. they topix driving on the regional index. things are looking better than yesterday. tous: fordham has offered
thelegacy fossil fuel and trading business is what could turn out to be the biggest utility acquisition and years. anna: it will make the offer of 22 euros a share to all investors. surely us is the ceo. good to have you on the program. you have the support of the aon interpersonal the to be persuaded. how important is that? guest: it is great to be on your show. be to have a dialogue with management. dion have said in public they were going to sell their stake anyhow. we approached uniper management and suggested discussions.
they said they want to stay independent and we respect that. that instead take and we are looking forward to becoming a good and constructive shareholder in the company. we are going to need a dialogue with management. manus: give us a sense of that dialogue among what are you going to be proffering to him as something that hits him and the management on board? respecting all agreements there are with employees, we have no operational overlap in their main country which is germany. we are looking forward to discussions about how we could cough rate between the two companies in this country so we have overlap like sweden and russia. we are looking forward to constructive dialogue between two companies and 47% stake
assuming that eon will [inaudible] it will give us quite a lot of influence but still we are looking at this as an investment not as a takeover. anna: so what are your intentions with regards to the rest of the business then, you have made an offer to the eon stake and make this broader offer packet. where does this and have, how willgo holder of uniper you be in the future? guest: this is something shareholders will have to decide. we have signed an agreement and will make the tender offer. they have a share or we have a great with them that if they do not tender, they will pay a large substantial conversation payment to us but when it comes to the other shareholders, every shareholder will have to decide
then we will see. i want to make it very clear the we are very happy with eon stake and level of influence that would give us in the company. offered 22 euros a share. i am reading what the market is in ing about, the eon stake uniper makes sense but you'll have to come up with a knockout price, you'll have to offer a bigger premium to get the minority interests onside. what do you think? -- this is the only deal there is. there is nothing else. manus: you will walk away from this deal if the minority interest do not accept 22. guest: as i said, this is the only offer there is. anna: could you explain about the commodities unit, how with
that business fit alongside, what is the rationale? guest: we are looking at this as investment, not as a takeover. management andng we trust 100% they know how to run the business. notodity trading, it is unfamiliar but our business is much shorter and we understand this business plays a critical important role in the securing of supply of gas in the german market so we respect that business very well and look forward to working with n uniper's management when they develop that business further. china was to stop supporting the coal market and we had a plunge in prices with that or could that change your perspective on some of the businesses?
guest: it would not change our perspective on this deal. but of course, we all know that for the european utility business and the power price in the european market, one of the important factors is the coal price and the coal price has recentlyg quite well and the comment from the chinese government have been they would have an interest to maintain prices on a reasonably high level close to the levels where they currently are. this is a very important thing. it is not the only factor that is driving power prices but it is one of them. in relation to some of these fossil fuel assets that you would be investing in with this deal, how does this deal which includes the fossil fuel assets, how does it advance europe's transition to other fuel sources, you says it advances it. how does it? it is about three things,
decarbonization, security of supply, and affordability. we need to make sure that we are able to provide affordable energy to consumers and businesses across europe. both are important. 40% is fact today that produced by -- of energy is produced by coal. germany will shut down nuclear power in 2022 which makes the security of supply even more important. there issolar and wind in the system and we hope there will be a lot in the future, the more solar and wind there is, the more important security of supply becomes. has interesting assets like flexible gas assets which are going to be very important, especially those parts of europe where there is not enough hydropower available as evidenced power.
manus: thank you for joining us, we wish you well with closing the deal. fortum ceo.rk, on the rails.ers we will be joined by the two ceos today. anna: coming up on the program, -- is a 20% policy tax and achievable goal? manus: we will look at the corporate winners and losers from the decision to allow women behind the wheel. this is bloomberg. ♪
weighing on things in the asian session. this is a guide to what we are watching out for today. the finance minister presented the 2018 budget in france. manus: the italian prime minister meets for talks. anna: labor leader jeremy corbyn wraps up his party's conference for the -- and we will talk about that in the next hour. manus: let's get across to juliette saly with the bloomberg business flash. juliette: siemens and ahlstrom have agreed to merge their real businesses. they are creating a european transportation giant aimed at countering competition from china. it will transit -- transfer its equipment in exchange for 50% stake in the enlarged company and will be joined by the -- we will be joined by the ceo of siemens.
u.s. commerce department of slapped import duties 220% citing improper subsidies after a complaint by boeing. the termination threatens to a bent bombardier's plan to order jetliners. nike shares fell in late trading after quashing any hope of a quick turnaround that its ailing domestic operation. the sports were maker said it expects north american sales to decline following a 3% dip in the region last quarter. converse will also drop in the current period. that is your bloomberg business flash. anna: thank you. hitting record highs in the global growth recovery story. janet yellen says the fed should be -- not be too cautious on raising rates.
manus: the fomc chair cautioned there is uncertainty around the forces keeping inflation low. >> a gradual approach is appropriate in light of subdued inflation and a low interest rate which implies that the fomc would have limited scope to cut the federal funds rate should the economy be hit with an adverse shock. we should also be wearing -- wary of moving to gradually. anna: president trump and republican leaders announced their long-awaited tax overhaul plan later today. they are expected to propose an individual rate of 35% believe congress to decide whether to create a higher bracket for top earners and corporation tax would be cut to what he percent. manus: joining us now, michael o'sullivan. great to see you. this could be the big moment for cuts, individual tax
making it clear, making it easier but bringing the corporate tax down to 20%. how important is this to u.s. eco-stocks, how important is this policy? michael: it would help the dollar, the dollar look sick it is trying to bottom against the major currencies at the moment. in terms of stocks what has been going on is a transfer from growth to value, specifically from technology to energy. tech companies already have a very low effective tax rate. they will not benefit terribly from this but the energy companies have a very high effective tax rate in the high 30's so they may benefit. you are at the margin, your traitor will be looking -- will be-- the trader pushing money out of tech.
strength ine seen the market stocks and we have seen once of under delivery from the u.s. administration versus expectations and that was one of the reasons why the dollar was weaker in the past six months. there might be room for more expectations to be rebuilt back in around tax. is inl: to a degree, it bonds, it is in equities. there are lots of other things playing on the dollar as well as this. begin torgin this may push long yields up in the u.s. relative to the euro, it could help the dollar. there will the big questions over the ability of the administration to push this through. they have little if any policy wins this year. trump and the white house is much better marshaled than it
was. there is a desire on the republican side to begin to put some policy in place. will look a people little more seriously that this is beginning to come back. manus: let's pivot to the other lady who is in charge of the fed, janet yellen. she said it would be imprudent to stay on hold but she goes on to say it is not absolutely a preset course. good morning to david kelly. not a fan. i love the line from michael in the debtstors market or pricing securities on the assumption that a hike needs to be proven rather than disproven and yellen is saying we need to have a hike
disproven. which camp do you sit in? michael: i am on the side of yellen. which is a risky position. the record of the fed in forecasting rates and inflation relative to the market is pretty poor. in the markets for the last four or so years. there is a fight coming between the fed in the market. if you look at the two or three year rate projections from the market is pretty flat and low. the fed is taking a different feel. seere beginning to inflation and wage growth picking up and to rise. we had the higher cpi reading, the weaker dollar, better monitor prices will translate into higher inflation. there is debate going on as to what is happening with inflation, there is a good recent paper from the san francisco fed looking at life expectancy and how that dulls down inflation. it is in fed speak of vibrant
policy debate. manus: you have gently shot across the fed in terms of their ability to forecast. this is ecf. saying theis forecast for 2070 -- 17 keeps coming down and there is the actual data. mystifiede, yellen is and should we be mystified because if we get the tax reform, that could add to the inflation debate but the moment the market is disbelieving the fed and inflation. is a bit like the man searching for his keys under the streetlight. there is inflation but it is not in some of the inflation measures. prices and at asset house prices, many of the big cities in the states and the same is true in europe.
we have asset price inflation, qe has played a bayer -- a very big hand in this. there is inflation. she wants to talk about inflation but her mandate is core inflation and not asset bubbles. that looks closely at things like financial conditions and they have been pointing out financial conditions are perhaps too easy and they need to begin to adjust. in a way is there a way -- that is their way of talking out financial rockets and what has been happening in the last year. manus: michael, you stay with us. anna: the former fed governor joins us at midday u.k. time. be aware that is happening, you might want to join in, no doubt talking about asset prices and
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>> live shot of the emperor's palace. you've got the dollar rising for a second day against the yen. tax reform is on the agenda. we are almost at the 112.50 level. is 6:30 a.m. in london. >> a mixed picture across equity markets. the index weaker by about 2/10 of 1% overall, breaking it down into the regions, you see more
companies trading on the topics dividends. a little bit of weakness in south korea. hong kong and china pretty much unchanged. .ou showed the dollar-yen the dollar index above 93, and has also gone above its 50 day moving average for the first time since april. that's what you can see here on this chart. part of that, perhaps a tiny bits of the yellen affect. we saw pullback, but a lot of it seems to be on the expectation of tax reform. here's where you did see the yellen affect, the u.s. to yield 1.45% on that hi, two-year yield right now. you would expect that you are seeing a little bit of curve flattening in today's session as well. finally, interesting story on the bloomberg about how to trade the war rhetoric between the u.s. and north korea.
perhaps look at tdn. it is falling towards its hundred day moving average. >> french president emmanuel macron has laid out a vision of the eu -- to defend their interests and project their values in a globalized world. manus: he called for more unity in the euro area. a budget can only go forward with strong political leadership led by a common finance minister and strong parliamentary supervision at the european level. only the eurozone, with a strong, international currency, can offer europe the framework of an economic world power. manus: for more, let's get to carolina from paris areas -- carroll enough from paris. was this speech
received? there was brussels, berlin, and the rest of europe. >> exactly. if you look at brussels, they praised the speech. if you look at the spd in germany, for example, we had gabrielle saying the speech was a plea against nationalism in europe, but it does reflect the speech in germany and the rest of europe with the rise of nationalism. the czech prime minister said with that kind of speech, macron will just leave more countries to follow brexit and want to .xit the european union however, we also have, in germany, from a number of merkel's party, he says that macron wants to turn the euro
zone, affecting the stability. we will see whether macron delivers the budget for 2018. >> what are we expecting to hear in the budget? what is off the table? it will keep the deficit below the 3% target. this year, it is expected to be at 2.9%, and next year at 2.6%. today, we expect 20 billion euros. we don't have much detail about how exactly he is trying to find spending cuts, whether we will see some cosmetic spending cuts here or there, also big spending cuts in some ministries. at the same time, we also expect 10 billion euros of tax cuts.
we are ready have some details. he has done announcements over the summer. we will see some tax cuts. for example, housing taxes, also payroll taxes and land of wealth tax. manus: caroline, thank you very much. is all the alpha of reform -- america is trying to build a coalition. our markets reflecting the hope rather?m >>. . think -- no i think people in europe and outside europe are still doubtful as whether this reform will happen. i am more optimistic that it will happen.
you have a couple of leaders who really want to force through reform and get back on this agenda. talk about reform -- and we have seen it falter in the past -- but there is a sort of commonly acknowledged shopping list of things that need to be done in europe, calm and finance ministry, etc. we will probably spend the next five years going down the road toward that. the root that things look to be taken, where does this leave the eurozone versus the eu? we had the eurozone at the core of the eu project. the eu, -- twoor speeds to the eu, or is it eurozone or bust? >> i think macron sees it that two speeds.
with the eurozone, you get fiscal uniformity. smaller countries have to adopt the fiscal policy of the core, and then you have no flexibility left. >> there are u.s. companies based in the republic of ireland. >> potentially. but this is a big fight that needs to be had. my sense is that people are still standing over the architecture, standing over the map and beginning to draw what needs to be done to bring the euro to completion. mario draghi spoke the other day and talked a lot about the domestic factors that would , almost ase eurozone if there are various stages of evolution in the eurozone. in terms of momentum, this is euro dollar 25 day risk reversals, and you are seeing a
renewed appetite. to 130?es us to 125, is it macron? does he have the ability to move the euro, or is it a coalition in germany that moves the agenda forward? >> there are a couple of small things. two months ago, people were deeply skeptical as to whether this would happen. i think his administration is very well prepared. they do a lot of homework. that's one positive. we've got talked this morning -- morning of more european companies. the next milestone would be the formation of the government in germany, and we would get a sense as to what kind of political capital angela merkel has to spend on europe. you aboutbout to ask
-- this is part of the rationale for putting the rail unit together, creating european giants to take on what's coming from china. is macron setting the stage for more of this, or is the european economic recovery setting the stage for more? >> i think conceptually there is a really big change. , and french and german politicians were always of each other and competing with each other. eu leaders are now much more aware that they are competing with the u.s. on one hand and china on the other. you now have more of a push for national champions. >> you get that at european borders when you talk to the leaders. i think in french and german board rooms, there is increasingly a sense of that, and you may see more consolidation in europe, in banks, for example, and may see
more across industrial companies . that's not a european thing. going to visit to one other question. we both looked at this story, john mcdonald talking about wargaming. it was it in a discussion of the labour party conference. it was very much in response to questions, are we ready for government? >> back to the early 1990's, this is what the run of the bound looks like. manus: you've got brexit. when you hear this -- and the bbc made quite a bit of it -- but it is obviously pressing upon their minds. the risk of an election in the u.k., what is the most manifest risk at the moment? we have had a bit of a resurgence. michael: i think the risk is
somehow you get a flaring up of hard brexit. i don't really see that at the moment. that's one risk. the other is that the bank does not raise rates in november. they have often said, we are going to tighten them. they have set the course for rate increase in november. i think whether they set that up as taking back the rate cuts of last year or the beginning of a rate hiking cycle would be the next determinant, in my view, of where it goes. michael, thank you for your time. chief investment officer at credit suisse international. interestingis very in saudi arabia, a removal on the ban of women driving. it is the only country in the world to expose -- impose such restrictions on half the population. to openovernment hopes
up saudi society with implications for the economy. yousef joins us. what impact will this have on the way saudi households spend their money? yousef: quite a bit. first and foremost, this is an answer to all the skeptics who thought saudi reforms were just cosmetic. now this royal family is making it clear they are going to be changing a lot of things. in terms of the impact this is going to have, you have to bear in mind that so far each saudi household will have a designated driver or the women in the family. those jobs are going to go away. foreignns that remittances are going to come down. saudi arabia has one of the highest foreign remittances in the world. jump on the bloomberg with me. we've put the actual remittance
flows on this chart. that is your lying in blue. your lying in white, which has backdown recently on the of reform programs. remittances have been a hot topic. the other is going to be the job market. that is going to see some change . a lot of the jobs previously accessible to saudi women might not be accessible now. you are also looking at possibly increased productivity, because people don't have to waste time dedicating themselves to driving women around the city. quite a few interesting angles to this. manus: there are indeed. let's talk about the oil market as well. and i and i touched on this at the start of the show. what is behind this? you've just gotten back from vienna. do you think it is a tailwind? yousef: the worries are down the pop -- the possible shutdown. there is part of the
conversation. but also, the inventory. u.s. crude inventory is said to have declined last week. we will get more clarity on the numbers from the eia data later on, on wednesday. the bloomberg survey suggests something different, and expansion of 3.1 million barrels last week. either way, that is interesting because it is the first time we have seen some of the refineries coming back online. we will see whether there is a stock drop. meantime, we are likely to see $60 a barrel prices in the short run. to see be interesting whether the market will push the price that high. >> yousef gamal el-din joining us from dubai. forget you can tune in to bloomberg radio on your mobile device or on the dab digital radio if you are in the london area.
anna: it is 6:48 p.m. in london -- 6:48 a.m. in london, 1:48 in new york. write home about as we wait to hear from president trump on taxation. let's go to juliette saly. the deal brings together former archrivals from germany and france to create a european transportation giant aimed at countering competition from china. siemens will transfer its
equipment to alstom in exchange for a 50% stake in the company. we will be joined by the ceo's at midday u.k. time. bombay's new jetliner just got harder to sell in the world's largest aviation market. commerce department has shipped -- has slacked import duties on the planes, citing improper subsidies by boeing. it threatens to a band bombarded -- b -- by marty a ship tor's plans to delta airlines. jpmorgan has been ordered to to pay more than $4 billion in damages. the ruling went to joe hopper and her two stepchildren who claim the bank mismanaged the administration of her late husband's estate. however, the verdict is likely to be knocked down on appeal to payngenta has agreed
more than $1.4 billion to u.s. farmers. the payments are related to a complaint that the marketing of the company's genetically modified corn shut them out of the chinese market. nike shares fell in late trading after a quick turnaround of its domestic operations. it expectsmaker says north american sales to decline again this quarter, following a 3% dip in the region last quarter. the converse business will also drop in the current period. itstwitter will lift 140-character limits on tw eets to a small group which may lead to an expansion. it allows as many as 280 characters, lengthening the ch
aracter limit may result in more engaging conversation on the platform. that is your bloomberg business flash. manus: thank you very much. it is in the mutual interest of the remaining nations as well as the u.k. for existing cross-border finance flows to continue after brexit. anna: a proposal for a good brexit deal to the city of london, and it is the work of the strategy group. we are now joined by its chair, mark, who previously served as the city minister. you put out this blueprint for free trade agreements, specifically on financial services. is it between -- is this the deal that theresa may has been alluding to? >> for the financial services sector, it recognizes the sector is heavily regulated, but it is
integrated across europe. do is find a way that, outside the eu, we continue to see those flows continue, and that is the benefits of corporate families, and it goes to people who work in the financial services sector. london. -- here in london. you talk about this resolution, is that one of the biggest parts of delivering on this kind of agreement? is that where europe has its most angst? >> i think it is angst on both sides. you need to make sure you respect the red wines, both -- , both the eu 27 and the u.k. wet we are saying is that should continue to supply our services across order and vice
versa, as long as our regulatory systems provide the same outcomes. when these diverge, we can lose access. you need a resolution body to look at those passive divergence. is brexit all about taking back control if we are going to have to have the same regulatory environments to make this work? and not just the eu -- you are talking about international standards. is anyone taking back control here, or is that not the point of this? >> that's why we talk about outcomes. we may have different approaches to achieving the single, said that is a choice for the u.k., of the eu 27. there is always the opportunity to say we want the regulation changed, we know it creates a divergence, we know it creates a loss of access. it is so important that we will do it. there is no guarantee that access will continue, and it does not ensure that the people
have sovereignty. what we want to do is find a situation where we can continue to benefit. if we take some of the words in this discussion, "passporting," or the american firms who domicile themselves to get into europe, and they are going to leave -- and they already are -- how does your againstion stand passporting and equivalent? what do i get from this proposition that serves me, if i am jpmorgan? ,> in terms of passporting passporting has generated huge cross-border flows without needing an establishment elsewhere in the eu. we need high levels of access to let those cross-border flows continue, but that is dependent on regulatory alignment. equivalent's means you are a role take her. -- rule-taker. >>
the referendum was about taking back control. you should not be a rule-taker. you have u.k. and that to have same policy goals -- you don't think that's rule-taking? >> if we disagree with something, we are locked in. we have no choice. with this model, we do have a choice. we can decide to change regulation, have material divergence and lose access. it enables us to have high levels of business across order. what is the latest from the machinations in brussels? do you think london will lose control? >> i think this is a big debate. i think this is a fundamental question that people need to think about.
it is in the interest of families and institutions to pull assets for clearing. it is cost-effective. do we let the politics get in the way of the business? i think they are increasingly thinking about, how much risk should my jurisdiction take on board in this? i think we are in the early stages of this. the changes affect not only london, but could also affect the states and elsewhere. people are very alive to the multilateral impacts of this. anna: mark, a pleasure to see you this morning. the international regulatory strategy group. manus: i will be joined by the former u.k. commercial secretary to the front -- to the treasury, jim o'neill.
[inaudible] ,nna: we are getting some keeping an eye on the breaking news and keeping an eye on futures. they look as if we are headed higher. manus: it comes down to this, donald trump will come up with his tax plan, this could be the shifting of the dollar. the corporation tax down and europe is up, you have the momentum behind the european equities. there was a little bit of reprieve all around in the markets and the geopolitics steps back as the day went on.
anna: there is the bringing together of assets to take on rivals elsewhere. let's put up the risk radar and show you another same which was strong dollar. yellen talking about increasing interest rates gradually being the right policy and the stages ripe for trump to present his tax plans. in the meantime we get the dollar going higher, could september be positive for the dollar? we have been falling but september is a little bit different. the dollar in -- index up .2 of percent. manus: the msci asia-pacific is down and that that -- the nasdaq finished the day in one of the biggest losses. they have similar issues, i wonder to what extent. you have oil rising versus the technology issue. and japan trading
ex dividend. to what extent is that a technical drawback versus the reality because they are a bit stronger. pc do this week and u.s. inflation as well. that's path that into the bond markets and see where we are heading. we see some moves lower in the bund future's. manus: let's get across to juliette saly. u.s. president donald trump and republican leaders will announce their long-awaited tax overhaul plan letter today. according to three people familiar with the planned the rate on corporations will be set at 20% and businesses would be allowed to write off their capital spending for the strive years. that -- they will propose a top individual rate of 35% but the congress to decide whether to create a higher bracket for top earners.
the white house did not respond to a request for comment. donald has said he is prepared to use devastating military force against north korea but he encouraged the world to work together to end the country's nuclear program as he impose new sanctions on its banks. speaking during a joint news conference the u.s. resident praise china for placing new restrictions on banking relationships with pyongyang. backedama the candidate by donald trump has lost the republican primary. and comment senator luther strange was being by judge roy moore. a democratic opponent. the victory is a blow to trump and senate majority leader mitch mcconnell whose efforts boost the campaign failed. chinese industrial firms have ,xtended this year earnings industrial profits increased from a year earlier. that is the most in four years and compares with the 16.5 pace
earlier suggesting resilience is enduring even admit slowing factory output and investment. saudi arabia will allow women to drive cars adding its status as the only country in the world to than half the population from getting behind the wheel. women will be entitled to driving licenses in next year. it is the muster medic move so far in the government's bid to open up saudi society, a counterpart to an ambitious program to modernize the economy which may see the country holding the biggest ipo. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . more than 1000 stocks trading with -- without rights sending lower and austria closing lower by .1 of a percent but when used about japan and
the small moves we have seen in some of the other markets you can see gains in hong kong led by tech players and gains on apple's players and taiwan and that makes the regional index higher up by .1 of 1%. looking at stocks in general we have seen a return to these chinese development stocks which were dumped earlier. the propertyding and upgrading the return on equity for the sector suggesting a return create solid moves coming through in the electric vehicle players led by byd in hong kong. aging could issue guidelines to boost development of the sector even further. this is one of the apple suppliers in taipei. they have been under pressure but a note out from k.g. i saying you should be buying into these apple suppliers especially the ones building the iphone x.
in november.unches anna: with the robust u.s. liver recordequities hitting highs and global growth recovering, janet yellen has sounded a hawkish note. cautioning there is high uncertainty keeping inflation low create >> moving too quickly risks over adjusting policy to head off projected developments that may not come to pass. particularlyroach appropriate in light of subdued inflation and a low neutral real interest-rate. which implies the fomc will have only limited scope to cut the federal funds rate should the economy be hit with an adverse shock. but we should also be wary of moving to gradually. to run wellntinued ahead of the longer run pace we estimate would be sufficient on average to provide jobs for new
entrants to the labor force. modestthout further increases in the federal funds rate over time, there is a risk that the labor market could eventually become overheated potentially creating an inflationary problem down the road that might be difficult to overcome without triggering a recession. president trump and republican leaders would announce their long-awaited overhaul of the tax laws. they are expected to propose a top individual rate 35% and congress will decide whether to create a higher bracket for top earners. corporation tax can come down to 22% -- 20%. anna: let's get your thoughts on the united states. how crucial is this tax conversation, a lot of expectation has been built up -- lastend of lost
year. that seems to be unwound from the reason part of for dollar weakness. how important is this now? guest: we have a conservative view on the dollar. it is tax reforms and not the fed that will be a game changer. we stick to two basic principles. economic benefits of any tax plan, it is the tax reforms rather than straight tax cuts that will yield the economic plan has to any tax make economic and political sense. we are not holding our breath on even -- either of those. we're not expecting markets to reprice u.s. reflation prospects. we think markets have learned their lessons going into these tax reform promises to early and they got burned earlier this year. we need to see credible steps on the political front that needs to be credible revenue raising measures in today's details for
the deficit hawks in congress to sign off on this. a 2018 story at best. thedaily profit, this is probability of a rate hike. not the fed that will drive the value of the dollar. it wasn't oversold, it is the longest losing streak since 2007. nothing lasts forever to >> we think the dollar is in a correction mode. for the fed we are encouraging investors to look beyond december. december is in the price and there is a headwind for the dollar. you could get some that data, geopolitical uncertainty. we a dovish re-think on december. we pointed to the downgrade of the longer run dots, that was important for the uncertainty the fed has signaled. isa: you think the market too focused on what happens in
december. we should be looking further out. guest: exactly. we will say any call has a time -- and expiration of february. we do not know what the future of the fed will look like in february next year, who the chair will be. it is another reason not to change the dollar -- chase the dollar strength. manus: referring back to the , it is almost like the death of a dollar kind of thing. the euro and the yen supplanted the yen as haven currencies. is that accepted, is that norm, the yenket has performed very well. when you concur with bank of america on that? guest: since 2014 since we saw that pro-cyclical dollar run it shifted from being a safe haven arrency to becoming
pro-cyclical currency. we are seeing that cyclicality unwinding and that is natural when the rest of the world is catching up with the u.s.. anna: what do you think is motivating janet yellen? ,f she more concerned about when you listen to what she is saying kamaishi rate -- concerned about reappointment or legacy or rising above all of that? guest: there is a lot of ifs and butts in her speech and there is enough for market doves and hawks to clean onto. we emphasize the keyword which was uncertainty. fed an innocent bystander, a watcher to is -- what is going on. manus: you mentioned doves. we will take you to the left-hand side and we're talking about the vacant seats that we have on the fed. there is this debate that the fed is an+++
the moment, it is bereft of one jeopardy. those people who have been there a while, there is less of them created can count the weeks that they have 10 year than months and years and it could move to a rules-based federal reserve. what would that mean for the market? guest: if we saw a shift to the rules-based system given what the president was saying about preference for lower interest rates it doesn't make sense to suggest interest rates would be -- we think we view it in the context together. when you have a government or an administration pushing with deficit spending the last thing they want is high interest rates. it is an extensive start. anna: with the tax plans we see reporting,at we are
what kind of stimulus effect with that have for the u.s. economy? corporation tax to 20% going from seven to three different thresholds, allowing companies to bring back their taxes but from abroad. we do not know at what rate yet. guest: straight tax cuts and corporate taxation, that is a demand, it is the supply side plaguing the u.s. if we can tackle that as you mentioned, bring in cash back andrea patry it back into the u.s., that is a game changer for the u.s. economy rather than the straight tax. the risk is it gets spent on tax buybacks. thank you very much. team at ij.strategy 45 minutes to go until the
start of the european trading day. here are the stocks we are watching. tham and uniper, that was the deal for shareholders, they can take it if they want to. has gonee seamen still through. a couple of lines have come through and they say the allston -- alstom deal kicking in. the: we will speak to seamen ceo. and macron's ambitious plans to reform the eu including his vision for the u.k.. manus: the former u.k. commercial zones secretary to the treasury joins the bloomberg team at 9:30 a.m u.k. time. this is bloomberg. ♪
past it is a 10 minutes seven here. ,he dollar is a little stronger perhaps that is more the storied this morning given the fed commentary and the tax conversation in the u.s. let's get an update. better openingly on the euro stoxx 50. we have 10 year government bond yields and stocks are up, futures a little bit lower in terms of price yields, a little bit higher. where will we go, we get a raft of fed speakers throughout the rest of the week. we have yellen and you have dubai at six percent. the rails is to unite unit of these two big european
businesses. this has been announced and we will be speaking to the ceos of these companies. against chinese companies in this area. manus: we have the conversation with credit suisse. this could be the start of, this manifestation of franco-german relations. good, theng it is guarantees andhe that is important in terms of the job factors. anna: he is speaking in paris. let's get a bloomberg business flash. juliette: bombardier's jetliner got harder to sell in the growth largest aviation market. the commerce department has slacked import duties of 220% on the c-series plane him -- citing
improper subsidies after a complaint by boeing. they decision plant -- could of been the plan to order more which has five jets. payrgan has been ordered to $4 billion for mishandling the estate of an executive. the bank had mismanaged the administration of her late husband's estate. subreddit is likely to be knocked down on appeal. thangreeing to pay more $1.4 billion to u.s. farmers. according to people familiar, the payments are related to a complaint that the marketing of the company's genetically modified corn seeds shut them out of the chinese market. a settlement with more than 100,000 farmers was announced yesterday. in a minnesota class-action trial but a spokesman would not confirm the amount of the settlement. that is your bloomberg business
flash. anna and manus. anna: thank you. the u.k. could find its place in a revamped and simplified eu, that is what president macron said about the plans to reform the eu. speaking for nearly two hours, his proposals range from defense to immigration. covered a broad area. the coalition w likely come together withill macro not -- merkel at the helm. if you are an investor saying do i want to own more europe, what is the conclusion from the fx desks around the world and the strategists? guest: this week we had a reality check given the outcome of the german elections and more so the pace of macron and merkel integration might be not as
rapid as many had predicted. friendo rally is a runner. it had a bit of up cause here but this is more of a technical the euron and we think dollar could run down to 116 but that is a great buying point given our view for europe. macron is talking about the finance ministry and investment, he has given some new life to them. other people talk about whether ae yes him could be used as bigger role. are they enough to give us step change, big used to the euro with the construct? guest: the next key to unlocking your zone growth. we have the recovery stage and we need to push on. premises from a lot of european countries on reforms and structural reforms are long positives for years on growth and that is one of the factors
why we are cyclic he -- cyclically bullish. manus: this is the economic in the blue for europe and the u.s. is a little bit below. the data is stacking up but is a moreking up for aggressive move from the european central bank in terms of their taper for 2018, how quickly will the taper, when will they raise rates, is it 2018 or 2019? guest: we think 2019, it will be at the fish tapering. it is the financial market implications especially allowing for front running of the euro to move up to quickly, too sharply. if the ecb were to signal that the threshold comes in at 125. that will start raising the red flags at the ecb so we do not think that is our base case or what we want.
anna: in the u.k. we are in the conference season. never far from the pound even all the brexit conversation but even more so. we pulled up this chart, this is one that you can find on the bloomberg. notable event in history back to the 1990's. describedhat can be as the run on the pound. yesterday at the labour party heard from john mcdonnell who wants to be the chancellor in the u.k., they are more gaming about what would happened if there were to be a run on the pound. is this something that is being looked at high ethics asks in london? guest: the run on the pound has always been a tale risk for the pound since the conversation started a couple years ago. when you look at the large stock of external liabilities, that is why we put so much emphasis on the transition. what a transition deal does is
push back the tale risk of a cliff edge brexit. the pound andon flights on capital. for both the u.k. and european leaders to find a proper solution. you continue to buy into the pound? that is the bank of england story price. for us to refined our pound forecast we need to see the credit transition and that could happen. anna: maybe they are listening in brussels. thank you very much, good to get your thoughts. from mr.line or two lemaire. he is saying france has no reason to keep a 5% state -- a stake. it is about unity versus global competition. that is against the chinese. for daybreak it
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morning and welcome to bloomberg markets. this is the european open. cash equity trading. we are starting and half an hour's time. we will bring you the first trade of the date. i am guy johnson in london. matt miller is in berlin. president trump unveils an overhaul. will congress back it? the central said bank should be wary of moving to