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tv   Bloomberg Daybreak Europe  Bloomberg  November 20, 2017 1:00am-2:30am EST

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anna: coalition talks collapse. germany fails to create a new government, putting merkel's future into question. the euro falls. manus: paying for brexit. profits could see ahead of a crucial meeting next month. anna: refusing to resign. robert mcgahn a shocks zimbabwe as he doesn't offer to step down in a tv address. he may face immediate impeachment hearings. all very warm welcome, this is "bloomberg daybreak: europe," our flagship morning show from
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london. manus: a little bit of breaking news. we have assets under management at the end of october, 393 billion swiss franc's. number, the fight for new funds. it's not just about new funds, it's about the profitability of those funds and putting them to work. that's the headline number coming through from julius berg. 393 billion swiss francs. that's the top line, and we have a little bit more that we will bring to you. angela merkel, who would have thought the stalwart of europe cannot get a coalition together? euro-dollar, euro-yen, -swissie.
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anna: does that lead to more talks? perhaps. a minority government, new elections? the euro is the key message. manus: the question is this. do you look into the eye of the storm and say she will pull it back? there will be a rapprochement? what we have is a reflection. these are the risk reversals. he were trading higher, quite a bullish sentiment on friday. the most bullish since 2009. the risk reversal, trading back at levels we haven't seasons october 12, and bang, merkel's coalition attempts failed. i will say this, asset managers might be wrong and temporarily wrong, because the bullish bets are the longest on record for the asset managers. is the euro a buying opportunity? anna: draghi was at 118. the asian session sometimes overreact to european news.
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we will see whether that is the case or not today. let's get on the risk radar in show you what has been happening in asian equities. the shanghai market stands at negative, although it has pared some of its losses, and the selloff is pretty broad. overall we are down .8%, nothing enormous. the shanghai composite was down earlier, now it is down around .6%. we do have some weakness coming through. in china there is a warning about stocks increasing too fast, which some people have attributed to the drop in the shanghai composite. u.s. futures in their, they were -- in there, they were down on friday. how much of a concern about growth is there as we see the yield curve fitting the tightest level in a decade on friday? manus: what is that telling you? what does the fed want to do? they have penciled in four hikes, the market believes there will only be one additional one in 2018. y, and that is a
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debate we will have through the programming. let's get to at ludlow with your first word news. ed: good morning. zimbabwe's president robert mugabe shocked his country with a televised address that failed to announce his highly anticipated resignation. the dramatic twist means he may face immediate impeachment hearings. he has been expected to announce he was stepping down after almost four decades of rule. 's command element has toerscored the need for us collectively, collectively, start processes that return our nation to normalcy. ed: u.s. senator susan collins has said the republican tax plan passed by the senate finance committee on thursday needs work. asked directly whether she would vote for the measures as written, she told abc's "this
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week," i haven't reached that conclusion yet. if no democrats vote for the bill, republicans can afford to lose only two votes and still pass it. ron johnson has already said he can't back the bill as written. japan's recovery remains on track, with exports growing by double digits for a fourth straight month in october. that is the best performance since 2008. exports rose 14% and imports gained almost 19% from a year earlier, leaving a trade surplus of $2.6 billion, improving local demands fueling growth in exports through the year, with new electronic devices creating orders for parts and machinery. the u.k. could be about to improve its financial offer to the european union ahead of a crucial meeting next month. members of theresa may's divided cabinet will consider how much money they are willing to offer if britain divorces the eu. yesterday, philip hammond
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suggested that a proposal would come soon. >> it is not about demand, it is about what is properly due from the u.k. to the european union under international law, in accordance with the european treaties. we have always been clear that it might be easy to work out that number, but whatever is due, we will pay. we are a nation that honors our debts. ed: global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . let's check in on the markets in asia, here's david ingles. david: thanks. it's not the best start to the trading week. as you can see, it is pretty much red across the board. there are a few exceptions, but if you look at the move across the region, it means the split -- close to 60% of stocks on the way down, give or take 35%. not a lot of volume coming through, certainly the lack of good news, not so much negative,
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but the lack of good news. a lot of these markets are also a bit extended. there's not a lot in the earnings pipeline to look ahead to. we are coming on one of the best earnings seasons so far, and when you look ahead, there is not a lot to look forward to, to drive this thing higher. but a few pieces of data, japan trade data, gdp numbers out of thailand not bad as well. it's this divergence between risk assets and the growth momentum remains strong. more an earnings story for the next quarter. a few big movers we are following in the asia-pacific, a big deal in hong kong. up 8%t has been swinging, at one point. it was down 13% at one point as well, down 4% at the moment. you have alibaba buying, getting
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a piece of the company, adding to their stake, at a discounted share. aftera is still very much it, planning to raise more money in the market. that's a wrap of the market story in the asia-pacific. back to you. anna: david ingles in hong kong. angela merkel's future is in doubt after a month of exploratory talks aimed at forming a coalition government collapsed last night, sending the euro lower. one prospective coalition partner, the pro-market free democratic party, walked out on a deal that merkel said had been within reach. speaking to reporters, she pledged to maintain stability. >> [speaking german] >> it is a day is deep reflection of moving forward in germany. i will tell you everything possible to ensure that this country will be well led through these difficult weeks. manus: matt miller is live in berlin. good morning to you.
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the reasons for this last-minute allapse she says, it's profound examination of germany's future. matt: yeah. the reason, according to people we were talking to in the cdu and her party, and people in the greens, is that the ftp walked out of talks. one of the members of the green negotiation team said that was well-timed spontaneity by the ftp, implying that they had tried to walk out earlier in the weekend anyway. the ftp, the liberal party here in germany, which would have been a minority partner in this government, says that they weren't getting enough progress on the tax cuts that they want, on the business friendly environment they want to create here in germany. they were also concerned about the state of europe.
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the stp once nations to be able to leave the euro and still stay in the eu, so this was something that was a disagreement, and they have had other disagreements with merkel in the past. matt, many of the options that now lie ahead are pretty untested in postwar german history. lay out some of the options angela merkel faces. matt: well, one of the things she could do is go back to the spd, the social democrats, and asked to continue this grand coalition that is currently ruling in germany. according to hobbles lot, the head of the spd has said no way, jose after these talks collapsed. the spd is already saying that is not going to happen, because it turned out so badly for us in the last coalition.
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so the other two chances she has, the other two options, are forming a minority government, which is something that never happened, may be getting together with the greens and relying on those from the fpd in parliament, or she could germany tosident of call for new elections, although that is also something that has never been done before. it is constitutionally questionable exactly how it would work. but it would take weeks, maybe months, to do that, and it is not something that currency traders would be thrilled about. manus: it certainly is effected in the euro this morning. that miller in berlin. -- matt miller in berlin. we have the chief economist at gplus, she joins us on set. welcome to the show. when you raiders news, how disconcerting is it? to me, merkel is the stall wart of europe, nothing was ever
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going to go wrong in germany. here we are a coalition she can't form. >i'm shocked, are you? the riseellor merkel is of the nationstate fortress and what we have seen around europe out of theoing liberal centrist, globalist, free market economics toward the fringes. of course, the rise of populism, anti-establishment is well documented by now. back in 2005, it took only 5% of the show, today it is close to 35%. the last time it was at this level was 100 years ago, and we all know what happened. there's a great deal at stake here, but what i think we should not be forgetting is that this is not an environment that is ultimately driven by security, certainty -- there's a great deal of discontent with
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democracies, and there is a very big question mark as to what kind of governance we are going to get at the end of the talks. --s is obviously a game of the potential coalition partners of chancellor merkel know she has no good options. there is great deal more bargaining power than she is probably willing to give. how that impacts other things like global trade, and in particular brexit talks, that is a big question. anna: in the u.k., the government doesn't have a formal coalition, it has a supply arrangement with its partners. there is a fragility in many areas. in terms of the euro and where this goes, we have written quite a lot in recent weeks about how the euro started to look increasingly like a safe haven currency. issues around it,
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to some extent, have been put to bed. could this threaten to open those up? when of the things that she seems to have fallen out with is very much around the euro and european issues. >> absolutely. we are in the year of discontent, and this is not a u.k. specific issue, it is globalized. it is the failure of these coalition talks, that we are talking about the future of governance, an open europe, does mean that this drive toward nationalism, towards protectionism, is very much a european story as well. from that perspective, the markets are probably underpricing political risk, and i think we are probably moving beyond the euro. although 2017 has been very much about the secret ninth double recovery, which has been a big beneficiary.
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however, we are looking at a growth and big market risks, because spare capacity and productivity growth is slowing down. in 2018, it will be a different proposition, which means markets should be more sensitive to political volatility. manus: a couple things. you said the fx prism is where you see the risk. anna and i started the day talking about the euro. a little too early to call the demise of angela merkel, but europe wakes up today, do you think that europe will take those currencies lower, and how much more aggressive can it be in a state of charters for germany? >> there have been several layers in this framework. in the short-term it is a political issue, in the long-term structural growth issue.
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markets have been trading the euro as a haven because it has been the major yield market. this is a very positive message to be heard at a time when political risk is high, but at the same time macroeconomic volatility is low. let's not forget that this is the time where populations are growing. there's no region that faces more difficult demography than the eu, china, and japan. productivity growth is very much challenged. the ecb is peddling liquidity in the wrong direction, so to speak. debt,e this very large european growth is under banked, and all of that will start to bear down on the euro. anna: what about the wages story in europe? mario draghi was mentioning this on friday, euro at 118, and we are getting word that german
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negotiators didn't have enough common ground, according to the german fdp general secretary commenting on german are notting, that they afraid of going into opposition. they are really setting out their stall after we saw these collapses. on wages, how much is that key? there's strength of the german economy, the strength of the euro zone economy increasingly evident, yet wages have been sluggish. >> absolutely. inequality, the sense that governments are being reactive rather than proactive, the fact that the hot button issue of the day has not been managed very well, is very much on chancellor merkel's radar. all of that is very much behind the social political fragmentation, setting the ground across europe, and of course it has divided
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traditional and political values. manus: the chief economist and managing director at gplus economics. anna: coverage of macron's failed coalition continues on bloomberg radio. you can turn in -- you can tune in to bloomberg radio on your mobile device or on dab digital radio in the london area. coming up -- manus: robert mugabe has failed to resign in a televised speech. the 93-year-old might face impeachment. anna: a race against time. theresa may is set to increase her black brexit bill offer. more details coming up. this is bloomberg. ♪
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manus: a live shot of singapore, early afternoon. msci asia-pacific down by .8%. is it investors locking in gains
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with the u.s. tax wrangle? the msci asia up 20% this year, s&p of 15%. there has been quite a dramatic outperformance. let's set you up for what you should be focused on for the week ahead. anna: on wednesday, the u.k.'s brexit chancellor is due to make his budget statement. on thursday, the ecb publishing the account of its october monthly policy meeting. manus: then we round off the week with a post-thanksgiving shopping bonanza, black friday. yes, yes. anna: nervous turkeys. president -- let's talk about african politics. it has been a plenty of -- has been a fascinating weekend. robert mcgaugh they failed to announced his highly anticipated resignation. manus: the dramatic twist means the 93-year-old may face immediate impeachment hearings. let's get to bob wallace, joining us for more. good to see you this morning. where does mugabe's
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non-resignation leaves and bubbly? what happened -- leave zimbabwe? what happens now? >> he had everyone waiting for resignation, which obviously didn't come. the next thing that happened were impeachment proceedings were likely to begin today, and and will lead to disaster that suppression of when not if he will go. anna: is there a chance he does stay on longer, or is it just a matter of time? from what you said, there's a process, that he will lead to his departure. >> well, it is difficult to tell with zimbabwe. most analysts think his time is more or less up, and that what he did yesterday was just his way of trying to negotiate a better exit for himself, and perhaps sort of secure whatever
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assets he's got. he did send the speech that he is going to preside over the party conference next month, which was very strange, given that the party had only hours before fired him as leader and replaced him with the former vice president. we've got to see whether he will be able to do that, whether he will be able to oversee that conference as he says he will. they chose the candidate for elections, which will have to -- which is scheduled to be held sometime next year. it does still look as if mugabe's rule is just about up, but when exactly that will calm, we don't know. manus: paul, i'm going to do something which is classic tv. you can see the chart but we
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will get the director to pick up this shot, the flow of money into zimbabwean stocks, aggressive because of the economic disc insertion in zimbabwe. give us a sense of just how battered this economy is, and how maligned it is by inflation, the challenge ahead for who takes over. >> mugabe said the economy was going through a rough patch, which is an understatement of note. it has been in freefall for the last year or so, probably 95% of the adult population is unemployed. some 3 million or so zimbabweans have immigrated to the likes of south africa and thin the last decade. the most recent crisis has been a return of inflation, and zimbabwe had hyperinflation about 10 years ago. while it uses the u.s. dollar,
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the financial system is running out of cash, and zimbabwe's response to that has been to print what it calls bond notes. they are meant to trade at parity with the u.s. dollar, but they don't, because zimbabweans don't have any faith in them. zimbabweans have poured them into the stock market to hedge against inflation, and on paper the stock market is the best performing in the world, until last week it was up about 320% in dollars. while it is obviously a small standards,lobal jpmorgan is there. anna: thank you very much. bloomberg's paul wallace, watching closely so in zimba. manus: britain prepares to boost its cash offer to the european union. chancellor philip hammond says a
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brexit breakthrough should be near. it is a big week for the chancellor. he has his budget. will the cabinet move on the brexit bill? ♪
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anna: "bloomberg daybreak: europe," 3:20 in the afternoon in tokyo. we have the dollar against the yen, the dollar is stronger today, the euro is weaker, that is more of the story. we are watching the geopolitical scene. on the subject of japan, we have had the japanese prime minister speaking of parliament. he has said that he did not discuss bilateral free trade agreements with trump at the summit. we saw president in the asian region recently, and he was focused very much of the bilateral nature of dealmaking rather than on the multilateral trade agreements. that is a bit of japanese news flow this morning. let's check in on the markets with guy johnson. guy: good morning, anna.
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let's talk about where equities are going. at the moment, we have futures trading on the ftse. the fair value indication is down around .2%, which is pretty consistent with what we have up here, which is what's going on in terms of calculations. in theory, nothing to see here. however i think it will be interesting to see how the currency trade works through. this will be one of the credit the factors and how your portfolio has done. what is your base currency? where have you invested? have you done it on a hedged or unhedged basis? you can do that on the wei screen. down .2%. you mentioned what's happening with the euro that will be the critical factor in today's session. ftse is largely international, a lot of the flows coming in our currency related. the euro is down about .5% on the back of what's happening in germany. how long that lasts is the other factor you have to be thinking about. today is going to be a lot about
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currency and how the equity markets will feed off it. the other interesting trade is what is wrong with this chart here. you have a situation where the market has got data that tells it that we are record longs, record longs on crude at this point in time. however, the rig count picks up again friday, and it is beginning to look like it is turning. if something is wrong here, either the market with its long volition is wrong for the rig count data comes back down. if it keeps going back up, that cftc data will start to turn. it's a balancing act in the crude market. manus: thank you very much. the u.k. will improve its financial offer to the european union. according to "the times," the government is likely to add another 20 billion euros. anna: chancellor philip hammond said britain was on the break of
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reaching a breakthrough with brussels. >> it's not about demands, it is about what is properly due from the u.k. to the european union under international law, in accordance with the european treaties, and we have always been clear that we won't need to work out the number, but whatever is due, we will pay. we are a nation that honors our debts. manus: the chief economist at managing director at g plus economics, the cusp of the breakthrough, about to break the logjam. billion,more than 20 mind the gap. but it sounds as if the government are preparing us for a bigger effort in the finances. would that break the logjam, do you reckon? >> this is a very encouraging indication, because this is all about negotiation tactics between the u.k. government and the eu. this suggests that the u.k. has been preparing to increase the
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the oldthey knew that one would never cut the mustard. the fact that they are expecting a breakthrough by offering more suggests that the other side has agreed to perhaps start the beginning of trade negotiations. this is a very important step change in the political dynamic, because for as long as the conversation is about the u.k.'s fiscal contributions to the eu's future budgetary obligations, then you have a united front. once the trade negotiations begin, the national interest starts to come into play. at a time when germany is occupied with its own government, this could be a very important window of maturity for the u.k. clearly, the u.k. government has sensed an opportunity to move forward in exchange for economic gain. anna: and according to our reporting, a number of the brexiteers in the cabinet want
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to keep things dry -- wants to keep the powder dry if it means they will have more and ammunition in trade talks. 2019lock is ticking, march marks a transition arrangement becauseas it is beefy businesses need to be able to count on that transitional arrangement. >> well, we certainly don't know, and this is not business as usual. we are not going to really know the specifics of this transition arrangement basically until april. planningre going to be for a cliff edge of a kind, with perhaps some specific arrangements made on a second by second basis. is this going to be a major change in the macroeconomic environment?
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what i am particularly concerned about, and this is what i think we should be looking for from the chancellor this week, is what the government is doing in terms of investment planning. while there is a certainty on the negotiation side, this government has had the time and the responsibility to start preparing infrastructure for a different u.k. trade relationship with the eu, and that has been feeling the ground. will be about strong floating investments. manus: you mentioned the budget, productivity and the markets. i don't know which one to whet your appetite -- let's talk about the markets. we will see how much the government wants to borrow this week, the deficit will be critically important. sentiment on the pound, the risk reversals, one weekend one-month risk reversals. we are most bearish in a month,
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and i think this is really what the market is more interested in. they are less focused on the taxes spent than on the growth outlook for the government. is that a fair estimate? >> from the market's perspective, it tells us something, that while markets are overwhelmingly long risk globally, and they are looking to allocate more assets to risk, they are overwhelmingly negative on eu risk assets. if it wasn't for the pound, the flexibility, it is quite clear traden economy like ours, deficit versus the rest of the world, will have to endure higher domestic rates, the cost of borrowing, the cost of risk. so from that perspective, the fact that we have an aging running at full capacity given that there is little more in the labor market.
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to silver skills gap the economy needs. and we have lagging productivity growth. all that means is it's a difficult proposition for investors and the government that is trying to fill a large, cyclically adjusted deficit. anna: lots of food for thought for wednesday. we'll park the u.k. there for a moment, because we will revisit it on wednesday. let's talk about the united states. one of the things that has seemed to unnerved investors is various interpretations of what the flattening of the yield curve looks like. it is the flattest in a decade. how low can they go? how much of this is a headache for you? is this giving the signal that growth will slow, that the fed might be tightening too fast, or are we trying to read into this yield curve things that might have applied in the past but don't apply now? >> there are some issues here,
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and i wonder if we have another hour. think it is widely recognized now that the global financial crisis was the beginning of a new era, it meant the fed had to drive the risk for the market as low for as long as possible. and that meant a dramatic change. it was done by an economy that runs a large deficit, the biggest consumer in the world, by importing savings from the other part of the world, emerging markets, the depression of return and capital has been globalized. where 2environment, trillion worth of accessibility evene eu, 1.5 in the u.s., now running through rate hikes and quantitive tightening,
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growing populations increasing global savings of supply. there is still a lot of liquidity around the financial system. the yield curve flattening right now is driven by the short end, which is a good thing. and we are nowhere near the fair value on that, because of course, i don't think the u.s. economy -- it could definitely accommodate more high interest rates than what the market is pricing, and that suggests a flattening momentum. until they start seeing longer yield collapses in conjunction with higher -- well, they could be one of two things. it could be an oversupply of liquidity or demand, too much of weakwing population, and productivity growth. or it could be concerned that central banks are overcooking it.
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anna: putting too much liquidity, something that could cause that. that's the contrast, isn't it? with what's going on in japan. there are still central banks being very generous. >> that is precisely the point. the deficit is the traditional way of central-bank policy making, what we had until a decade ago, means that some have become agnostic toward the inflation gap, and they have become much more concerned about keeping nominal rates at low levels so as not to create another contraction in the global economy, that is very much long on debt and short on productivity. this is the kind of inequality imbalance that could cause the next crash. as long as that remains the case, assets will continue -- there is no reason, given how strong the u.s. is. manus: thank you very much. very comprehensive coverage. later
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anna: cisco systems chairman john chambers joins us for an exclusive interview at 10:30 a.m. we will get a little insight into the global economy, through the eyes of this big tech player. manus: no better man to give us the rundown. between $50 billion and $100 billion between settlement agreements in the anticorruption crackdown. anna: this according to the country's senior official. are executive editor tracy alloway joins us from dubai. good morning. what does this tell us about the crackdown, about the reasons for it, and the success, what it is trying to achieve? to $100he $50 billion million, there was an a hundred billion dollar number floating around at one point, which would have been an obscene amount of
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number. in terms of the purpose of the crackdown, it does make you wonder a little bit. some of these arrestees seem to be getting off lightly, with settlements instead of a trial, a stay at the ritz-carlton before being let go. but you can see potentially what the intent is here, it does three things for the existing saudi regime. audience,o a domestic to have been long concerned about corruption in the bureaucracy. it also to some extent boost reserves at a time when saudi foreign reserves have dropped from over 700 billion to about 450 billion now. finally, it sends a message about who was in charge, and that is mohammad bin salman, the crown prince. manus: he has, indeed, and his audience is clear. but from the market's perspective, a couple different things have happened. the ipo got away, but the markets have been hit, and that
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was really a rush to get the properties listing up and away, wasn't it? tracy: that's right. saudis have to walk a fine line. they are doing this corruption crackdown, the unexpected crackdown, at a time when they are also trying to attract foreign investment. meanwhile, we have seen the uncertainty caused by recent events filter into the region assets as a whole. the ipo was a really good example. this was the biggest ipo since 2014. yes, it was coming from a real estate company, at a time when some people found questionable, it was always potentially going to be difficult, but we know it became increasingly difficult as events in saudi unfolded. when they first started the ipo, it was october 26, a week before the event went down. it apparently became increasingly hard to get investors committed to the deal. finally they were able to get some big anchoring investors.
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if you look at what is happening with the region's market, you can see the story is almost being entirely driven by geopolitics. the correlation between saudi stocks and the oil price, something that had traditionally been quite closely correlated, is no negative. the most negative since 2014, all because of what we have seen in riyadh. anna: thank you. tracy alloway, bloomberg markets executive editor, joining us with the latest on the saudi crackdown. coming up, destination euro. is eurozone growth boosting tourism? manus: and later, more on germany.the dramatic collapse of the coalition talks . could angela merkel's 12 year run as chancellor becoming to an end? this is bloomberg. ♪
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anna: this is "bloomberg daybreak: europe," 1:48 in the
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morning in new york. weaker at the start of the trading day. u.s. equities were weaker on friday, concerns around the flattening of the yield curve, what does that tell us about future growth and fed tightening intentions? bear in mind that the asian session has been turning things around the little bit. we saw some decent selling in the shanghai composite, and now it is up by .1%, japanese markets still down .6%. let's get the bloomberg business flash with ed ludlow. ed: toshiba plans to raise $5.4 billion by selling new shares of divestment of his westinghouse related assets. it sold 2.20 8 million shares, about 10% less than friday's closing price. the move comes as the embattled conglomerate tries to avoid being delisted from the tokyo stock exchange. abu dhabi's state owned oil company plans to sell between
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1.25 billion and 2.2 5 billion shares, according to an advert. the ad also says it will reveal the price range on november 26. the initial public offering is the first of several expected in the region, most notably aramco. alibaba has agreed to buy a stake in china's largest hypermarket operator for about $2.9 billion. the retailer giant is purchasing 36% of sun art, which operates about 400 hypermarkets. the deal marks alibaba's latest investment in old school shopping, as it sees an ambition to shakeup of $4 billion and mortar arena. bitcoin has topped $8,000 for the first time. investors shrug off a 29% tumble last week. despite torrid trading and a recent move to alternative currencies like bitcoin cash
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injecting volatility, they are offering futures next month. that is your bloomberg business flash. manus: thank you. global investors are set to boost investment in europe as economic growth and stability in the eurozone seems to become more attractive. the u.s. is ahead in global markets, according to a survey from invest europe. joining us from brussels, michael collins. good morning. a very bullish report, makes for great reading. talk us through why europe is such a a heavy destination for the international 360 investors he spoke to. >> we have always known that europe was an attractive destination for international investors. we certainly see that from invest europe members. what we are seeing now, i think, from international investors, is a realization that
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some of the difficult decisions that european policy makers make over the last five or six years have really started to bear fruit. the emphasis these international investors have put on the eurozone stability is a reason to feel positive. politicians are now starting to see the benefits. anna: your association represents europe's private equity, infrastructure sectors. i know you haven't asked about the current state of german but there seem to be a lot of assumptions made about stability in politics, and we sit here this morning with news about an uncertain, unstable looking picture for germany. how unnerved do you think your membership with the around germany? the fact that the chancellor fails to pull together a coalition despite expectations that there would be one? >> germany is an important market for private equity. we have large numbers of fund managers operating there, and a
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large number of institutional investors. but in the private equity and vc sector, people are always taking a long-term perspective. they are raising funds for 10 plus years, five or six years on average. they have gotten used to having to deal with short-term political difficulties, whether that be in individual countries across the currency bloc, or around the world. this is what comes out from this survey we have done, that despite short-term local instability in particular countries, europe is still seen as a good place to do business, as a place that is stable, where investors can achieve good returns. manus: it's interesting in terms of what the report told us about chinese investors in the u.k. versus, perhaps, core european investors, of putting money into the u.k. talk us through the numbers. were you surprised by that? >> it's very encouraging, that
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chinese investors have such a positive view of europe in general, of the u.k. specifically i don't think it is a surprise. anyone who follows chinese investment flows over the last few years will know how attractive to chinese investors europe has been. i think that we are particularly encouraged by is the fact that chinese investors don't seem too worried at all by the turmoil and the downsides of the brexit negotiations. that long-term perspective and realizing there is underlying strength in the u.k. economy and the broader european economy which will continue to make this a good place to put assets to work. anna: michael, one of the things your survey credits with an improving attitude from the investment community is improved capital markets throughout the eu. what exactly has improved?
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is its use of public markets to raise funding for companies, as opposed to going through the banks? what is it that is seen is so improved? there haveright, been improvements in europe. the survey shows we are still behind the u.s. in that regard, in terms of international investor attitude. we know there is more work that needs to be done. this week we are organizing a whole range of events in the european parliament under the banner of invest week, to get across to policymakers what still needs to change. we still have a european economy that is very reliant on bank finance and debt finance, and capital markets union is supposed to encourage more equity finance. there is a lot of progress that has been made. inhave seen improvements cross-border fundraising mechanisms for venture capital, but there is still a lot more that needs to be done. in particular, we need to kickstart the ipo market. that is a vital exit move, a
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vital way for businesses of all sizes to get equity financing. we are still not where we need to be in that respect. manus: finding the exit route, everyone wants to find it. michael collins, great to talk to. thank you for bringing your survey to bloomberg. joining us from brussels. we have the data flow from -- we have a bit of news flow from the various german factions, but you brought attention to the cfi. shadow banking clampdown hit the stocks this morning. security stocks hitting the lowest in nearly five months, but we have turned it around. anna: chinese markets now up by .2%, japanese market still negative. , msci asia is weaker but not by an enormous amount. the euro remains one of the big trading themes in the asian session. we will see how the euro does as we move into european trading hours, and the reason behind that, further analysis from
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germany. angela merkel fails to form a new government. the collapse talks have thrown the future of her chancellorship into question. that is next. this is bloomberg. ♪
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♪ manus: coalition talks collapsed. angela merkel fails to create a new government, putting her future into question. the euro falls. britain as a new offer to the european union ahead of talks. shocks zimbabwe as he does not offer to step down. ♪ manus: welcome to bloomberg daybreak europe.
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i manus cranny. anna: i am anna edwards. big questions about german politics. news keeps coming through to us. we have seen the collapse of these coalition talks between angela merkel and her intended partners. to what extent is that going to knock european stocks in the same way it has knocked the euro? one group saying that germans becauseot have to vote one of the options open to under the merkel is whether or not to call new elections. manus: she had very few good options. her political opponents knew that. the german ftp said they are not afraid of going into opposition elections.
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are lower. there is a slight risk off. is that because of u.s. tax? is that because of china? it's undeniable that this merkel coalition collapsing, it has translated into the market. euro yen, euro dollar, euro swiss all down. we've gone to a turnaround on the shanghai cop. shanghai comp. that goes around state reporting that stocks are going up too fast in china. marketures in the u.s. remains stubbornly in negative territory. you will see of that positive momentum from asia will modestly
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improve that situation. we have the spread of twos and tens in there. it's currently around 60 points. the curve continues to flatten. it's one of the things that take the edge off equity markets. manus: let's talk about the bond market because that's where the merkel risk, the lack of coalition forming, has had a fact. boone's --e dying, bund are higher. expected relation is at the best inflation is at is -- expected inflation close to its u.s. counterpart. in terms of the bond markets, a little bit of money flowing into the boone and the oit's. thelowing into the bund and oats.
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medical and it does not intend to make an offer for bias. -- for aspire. a statementut out as well. they have rejected the offer saying that undervalues their business. inspires as they are on tack -- spire says they are on track. manus: and ludlow has your first alert news. ed: robert will got a shock his country last night -- robert mugabe failed to announce his
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resigning. he may face impeachment hearings. he was expected to announce he was stepping down. today's meeting with a command element has underscored collectivelyus to start processes that return our nation to normalcy. senate collins has said that the republican tax plan passed by the senate committee needs work. asked if she could vote for the measures as written, she said she had not met that conclusion yet. republicans can afford to only lose to votes and pass it under senate rules. ron johnson has artie said he cannot back the bill as written. remains onovery track.
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it's the best performances 2008. exports rose 14% and imports gained almost 19%. of $2.6a trade surplus billion. meanwhile, japan has said they are trying to salvage the asia-pacific trade pact the u.s. has abandoned. the, was made in an interview with bloomberg. >> there are elections in different political events in the member countries next year so we hope to sum it up before these events. there are also remaining issues to be solved and it will take leadership to get the signed us as possible. be ahead of could improving its financial offer to the eu. theresa may's divided cabinet
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will be considering how much money it is willing to offer in britain's divorce from the eu. global news 24 hours a day. in more than 120 countries. you can find more stories on the bloomberg at top . there's a check on the markets in asia. the last hour or so has seen a few markets close up shop. japan closed lower, south korea close lower as well. you heard manus and anna talking about the shanghai. guess what's happening this market. a close tire for today. half of 1%. there's not a lot of news coming out of china. we are down four straight days into this morning.
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perhaps you have a little bit of bargain-hunting coming into the market. if i had to pick reasons, perhaps it is think. it's anyone's guess. chances are, we will be wrapping up hyundai with the lines of us the regional benchmark. -- with declines across the regional benchmark. toshiba is trying to raise money to lug in the hole in its balance sheet. 13% as down as much as -- 13% at one point. i will be there for now. anna: thank you very much.
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angela merkel's future as german chancellor is an doubts after talks of forming a coalition government collapsed, sending the euro lower. one prospective partner walked out on the deal. begin to reporters, angela merkel pledge to maintain stability. of deep a day reflection. i will have to move forward. i will do everything possible as transitional chancellor to make sure this country is well led in these weeks. matt miller is live in berlin. give us the reasons these coalition talks have collapsed. matt: i guess there are more immediate reasons that they collapsed and then kind of longer-term recent. theright now, the reason
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ftp walked out is they were not getting the ground they wanted on tax cuts and business friendly reforms. the longer-term recent, though, is a lack of trust. the head of the ftp and angela merkel have had a tumultuous relationship. since the ftp was in government with the cdu back in 2009 to 2013, they felt burned. they felt the lack of trust. the is is like it is better off -- the ftp feels it is better off going on its own than in another coalition government. we see the same thing from the social democrats. martin schultz says after the
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coalition talks failed he still will not go back and form a grand coalition with the cdu. maybe she should have a talk with theresa may. what are the realistic options? you could go back to the country or try and manage in minority. what is the thinking? matt: the possibility of a minority government is one that is talking about, but hell well -- how well could that work without a coalition? thatreens have just said they won't be interested in forming a minority government with her. the ftp would not either. she would have to go it alone considering she is not willing to work with the far right.
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she probably will not want to pass laws with them either. that really leaves one option which is new election. she has to go to the president untesteds to begin the and possibly long procedure of calling new elections. we could not see them until next year area anna: thank you very much. matt miller with the latest. dean turner is a member of u.s. .-ubs wealth management i want to talk about german stocks. it looks like we could be down. this is something that they think will shape markets area --
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markets. it was not development that any of us expected to a got to. it caught the markets by surprise. we have to look at the number of options available. there is potential for mrs. merkel form a coalition. or set up a minority government. shouldn't write them off just yet. i think the reaction is to be expected. however, let's see how things move on in the coming days. it was almost routed to the ground that angela merkel is the work of europe. -- bulwark ofrk europe. she was holding europe together. that could be shaken in 2018. that could have a number of reverberations from monetary policy to political acts of power.
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dean: that is the clearest year. if we were to the that mrs. merkel is not the continuous chancellor, what does that mean for the future of europe or brexit? that's the question. the immediate concern is there has been a lot of focus since the french election that rebuilding this franco german alliance with the and to restructure europe. i'm not suggesting that's going to happen. it's going to be something that is put into question. anna: people who invested in the euro and germans docs with things to think about this morning. you mentioned the franco german axis and rebuilding. at the same time we have seen an uptick in global synchronized growth. the europe is very export
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driven. your thoughts on how the .urozone continues to grow how far we into the story? back and take a step look at the eurozone now. it's been a fantastic year for growth. encouragingly, a lot of that growth has been domestic driven. our senses that momentum we are seeing can be maintained. we do have growth slowing a little relative to this year but we're still looking at growth coming in around 118%. , it's ahat into context pretty decent outcome area --
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outcome. the chart that i referred btv 3105. this is the five-year five-year forward's. it's the focus of draghi. years isfive-year five narrowing between the u.s. and europe. this is a shift in the look at inflation in the european contact. dean: i think that is right. we are past the lows for inflation in the eurozone. i think that is something that has encouraged the ecb to reconsider its stats.
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considering the economic backdrop, this inflation pressure should continue to rise across the eurozone. in our mind, that is something that should drive the euro higher. anna: thank you ray much. stay with us. that's coming up. manus: we haven't talked about the race against time. theresa may is set to potentially increase her brexit bill offered to her key european allies. talkslater, bloomberg exit with mario monti. this is bloomberg.
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♪ very appropriate that we focus our attention over on berlin today. the euro is down against the dollar. weaker versus many currencies. it could be a big underperforming today on the european trading day. a government officials saying that the german president must decide on a new vote. another election is one of the options. there are others. let's get a bloomberg business flash. alibaba has- ed: agreed to buy a stake in son retail group.ts
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latest--itlie mamas marks alley bothers -- it marks ali baba's latest stake in old-school retail. alternativee to currencies has created volatility. that is your bloomberg business flash. the u.k. could be about to improve its financial offer to the european union according times."e likely to offer another 20 billion euros to what is already agreed. it's not about demands, it's about what is properly do from the u.k. to the european union under international law in
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accordance with european treaties. we have always been clear that it won't be easy to work out that number but whatever is due, we will pay. we are a nation that honors our debts. we will spend the next 10 days depending between 20 billion and 60 billion and everything in between. what is think of the offer? dean: it's pragmatism. there had to be more give-and-take. u.k. is in a slightly weaker vision. so there will be some knowledge meant of the u.k. and their past liabilities. my sense is we should get close enough to a agreement so that the talks can move to phase two. this is a step in the right direction of true. anna: wednesday we see the budget the u.k..
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you've done a lot of work on u.k. productivity. usre could be reductions in mitts of u.k. product to the team. gives a bit of a headache to the chancellor. what explains the week but activity for you and how we turn it around mark -- turned around? we cannot escape that the compositional effects of the economy are weighing on productivity. things like financial services. dean: and less reliance on traditional injuries that have high rates -- traditional industries that have high rates of productivity. to me, the revision has an impact on the long-term growth rate. i wouldn't be too pessimistic. there are clearly a number of factors that can be reversed.
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one of the things we have to think about for the u.k., perhaps in it was brexit world, is the fact that perhaps the u.k. could use this opportunity to rebalance economy away from some of the less productive stuff. seem to be the theme on sunday. what does it do for the gilt market? there aboutece out how much guilt issuance there is -- gilt issuance and how much we get from hammond. think there will possibly be changes to the assumption on of limit areas that could have an offsetting effect. thissaid, i don't sense of point we are on the verge of a significant change in the current docs.
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there will be some easing. the election results in a clear message. i don't think we are currently on the verge of a dramatic. i suspect we won't see much in the way of changing targets. wind is too late for transition? manus: i think it has to come by the first quarter of next year. otherwise businesses will have to exercise dancing klein -- contingency plans. manus: think it very much. euro, all down. you know have mr. triton freshts talking about elections. anna: that remains one of the
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options. back in ar will be moment with european open show. this is bloomberg. ♪
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♪ guy: good morning. welcome to "bloomberg markets: european open." i'm guy johnson. in london, things are exciting with thickly but not as much as they are in berlin where matt miller can be found. coalition talks collapsing. merkel's attempt to form a new government all in a part. the euro is trading lower. governm


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