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tv   Bloomberg Markets European Open  Bloomberg  November 21, 2017 2:30am-4:00am EST

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♪ guy: good morning. welcome. you're watching bloomberg. your open soon. miller is in london. merkel says she's open to new elections to break germany's political stalemate. we will speak to mp member at 830 -- 8:30 k time.
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how long can the fed function with a depleted staff? the turkish currency hit record lows against the dollar. matt: we have breaking news on unifer which came out with a statement that it recommends all shareholders reject the takeover offer. they say it does not represent the full value of the company. is saying that shareholders should reject the offer. we will be speaking of -- with the ceo of uniper.
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he says they will meet again soon but currently they recommend the shareholders not accept the bid. than a half hour away from the start of trading. let's look at futures. we have kind of a mixed picture but very little change. even the you see red arrows the movementard, is very little in terms of futures. the ibex futures are down considerably. i see dax futures gaining slightly. if you look at the core of europe, you have mixed race. trade.a look at the bund
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the three year yield -- three year yield came down considerably. even though we had those failed coalition talks, it looks like we have sideways movement. trading at 36 basis points. guy: some chinese data coming this morning. 1.78%. up by is in the turkish lira. hitting a lows against the u.s. dollar. the central bank having its hands tied behind its back by the president. the lira continuing to fall. let's get a first news update. u.s. president donald trump he's designating north korea a
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state sponsor of terrorism. the move subjects the regime to additional sanctions and reinforces its status as an international pariah. -- iran, sudanon , and syria. >> this supports hour maximum pressure campaign to isolate the murderous regime. janet yellen has said she will step down from the board of governors once jerome powell is sworn into office. this allows donald to shape the banks leadership for years to come. change is a long-standing tradition of presidents nominating their predecessors pick. the ceo of at&t says he will see
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the justice department in court after they block the merger with time warner. he reiterated that he would not sell cnn to appease washington. the new leader of zimbabwe's ruling party has asked robert mugabe to stand down. ask the latest move to mugabe to leave power. be impeached if he continues to refuse to resign. the washington post has reported that eight women have reported that charlie rose has made inappropriate sexual advances towards them. pbs have suspended production of charlie rose.
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bloomberg, who has a distribution and production agreement, is suspending the show as well. this is bloomberg. thanks ray much for that. angela merkel has signaled that she is ready to call snap elections to break germany's clinical stalemate. what does the prospect of a new vote in eu's biggest economy mean for european assets? ours talk about that with strategist. i misspoke slightly. merkel herself cannot call the election. it has to be the president. it takes a really long time. how do you see the time aspect playing out? : i think the reaction will
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come soon. you saw this last night. very late european time, this news broke. it implies that merkel would support new elections rather than try to push through with a minority governor. that hit the euro after recovered earlier in the day. i think the market has now priced that new elections are the most likely outcome. that's not good for the euro. if merkel is not part of the lead form of the next government, that would be a negative europe. slower anduld evolve we will have to rate closer to any election. you say, once we know we can move on. her chief of staff was on german television earlier today saying the priority for them is to warm it coalition. indeed, that is the priority for the president as well.
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even if some of the parties prefer election, it's going to take a long time to get there area that -- there. i think there's a little bit of extra rex -- risk premium price and zero. -- priced into euro. i don't think it's going to be continuing having a shock value on the euro area i think the immediate pricing of this news has already happened. now it will be more marginal until we have a definitive outcome. coalition, a coalition minority, or new elections. i think the going to stop trading based on this with the euro. guy: does the turkish central bank have the chops to raise rates aggressively?
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mark: the turkish situation is serious. it's all about signaling. at over 12%, it's expensive. investors have been told by the feddent of turkey that the is on the wrong path. that worries them. they are essentially forced to react of them are the rate hiking meeting. investors are used to this in turkey. it happened twice in the last several years. i think will be volatile. but it will continue selling off overall until the next hype rate -- hike rates properly. guy: what does out of control
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look like? where at nearly 4%. mark: i think back to 2006 will he went on 140 12 180. -- 141 to 180. 60% in the space of a few weeks area i don't think we are going to go that big. turkey is one of the more horrible ones. the laboratory to the politics for a while. -- turkey is one of difficult ones. people have worried about politics for a wild. violent rallies back in the lira.
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they need to send a clear signal to the market that the central bank is in control. they can take measures when needed. when they send that message, the lira should be ok. just over the last few minutes we can see the pound rising strongly against the dollar. 132.62 is the level i'm looking at. is that due to optimism that the britons will offer a decent amount of money to the eu and get on to trade talks? mark: that's a positive. everyone is counting on the fact that trade talks can start soon. if they don't, companies might have to react and move their headquarters away from the u.k.. i think they like that they are
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seeing some progress on brexit negotiations. the fact that the u.k. is able to double their offer to 40 billion pounds, it doesn't quite meet the 60 billion euros that europe is asking for but we are getting close. there might be some compromise. this does play into the whole merkel story. one of the problems is that merkel did not seem like someone more willing to lead that compromise. is involved in domestic politics, it might be harder to reach that copper mice. but that is why sterling has rallied. there's some optimism about trade talks. i have the charts up. where you sit? does the curve keep flattening? are we reaching the limits of this trade?
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mark: i think long-term it flattens more. this happens every single cycle. it flattens and that inverts. inversion is not that strange in u.s. history. i'm absolutely in the camp that this goes much flatter. short-term i have no strong views. purely in terms of market dynamics, we could see a little bit of steepening. even if the curve goes flatter, it's a multiyear process. it may not reach zero for another year or two years. the point is, is a long-term process. i don't know where the next five or 10 basis points will go, but i'm in the camp that the curve will flat much further. matt: thanks ray much. mark cudmore joining us. a number of issues.
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bloomberg's mliv strategist puts his thoughts, his trade ideas, not recommendations but his market observations into his blog. you can follow it on the bloomberg at mliv . uniper has suggested shareholders reject an offer tum. boredom -- from forham universe shares are trading above the offer price from boredom -- fortum. uniper's ceo meets with us now. why do you think this is a bad
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idea/ > ? >> the offer price is simply not attractive. it's not enough for us. shere is some unclear intention with what they want to do. recommend that shareholders except this. i will meet with the ceo, which is quite normal. we will meet and try to have a constructive discussion. we will see where we take this from here. imagine, even if it were not an outright takeover , the two of you working together in some other way? are there areas of the business in which you could cooperate and
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create synergies without a merger? >> it's a bit of an unusual takeover situation. 47% of the shares will most fortum and up with we will see a change in their shareholder base so we should see in what warm we can work together and cooperate. we are looking at business in terms of hydro and nuclear. we will see what we can come up with. would you prefer a different fire? what a different name make a -- would a different name make a difference? right now we are trading at
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.18.ad .18 -- 23 we want to increase the free flow. choose whatu cannot is happening. we need to work now from that basis. germanuld you prefer a government that does not include the greens? in a business like ours, anditability -- credibility stability are the most important aspects. i hope that in germany we can
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government those who can manage our political future. know.ard to we would appreciate a new government focused on the future. the timeline of how many coal-fired plants you get rid up and by wind is one of the things to negotiate. whether or not they tried again with this coalition of go forward with a grand coalition, if there are new elections they will talk about that as well. what timelines you think is right? er?t timelines right for unip
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the coal situation will happen because i do not see it in one else wanting to build new coal plants. of how longquestion do we use the existing plans for. one should carefully look at the happen.nd what would we need an increase in the renewables. that requires back of capacity. capacity. we have a balanced portfolio of gas and coal and hydro.
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happens, we will move the business and benefit from that. we want a strong, reliable german energy market. guy: you mentioned a moment ago your concern about stability. the german economy and the data about it seemed to be very strong. do you think the german onernment will have a affect stability? you look atbility is only a few weeks. looking to the future there is plenty of options for stabilizing there. the german economy has shown incredible resilience.
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instability there is a value. i'm sure the german economy can survive a couple of weeks or months without a ruling group. thank you for being here. we are minutes away from the start of european trading. let's take a look at stocks you should be watching. easyjet has a positive outlook for next year. the market open is eight minutes away. this is bloomberg. ♪
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♪ five minutes to go until the start of trading. a stock to watch, easyjet. it's a positive picture. problems result of the of every linen and monarch. here is what she had to say earlier. ryanair has taken some capacity out. we bought a part of air berlin which is part of the consolidation. it's all good news for easyjet.
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the forward outlook is good. nestle, also, that company said to be one of the suitors of celestial, the maker of teas and healthy, vegetarian foods. push into thatto space. agreco coming in with profits up. their revenue rose 8%. take a look at aggreko. up 15% over the past three months. minutes time, it's european market open. futures are mixed.
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not a lot of direction on the indexes. but individual stocks may be in play today. this is bloomberg. ♪
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guy: good morning. welcome back. we not expecting european equities to go in a hurry this morning. we are going to start flat. by --toxx 50 pulled down as is the cac here in the dax which is down by .1%. policies is going to play a part in all of this. some interesting stock movers out there that we are focusing on. matt: i think it is interesting to point out that the dax did not plummet yesterday after the coalition breakdown. if you look at the trends in
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germany, this is going back to 2008 showing the gdp as the bars here and the german business climate at the white line doing quite well. back at low jobless rates, record high business confidence. even with a caretaker government, germany can continue to do quite well. guy: ftse open. we are barely sing a budget in terms of headline numbers because we are not going anywhere in a hurry. we will wait and see with the dax does. european markets, .2% is where we are opening this morning. manus cranny come over to you. manus: they are three dominant forces, merkel possible quality to go back to the country. -- preparing to go to battle over time warner. yellen, a trump-esque federal
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reserve. yellen proposes that she will no longer be a part of the fed. for spaces for trump to feel -- trump to fill. you mentioned the dax, 25 record closes in 2017. it was a clever day in euro and in the dax. the markets do not believe that this geopolitical risk is going to temper the bullishness. if you have less than a month to run in trading between now and when you seen a wind down just see a wind down in volumes, would you not be tinted to take a wee bit of money off the table. just in case? this is a comparative of some of the indices out there. small stocks of europe have been the belcher's of 2017. large cap's and the midst of.
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it is the heart land of europe. 9379, the third quarter so the misses -- saw the misses. the small caps, can they continue to grow. something went wrong with chart number three. should we do it live? why not? opening -- nope, that is not happening. i will leave you with a view of the gilt markets at the bottom of your screen. technology, guy. technology. manus, thank you very much. it is trading down as strongly as it is. xp, on a run to see
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executive with stocks are going. compass group's is chit -- is trading down. utilities also showing signs of weakness. on the upside, a couple of u.k. stocks, specters trading higher. the departing ceo of easyjet, she seems to be leaving with a little bit of a tailwind in terms of the story. the stock is rising. the company she is going to come up 2%. 2%.s going to, up matt: let's talk about angela merkel p it's she would rather face -- as a merkel. she would rather face voters again. she is certain that new elections are the better way. >> i have no plans for a minority government at the moment, so we have to wait.
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a new election is one way. the minority government is another. that would be something to be thought of very carefully. i don't want to say never but i am very skeptical. she and's would be the better way -- new elections would be the better way. matt: joining me now, stephen macklow-smith. even if she would prefer elections, she's got the president pushing for coalition. he is going to mess -- he is ftp. to meet with the she has to go through three votes in parliament before president can call a new election. how is this uncertainty is affecting the european business i'm not surehen: because we are in the middle of a negotiation so you had the results of the german election which were inconclusive. them a senior hand in
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the negotiations. issues with merkel's policies but to a degree with ftp. you havesically saying a patriotic duty to make this work because this country is entitled to stable government. german politics is a very centrist spectrum of political parties. merkel is a master operator in negotiations and coalitions in the past two governments. she is putting pressure on the ftp and saying if you want to get to the elections, fine. let's see with the voters think of the fact that you have on negotiations.
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matt: it does look like it is going to cause that much of an issue the mystically over the medium -- issue domestically over the medium-term. what does it mean for mccrone or prime minister may -- what does it mean for prime minister may?n, prime minister stephen: supposing the new coalition discussion starts and results in an agreement, then fine, you have a government. if you to know elections and ms. merkel's hand is strengthened calmly go back to negotiations. you're likely to have essential coalition in germany. you are burning up time. it would be nice to have some substance -- some certainty.
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from a brussels point of view, yes, it would be nice to have clarity about future direction of germany. that clarity will come. there's that -- ms. may, visit phrase that clocks are taking on negotiation. it would be nice to have a german government with a policy on u.k. exit from the you. yet to go with the instructions that were given to mr. barnier. guy: of the markets are good at trading politics. the reaction, are we seeing the right one? the answer is no. the markets not good at pricing politics. stephen: ok, so let's take a step back. one of the things in politics is normally that changes in government really result in major changes in policy.
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had we had a national france government in france, that would be a major change in policy. if you get a coalition, it doesn't make an enormous amount of difference. guy: what if angela merkel doesn't head one of those coalitions? she has been the chancellor for 14 years now? guy: yeah. stephen: she has brought a great deal of stability during that period. you might have a generational change of leadership. matt: that is a good point. some people that we spoke with
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here, including the deputy head of a very important bureau that watches the marshall fund bureau in berlin said that maybe merkel doesn't move fast enough on issues. she is a steady hand and people love her for that. if you got new leadership, you can see some real deeper integration in europe. the you think we need that? does the market care if we get banking union finished and deeper european integration? european minister finance? stephen: i think it would make a great deal of distance -- deal of difference. traveled worried to change radically, that would make a difference. if you think where people are investing at the moment, i'm not -- whether it is
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going to be european minister finance. greatrection of travel is with europe works slowly. the direction traveled on banking unions is clear, the next thing they need to grapple with and the capital markets. in the medium-term, it would be corporate's. getting agreement on the finishing of the banking union which would include deposit insurance scheme. it takes a long time. 13% if i may euro investor. the currencies of a factor. it this where the pressure stress to manifest itself? -- is this where the pressure starts to manifest itself? stephen: potentially. currency is clearly a factor.
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one of the things that sits behind is the sense in the long-term, if you take the long-term capital markets, our sense on a parity basis, the dollar is overvalued with other currencies. we would expect the euro to rise in value against the dollar. that is something you need to take into account when you are an investor. you don't want to see all of your possibility down. -- all of your profitability down. -- youg other than that configure your supply chain. guy: stephen macklow-smith, he is going to stick around. we are going to be speaking to michael fuehrer. janet yellen says she will step
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down from the board of governors . what does that mean for the future of the fed? we have for empty spots, three that are currently occupied. lots of seats to fill. this is bloomberg. ♪
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matt: welcome back to "bloomberg markets: european open." we are 15 minutes into the trading deal. let's take a look at where markets are trading, down across the board. the stoxx 600 off a quarter of 1%. the ftse, the dax, the cac off a little less than .2%. down but now -- but not getting crushed after a sideways and date is today. guy: every sector is in negative territory. let's move on and talk about the stories on the bloomberg. janet yellen said that she would step down with the board of governors once or successors
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brought into office -- once her successor is brought into office. toome powell was nominated succeed yellen. got in terms of the governors four empty seats. there are only three there. in stephenback macklow-smith. i have this exhibit. this is pretty famous. the problem is i don't know what to do this now because all those peoplee represented by that i don't care about anymore. i don't know whose dot is which. those dots are going to disappear. it is a lot of dots. what do i know about the reaction the function? can i believe the dots?
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is pricing amarket fairly devilish approach from the fed. -- fairly dovish approach from the fed. the bond market is saying the fed will be more dovish. we will have to see if that changes. it is unlikely there will be a discontinuing of policy. you don't want that kind of volatility. guy: i am going to pull up a chart here. this is the city economic price economic prideti index. wrong? -- isrket the bond market wrong? stephen: i am not a bond market guy.
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if you think about the price index come all of that changes. happen is people undershoot underestimates. then you see and where the next day that takes you. the recovery will continue. we have yet to see a significant inflation price to the upside. the fed said they are expecting wage inflation to rise. you're not seeing signs of that across the economy. it looks as if the rate of growth will be the relationship and growth inflation is fairly benign for markets. were inflation to excellent, you would since a rise in yields. that's not bad for stock markets because as long as yields are discounting accelerating growth,
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that is good news for earnings. matt: what do you think of the dollar? if we did have a rise in inflation in the u.s. and the fed was able to stick to a dot plot, does that mean dollar strength against the euro that may have to extend quantitative easing do to a lack of fiscal stimulus coming out of european government? stephen: the question about quantitative easing isn't exactly the right question to ask. there is very little pressure to extend ecb -- to extend qe. if the euro were to strengthen, i am a sure it would check of those elements of recovery. -- i am not sure it would check off those elements of recovery. unemployment is falling. the participation rate is rising.
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employment in the eurozone is at multiyear highs. the economic backdrop looks encouraging. i'm not sure that another five or six cents in the exchange rate would do anything. matt: what do you think when you look at your stocks versus investing here at home? does it look attractive? would you rather not go there? stephen: i don't make a call between uris -- between u.s. and european stocks. in the u.s., ec market that has been largely led by a benign environment at home and a recovery that is now fairly long-lived and robust, taking unemployment very low levels. result, -- the u.s. equity market is a such active as it might be.
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we are looking at earnings growth next year and operating leverage works to bring benefits to companies. within europe, you are getting invisible earnings growth story at a reasonable valuation. guy: some headlines causing at the moment about the list of global important banks and the kind of list who is up and who is down. citi falls in the list of global banks. bnp paribas is another story. a look at this and i will haven't asked you about -- as i look at this and i haven't asked you about tax. whether or not -- about banks. whether or not you play europe by the equity or by the credit. investori am an equity . i can find attractive options within tanking equity. the old model is changing because we are moving from a
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situation in which they were allowed to grow and work rewarded as long as it did result in over leverage. -- as long as it didn't result in over leverage. when they generate free capital, there is going to be potentially sending that to shareholders. it goes back to the desire of european authorities. is to lowern capital across the company's. -- across the company's. reduce the role. guy: that last question is important. the stocks, it is about bank phone. jpmorgan has invested an awful lot of money into technology and spends a lot of money and
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speaking -- and seeking out sums. if i look at banks through the filter of technology stocks, how big does the gap look between the various institutions? itphen: i don't think that is going to be help. if we think about the use of technology in banks, it is all about improving affability. -- improving profitability. if you think about technology stocks, the fang stocks in the u.s., that is all about growth and getting a market share. fundarket was prepared to years of losses because it felt that the land grabbers were robust. completely different in banks. banks cannot afford to be profitable -- cannot afford to be not profitable.
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matt: stephen, thank you very much. he is going to stay with us. there is a lot to go through. onant to get to u.s. story at&t. over theto go to court proposed merger with time warner . that is after the justice department sued to block the -- $85.5 billion deal. david, what is the market telling us about these announcements? david: one might expect for the shares to drop. the justice department saying they are going to try to stop this. that is normally a big sign but what we had here was a small job and that's because the shares
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are quite been down on the expectation that there would be some interference, some way the justice department would seek to try and block this deal or try to pressure some sort of reconfiguration. this is failing at the home plate for months. this is a deal that has been expected to go through over the last month, we have seen the market value of time warner drop right a bit. it is now more than $20 billion off. that is basically $20 billion worth of worry that investors have if this deal does not go through. guy: what impacts is this going to have another deals and what the industry looks like going forward? david: that is a big question on everyone's mind. for that, we will have to see how it unfolds. it does raise a greater concern about deals.
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everyone expected the trump administration to be friendly to dealmaking, especially big deals like this. they call it a veritable deal which means they are booked -- call it a vertical deal which means they are buying a supplier. some tweeting from the president came out that raise questions and now this lawsuit raises questions and doubts about possibly the environment for other deals going ahead. as far as the broader environment, i think that is where the justice department does raise concern of higher prices for media. that is a -- there's a scramble to get content for these enterprises that are vying for the space. matt: dave, thank you very much. giving us a little bit on the telephone and time warner story. up next, with third-quarter earnings season drawing to a close, we will focus on european
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equities stephen macklow-smith has been with us for the hour. we'll get more from him. this is bloomberg. ♪
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matt: back to the ballots. merkel says she is open to new elections to break germany's politcal stalemate. we speak to michael tour -- michael theurer in 10 minutes time. four vacancies to fill. janet yellen will depart the reserve once jerome powell is sworn in. how long can the fed function with such a depleted staff? the turkish lira humbles to a low.- tumbles to a our the banks hands tied after president erdogan said they were on the wrong path. good morning, this is "bloomberg markets: european open." i am matt miller alongside guy
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johnson. news on thereaking banks considered systemically important by the fsb and how systemically important they are. we have a list of those banks hasit shows that citi fallen down to bucket number three in terms of importance with one being the most important. five being the most important and completely empty to one being the least important and filled with the most banks. the higher the budget you are in, the more you have to pay in terms of the surcharge. almost a penalty for being that systemically important. the fact that citi has fallen down to bucket number three is a good thing. now they only have to pay a 2% surcharge. only one bank is in bucket for, that is jpmorgan. there is none in five.
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less systemically important the city are goldman sachs and wells fargo, as well as bnp paribas. very interesting. we have this whole list of banks that are considered systemically important and how they shift around. guy: from an investor's point of view, whether or not you're expecting a return of money, the higher on the list you go, the more difficult it comes -- it becomes. the banks are neutral in europe. they are one of the few sectors .hat isn't budging this morning financial services another in that list. where we are seeing down south -- downside, travel and leisure. let's go to bloomberg business flash. sebastian: trump has said he is designating north korea as a state sponsor of terrorism. territory toct the
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additional sanctions. iran, and syria on the list. >> this will impose further sanctions on north korea and related persons and supports our maximum pressure campaign to isolate the murders -- the murderous regime. >> janet yellen says she will her successor is sworn into office. it winds of the scope for donald trump to shape the fed leadership for years to come. the new leader of zimbabwe possible ruling party has called on robert mcculloch be to step down as president. hiss the latest move to end leadership. it could impeach him should he
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stay -- should he remain steadfast in his refusal to leave. -- in a statement to the post, rose apologized for his behavior. cbs has suspended rose and pbs is halting reduction of the program. -- halting production of program. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. guy, matt. third-quarter earnings season come to an end and the picture is quite mixed for the euro. mostly lower as high expectations created a negative -- just to give you an idea of
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where the rotation is happening. it is rotated in the last month. it has rotated out of banks, telecom.re, retail and stephen macklow-smith, what should i make of last reporting season? were expectations too high? stephen: the main theme was the impact of the balance between the euro and the dollar. it is a very mixed bag when you look at that screen. you can see that real estate come up top, personal household is good. done at the bottom, health care, utilities, very sensitive. you got cyclicals and financials at the bottom. guy: no clear message. >> it is difficult to pick the bones out of it. the yield curve in europe hasn't flattened this year. unlike the states.
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there's a sense that the growth will be holding up over the next 50 to 18 months. -- 15 to 18 months. matt: stephen, thank you for your time. , wehen macklow-smith appreciate being able to get so much time with you. german chancellor has signaled she would rather face a new election than a minority government. preliminary party coalition talks broke down so tonight with christian lender walking out over merkel's stance on immigration. ftp was pushing for a tougher stance on europe and europe bailouts. they also wanted tax cuts and other demands. 120 points were left open. let's speak to michael theurer.
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he joins us on the phone. michael, thank you for your time. let me ask, you are not concerned, new elections would hit the ftp hard as it appears a lot of germans in polls feels that lintner shirked his national responsibility by walking out of these talks. michael: good morning from berlin. we are not afraid of new elections. we are not heading for new elections, so we made it clear that the free democrats as a pro-market party can only enter into a coalition government if we have a change compared to the coalition government. we really wanted to have a more market approach on the euro. you mentioned it. from that point after four weeks of long negotiations, we had to realize that there are still 100
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points open and we didn't believe that we could get on a common basis with the cdu, csu and the greens. situation thata we tolerate the minority government. we are not afraid to stand in front and tell them that we are fighting for our positions. matt: you are going to meet with president steinmeyer as well as the greens. he has spoken with angela merkel. is there any chance this could put the four view back into coalition talks together? michael: at that state, that is too early to judge that. the 3 -- the free democrats have of beingd a history prepared to take responsible t.
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after four years out of parliament, we have said that we are convinced we have to stick to our positions and we enter only a government if we can make the difference. guy: good morning. it is guy in london. one of the things that came out was that there was a lack of trust between the parties. who don't you trust? can any government before with the lack of trust you're talking about? formed with the lack of trust you are talking round,michael: the first we took to know each other. that was already lost in a lot of details. , openinge negotiations chapters, closing chapters. we came to the conclusion when we were fighting in favor of a tax reduction to get rid of the solidarity tax, that we couldn't
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achieve what we wanted. we also wanted to change the constitution to have a better finance for education. we couldn't get through with that. the resistance to our proposals was quite great. we said if you would take such a long time to get on a common denominator, it will not be possible to have that government aich we would want to have government of reforms and progress. we really have to say that as a ideal had no overwhelming for that constellation. guy: is angela merkel the issue? do you think she is a person that needs to be replaced? summit argued that she didn't have a vision for both steps that needs to be taken. she is a incremental kind of politician.
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do you think somebody with a bolder vision might be of to generate the kind of outcome that would produce a coalition between the parties and play? michael: as a merkel is a very experienced politician and moderating conflict. we believe or we have learned that in that consolation, that is not enough. we need here is strong vision which is combining the possible partners. we were calling for that but it was not delivered. will not workt it and therefore we have drawn consequences. we have put ourselves in a big risk. we decided to be consequent. matt: can i ask you, michael? more as an experienced parliamentarian than as a member of the ftp party, and a german parliamentarian. so the rest of the world understands, what is the earliest we could see a new election if it comes to that?
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see new i don't elections are the next step. the president made it clear that it is not the responsible t for --h party to talk responsibility for each party to .alk in organizing new majority his only the last option. -- new election is only the last option. matt: let me ask you, it was a member of the ftp who is in the preliminary coalition talks. did it seems you that the union that merkel, cdu and the csu were close to the greens than they were to the free democrats? michael: i have to drop out in the parliament. we believe that at the moment the one option might be the prolongation of a grand coalition between cdu, ftp and the other option is a minority
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government tolerated. guy: michael, thank you very much indeed. let's stay with your conversation in focus away on the way forward for germany and what it means for the future of european integration. which outcome do you see being carsten:ly, carsten? there is no way around early elections. to pick up on the question that you guys asked earlier, i think technically, the date would be somewhere around the second half of february. guy: do you think angela merkel remains in office in the medium-term? we were just hearing from the free democrats suggesting that she doesn't have the big vision required?
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carsten: she has over 12 years been a very incremental policies maker. if you're looking for big vision for big challenges, the conversation that is the proposal that is coming from france for buildup in the eurozone. look at the challenges that are out there. look at russia, turkey relations with the u.s. next line look at a story like brexit. there are plenty of the conversations. i don't think it was down to angela merkel. i think it was down to the liberal free market party. matt: we were used to talk about germany is a powerhouse as a mover and shaker in the you. domestically, there hasn't been a lot of policy change in this country since schroeder.
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the ftp was in charge under schroeder. is that one of the reasons this kind of stagnation that merkel seems to be failing and bringing all these parties together? carsten: it is true that anyway the economy has been going far too well in germany from the 12 years under as a merkel's leadership. it is right to say that she is cashing in on these reforms. if you look at the challenges out there on the european stage, if you look at the driving topics. the conversations which is the issue of identity politics, migration. the fallout from that. there is plenty of room for conversation between parties. the big issue is to ultimately do a german parties usually do and that is to meet at the center and follow pragmatic government that has a majority in parliament.
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the liberal ftp was unwilling to do that. guy: are people in brussels worried about this? this is a vacuum at the very heart of the european project. is this something that is perceived in brussels as an opportunity? maybe to fill that gap echo or a threat in terms of the inability to take a drive forward in those topics you listed? carsten: whichever way you look at it, i don't think the vacuum will last too long. come spring, i am fairly confident that we will have a government with a workable majority in the german parliament. the initial phase of uncertainty will take some time but we are looking at a stable government come march. going back you think to the german people produce different results? carsten: whether we would end up
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with a fairly different result? the upheaval of these failed coalition talks had -- of campaigning. assuming we end up with the same results, the way out of solving the bundesbank again will not be available. after the next round of -- form a it will be coalition or to accept something like minority government. matt: do you think this is going to affect what is going on in brussels? theresa may going to find is harder to get her new offer accepted by the eu without angela merkel helping her out? carsten: if you're looking at context of brexit, anything that makes it more imperative for the british side to achieve a breakthrough in the technical conversation with michel barnier
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here in brussels. if anything, this is a powerful reminder that it is crucial to achieve this breakthrough in the technical talks and not focus on the political support from berlin or elsewhere. matt: what about -- you mentioned macron in the reforms he wants to push through. how is he going to do that? does he have to put his plans on hold until next year? carsten: i think that is fair to say. if you take a step back and look position, it would've been naive to assume we are moving relatively quickly towards this big buildout project that macron is proposing. what you need in place is a new government in germany. liberals were the
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the most skeptical of macron's proposal. be that over a medium-term timeframe, all of this might not be -- guy: the turkish lira has moved to a record versus the u.s. dollar. record low. we are between this bank and the government, mr. erdogan is talking about the central bank is on the wrong course. turkey feels like it could start to become a very big issue. i want to feed it back in to the germany conversation. how worried should we be about the situation in turkey? how worried should we be that the deal on migration could fall apart? there seems to be a lot of fragility creeping in. .arsten: that is certainly true i think that explains while
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markel has been focused on keeping that migration deal alive. keeping a very tight balance between plainview -- playing to the domestic constituency, that means criticizing turkey but stopping short. thinking in the context of association between the u.s. and turkey. cutting all ties in order to keep that migration deal alive and keep the strategic connection between the eu and turkey alive. there will remain a difficult balancing act. matt: just want to get your take on at a wants power -- take on at against power. this is a leader that put thousands in jail. how much independence does the central bank in turkey has? if he says, don't do this, do they not do that?
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carsten: that is difficult for me to judge from the brussels perspective. the focus remains on erdogan. there's no doubt about that. guy: carson, great to focus on some issues. up next, we are going to take a look at some the biggest movers in today's trading. this is the stock market open. london, up and running. this is bloomberg. ♪
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matt: welcome back to "bloomberg markets: european open." i am matt miller here in london. i want to talk about the banks ranking list that is put out by the financial stability board which is a g20 mechanism that keeps track of the world's biggest and most important banks in terms of their danger to the
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system should they go under. they have five buckets with which they rank the banks. but the number five being the most dangerous and bucket number one being the safest. the higher you are, the more you have to pay in terms of a capital surcharge and they come up with a list that shows a number of banks, all of them falling to a less dangerous bucket. citi falling from bucket number three to four. 2%.surcharge will be it had been 2% -- it had been 2.5%. the only bank and bucket for his jpmorgan. there are no banks and bucket five. paribas, credit suisse, royal bank of canada all falling to lower buckets. only bank of china rose to a higher bucket. guy: it is a greco.
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an event that has a portable house. a greco probably provided -- the stock is being crushed this morning on the london markets, down very heavily. this is the didi function -- the gd function. at this point in time, we are trading higher on the normal average. what is happening, what the companies indicating in 2018 guidance is going to be very tough to achieve if you read between the lines. a bunch of institutions are out with notes. it sees a 20% downside on the stoxx. this morning may not be all that we get out of a greco. it was a company that was mentioned with a situation indians about -- situation in zimbabwe. stay with bloomberg television.
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up next, it is surveillance. matt miller and i are off to number radio. -- off to bloomberg radio. this is bloomberg. ♪
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francine: election rerun. merkel says she is open to a new vote to break germany's political stalemate. the u.s. forces at&t, going after the $85 billion bid to buy time warner. is this all about cnn? the u.k. chancellor is under pressure from all sides. this is "bloomberg surveillance" and i'm francine lacqua in london. we have a packed show for you.

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