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tv   Bloomberg Markets European Open  Bloomberg  November 22, 2017 2:30am-4:00am EST

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far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. ♪ good morning. this is bloomberg markets, the european open. we will bring you the first chain -- the first trade of the day. what are we watching? u.s. equities surged to all-time highs. asian markets learning to love that flat yield curve. are betting ons a deal with the spd.
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and uber hack. the ride hailing firm admits to covering up a security breach of 57 million riders and drivers. will regulators ever trust this company again? match: we are less than 30 minutes away from the start of cash trading in europe. let's take a look at what is going on with futures after the record runs we had yesterday in are watching in asia overnight as well. records on every single one of the u.s. indexes going into the thanksgiving holiday. asia looked at a nikkei that came up over 2007 highs. we have what looks like a mixed picture as far as equity index futures. not really full steam ahead. ftse equity index futures down just a little bit. not very much changed on the euro stocks, dac and cac. take a look at what treasuries
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are doing. yields are lower but coming back to little change. this is a three-day chart. up threeee yield came sessions ago and now they are sort of trading flat for the last couple of sessions. right now it is 235.24. we took out 20 six yesterday on the s&p 500, closing just below that level, but nevertheless strong equities. the dax was up 8/10 of 1% yesterday. the yen is stronger this morning, the dollar a bit weaker . the other thing i want to mention is the turkish lira is continuing to weaken, and wti crude doubling by 1.6%. let's go to the bloomberg first word news update. reporter: german chancellor angela merkel's party is betting on a revised alliance with the
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social democrats to dodge the risk of a snap election, according to people familiar with discussions. they say while merkel has publicly stated she is open to a to renew preferences the partnership that underpinned to over three terms in charge. zimbabwe is waking up this morning to the post-up robert robert mugabe era. the 93-year-old figurehead has been under increasing pressure to stand down after the military took control of the country last week. mugabe dismissed as vice president will take over as interim leader area >> the outgoing chair of the federal reserve has cautioned that increasing interest rates to quickly will -- janet yellen also said there have in some -- there had been nt that expectations for future price increases may a
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heading lower. one reason it is dangerous is because inflation expectations are likely to also drift down. i don't really think they have drifted down much, but there is some hint that after so many years of low inflation, they may be drifting down, and that would be a very undesirable state of affairs. reporter: the mexican peso weakened against the dollar after robert lighthizer said there is no evidence canada and mexico will seriously engage on renegotiating nafta. that came after the fifth round of talks which are said to have failed to make any significant process. -- significant progress. u.s. president donald trump has effectively backed alabama republican senate candidate roy moore, who has been accused by multiple women of improper
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sexual conduct when they were teenagers. trump told reporters, "we don't need a liberal person in there, a democrat." past if he believed the accusers, he says that alabama republican denies it and you have to listen to him also. the israeli prime minister has arrived in beirut area he announced his shock resignation earlier this month, accusing iran and hezbollah of the stabilizing his country. raise questions about whether the 47-year-old had been coerced into quitting. saudi officials denied the accusations. global news 24 hours a day, powered on more than 2700 journalists and analysts, this is bloomberg. matt: thanks, ed. we are looking at statements coming from minutes and check, the deputy prime minister of turkey, as the lira hits another
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all-time low. saying not to panic, that the public sector balance sheet is stronger than ever. debt stock to gdp ratio is 28.5%. he says their banking industry is strong, reasonably profitable, and the bank industry does not have a net shortfall when the turkish households have a net fx surplus. he is speaking in istanbul to try to calm markets event as the lira falls to a new record low against the dollar. matt: -- guy: let's get mark's take on --s area we are approaching let's get mark's take on this. we are approaching cointreau dollar-lira. will a have to defend that level? >> i do not think so. i think some check is correct that the fundamental levels are
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not as bad as received -- as perceived. it often seems to ignore the fx asset part of the balance sheet. the private part of the balance sector is short in fx already. there is a chance, if the central bank turns the narrative .round, the lira will rally the point is, the narrative won't change until the french bank sends the signal that they are free of the dog, they can hike rates -- free of erdogan, they can hike rates if they need to. matt: how much of a problem is this? when i hear a deputy prime minister advising not to panic, that is worrying. do think it is a reason to be worried. in turkey, they have large fx liabilities at a lot short-term external debt that is due. .his is a serious problem
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i just think it can be turned around it the central bank sends a message. growth is ok. it's not that turkey is too bad a case. is the fact that investors have been told central banks can't react if things go wrong, and it is starting to go wrong. investors want to hear the central bank is back in charge. i think later this week, we may see an emergency central bank meeting where we see aggressive rate hikes. insaw it in 2006, we saw it 2014. i think it can happen again. guy: it is a tough battle to win. we are learning to love the flatter yield curve. mark: i would say we are not. we should be loving it.
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this has been a great time for u.s. economy and equity markets. the yield curve getting flatter normally comes at the end of the cycle. that is normally positive for the economy. it is particularly positive for equity markets. yes, it is true that when the curve inverts, that is a sign that a recession is likely ahead, but the curve has not inverted yet. on average over the last 30 years, when we have had yield curve inversions that have led to recessions, there has been an 18 month yield time. it might take a lot more time to get through the last 60 basis points. we could have this discussion in six months time when we are at 30 basis points. we should still have bullish equities of trading on that reason alone. the yield curve is sending a bullish signal. matt: shouldn't we be bullish on all equities? don't banks make less money when
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you have a flattening yield curve? mark: that's true. it's not saying every single equity. it's saying it's the right time for the economy, sending a positive signal areas it is still -- sending a positive signal. it is still positive growth. overall, the economy is doing well. growth is going higher, which should be good for earnings. it's not saying that every sector can do well. i think it is overall good for u.s. equities. it is important to note that there may be other reasons to be bearish. i'm not saying that u.s. equities have to keep rising forever. i am saying if you are trading off of this in isolation, this is bullish, but if you are saying something terrible is going to happen in china, then i would buy that argument, but not on the yield curve. guy: let's talk about the other end of this story. inn do we start pricing
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concerns about the u.s. and maybe a government shutdown? when do we start thinking about these other factors? moment, the equity market is kind of on a positive tone, and i am wondering what it will take to knock it off. what is the magnitude of event that would have to do that? mark: mark that's a very valid question. two weeks ago, i thought the market was turning different for equity markets, and they are still making record highs. markets are still grinding higher. the low liquidity this week makes it a bit of a worry. i do think the debt ceiling is going to be an issue. it might not be an issue for another three weeks. investors have learned to realize that ultimately the debt ceiling will be resolved at the last moment and there is no need to worry. the worried that with particularly partisan nature in america, this may go a bit further, take a bit longer to resolve than normal.
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if we go into low liquidity at the end of the year, there is a chance for low volatility. you don't want to get stuck on trying to look for this pullback, given the structural pillars of the bullish market remains strong. liquidity continues to be prompted to the system by major central banks. growth is still good. earnings is still good. those are the three pillars of global market equities, and they remain strong. if you are looking for a correction can think the next two weeks are going to be tougher, it is ultimately a correction and not a changed into a bearish market. this poll market takes -- bull market takes time to run. a couple ideas on what the fed is going to do next. we get minutes later today. maybe people are thinking the strong jobs market will keep people on the rate path. on the other hand, janet yellen was talking at nyu last night
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and said, maybe we are starting to see reflection role to the downside and you can't leave that alone. what do you expect from yellen at the end of her term? mark: you mentioned quite a few points. it is great that the fed is thinking that after six years, low inflation is not transitory. yellen's comments have less relevance. since the fed hike is priced in for december, it's all about what happens next year. yellen's views are becoming less relevant. obviously she speaks for the committee at the moment, so it might imply what some people, to it is a committee meant get several members next year, so it is a composition unknown. and ifthe data coming in that implies what they are doing next year, one of the reasons equities might get tougher to year and is the fact that the fed seems determined to hike, yet there is no inflation.
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the markets have not bought into the idea that they will actually be able to have hikes promised by the fed. we will have to see that direction. go, we can'ting to hike three more times next year after hiking in december, or else the market is going to go, the fed have got this right. they are going to deliver always hikes. it is aay, i believe slightly negative scenario for equities, and that's why i believe the market that year-end is going to be slightly tougher. the easy gains we have had for much of this year may not easy. -- may not be easy. up next -- germany ovoid a new election with another grand coalition? that's what speculation is out of berlin. it is an incredibly fluid story.
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it changes every hour. ♪
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guy: let's get a bloomberg business flash. : hackers sold data from bloomberg in a massive breach the company concealed for more
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than a year. included a $100,000 .ayment to the cyber attackers compromised data from the hack included names, email addresses, and phone numbers for 50 million uber riders around the world. earlier, shares were suspended in tokyo after reports that it had made the approach. the move comes after axalta and akzonobel said they were ending talks over a potential merger. hewlett-packard enterprise slumped after hours after meg whitman said she is leaving her role. she will step down on february 3 and be replaced by president antonio neary. that is your bloomberg business flash. that.ed, thanks for
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could germany avoid fresh elections with another coalition? merkel andof angela her party say they expect increasing pressure on the social democrats to take part in a new government, according to people familiar with the discussion. let's go on the ground in the capital. spd's poor showing in the election, they have said, over my dead body will we go into another grand coalition. how could it happen? >> basically there is a lot of pressure now to say, look, this is another situation for after the election. this is a difficult situation for the country and europe, and you should put your internal politics behind and look at what is at stake and the responsible.
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also, from within the party as well as the public and the president of germany, to say, get your heads together and move on. this decision has to be taken next year. schulz bed marcus able to stay in the spd and go back to a grand coalition, since he has sworn it up so many times? with ef to leave -- what he have to leave as the party leader? -- would he have to leave as the party leader? >> the question is whether martin schulz would be able to stay. he has really made such a strong only above my dead body will lie not enter into a grand coalition, and he has made an agreement with the party left that they will stick to this. he probably would have to go. the discussion as to whether
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schultz is the right candidate for the next four years is any way going on in the party, and the discussion will go to next two weeks where there is a party convention and they will decide the leadership. let's be honest, it is not unlikely because the spd leadership is united and wants to get through at the moment. what happens if it does not happen. if it does not happen, we are heading to new elections. merkel has said a minority government is probably not good for the country because it leads to instability, and i think that most people in politics would agree. probably the president will been
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basically decide against a minority government and we will have new elections, but to your early question, what will be the outcome? at the moment, there is no indication we will have this scenario. if you look at the polls, the party is almost the same. guy: thank you very much. we have got seven minutes to go until the start of european equity trading. luxury stocks could be on the move this morning. the openings are next. ♪
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akzonobel no longer in merger talks with axalta. stock.hat guy: slightly compelling pictures, slightly mesmerizing. budget.eye on the u.k. there could be some change in the nature of the structure of the u.k. mention that you should probably keep an eye on the luxury goods sector today. . did not know this fook is the world's
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leading jewelry retailer. it is coming out with big numbers. demand for gold is lifting sales there strongly. ♪
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guy: let's talk about this market open. we are a minute ago and took half trading in europe. the fair value indications telling us we are not going anywhere in a hurry. we went somewhere in a hurry yesterday and overnight in asia. we see that continuing. it is a reset in europe. we priced in a lot of what we saw yesterday in the states. where is the next catalyst to take this equity market to?the next level matt: we had all-time highs in each of the major indexes. if you take a look at this chart in the bloomberg, g #btv 808, the consumer relative value of to the stoxxposed
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600 is hovering around the highest it has been since 2015. it is also getting closer to the all-time high we hit on october 31. it has been a month since we were up at those levels. guy: just checking that the markets are opening as they should be. the ftse 100 is expected to come out of the gate where it went into the gate. we are up by .1%. the ibex is trading up by a very similar amounts. we will move that. european equity markets, to be honest, largely priced the move yesterday. what we are looking for is something of a catalyst here to keep these markets on the move and to give us an idea of what is going on. manus cranny. manus: bullishness is contagious, so says the mliv blog. you have just got to read the mliv blog and then you just go "wow, a perfect storm of
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wonderfulness." is there any vulnerability in these equity markets at all? i get painfully to social of market -- painfully distrustful of markets when i see flat yield curves. ito need to worry about that until 2019. i have read the kind of reports before. financials are bid .1%. that is undeniable. that is absolutely undeniable. where we go next in terms of politics of merkel, ramifications for growth, stability, and the whole of the growth story. .eep an eye on oil could be a fly in the ointment. that inflation could be rolling over for them. what kind of message is that? you want the market to get from pricing in one rate hike. down and say "actually, i am a little bit worried about
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everything. matt miller is cautious." that is sending ridiculous messages to the market. matt miller, you have come to london and you are a vagabond, sir. you took my chart, so i will not dwell on it too long. let us give the chart -- matt: genius. genius minds are on the same track. manus: matt might give you the old spin in terms of the chart. he is correct. the highest valuations relative to the stoxx 600. dax is rallying 14.69 percent. miller did not tell you that. relative to the stoxx 600, 7.83%. that is the outperformance relative to the stoxx 600. it has been a pasty, racy kind of year. bloomberg intelligence ran the numbers. let me talk about the boom.
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we don't have a gilt chart free this morning. we have a special price slahs. it is all about the budget and how much they shave off the gilt barring requirement relative to the drop in productivity that is expected to go to the market. all of your budget coverage, i'm sure you gentlemen will be in the thick of it. miller. matt: waiting with bated breath. manus: matt really cannot wait. matt: for the england budget. i will be riveted for sure. let us take a look at the individual members. what is going on under the hood, so to speak. you can see the laggards on the -- which index have you gotten? guy: this is the stoxx 600. matt: i am seeing b.a.t. as one of the big losers and astrazeneca. i see. percentage tells one-story, obviously. this is really a look at why the
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index is moving the way it is. it like this, you would see some of the defensive stocks are driving on the indexes right now. that is a bullish sign. you see some of the drugmakers down. astrazeneca, novartis, sanofi, down right now. everyone's favorite. most people -- i will stop there. if you look at the leaders, the banks are gaining. hsbc is one of the gainers. and then he oil stocks, bp and total are up as well as royal dutch shell. all of those oil stocks doing well because oil has done well. guy: the charts -- it is the only moment in the house of commons where the chancellor can have a drink of whiskey on the desk in front of him. matt: ah. guy: as he delivers the budget statements. matt: maybe he will need it to get his courage up. guy: two calm his nerves -- to
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calm his nurse. theresa may looking at the annual budget statement to shore up her support. the chancellor, philip hammond, under pressure to strike a balance between meeting his fiscal targets and appease who are growing tired of austerity. joining us now, elizabeth martins from hsbc. will this change the trajectory of the british economy? elizabeth: i think philip hammond would like it too. productivity is weighed down on growth rate, and he would very much like to address that. the problem for him is that , george osborne has tried to do that very thing and has not had much success. productivity growth averaged -- in the post crisis period. for him to address that would require some really big spending, and i don't think that is what we are expecting.
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matt: he is not going to throw off the chains of austerity and give the british people what they deserve for voting brexit? elizabeth: in this political climate, you might expect the chancellor to throw a bit more money at the economy. we have got a bit of a slowdown, some uncertainty about brexit, but actually, this particular chancellor is quite cautious. he is focused on his own fiscal target. i think he is looking for the long term as well if you look at the u.k. public finances over the long-term. there is good reason to focus on that now. guy: how bad are the public finances in the u.k.? elizabeth: pretty bad. if you allow for all the spending cuts and austerity built in the the projections right now, that comes a little, but that is because of the burden that will be on the taxpayer going forward, and that will increase. actually, they deliberate about over the long-term. matt: how political is this? guy: it is completely political. matt: philip hammond is a remainder.
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guy: yes. matt: he seems to be in these arguments with theresa may -- they say competing statements occasionally. is this budget reflecting how he feels about brexit? elizabeth: i don't think so. i think he is under pressure. he will not want to do it wrong. there have been mistakes in the past. back in to put it in march that went very wrong. and i think, there has also been trouble when previous chancellor, george osborne, has tried to introduce reforms like disability, benefit cuts like family tax credit cuts. that is not -- matt: why are tax credit cuts popular? elizabeth: they won't be. he want want to make those missteps again. guy: what is success here? what is going to be a successful budget? not making a mess of it is probably going to be a successful budget, but everybody
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has got their competing agendas at the moment. so i am wondering, tomorrow morning, when we sit back and try have -- when we have dealt into the details, what we would think of the budget and going into it, what defines success. is it just not in shambles, just not upsetting more people? i don't understand what a successful budget looks like here? matt: does the market reaction matter? guy: i don't think so. elizabeth: i don't think there will be a big market reaction of us he does something spectacular, but there is nothing to indicate he will. i think the headlines he wants to see is he has done loosening, something for the nhs will only go down well, and no big miss that like the national insurance stuff we had back in march. but he will want to say "i am still on target, closing the deficit, and i am on track for my own target, and i have a little bit of headroom left."
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if he can knew that, i think he will be quite happy. matt: will he give mark carney anything he wants to see? elizabeth: i think the bank of england this kind of on the same page as productivity. they think the productivity growth is structurally lower at the moment and therefore, the potential growth in the u.k. -- i think if philip hammond announces something that looks like it could beat relativity, that would be good news all around. again, it is hard to imagine him doing that. guy: is there a problem in the u.k. housing market? elizabeth: there's a problem, isn't there? if the budget also my to address that, they are going to try to increase house built into 300,000 per year. they are not going to actually give any money to the program as far as we can see or a little bit on the council homes. they will not be taking any great steps to address that, so whether they can meet both targets is another question. guy: changes? elizabeth: there have been some weeks of younger buyers.
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political sidee of this budget. probably will not be a very expensive measure, but it might appease some younger voters. matt: so everyone knows, that is a cost-effective -- cost you have to pay when you buy or sell a house. we have some non-u.k. viewers who don't know what that is. i am a little confused. aren't prices coming down in the housing market? you talk about undersupplied. prices are coming down in central london. in general, housing prices are rising in the u.k. but at a lower pace. that does not change the fact there is an supply situation. it probably means the activity is quite slow at the moment. people are not buying and selling many houses, but it does not mean the problem has been resolved. guy: question coming in. would significant revenue make cuts to the spending if the brexit causes significant loss of revenue? in terms of the tax going
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forward, how easy is it to model the tax take going forward given what happeneding with brexit -- happening with brexit? elizabeth: we don't know what will happen with brexit or the financial sector. and so, i do not think the kobe willwill try -- the obr try to gauge that risk. what they will be most based on a slower growth and they anticipated and i don't think they will probably go there on the impact of brexit. matt: willis have any impact on theresa may? u.k., her the her role is seen as fairly precarious. will the support her not? for harm -- or harm her? elizabeth: we'll see what happens for today. chancellor will looks to bring forward some policies
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that will appeal to younger voters, which is where they lost out in the election. the second way is because it gets through parliament. todoes not try anything controversial and terms of the position. we will see how successful the chancellor is in doing that. guy: elizabeth martins, chancellor at its. you use the i.b. button or send us a message, giving us an idea of the questions you think we should be asking at this point in time. the budget delivered by this man, philip hammond, is a big story for us here today. the budget committee 2017, local coverage, 12:30 p.m. here in london. you can want all of that. there is a live and all kinds of functionality on your bloomberg that you will be able to use to access all of this. you can also access the tv function. there is the ever dapper simon derrick joining us earlier on in the day. the little blue button-down here
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is how you get to join the question -- joined the team, asked the best your question, and send a direct i.b. into us here. you have the functionality. plenty more to discuss. this is bloomberg. we will continue with the market coverage, next. ♪
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matt: all right. welcome to "bloomberg markets:
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european open." i am matt miller here in london. guy: a delay was caused by you being in berlin normally. matt: normally, there is a delay caused by my brain. janet yellen has cautioned that raising interest rates to quickly risks stranding inflation below the 2% target. the outgoing fed chair of the federal reserve also said there have been "some hint that expectations for future price increases maybe moving lower." janet yellen: one reason it is dangerous is because inflation expectations are likely to also drift down, and indeed, there is some evidence -- at don't really think they have gifted down very much. thathere is some hint after many years now of low inflation, they may be drifting down, and that would be a very undesirable state of affairs. matt: all right, this as we heard earlier did not impress
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manus cranny at all. fomc minutes are due tonight at 7:00 p.m. you take -- u.k. time as well." they may sho concern about tight labor markets. elizabeth martins is still with us. she is worried about inflation, it seems, turning lower, and the fed is worried about labor market that are too tight. what does this mean for the passive interest-rate? elizabeth: one of the interesting things she said was that you can explain away why in 2014, 2015,ow 2016. we had a strong dollar, lingering capacity in the labor market, but for 2017, the downside surprises are harder to explain. the reasons have gone away. we have the downsides prices on core inflation. it is a balance to strike. daily, they have differing -- clearly, they have differing opinions on where you click the him is. we are below it now. it should be the time when inflation is picking up, and yet, it does not seem to be --
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at least convincingly. we think it's a limits the amount they will hike next year. if they go in december and march, and take a pause after that because the wage growth pressures disappointments again. guy: you guys are traditionally very bearish. or bullish, depending on your point of view. you think the yield will stay pretty low, and that has been a story he has been right on for a very, very, very long time. thatere any evidence now we are starting to see the trend being broken? if yellen is concerned about the lack of inflation at the moment, steve is looking more and more right on a daily basis. theybeth: some people say are seeing evidence that it is picking up. it has been indicated in the u.s.. it does seem to have stalled for now. that really underpins this. there is a limit to the further tightening. guy: where do you think the rate
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is? tricky question. elizabeth: i'm not sure i want to pin i self down on that. but clearly, lower. we wouldt is something all agree on. what is the ballpark? elizabeth: again, i'd really want to pin myself down on that particularly, but clearly lower than it has been. matt: right now, we are seeing the fed basically deliver everything it has promised, and now, the dot plot shows we are going to have three increases next year after one year in december. does that seem like enough to put a dent in the u.s. is seeing right now? elizabeth: not a big dent. we are still forecasting good growth, supported in part by the tax reform plans, if they come through, what probably happened q1 of next year, and i probably offset some of the tightening. matt: so you do think that is going to happen?
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that is something that was to a large extent price into markets. can they actually get it through congress? elizabeth: exactly, and that is hard to predict. anything that comes out of the politics is hard to predict. some of what we have factored into our forecast, some of that pushes into 2019, if it takes a little longer. if it does come through, it will offset some of the impacts of tightening. that is proceeding very slowly, very cautiously, so we don't expect big impacts on growth. likelywant to turn very to what is happening in the market. the lira is beginning to strengthen ever so slightly. the most important thing here is that the trend may be starting to abate little bit. we have seen the dollar being on a real tear against the lira. the expectation that we are heading up and maybe seeing an emergency meeting with the cudmore. and mark
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it will be interesting to see whether the central bank in turkey does extend the fault level. he was giving a speech in istanbul, talking about the fact that you need to look at both sides of the balance sheet when it comes to what is happening in terms of liabilities and reserves. it is critical you focus as much on the reserves as the liabilities. we will continue to monitor what is happening. will we get some sort of emergency meeting this week? we'll find out. we will talk about the uber hack. another bump in the road for the ridehailing firm. a couple of security breaches. it tried to keep them quiet. the details are next. this is bloomberg. ♪
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guy: welcome back. you are watching the open. just in terms of the way the markets are, no clear sense of direction this morning. let us turn our attention to what is happening with uber. hackers stole the personal data of 57 million customers and drivers in a message breach that the company concealed for more than a year. they paid the hackers to keep the breach quiet. uber says no critical information was taken. joining us now is reed stevenson. let us get to the nuts and bolts of this. first of all, how did this happen? reed: essentially, there was a deal struck about one year ago where a bunch of hackers basically blackmailed uber and went and said "we have data on 57 million customers and drivers. pay up and we will keep quiet."
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so uber paid $100,000 to keep things quiet. probably not so much to protect customers but to keep this out of the news. and as with most things, we discovered, the cover-up is the crime. crime - the ceo's had to apologize. matt: first of all, it is interesting that the security chief was a federal prosecutor before. he probably should have known better. and travis kalanick knew about this as well. is that correct? and what is the new ceo saying so far about that? yeah,beth: yeah -- reed: there are some unanswered questions. as it turned out, they were actually already in the middle of a settlement with federal regulators when this happened.
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that may be a factor. travis kalanick has been pretty quiet so far on all thing. uber has already been put on notice that another investigation is going to be forthcoming. and a bunch of customers also slapped it with a class-action suit. insofar as the new ceo, he is just apologizing area. 20put out a story t minutes ago. almost every statement you have made since replacing travis kalanick has been in the form of apologies or mistakes were made. we believe it there. thank you very much indeed. reed stevenson, bloomberg's deputy technology editor joining us on the uber story. just a london, it is lack of trust in the uber team which caused so much of the issues surrounding the licensing in the country. matt: they did not get credit card numbers or travel data.
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they just got names and addresses, i think. if you are one of the 37 million customers, you don't have to worry that much. next, we will talk more about what is going on in germany. could we see a new grand coalition? this is bloomberg. ♪
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matt: stocking up. u.s. equities surged to all-time highs. the buying continues in europe. e marketsts -- ar learning to love a flat yield curve? grand coalition 2.0. merkel's backers with -- will schulz put country before party or just leave his party? uber hack. the ridehailing firm covering up a security breach of 57 million riders and drivers data. will regulators ever trust this company again? good morning, and welcome to." i am -- and welcome to "bloomberg markets: european open."
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i am matt miller alongside guy johnson at bloomberg european head quarters in london. i came for the u.k. budget. [laughter] matt is here to deal with the current account. let us talk about what is happening with the stock break down this morning. equity markets at the headline of are not going anywhere. they had a solid day. the grr, basic resources bid this morning. banks on the front foot. hsbc trading up quite strongly. oil and gas as well. we have seen performance out of the oil markets. an opec meeting next week. media, technology, travel. that is where the money was rotating out of. look at the first word news update. here is at ludlow. u.s. navy aircraft has crashed into the sea selfless evoking our. sea, uss okinawa.
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because cause of the crash is not known. is bettingel's party on a revised alliance to dodge the risk of a snap election according to people familiar with the discussion in berlin. they say that while merkel has publicly stated she is open to another vote, her preferences to renew the partnership that underpinned two of her three terms in charge. zimbabwe is waking up this morning to the new post robert mugabe europe. it was announced the president of 37 years was resigning. the figurehead has been under increasing pressure to stand down after the military took control of the country last week. mugabe dismissed, will take over as interim leader. the presidential candidate's elections next year. the federal reserve has
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cautioned that raising interest rates to quickly risks stranding inflation below the u.s. central bank's 2% target. janet yellen said there have been "some hint that expectations for future price increases may be moving lower." >> one reason it is dangerous is expectationstion are likely to also drift down. and indeed, there is some evidence, i don't think they have drifted down very much. there is some suggestion, some hint that after many years of low inflation, they may be drifting down, and that would be a very undesirable state of affairs. >> powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. matt, guy. matt: could germany be headed for a new grand coalition to break the political deadlock? angela merkel that he got a revived alliance with the social democrats to dodge the risk of
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collection according to people familiar with the discussion. publicly, the chancellor has said she is open to another boat, but her backers expect increasing political pressure to ave the way for a rerun of grand coalition. indeed, it has been quite good for her. and she has also stated her first priority is a coalition government. elizabeth martins is still with us, and i want to ask you to weigh in on the politics of this. it is such a fluid situation. it is changing every couple of hours. as far as the economy in germany goes, and this economy has been fostered by the grand coalition over the last four years. it does not look bad, does it? elizabeth: not at all. it is firing on all cylinders. to data continues to come in the upside. the economy is on autopilot. there is no big threat of change and economic policy. there is a bit of uncertainty around who will be assessing
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policy, but i don't think we are looking at a big game changer. that indicates, the economy is on autopilot and doing very well. from the u k posts referendum last year, we know that -- u.k. plus referendum last year, we know it is not -- guy: one thing it might have an impact on is the sense that europe is moving forward and we will be seeing a lot of political moves that will allow us to see europe develop deeper in key areas, become more deep in key areas. the french come in particular, want to push onwards. is that the risk that this does not happen, and if that does not happen, where does that leave sentiment? elizabeth: perceptions might move in that direction. if we remember to the beginning of the year, as we came into the year, there were a lot of worries about the french and netherlands election. everyone relaxed. the eurozone have had a very good year, germany in particular.
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part of that has been fueled by the perception that actually the political situation has been improved, and of course, if you get a little bit of instability in germany, which -- key players, that perception is down a little bit. matt: when these coalition talks collapsed on sunday night, we had just the week before been in frankfurt for the ecb conference him and draghi had been again -- conference, and johnn draghi had eins. the fiscal r my immediate thought was that if germany could not do that, does draghi -- will he have to continue his qe program even further than september of 2018? elizabeth: there are certainly other factors in play. by that time, many other things could have changed, and there is another question of how much germany was going to do that anyway even if we had -- matt: very good point.
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probably unlikely that they were going to inject a lot of fiscal stimulus into the economy. economy is doing very well right now, but what is the priority for the next german government economically?what does it have to do ? doing,ing what i it is or will the world have to move against germany inasmuch as it has a very sort of mechanical economy? it is very much german by what is happening in the car sector and the supply chain that feeds into the car sector. it does not have a lot of phd's coming out of its universities. what are the economic priorities for the next administration? elizabeth: that might be one focus. i think germany has got the same everyone else, wage growth. you have a strong labor market, good growth, but it has not fed through. ultimately, that is one of the most important things people of four in economic growth, and it just is not happening. the rest of us, they will be feeling that out. matt: they will not be closing all of their coal-fired power
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plants right away. they are going to come a you know, outlaw internal combustion engine production. there will not be a speed limit on the autobahn. guy: match is very happy about this. matt: there was a concern that that would throw a wrench into spanner, while a we are in london. governments are presiding over pretty good growth and economies over the past few years. elizabeth: absolutely. martins, hsbc. if you are a bloomberg customer, you can move on from the eurozone cop as it data -- composition data. you end up with the landing page. let us not forget -- matt: i am glad you're going to the landing page. a lot of times, you click into the interactive tv because you are on tv. you can listen to radio. and you can follow event
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coverage. there is something going on in the u.k. that everyone wants to giving his hammond budget statement. you can do this with the live event coverage button. guy: you have theresa may, questions from lawmakers, ansys from the prime minister, and then philip hammond giving his budget statement. up next, continuing coverage. will the statement give a boost to the prime minister theresa may as she struggles to make progress with her brexit negotiations? that is next. this is bloomberg. ♪
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guy: 8:41 in london. it is budget day. let us talk about what is happening later on in the u.k. thoughs faltering, we may see an examination. theresa may looking at today's autumn budget to shore up her support. autumn is a bit of a misnomer. ahead of the chancellor is speech, let us go now to westminster and join bloomberg's anna edwards. anna. anna: you would think so, but it does feel unseasonably warm. good morning from westminster. we are here because of the budget. philip hammond presents at 12:30 u.k. time brexit and productivity in the u.k., big themes. alison mcgovern joins us here. the treasury select
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committee for some time. talk to us a little bit about housing. this will be one of the big themes of this budget. what will success look like on his budget? alison: every time mark carney comes to see us, we ask him all about what the policy sectors can do for the housing problem. he always says this is about supply. the problem we have in britain is we have not built enough houses. if the first chancellor comes to the house today and offers -- i increases in the scheme that pumps money into first-time buyers, personally, i think that would be yet more policies. what a success will look like if him finding-- is the resources to get it directly for building. i would specifically say what we need is regeneration. we have got overheated housing market in london, and we need to find new areas of the country and open up new parts of cities
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so that we can properly rebalance our economy, not just pump more money into london. anna: there is talk of maybe 300,000 being the aim in terms of house building. that would be a big number. not since the 1970's have we seen that kind of number. alison: we have heard a lot of big numbers in relation to housing, a lot of promises. david cameron used to promise all kinds of big numbers. it is about what actually is the policies. and i think that has got to be finding the resources, and then opening up, as i said, new areas of the country. , land where we could get regeneration, so people have new places to live and not just trying to cram evermore homes into london and south. anna: the kobe are looks -- the set to cut rates because of declining productivity. this is not just a conservative party problem. this has been going back decades. what is your quick fix solution
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for that? alison: in 30 seconds, it would be skills and childcare. the problem you mentioned is the skill level of people in our economy. we have 5 million adults without basic skills. that is much more important. you will hear about railway schemes. those things cap, but it is much more important to get people to write skills in our economy. we have 12 million adults without the doodle skills. the cannot go on like -- digital skills. cannot go on like that. the system is overcome located, and under resourced. it is a bit of a shambles. be ant think there will ambitious scheme. we had to deal with productivity and that is what we should do. labourf we were to see a government in the future, in the very distant or near-term future, we know the chancellor of the a sector --
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eschecker,llor of the secto what would be position be on that ? alison: we would invest but bring it to a close as soon as possible. most constant broken promises. george osborne has definite looks so philip hammond give himself a far in the distance target so he could have all of this headroom just it ise, because appalling. it looks like he will have problems with his deficit target, so my focus would be on what are the underlying problems in our economy? we know what the big one is. the big one is brexit.on the deficit , what we actually need is a changing on policy for brexit. we need a policy that is pro-customs union and single
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market membership, and that would help industry to see that actually the government had a jobs first brexit that would bring in taxes to deal with the deficit. anna: you would suggest future labor government should not boxed themselves in, and should instead focus on outcomes as regards to brexit, and in terms outcomes, how would a labor government look very different of a tory government on brexit? alison: we have already said that we would want a long period of transition where the current trading arrangement, membership in the singles market, the custom union state the same. that is to have him where the tories are where we don't know what their implementation period amounts to. i would like my party to the ones that should be the permanent arrangement, because whether it is leave voters or remain voters, the priority was to get a deal done, and membership in the single market customs union would enable
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us to get a deal done and build ourselves up, not be hamstrung by this long debate. we don't really know what the cabinet wants out of brexit. if we stayed in the single market and the customs union, and our ability to do trade deals would be hampered, would that look enough like brexit to satisfy people? alison: we would leave the political union but keep our trade deals the same. that is what many brexiteers were offering in the referendum to when i talked to my constituents, their priority in the june election was to get a deal done and move on to working out how we fund our schools to keep all the people healthy. of course, nigel farage and the kind of hard right in the country, of course, they will cry betrayal. but does that mean that those people get to dictate to everyone else in our country what this looks like? i don't think so.
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anna: where should he put the money? that to the budget today, should it be the nhs that gets it? universal credit? what would be the headline grabbing spending splurge you would recommend? alison: i think, if we want to -- it has to be universal credit. but i know that, you know, the nhs cannot go on as it is either. you have got a really difficult job but in the end, you would have to take a balanced view. anna: thank you very much. alison mcgovern, m.d., joining us on the green. much more to come from here before then. matt. matt: thanks very much, anna edwards, in westminster. does for the leader -- new loew for the lira. will the central bank stop the slide? we are live in istanbul. this is bloomberg. ♪
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the hour.nutes past welcome. the turkish has hit another record low against the dollar earlier, bounced a little bit since then, deepening tensions and ballooning issues which continue to surround the confidence on the currency. economists said a short rate hike -- sharp rate hike may be necessary. this after president heard on --
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central bankthe was on the wrong part. joining us now, the bureau chief. deputy primethe minister speaking earlier on in a conference by bloomberg ht. what was the message he delivered? the currency is moving in the wrong direction -- what did he have to say? expected, he was here to take this opportunity to try and reassure investors. it was a speech where he very much focused on where he argued the perception of turkey is much worse than the reality, whether it is on debt dynamics or the growth potential or even rule of law. that was the message he gave here. he argued that a year from now, this will be improved and that we just -- turkey has to whether this period -- weather this period. matt: i wonder how much independence the central bank has there.
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is there a concern that erdogan is too overbearing? is he to overbearing or is the central bank still free to act independently? that is definitely a concern, and in fact, it may be the primary concern for investors in turkey. erdogan did say the central bank was on the wrong path. he has been for a long time an advocate for lower interest rates, whereas most investors think turkey need significantly higher interest rates. it has shown that it has been willing to raise despite objections. anybody looking to take a long position on turkish assets has to bet they are going to do it again, which given the president's influence over policy in turkey, is a difficult call to make, obviously. guy: the market is beginning to come around to the idea that we
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could have to see some sort of emergency meeting here. is that what people are talking about in istanbul and ankara? benjamin: definitely. that is a big topic of conversation. the next central bank meeting is on december 14. we have got a long time to go until then, and the markets are really pushing to see some sort of action. matt: i want -- let me just quickly asked, because i think about, whenever i see a currency weakening like this, the offensive has on the companies that operate in that economy. indeed, the turkish stock exchange has not done poorly as a result. are you hearing anything about the lower currency helping the revenue of turkish companies, benjamin? there are some people who make that argument. i mean, there are exporters groups that are lobbying for a weaker currency in that it will
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help exports. there are also members of the erdogan's advisers who are doing the same. counter to that, you have turkish companies with a sizable t pile.le -- deb weakening currency causes trouble for them. that is a balance they have to meet right now. matt: benjamin, think very much. bureaun harvey, istanbul chief covering what is a developing story, a fluid story, and we can expect to see a lot more out of turkey over the next few hours and days. up next, we have bloomberg "surveillance." francine lacqua will take over. guy: we are going to bloomberg radio. she will be joined by tom keene later on. life coverage of the budget. that is something to be talking about in the u k and the ongoing situation in germany. you and i are going to be talking about that on dab digital radio. matt: you can tune into digital
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radio in london and you can listen to us by typing radio or tv . guycan go straight to live and matt miller. this is bloomberg. ♪
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francine: u.k. budget day. the chancellor walks a minefield. uber hacked. ride-hailing service concealed a breach of nearly 57 million people. the outgoing fed chair says rai sing rates too quickly risks inflation below the central bank 's target. this is "bloomberg surveillance" and i'm francine lacqua in london. we have a really packed show.


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