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tv   Bloomberg Markets European Open  Bloomberg  January 17, 2019 2:30am-4:00am EST

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"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. ♪ the "bloomberg markets: european open live from our european headquarters. i am alongside anna edwards in westminster. european futures points out after theresa may narrowly survived a no-confidence vote in parliament. we will she have any luck with cross party tough -- will she have any luck with cross party talks? we will have all the latest from westminster. the cash starts must than 30 minutes -- the cash trade starts in less than 30 minutes. ♪
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matt: you cannot topple theresa may. the u k scrapes through a vote of no-confidence, but with the prime minister's brexit deal in the dust, where does the u.k. go from here? the risk rally fades. u.s. investigations into huawei threaten to destroy any optimism, as china confronts the vice premier will attend the next round of trade talks. gains physical out of asia and futures decline in europe and the u.s. socgen warning that they expect to book a $240 million -- 240 million euro charge a minute revenue declines in its global markets division. are for the risks i had for european banks -- further risks ahead for european banks? take a look first at futures. you will see red arrows here after asian markets turned around and started to fall into the close of the session.
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we have euro stocks futures off 0.5%, as well as ftse and dax futures, cap futures down 0.6% -- cap futures down 0 -- cac futures down 0.6%. we had gains in europe. you can see the ftse was up. on the continent. we had losses in the u.k. you can see what happened in argentina and turkey, gaining as well. argentina's peso falling come up probably helping to boost the stock index -- falling, probably helping to boost the stock index in that country. we have other emerging-market currencies down this morning. let's get the bloomberg first word news. >> reports from washington say federal prosecutors>> are pursuing criminal investigations against china's huawei. we are told the case involves alleged theft of trade secrets from u.s. business partners and includes technology for a
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robotic device that t-mobile used to test smartphones. the inquiry is advanced and could see in indictments and. huawei has previously denied wrongdoing. theresa may is said to be prepared to blur her red lines to find a by the compromise that could get through -- brexit compromise that could get through parliament. the u.k. prime minister held discussions with other party leaders about a way forward for leaving the eu. jeremy corbyn refused to take part, demanding theresa may roll out a no deal brexit before talks. the u.k. leader must return to parliament with a plan b by next monday. >> i am disappointed that the lever of the later party -- of theparty -- leader labour party has so far chosen not to take part, but our door remains open. it will not be an easy task, but mps know they have the duty to act in the national interest,
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reach a consensus, and it is done -- get this done. >> the reckitt -- record u.s. government shutdown drug drags on -- drags on. the u.s. passed a bill to reopen federal agencies, but did not include money for the border wall and is unlikely to survive the senate. the white house is considering using $14 billion of funds for the wall. democrats said that would be illegal. a nigerian businessmen and and the main opposition presidential candidate said he would appoint a new central bank governor if elected. in an interview with bloomberg, he also says he would sell a stake in the state will company, reduce the government's interest in the company to a minority, send there really is a mafia in there. nigeria will elect a new president on your 16th. >> that is -- february 16.
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>> that is really a mafia there, people who benefit personally at the expense of the country. we can do anything. >> you think you can do it? >> of course. why not. we have the political will. >> global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. matt: thanks very much for that. markets fell on concerns about quantitative tightening last year, the fed decidedly -- the fed decidedly hawkish stance -- the fed's decidedly hawkish stance turnaround to what looked like a dovish stance. there are also concerns about the fed's independence in the wake of twitter storms against
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jerome powell. joining us now is dennis lockhart, former president it up -- former president of the atlanta fed. met me ask you first where you make of where the fed stands right now. you would -- let me ask you , what you make of where the fed stands right now. in the u.s. more than any country in the world probably, you have got this feedback affect because so many people are exposed to the stock market. dennis: i think it's important to start with the point that monetary policy is about the real economy, not about the financial economy. in that respect, i think the federal open market committee will do it thinks it's best -- is best for the broad economy. from time to time, that may seem out of alignment with what markets are signaling.
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that's very much the case today. the markets are signaling greater concern about recession, or about the medium-term outlook membershink the fomc see. so there is a bit of a disconnect. the the fed -- the fed is not the handmaiden of the markets. to really is going make the decision that it thinks is best for the broad economy. matt: let me ask you, i have heard jerome powell saying that he thinks the fed is getting closer to the neutral real rate of interest. you are a stanford man. with have a great function on the bloomberg -- we have a great function on the bloomberg that shows the taylor rule. i can never decide what to put in. traffic -- that's a great question economists need to
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answer. where do you think it should be? in answering that question you will tell me how far away you think we are right now. dennis: i will take at face value what the fomc, with all the support they have in judging something like this, fomc participants say. that is somewhere between two and three quarters, and 3%. woat would suggest maybe t more moves this year would put them at what the estimate to be neutral. it's --d understand it's a notional concept. matt: and a moving target. dennis: in all likelihood they would sort of feel their way to a point they think is neutral. it is about where we are today in terms of rate setting. it would imply, if that were a more to get to neutral, 2
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moves maybe. anna: good morning to you. if anna edwards in westminster. given what you said, does that , if that ispause what we are seeing from the fed in the next few months, will not last very long? dennis: the what? i'm sorry. anna: the pause and rate hiking were not last test in rate hiking -- in the rate hiking one not last very long -- will not last very long. dennis: they have a number of reasons if they wish to pause, they can certainly do it with justification. i will put it that way. the first quarter will be affected now, in all likelihood affected by the shutdown. i will point out that for several years, but not last year, but for several years the
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first quarter in the night it was sort of an unusual quarter. it was difficult to understand. there were sometimes weather events, sometimes other factors came into play, but the first quarter was sort of a puzzle. if you have a shutdown plus other aspects creating a very soft first quarter, then it would be perhaps more difficult to go ahead and make a rate move. they have signal patience. they have signaled no preset path. they have signaled flexibility, so i would not at all out a pause at the end of the first quarter. so you are drawing a link between fed policy and the shutdown? the longer the shutdown lasts, the longer the path in fed rate hikes -- pause in fed rate hikes? is that the case? dennis: i would not necessarily
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say longer, but i think taking a stance at the march 20 meeting of wait and see. take a little time to evaluate what the effects of a shutdown, but also unexpected slowing of the economy. expectedd have -- an slowdown of the economy. they would have every justification, if they wish. rather to just simply take a positive and wait and see that pause and wait and see -- paz se andit and see -- pau wait and see. matt: it's not all about rate increases or disk greases -- decreases for this fed. jerome powell told us he was in terms ofutopilot reduction of balance sheet. i have a great chart which shows
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kind of a global view. maybe u.s. investors are not think about this all that often. here in white is the fed's balance sheet. we are declining, but they're in purple you have got the bank of japan. obviously massive balance sheet. in blue you have the european central bank. it was the biggest in 2018. not china has once again overtaken the ecb. these other global -- now china has once again overtaken the ecb. these global balance sheets are expanding. does this quantitative tightening work almost like an administrative job? dennis: i will depend on my experience having been in the fomc meetings for 10 years. global conditions, including global balance sheet conditions and such, are a consideration, are monitored, but very rarely are they really a critical factor in a decision. the fomc, by law and by nature,
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is focused on the domestic economy. so what is the right thing to do with its own balance sheet at this stage? and whether or not, for example, is very muchrunoff a domestic kind of decision with this as background knowledge. matt: anna? anna: i just wanted to ask you about concerns around recession and united states -- in the united states. i saw one piece of research from a dutch bank talking about a 69% chance of a recession by 2020 and united states. do you see any worrying signs that point to recession in the next couple of years in the u.s.? dennis: is very hard to see in the data. the data continues to show a economy operating or performing very strongly.
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citigroup saidof something that i picked up the day before yesterday, and that is perhaps we are talking ourselves into a recession. that is the end of cycle thought process that consists. recovery has been going on nine years, and it's so long into two -- in the tooth. surely we are due for a recession. matt: or perhaps president trump is pushing us there? deutsche bank said maybe the trade war with china and the government shutdown could push is there this year -- us there this year. dennis: certainly those elements increase the chances of a recession. if you are focused on data, it's not there yet. you don't see it. you don't see enough indicators of weakness to suggest a recession. bankers haveral
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identified imbalances, major imbalances in the economy that would suggest a recession. , i chances of a policy error have enough faith in my former colleagues to believe that it's unlikely that they will -- for example, raise rates so high that it causes a recession. i think that's clearly not in the cards at the moment. you know, it's very hard based on evidence to see a recession. ok, thank you so much for joining us. dennis lockhart, former president of the atlanta fed in london for a conference. not just brought here by the brexit excitement, but we hope that's keeping people on to take. up next, -- people entertained. up next, we will talk about markets. the rally loses steam.
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we will talk markets next. this is bloomberg. ♪
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♪ anna: welcome back to the european market open. 12 minutes to go into the start of the cash equity trading day. uris -- u.s. and european futures pointing downwards. this follows news that u.s. federal authorities are said to
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be investigating huawei for allegedly stealing trade secrets. that's get to the markets. mark cudmore in singapore joins us. european futures pointing decidedly weaker, perhaps being led by the u.s. asia losses more muted. what spooked everybody? is it just huawei? >> certainly that caused risk aversion early in the morning and a late slump in the u.s. we started recuperating on this idea that china is providing stimulus towards the end of the asian session. it tailed off into europe. we are in a higher volatility regime than we were back in 2017. i think investors are still djusting to -- a this. i think over all at the moment this is just noise. the overall favorable environment for risk assets remains in place. matt: when you look at the safe
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haven trade, i noticed yields are falling today. the yen is gaining strength, although it's not a considerable move. do you see that investors are positioning themselves are uncertain? >> certainly they were kind of unwinding a little bit of the optimism we saw last week on the trade front between china and the u.s. i think people are starting to realize we have not got any concrete information on what next. all we know is that there is this meeting in washington and it will be attended by a high-level representative from china, but we don't know if they will reach a plan. just because there were some positive statements from both sides does it mean we clear off this trade war that undermine our risk assets last year. year.ll risk assets last there is still low liquidity in the system. global growth is still solid. it slowing down, but not heading
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towards recession. i think it's overall a good environment, especially with risk assets being repressed so much over the last couple of months. anna: remember, you can join the debate. we are minutes away from that market open. up next, we will take a look at our stocks to watch, including alstom, after it warned that a merger with siemens could be blocked. this is bloomberg. ♪
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♪ to "bloombergback daybreak: europe." -- "bloomberg markets: european open" let's get your stocks to watch from around the newsroom. paul jarvis from are equities team covering a be foods and annmarie hordern focusing on alstom. we are looking at u.s. bank earnings, where we got some disturbing news out of france. >> that's right. it was not expected at all. socgen has said they are expected to take 240 billion euro write-down on disposals and that trading revenue will be 20% less than last year. negative, but that
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expectations are already pretty low for not only socgen, but most french banks. we knew they were taking a pretty big hit on their disposals. how much more this extends what they have said is unclear. it should be pretty negative, but mostly priced in the we expect. -- in, we expect. matt: on jarvis, let's get to -- paul jarvis, let's get to av foods. >> all eyes on the performance of primark, the retail juggernaut over christmas, and it has not disappointed, as is normal for this business. sales up 4%. margins they are also saying are very strong, for multiple reasons. this really shows that the primark model is still very much on track. they say christmas was particularly good after a difficult november. food's expect to see ab
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doctrine higher -- stock trade higher. matt: alstom has some doubts on the merger with siemens.
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>> less than a minute away from stock market trading. take a look at some of the assets we have used try to give us a signal. euro-dollar trading week, but very little change. we do see the pound down a little bit at 128.5. still where was we spoke yesterday. oil at 61.1, holding steady. it rose during the morning session and fell in the after lunch session in china. we take a look at futures, we see red arrows, not only here in
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europe, but across the u.s. as well. right now, ftse futures are down lookingalf of a percent at negative futures the s&p, dow, and nasdaq. european stocks from germany to france here in london. are now open let's look at how markets are trading. the ftse coming down about .2%. maybe that inverse correlation between the pound and ftse stocks is not so apparent today as the pound is down as well. ibex coming down about half of a percent right now in the. you see continental stocks falling maybe a little bit harder then you a -- u.k. stocks. yesterday, we had stocks down and most indexes on the continent to gaining. could be a reverse, albeit with already arrows third what's take
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a look at the breakdown by industry group in our imap. we see a lot of red there on the screen. health care is a big loser today, as our financials. hand, the defensive sectors taking a beating. on the other hand, financials are doing well. financials sign see here, if your lungs markets. this could be the reason we see it across europe. on the other hand, consumer staples are doing well and those are obviously a very defensive stock that had a rough time this week. look at the individual movers in the stoxx 600 index with the bloomberg movement screen. first off, you can see brett there. 480 five stocks down, only 83 brett veryn your
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much to the downside, and it has been one-sided. here, we the winners have a be foods. stocks we talked about during our stocks to watch report, a big gainer. most points to the stoxx 600 of any other company on the screen. otherwise, we see jim barrett up 3%, a company very closely associated with european bathroom. british american tobacco also a gainer. one of the defensive stocks taking a hit is now showing recovery. gains on thee stoxx 600 or holds back from losses, as we're seeing today. as far as losers, you will see the financials, that is the concern after the warning societe generale itself is down.
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down, iis also definitely affect these markets. opening broadly lower with consumer staples showing a little bit of resilient, that is possibly just a debt dead cat bounce to use. asian stocks traded mixed to down. u.s. futures are declining as well as concerns over rising u.s.-china tensions offsetting signs of a positive start to the earnings season. joining us now is the global head of macro strategy at state street. what a fascinating time to be watching these markets through the saga of brexit, it seems that the trade war earnings, especially from banks, are really front and center. what do you make of what we have seen so far? in a funny way, banks are the microcosm of the bigger macro question.
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our things as bad as we think they could be? our expectations potentially to negative us mark we see earnings expectations have fallen really significantly, we're beginning to see whether that was enough. the other big debate is with aal markets, weakened an awful lot at the end of last year but the economy had not really moved. that will be the debates, which is right? the data is not quite there yet. you can see that encapsulated in the bank earnings where the real economy news has actually been ok but market revenues are not as good. see can see that tension about whether expectations are low enough and second as to whether. we know that net interest margins or something jamie dimon just is not care about. good morning to you.
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a gloomy start. the weather has turned the gloomy here in westminster as well. how much comfort to you take from what we have heard so far on earnings, if any. or is it too early to say us market will kind of reflections >> theu made so far? optimistic case was that the expectations have normalized enough already. analysts have downgraded earnings quite significantly in the last quarter or so. what the earnings results are telling us is that that was probably the right move and that there may be some normalization to come. i think that so far, it has been a little bit mixed. that it is going to be much more selective. i don't think that there is necessarily a lot of news.
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matt: which stopped with the former fed president and he was saying that the fed does not want to be the handmaiden of markets, clearly. questioncan go to your , s&p 500 level put fed hikes back on the table. >> clearly, if financial markets are very volatile, there will be news driving that. markets don't create that volatility out of nothing. one example is that the volatility then feeds through the things like business sentiment and consumer confidence. saw that with the isn. it would be tempting to say that financial markets are forward-looking. the two are clearly linked. that the fedasons
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has backed off from its hiking we have course is that had volatility and financial markets and it has impacted business confidence. i think there is a volatility level, but it needs to be extreme. anna: what about colleagues is making the point that it is the moves of the duration. that interesting to see asia was a little spooked overnight with more news about huawei. what are your thoughts on trade? as we head towards the end of the month at all the meetings to take place. are we optimistic about progress that can be made on trade? another way you could have couched the question is what level in the s&p persuade trump
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to do a trade deal? is also a becauseand right now, both chinese and u.s. equity markets have been under pressure , it is not clear that the u.s. is winning the war. i think that this is a much greater chance now. at least some kind of deal and some kind of agreement gets done. you've if we don't reverse the tariffs seen so far, at least there is no escalation. that risk that markets fought with all through last year will effectively disappear. and let's hope we are saying the same thing about brexit as well. those two big risks that really drag sentiment down last year, they could quite easily be resolved or on their way to being resolved quite soon. >> if huawei does not get in the way.
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metcalf from state street. up next, bring you stocks on the move. one of the culprits for the drop and on the cap says it expects a 20% drop in trading revenue. this is bloomberg.
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matt: welcome back. this is the european open. they just about 11 minutes into the trading day. sincerely are down across the board in terms of indexes. we go to annmarie hordern. banks under pressure across the board. socgen down three point 5% government expected to book a 240 million euro charge they also see trading revenue down and they pointed to the fact that it just has to do with what is going on in the market and market volatility. asml also to the downside, the bad day for chipmakers. is to be read across with what we saw in asia with a taiwanese chipmaker. revenue and market how that came in well below expecting. sector, banks and autos are looking hit. we could see carmakers under player -- under pressure.
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,he president of united states president trump, is inclined to slap tariffs on european carmakers. that mean 25% duties coming in. fortunately, i have moved here. theresa may is holding cross patty talks in an attempt to break the cross party deadlock. eu hasrg sources say the told may she must radically read take redline to reach a new agreement. joining us for the european reaction is bloomberg's maria tadeo in russell's. may fromw far is having an actual plan b? does she just prefer to adjust plan a. >> she is very far from having a plan b and it is quite telling that european leaders expected
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.er is because they wanted to see a plan b that looks completely different to what they have on the table. the sale of this point, there is nothing they can do to flip 200 votes in her favor with that means a cross party deal or a confession on the union. they want to hear that from theresa may. at that point, they say they can get the next stage. matt: all right. how open is the eu to extending articles? >> the official line from the u.k. is deal or no deal. brussels, it is very
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different. a, there say the u.k. cannot afford to go no deal in two months. but also, extending that is just inevitable but i have to say, there is tension going on between members of the eu. some of them do not agree into how long this should go on for. there are member states saying that, frankly, it makes no sense to keep the u.k. and european union while the election is going on. it,also, if you think about the u.k. parliament needs to agree on the field but also the european parliament in july, we will have a very different parliament. you have a situation where different members and negotiators are working on this. the timeframe is just very different for the eu who have accepted they will have to extended, but for how long is the big? . matt: thanks very much, maria tadeo joining us in brussels.
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michael metcalf global head of macro strategy at state street -- with with us your us. it is interesting to see not only this problem, but also the greek problem flaring up. italian sort of problem constant is still with us. have you see the european economy shaping up? unfortunately, the european economy has ended 20 18 with a significant lack of momentum. i sort of felt in conversation. yes, european growth is soft, but it is because of one-off this is right in your wheelhouse. your initial concern as we go that we area is just
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are from the industrial point of view on the brink of recession. i just don't think that is something europe can't afford. right now, we have managed to get through the italian budget theute, for instance, italian government forecast 1.5 gdp. the economy enters with very little upward momentum in what is quite a soft global environment anyway, then i think that is a risk. it treats backt into the politics. we have been saying these are all one off things straining european. all i would say for the first quarter is they really had better be because that could put a real roadblock into european progress. anna: michael, we started this conversation by talking about the u.k. lingering. lb regards to brexit.
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how close the u.k. assets are you? where do you see vulnerabilities, and do you have a base case? >> a base case, that is a good question. can answer that in a couple of days, no? the baseay right now case just has to be some kind of delay. i think the only thing that we are sure of at the moment is that there is not a majority in parliament for a no deal and parliament will do their best to prevent that. it seems to be the worst case scenario for markets is being mitigated for now. when we think of how calmly markets have reacted, the other thing we have learned this week the opposition to the deal does not translate into opposition for the government.
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there also the trees we were able to look at. maybe starting to rub out the chances of an election. risk forpotentially a some markets. there are other downsides. we don't know where to go other than to say that it seems likely we will get a delay. a second referendum and a different kind of deal are still there. i have been impressed as to how the lack of volatility in markets, i do think they are a little defensive on u.k. markets, but less so on sterling. right now, it is still a wait and see. matt: we are going to try for a brexit free 20 minutes. michael metcalf is with us for the hour. let's take a look at some sectors on the move, they are for the most part down. we do see one gaining sector. there are beverage stocks we
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talked about. foods rising today. otherwise, we see a lot of losses. the biggest loser of the day down. parts down 1.4%. coming up, we talked about teflon theresa. greek primet the minister, surviving his fourth vote of no-confidence. we will get to european growth and politics next. this is bloomberg.
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anna: welcome back to the european open, 23 minutes into the trading day. a negative section, equity markets down. .9% weaker on the back. -- daq. it was not just theresa may who survived a no-confidence vote, the greek prime minister survived with a margin of just one vote. despite these threats of instability across europe, goldman sachs ceo david sullivan still sees the economy growing. he spoke on the banks call with analysts following a bumper set of results. >> despite the global uncertainties including trade policy about brexit, the planned
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removal of monetary policy stimulus and yield curve flattening, our economists still see global growth next year, including 2.4%. 1.6% in the eurozone, over 6% in china. european rates will remain slow but not drip into a recession. ask our guests, the global macro strategist at state street. we talked about trade, little bit about the growth story. is fixing trade tensions the most important thing for european growth? >> it is interesting. when we think of the trade dispute is being between china and the u.s., of course, europe is huge, germany in particular is huge. it is clearly, along with other factors, clearly being impacted by the dispute.
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ofope is also at the center exit. you can understand why european industry is under pressure because they are at the center of both of those risks. said before, there is a chance that, at least by the middle of the year, that both of those risks have either been medicated or resolved. there are other issues even beyond the politics. if volkswagen has to suddenly cars, a country are it a try to destroy its most important industry by making diesel motors a legal in many -- all legal -- illegal in many main cities. but commerzbank merger which would result in redundancies, do you not see big red flags when it comes to the european economy? >> there are, and the market
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clearly sees the. whole year of underperformers of european equities across broad sectors. is how thing in europe much of this bad news is discounted. yes, that is a global question, but it is an important question. i think that, yes, there's a lot of negative news. now, there is a consensus growth down to 1.5%. normalized, we have an unexpected year. think now we're getting into a point where expectations are getting pretty low. we just hope there will not be a recession. i think that tells you how low expectations are. the other thing which is interesting and will help the ecb is that wage growth is pretty supportive and labor market has time. matt: we are going to continue
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talking about that banking story. michael is going to stick with us. we will talk about the european banks and also u.s. bank earnings. s. bank earnings.
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anna: good morning, everybody. 30 minutes into the trading day here are your headlines. the u.k. government scrapes through a vote of no-confidence. with the brexit deal in the dust, where does the u.k. go from here?
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u.s. investigations into huawei threatened well -- threatened to crush optimism. european stocks decline and u.s. equity futures suggest that there will be no let up on wall street. socgen's warning, shares in the french lenders slides after they announced a 240 million charge in the fourth quarter. this is alongside revenue declines. our further risks ahead? morning, everybody. i am in westminster, anna edwards, alongside matt miller at bloomberg's european headquarters in london. matt, what do the markets say? the weather say looks a lot nicer than it did 10 minutes ago, so that is one thing that's good. we're looking at defensive stops looking quite well. here the stoxx 600 and you can see all of these defensive names. , a.b. foods, british american tobacco. liquors,r, diageo, unilever. these defensive stocks are on the upside and there are only about 100 gainers. many more losers, and unfortunately, you have got these automakers at the auto parts makers on side of the ledger as well as banks.
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financials are big losers today. we switch over to the board, you can see perry bob, socgen. santander's down third hsbc, prove, ing, lloyd's. here you can see daimler, i mentioned the auto's and parts makers are down your also down. let's go over to first word news. reports from washington say that federal prosecutors are pursuing a criminal investigation against china's quality. -- huawei. involves alleged theft of american secrets and technology t-mobile used. as saying theoted inquiry is advanced and could see an indictment soon.
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quality has previously denied wrongdoings. theresa may is said to be prepared to blur a red line to find a compromise that could get through parliament. after surviving a no-confidence vote, the prime minister held discussions with other party leaders about a way forward. however, the leader of the main labour party jeremy corbyn refused to take part, demanding she rule out a note yield brexit. the leader must return to parliament with a plan b by next monday. >> i am disappointed that the leader of the labour party has not, so far, chosen to take part . but our door remains open. it will not be an easy task, but mps know they have a duty to act in the national interest, reach a consensus, and get this done. a nigerian business tycoon and main opposition presidential candidate says he would appoint
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a new central bank governor if elected. in an interview with bloomberg, they also said he would sell a stake in saint oil companies and reduce the government's interest in the company to a minority, saying there is really a mafia in there. nigeria, africa's largest economy, will a next -- will elect a new president on february 16. benefit are people who at the expense of the company. so i know they're going to resist. >> but you think you can do it? >> of course, why not? i have the political will. here for hedge funds, one hong kong-based fund was in hiring mode. said to have increased the workforce by about 70% of bringing the number of employees to 67. they are said to have made a
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mid-single-digit return, about 70% of asia's focused hedge funds lost money over the same time. john vogel, the founder of vanguard and an advocate of low-cost, index based investing has died at age 89 under his leadership, the company introduced the first retail index mutual fund in 1976. vogel cautioned that the pursuit of short-term profits typically hurt. he turned vanguard in the longest manager of stocks and bonds. global news, 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. matt: thanks very much. deadly humphrey from boot dubai. in an earnings season, profits are piling has shares advanced.
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jpmorgan reported a record year and wells fargo stumbled they are the only u.s. banks of our trip report -- report a drop in annual revenue. goldman sox clock to their biggest day after beating estimates. bank of america shares also soared thanks to their interest margin. left themn stanley is of which will likely add to the record quarter for u.s. banks. joining us now to focus on , a senioranking intelligence at bloomberg analysis and michael. we have to talk before we get to banking records. soft agenda seems to have stumbled, pushing stocks down across europe.
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>> there are two main factors coming up. first be the divide down on some of the disposals. refer tos, they did s.rket condition matt: anna? anna: good morning. our european banks struggling to compete with wall street? what are the dividing lines? indeed, that is very much the case of what is happening over the last 2-3 years. thanks are doing very well and the europeans are continuing to struggle. also, the u.s. banks have a much stronger background. of course, that is a complete contrast to what we are seeing in europe. interest rates, 6-12 months away
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have been delayed and delayed his exit the cooperation of the europeans in a weaker position. matt: i want to touch on something that i was talking about tangentially a moment ago. deutsche bank will obviously be a different story than the other banks. it is a disaster, right? yesterday, there was a story that they might be pushed to other european rivals rather than with commerzbank. been hearing about deutsche commerzbank merger possibilities for years, but now looks more serious they will have to find a savior. 2-3 years ago, they were doing lots of restructurings. they did not work and now they have got a new ceo and it is still not working. are down 45-50% for commerzbank and deutsche, that is now getting on the radar screen. done, thiseeds to be impasse is been going on for far too long.
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let's bring you in on that very subject. i think there has been talk about the need to merge, in particular, german banks were as long as i have been talking about financial markets. what are your thoughts on whether 2019 could be the year. >> in a sense, because the macro environment is soft and the political pressure is only going to rise because of the performance of equities , if it does not happen this year, the question might well be when does it needn? terms of macro, we to do this, it seems to be rising. our european banks ever going to recover to that level? european banks, after the crisis, did the dirty work and have been in the clear especially relative to european banks. will that ever be a nice trade.
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these banks are trading at -- >> i know, i know. this is the point i was making about how low expectations are in europe. it is particularly true in the banks. there are reasons for that that we talked about. the question is yes. clearly, it will be. these are viable businesses and the economy will recover. the bad news compresses of the same time, which is why .here is this urgency to act anna: what do you think is dividing the u.s. banks from the one the do well to the ones doing less well? it seems to be quite a divergent performance. it is, and it is between the focus banks for fixed income businesses.
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on the retail side, they are benefiting from that strong economy and economic backdrop we have had. that is the contrast to what we were talking about in europe. they don't have that sense behind them. jpmorgan had fix problems as well as jamie dimon says he does not care at all. >> that's a fair point. not the firsts is we have had. we had the texas, then basket. this might be the beginning of the trend results starting. a lot of these banks are trying to get the bad news out as soon as they can. anna: thank you both very much. philip richards, from bloomberg intelligence. also thanks to michael, global head of macro strategy at state street. let's take a look at mid-cap movers. emery has details. >> good morning.
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this is slightly higher, third quarter intake 3.3 9 billion euros. this time last year, it was just a million. so quite positive, but the market is focusing on this planned merger, saying there is no certainty they will go ahead. down .6%.wnside, a steel company in austria, another profit warning for the company. the second time in three months there talking about pressure on cost and also the whole economics of the market area. associated british foods to the upside, up nearly 5%. it is rising the most in two years, anna, i know you know what this is but not sure if matt does. they say holiday sales exceeded estimates, quite positive given how challenging november was for the company. matt: actually, guy johnson told me about it. many peoplethat
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very close to me rely on it as a stable for undergarments. that's next, breaking the brexit deadlock. theresa may holds cross party talks after narrowly surviving a vote of no-confidence. how far away as she from having a plan b? this is bloomberg. ♪
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>> welcome back. 46 minutes into your trading day. headlines coming in from michel barnier, the chief brexit negotiator. he is speaking in lisbon, saying that we are in a serious moment. we will keep monitoring that and see if we get any further headlines. theresa may is holding cross party talks in an attempt to break the deadlock after narrowly surviving a vote of no-confidence. dimon has told bloomberg he sees brexit being delayed. >> a hard brexit will be a disaster for great britain. we don't think it is going to happen because it is bad for europe, to. they will extend things, but we are prepared for hard brexit. anna: joining us now is roslyn matheson, executive editor at bloomberg. she has been following all of the latest brazen news. good morning to you.
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theresa may starting her outreach, she did that yesterday. the vote of no-confidence, but there are pitfalls aplenty in this. let's set out the challenge. indeed. she is now seeking a compromise your she has until monday to get back to parliament and to prevent her plan b. she is doing that outreach, suggesting that she is going to end up often -- opting for what we call a soft brexit because it might bring over some of those oppositional makers. said, all of party arrivals are coming out already, setting out strong could jensen's and , everything from delaying brexit to keeping open the option of a second referendum. does offer that, she risks alienating lawmakers in her own party, a strong number of her own lawmakers want a clean break. we say she narrowly
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survived, but we knew she was going to survive and she did. it was kind of a given. is your me corbyn going to put out a real challenge for leadership? he certainly can. there is no limit on him having more motions heard he has rebuffed her outreach. he has called her a zombie government. he can bring those further challenges on, but as time goes on and the split widens against him, that could weaken him. right now, he could end up being obstacle. as an she is saying let's put politics aside and move is a collective. matt: even tony blair saying. >> and if she is saying i don't is sayinglk, that he i do want to talk, that could negatively affect them. that i find it interesting tony blair is saying that because some are suggesting corbyn does not want to get involved. if we have the remainder in
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chief saying he should get involved, that is interesting. what about the european side? the westminster, i am tracking the u.k. side of things. what is europe prepared to do at this point? you hear messages that say we are not ripping up the agreement already made, others say your act together -- and get your act together. what we are hearing is that the size of the defeat to did surprise officials. they're using that as leverage to say to theresa may that she needs to be more flexible on some of her red lines. extendy be willing to the departure date to give her the time to do that. , the chief time negotiator yesterday pretty much said it is now up to her. come fromon will not brussels, sheets to stay here, negotiate an agreement that will stick with parliament and go to brussels and say this is what i've got. they are essentially saying it is up to heard find a way forward. matt: thank you very much for
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joining us. is ourd matheson bloomberg executive our. -- editor. socgen is one of the biggest losers on the stoxx 600 helping to drag down the whole sector and drag down the broader in his right now. out with company came a profit warning and says they see a 20% trading drop on a challenging market environment. you can see that shares are down 3.5% in paris. you can also use the gd function to get a lot more information on any equity. i have got my graphing dashboard pulled up, and you can see here that, not only is the stock down more than it typically is, you can see that they are also trading a lot more than it typically does. that is mucharket lighter volumes than we normally see at this time of year. don't forget, you can user don't forget, you can user
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terminal to interact with all of the charts that you see here. -gtb go in order to browse recent charts and catch up on key analysis. this is bloomberg. ♪
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anna: welcome back to the european open. 53 minutes into your trading day.
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let's talk about the technology. to be cutting back on hiring in some of its divisions. the news comes after weaker than expected iphone sales cause becoming to miss revenue forecasts. ceo tim cook made the disclosure to employees in a meeting earlier this month. joining us now is bloomberg's head columnist alice -- alex went. -- webb. saying they might manage to avoid some more extreme measures. what is the latest? this is a story from our colleague on the west coast. he understands that, soon after the letter he sent to investors in which he said they would fall short of expectations in the christmas quarter, he said they are going to rein in hiring on some projects, notably saying they will not cut headcount.
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it is still a growth story. they're not going to restrain hiring unimportant things like ai with it got a lot of ground to catch up on things like alexa and google is. -- assistant. matt: are they still working on that? >> they are. matt: at some point you have to cut your losses. syria has not worked for a -- siri has not worked for a decade. they claim that they are the one who respects privacy. your only worried about interaction with the customer, you say alexa, hey, google. if you are not only that interaction, that is potentially a huge problem for keeping people in your ecosystem. anna: we started talking about apple. tsmc then, a dismal outlook from them. how does that link into the iphone story? tsmc, it's in the name,
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taiwan semi conductor manufacturing company. they designed chips for apple. there is quite a good read across from what they expect in the coming quarter. that gives some indication of what will happen for apple sales as well. apple is perhaps cutting supporters. one caveat, they have a lot of customers, least of all huawei. they have had a tough time of things at late. that is some indication of what is happening at apple, but it is a broader story. matt: very cool, thanks for joining us. that's it for the european open. stay with bloomberg television, up next is bloomberg surveillance. francine lacqua will be speaking with the cochair of the green european free allianz group in the european parliament. this is bloomberg.
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francine: theresa may opens cross party talks to forge a new brexit deal. her government survives a confidence vote. is said mounts, huawei to be the target of a pro and an indictment could come soon. -- atlantaatlantic fed weighs in on the shutdown. we speak to dennis lockhart. ♪ good morning, everyone. good afternoon if you're watching us from asia. this is bloomberg: surveillance.

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