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tv   Countdown  Bloomberg  April 18, 2016 1:00am-2:31am EDT

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doha down her. oil talks and without an agagreement sending crude futurs on their biggest drop since february. seeking havens. investors moving to the yen as oil slides. asian stocks are retreating from a four month high. plus, the brazilian presidency hangs by a thread as the lower house votes in favor of impeachment. the process moves on to the senate.
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manus: welcome to countdown. anna: a warm welcome. , a lot ofctures emotion on the streets coming from result. with theart in doha oil story. doha.et in such expectations built up to this meeting even though we knew the iranians may or may not have played ball. manus: the saudi's made it clear that they wanted the iranians on board. road to dohathe crash. everything is reacting aggressively in the wake of that disappointed. let us check out the fx board. the wtiwn 4.7%, and
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down 4.2%. the aussie and the canadian dollar and the yen. the biggest around the yen. near a 1.5 year high. there was also an earthquake in japan. lew called on foreign exchange moves to be orderly. warning against the potential intervention. this has flowed over into the fx well inut elsewhere as reaction to the story out of brazil as well and that has also rocked markets. anna: treasuries are also on the move. money going into treasuries. the perception of it being a safe haven. some of the yields coming down on the short end of the curve.
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result, it is of hard to find a better reflection of assets on the move. in japan, some reaction including a selloff. the story is not over. she is clinging on her fingernails. manus: the impact on the brazilian currency. what is the reality of this debacle in doha. rebounds. yvonne: good morning. the brazilian lawmakers have voted to impeach the brazilian president. the opposition achieved a to thorton -- a two thirds majority. a simple majority in the senate would have her suspended while she faces an impeachment trial. the president said the campaign
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ousted -- the campaign to oust her amounted to a coup. a treasury report. permanentuld cause rather than temporary damage to the economy due to lower trade in investment. cutrnment income would be at enormous cost to public spending. the french economy minister said britain leaving the eu would weaken its power in the world. he will attempt to persuade china to drastically scale back its production of steel. because when you discuss this deal industry with china, you have credibility because you are part of the eu. situationever be in a to make agreements with china
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because your domestic markets are involved with china. ne: stuart gulliver plans to quit in two years and the bank will appoint a new chairman to help pick a new executive. he took over in 2011. he has gail spector hsbc's operations and cut nearly 90,000 jobs under pressure from unhappy shareholders. the stock has followed about 16% this year. a series of large earthquakes in japan may add to the case for all-day to increase -- for abe to increase physical intervention. 2011 quake and tsunami would justify delaying the height. economists had been calling on him to hold off
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raising the tax. a british airways flight has landed weekly at you throw after being struck by a drone. reported an object hanging in front of the airbus 320. it is thought to up and the first time a drone collided with a commercial airliner in the u.k. although dozens of near misses have been reported. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. you can find more stories on bloomberg at top . manus: thank you. let us get into the markets. the cfi is dropping. disappointment abounds from doha and the reverberations are global. juliet: a gloomy start to the trading week here in asia. ande is a pickup in jakarta new zealand.
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elsewhere coming you can see there is selling coming through. that is probably similar to what you will see in europe led by oil producers and the crude futures. in hong kong, coming under and oilant pressure producers being sold off across the region. the earthquake and the flight to the yen putting pressure on that nikkei 225. down over 3% in late trade. export stocks coming under pressure as well as the companies that have factories in the earthquake area are coming under selling pressure. in korea, the cost be up by .4%. kospi up by .4%. every sector is heavily in the red.
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coming off the four-month highs and we had on friday. the first time it has been in the red. looking at some of the other watching,have been qantas airways has fallen to a two-year low. in australia as it cut its domestic capacity outlook. the flight to say favorite. here are some of the companies in japan at that have been affected by the earthquake over the weekend. ntn, aa 10 week low -- 10 week low. the recovery in macau. we are seeing sans higher. -- sands higher.
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property prices are better than expected. property companies. here is another reason why we are seeing this downward pressure in the region. the researches of the japanese yen. up 5.7%. 107.96. another reason to put downward pressure on asian equities today. wrapping up the latest moves in the market. many reacting to the oil story. talks between the -- the world's biggest oil producers has failed to strike a deal on freezing oil production. doha tohered in stabilize the global markets. manus: the news of the failed talks has sent oil tumbling.
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run us through this debacle. what went wrong? before this meeting took place, it could be deal or no deal. the iranians did not show. the saudi's have a long-held position that they would only freeze output if everyone did likewise including the iranians. saturday night, word emerged of a draft agreement involving the russians, the saudi's, and the venezuelans. according to the russian oil minister, some countries changed their position right before the summit was due to begin on sunday morning leading to some the oilussions although minister refused to pen the thee on the -- to pin
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blame on the iranians. >> how could a country that did not participate be the reason for the failure. this is the position of the largest producer, saudi arabia. all think all white back -- opec members should participate. toan will continue increase its production. anna: you mentioned the june date. is that what happens next? the russians are saying that the door is not closed on a freeze agreement. >> that is right. ari minister said the
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channels of communication remain open. unless something major happens, the next big get together for oil ministers will be at the next opec meeting on june the second in vienna. i ran will continue to try to claw back its lost market share. it is aiming for 4 million barrels a day. the other producers will continue to produce at near record levels. the consequences will continue. startedce the oil slump in 2014, they have put away significant reserves. the saudi's can get revenue from other areas such as an ipo. for others, it is more painful.
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as the prices decline further in trading after the meeting, there will be plenty more pain to come for these oil producers. globale're joined by the head of fx strategy. doha.s your thoughts post a lot of expectations were built into the market in many asset classes. >> that is right. the reaction that we have seen so far is largely expected taste on what happened yesterday. we will see a continuation in the early part of the week. bearish.that the rally we that have seen in the oil price in the last few weeks was not entirely driven by expectations
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about an agreement in freezing the output. let us not forget that over the past couple of months, we have seen some improvement in chinese data which tends to support commodity prices. whole, on the notwithstanding volatility, we may see some resumption over the in a marginally upward trend. manus: the immediate reaction. fxre will be pressure on the reserves of some of those middle eastern countries again. and then the commodity producers. the immediate reaction. which has its own story. canadian dollar along with that as well as the aussie dollar. they have all had outstanding first quarters. all predicated on this road to doha and stopping production at levels we saw in january.
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do you scale back from your exposure based on the fact that saudi has taken a demonstrative line? need to be far more cautious than you used to be. i say this because i go back to the previous points. all -- the rally has been exceptional in these currencies. was justhink that it the expectation of the doha agreement, there is a dollar element in this. the overvaluation of the dollar is being corrected. put asidemarket, if i for a second what happened in doha, we need to start differentiating. valuations will be far more important going forward. by our estimates, the australian dollar is working percent overvalued. i would because is about it. the loony remains undervalued.
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i am quite bullish. anna: we have to differentiate. here are some highlights of the week ahead. manus: u.s. earnings season accelerates today. morgan stanley will hit the tape tomorrow. new york state kobe holding the primaries. wednesday, president obama visits saudi arabia to visit the heads of state of the gc nations. -- gcc nations. manus: friday, it is earth day with a landmark paris agreement set to be signed by 120 countries. anna: obama will conclude his visit by coming to europe and to the u.k.. what will he say about brexit?
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what is next for brazil's in battered president -- embattled president? ♪
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anna: welcome back. the hang seng is down 1.3%. weakness of the asian equity market in today's trade. yvonne: hsbc is said to be preparing for change at the top. stewart gulliver plans to quit in two years. the fed will first approach a new chairman to help it pick a new chairman. hsbc'sscaled back business. including cutting 90,000 jobs.
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the stock has fallen 16% this year. telecomitain's biggest operator with -- may be veep to -- the tote by the eu. it may be blocked within weeks. regulators are said to be unconvinced hot and since offer to sell space to virtual operators will create enough competition. they want them to sell network infrastructure to a new rival. verizon is the leading suitor for yahoo!. verizon and it's a unit is working with at least three financial advisors on a bid that would include yahoos stake in yahoo! japan. that is your business flash. manus: let us focus on the brazilian president. it is -- her presidency is
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hanging by a thread. anna: the opposition has achieved a two third motion to advance the motion to the senate. let us get more on the scandal. great to have you on the program. ishii doomed? --is she doomed? bleakis looking pretty for her. last night, the result was a her opponentsfor than they had been expecting carry a 25 vote margin in the lower house. that suggests that when the senate continues whether to start the process, her chances of winning that boat are pretty slim. the senate only needs a simple majority to start an impeachment process. that would remove her from office.
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let us talk about investments. to get that momentum to continue, it is a tall order. likely tors are respond positively to the development yesterday. the politicswhen has played out, the underlying economic situation remains pretty ghastly. 3.8%mf is forecasting a contraction which is amongst the worst in the world. whoever is in charge of brazil going through the rest of this year has a job on their hands. manus: thank you very much. the global fx strategy is still with us. these markets have rocked along. a similar story and trajectory
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for the real. all predicated on her going. she is there by a thread. the risk in the markets, the brazilian currency has been one of the better performing ones. rings happen. let me make a couple of points. about emerging markets in general. the first i would say is that if you look at the number of mere -- emerging market funds, they underperformed the benchmark. which means that although we have seen signs of implosion in the markets, they still seem to be under weighted to the benchmark. going back to the chinese point of view. about china, so much so there is a fear about how planning is priced out. to the extent that we are
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pricing that out, to the extent that the market is still shrinking -- thinking about a cautious said and a mild height in cycle, i think it is quite likely that these emerging markets will continue as investors rebalance overweight. distinguisheed to among the emerging market currencies. which market you favor? favor?h market do you risk needs to be taken into perspective. lira will be laggard in this rally. currencies that i do favor include the south grand -- the south african rand.
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i like poland as well. volatilityke out the coming from the oil market, the --le is going to fair well fare well by the end of the year. last time you were here, we looked at this and the complexion has not changed that much. the ruble and the brazilian currency. this relation between those currencies and oil is indefatigable this year. >> the whole structure of the -- has been very traditional. all of a sudden, higher oil prices are a good risk. risk on.
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now that oil prices are retreating, it is risk off. world.t is an al when we return, the battle of the banks. ♪
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able yuan man has a first word news. yvonne: we're taking a look at resilient lawmakers who voted to impeach the president. achieves a two thirds majority needed to move the process to the senate. a simple majority would see her suspended while she faces and impeachment trial. george osborne will ramp up his campaign to keep britain in the european union.
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he will highlight a treasury report showing that a brexit would cause permanent damage to the economy. he says that would cut government income at enormous cost to public spending. a deadly series of earthquakes in southern japan may add to the case for the prime minister to add to economic stimulus. said only an economic shock on the scale of the 2008 global financial crisis or the 2011 quake and tsunami would justify delaying the hike. advisors had been calling on him to hold off. airways flight has landed safely at heathrow after being struck by a drone. an object hit the fun -- the front of the airbus. it is thought to be the first time a drone has collided with a
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commercial airliner in the u.k. although dozens of near misses have been reported. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. you can find more stories on bloomberg at top . anna: let's check in on the live market action. the oil story out of doha is dominating market moves. the first significant attempt at coordinating oil output between opec and other countries in 15 years has come to nothing. hedge funds did want the summit to work out because if you look at the yellow line, we are looking at net long positions on wti in the days leading up to sunday. they were near a nine-month high. in the wake of the meeting, wti has tumbled. 38.59 dropping down
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below the $40 mark. it is impacting markets across the board. looking at currencies, we see the aussie dollar and the canadian dollar, the malaysian ringgit and the norwegian krone weakening today. from 100. the commodity currencies have fallen and money has been moving into the yen. againsthas been rising the dollar. it is been supported by the fact that japan did not much -- find much of support. in terms of stock markets, we have seen japan's topix dropped the most in almost two months. strongercause of a yen. insurers are leading the losses. overall, looking at asian markets, asian stocks falling
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for the first time in nine days. dropping from the four month high. risk off. the oile are joint by markets analyst. global market of fx. great to have you with us still. the saudi's locked a deal. cked a deal. rallyarge part of the which started early in february was based on investors and the sentiment in the market being bullish because of the potential freeze. the verdict is out. they were not able to achieve a freeze. it was a clear indication that there was no agreement. go?: how low does it
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if you look at paris stocks, we were down almost to $28 kirk ferentz. -- for brent. justified.ould be for brent. manus: the supply and demand situation is critical. saudi and kuwait production are at juxtaposition. is that my biggest risk? hedge funds are bullish. they are geared for a rally. they are on the wrong side of the trade.
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they are ready to crank out more oil, the saudi's. >> yesterday's meeting was an indication to the iranians -- if you are not joining, we have enough power to crank up production. now that there is no freeze, the saudi's can increase production. see you a and other members -- uae and other members increase. the money managers expecting production to be frozen and not increasing are caught at the wrong end. they will selloff or get out until prices find a bottom. once you start to see that, you will see u.s. producers who were
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otherwise hoping for this to happen, they will get a lifeline . anna: how did markets get this so wrong? misunderstand what the saudi's were going to do? if you look at the stoxx in february -- stocks in february, the foreign reserve has declined in the last 18 months. made one of the largest losses in foreign reserves. gauge. are trying to even for markets, that was enough. the fx reserves have
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dropped by 20% since the oil market was rocked. egs underf the pa pressure? options pricing. is that a trade that some should consider? >> no. the pegs you mentioned are to the dollar. comparedifferent now to the fourth quarter of last year is that the dollar has reversed strength. the problem with the peg is that when you are chasing a strong has come-- the dollar off. anna: the pegs get some relief.
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arabia and saudi what they wanted to achieve. there is a great piece by one of our oil experts talking about how the saudi's will not cry over this diplomatic failure. they did not want the prices to get so high. i do agree on that. if you look at the saudi position, they were stuck. it was not just about the iranians. inre was a chance of giving to let the iranians out of the freeze. but if they had frozen production, all of them excluding iran, markets would of taken on a bullish sentiment. prices would have started rising. story ended.
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hope that inhave a six months, they will ultimately see the effect of the strategy that they took 18 months ago in production. a large part of that will show up in north american production. anna: thank you for joining us. two houses and two different views. what you should do and how you should own the u.s. stock market right now. it is all about the dollar making the difference. manus: jp morgan's strategy is to focus on firms that get most of their sales from abroad. buyman sachs once to domestically. variousways to play --
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ways to play the u.s. market. you would maintain that the dollar is overvalued. let us put up the five year charts. a big leg up. theseoking at one of broad measure charts. reconsider where we are in the dollar. >> to clarify. 70% by the end of the first quarter. the rally was in the second half of 2014 and the first half of 2015. rallyllar did not sustainably during the three quarters of 2015.
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the market -- manus: a big misnomer. >> depending on the dollar index, you could see what percent-2%. against the euro it was down. the fed worries about the strength of the dollar. there is no question about that. they have toank -- worry about a number of things. anna: are they looking at a different measure? >> the trade weighted measure. the biggest worry that the fed has is the relationship between labor market dynamics and insulation. we are not seeing that pass through from a tighter labor market. that is why the fed has to be
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cautious. -- s: article, is the relationship between the u.s. and china. there is a cracking piece on bloomberg. yuan weakness causing the biggest move in the u.s. thencial conditions during devaluation. back in august. they constricted. a little bit of a loosening. but a big risk in what happens in china next. in terms of conditions in the u.s. and what happens next in china. >> if you look at the direct
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exposure, you will not find a a lot of meaningful linkages. spooks investors is the growth outlook for china. and how they perceive the feds policy being linked to chinese growth. if yellen continues to point out international risks regarding china, and eight deterioration in growth outlook means a more accommodative policy are the fed as a response to tighter conditions. these things run the risk of being drawn out of context. i don't see any doom and gloom in china. there are still a number of
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risks remaining. is structural slowdown growing. up -- oming manus: we will talk about the u.k. the referendum on the eu membership put britain's property market on shaky ground. we will talk to the man who knows the answer. ♪
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welcome back. the futures could be weaker at the start of trade. thepean market may pick up battle from the asian session.
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let us get the bloomberg business flash. hsbc is said to be preparing for change at the top. stewart gulliver plans to quit in two years and the bank will find a new chairman to find its new chief executive. he took over in 2011 and has scaled back operations. exiting 80 businesses. cutting 90,000 jobs under pressure from unhappy shareholders. the stock has fallen 18%. hutchinson says the biggest telecom operator may be vetoed. bid for the u.k. mobile business may be blocked. set to be are unconvinced hutchinson's offer to sell space to virtual operators will create enough competition. they want the company to sell part of its infrastructure to a rival.
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bidders have decided not to make an offer for yahoo!. according to the wall street journal. verizon and it's aol unit is working with three financial advisors on a bit. the owner of china's most popular payment system controlled by jack ma is planning an initial public offering in shanghai. according to sources and financials. the company be -- behind alley pay. alibaba's financial affiliate valued at $60 billion. that is your bloomberg business flash. let us return to one of our favorite subjects, house prices climbing to a record in april. the average asking price rose
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1.3%. 7.3% higher than a year earlier. anna: increase comes as many investors rushed to complete transactions. the commercial director at right ways joins us now. this book we have seen upwards in house prices. how sustainable is it? will it dragged demand forward? there has been a chain reaction. many thought it would be landlords selling to landlords because of the interest tax relief change is coming. it appears to be a lot of first-time sellers selling to to beat the tax
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hike. a chain reaction. those people have traded up. it degree of sustainability because it started chains moving earlier. there is demand for housing. and overall lack of supply and interest rates are cheap. the kickstart may help this year but there are some headwinds on the horizon. manus: headwinds on the horizon. when of the stories we wrote london luxury apartments to sell. knocking them out 100 at a time with the discount. some radical undertones going on in british property. london, more supply coming to market. tax changes. high price rises. sectors, certain
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supply and demand tends to balance itself out. with foreign buyers taking a breather, these developers need to sell. some discounts are out there. anna: tell us about foreign buyers taking a breather. people outside europe? is that the run-up to the brexit boat story? -- vote story? >> the drop in sterling. top of then the market. excess supply. looking to rent property and rents falling slightly. people are standing back. uncertainty in other parts of the world as well. russian embargoes have affected
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some buyer settlement or the ability of some buyers from some sex start -- from some sectors in the market to buy. this is one of those last ditch moments. just over 60 days to take sterling exposure. what is the smartest way to play it? from an fx perspective, where are you seeing odd oddities of risk? >> central scenario. a vote tong to have remain meaning a brexit. what we have been highlighting
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is the specific case in the u.k. deficit.urrent you will enter into a hugely uncertain time frame and the portfolio flows will reverse quickly. thismartest way to play through sterling. i am not a big fan of correlation trades in this environment because it is unchartered territory. brexit isieves that going to materialize, going into cable is probably the cleanest way to do that. i would favor option ionality because volatility will increase. goa: where does the pound
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over the coming months? that is important to some of the clients. >> it is exceptionally difficult to determine where cable will go following brexit. it is exit everywhere. we wouldr to say that levels,est 135 or below 130 potentially. , not just theies direct economic exposure. uncertainty and all that entails. manus: according to the eu referendum, the decision to leave the eu will cost every family over for thousand pounds. .- over 4000 pounds it is 6:56 a.m.
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manus: crude slides as there is a failure in doha. ♪
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jonathan: crude futures on a huge slump. asian stocks retreating from a four month high. --s [yelling] rousseff'se presidency hangs by a thread.
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manus: welcome to "countdown." anna: the oil story. that is really dominating a lot of the asset movement we have seen overnight in markets. let's see what this is doing to the futures as "a for the start of european equity trading. manus: we have a nice story on bloomberg about dax falling. london down by .8%. it is the demolition derby int terms of prices. rousseff, the impeachment, is hanging by a thread. let's show our viewers the fx markets. anna: the biggest move will be
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coming from the japanese yen. in various asset classes we are risk inome light of terms of turmoil. 107.97 on the u.s. dollar. manus: it is a risk off day. it is really moving all of these markets. anna: let's get to the bloomberg first world news. reporter: good morning. we are taking a look at brazilian lawmakers, which have voted to impeach rousseff. the opposition achieved the 2/3 majority needed to move the process onto the senate. there is a majority that would like to see rousseff suspended as she faces the impeachment trial.
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george osborne will ramp up his campaign to keep britain in the european union today. he will highlight a report that shows that could cause permanent, rather than temporary, damage to the economy, due to lower trade and investment. that would cut government income. hsbc is preparing for change. the sunday times says the ceo plans to quit int w two years. gulliver took over in 2011 and has scaled back the agency's operations, cut nearly 90,000 jobs under pressure from unhappy shareholders. the stock has fallen 16% this year. a deadly series of large earthquakes in southern japan may add to the case for abe to increase fiscal stimulus.
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said this would justify delaying the hike. advisors and influential economists have been calling on abe to call off raising the tax. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. you can find more stories on the bloomberg top . manus: david inglis is standing by in hong kong. crash, y, the car talking about markets. anna: let's talk about what happened in dohar. talks have failed to reach a deal on freezing production. a bid tothered in
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stabilize the global market. by with aare standing very special guest. take it away. reporter: i am very pleased to say that i am joined by the armani oil minister. it is great to have you with us this morning. first of all, no deal here. were you disappointed or surprised? >> disappointed, yes. but i kind of expected that there would be problems. there were many talks about iran not joining and saudi's insisting on having iran on board. so, yes, in hindsight. on saturday night, word leaked that there was a draft. the venezuelans were on board.
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but then, some countries, without naming names, change their positions right before the summit. onyes, when we arrived saturday we were told that we had a draft, we had a deal. and then the whole thing would be done in a few hours, to just sign the deal and leave. unfortunately, it did not happen. >> was this because of the saudi's? >> yes, but one or two supported stance.di so yes, to be honest with you. reporter: can you tell us some of the plans that were discussed? hise had a few options and options were agreed on by all of us, including the saudi's. let's agree on a timeline.
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is by the time june,eet, in opec, in hopefully, those that were not on board yesterday, would be on board. now until june, we will be working to try and convince everybody else. the freeze is the rightw way. and to be honest, everybody agrees on the freeze. the levels were negotiable. it was not a dealbreaker, which level we should stick to. so i think, remember it is really academic. we discussed the february, march, april. >> did iran stick to its guns?
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if saudi arabia sticks to its position that it will not freeze out but if everyone else does not agree to do so, you were never going to have a deal. >> we might have a deal. to be honest, my personal view is, maybe the freeze was not a good idea to start with. maybe we should have talked about a peak of production. the reality in the field is, most of us have peaked. with the exception of one or two. look,we had said, everybody is producing at maximum levels, let's try to agree on where we are now and then move forward. >> was there a scenario that you discussed? >> not really, but perhaps, this could be a suggestion going forward. about 4%.ces are down
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are you surprised there was not a bigger drop in oil prices? >> i thought it would be more than this, but the market has not spoken out. so, we will just have to wait and see at the end of the day what will be the drop. reporter: do you have a next rotations of where prices will go from here? >> i think it will go up and down, depending on the figures. most of us, if not all of us, even those who have the cap capability to produce more, you don't just pump. wanton't just say, today i millions of barrels. it takes effort and investment. all of this is not happening right now and that is one of the concerns. so, going forward, i think we will see a decline, if anything. and everyone agrees on that on the wide scale. produce in multitudes
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will produce less in the coming months and years. this is one of the few countries that have good relations with the saudi's and iranians. or twole could be played stabilize the market -- played to stabilize the market? >> i said i was willing to talk to anyone. i wanted a good relationship with everyone, not just saudi arabia and iran. what isrepared to see good for all of us and if we can achieve that, that has always been the philosophy of omani reporter: we wish you the best of luck with that. you for al ruhmy, thank joining us this morning. this is in the wake of a failure an agreement at
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the meeting that took place on sunday. i don't want to go over schedule too much. so faor now, i will hand it back over to you in london. anna: it is fascinating to hear the omani oil minister to hear what work could be done before june. manus: perhaps the conversation should have been more about peak production. i was fascinated by his line that everybody agrees. it is just a question of timing. it is possible to about giving the iranians a little more time and satisfy themselves. >> i think it is fascinating that ok, we have missed the freeze today. but they are still holding out hope that perhaps next week in a summit, once they ready and
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production is up to a certain level, that was the deal that was actually made. yetill freeze, but just not . that might help the limit. as far as we know, there has been a speculative buildup in the market. anna: what is limiting that fall in oil prices? is it the fact that the market really doesn't want oil prices to fall? now,e interesting thing what level where those positions struck, and can they hold onto them? those comments that we have heard -- like with a central bank, they say we did not tighten today, but we hold out hope to tighten. this is guidance for the output in the oil market. those comments seem to suggest that we did not get the freeze today, but it is coming. manus: i was also reflecting on what the omani oil minister
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said. you just can't turn the sprig it it on. to's switch it all back investing as a consequence of oil. it is oil and its relationship with global equities. it is incredibly length. it is inextricably linked. the oil rally drove the equity rally. it was one of the protagonists of this rally, along with the fed. without a higher oil price, can continue higher in equity markets? >> i think we can. remember earlier in the year when we had the collapse of oil, there was a question of how much is it related to global demand and supply. if it is supply, it should not be that damaging for global growth.
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it should not be as systemic as oil prices have turned out to be this year. with the selloff we are having today, in view of global demand, it did not change over the weekend. not substantially, at least. given that, you say, ok, they have not frozen output, but they may in the future. but today, i am not going to downgrade my global expectations because they are refusing to put the freeze on today. anna: if that is the case, the relationship between stocks and oil does not make sense. many people have said that. tandem?they so in >> there are systemic elements to oil. it has been a focus in europe. so look, i think it is not that own and goingits to covertly disconnect.
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-- completely disconnect. however, let's think about the case in europe. the ecb has put in this massive measure that we did not have at the start of the year. they backstopped some of this. they have taken away some of the risks to the financial system. perhaps now, that correlation with oil can begin to break. manus: let's see where the japanese can add to this in the next meeting. great to have you, michael metcalfe. anna: up next on the program, hanging by a thread. what is next for the brazilian president, rousseff? ♪
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anna: welcome back. this is "countdown." 18 minutes past 7:00. let's get to the bloomberg business flash. reporter: hsbc is preparing for
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change at the top. the sunday times says the ceo stuart gulliver plans to quit in two years. the company will pick the next chairman. gulliver took over in 2011 and has scaled back the operation, cut nearly 90,000 jobs under pressure from unhappy shareholders. the stock has fallen about 16% this year. the deal to great britain's biggest telecom operator might be vetoed by the eu. the $14.5 billion bid might be blocked within weeks. regulators are said to be unconvinced. offer will create a competition. they want the companies to sell part of the infrastructure to a new rival. verizon is the leading suitor after many decided
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not to make an offer for the struggling web company. meanwhile, verizon and its aol unit are working on a bid that would include yahoo!'s stake in yahoo! japan. initial public offering in shanghai in what could be china's highest operation since 2010. the company behind alipa was said to be targeting a private right of fundraising. that is your bloomberg business flash. manus: thank you very much, yvonne. 's presidency isf hanging by a thread. vote is in favor
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of her impeachment. anna: the opposition achieved the 2/3 majority required to take the vote to the senate. this has dominated thoughts in brazil for the past two years. is dilma doomed? will she lived to fight another day? where does this go now? reporter: it is looking pretty blake foeak for dilma. vote last night was a crushing defeat for her. in the end, her opponents managed to get past that 2/3 majority. the attention now turns to the senate, where her opponents need a straight majority to start the impeachment proceedings. at that point, she will be temporarily removed from power. it does look as if the clock is ticking down at the moment. manus: the risk assets have
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really rocked this. that momentum might be hard to sustain? therter: well i mean, initial signs this morning is that vote will be of the stocks another shot in the arm. etf is up 3.7%. if that is any sign of what we can expect from the next of the session as markets start opening in brazil, it could be another good day for investors. anna: ben, thank you. michael metcalfe is still with us. what are your thoughts on brazil, michael? it is remarkable that such political volatility can lead to such a strongly
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performing currency. the one thing we are concerned though, andan obviously, it is unclear how the portal process will turn out, but they do have a real inflation problem. all of this has been eroded away. brazil now for us stands out as one of the few emerging-market currencies that has been significantly overvalued. just as risk has come back on in general, most em assets have valuations, but brazil stands out as not having good valuations. it is not clear where this process goes from here. anna: because of the inflation, you think? michael: domestic inflation is very high. it does not look that stable. it is not clear.
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the peak died. the question is, how much compression can you have in terms of default risk, given the scenario? do you think markets have picked for the moment in terms of the equity, in terms of those asset classes? i think the one thing i would say, that spike is not all to do with politics. it is also related to the commodity story. now, we willusly be the political preview come out. b you still have the other topic there. inflation is a big issue. anna: not everything is going away from that story. take us somewhere else, michael. i was fascinated regarding what
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position the japanese delegates would take when they went to washington last week, the g20, the world bank, the imf. what kind of pressure do you think the japanese were under with regards to their policy around the yen and what they have been doing to interest rates and negative interest rates? what does this mean to you? orderly quarterl perhaps. this shows you how abnormal the markets currently are in terms of their correlation. i think the japanese now face a real challenge at the end of this month. there is anticipation that the boj will have to deliver further reasoning. the question is, what form will that take? significantly strengthened the currency. so, the inflation challenge is getting deeper and deeper.
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perhaps one of the most natural thing for them to do is to buy foreign bonds. or just do straight up intervention. manus: but intervention does not seem to be on the table. if you read what jack lew said, there seems to be a really we l u.s. opposition to that. michael: the question is, if you are in deep inflation, can you argue that you are intervening to prevent inflation? that is a little bit of a play with words, but these are political comments. we have seen things like this before. and certainly, if you get to a situation where the yen continues to struggle, the knowts rise -- we anna: michael, thank you for joining us. manus: that is it for this
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monday morning. risk rises will be the focus of the morning. anna: that is it for "countdown." we leave you with "on the move." ♪
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thank you, ping. reliably fast internet starts at $59.95 a month. comcast business. built for business. we are counting you down to the european open. i am guy johnson and here is what we are watching. oil output talks between major producers end without an agreement, sending crude futures tumbling. how much more selling is there still to come? is dilma done? hangs by apresidency thread. the process now moves on to the senate. and the brexit battle

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