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tv   Bloomberg Daybreak Europe  Bloomberg  November 28, 2016 1:00am-2:31am EST

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back thetz republicans former prime minister to take on -- france republicans that the former prime minister for next year's presidential election. a last-ditch push to reach a production cuts in the enough. but, saudi says it might not be needed. shouldnt elect says he have won the popular vote and resizes recounts in three states. losing sleep. as the reason may repairs to hostser -- as theresa may are polished counterpart.
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polish counterpart. a very warm welcome to "bloomberg daybreak," right here in london. i am anna edwards. yusuf, good morning. a substantial moving the dollar against other currencies. yousef: we brought this chart. you can pull it up on your bloomberg. that is your line in white. we contrast it with treasury yields. for thosea revert bond investors. the worst bond rout of 15 years. that is a 23 basis point move we saw in october. anna: some of the weakness we are seeing in the treasury
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yields overnight seems to be driving a little bit less demand for dollars. let's bring up the risk radar just to show you the threats about movement we have coming in. 0.5%,llar index down by probably against other currencies. the euro, the yuan on the rise. the asian equity session is pretty good. asian stocks moving higher, japanese stocks moving lower. down by that futures 0.3%. $47ef: brett currently at and $.20. the concerns around the opec meeting, rna or are they not going to reach a deal after reports that saudi arabia may be pulling out of the talks. there is more on the line for oil companies. look at that, up 5%, heading for
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the highest close in more than nine years in london. on optimism over global demand. anna: when we look at lead, gold, silver, all surging. let's get the first word news with angie lau. opec is embarking on a last-ditch push for cots. they suggest that the organization doesn't necessarily need to curb output. they finalize the terms of the first deduction decrease in eight years. donald trump claims fraudulent voting. he tweeted that he won the popular vote if the millions who voted illegally for hillary clinton are removed. campaign hason's pushed for a recount in three battleground states. trump said that is also fraudulent and called his critics crybabies.
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british prime minister theresa may will host her counterpart from poland today. she prepares brexit negotiations, due to start in march of next year. may set the goal of holding one-to-one talks with all 27 eu leaders before the eu parliament meets on december 25. she will emphasize britain's former -- britain's links with poland. michael gove has accused others of stalling the brexit process with a buffer plan for business. that is after the "sunday times" reported that carney held meetings to allow british businesses to remain in the market for at least two years after brexit. he said such an arrangement would be needed with what he calls the bureaucratic web.
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analysis of transactions show country's central bank has cut back on open market operations and are extracting more funds through contracts, which has the result of raising borrowing costs. yet another sign of selective tightening. global news, 24 hours a day, powered by more than 2600 journalists. you can find more stories on the bloomberg. this is bloomberg. yousef: thanks, angie. let's check in on the markets in asia. juliette: it has been a pretty mixed day here in asia. things are generally better as we head into the final couple of hours of trade. been trading near the years highest.
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within oil affecting the energy players. japan closing out with the nikkei off by 0.1%. we have of course the dollar weakness and the yen higher. that it had been higher for 11 consecutive sessions. elsewhere, very strong here in hong kong. in hong kongs heading for a five-week high. upgrade, ander another -- and a number of derail players as well. -- number of the rail players. some solid moves on the shanghai composite, up 0.6%. the state own rail and road projects doing very well, up by about 10%. one of the best
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performers against the weaker dollar. a little bit of mixed movement coming in and southeast asian markets. this flight to safety havens we have seen in gold, we have also seen bonds in asia rise. you are seeing the yield down by six basis points, at 2.7%. also, a little bit of movement coming through in the japanese 10 year note. we are seeing the yen and gold also with a little mixed movement in terms of equities. .nna: thank you very much the former french prime minister, francois fillon uppe in theain j
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runoff with a promise to slash taxes and undertake labor reform. >> the serious this and understanding of our citizens, i will meet them in the coming months and take on the challenge of truth and of a complete change of software. yousef: fillon's most controversial policy is his plan to scrap the 35 hour work week. other plans including cutting the retirement age and slashing government spending. he also touched on the unexpected nature of his win. mine,llon: the victory is and this is a victory based on beliefs. but it has three years, i have been listening to the french people with my project and my values. i felt this wave have crushed all scenarios. jeffries's bring in chief european economist. think early on a monday to talk
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about the french politicals -- he got up early on a monday to talk about the french political scene. francois fillon will be one of the contenders. it looks likely marine le pen will be another one. looking at the platform he stands on, which is kind of factor-inspired, what does -- which is kind of margaret thatcher-inspired, what does the political scene in france look like to you? then terms of france, after donald trump election in the u.s. increasinglyng lots of questions on the entire issue. thathing about france is globalization has not been popular at all, whereas in countries like the u.k., it
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really is. france has been a standout in terms of the larger european economies when you have globalization and it is not really popular. in france, we know structural reform is necessary. it is highly contentious and unpopular, particularly when you don't have a strongly growing economy. how much of all of that is the marking -- is the market pricing in? we will show you the yield curve in france, the u.s. and germany yield curves as a reference point. how much are they pricing in at the moment? >> not very much. yousef: complacency again? >> not really complacency. the argument is that the eu breaking apart at this point is still very low. they are concerned that some of the risk wasn't being correctly priced in.
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selloff that we saw in the presidential elections in the u.s.. particular, things held by asian investors. when you look at the netherlands and belgium, they haven't been affected as much. it has been france more impacted. you can see, with the italian market, they are pricing and more concerns about a referendum there. -- france has just come onto the radar in the last two weeks or so. argue something about the link between economic stress and populism. about past, you can talk how, when it came to electoral outcomes, "it' the economy, stupids," that phrase seems to ring loud. now, we see a rise in populism.
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i have this map here, just zooming in on europe. we have seen political tensions increase. we also seen them with the brexit vote. in hungary, a fairly populist leader. there is not this link anymore? europe, the> in largest economy that really likes globalization is the u.k. inthe u.k., we have had june, brexit. anna: very different paths, just like brexit and the trump vote. id: these economies, coming out of the financial crisis, have not been strong enough. financial policy and everything else. we are seeing it across these. france, in particular, some -- in particular, globalization is
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not that popular. you can see that through these surveys. unemployment is very high. how do you deal with this? growings recovering and broadly in line with the eurozone average. yousef: what is the risk of the euros on breaking up as a result of these folks? that is what many are worried about, is that this snowballs into something much larger that threatens the integrity of the european union. context,th this in bond spreads, which would be the best guide, they are now at prices of about 2015. we're back to this period of 2013 and 2015, before mario .raghi and qe france is one of the founding fathers of the entire euro zone project. in particular, in france, politics are supposed to trump
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economics. at the moment, economics seem to trump politics. france is in the middle of all this. other countries came into the party later. it is very hot, in a sense -- very odd, in a sense, that this is seen in france in particular. anna: you talked about italy with the forthcoming vote in early december there. eu inflation divergence is the title of this chart. it shows italy here in the yellow, and the fact that the inflation story in italy, maybe because of mario draghi's best efforts, we are seeing inflation come through in the eu has a whole. italy, no. david: core inflation in france has also trended lower. you're quite right that there is a small divergence. the thing about italy is really the banking sector and, in particular, if we get a vote for
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your -- vote for reform, whether the ecb takes a harder line on italian banks, the balance. banks, not byy retail investors. a lot them are held by retail investors. i don't think the eurozone at the moment are is in danger of breaking in the next four months, but the tensions have come to the fore again. and, the ecb is almost next out. it can do more but we need a stronger economy. yousef: let's see what is ahead in terms of the week ahead. monday, theer biggest u.s. online shopping day of the year. tomorrow is third-quarter u.s. gdp. wednesday, the bank of england publishes the results of its annual bank stress tests.
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thursday, president putin's addressed to russia. we round off the week with u.s. nonfarm payrolls. rigging claims, return. see why donald trump thinks he should have won the popular vote. can they reach a production reduction deal by wednesday? we are live in vienna. losing sleep. theresa may meeting her polish counterpart. ♪
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is 6:19 in london. the nang seng currently trading higher at 0.8%. m&a spree, and they
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said they would generally bar overseas deals of $10 million and above. that is to prepare the guidelines for those flat curves. anna: sweeping curves on overseas dealmaking by the companies with -- by people with familiarity with the matter. it is putting pressure on its currency to weekend. there might be some in the west to have raised some eyebrows about chinese corporate's coming in and buying assets in western countries. the curve is to last until the end of september, 2017 apparently. thea lot of reasons about reasons behind these curves. billion-plus foreign property deals. big moves there by the chinese
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authorities. let's go to the bloomberg business flash with juliette saly. lufttte: live times a -- hansa pilots have announced new strikes for tuesday and wednesday. the strikes affected 345,000 passengers. the ceo says the airline cannot survive if it caves into the demands. korean air may find about $1.3 trillion in undue profits. the trade commission sent its report to prosecutors for further consideration. korean air was not available for immediate comment. the u.k. service sector increasingly pessimistic about the future as sales slow and costs rise. that is according to the association of british injury. more companies said they were less confident about the situation in the third quarter
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compared with the second quarter. anna: thank you. president-elect donald trump is back to making accusations about vote rigging. ,ver the weekend, he tweeted "in addition to winning the electoral college in a landslide, i won the popular vote pimco -- popular vote. " "serious voter, fraud in virginia, new hampshire , so why isn't the media reporting on this?" david owen is still with us. we got the verbal back-and-forth picking up again. that has to dong with the political risk in the united states? we die was over. david: -- we thought it was over.
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david: he won the election. political risk is everywhere. i am not sure. anna: one thing we are sure about is the impact that his vote has had on markets. a treasuries picture for you here. are they oversold? u.s. bonds never felt as far. the corporate data is a little bit different. we are seeing a little more appetite for bonds in today's session. is overselling of treasuries and issue? 1994. it is not the biggest bond rout was in 1994. that was because you had leverage taking out the system. you had a lot of international selling led by investors globally. in bondanother decline prices, i think.
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it is just eight repricing of risk. ratess., raising interest . other countries like japan, here in the u.k., ecb, basically doing more quantitative easing. yousef: is the market front running the market expectations? this is where we are with inflation. monthws cpi month on versus the dollar month percentage change. you can't help but feel that inflation is not as far out there as the market feels. a colleague of mine went through every cpi bucket including the -- cpi bucket, which basically highlighted that even in the u.s., there is not
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really a sign of inflation, services, medical services, housing, still not inflationary pressure, particularly. globalization, the internet has led to very low inflation everywhere. this is even true in the u.s. we are not going back into a major inflation problem at the moment. anna: do we need to hear more details from donald trump? global trade has put downward impression -- downward pressure on inflation, hasn't it? he has said he was to rip up tpp, for example. he has talked about replacing it with bilaterals. will that be more inflation pressure? david: that is right. dealsese bilateral trade
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work in practice is what economists worry about. you look at terrace and barriers on trade. it is only talk at the moment. in the u.k., we had the odd statement last week. there wasn't really much. you could have the same thing in the u.s. coming in a sense. the, the decision of federal reserve in the u.s.. yousef: how much farther to the yields have to go here? the fiscal stimulus will take until 2018 to really kick in. what is your target? david: we don't really have targets for bond yields, but further rise is probably warranted. what i would also argue is that the spreads do matter for investors. here, you have a situation where there is repricing in the u.s.
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and investors in japan are looking at the u.s. anna: when we come back, we will be live in the head of opec's big meeting. ♪ seeing is believing, and that's why
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you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. anna: welcome back. this is "bloomberg daybreak: europe." it is 6:30 here in london, but you are looking at tokyo. much thisr, not so morning. 111.91 at 3:30 in the afternoon and that is weighing on the japanese stock market. it is different in the rest of asia where we see things moving broadly higher. yousef: what is also moving its stories on the new additional daybreak on your bloomberg and mobile. let us take a look and see what those stories are. the cover story is opec,
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embarking on that diplomatic push to reach a production cut. ministers are flying to russia as saudi arabia suggested the organization does not need to curb outputs. andgates are set to meet finalize terms of the first production decrease in eight years. anna: the next story is francoise you don't -- francois fillon being elected. yousef: finally, daybreak focuses on the italian referendum which takes place on sunday. investors are unsettled by the prospect of political and matteoc instability to renzi's senate. let us check the risk radar to recap where we are. king dollar not quite the story
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that it was last week. the dollar index down 0.6%. moving all that much. that is a potential move. yousef: a few more bearish moves. ecb paribas -- s&p: we have got the futures it in there for you, down at 0.3%. the asian session is positive. msci asia up. japanese stocks are underperforming. u.s. futures looming on the horizon, down 0.2%. oil story, a big one this week. $47.15, coming through with sentiment around the oil talks, changing by the hour over there. we'll get the latest on that shortly. 4.75% in gain. in
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his set for the strongest finish since 2011. anna: l it could have beenead, goal -- it could have been led, gold. group is meeting in vienna on wednesday to try to finalize the terms. reporter joins us now from the austrian capital. there has been a flurry of activity ahead of this meeting. tell us the latest. yousef says, changing by the hour. opec ministers making last-ditch efforts to shore up a deal. minister,e saudi oil first off, so many things are changing. saudi decides to pull out of today's meeting and this is a preparatory meeting ahead of wednesday's big gathering. yesterday, we, heard from the saudi oil minister saying the market could rebalance without opec making it a deal next year, so critics are
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saying that saudi's are really trying to rebalance their position and don't want to look to desperate that they need a deal but want to preempt the markets if talks were to collapse. that is what we heard yesterday from the saudi's. finally, in a last it diplomatic ever, the algerian oil minister and the venezuelan oil minister heading to moscow today. opec has proposed non-opec countries cut about 600,000 barrels a day and this looks like they are trying to get the russians on board in a very last-ditch effort as they are all supposed to be in vienna. --ickly, we heard from lastly, we have heard from novak. they want to get the russians alongside to get a deal. headed byn-opec russia would be one part of that puzzle. the other part, the opec itself puzzle. what is happening within the cartel, and what is the progress
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being made when it comes to iran and iraq specifically? yeah, that is exactly right. if out years was about finding consensus within opec, the last few days in vienna is about how to divide and conquer to get these cuts done. it is all about ron and iraq. those are the two biggest -- an and iraq,d -- ir the two biggest producers. david: they annmarie: -- they all need to bear the brunt of the cuts. the iranians have been insistent and insistent getting back to pre-sanction levels. it would be hard for them to sell a deal back home to the hardliners to accept any cuts that don't match these pre-sanction levels.
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when it comes to iraq, the prime minister says a deal but debating supply estimates. how much they are willing to cut, no one knows yet. without these three, saudi's, iranians, and iraqis on board, we could potentially not get a deal on wednesday. yousef: annmarie horton from vienna. let us brought it out the conversation. joining us now is the head of energy and national resources. the chief economist for europe at jefferies, let us dig into these numbers. we have brought up this amazing chart for context. shaded see that bloom range is the range and they initially targeted after that agreement in algiers. 33 million barrels a day and you can see the opec production based on bloomberg estimates, you can see how that has climbed since march 2015. opec has not made it a lot
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easier to reach an agreement. they are all pumping out record levels. how likely is it they are going to be able to agree to a freezer cut? >> the market has been conditioned largely to expect to something positive to come out of this meeting after some two months of a very strong guidance and, you know, sort of back channel on use flow. shaia: when you look on it, you are right. if you look at the cut, if it is half-a-billionaire a day, we are talking about effectively getting back to what it was the first half of this year. really, it is tantamount to a freeze. to really cut and make a difference in the market, you have to see something worth of one million barrels a day and i am doubtful we'll see that. anna: even if we go to freeze, it is that something that is viable this week? what do you make of the comments on the saudi stock about the demand story and suggesting things have changed in the united states
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that the demand story is picking up? at expectations around growth, based on donald trump being president, does that suggest that they are having a change of heart? story ise u.s. certainly encouraging, but it remains to be seen. oil demand has then rather anemic and in fact, declining. hasreal story for growth been india and the emerging countries. i think it is a little bit early to jump to conclusions about growth and demand. i think what we'll be more interesting to see is, from algiers to today, opec has added about half a million barrels a day. that coincidentally is very similar to the number they are going to be cutting, and so, if you look at that, one might be tempted to ask, "why would you be cutting exactly the amount that has been added between november and december?" yousef: what is priced in at the moment? if you look to go all, the market got it wrong. if you look to algiers, the market got it wrong again. what is the market expecting?
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what does that price reflect? ?a deal or no deal? shaia: we have the canadian wildfires, a number of outages in nigeria. so, i think that lent a lot of support to the notion that oil prices went from $26, to the 50's. one of the thing that is interesting -- of the things that is interesting about the cartels and opec is that it is difficult to tell sometimes whether it is policy regarding price or price driving policy. so, the rhetoric tends to get a when you getntense to the 50's and high 40's and then it comes back up in the low 40's. the market is expecting something in the region of half a million a day if we come out with a no accord. that could put concern into the market place because it says it there is no consensus between the member states. to work oute trying what this means for inflation.
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it seems as if inflation was getting a boost by the rebound we have seen this year in the oil prices. we were heading back up to that $50 range and hanging around there for a while. there is a risk that inflation battle for central bank becomes even more tricky. focus people like the ecb on the five-year forwards, which is driven by the old price. that is something they focus on, but at the same time, if the oil price picks up and you get inflation rising, but you don't get fundamental growth and wages , everyone rolled over again. central banks don't want a much higher oil price of than these levels because that affect the recovery we are seeing in particular. anna: they don't want it to go any further. david: the five-year forwards have gone up, but they want a much stronger economy which depends on the oil price remaining relatively low rather than rising from here. yousef: when do you see oil prices ranging? what is your base case? --id: i will take my leave
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you know -- [laughter] shaia: the crystal ball for private equity is foggy. when you look at the structural supply/demand balance, you could see a range bound market for the intermediate term and the magic number is above $50, you start to see a large amount of u.s. shale supply come in. i don't think opec wants to see too much more than the low to near-term. we could be in a market that has six in front of it. anna: you have seen the distressed part of the energy sector. one of the best opportunities that you see now in the energy sector? shaia: i think they are twofold. on the one hand, the market really does not like assets that have some level of complexity. it could be too much debt. it could be a midstream contract. it could be something that sort of pushes away the traditional
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in energy. we have been active trying to find assets in the e&p sector factors like that. secondarily, in services, you might be able to find opportunities on the right side of what i call "the megatrend." yousef: we'll see how it plays out. shaia hosseinzadeh, head of energy and natural resources. david owen, chief european economist at jefferies, stays with us. remarkable the amount of market value that has been added. 630 billion dollars off the back of a recovering oil price. let us get you oil stocks. still to come on the program, france in focus as french law fillion gets the republican -- lon gets thel republican nod. on vienna asmore opec prepares for its big day on
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wednesday. stay tuned. this is a bloomberg.
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anna: welcome back. this is "bloomberg daybreak: 45 in london.: bit ofd see a little weakness in the u.s. session. up asian equity session right now. let us get the bloomberg business flash. here is juliette saly. >> new strikes for tuesday and wednesday for the tomsula -- lufthansahe -- for pilots. ceo says the airline cannot survive if it caves in to worker demands. korean air has been fined about $1.2 million for paying undue
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profits to its owner family. the country's share trade commissioner has sent its report to prosecutors for further consideration. korean air was not immediately available for comment. the u k services sector are increasingly pessimistic about the future as sales slow and costs rise according to the confederation of british industries. in a report out today, more companies surveyed said they were less confident in the third quarter. that is your bloomberg business flash. anna, yousef. beenf: francois fillon has nominated. he is promising tough economic reforms to embrace traditional values. let us get reaction from the biggestt of france's business lobby group. thank you very much for joining us on the program. looking at the agendas of these
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two candidates of juppe and the opposition, is that really the better deal here, the way the outcome of the election played yes, i think fossil if you don't is very close to the business -- i think francois fillon is close to the business community. he wants to optimize the labor laws and france, so i think he is the best candidate for the business community. anna: he may have won over the business community, but can he win over the population? what do you see on the ground that convinces you that he can take on marine le pen? pierre: i think, you know, marine le pen has no program at all. francois fillon is very well known. he was prime minister during five years. in france andwn was well known worldwide. his program is very
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pragmatic. he can restore the trust of the business community. this is why there is no program with marine le pen and a full, detailed pragmatic program with francois fillon on the other side. fillon arepe and very close. what went wrong? pierre: the french people want reforms. they basically want structural reforms. i think fillon said he has a vision of being one of the first country in europe by 10 years -- he was, you know, quite strong and realistic and detailed already the reforms. that is why, the right people say, well, francois fillon has good reforms and the guts to do that. i think that is why he won yesterday.
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anna: tell me a bit more about those reforms. he has talked about being inspired by margaret thatcher. how thatcherite of program does he present for france? pierre: he wants to have a dialogue with the unions. he has to give meanings to the reforms and he has six months to do it with the french people and unions. to 35 onlyto go up with negotiation and dialogue. i think the first thing he is going to do is let the people business administration to hours with the9 unions, so then, we'll see how it will happen, but i am sure he will be strong enough, first of all, to explain the reforms want to do with the unions and then to make the reforms with or
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without the unions. yousef: i'm getting a bit tired of both campaign promises. is going toing he cut the number of public servants by half a million. the opposition says that is not realistic. who is right? really tough countries have done that. canadians, it the u.k., germans, new zealand -- the u.k., germans, new zealand, and 500,000 is only 10% of france. it.e are tough ways to do i think it is absolutely realistic and more than that, a necessity for france. -- that we useof in our companies to do that. management, motivation, quality, is know, it is, i think it a need and again, a question of how we are going to do that without blood.
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we can do it with -- anna: pierre, thank you very much. edef president. the u.k. prime minister will h counterpart. the groundsprepares for brexit negotiations due to start in march of next year. yousef: may has set herself the goal of one-to-one talks. emphasize britain's historic links to poland. has: they u.k. secretary accused mark carney of trying to stall the brexit process after the sunday times reported that carney had held private meetings for the executive to gain support for a plan to let british companies remain in the eu single market for at least
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two years after brexit. yousef: such arrangements won't be needed after what he calls the "bureaucratic web" of the singles market. david owen is still with us. carney ishink mark stating the obvious, and i mean, basically, we go through the process of article 50 and that is all about -- london, for of financing, for german companies for example using london for financing, what they were doing that in germany. we all know this. it is stating the obvious. we don't want to face a cliff. yousef: how much appetite is there going to be for a transition on the european side? david: absolutely. if you can't get financing in london -- anna: new yorker somewhere else. david: you have one of these. -- if everything
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fell off a cliff, then a lot of things would not work. i think for europe, we all know, i mean, the ecb will want this to be a transitional arrangement so everything functioned properly. they don't want the whole system to break apart as soon as they exit the eu. yousef: want an agreement give werera of exceptionalism weakness from the -- or weakness from the european side? david: no. no, it can sort of hard brexit ensure thatto everything doesn't simply stopped, that everything still functions for a period. we have to arrange these new arrangements with the rest of the eu and the world. that is the whole thing, the timeline. these transitional arrangements will be needed because by the time article 50 is completed, we to negotiatent
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everything needed for us to move forward and for the rest of ecb, itthis -- for the is important indeed. anna: there was a sunday times story about the bank of england, but for these essential banks, these matters remain stability and markets. david: absolutely. mark carney has got to ensure the financial stability of the system. modes of companies use london as a way of getting financing. all of these banks, he would banks, doing their clearing -- huge thanks doing their clearing here. anna: it is in europe's interest. we know we can go to other financial sectors like new york. eventually, probably, they can. maybe it is a case of clearing. the opposite frankfurt but new york. gu don't want to have --
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not tofrankfurt, -- goes frankfurt but to new york. that would be a disaster for everyone. transition arrangements will be needed. yousef: you think they are realistic and will be implanted? what is his -- implemented? what if it is just the ecb? david: they will be advising their governments that if you do not do this, then, you know, you will have the eurozone back into recession. it is in everyone's interest. who knows, maybe everything will happen quickly and we don't need the transitional arrangements? are now, most considered experts will view transitional arrangements as being needed. anna: you can tell that word. we will not tell michael gove. david owens, jeffries economist. this week, up next, the call for change.
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for the fillon will run presidency on a platform of tax cuts and labor reforms. we discussed it already and will continue to. will he be able to fend off marine le pen's front national? this is bloomberg. ♪
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yousef: french republicans back fion, likely to take on marine le pen in next year's presidential election. opec ministers embark on a last-ditch push to reach a production cut in vienna, but saudi arabia says the curb may not be needed. planningd to be sweeping curves on overseas dealmaking as they put pressure on the yuan. nd president-elect donald trump says he should have won the popular vote. recounts in three battleground states.
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welcome to bloomberg daybreak: europe, a reflection morning our flagship morning show. taylor: let's have a look -- anna: let's have a look. are undertocks pressure because of the currency markets but generally asia went higher. custom, are cut in the middle o caught in the midd. a mixed bag, ftse under a little pressure. if you throughout the risk radar, you can see that the dollar strength last week and the week before but not so much this morning. yousef: currently they are at 100.97, and we have been seeing
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more bearish calls, some predicting that the slump passed low off the back of the yield differential that keeps coming into focus. the future is currently called lower. are they going to be able to reverse that to extend those record highs? anna: we have brent in there as 45.94, down following the big move we saw friday friday saw it down, a lot of concern about what saudis want to get out, whether the russians will play ball, whether they can get the same page. 5%, a surging metals complex once again. yousef: yeah. it strengthened a bit more. now we are looking at the
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highest close in more than nine years. let's cross over to the bonds look at theoser 10 year yields. we have seen a rise by 63 basis points. now you are looking at 2.32, slightly lower as a lot of these investors make it easier to recalibrate the fed expectations. have we gone too far? anna: and some people are attributable to dollar weakness to that in the u.s. 10 year yields. let's get the bloomberg first word news. opec is embarking on a last-ditch diplomatic push to reach a production cut. ministers are flying to russia for talks for the first time, saudi arabia suggesting that they don't necessarily need to curb output. delegates are due to meet in vienna on wednesday as they attempt to finalize the production decrease. yousef: president-elect donald trump is claimed without evidence that the u.s. election
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at fraudulent voting. won the popularon vote if the fraudulent ones were removed. hillary clinton is pushing for a recount in three battleground states. anna: cuba is observing nine days of national mourning of fidel castro. public activities and events are canceled and the fugu cuban flag is flying at half staff. his funeral will take place on saturday, followed by a ariel. yousef: the u.k. prime minister will host or call us counterpart in london. the meeting is the latest stage of theresa may's charm offensive as she prepares for brexit negotiations in march of next year. may sets herself the goal of holding one-to-one talks with all 27 eu leaders before the european council meets on december 15. it will emphasize their historic links to politics. anna: the former justice
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secretary has accused the bank of england governor mark carney of trying to stall the brexit process. that's after it was reported that carney held private meetings in dinners with executives to gain support for a plan to let british governors remain in the eu single market for at least two years after brexit. gove said the arrangements will be needed after they quit the single market. yousef: global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. reminder that you can find more stories on the bloomberg at top . let's see how sentiment is evolving with the markets in asia. what's the latest, juliette? juliette: a pretty good day all things considered. we certainly finished on most of the markets that are closed off day's lows.
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a little weakness in the yen and australia is also lower with the energy players and focus. some weakness from the southeast asia markets, but mostly things up and looking quite good, and that has lifted the overall regional index. various dollar trade moving through in hong kong, up by 1%. some of those energy players are turning positive after being in the red for most of the session and good buying coming through number of casino stocks. in shanghai, the benchmark indexes closing higher by .5%, still holding onto the bull market territory. a a lot of positive movement coming through from the state owned movements. we've also seen a positive uptick in korea, because the south korean won has been one of the standout performers in terms of emerging-market currencies, taking back lost ground from the dollar. the dollar index falling quite sharply. and justeing won up,
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having a quick look at the dollar index, it has fallen quite sharply, giving boost to emerging-market currencies and equities today. anna: thank you. juliette saly in hong kong. china plans to implement sweeping curbs on overseas dealmaking, according to people with with knowledge of the matter. this follows a record acquisition. for more, tin sieverts joins us now. what is the rationale behind this? is this all about the chinese currency, from the chinese perspective? well, they weren't specific on what brought about these new rules, but they do coincide with an unprecedented acquisition spree. chinese companies have already doubled last year's record of $106 billion overseas acquisition. this will possibly provide them the leverage to mitigate the overseas flow. yousef: so what effect will these new restraints have on chinese companies overseas?
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m&a ambitions? we have seen the monetary the last couple years -- seem been on a tear the last couple years. >> indeed. --ically, it's going to they're generally going to ban overseas investments of $10 billion or over. this gives them a lot of wiggle room. this also leaves room for potential strategic acquisitions. below that, they will also restrict -- put the restrictions on companies buying outside their industry and someone. certain overseas real estate acquisitions as well. it's going to have an effect. removend tim, this could one of the key speculative drivers around m&a for certain european stocks. is this indefinite? has the chinese government said they will remove these restrictions at some point? -- it's not indefinite.
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apparently it's going to be in place through at least the end of september of next year. what's going to happen from now is the state council, the equivalent of china's cabinet, will publish some of these rules, and the various chinese bodies will work to put them into place. i'm told at least until september next year. sifert, joining us from hong kong with the latest. let's crossover back to what's happening in france, where the former france prime minister francois fillon is the candidate for the 2017 election. he defeated his rival in the second round runoff and pledges to slash taxes and initiate major labor reforms. >> [speaking french] the seriousness of the situation and the
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expectations of our fellow citizens. i will now go to me then throughout the coming month. with them, i will take up a central challenge of france -- the challenge of truth, and a complete change of software. anna: his most controversial policy is his plan to a sack the 35 hour work week. he also plans to raise the retirement age and cutting 100 billion euros from government spending. speaking to the french people, he also touched on the unexpected nature of his claims. >> [speaking french] >> the victory is mine, and it is a victory based on beliefs. for the past three years i have been chasing a path, listening to the french people with my project in my values, and progressively i felt this way that crushed all the foreseen scenarios. yousef: let's bring in lizzie mcdonald, cio of global equities. terrific to have you on the show. again, some progress on the french election front. what is your read on the latest developments? does this feed into an improved
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outlook against the european populism? >> well, it's a different voice to what we have been hearing. --hink it will give a really two sides for the election next year, which is needed. as far as we are concerned, standing back from it, we have italy, than france, than germany later in the year. more volatility, a lot of noise, that is what we have become quite used to. but it also does give some opportunities, and we have seen that with brexit, with the u.s. election, those political upsets have given opportunities to direct the market. anna: do you conclude from a we have seen from donald trump, and we are waiting to hear details -- he's not even in post -- waiting to hear details of his platform, but do you read across from the reaction in markets a
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populist victory in the u.s. to into populist victories in europe? could populism in europe deliver the level of optimism around growth and infrastructure investment we have seen the united states? >> progrowth policies are clearly going to be welcomed by equity markets, and that's very, very clear. the scope for delivering that growth and whether it is delivered is the question. samee likely to see the questions around europe, but you could have optimism. there really isn't too much scope to increase the spending level. and that is one thing that is standing back from all of this that has not changed, the background. that level of debt overall is probably going to be rather similar, and that will be a constraint on all politicians. yousef: so how do you position yourself to benefit the most out
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of this wave of european populism? let's say the french elections go on, the italian elections go on -- you are saying, put your money in banks? the issue for financial -- as we have seen in the u.s. -- if we get some reprieve from both the regulation and from the financial repression of interest rates, and if you get reprieve from that, and it appears that we are in the u.s., that is clearly good for financials, which had previously been looking very difficult. take some ofved to that constraint off it, that is very good news, and that is why you have seen a big move. it's slightly different in europe, because of the still very fragile state of the
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banking system. yousef: right. that has been the key transmission mechanism and a lot of this. how do you gauge investor reactions? we see this happening in italy as well. are you saying we have to look for opportunities and financials, even with rising european populism. >> within financials, the two things that are important are regulation and taking some of that burden off, as we may see it in the u.s., and taking it off interest rates. but interest rates do start to rise in europe, which we have seen to some extent. you get some pulling back of regulation, and the other difference in europe is that you do not have consolidation. you have not have the rebuilding of the balance sheet. th situatione is different, and financials are one sector where local conditions are very important. anna: do you have particular financial stocks of the
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financial ecosystem in mind, once we get clarity on the regulatory environment? >> wealth management, still. that is one area where you've had a real depression of the return because of the interest rates. in searches of cash with no ability to get feed off them. if you get to have cash recycling into equity markets, that you can charge fees. wealth management looks interesting. plus in the u.s. you have also away -- iern taken think wealth management seems to be in a better state, and could immediately benefit from high interest rates. yousef: we are keen to get some of your other calls and we will get to the shortly.
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we are keen to get some of your other calls and we will get to the shortly. we are keen to get some of your other calls and we will get to the shortly. anna: coming up, running out of time to reach consensus on crude cuts. can a deal be done? we discussed this next. this is bloomberg. ♪
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yousef: 7:19 a.m. here in london. you are looking at the sun rising above the city. currently sterling is trending at 124.97, up more than a 10th of 1%. monday,ort published on business in the u.k. service sector are increasingly pessimistic about the future of sales and cost price. let's get more with the bloomberg business/. here's juliette saly. juliette: thank you. lufthansa pilots have announced new strikes for tuesday and wednesday. the company says it is working on special flight times for
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those days. for the past 30 days of strikes, they have affected 400,000 passengers on 2000 canceled flights. the ceo says the airlines cannot survive if it caved in to worker demand. about $1.2has find million for paying profits to the owner family. the fair trade commission sent its report to prosecutors for for the consideration. korean air was not immediately available for comment. businesses in the u.k. services sector are increasingly pessimistic about the future, as sales flow and costs rise. that's according to the confederation of industry. today, ort out companies surveyed said they are less confident about the business situation in the third quarter compared to the second. and that is your bloomberg business flash. anna: thank you. juliette saly in hong kong. opec is embarking on a last-ditch diplomatic putsch to
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reach production cuts. they are flying to russia for talks for the first time, suggesting that the organization doesn't necessarily need to curb output. delegates are due to meet in they try wednesday as to determine the first production decrease in eight years. lucy mcdonald is still with us. i want to tap into your thoughts on big oil right now. shale and bp140, shares heading for their biggest annual increase since 1999. not just a rebound in oil prices, but a rebound in oil stocks. >> yes. they are following the downdraft we have seen before. it's a recovery in that sector. i think it probably will take quite a long time to heal, particularly at the capex. the reason they are performing better is because of investment capital. i think it will take some time to work the system, whatever happens.
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yousef: that makes a lot of sense. ultimately, higher oil prices mean better margins for oil producers. you are saying that it's not just the oil and gas companies benefiting, it's really feeding across the board into earnings for companies. >> that's absolutely right. and when you are looking at the corporate earnings at the whole, globally, where we have seen better momentum coming through in the last six months, it has been in resources, metals and mining, energy, technology, and financials. you have seen a little bit of relief around interest rates. those are the sectors where you have seen some improvement in momentum, which fed into a better earnings picture overall, and that's another reason why equity markets feel better, apart from everything we are seeing . anna: what do you make of this story we have been covering in the last hour, around chinese money?
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chinese m&a? authorities are clamping down on big m&a deals done by chinese corporates elsewhere in the world. certainly there are parts of europe that are influenced by chinese money -- will that end? >> i don't think so. this seems like a response to the capital account and the impact of currency. slow it down but it's not going to stop it, because there is still a desire is outward investment to happen over time. yousef: so you don't think there is going to be a material decline as a result of the suggested legislation in terms of how much money they are actually able to put to work across the world in those m&a sprees? >> i think it's likely to decline, but it is coming off a high level this year, but it is still -- overall, that will be the trend, for capitals to come
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out. anna: let's talk about the things you like at the moment. we talked a little bit about opportunities and wealth management. what about the technology sector? a lot of people are asking questions, when we didn't see tech stocks participating in the most recent equity rally. what is your view of that? >> the sector is still seeing some good earnings, which is always good. valuations had become relatively stretched, because it performed very well. going to be necessarily the highest valued stocks which are going to lead. that withinerlying technology, there are still plenty of good growth trends happening. whether that is machine learning, mobile, gaming, all of these give structural growth.
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then on the more cyclical side, we have seen the microchips, re's plentyors, the of potential growth within technology. plus we also have the potential for a patch relation and the increasing of shareholder returns. guy: we have talked a lot about opportunities, which industry should i not be? which companies should i avoid? that is both the rise of european populism and the donald trump -- it would be multinationals? >> well, multinationals are going to find the overall environment more challenging. yousef: that's the common denominator, isn't it? >> it is going to more challenging, because you are going to have more risk in many places to manage. tax, which is going to become more complicated. and you are going to face in
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some cases some of the populism, the backlash against globalization. i think it's going to be a more difficult environment. however, still having that spread of businesses is probably giving you more diversification and strength. but i think it's going to be a more challenging environment. anna: you mentioned repatriation. this is something you invest in? further opportunities there? >> the biggest beneficiary is technology. about 15% of the market cap in technology is offshore in cash. if you get even some of that back, get it into share buybacks and higher dividends, which traditionally, that sort of thing is where you would go. that is clearly good. anna: thank you so much for your time this morning. good to see you. .izzie mcdonald, ollie on that's it for us.
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the european open is up next. a quick look at the futures -- things looking pretty next. yousef: the u.s. is called slightly lower, and for europe it is patchy. stay tuned. full story shortly. ♪
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show me house of cards. finally, you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. guy: welcome to bloomberg markets european open. coming up, i've alongside matt miller over in berlin. what are you watching? the greenback turns red. enthusiasm fades, the dollar comes off decade highs. will gdp or the jobs data force the market to reeto look t positioning? bold reforms as francois fillon seeks to run. and shuttle diplomacy.


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