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tv   Bloomberg Markets European Open  Bloomberg  April 26, 2017 2:30am-4:00am EDT

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guy: good morning and welcome. this is the european open. first trade of the cash session coming up shortly. it could be a positive one for most markets in europe. i am in london. matt miller in berlin. what are we watching this wednesday morning? president trump said the planning a 10% acculturation tax . let us keep the equity rally rolling? credit suisse is abandoning plans to spend off its swiss business. will this be enough to close the
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gap with its peer group? unfair and punitive. that is what canada's foreign affairs ministers calling the lumber levy. matt: very much looking forward to that conversation considering how hot this story is right now. you look at futures. we are looking at slight gains, the price looks better on the wti screen. after little gains yesterday, they jump on monday. we are looking for gains again today. check out the bund spread from treasuries. .96 going back to 1999. if you zoom in since then, you can see that we have come down substantially and we are now down below 2 again for the
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second time. the spread is getting thinner between buns and treasuries. guy: whether we will see that tighten up significantly, it is something we will watch carefully. money is flying into european assets right now but mainly equities. we will talk about on throughout the program. new zealand up nicely overnight. the nikkei up 1.1% in asia. many of the european markets strongly bid. off itsnese yen is highs. why do you need a safety trade went through one happy about the direction of travel of their long equities? there are so many questions to ask about this rally. what is the momentum question mark let's get a bloomberg first word news update.
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credit suisse has announced plans to raise $4 billion in the rights offering abandoning its intention to hold a partial ipo. the lender -- ran into opposition from analysts and investors who questioned the merit of splitting a business that generates more pretax profit than other units. credit suisse announced first-quarter net income of hundred 96 million for swiss francs beating analyst estimates. click under normal circumstances , that should be it. alwayss always part, we said complete restructuring. about 900 million of restructuring costs to go through, continuing cost-cutting. is in abanko santander fitting from the return of political stability to brazil
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with the rising real driving a jump in first-quarter profit. 1.8 7 billione to euros beating estimates. profit from the biggest market jumped 77% from a year earlier ther the president boosted economy following the impeachment of dilma rousseff. theresa may will host european commission president sean klug -- jean claude junker. it will be the first meeting with vanier. german --ll face jeremy corbyn. softened yourhas position on europe. speaking on the country's most-watched television station, she refused to be pinned down on whether she wanted to leave the euro, a position she has championed in her campaign.
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-- used a -- appearance to her parents to attack centrist rival emmanuel macron. >> are we going to vote for someone who has a global ub as a whole? society the policy is fratricidal. i said it. fratricidal because it is aiming to rise up committees against one another, drive employees against one another, especially with the directive of hosting workers he will not question. returnsemmanuel macron to the campaign trail after criticism that a victory -- a victory dinner he often his team was inappropriate and premature. attackedist candidate le pen for what he calls her brutality. madame le pen, her formulations, her town, her gesture, i see much more brutality than on my side.
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brutality chooses its side. a brutal project, heinous project, a project of rejection is not on my side. on the other hand, i not presenting a project of a joyful liberalization. a naive one. i just take we are a part of the world. france is part of it. sophie: stock market valuations have become divorced from reality at the likelihood of tax policy changes to drive company earnings has slipped, so says david einhorn in a letter to clients. the nasdaq closed above 6000 for the first time ever yesterday. he warned previously of inflated equity prices caused by central bank is in. the firm said tax reforms pushed by donald trump could be a boon for economic growth and favorably affect [inaudible] global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries.
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you can find more stories on the bloomberg at top . guy: thank you. -- up on that einhorn idea. details on what has been the great driving forces of the trump rally. the u.s. president said the tax reform and -- will be announced. it will include a 10% tax on the more than $2.6 trillion in earnings that u.s. companies have stockpiled offshore, mainly tech companies. sachs'sg asked goldman chief economist about tax reform. back's we expect something that deficitit -- not decimat neutral. boost --rs not modest boost to growth. guy: let's get another take on this, bringing in mark cudmore.
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let's talk about this tax plan. we had a debate about this this morning. what is this that is driving this equity rally and what will keep it on the rails? the french have had a good go at it, they boosted us up. do we need a tax plan to keep us going? mark: i am not sure we do. what has driven this is that global data continues to be strong trade there is an uptick in growth expectations around the world. the u.s. is the one lagger. it is not growing as quickly as people hoped at the start of the year. the rest of the world doing well. we have moved beyond all these geopolitical risks whether it is european election risk or north korea or syria and the russian-u.s. detente, whether it is trade wars, we seem to be moving beyond them. people have excess cash and they need to put it to risk -- to use. the tax man could be a massive boost but he might also deliver nothing and there is the chance that the market goes, we want to
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see congressional of people first. what you promised may not be what comes into law and therefore we will not get too excited. this is a market that wants to rally, investors want to chase it. mark: they will want to see something by next year. they will want to have something there but for now as long as you headlines aggressive from trump, isn't that a catalyst to boost this market higher, especially the u.s. market? mark: i think so. we see this real positive headlines and they will spin them the way they want. when you have this speech you can choose what you take from it and what you think is most relevant. it is a speech about proposed plans, it is not hard data. --estors can choose to sit what to fit their narrative. u.s. stocks are going up, they will probably make record highs
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soon. the worst case is we get a bit of a negative shock. is worried for a few days but it means a delay of a few days. a few days later we will be focusing back on the positives from tonight's speech. whatever happens it is the amount -- matter of timing before we focus on the positives. guy: let's talk about technicals. .ice line in the mliv the positive momentum signal we have, it has returned for the s&p 500 so that is important. it needs confirmation. give us a sense of what the sense of it is now. valuations are rich but momentum is a massive factor. mark: went of the hard things is we are in 1% of the record high and s&p index. it is hard for a trader who is not long already to have access cash. to admit to themselves i am
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underexposed, and i want to buy and now before the record high. when we break into that new range and break that record high, where is the resistance? nothing you can cling to. psychologically, trump's speech can give him the excuse to go, i am going to buy now the for the break but technically we want to see the high break sometime in the next few days then give us the next big leg higher. time.thank you for your you can follow mark's insights and his team's insights on the bloomberg mliv blog. very keen right now as we are getting deeper into earnings the season and they break down the tea earnings as well. if you feel like you need to catch up, that is a easy footnote for the market. coming up on the show. we are live in zurich where we have been speaking to the credit suisse ceo. -- reportedk income
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that income beat the streets estimates. this is bloomberg. ♪
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matt: welcome back to the european market open.
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credit suisse's income has eaten estimates. it is raising $4 billion in a rights offering and has abandoned plans to launch a ipo. ceo ine lacqua to the zurich. >> has been a good quarter. if you think about the work we have been engaging in. up 18% and costs are down 11%. that is what we have been trying to do, drive the costs down and preserving the franchise and the revenue power of the company so we are profitable. we finally had a quarter. is able tot the bank produce today. even taking into account all the losses we are profitable. see that is across the
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board. that is for we have done in the quarter. that is across the board. we have good profit across the board. global market up 29%. 15% and capital down 12%. this was the target we had given. francine: the international wealth management could have been stronger, are you disappointed there? guest: no. we really did well. , wee is one of the profits sold city airport. management and wealth management was up 400%.
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better not wish for a quarter. we had a number of tailwinds. in credits we had when hundred 33% increase which i think will be market beating because markets have been very constructive and supportive. it is a good quarter. >> the numbers speak for themselves. -- that means the end of the restructuring. we started at 73 billion. that is enough to close it down. francine: why did you decide to theo the markets instead of ipo of the first unit? that ise were seeing something that we got right.
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we needed 9 billion of capital. internal one for measures. 224 billion in 2017. we have thfuel and e -- the ipo as an option. that was entirely under our control and we have not yet proven the value of the concepts we are talking about. we feel now that with the progress for five quarters we raised 27 billion last year, another 12 billion this quarter. we believe we have been demonstrating the quality of the power of this platform and beating the competition. capital.ply raising hen weore palatable and w
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were thinking in october 2015, we had two big things ahead of us. a big write-down and [inaudible] we had a goodd, range of outcomes. in decembert january, completely reset the dials. we can look at our capital planning without huge uncertainty. when you look at it and that context, we have no downsides. in the coreive strategy. it was something we were willing to consider given the more it -- magnitude of [inaudible] ae other thing is
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huge improvement in the business. profit is up 15% in two years, the company had been prepared to be ipoed. having looked at both, a straight capital raise is less [inaudible] we dilate the shareholders bless and keep 100% of a good cash flow of a very good business. us live.ncine joins will this new strategy go far enough for investors? i feel like this bank is constantly cutting heads count -- headcount are restructuring, and worrying about capital. francine: a lot of the analysts are saying that they may have to raise more capital and 12 months. saidis something that he when not be true but i feel as always quite realistic. he said if the tent -- trend continues, there is no geopolitical shock or risk their
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fine in terms of capital raising. he was also at pains to tell me this was part of the plan. they always wanted to reach this amount of capital raising level. swissends on the [inaudible] our go straight to the capital market. guy: the last year, credit suisse was a big underperformer. do you get any sense that he feels he can close that gap because investors are a ticking clock here. francine: yes, that is a good point. he is targeting the share price again, he has always told me that the share price if it were going up a lot more, it would make his life a lot easier. if you look at the share price and he sometimes comes in and interviews with his share price the last 12 months, it was at a record low last year and he has brought it up. this is probably a personal victory for him. guy: the rest of the banking sector has gone up a little bit
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more. francine lacqua speaking to the credit suisse ceo. fantastic interview, always a pleasure to hear what he has to say. useful insights into what is going on. we are minutes way from the european open. we will take a look at what [inaudible] are doing. watch, keringk to sharply higher. the open seven minutes away. ♪
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matt: we are minutes away from the open. let's get some of the stocks you need to be watching this morning starting with kering. they own brands including gucci. sales growth is surging. first quarter revenue exceeding analyst estimates. because of sales of gucci and you said laurent -- yves saint laurent. i know so much about these luxury brands. geico on that talk about santander. credit suisse has been an interesting exercise, fascinating to watch. santander has been a paradigm of stability in so many ways. the brazilian real helping out, the u.k. economy and the fact
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that has not cratered yet. -- data are flowing. the numbers are good. is sharply higher. the opening is next.
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guy: let us have about where we are going to go today. to be honest, you're not going to get the kind of momentum you had over the last few days. plenty of things happening. look at what is going on in the states for the trump plan. we are going to pay attention to that. nevertheless, stocks continue to move higher. that is what we are anticipating. we are not up by much, but we are up by a little bit. you have seen what happens. higher.nding i think it is significant. as close as we are, from those records in the united states. matt. matt: investors piling into the dollar out of this tax plan, so keep your eye on it.
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any currency that have gained a lot into this run-up. here is the euro. over the last three months, the euro has done quite well. i left this chart wider because it shows you the gap higher monday and the super surge we have seen since then. dollar,y in the something worth paying attention to. the ftse openings offer this morning. no clear sense of direction either way. we are not going anywhere in a hurry right now. we need a new context of that big rally. we have seen some reason to sell . momentum indicated in the states is positive right now. something to pay attention to. money is flowing into european equities fairly aggressively. such a big move. people are going to take a look at what is going on in more detail. that is the open. we are softer in london.
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here is manus cranny. manus: very good data do you -- o you. look at euro yen. 4% rally in three days. look at euro-dollar as well. a little bit less. the real momentum is in euro-yen. european stocks this morning, just a tad lower. keep a tab on credit suisse. what it trees going for the -- credit suisse going for the r rating. the jewel in the crown so to speak. there is the first flash on credit suisse, down. who will be the supporters of it? i'm sure he's done his fieldwork before he went for that particular announcement. this is the flow you were talking about, guy. the biggest inflows into europe. europe is up by 7% on the euro.
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the s&p 500 up. what could unseat the momentum in the equity market rally? one is trump from a global perspective in terms every touch edition. overseas currencies. impact?t really have an second is the ecb. that they be shifted from their rhetoric stands at the moment? let us have a look at the momentum. if you are wondering whether the this is ae 1999, perspective for you. there's the bandwidth at the moment. inhere near what it was back 1999. less thanentum technology on the upside? the shanghai composite closes for the day. i'm sure you do not want to see my little chart. as to who i'm talking to, what we are talking about. there you go. the shanghai composite closes.
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a nice rally turning around. that is going to be good news. what are the chinese doing? taking their money outside the country, building up dollars. you begin to understand. se strengthening their checks. again, you are seeing the chinese buildup their port of dollars. of if you cannot get it out of the country, lock it up in a bank near you. guy. guy: thank you very much indeed. those are some of the details. let us take a look at some of the individual movers and what has been going on this morning. this is the stoxx 600 breakdown. here is the downside. this is a lock maker. i want to point out a couple of things through this stock is no up on the month by 6%. it is down by 2.89 after the 2.89 drop. this is set up as an trade nestle with a break this
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morning. today --cks go ask the three stocks go xd today. just pay attention to that when you are thinking about how to market is going to perform over the next 24-48 hours. on the upside, the real highlight for me is santander once again really delivering that stability. by theain being rewarded market. santander up by 1.08%, just providing clarity on what is happening next. it is the stability story, what is helping. lvmh continues to remain well bit as well. thanking sector in more detail. credit suisse and santander beating their first quarter earnings this morning. here is how it opened up. softer. it is going to have a capital raise. we also get a standard chart a result of little bit later on this morning.
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joining us on set to discuss all of this, bloomberg banks editor chiefl moore and a investment officer at cross bridge capital. let us get with the details. i want to start a little bit with cf. let me just show you a chart, cf versus the european banks. this is taking you back to the beginning of the 10 year -- tenure. on the way up, lagging and quite a lot. does today's news start to close that gap? is that enough? reason for the gap was pricing in some sort of capital raise, be it through selling the swiss bank, which they have decided not to do, or through a share sale, as we are seeing today. over the last few months, investors have started to price that in. that could kind of set credit suisse up to have this question behind them and really go forward more on the earnings
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story rather than a capital story. cuts, i think, 1400 jobs in the first quarter and they want to cut 5500 this year. . when does this bloodletting stopped for credit suisse and for other european banks? how many heads will roll before this cycle is over? michael: i mean, i do not think we are done at this point. you would need to see a really sustained turn in the revenue do not because banks really have a revenue growth story to sell right now and so they are focusing on the cost-cutting. if you see rates rising and you get some sort of revenue boost, then we might see it till off. i think we are in the later innings of it because a lot of the major overhauls have been done. european banks have rallied aggressively over her the last few days as a result of the tell risk of the french election being removed. too far too fast?
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do you like the price action? give us a sense of what you are seeing. manish: if you have higher rates, better growth, and smaller losses -- if the risks are going to go away, then these things are going to happen. how far is it going to happen? we would have to see. there could still be some risks later on. at the moment, i'm really liking it. before theell it first round, so we are enjoying the rally. my belief is that the big discoursef political was there, keeping people away from thinking the ecb could do anything. if it was to taper, that could increase the yield higher on interest rates. he have to be along the european bank. matt: so how much are they worth, do you think? .aluations are pretty weak if you look at any measure, european banks are valued much less than u.s. banks.
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where should we be seeing valuations? manish: so, i would say, if you european index is higher than the u.s. index. this is the leg we are seeing up, so i would say that they are still undervalued. things are not going to get stronger earnings without stronger gdp growth. the gdp growth is still important. this is a rally you are seeing from oversold position. it is not based on the gdp growth. if you look at france -- what you are seeing is over bearishness that people have on the market and not an endorsement of everything that has happened. guy: santander able to exercise its ability? michael: you were them talk , "we are diversified geographically. it will help us during we are
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starting to see that. brazil getting some growth. the real appreciating. that has boosted their earnings. guy: michael, thank you very much for michael moore joining us from our finance team. going to stick around. well to come on the program, will be talking about what is happening between canada and the united states. we are going to get an in-depth ,iew from christina friel the canadian minister of foreign affairs. that is coming up, later on the program. ♪
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matt: welcome back to the european market open. i'm matt miller in berlin alongside died johnson in london. let us check in on the markets right now. we see red arrows here. very little movement in equities. very little movement now, at least, in the euro. unchanged against the dollar. investors are still selling bonds, so the bund and guilt yields areilt rallying. i think everyone is kind of waiting and seeing how it goes with the trump tax news this evening in europe this afternoon in the u.s.. let us cross over to nejra cehic for your mid-cap movers. nejra: i'm starting with a record high today for critter
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plc. this is the holding company in the chemical of 4.7%. first-quarter sales up. i say the shares have hit a record high. they have risen the most since 2012 at one point. downside, itthe makes first quarter net sales declined. a note called the first quarter very disappointing. we have seen bit shares hit their lowest since january 2015. the downside kindred group, which is an online ambling services company. first quarter, gross winnings revenue, payment at a mess. we have seen this stock dropped the most since july. matt, guy. guy: thank you very much indeed, nara. marine le pen has thought to soften her position on the euro. downn refused to be pinned
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and whether she actually wanted to leave the single currency. it position she has championed in her campaign. french presidential candidate and manual macron returns to the trail today after widespread criticism. us, manish singh. how big an event was sunday and monday? manish: so many people. you can kind of see, this is a u.s. etf that tracks european assets. the amount of money that poured europe result of that -- has crossed some of its biggest challenges successfully. bestone had a base case -- case scenario that macron was going to be the winner. still, you had such a big rally. it shows you how much the market was. guy: we are still up? manish: rallying 10%. the market did not believe itself that macron was the best
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case scenario. there was a lifting in that sense, a relief. we will see what happens in two weeks time. macron is definitely the favorite. he has no doubt about it. is he going to pull out of it? i don't know. i think he is still the favorite, so the risk rally will continue. guy: let us talk about this and slightly longer-term format. winning this election could be the easy bit for mr. macron. he has to do with parliament, a difficult french economy, terrorism, a unions, you name it. challenges are multiple. when you think about the macron presidency, if it were to come to pass, am i long and short out when it comes to stocks, or short and long out when it comes to bonds? manish: when you look at the long term, the negative consequences and reactions to macron winning probably will transpire before the positive ones. you see in the first round, the
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vote has gone to and that you candidates. anti-e.u. candidates. you have francois hollande, who came on attack of benefiting everyone. look at his popularity rating. 10%. the risk i see for france is francois hollande has discredited the left. he discredits the center, what happens to france? if you look at the gdp growth since 1990, france has one of the worst growth number 31.4%. what is the difference between a 1% gdp growth, 3% gdp growth? you take 35 years at 2%. 23 years at 3%. 1% gdp growth is a loss of a generation. what you are seeing in france, high unemployment rates, youth unemployment rate, 25%. france has great companies, but no labor, that is tragic.
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it is so embedded in the thinking of the people, it is dangerous. i do not see that macron is the person who will change that. he will have his opportunity. matt: that left-wing thinking is not embedded in the thinking of all of the people, clearly. le pen made the point on the television interview yesterday, or monday morning, that she only needs 10 points according to the in order to beat macron. do you think are moved to step down as the leader of the national front and in her words, represent all french people, is going to help out? and that she may actually have a chance to pull it out one second round voting comes? manish: i think she's trying to do what macron has done, he left his party to get a new party. it is too late in the game. you never played zero probability on any of and. there will always be risk of le pen pulling out a big surprise,
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but that is not the best case scenario. in my conversation with the french people, it is more about the fear that le pen can come and take france out of the euro. that is the biggest here. if she did not have got and has said she would renegotiate, i think she would stand a much better chance, so i think it is a bit late. it might help her. coalition of catholics or leftists who would not work for macron might help her. that macron is most likely the next president of france. matt: do you weigh then until s, and then eventually start shorting french assets? you seem to have some kind of fear that macron will not do well as the leader of france post elections. manish: i think that, you know, you are buying assets in france.
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i would say you always have to give a new president a chance and see what his policies are going to be. my feeling is that he is not going to be as successful as everyone is trying to play that just because of the way the politics are organized in france. the thinking of what is happening in the french economy. look up a labor reforms. the people who will benefit from them are out there protesting. that is what happened with the labor reform. you have youngsters who will benefit from left sector labor laws. they were protesting against it. there has to be a change of psychology in the people. i do not see that coming so soon. that is my big fear. gdp growth is not pick up and you that implement, 25% in france, and compare that to u.k., 10%. germany, 6%. u.s., 10%. that is tragic to have a good economy in the sense that they have great banks, luxury, financials, technologies, various companies, but one fourth of the use is not in the notforce -- of the youth is
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in the workforce. in the short-term, you trade price. you are trading a price where so mye buying things, confidence is much lower and i'm happy to be proven wrong and i will wait and see what president macron does. thank you very much indeed. he will stick around. to be honest, the economic activity traveled across the channel and we need to think about how the u.k. economy will be performing. are starting to appear in the british economy. we saw that yesterday in the vat receipts numbers. starting to be a concern. if all is on the heels for the consumer numbers as well. we are going to talk u.k., brexit, the general election, next. this is bloomberg. ♪
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matt: welcome back to the european market open. we are now seeing gains across the board after her drops early in the session. still not a heck of a lot going on as far as size of the move, but i think investors to some extent are waiting for this trump news to come out of the u.s. later today. let us go right now for the bloomberg business flash to sophie kamaruddin. sophie: thanks, matt. a company has exhausted all options after workers voted against job cuts aimed at
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salvaging the italian airline, pushing it toward meditation for the second time in a decade. its 2 billionid euro recapitalization tied to the statement plan is effectively dead and will start appropriate legal procedures as funds run out. another company has raised its outlook on surging profits from the mercedes-benz luxury car unit and improving vehicle operations. the carmaker predicted significant growth in group profits compared with its previous forecast of only slight gains. estimates compiled by bloomberg suggest earnings for interest and taxes this year will luxury goods giant's first revenue soaring. comparable sales increased 28.6% from one year earlier, way above expectations of a 13.3% rise. that is at the gucci -- the kleins reversed. -- delicines reversed.
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guy: thank you very much indeed. i want to talk about a turnaround we are seeing in credit suisse stop this morning. this is yesterday. this is into the mornings numbers. now, we are seeing quite a sustained rally, so this is what you are getting this morning. we are now up on a one-day basis, up by over 2%. the stock popping over the last few minutes. we will carry on covering that stock. very important. let us talk about what is going on in the u.k.. written cap to its monitoring -- britain kept to it barring forecast. tax receipts fell 0.8% in the first quarter compared with a year earlier, versus the 4.1% increase in the previous three months. very quick comment for managed thing. do the summer's were you?
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we havenot immediately a good set of numbers coming into this new set of numbers we have seen. we are seeing a very strong government going into election with a very strong footing. policies matter. a strong government does matter. there has to be a consensus. there is no consensus. a good, strong government is going to help. that is where we keep heading. matt: is there a chance that europe puts up an incredibly young front and makes -- know, pushes the u.k. out of the single market? the opening gambit in any negotiation is going to be a strong one, and if you saw the press this morning, some people were saying the u.k. will have until into the budget 2020, which is fair enough, because the u.k. will go out in two years time. is a small price to pay to be part of a singles market, sure. the u.k.ways believed
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is a pragmatic nation. all right, manish singh, thank you very much. coming up, bringing it all back home. find out about the tax plan. ♪
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matt: bringing it home. 10%ident trump planning a repatriation tax. will escape the equity rally rolling? pulling the ipo. credit suisse is planning a $4 billion offering after abandoning plans to spin off its swiss business. will this be enough to close the gap with its peer group? plus, unfair and punitive. that is what canada's foreign affairs ministry is calling the u.s. softwood lumber levy. good morning and welcome to bloomberg markets, european open. i'm matt miller in berlin alongside guy johnson at bloomberg's european headquarters in london. guy: let us talk about what is
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happening in these markets. half an hour into the trade, let us show you what is going on. we have generally got more of a rally on our hands now. we are still watching quite carefully. it feels a little bit more positive. a little 600 is negative. the negatives are on the left-hand side of the screen. bnp paribas is adding to the downside. roche is negative. there are a few next evidence -- ex-dividends. i think it is going and the stoxx 600. the luxury sectors absolutely powering ahead at the moment. up by over 9%s this morning. the other thing i want to mention is if you look at the weight we have seen being added by credit suisse, credit suisse is now up, sharply reversing the overall losses, up by 2.3%. i want to highlight the tli the, the top liv function.
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what they are monitoring is the core, which is underway with management. they have just started taking questions and this could contribute to the positive turnaround we have seen, and a citigroup notes which has just dropped, talking about the report being impressive. they pushed this out to clients in the last few minutes, and talking about the asia-pacific remaining strong and basically talking about the fact that this was unit is largely offset from the capital increase, one balancing the other out. matt: absolutely fantastic tool, and i highly recommend all bloomberg clients check it out. today, we get details on one of the great driving forces of the trump rally. hebig tareform and reduction will be announced,"
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said the president. it will include a 10% levy on the earnings that u.s. companies have stockpiled offshore. the plan is also said to include cutting the top income tax rate on businesses to 15%, down from 40%. the plan is also expected to include a 15% top tax rate for corporations. still with us is anything -- is -- is manish stephanie, who benefits the most from this trump tax plan? it is more about the corporate side. think, youyes, i know, it depends on what is included in the final plan, of course. if this 10% tax on repatriated profits is included, you will see some big tech firms benefit.
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we do not know. it looks like trump's proposed order adjustment tax is not going to be put forward later today. that was opposed by big retailers for instance. however, the cut in the toporate tax rate from 35% 15% is expected to benefit retailers who have not been able to benefit from a lot of the deductions that other big corporations like utilities or energy companies have been able to exploit. it really depends on the details. what is he including here? and if the border adjustment tax comes down the line in a few months time, then retailers can be hit again. matt: let us talk about balancing the books. guy: can the books the balance, can this be paid for? that is a big issue for the republican party. it is a huge issue. stephanie: until this issue of the tax on repatriated profits came up, it looked like he had no plan to pay for this massive tax cut.
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and that they were talking about -- it would be paid for by increased economic growth. a lot of people were doubtful of that. exactly. this caps on repatriated profits could pay for some of it. maybe not all of it, and it depends on how much gets repatriated, but that is going to -- you will face an uphill struggle in congress with members of his own party, who feel liket hawks and this plan could blow up the deficit. matt: is there a plan, stephanie, the kind of reduce loopholes at the same time as they lower the corporate had straight? corporate tax rate. we all know they had a relatively high corporate tax rate compared to other nations on paper. most big, intelligent corporations don't and up paying nearly as much. what they actually have to pay a 15% tax rate? stephanie: like i said, i think it does eliminate some of the loopholes so interest payments,
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that is one of the big loopholes that appears. he's considering closing down. it would affect a lot of energy and utility companies who have a lot of debt. retailers have not benefited from that. it could level of the playing field in many respects. he's also looking at closing down the loopholes for individuals as well. allowing people to increase their standard deductions, but that would block them from deducting their mortgage interest payments, for instance. a lot remains to be seen. his campaign promise was to simplifi the tax code and that widespread support. he has not reached out to members of the democratic party to get partisan consensus on this. that will be a big problem for him. manish singh is going to
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stay with us. stephanie baker, thanks very much for talking is over with us. i know it is difficult when the plans are not really out yet. we have only got a rough outline through the question is of course how much are we actually going to get from president trump today? what do you expect as far as how much we are going to get from the president today, how much actually gets put into action? so, as stephanie mentioned, if republicans are deficit hawks, we have to see how this gets funded. if there's going to be eight tax cut which is temporary, people are going to be excited about it. this money has to go somewhere. it has to go into the market and people will be excited about it. if you have a sunset clause and it is not going to go on for a longer time, there is not a structural tax overhaul that people have been expecting. i would also say that i am
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looking at how he is going to ease the tax burden on small businesses, because that is really where his focus and gdp that he talks about is going to come from, so i would be looking for that detail in his plans, his incredible tax plan, which we are going to announce today. guy: as far as being out of farmers -- if we were going to get this report creation, homeland 2.0, to the banks massively out of him again? do you want to be involved in technology? they have huge amounts of money overseas. if they bring that back, and they could go back in, they are going to get -- you cannot absorb that kind of money. you have to push it somewhere. you are not going to push it into investment. you are going to put some of it into returns. how does it work? no-brainer? you to look at what happened. they valued 14% this year. financials, 2.5.
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they had all the rally last year. theink you could still have rally, and of course, valuations will become a question, but again, you come back to the same thing that if it leads to a better gdp growth, then you will still be with the tech stock along with the amazon and googles of the world. valuations may get stretched. we will have the tech earnings to see how they are performing. there is the risk of them getting overstretched, but you cannot not be the leaders. guy: how do you keep the momentum going in the states? the momentum indicators are starting to return. you are not going to get across-the-board gains. theyou are going to be -- market is going to think very specifically about where it is. you have seen that over the last few days. if the structure is coming. he saw what the stock did yesterday. where do i need to be in the states?
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it will be a relatively small group of stocks to keep this rally on the road. manish: absolutely. if you look at nasdaq, five stocks have delivered most of the earnings through this is not the time to be an etf. you have to be a single stock because they are not going to outperform. whenever you have earnings season, you would rather be in stocks than by the whole index. i would say you choose your financials. for me, it is bank of america, financial stocks, jpmorgan, crm, technology stocks, google, amazon. industrial stocks, you have to look at some of the basic stocks also, which got hammered a lot. if you build up a basket, based on single thought names, -- stock names, you're going to perform better than the index. for what he is saying about 10% repatriation tax and money coming in to the u.s. economy, clearly, that is going to be a stimulus provider.
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all right, manish singh, cio at across bridge capital, staying with us on this very important day. it really appreciate your time. if you are a bloomberg customer, you can watch the show using tv . you can participate in the conversation as well as watching the video stream here on the interactive tv panel. you can also listen to bloomberg radio. for example, guy and myself will be doing a show on bloomberg radio in just about 20 minutes time. and you can see the and coverage as well to read for example, later today, theresa may is going to answer questions from lawmakers. you can click on tv to watch that kind of thing as well. guy. guy: i want to come back and talk about what is happening with credit suisse. let us have fun with the charts. this is the one your performance versus the stoxx 600 banks index. you have seen underperformance. what you are seeing today is the exact opposite of that. banks are on offer this morning
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in europe. that is the blue line. credit suisse is well bid. a good day for tidjane thiam. that is an important milestone for him personally, i suspect. we will have more on that story. you can follow the earnings story that is happening right now. tliv. this is bloomberg. ♪
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guy: welcome back. you are watching the open. let us talk luxury. nejra cehic, over to you. nejra: i'm starting with kering, where stock has surged to a record high. stellar performance from gucci helped first-quarter sales surge beyond analyst estimates. we have seen the stock price as much as 11% in today's session. since octoberin 2015. we are at a record high, as i said. pretax in line. first-quarter net income beat the bit and maintained its outlook, so it hid it highest since august 2016 and we have seen the stop right the most since april 2016 at one point in the session. ide, revenuethirds rising tempers and. they put out a note saying implied single-digit since growth, a constant currency in the first quarter, is "a disappointment against easy comparisons from a year
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earlier." we have seen shares down 4%, dropping the most since october 2016. guy, matt? guy: thank you very much, indeed. here is sophie kamaruddin. sophie: thanks. santander benefiting from the return of stability to brazil with a rising real. the biggest banks say net income rose to 1.8 7 billion euros, beating estimates. profit from brazil, its biggest dropped 77% from a year earlier after the president boosted the economy following the impeachment -- french presidential candidate marine le pen has sought to soften her position on europe. speaking on the country's most-watched television station, pinned pen refused to be down on whether she wanted to leave the euro, a position she
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championed in her campaign. she used the appearance to attack rival macron. a san francisco judge has barred enforcement of president donald trump's executive order, withholding funds from so-called think very cities that fail to comply with federal immigration demands by shielding undocumented immigrants. ruling could reinforce similar of the nation's capital's cities including new york, los angeles, and chicago. it is another blow to trump's call to crack down on those living in the u.s. illegally. powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. guide, matt. , matt. matt: credit suisse has beat its highest estimate on the street. the bank aims to raise $4 billion in an offering and has abandoned earlier plans to launch an ipo of its swiss business. shares are getting this morning. 3% there.
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francine lacqua spoke to the credit suisse ceo tidjane thiam earlier. >> i'm cautious because it is the tale of two cities. [indiscernible] >> it is very pleasing for us. not ahonest, april was great month in the markets because of the uncertainty of a french election. we saw that in reverse in the rally monday. there may be a normalization, but we are cautious. we had very strong tailwinds. issuance was enormous. 54%. this year, up 90%. spreads.ow people have issued a lot of debt. in the first's
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quarter, so those conditions were very favorable. they may continue or may not continue, so we are just -- we are always cautious in our effort. >> i know that very well. talk to us about cost cuts. where will you lose jobs? >> we are making good progress. just is not it is to make the bank more efficient. in austin involves job cuts. we really focused on the non- complex expenses. we insisted a lot on how we are cutting with nonpersonnel, non-staff. we are well on track to hit 18.4 billion we gave at the end of 2018. we generated -- we need to generate savings. we are just on track. thiam speaking to francine lacqua. fantastic performance along the
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stock as well. underperformer the last few months. the market this morning seems to be applauding what has come out of this business. you can certainly see that very clearly on the share price. you can see it coming through. this is the blue line the stoxx 600. things index. as you can see, this is coming down. cs initially dipped, but seems to have popped really sharply. the analyst notes, really quite strong this morning on the back of this rich strong outperformance. this is the last three days. strong performance now overtaking. that is vertical because tidjane thiam at this point in time, until this point in time, the bank was largely underperforming in the wider banking sector. maybe today starts to address some of those concerns and we start to see that our performance. this is the last month you can see the bounce we saw monday as a result of what happened in france. cs did not deliver quite as much
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on that day, but it is this rally here that has allowed those two lines to cross. now in ay cs, performer. outperformer. matt: daimler raised its earnings forecast. what is the outlook for the sector? haslinda amin is with the chairman, carlos ghosn. haslinda? that is that southeast asia will contribute to that growth going forward. , a growing people middle class. aspirations of wanting to own a car. given the uncertainty in europe, given the possibility of a hard brexit, given the possibility of over negotiation of nafta, asia makes sense. carlos ghosn, are you excited by
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what you saw? what is it you saw that made you excited? know,: first, as you there is a growing economy in many countries in the southeast of asia. on top of it for us, there is a very low level of modernization, something i can go up. i was in indonesia, which is hitting one million cars per year now. no more than 50 cars per 1000 residents. president, we are 10 times as level. states, 15 times this level. you can imagine our excitement. we need to make cars which are adequate for this market. affordability is an important issue. market continues to grow. haslinda: what targets my you have. toyota is leading the pack with over 30% market share. carlos: obviously, for us, as a group, when i count nissan and mitsubishi, we are still small
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in the southeast of asia. it is subsection. market shareng 30% in the region, i would be worried. ,hen we are around seven or 8% particularly knowing all the , thects we are bringing target is doubling our market share. we have to take the time to do it well, but without any doubt, i see a potential for doubling our market presence in the southeast of asia. haslinda: when you take a look and,ighland, both -- thail both have factories here. would that be specialization? what can we expect? carlos: without any doubt, on the midterm, long-term, you are going to see not specialization but rationalization. you are going to see ross manufacturing between the plants because the whole beauty is to avoid the petition. maintaining the brands separate,
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maintaining the products separate, but avoiding doing things twice, on -- avoiding investing twice. you may see more cross manufacturing between the plans of nissan and mitsubishi in the region. haslinda: mitsubishi is a more popular brand in this part of the world. can you see perhaps brands being rebranded as mitsubishi like the likes of -- could they be rebranded as mitsubishi? carlos: we do not like cross badging in general. we do it fairly, particularly and someercial bankers specific markets. even if we take a product which , we willon a platform at that the design and make sure it is a mitsubishi car, not a car branded mitsubishi. i'm not saying we will not do it, but it is rare we do
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something like this because we want to keep the integrity of each brand. haslinda: are there plans to wrap up production? because 2016, last year, all your three brand put together produced just on a 10 million -- under 10 million vehicles. gw, volkswagen. what will you be doing to overtake your rivals? carlos: i do not think overtaking arrival at this level, it doesn't make any sense in terms of business you what is important is that you are at the scale of 10 million, which means that nobody has an advantage on you. the difference between 10.2 million is not something which eggs sense from a business point of view -- which makes sense from a business point of view. we had to make sure we are using the scale to make ourselves competitive. if we got up top automotive groups, it would be a satisfaction, even though we are not going to dedicate too much attention to this 32017, the three companies are going to have significant growth.
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haslinda: i want to touch on the french election. renault is a french company. macron presidency, good for europe? your thoughts on that. carlos: the election is not finished, so we do not know what is the next president. you have to be careful. it is not finished. and a couple of weeks, we know the new president. what is important is not only the next president, but what is the assembly that will be elected after the presidential election to see what kind of government is going to come and what is the program. haslinda: you said anti-globalization sentiment is bad -- carlos: without any doubt, business people favor open trade, open border. large companies consider that the planet is there market. anything which facilitates flow of products, flow of people's favored by large companies, without any doubt.
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without talking about any particular candidate, because by definition, we did on take any position, we obviously go for globalization. haslinda: we have to leave it there. there you have it. the man himself. heading back to you. ♪
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francine: credit suisse scraps plans to sell off part of its swiss business. will it ease concerns about the bank's capital leverage? the president is said to be planning a 10% charge on cash u.s. companies have hoarded abroad. the dollar rises. and, brexit battle. teresa may prepares to host juncker. how aggressive will she be? good morning. this is "bloomberg surveillance ." i'm francine lacqua in zurich,


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