Skip to main content

tv   Bloomberg Daybreak Europe  Bloomberg  August 23, 2017 1:00am-2:30am EDT

1:00 am
trump threatens a shutdown over his border wall. the president said he might terminate nafta. president trump: they have made such great deals, both of the countries but in particular mexico, i don't think we can make a deal. theresa may accepts eu law will influence the u.k. after brexit as she seeks to accelerate divorce talks. anna: the president addresses economists this morning. will he get away anything ahead of jackson hole? manus: hong kong trading is
1:01 am
s thended at the tycoon hit financial house. ♪ anna: a warm welcome everybody to our flagship show here. donald trump has finished speaking in arizona. much more about his threats on nafta, his threats about a government shutdown in a moment. --re is one market which is not even quietly roaring away. nothing quiet. digging industrial metals out of the ground or the industry. this is the industry metals index. a limited, copper, nickel of 30% -- aluminum, copper, nickel up 30%. if you are along the subplot here which is energy and the
1:02 am
commodities, relative to the base. addicted to base. this is about the global recovery. aluminum is capping the longest weekly rally in three years. this is the one to be in. anna: interesting research talking about the skyhigh steel prices. the divergence we are seeing between these base metals and presaged metals -- precious metals. donald trump has been talking in arizona. let's show you what that is done to u.s. features. it has come off the high from earlier during the session. o typhoon closing networks in hong kong. nasa may end. the wall, they will build it.
1:03 am
really against the media, defending his handling of charlottesville. off adds jitters, a risk sentiment. this, the question is nafta hot air may be an excuse for the market to take money off the table. whatever way you cut it out, look at dollar-mexico. the talk about a war, his ability to close down government and get the wall has moved the mexican peso lower. theseestion is are promises he will stand by? anna: how much action will we see behind these comments something -- comments? in relation to those comments around nafta, the wall, the shutdown coming through from trump. we will focus later on mario jackson hole. will he give us insight into where his thinking is?
1:04 am
manus: one of the key questions in germany. juliette saly -- questions in germany. manus: juliette saly has your news. juliette: financial restrictions on north korea after it slapped sanctions on russian entities, assisting pyongyang's ballistic missiles. rex tillerson said it north korea hasn't carried out provocative acts the security council imposed new sanctions on the country, saying restraint might lead to negotiations. repudiated heras party as being of service. -- obsess. -- obsessed. in an exclusive interview with bloomberg, merkel's chief of staff says germany has interest in preserving the scandal in the diesel automotive's industry.
1:05 am
>> i am optimistic we will overcome this and the german industry will come out of this situation as stronger and safer as it has been before. anna: the uk's prime minister has conceded that european law will influence britain after brexit. theresa may declaring the country would take back control of laws and bring an end to the jurisdiction of the european court of justice. the government will say it is seeking to escape the fiction. accelerating divorce talks. trading on the hong kong stock exchange has been suspended as authorities announced the highest level storm warning for the first time in five years. blasted witho heavy wind and rain. hundreds of flights canceled,
1:06 am
trains canceled and all schools are closed today. global news 24 hours a day powered by more than 2700 journalists and analysts in more , you can findries more stories on the bloomberg at top . checking in on the markets in asia, of course, we mentioned hong kong has been closed today. .3%nikkei will supported by as we have yen strength coming through. stocks pretty flat, down a quarter of 1%. bytralia's asx 200 is off .2%. your business as we heard donald trump speak. the kiwi is lower today after the government cut its gdp forecast. toshiba doing well. report thatsmiss a it could be close to clinching a deal with western digital. that would help out toshiba's finances. , it saw a profit
1:07 am
fall 39%. warning of more ahead. sending share price down by 15%. this is singapore's largest taxi company rallying on reports it is in talks with uber to form a partnership. we are talking about the rally in commodities. manager out there has warned about these partying markets and is starting to short a lot of the middle stocks in anticipation of what he says is flowing economic growth in china. china asset income starting to fall with retail sales. manus: thank you very much. rally in phoenix, donald trump threatened to shut down the mexico border wall. president trump: believe me, if we have to shut -- close down our government we will build
1:08 am
that wall. let me the very clear -- let me be very clear to democrats in congress who oppose a border wall and stand in the way of order security. you are putting -- border security. you are putting all of america's safety at risk. trump has: --anna: asked for $1.6 billion. addressedent also nafta saying he might terminate the trade agreement at some point. manus: s&p futures flipped as trump spoke. the mexican peso weakened in the risk radar. s kathleen hunter. the threat is now -- the s&p futures turned on this. the threat that he would propose a government such down -- shut down if he does not get the money for his wall. how real is that threat? quantify the slim pen.
1:09 am
anna: we should point out william. as we were on the conversation about trump. upi think it really sets even more fraught diamondbacks -- dynamics when congress returns. they will have a short. of time -- a short period of time. they don't return until after labor day. they have three weeks to get this done. helping himself. he is going to need the help of , and hasns in congress been in a feud with the senate majority leader. he recently was taking aim at the arizona senator's john remarks inhis phoenix. a difficult situation. congress does not do well when they have a short amount of time to accomplish a goal. this raises the stakes. anna: what are the chances congress gives trump what he
1:10 am
wants? >> democrats have been pretty clear they are not going to. willbeen very clear they not accept any kind of funding for a border wall. himself inxing because now he is in the position of either having to back down and look weak, which he does not like doing, or press ahead and potentially have a government shutdown. in the senate at least there is not going to be -- they would need 60 votes. definitionally you will need democrats to support it. he has painted himself into a corner. my apologies for you from my side. -- should markets really be there was a momentary move in mexican peso. there was a move in the s&p. but this is a bond market issue. this is about funding the united states of america and the markets have begun to position
1:11 am
at the short end of the curve. -- rather than a default. small matter of 18.7 trillion which is more than a bit night out. manus: depends on who you go drinking with. >> even by your standard. every time the debt ceiling fails to be raised it sends smells of recession and equities tend to sell off. because it is not been so raised -- raised in so long the ceiling cap.theoretical actual debt has gone ahead and are approaching 20 trillion. they need to raise the bar to confirm what they have committed to. the concern i have is something that is now coming back. protectionism. manus: that is the whole thing in nafta. we had this conversation with -- stephen saying
1:12 am
trump will want a major overhaul of nafta. here we all again -- we are again, quantify that risk. we have been here before. is he boxing himself in? seems to like to draw these lines in the sand on issues. he went to arizona to talk about immigration and he brought up nafta, the border wall obviously. huge rake in the sand on that. -- he drew a long line in the sand on that. to kind of draw these bright lines, i think it creates some uncertainty and faculty for lawmakers who have to work with them because they are not sure what decisions will be from day-to-day. anna: kathleen hunter joining us.
1:13 am
president trump speaking in phoenix. let's talk further about the united states. we turn our attention to the fed. i know that you are very much focused on the unwinding of the balance sheet and how the unwinding may mean we don't see quite so many hikes in interest politically. that would make life easier for the fed. twot would, there are reasons why the fed does not have to go as hard as many suspect. even janet yellen suspects. first of all, you can take that off and go to dot. what else i live in life to do? it waslast time i saw the fed currently sees u.s. rates going to a peak of 3% and is staying there. for what it is worth, they are trying to push on the other leave.
1:14 am
they are about to reduce the $4.5 trillion balance sheet. what does that mean? there is a trade-off. by pushing harder on the balance sheet they can push less on interest rates. look, back of the them a the nice people back in 2011 told us about the trade-off. $600 billion back then was equivalent to taking off 75 basis points off interest rate. the interest rate was only 0.25. assuming it works the other way around we could say that we have over one trillion. the fed is proposing to do in a , akin to 130g basis points. by pushing on the other lever they can take out five extra hikes. anna: different parts of the economy but yes. manus: where do you go? in theory, where the market rate
1:15 am
some 4%e right now just is where we should be. you are saying we will end up nowhere near that? >> absolutely. the rule has been useful in past cycles but this is a different cycle. what of the taylor rule does not take account of is the balance sheet, the qe stock. osco this a fiscal -- also the fiscal position. wayou factors those in any -- in a way, way lower than the approaching 5% taylor has been suggesting. most of the members who want to peek out are ignoring their own rule and that is just as well. anna: how long do you think the tightening will take? you have some lines in your research, the pace of it, unless it is accelerated, 2023.
1:16 am
this is quite a long time. you don't know what the strength of the economy -- if you are equating to interest-rate hikes -- you don't know what the economy is going to be. >> you can't blank. it will be like watching -- you can blink. it will be like watching paint dry. 2023 untile until the get back to normal. normal is a matter of $1 trillion. by the end of the next presidential term you will have a new government by then. this is a slow process. what it does. what it does. next term. the sorry, all right. >> a different time. but nonetheless, the value is that it just removes some of the extra urgency if there is any to add in the next year or so. manus: william stays with us. the group chief economist. anna: base metals rising.
1:17 am
citigroup raising price forecasts for markets as john implements reform. this is bloomberg. -- china implements reform. this is bloomberg. ♪
1:18 am
1:19 am
1:20 am
♪ it is definitely typhoon time in hong kong. you have the markets closed. that is pretty severe weather in hong kong. a pigeon. hna: wreaking a lot of avoc. let's get a business flash with juliette saly. you.tte: thank u.k. companies are getting more worried about the economy. feeling less confident in spending money or hiring or investing.
1:21 am
an index of economic conditions has fallen to the lowest levels this year. although the looking to hire, confidence has diminished. coldwater on the process of fiat-chrysler. there are no talks between the companies and it may not pursue a takeover of the jeep division. commenting one day after expressing interest, there are big uncertainties whether it will continue to study fiat-chrysler. john watson who has led chrysler's is 2010 is reporting to step down. with theople familiar matter, the company has not yet made a final decision on a successor but michael worth is seen as a leading candidate. an announcement is likely to be made next month. top apron has lost the
1:22 am
human resources executive. a temporary hiring freeze of salaried employees and firing half its routing team. -- recruiting team. on augustinternally 10, the same day the company decided to halt the hiring of salaried employees. the move comes just as lou apron ramps up a new fulfillment center to help the troubled company expands. -- expand. manus: thank you very much. let's talk to the hermes investment management. we talked about addicted to base. 2051. this is the industrial metals index, up by 31%. if you on aluminum, copper, nickel, zinc him a you were off to the races. a lot of people trying to join this global truth. -- growth. the growth trajectory of china is something that i suppose underpins a lot of this rally.
1:23 am
does it underpin hope for you? china can slow within degrees but the bottom line is that china can grow almost as quickly as it wants to. there are levers china can pull. infrastructure spending, agricultural subsidies. they are aiming to grow 6.5%. so the 2010 gdp level can double by 2020. if they need 6.5% in the meantime, they do that. certainly they don't have the momentum that they had if you look in the range of indicators underlying freight month etc.. china is not growing in the private sector by close to that. the thing that worries me slightly is things, if they change, will be after this awesome because autumn is a important time. he does, he will solidify his position all the way through 2022.
1:24 am
that is when the policy landscape may change. what might happen? -f it comes down to the word - p word. if trump imposes protectionism without congressional approval through 301, china will retaliate. she will be free to act and the main pressure release for china is to let foster. manus: what exactly is that? >> for the viewers nodding off, it is legally -- [laughter] it is section 301 of the 1974 trade act. anyh apparently allows president of the day to impose trade sanctions against a deemsy he or see -- she to be against the actions of the u.s.. during the campaign president trump pointed his finger at
1:25 am
china, mexico, 45%, 35% tariffs. hasn't gone away? -- has that gone away? tois now increasingly going punch with the other fist. overseas. election,n-up to the the way that the u.s. power can work overseas to a greater extent than it does at home sometimes. a president can have more influence over see them at home. we saw you talking about the commodities market and went on to talk about china. citigroup talking about still choices through the roof -- steel prices through the roof. global central banks are dealing with a low-inflation environment. with this kind of boost to inflation not necessarily where they wanted to come from or a will take any inflation -- they will take any inflation? >> the economic recoveries we
1:26 am
have had since then have been output driven. a have not been inflation driven. central banks now have become creatures that actually crave inflation. different to the past. if we get commodity price, that is going to raise headline inflation rates. do central banks tighten harder on the back of their sacred inflation -- targets being met? i doubt it. we would have a competition of higher inflation of people feeling that more in their pockets then central banks tightening harder. manus: put the word balance sheets in context. that is the risk of what we have eventually being taken out. the4 trillion in terms of big four central banks. one and a quarter times the size of china's economy and three-quarter times the size of the u.s.. slowly. thank you.
1:27 am
the group chief economist of course. manus: up next we talk mario draghi and his speech in germany today. what could it do to markets? this is bloomberg. ♪
1:28 am
1:29 am
got you outnumbered. the dinosaurs' extinction... don't listen to them. not appropriate. now i'm mashing these potatoes with my stick of butter... why don't you sit over here. find your awesome with the xfinity stream app. included with xfinity tv. more to stream to every screen.
1:30 am
♪ anna: welcome back everybody. over in tokyo, the dollar-yen as trump pushes a few of those markets around nafta, the war with mexico, his -- the wall with mexico. asian equities off their height of the session and drove a few investors into the hands of the japanese currency. -- nara -- j pitch >> listless is the word i like to describe it. pretty flat overall.
1:31 am
tech stock leading the gains with utilities and materials over performing. a little strength in japan, part of that down to the weaker yen it yesterday. we saw the dollar gained against the yen yesterday. some of that driven around hopes in tax progress in the u.s.. a technical chart of dollar-yen, the dollar weaker. 109.48. here it is showing the dollar-yen spike above the coup --oup -- ichiro taking a look at wti crude. we are below $48 per barrel. 48.73. we got that data yesterday but basically crude it seems to be falling on signs that gasoline stockpiles expended. we get the data later. the expectation is we saw in
1:32 am
inventory and gasoline stockpile drawdown. that will be a driver for the price. belowand brent holding 72. manus: here's the new edition of daybreak. you get it on the telly, bloomberg.com. let's look at the top stories making the edition. theresa may looking rather reflective with a gavel of justice. we are talking about the potential for the u.k. to optimize mise over the u.k. court of justice. theresa may has conceded that the eu law will influence the u.k. long after brexit. of a tone frome seven months ago when she invited that the european court of justice jurisdiction was something they wanted to end. the five papers being released, some analysis on that.
1:33 am
the next story this morning, u.s. sanctions. sanctions on chinese and russian businesses and individuals assisted north korea's the listed muscle program. urged the u.s. to immediately correct its mistake of punishing its nations. manus: the story on daybreak about the typhoon. hong kong is being lashed with gusts of wind of two 223 kilometers and driving rain and storms expected to peak in the afternoon. the hong kong stock exchange has been suspended. what did we learn about the typhoon? anna: the japanese word for pigeon. the german chancellor angela merkel has hit back at her party being obsessed with debt at a rally in the city of monster.
1:34 am
her budget record is a act of generational justice. i don't think that is defending a reputation. manus: an exclusive interview with bloomberg, merkel's chief of staff has germany has an interest in preserving the scandal in the auto industry. >> i am very optimistic that we and that the this industry will come out of this situation stronger and safer than before. matt miller, good morning to you. where does germany stand with ?ts diesel issue 30 topical during the election. where have we got to? matt: sony people have been
1:35 am
suing munich and dozens of cities around germany for exceeding the legal level of pollution the you you -- eu mandates. diesel now that these cars spew out more nitrous oxide in the real world than in laboratory testing. germany has to deal with this because of lawsuits. the election has made it a bit of an issue so far. now ashey stand right they have already had one diesel summits. they decided to give money to clean up cities and offer money for old diesel and a software fix. they need a hardware fix to bring down nitrous oxide levels. remember how close the government and automakers worked together. iny employed 800,000 people germany directly and one in for jobs are connected to the auto industry indirectly.
1:36 am
you have labor unions on supervisory boards. germany sotant for they cannot just shut it down. important.s not just it is integral. part of the fabric of society in germany. where does it rank in the menu? the issue for the election? where does it rank? it could be the number one issue. it could be difficult for the party to disagree on too much because they both obviously are in government. they both have been in power together while this diesel scandal has developed. voters want to see cities clean. obviously germans are anti-pollution. very green. on the other hand they want to drive these cars they have all lots. 80% of german cars that leave the lot are diesel.
1:37 am
they pay the money, they don't want to these cars and in the cities where they live at that leaves the voters in a bit of a conundrum as well. anna: matt miller joining us from berlin. the chief economist is still with us. the campaigning around the german election, car industry is one of the topics everyone is talking about. another one is around that levels. this ties into your field of vision. angela merkel defending her party reputation on debt yesterday. talking about it being a generational justice she is trying to deliver on to not increase debt levels. >> german governments have never been keen on debt over the next 4-5 decades. maybe this is her way through the german electorate getting through to macron. a wide budget held by a finance minister which really is enough to keep german policymakers
1:38 am
awake at night. them, will be back toward mutual issue for bonds and get sharing which clearly germany -- anna: during the financial crisis, european structures. they could threaten to become something bigger but that issue is a corporate issue. >> we went further down the path then-president would like germany to have gone. i guess they may be happier because we are inching our way towards the ending of qe. i'm not expecting much from jackson hole from mr. draghi but nonetheless he may start to use himself the t word. we may learn that for next year. anna: somebody will tell us no doubt. manus: baby steps. guest last week, the united states -- the implement rate and inflation combining. this is the european misery
1:39 am
index. i have taken index of your note. the higher the misery index, the greater the expectation of economic hardship. if you are a trend tracker that trend is down. less misery. that changes the heartbeat of the ecb? >> i have a flight problem with that chart. indices simplyy add inflation to an appointment. what happens if you have deflation? that suggests happiness. i'm not sure that those in dublin who faced a pay cut or property price cuts would be very happy about that. i would put together and adjusted misery index which, having said all that, is the same thing. anna: adjusted misery. the level suggesting of misery, or if you prefer the level of happiness, is now in the best position it has been since the start of the euro project. more importantly, the divergence between the core and the peripheral members of the eurozone, that convergence is
1:40 am
equally the best it has been since 2007. since before the worst of the crisis itself. it adds fuel to the argument that mr. draghi seems to be leading. inflation is yesterday's problem and he may review policy. manus: you would make the point that the rise of value could be an obstructed force for the productivity gain. >> the underlying -- manus: it's could threaten. >> mr. trump he could do bucket loads of qe which addresses the symptom, inflation. surely,rlying problem, is that the eurozone is a monetary union without enough economic union. in that the countries that joined the euro or simply to disparate and found out later when greece had debt problems that they were so disparate they had to help each other to stay in the club.
1:41 am
far better had it have been if the original 12 members had passed the tests. i don't know if you're a member those. back in 92 there were perfectly good test for countries to have to pass to join. do your member how many actually passed the tests? manus: a number of them did derivatives to fudge it. >> three of the 12. the monetary union made little sense. they found out later there were problems. that is what mr. draghi has had on his hands since then. anna: the divergence has increased since then? >> the idea is every country becomes germany innocence. anna: oh, you are upsetting people in paris. setnce those tests were they offer discipline. the countries suddenly got their acts together and became more german with respects to all countries involved. theythey were in the club
1:42 am
stopped behaving again and the >> started to widen. it took a crisis for them to start to get their own houses in order. says mr. starkey -- draghi inflation has gone away. definitely. it does set us up for radical change. manus: the queen of charts put this together. where rates should be according to the theory of where we are. in germany you could potentially be facing another rate of interests, 7.25%. if we were all one big homogenous earth. this is the challenge for draghi. a change in rates and reducing quantitative easing. one of chart highlights the many anomalies within the eurozone when countries are so disparate. one glove does not fit all hands. the country's running deflation, the high unemployment countries.
1:43 am
grease, etc., they are the ones who have the least generous interest rate. whereas germany has been growing faster, and's of having the more generous interest rate. that sort of paradox is embedded within that fixed rate. unless countries become more like-minded. more like germany and france. not to upset too many viewers. work on thesome finding home prices. even places that do have inflation. homegrown banks. we don't have time to talk more about that. staying with us to discuss all things u.k.. manus: that could be a chart in preparation. get your boots on. we will be in surveillance in that conversation and in that
1:44 am
show we will have the economist at princeton university. the chief investment strategist at anderson investments. anna: a famous economics model. the u.k. seeks to take back control of its laws but not quite as much as before. we will preview the government's on the european court of justice. this is bloomberg. ♪
1:45 am
1:46 am
1:47 am
♪ manus: 1:47 a.m. in the city of new york. s&p futures down. usede the wind that you which is a button. donald trump is pressing the buttons of the market. talking about getting out of market -- nafta. perhaps threatening not to do the budget extension in the autumn time if he does not get the money. a government shutdown if he does not get the money for his wall .
1:48 am
all of the markets are taking heat. anna: he has been talking about the media. a rally in arizona. now he is on twitter. not only does the media give a platform to hate groups but finds a blind eye to the gang violence on our streets. trumpunding more like the we have come to know rather than any kind of trump reset that may have been an expectation around arizona. andelieve that one there get a business flash with juliette saly. thank you. u.k. companies getting more worried about the economy and feeling less confident in spending money for hiring or investing. saysecruitment employment it has fallen to the lowest level this year. respondents said that although they are looking to hire, their confidence has diminished. water on fiat
1:49 am
having chrysler, there are no talks between the two companies and it may not pursue a takeover of the italian-american jeep division. came one day after expressing interest. there are big uncertainties whether it will continue to study fiat having chrysler. that is your bloomberg business flash. manus: thank you very much. to concede the european union union law will -- anna: london bureau chief joins us in the studio. the chief economist is still with us of course. a very good morning to you. this is fascinating because the bloomberg story here suggests something of a compromise.
1:50 am
constructive tone. some flexibility in the u.k. approach here. how significant is that? >> the key word is direct. theresa may before had always said she wanted to get rid of any jurisdiction of the ecj. that was something the partyexit -- pro brexit or about. anna: october, 2016. at the conservative party conference. we're not leaving only two return to ecj. now they are talking about direct influence. it leaves enough wiggle room to get some kind of copper mine is. -- compromise. as you know norway has single market access and the esther court basically takes judgments from the ecj. they are nonbinding but that is a compromise.
1:51 am
perhaps you could argue that the eu would find that acceptable. this is important because on the one side the ecj is taboo. to the eu for trade deals or the transitional deal, arbitration is crucial. isus: the essence of ecj even if they want to the model as you explained, the roots of those laws and rulings come from europe. bloomberg has written it as being the distinction. here's the front page of the sun. the eu can't lay down the law. assigned theresa may -- a joint run panel. it will refuse the demands. this is an interesting pitch to the hard brexiteers, the core brexit voters. anna: the daily mail front page, not running with this story.
1:52 am
the royal story instead. >> government will be pleased with this headline. theresa may probably is not going to be headline -- pleased with headlines that say this is a climbed down or compromise. her role is very difficult. negotiating some kind of brexit that is not going to destroy the economy and keeping those pro-brexit of her party onside. he has sort of said if there is no direct jurisdiction that could be acceptable. it?s: it's a nuance isn't the group chief economist, we are down to the distinction. the direct jurisdiction. it isis as anna suggests, a shift to get on with the brexit negotiation. would you applaud this kind of nuanced shift?
1:53 am
>> i would welcome it but i am concerned after being in the parks or lounge -- departure lounge for six months, we are on a far longer journey then many expected. the conservative part of the government said it will be done and dusted by the next scheduled election in 2022. he is extremely optimistic. i fear it will take seven years or so to get close to square one. what is behind theresa may's thinking when it comes to the court of justice is also the position of the financial center in europe. a good deal, three quarters of our foreign-exchange trader through london, two thirds of bund trading goes through button. allowed only by the european court of justice that allowed us to hold that and for its not to go straight to the jurisdiction of the ecb.
1:54 am
we can stick two guns but there will be a heck of compromises. negotiationsk of -- if this does prove to be enough progress on divorce those that examples, allow things to move on to trade ? he priorities being the divorce issue. some of theake away pressure on a couple of those but is this enough progress? >> we will see. we have not heard reaction on the eu side. certainly the last round of talks when they were talking about rights, the ecj was very clearly a stumbling block. the ecj kept coming up as a stumbling block. if there is room for a cover my's perhaps it does accelerate things.
1:55 am
said, very clear that he does not expect trade talks to kick off in october which is what the government wants. these discussions, these nuances have a material impact in terms of what we have for you here. if the recruitment and employment federation are taken at one of the best known indices , it is showing it has fallen to the lowest point this year. respondents are saying things are getting worse. so --confident in doing their confidence is diminishing. if you're saying to us seven years or several years to get back to some sort of normality, is that a foreboding chart for you? >> is a very good charge. i'm not shocked that things have held at reasonably well.
1:56 am
it was only three months ago we started to talk about getting out. we are far yet from getting out itself. there is no immediate impact consumers -- impact. consumers buy carpets and companies supply them. that, it seems, a lot of that will be put on hold until things become clearer. for what it is worth, policymakers like the bank of england already factor into what isrecast you ultimately seem to be date before we leave. anna: thank you both very much. investment managing groups chief economists. thank you very much. talk: we are going to about the mexican peso, s&p futures, we will talk, i suppose, breaks down what this latest speech from donald trump
1:57 am
means for markets it when he talks about the wall with mexico. the desire to jump out of nafta. anna: live shots of hong kong. a typhoon making landfall in the last few minutes. ♪
1:58 am
1:59 am
2:00 am
mass: government trump's friend they government shutdown over his border wall. the president said he might terminate nafta. >> we have been so highly taken advantage of, they have made both of theeals, countries but in particular mexico's that i do not think we can make a deal. accept thesa may eula will influence the u.k. after brexit as she seeks to accelerate divorce talks. manus: draghi's warm-up. addressing nobel economists. will he give anything away ahead of the jackson hole? anna: the hang seng, hong kong
2:01 am
trading is suspended as a severe typhoon hits the financial hub. tonus: you're welcome bloomberg daybreak: europe. i am manus cranny. anna: i am an edwards. we're getting numbers from world'se, wpp, the largest advertising business giving us their numbers, they are thinking about buying an agency called design bridge. giving us their numbers. it ordered revenue up by .3%. pretax profit up by 124.7%. at headline eps up by 16% 45.4 pence and an interim dividend of 22.7. they're cutting their full-year comparable revenue from zero to
2:02 am
1% from 2%. in march the stock had the biggest drop since the financial crisis. the company projected 2% growth -- cutting their revenue. that could be the thing that swings it. we have not seen a number yet of the impact of the cyberattacks. this is one of the companies that was impacted by the cyber attack in june. we heard from maersk about their impact. rosneft was that affected. be of a one for the market to keep an eye on. what the markets are dealing
2:03 am
with is trying to divide the rhetoric of donald trump and see it -- if it is rhetoric and how it translates into futures. london said to open down by .8 of 1%. all this talk of $450 billion worth of tax cuts imbuing a market rally. the u.s. might terminate nafta. and threatening a government shutdown if he does not get the money to build his what with mexico. those are the disruptive forces we have to contend with. anna: president trump pushing some of those buttons as we did last hour in terms of the themes the markets have been nervous around and the theme of media and the way the media represents him and defending his handling protest.arlottesville let's put up the risk radar and show you where we are expected to go in the u.s. features, the
2:04 am
futures suggest we will be down and that is in keeping with what you are saying with everything we heard from president trump, the end of nafta and the shutdown, all that back in the mix and the peso falling by .4 of a percent. giving more ground. to again theillion construction of the wall. haysis hot air, kathleen said he has boxed himself in. at dollar in his comeback 109.47. the yen strengthening ever so slightly on the nafta warning coming from donald trump. let's have a look at the bond market. london has indicated lower, the rest of europe is paying that isch up and the bund market lower. mario draghi speaking today. what he run the risk of irking
2:05 am
the market this morning ahead of apps the bigger theatrical said he's which is jackson hole? way and are working our getting there slowly. it starts tomorrow officially. let's have a quick look at the bond market. let's not do that. that is why we were talking about jackson hole. let's get the bloomberg first word news with juliette saly. juliette: thank you. the u.s. has tightened its financial restrictions on north sanctions onlapped chinese and russian entities is accused of assisting pound gangs development of nuclear missiles. rex tillerson said north korea had not carried out provocative act since the yuan security council impose new sanctions thing restraint might lead to negotiations over its nuclear arsenal. rejected the has caricature of her party as being [inaudible]
2:06 am
at a rally she said her budget generationalact of justice. in an exclusive interview, her chief of staff said germany has a vital interest in preserving the scandal hit diesel automotive industry. rexam optimistic we will overcome this and the manufacturing industry will come out of this situation stronger and safer as it has been before. the uk's prime minister has conceded that european union law will influence britain long after brexit. theresa may declaring the country would take that control of our laws and bring an end to the jurisdiction of the european court of justice. her government say it is seeking to escape the direct jurisdiction. the climbdown is aimed at accelerating divorce talks but opened her to attacks from eurosceptics. trading on the hong kong stock
2:07 am
exchange has been suspended as authorities announced the highest level storm warning for the first time in five years as a severe typhoon lashes the financial help with heavy winds and rain. many trains and flights canceled and all schools closed for the day. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . trade in hong kong having a look at what we are seeing on the close in japan, the nikkei has had a reversal as we see an upside. australia's markets lower in things are turning around. equities are falling -- following the comments from donald trump which came during the asian system.
2:08 am
toshiba and western digital maybe close to clinching a deal. saying the nikkei news report would help out to chivas financial woes are you health falling thetralia most on record after profits plunged 39% and this company is singapore's largest operator raising reports it is in uber. there is a rally in metals players but one hedge fund manager is saying be wary of these market. about shortingg stocks. you can see a downturn in text investment. the white line is the following china retail sales while the met als index continued to climb. perhaps a warning there.
2:09 am
is a rally in phoenix, president trump threatens down to shut down the u.s. government over the mexico border wall. >> we have to close down our government and building that wall. let me be very clear. two democrats in congress who oppose the border wall and stand in the way of border security. you are putting all of america's safety at risk. in $6he has asked for one billion to begin construction of the wall as congress is under pressure to as a spending bill that will keep the government open after september 30. he addressed after saying he might terminate the trade agreement at some point. manus: joining us now is kathleen hunter covering congress. hetening to the speech, covered a broad church. we will get that while one way
2:10 am
or another. $1.6 billion, it is a heck of a threat but we have heard it before. how much more real is it today? it inen: he said he wants terms of specifically talking about the upcoming debate over government funding, this is the clearest he has been. he is painting himself into a corner as we have seen him do on a number of issues. he is going to need their support of democrats to pass a funding bill, government funding runs out september 30 and something needs to happen before then or there will be a shut down. i do not think this is necessarily the way to get democrats to come on board area they have been clear they do not support a border well and they are not going for funding that and trump is putting himself in the position where he has to week by backing down, he doesn't like to do that or are there is going to be some kind of shutdown. anna: what kind of prospects
2:11 am
that congress gives him what he wants and we end up in a shutdown? think the odds of him having a lot of sway with members of congress have gone down. we saw him in the valley, yet negative things to say about john mccain and jeff lake, the two republican senators from arizona but did not mention them by name. he has spent august fueling feuds with mitch mcconnell and other republicans in congress and that will not help him when it is to be september and he would -- he needs congresses help to pass legislation. manus: the other clanger was the threat to pull out of nafta. we had a variety of conversation on this, some say he wants to tweet that ministers have said he wants a radical overhaul.
2:12 am
this will upset markets quite substantially, he is attacking something that is about growth area -- growth. kathleen: and that is concerning concerning two markets. he wants to pull out and other days saying other things. we have seen this happen where he says one thing and something slightly different. policymakers and people in his administration do not know what the actual policy prescription is going to be. anna: on north korea, another topic that is front and center for investors. we heard rex tillerson on the subject. but that in context for us. kathleen: that is another example where trump comes that with harsh rhetoric and we see his cabinet secretary everyone from james madison -- james mattis to tillerson trying to walk back some of the president rhetoric.
2:13 am
it was notable that tillerson seem to go out of his way to net -- mention north korea and mention it in such a way to dial down the rhetoric that we saw from trump last week. manus: that is something the markets would have favored in absent year after the warning on nafta. fork you, kathleen hunter bloomberg news. anna: s&p 500 futures slipped and the mexican peso weakened. for more on his impact on the -- he washave speaking as we were coming into work. he was still in full flow over in phoenix and arizona. to take the politics into the realm of the assets, our guest joins us now. good to speak to you. let's talk about what we have heard overnight, threatening government shutdown over the wall and terminate nafta at some point, all of this ratcheting up
2:14 am
that kind of rhetoric. we have at this before but we are hearing it again and that matters to trump. >> it certainly does. we were expecting this last year when he won the election and we had the reprieve from it this year. it is coming back to the forefront. it is a very credible threat. right now, trump is really playing his cards, he is focused on the art of the deal, he is clearly signaling the white house is going to have a very hard stance with regards to key issues they are concerned about and sewed it does matter, markets need to take account of all of this. use, they phrase you credible threat, as if one has a traffic warning in terms of the scale of risk. if we are dealing with a credible risk -- threat, as you discuss the speech, what action
2:15 am
if at all would you take? this debt ceiling could be the volatility trigger that everyone has been talking that we have lacked. guest: well have been talking about lack of volatility but it has been an interesting august. what is the ultimate goal of trump and the republican party? compared to the other debt ceiling negotiations or shutdowns we have had in the in 2013. what is different from today? we did have a divided congress. right now we have a republican-controlled congress and right now, there is a name to get some tax reforms later this year. and so we do need to know what is our negotiated start so you are keeping pace with the ability to deliver. say he controls congress.
2:16 am
he will do something on this by the end of this year and others say no. like that word keeping the faith, i am holding on. the controversy we have had over the last few weeks, i am hoping that would galvanize the rebel congress right now and it will galvanize them to make a change or do something. manus: the discussion around charlottesville and north korea, trying to divide what it is that would galvanize the gop. one moment their driving him and the other he is looking -- they are looking his boots. is losing hise approval rating this is the gop congressman up for reelection and it is in their interest. anna: they want to be seen as people who deliver on something.
2:17 am
if it is not a bnc it is the tax matter. thank you very much, we will speak more shortly. manus: coming up. theresa may's red lines fade to gray as the british prime minister makes a concession on eu laws to aid brexit talks. we will bring you the story. this is bloomberg. ♪
2:18 am
2:19 am
2:20 am
, 720 a.m. in back london. futures will be a little bit lower at the start of the european trading day. president trump talking about nafta, talking about the border wall, talking about the possibility of a government shutdown in fighting form in arizona. let's have a quick check on the market. will be weaker at the start of the trading day. pretty unchanged on the german bund market.
2:21 am
the market in dubai, middle east market a little more [inaudible] the state of play on the markets, juliette saly is standing by. juliette: nikkei companies are getting more worried about the economy and feeling less confident in spending money on hiring or investor -- investing. and index of economic decision has fallen to the lowest this year. saidndents to the survey they are still looking to hire, confidence has diminished. great wall motor has worked water on prospect seven deal with fiat chrysler. they are -- they are not in talks and they may not pursue a takeover. commenting a day after expressing interest, great well -- well said there is an uncertainty. that is your bloomberg is this flash. thank you.
2:22 am
a quick line coming through from wpp, you broke the line at the top of the show in regards to the warning. they have no significant loss from the revenues associated with data breaches in the separate attack in june. that is different to what we heard from what we heard from maersk and a number of other institutions. perhaps they will be reassuring to investors in like that they had to say about their like for like revenue growth forecast which they did have to bring down. we have more detail about why that is. they say they are seeing pressure on client spending in the fast-moving consumer goods and package sector. but talk about what is going on in the u.k., they released a crucial brexit position. manus: theresa may has considered the law will influence britain after it
2:23 am
leaves the block area the climbdown aimed at accelerating divorce talks, she declared seven months ago that the u.k. .ould take back control fascinating morning in terms of news flow. we have written this up, theresa may wants to and direct jurisdiction from the european court of justice. the front page of the sun is suggesting she is not crashing through red lines that she is holding firm but when you see this kind of move trying to get to a point where we can talk about trade my this is one of the big issues getting it out of the way. did that shift the agenda for you this morning at all? guest: it sounds a little bit like come from eyes which is the first step when it comes to meeting in the middle. with the europeans. what matters for business leaders, what matters for investors is what does it mean when it comes to discussing free
2:24 am
movements is good. bet kind of compromises will made? it sounds like we are going back to the status quote, perhaps it is too early to say that but as we make the compromises, it feels as if theresa may and the conservative government are thinking about what they need to do to get a deal done. anna: what is the appetite for u.k. assets? i asked in the context of vista bp p story. there is considerable pressure on their clients. this is a idiosyncratic story. they are facing a lot of pressure from activist investors. guest: when i think about u.k. assets it is a challenge to the environment because we do not have the good story, positive story for the u.k. in particular so it feels as if u.k. is at the
2:25 am
mercy of what is happening globally and at the mercy of the brexit negotiations area there are idiosyncratic views with regard to stocks in particular and the u.k. equity market at the moment is a very interesting fertile hunting ground for some stocks that have been unduly ignored because of brexit. when i think about the u.k. equity market in isolation or more broadly, you do not have an -- interesting new story that is positive to the u.k. elliott management, activist shareholder's, they seem to be good at delivering at nestle and bhp billiton. to what extent do you talk about activists and to what extent does it drive your thinking? of management -- managers are also activist.
2:26 am
it is important that shareholders try to maximize returns and make sure these companies are listening. it has been a change in the last 10 years. governments, -- governance, boards are listening in terms of governance practices and some are more open. shareholders are more engaged. anna: what kind of things do you buy? aest: in the u.k. there is good dispersion and valuations and one can argue they are trading at a premium is the have benefited from the weakness in sterling where it is the domestic focused stop -- stocks are cheaper. that diversion is interesting. anna: thank you for joining us.
2:27 am
manus: the rest of europe has caught up with the uk's opening call. equities are opening lower. -- will be in focus as the they cut their revenue growth forecast.
2:28 am
2:29 am
2:30 am
♪ open, wee european bring you the first trade of the day. i am manus cranny alongside matt miller. here is what we are watching for you today. shutting it down. president trump says brace for a government shutdown if his border wall does not get funding. stocks stall and the peso falls as trump says he might terminate nafta. brexit back down. u.k. prime minister concedes that you law will influence britain long after brexit.

26 Views

info Stream Only

Uploaded by TV Archive on