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tv   Bloomberg Markets European Open  Bloomberg  February 8, 2018 2:30am-4:00am EST

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guy: you're watching bloomberg markets. this is the european open. i am guy johnson alongside matt miller. he is still in frankfurt. cash trade less than 30 minutes away. as asian markets struggle for direction european futures pointing to a negative open in 30 minutes time. rebounds -- have the rebounds run its course? move pile pressure on
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asia fx and commodity trades? socgen surprises. for a lossctations posting a net income of 69 million euros. we will speak to the ceo. than our peers. it is a modest decline. we have been doing better. we are gaining market share. matt: we are less than half an hour from the start of european trading. futures indicating a lower open across europe. a ho-hum loss in the u.s. yesterday and that spread through asia overnight.
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futures are indicating a lower loss -- open for a ho-hum loss . london, germany, the cac, all the european indexes. if you take a look at bonds it can see investors are selling off debt and pushing them -- the yields up. treasuries up over 2.8%. we're looking at 2.83% right now and treasuries after the 10 year rose a little bit more than one basis point in asian trading. what are you seeing on the gmm? a move on thisdo i want to highlight something. chinese markets down overnight by 1%. china, is whatin is happening with the renminbi. we will get into the details of why it is happening. fixing cut of with the that's what they're up to.
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factors.a bunch of it could have implications for other asset classes. we will talk to the mliv team. the chinese renminbi probably the biggest story in markets. u.s. futures are pointing negative at this point. it could be buckling up for another bumpy ride stateside. let's get a bloomberg first word news update. hasette: society general eaten estimates with fourth-quarter net income of 69 million euros. it had been expected to post a loss of 180 million euros. in an exclusive interview the >> we are doing better than up here. it is a modest decline. future wek at the
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have [indiscernible] so it means somewhere that we're gaining market share. juliette: u.s. senate leaders have announced a budget agreement that would provide $300 billion in additional funding. the plan would suspend the debt ceiling until march 2019 and provide $90 billion in hurricane and wild fire disaster aid. as --llar rose onthe deal and the yield on the 10 year note. allegationsviolence before -- [indiscernible] knew aboutclear who the history with his two ex-wives or how much they knew. officials said trump was unaware of the allegations before the white house was approached by the daily mail with details of an interview with one of the
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former wives. a senior british official said china is wary of providing trade commitments until it sees how brexit plays out. the u.k. hopes to negotiate a new deal with raising during its implementation p eriod. >> we are not implementing until we have left the eu. it has been clearly endorsed by both sides. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. guy: thank you. let's stay in asia. is arriving in south
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korea. let's watch what is happening. the latest surroundings the olympics and negotiations with north korea. they are not meeting with high-level u.s. visitors and the vice president fits the bill. the latest report seems to suggest there is a high level delegation attending the games and the south korean president will meet with north korean officials we understand on february 10. have turnedutures around indicating a positive open overseas. the major indexes dropped in wednesday's trading but it looks the emotions have called down. asian equities have shown some resilience but european futures show no rebound yet. we are down across the board. daythe -- did by the dip
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come to send? too do think, are people complacent about the big drops that we saw friday and monday, are they going back in a little too soon? not -- i am not sure if there is too much complacency. it worries me the number of people who referred to this as a rough correction. earnings still good, are supportive and a lot of people saying that the economic fundamentals have not changed in that is true. what has to it -- changed is the market fundamentals. we discussed this on the program and there has been of blow that will last all year. lower leverage for banks and hedge funds for the rest of the year. we removed the supply of volatility. liquidity will be structurally lower than it was even a month
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or two ago. because the market fundamentals have been hit and you do not want to be too hasty about running into the market. even if the economy is looking good. anotherwe were to see leg lower, i am looking for an order of magnitude. we have seen a leg lower. orld another be of similar larger magnitude? >> it is a good question. the way these things pan out is you get the initial panic and then you get the solid panic. blow up volatility. tuesday we got the expected. the risk-averse markets because there is less liquidity. which is whather
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you expect. wondering what to do. from here you would expect the markets trading another leg lower. that should start today and continue tomorrow. how far goes might depend on how the week closes. they might provide confidence that we have not got toward the lows. i am worried that we had back toward the lows and break the lows. , will not be the dollar. the dollar is trading week but if it gathers more momentum it will hit yen and commodities and go into a spiral that will feed back into commodities. matt: hang on here. if you think that we are going to go lower here but you say that growth and earnings are supportive at equity prices and
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the dollar is going to gain, does that mean that is a great european -- opportunity for european investors? mark: global equities will get hit. hit if u.s. equities get first it will drag down european equities. equities have been underperforming for many months and one of the worries is there androbably more fragility less fat in terms of profit that they could afford to observe the profits. equities are roughly flat. asian equities, u.s. equities are up a long way. that is one of the flight risks in europe. guy: i want to highlight this chart. let's bring it up and show everybody what is going on. we are getting a little bit of a bounce. , why isications of this
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it happening? mark: we had the trade debt this morning, there was a massive [indiscernible] and that trade surplus would shrink. comments from the pboc. and in terms of the market reaction was this report there might be -- they might forward the program that was long talked about. clarify ofet to where the timeline is but the fact that the headline went out saying they were going to increase the quotas has excited markets. that weekend the yuan. what it means for markets is this is the yuan leading to dollar strengthening. if this does that could be the
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next trigger for equity weakness. i have been surprised by how well the dollar ignored the so far. not strengthened yet. that is something to watch this morning. guy: thank you. you want to follow mark's thoughts and the rest of the team's thoughts on mliv . a positivell get economic forecast. are we going to get more brexit uncertainty? when itg to think about comes to what mr. carney will say this morning. we have it. that is next. this is bloomberg. ♪
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by: welcome back. this is 14 minutes before the start of trading in europe. in missing the lowest estimates. even nine-month numbers that are coming out. it will be interesting to see what they say. saw 645, a miss for nissan. we will come back with the details in a few minutes time. let's get a bloomberg business
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flash. there is juliette saly. juliette: thank you. softbank could purchase as much .s one third of swiss re the transaction could be valued at more than $10 billion. are at anthat they early stage. commerzbank has reported better-than-expected revenue and profit for the fourth quarter and predicted growth. germany's second-largest bunkley traded lender said fourth-quarter revenue came in at 2.1 9 billion euros while net income fell 44% to 90 million euros. the comes less than a week after deutsche bank posted its third and that's consecutive annual loss and the lowest revenue in seven years. the cfo joins us for an exclusive interview at 11:00 a.m. u.k. time. and overcoming a record year for natural disaster claims to deliver its first dividend increase since 2011.
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switzerland's biggest insurer raised dividends by 6% to 18 swiss francs. that is a share after signaling higher investor payments -- payouts. that is your bloomberg business flash. juliette.ks ray much, the bank of england is laying out how it expects the u.k. economy to perform over the next three years. with little clear indication of what britain's relationship with the eu would the after april 2019. the central banks to protecting the future is becoming increasingly difficult. let's go on this super thursday a -- nejra. nejra: we will get the decision at noon london time followed by a press conference. updated forecasts
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and the expectation is the consensus view is that it will be a unanimous vote to hold rates today and upgrade the economic forecast. what is more interesting than the decision is the forward guidance will get from mark carney. we will -- we have seen is the markets priced in an aggressively hiking path. the markets were expecting the next hike to come in the final quarter. august has come into play and we were seeing the probability of a hike in may at 60%. it has come down to even odd. is how mark carney will manage that in the news conference. guy: sterling is strengthening, how is he factoring that into the models the bank has? as you say sterling did have a strong start to the year
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particularly in january. you cannot just look at it against the dollar. also on a trade weighted basis intohey will take that account. last week mark carney appeared before parliament and he gave some sort -- what some interpreted as a upbeat view saying that he was shifting or the bank was shifting from tackling brexit to looking at inflation. where themewhere strongest sterling could feed and but it always comes in with a bit of a lag. matt: thanks ray much. -- very much. standing outside the bank of england on the super thursday. we will bring the decision and an inflation report. some data that you do not want to miss. we will hear from the bank of england governor, mark carney. we bring you that live as well and there will be a to you live
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-- tliv . we will take a look at the stocks that you need to watch at the open. a lot of things that could be moving this morning including swiss re. have deutsche bank, commerce bank on the move. the open is four minutes away. this is bloomberg. ♪
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by: seven minutes to go before the start of european trading this thursday. let's look at the stocks to watch out for. let's start with the french banks. let's start with socgen. big story ofe today. analysts were expecting major losses for societe generale. i has turned a nice profit in the fourth quarter driven by equities trading business. , we can expect that to keep growing. matt: positive surprise this morning. what are you hearing?
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longer theank is no poor cousin to deutsche bank. it was deutsche bank a week ago reporting an annual loss and commerzbank is looking good in comparison. it is boosting growth forecast for this year. the cuts at commerzbank are working. guy: it is interesting considering how much pressure deutsche bank is under at the moment. let's talk about what is happening in the consumer space. let's talk about what is happening with pernell. is helpingor liquors which is boosting its growth outlook for this year. matt: it is pretty disturbing
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looking at these pictures so early in the morning. and amazing how much jamison whiskey is drunk in the u.s. there must be a lot of irish people there. let's look at totale. one of the things investors have been clamoring for is more money back in the form of dividends and buybacks. are they going to up that? is one of the last major oil companies to report reported it they plans to boost its dividend payout by 10% over the next three years. also a $5 billion by back. it is doing everything to share its loads of cash with shareholders to make its investors happy. this is likely to be an optimistic stock today. guy: thank you. you want to find all the great
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words they do on the stocks team first, go on your bloomberg. next, it is the market open. softer. open a little that story next. lovely day in london but chile. this is bloomberg.
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♪ go in front ofo cash trading. i want to give it some context. the bank of england is coming up later on. the nikkei was positive overnight. oil is trading around the 65 mark which is interesting. yesterday, i didn't get a clue. let's show you what is happening next story. valuesmoment, the fair are pointing to a half percent off of european equities. we going to get a softer open
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after a decent bounce yesterday. and the s&p are lower at this stage. they have been weakening over the last hour as well. that could be interesting. let's show you the monitor. let's go do that now. we did seeesterday the ftse up by about 1.9 percent. today we are expected down by about .5%. taken similar numbers of the london market. may take a little bit longer to get there. dax as well. keep an eye on commerce banks. those banks are going to be a's fascinating story. we are down by 8/10 of 1%. let's show you with tapping from a sector point of view. give you a heads up on what is
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happening. there is a single sector in positive territory here in europe. it is the media and it is trading in positive territory. goods, basicehold, resources are where losses are coming. basic resources down by around 1%. i just want to take you back to what is happening with the monitor. quickly show you it's going on there. what we are seeing here in the picture is largely negative. around i have been watching the banks for a closely. i am here to see the commerzbank cert fo -- cfo. we also have to focus on deutsche bank a little bit. .t continues to fall
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yesterday, coming down to the lowest level since 2016. looks like they're up a little bit this morning. let's look at some of the movers. we need to get a sense of the direction we are going to see. , since we are down, the losers on the left side of the screen. nestle is a gainer. unilever is a gainer. sorry, loser. of these more defensive stocks being sold off. that's not necessarily a bad sign but it could indicate that investors are more interested in yields. in may be a little more interesting and some of the typical dividend payers are offering. you also see santa fee is down 1%. novartis is down 1%.
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watch these luxury stocks. let's switch over to the winners. take a look at who's on the right side of your screen. as we are ready mentioned, you are going to see total up there because they're going to make noise about giving money back to investors. you see swiss three as a big gainer. zurich insurance up three and a half. i guess it's late enough that they still could be a wash on jamison. some of the banks gaining as well. that's the sector economy paint tickler attention to today.'s get a broader europe is lower. strong session yesterday in europe. we were working for a bounce and we got it.
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good morning. how is the portfolio? >> really because of the equities. we had some stock specific risk and it did not fall as much as market would've hoped. diversifying assets has not really worked. there hasn't been anything rising in this market in the chaos. we feel a little bit lucky over the last few days. matt: do you expect these kinds of scenarios? it would be more unusual to see one short, sharp drop. and then to move on with the bull market. is it possible that bargain hunters might want to wait around a little bit for some or deepluation valuation to get in there? i think that is probably right. it's always impossible to call
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these things. a one-stop drop in straight to a bull market. it seems unlikely to me. there's going to be a little bit more fundamental selling. i think it's quite clear that the selling we saw was technical selling. i think people reassess their portfolios now and it's more likely that we see the low again rather they go straight back to the highs. bounce there a by the mentality? we do but we didn't buy anything. we saw a slightly overvalued -- that fellalling 8% and that's still a little overvalued. it was a short-term, technical blip. it was about having a balanced portfolio to whether it. matt: where have been the best places to hide? if you are in defensive mode, let's pops up in your head as the first places to go? we do see treasuries continue to
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rise. the yen hasn't really gained that much strength. gold has gain that much either. currencies really haven't move that much. it's been with an equities that we've been able to add value. it's been in the more esoteric places. two steps that -- two stocks that did well for us were royal mail and nokia. they're very anti-momentum. i think those the stocks that formed less of a part of these portfolios. they had positive news of their own. guy: have your risk models changed? freddie: not yet. anything like this changes people's outlook. he could move us into a late cycle position like some of the drops is all in 2007. we have to keep alert to the fact that something might of
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change the on market. guy: plenty more still to come. to up next, a breakthrough in germany. are going to bring you the latest on angela merkel's hard-won coalition deal. that's next. ♪
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♪ back.welcome
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we are about 10 minutes into your trading day. let's look at some of the stocks on the move. stockton is one we have been talking about. this is a big gainer. they weathered the low volatility in late 2017 better than some of his competitors. returning the banks equity business to its traditional strength and that something that's investors will reward. re up more than 5% and commerzbank up for the half percent. disappoints,e bank it contrasts well. seeing selected financials do quite well in this market.
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i'm going to run over to commerzbank in a few hours and interview the cfo. we will find out what went right and what continues to go right. maybe they are making it a little more simple. take it back to basics and focusing in on the retail operation. monitor ando to the talk about what is happening here. we saw initial drop of 6, 7, 8%. the ftse 100 is still down by about half of 1%. dax down by about half of 1%. the swiss market is up a little bit. down around 2/10 of 1%. i will quickly look at my wei screen. matt, the market there in the states, the s&p, is down at around 3/10 of 1%. value that the
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bloomberg is giving me. let's talk a little bit about the news that had our jaws on the floor yesterday afternoon here in germany. yount to start by showing the most widely read paper here in germany. it's a gigantic headline that says merkel gives the government to the spd as a gift. when thishe feeling news broke. the government has finally been cobbled together. the question is at what price. let's talk to tony church got about what is going on. we obviously still have another big hurdle to clear before this is set in stone. give me the basic rundown of what has gone on. the spd has seem to have gotten every important post.
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yes, and what we heard from the inside is the spd negotiated hard. sinking to their worst performance or worst showing since world war ii in the election in september, remember that? they used all the leverage they had and pride these two key posts from angela merkel as the price for a green to put this coalition to its membership. which, as we say, is the hopefully final step in this whole process. how does that look? did they get enough? they have finance, they have the foreign ministry, they have a number of other key posts. did they get enough to convince theirdid they get enough?
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voters, especially the younger ones, the young socialist so to speak, to agree with this and the mailing campaigns about to commence? in a way, it's anybody's guess. the last one went down four years ago and with about three quarters yes. this is a totally different situation. we reported on the spd's problems. it's decline as a broad-based party which parallels the decline of unions and classic industrial jobs. we reported on that today from the sadiq khan dues aboard -- rg.m a city called duesbo it doesn't have the classic industrial jobs. there is a whole element of
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uncertainty in the spd's base that makes this ballot harder to predict and perhaps in the past. guy:uncertainty in the spd's th. joining us out of berlin. let's focus in on the agreements and the wider economic implications. we had the bank of england today but the ecb remains firmly in focus. that's go to manus cranny in frankfurt. he has a guest for us. manus, the conference is quite a mouthful. >> it is. we have huw r. pill from goldman sachs. it's former central bankers and current central bankers. there is one man who can perhaps
3:16 am you just got off the plane. some up your contribution to the six days of volatility. is this a more realistic pricing of markets? we have to consider that normalization and volatility are back on the table. have the view that inflation in the u.s. will eventually come back. i think last friday's data is consistent with that. we also believe the fed's normalization will create a quicker pace than markets have been pricing. the combination of somewhat stronger inflation trends with the market response to that and i think this is a relatively healthy, more realistic pricing. europe is behind the u.s. in terms of the cycle. i think the inflation outlook is a little more quiescent.
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immune to the pressures to normalize. i think they are a little further behind the u.s. in the process. we don't really think it will be a big disturbance for europe. we've largely seen a marking down of equity prices. equity prices are equity markets are probably been -- probably not the most important channels. at theequity prices are equity s are probably moment, i think pag through, it supporting growth and supporting recovery. down the road, supporting a better inflation outlook. when we talk about the ecb, we were chatting earlier. he said they have a clear set of traffic lights in the hurdle to do anything before september is quite high. put that in context for me.
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huw: we've had a very controversial discussion of asset purchases, qe, and so on in the past. that's understandable. policiestries, many and one monetary policy. we've moved into a phase where that debate has been put into the past. we are what we are. i think there is a recognition that asset purchases become a useful tool to signal a very difficult problem which is how to signal when you are beginning to normalize. you are normalizing rates on the back of accumulation of evidence of the last 18 months. the recovery is beginning to kick in. the marginal information you get right before you raise rates will always seem to be small relative to the decision to raise rates. do haveecb is able to
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invested in this discussion, indeed well past, the decision of when to end your asset purchases at this point is a signal of when you're going to raise rates. if you want to raise rates next march, you would end asset purchases in september. if you want to raise rates next june he would continue asset purchases through the end of the year. i don't think the previous skeptics are really going to stand in the way. >> do you think they will use the language that have the markers of march or little bit later in terms of changing the sequencing language? the market has gotten quite ahead of itself in terms of its presumptions of windows rate hikes could be brought forward. huw: i think the market is always inclined to treat the ecb as congenitally hawkish.
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it will think the rates will come earlier than later. in the past, the bank of england and the fed have been on the opposite side. the actions of central banks have to reflect that. we were here to some extent in march but certainly in april and june. particular you around the language the asset purchases will continue. we think they will go on until the end of the year. they will bring their pricing forward. quick insightet into thinking of france and macron. you are looking at the best year of investments in 2011. how confident are you in your forms? macron inur take on 2017 and 2018? huw: i think the election was a sea change. i think the credibility of a
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reform and change program in france and the leadership of macron is quite high. that's had a profound effect on sentiment. of the same time, the strategy of mr. macron is, understandably from a political point of view, to pursue a 10 year presidency at a 10 year transition. that has led him to prioritize both. measures that are politically feasible and achievable in the short-term rather than very ambitious short-term in order to build a record of success and have a snowballing effect that will create the underlying real transformation of the longer. . much for being with us. enjoy the conference. he is the european chief economist for goldman sachs. let's expound a little bit on
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whether we are still in the market for three or four rate hikes. in the we have asked of denver. you never thought you would hear about regulation and me for 30 minutes. wish me luck. guy: good luck, manus. i'm sure it will be fantastic. thank you very much, indeed. this -- wee a blend have a board member join us at 8:30. we will get back to the markets. european markets still down. the swiss market outperforming this morning. zero insurance really helping out. we will be back in a moment. this is bloomberg. ♪
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♪ guy: european indices are down this morning. let me show you the map. we can see a muted red color out there. germany is down more than most. the market i want to highlight is switzerland. it is outperforming this morning. the insurers and the reinsurers are performing very strongly. freddie, i want to come back to the story. a lot ofdiversify?
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people are asking this question. what would your thoughts be? try and find a satiric ideas that have idiosyncratic risk and aren't part of the market as a whole. it's a hard job. if you're looking at more sectors are styles, one thing people will look more for is more certainty. you want to find certainty. certainty of cash flow. perhaps, that becomes a style where you can guarantee 5% the year. it gives you some sort of comfort in eight more volatile market. matt: speaking of strategy and styles, we are going to continue to talk about that with you. he will stay with us. coming up, keep want and carry on. markets continue to fluctuate so where is the smart money going.
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we will talk about that next. this is bloomberg. ♪
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♪ we are 30 minutes into the trading day. asian markets struggle for direction. european stocks start the day in negative territory. has the rebound already run its course? and enough is enough. china's currency plunges the most since 2015 after hitting a two-year record high. pile the pressure on asian assets and commodity trades? france's second-biggest bank posted net income of 69 million euros. we speak to the ceo. >> in the fourth quarter we do
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better than our peers. it's a very modest decline. i only know when i look at the figures. the decrease is lower than the others. good morning and welcome to bloomberg markets. i'm matt miller in frankfurt. i'm prepared to go over and interview the cfo of commerzbank after they also beat expectations with earnings this morning. guy johnson is at our european headquarters in london. financials are actually the story this morning. it's interesting to see what's going on. this is the picture. aboutworry too much travel and leisure. it's the insurance sector at number two in the banks at number four that is really interesting.
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the insurers out of zurich are trading really strongly. that's a really solid day. enoughe don't worry about travel and leisure. we probably-- guy: should worry more. the financials are really driving the story this morning. doing as well this morning, europe would be really feeling the pressure but it's lifting that story up a little bit adding some way to the upside. downside, basic resources, real estate, utilities. financials, particularly insurers are trading very strongly. something to focus on their. we will see what commerzbank us a sale of the later. let's get a first word update. senate leaders have announced
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a bipartisan two-year budget agreement to provide nearly $300 billion in additional funding. it would suspend the debt ceiling until march 2019 and provide almost $90 billion in disaster aid. a senate vote is inspected today followed by the house. the dollar rose on the news about the deal as it yields on the tenure u.s. treasury. aides hadte house heard about domestic violence allegations against president trump's aid. it was not clear who knew rob porter's history of his history with his ex-wives or how much they knew. approachedouse was by the uk's daily mail with an interview. despite the stronger chinese currency, import growth surged. rose byr terms, exports
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11.1%. imports decreased by 30.9%. it straight of $20.34 billion. a senior british official says china is wary of providing untilg -- commitment brexit plays out. the two nations launched a review of their trading relationship during theresa may's visit last week. >> they recognize that we are still members of the eu. we can't implement any trade agreement to after we left the eu. it's been very clearly endorsed by both sides and been put in place to do that. this is bloomberg. guy, matt? guy: thank you.
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matt: stocks tanked as we all watched. treasuries went haywire. they continue to do that. volatility spiked. but one set of trainers -- traders were not panicking. quant investors have largely been able to shield themselves even as they get blamed for it and maintain near record equities exposure. let's get more with our reporter. he's in the studio. danny, let's start with the question of how this is possible . so many people have come out in blamed the many flash crash on quant's but to say they have managed to avoid the blood. i want to get specific here about what we are talking about
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his is a lot of different kinds. talking about equity market neutral. what they do is hold thousands of stocks and had job greater market movements and take very specific bets on the contours of the market. an example of that might be of value trader and translate that into more of a quantitative strategy. these funds actually weather the storm very well as an you think about the damage that occurred over the past couple days, it's been market wide. we didn't see one industry do better than the other. if your sole purpose is that you hedge out greater market movements, then this wasn't as painful. they used this as a opportunity to trade more. i've been talking to a few different trading desks. they have actually seen trading pickup by quan's. their exposure hasn't changed. selling into the downturn.
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instead, they were looking for opportunities. these guys do very well with fall to the and finally they get a bit and can find a few opportunities to arbitrage in the market. you either need to go very small and specific are very big and very wide. freddie: as danny said, the quan's very different structure. for a fundamental investor like myself, i will the stocks for the long term. advocates about trying to get a specific as you can on the single stocks and try to take it vantage of what the other quantum actions are doing to a degree. the action that is cause the stocks should be an advantage for longer-term fundamental investors. we just haven't seen enough chaos that for me to see that there are bargains on the table. the quant saying
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right now about strategy? with a stick to, those that are market neutral and invest less ready have to do what is the hot topic right now among quant's? thatey are praying volatility is back. for a lot of strategies that's quite beneficial. they can take it vantage of some short-term changes in the market. but freddie said also checks out. because january was pretty strong, for a lot of managers, they were able to absorb some of the pain. they were just able to take a survey of the land and not make any some decisions. looking at a qr in the s&p 500. january line looks a little bit strange. they are focused on the year to date. it mostly stay the same for this year while stocks tanked there. this shows that if you are market neutral, you held up quite fine.
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now is not a time to be panicking or step in with the human hand and do any sort of stoploss. freddie, what would volatility mean for your portfolio? you want to paint to create opportunities. be different could the next -- next year be to the. we've been through? are trying to fundamental bottom of grain your analysis, you want distortion. can you have too much of a good thing here? where you see it? does a developed this year and how will affect getting your portfolio decisions. i would welcome volatility. it would give me more choice of what to buy. mean that people underpay for volatile ones. people price risk through volatility in so many cases. i think of risk very differently
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or in very different ways. it would give me more optionality on where to buy and make -- might cause this to become more late cycle. i haven't bought a new stock in the last year. there have not been many options. i would love an opportunity to buy into some of the great businesses that have been out there. i would like some more volatility but not have a come is quite as sharp as it did yesterday. let me ask you quickly, for non-quan's, what you're hearing about the market direction from here? on earlier. was he expects another drop. could be a violent drop before we do get the recovery that he thinks growth and earnings really supports. there's still a lot of mark -- money in this market. a lot of people are near record exposures.
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the etf saw's biggest four-day outflow. 17 billion coming out over the past four days. there clearly are some nerves left in this market. people not quite sure about what is coming up. because exposures are so high we seem retail investors also join retail brokers reporting there been a lot of traded -- trading going on prior to monday. the market is fully valued. we aren't the nice. guy: thank you very much, indeed. also freddie lane. freddie's not done yet. we like to get our value for money. he's going to join the radio team. join him on london's zero dab digital radio. coming up, bundesbank board members will join us on set. that's next. this is bloomberg. ♪
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♪ more conviction buy investors, more flows. i am positive overall. if you are on the markets, we have good growth prospect. in particular in europe. overall, yes we see signs of monetary policy that has connectivity and also capital
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market connectivity. low volatility. that was the ceo of france's second-biggest bank. you are watching the european open. let's focus back on europe now. a week of chromatic moves in global equity markets leaves the banking sector scratching its head. trying to figure out what is happening here. let's start an exclusive interview with andrea strummed andreas dombre. i've heard it as a healthy correction. this at current to you? neither surprised nor your tainted by what happened in the markets. it hasn't changed in the fundamentals.
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it is also not changed my view of the economy. or my expectations. there have been concerns about higher valuations for quite some time. that's why i was not irritated and i was also not surprised at the same time. corrections can be healthy. recently started very so it's not easy to say right now but corrections can be healthy. let's don't forget that the stock markets up nine or 10% compared to one year ago and are still rather high. we have seen mostly a technical correction. the lesson learned for me was that qantas can actually change the market and have an impact. i'm not worried. do you see evidence that this was all down to the out goes? ?- algorithms does digital trading habits of
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fingerprints all over this market correction? always better to ask people from the market. we are only partially in the market. what i look at most is what happened in the vix and in volatility. that is what we are looking at of a we are concentrated on. now were them trading may well be part of this but it's mostly an issue of the vix and what happened there. higher volatility can be quite good for banks and exchanges so i do see a little bit too much of a comparison to this being a flash crash. comparing it to previous flash crashes. i'm not quite sure this really helps us. we have to what exactly we are sold in terms of instruments. these instruments were sold by a few firms.
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many people have been talking about in the past. i am not surprised that i'm also not irritated. the instrument's that were sold, europe has a very different attitude. one of the things it appears to be coming out of the story over the last couple of days is that there were a lot of nonprofessional investors buying into products such as short six etf's. is that the lesson we need to take away from this? that maybe the regulation needs to be tighter? >> you always have to look at the motivation of regulation. are referring to i think is the issue of consumer protection. if you do regulation, you have to be very sure of what you are doing. you are impacting a market and changing a market.
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to thinkurge everyone very hard before we do new regulations because it's something difficult to turn back and you have to have good evidence. let's think about what happened. no circuit breaker was triggered as far as i saw. when i hear the word flash crash you are thinking about circuit breakers being triggered, etc., etc.. i'm not sure this happened at all. let's look at those instruments and have a view on it. i understand that you asked for is oftion but regulation the unit only do after a very thorough analysis and good thinking. let's not rush in new regulation and market interference straightaway. matt: was it a mini stress tests? in your responsibility for
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looking after the safety of the financial institutions, do you see any of them even quiver a little bit? did you calls, for example? >> know, we called. we are in constant contact. i don't see anybody overly nervous whatsoever. one should not be because it is a bump in the market, a market again, asery high and the first question was, corrections can well be healthy. bankers have argued for higher volatility and now we have somewhat higher volatility so i fail to see where we should -- why we should get nervous. i want to ask you and i would be surprised -- guy: i want to ask you and i be surprised if your answer. the market is putting pressure
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on deutsche bank at the moment. we can see it very clearly in the share prices revealed on a daily basis. you more in touch with deutsche bank at the moment than you would normally be? are you contingency planning around deutsche bank, paying more attention than you normally would be? i think your initial thought was the right one. nothing has changed with regard to any german bank. in terms of the frequency of our discussions. we are trying to look forward and we try to be ahead of the curve. there is no hectic reason to do anything with regard to any german bank. street andwo-way don't read into this anything whatsoever.
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matt: as an executive board member you have to be concerned when any german financial institution as declining revenue for years in a row. has posted full-year losses for multiple years in a row. or three strategy turnarounds that don't seem to work and investors lose confidence. in that thesecure banks are being led by the right people in pursuing the correct strategies? germany, at the end of the day, needs a safe and secure banking system. bank supervisor is interested instability of the banking system. as a system but also in terms of individual institutions. we do this together with our colleagues from the european central bank and the german regulator. before, there is nothing new, nothing imminent in anyhow, nothing specific i could talk about right now.
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no heightened levels of concern. one final, quick question. we have been focusing on equity markets the credit is interesting as well. credit valuation is very high. spreads are tight. it's a crucial part of the transition mechanism. are you paying more attention to what is happening the credit markets as a result of what is happening last couple of days? know but we couldn't be paying attention because we are looking at it as closely as we can. guy: pedal stuff. the deutsche boerse spank chief. thank you very much indeed. up next, we will bring you the stock of the hour. we'll figure out what is happening in the markets. this is bloomberg. ♪
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♪ matt: welcome back. almost an hour into the trade. i want to highlight one stock is our stock of the hour. the boring cousin to deutsche bank, it has beaten industries expectations. it continues to add clients and grow its business. the cfo says that will be their business that -- focus this year.
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targets are little low but this looks like a bank that over -- under promises and over delivers. talk to the cfo and a couple of hours. this is bloomberg. ♪
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♪ francine: european indices dip. the dollar drifts. the boe is an eight bind. mark carney deals with inflation and brexit. china's currency thinks the most since 2015. stefansson -- stepan -- step in soon? ♪ francine: good morning, everyone and welcome to "bloomberg surveillance." these are your markets. i'm looking at


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