tv Bloomberg Daybreak Europe Bloomberg March 27, 2018 1:00am-2:30am EDT
♪ anna: in the city of london, i am anna edwards. manus: i am manus cranny. these are today's top stories. anna: bouncing back, stocks climb in asia, and the united states, there is concerns over trade tensions. the biggest one-day jump since august, 2015. retaliation against the kremlin. 100 and voice will be sent home. this in the wake of the nerve agent attacks on british soil. i will putin respond. anna: the ceo -- the ceo of the oil giant, investor skepticism
grows. >> it will show ultimately how and how we are the highest producer, the most efficient, the most reliable. so, this is a great company. ♪ anna: very good morning. this is "bloomberg daybreak: europe." we will get you through the markets and a moment, but let's go to breaking news. selling the stake in health care, for 13 billion. they see the completion in the .econd quarter of 2018
a few more details coming through. the $13 billion exchanged here. inartis is selling its stake health care. let's talk a little bit about what is going on in markets. picture across the asian equity markets. asian stocks higher -- following united states higher. remember the words from steve mnuchin, he was hopeful and a deal could be done or reached with china. we understand that president trump is trying to get the chinese to reduce tariffs on imported cars, and open up the services industry. more like the art of the deal than the terrorists we thought would be announced, or were announced on friday. it is not as simple as they seemed at the time. this is the dollar losing ground against the korean won. the korean won is stronger today
because of a surprise visit to china by the north korean leader. it is the first since he took that role in 2011. we put oil in here as well, up by 0.4%. increasing tension and outright conflict in the middle east region, not disrupting supply too much. back to the big risk on risk off story. whipsaw,'ve gone to and that is reflected in this chart. there were two words that drove the market. cautiously optimistic and cautiously hopeful from steve mnuchin. dramatic moves, and in the shorts got squeezed. the question is, the head
spinning you are seeing in the s&p 500, do you trust it? but it spreads are not reflected in the turnaround you are seeing in the equity market. it is getting a little bit of warning. the bull case is mnuchin. detail when could come from russia. there were 20 stocks that climbed yesterday. you got u.s. equities snapping back after the biggest weekly route in two years. later in terms of the markets, and show no fear. we are seeing this reflected in terms of the turnaround. can it last? it is an impressive two day moving average, but a question whether sentiment has been damaged. that is the question really for these markets. that is the move in the markets,
can it sustain and in the news that novartis is selling their stake in consumer health care to gsk. it will be paid for in cash. int is an interesting line terms of the cash take on this deal. anna: we will keep watching the m&a story. this is what it looks like now in terms of the u.s. answer to your question about whether sentiment is damaged, it seems to be be returning in the asian session. , and we will be talking more about oil. , we will be hearing more of our interview later in the program. let's get an update on first word news. the u.s. and its
allies are expelling more than 100 russian diplomats in response of the nerve agent attack. washington is ordering 60 people out of the country in the largest such action in u.s. history. british prime minister theresa may has had the global response. >> we will not tolerate russia's continued attempt to undermine our law and values. as well as bolstering our capability to deal with threats. juliette: kim jong-un has made a surprise visit to china and what would be his first trip outside his country since coming to power in 2011. the unannounced visit is the latest in a series of diplomatic power plays in asia, as donald
trump battles to lower the trade deficit becomes entangled with to get himto give -- to give up his nuclear weapons. saudi aramco says it is on track despite growing investor skepticism and government prevarication. in an exclusive interview, amin nasser says there is still much to be done, but the plan is moving ahead. >> we should be, as we always say, as a company for listing in the second half of 2018. toare doing a lot of work get the company for listing. our committees from the government looked at what we are --ng, juliette: white house attorneys are looking at loans secured by senior adviser jared kushner's family's business may have violated laws or federal ethics regulations. the deals revealed last month by
"the new york times." and $325 million from citigroup. investors have denied discussing the loans with kushner during his time at the white house. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. find more stories on the bloomberg at top . when you have that coming through from wall street, you would expect asia to follow suit. we are having a great session here. the nikkei is looking good, up by over 2%. there is a solid move in the hang seng. wong, --that japanese japanese wong. you but the kospi tracking higher by around -- in terms of stocks in the region, steel futures in shanghai are up by 2%.
they closed higher by more than 4%. also a return to these electronics makers in the session.and hong kong we are seeing tencent rise. china unicom in the hong kong session is looking good. the stock is upgraded on its internet business. i will pick it up from here. you broke those headlines that novartis is selling its stake in health care. jfk has come out and said -- gsk has said it will come out and, and it will be done i the end of this year. reflectet is going to this morning when we see the price open. , there is an initiated
review on consumer products and a strategic review. what am i going to do if they change the brand? i don't think i've ever seen that before. let's get back to the global markets. andill be watching gsk novartis at the start of the trade. asian equities are higher this morning. the stocks surged back from against weekly route in two years. concerns over global trade tensions eased. ofning us, the cofounder investment management. justin, thank you for seeing us. give us your take, the selling we saw, and the gains we are seeing now.
it seems the m whether you take what comes out of the white house at face value, or if you put it in a box. 9 welcome to this -- just in: the market is very keen on trying to be positive about things. give it some good news. it will bounce back up. we will have to be careful. maybe the trade war has been delayed you to lack of interest, or if you have better news on brexit. surehose things will make you will have more volatility carrying on. chart, this is the rebound in stocks. something.ite gains were made yesterday, the most since the middle of 2015. put this in context.
these are essential moves, the twists and turns and rhetoric. last year we had eight days when the market moved 1%. that should be about 50 days a year. we have done the entire year in three months. this is good news. there are great opportunities. you will see more volatility later in the year. , there will assets be a positive rebound. companies are doing rather well. ofere's a whole lot puns there. i'm not going to be disingenuous but i want to reflect back to 1987. we peaked. congressmen were smashing toshiba radios on television. two months later markets peaked
in the united states. case is that bellicose rhetoric from the united states of america. case is the bellicose rhetoric from the united states. a pictureu can paint where we would end up with another crash coming through. the trade issues will be of concern, but no one will take a hard line with it. the market will keep on recovering. if there is something more aggressive, we need to be careful. i put that together with interest rate rises, if you have a hard brexit coming through, which is less likely. then you have an opportunity to see quite significant dramatic drops. i think you will see some more that will frighten people. a whole generation of people who have not seen these
things before. manus: the other thing we have not seen, is a shift at the fed. -- wee a hot case saying have the hawk case. a story there. yes, the makeup is starting to change. i think it is healthy. we have been used to a steady story coming out of the fed. in,will get a change coming maybe more of an aggressive change. we have to take time to interpret what they will be saying. the theme has changed. we will be seeing more tightening carrying on. that will impact in terms of where we will see rates going. be at a tipping point soon as those rates go up. we have three or four more to come this year.
they will put another sword in the bull. as we moved to the end of the bull, you will see more volatility. manus: we have more to get to. justin stewart, co-founder seven investment management, stays with us. coming up, cracking down on the kremlin. are than a hundred expelled. how will rip -- how will rush out retaliate? anna: aramco should be ready to list by the second half of this year. our exclusive interview later. this is bloomberg. ♪
trade war's. the headline is dollar-yen is on the move. can you trust the rally? anna: that is the question. were talking about this yesterday. the words from steve mnuchin that has changed the sentiment in the market, it took a day. the markets had to get their head around what it meant. let's talk about what we are watching out for today. at 9:30, the record of financial policy committee meeting. the spanish cabinet is expected to approve its 2018 budget bill. that was in the wake of an upgrade from one of the ratings agencies. president is at an economic policy conference. let's go to bloomberg business
flash with juliette saly. juliette: novartis plans to sell a 36% stake in its consumer health care venture to its rival a $13 billion deal. this will focus on development and growth of its core businesses. deutsche bank is considering canada to potentially replace the ceo. according to the times of london, the bank approached ahead of goldman sachs international operations. he is thought to have spurned the overture. the newspaper said deutsche bank declined to comment on the report. the newspaper said goldman sachs also declined to comment. ordered uber to stop operating autonomous cars on the states rose in definitely, after
the death of a pedestrian a week ago. ceo, thatr to the fatal incident involving a self driving car was called an unquestionable failure to comply with safety standards. the company had already voluntarily halted all testing after the vehicle killed a woman in tempe, arizona. volkswagen has said its first wave of electric cars will not be as profitable as can -- as combustion engine models. they will be better than the previous battery-powered vehicles. comments in an exclusive interview with bloomberg. $34e are going to spend billion on electrification and a time as driving. we are serious about it. we think it is what the customers are looking for. we will also continue to invest in optimization of our
combustion -- portfolio because the foreseeable future combustion will still make up the majority of the market. the number of customers will consider self driving cars. juliette: that is your bloomberg business flash. president donald trump has ordered 60 russian diplomats to leave the country and closed russia's consulate in seattle. his response to the nerve agent attack on the spy in the u.k., it is the largest expulsion in u.s. history. rosalynn matheson joins us for more on the story. we caught up in our ago. how hard did theresa may have to work to get this kind of response? glorifyin, reset, and as the tories would like to put it, a special relationship with the united states.
she had to work extremely hard for a number of weeks. she lobbied germany and france. she said her national security .dviser to brussels to brief she did play on the special relationship the u.k. and the u.s. has. it came at a important time for donald trump. this is an allegation about russian meddling in that 2016 election. the time for him to stand up and look strong was pretty good for him as well. what is the significance of this court needed effort? you weren't sure if we were going to get a couple of european countries that had a history of standing up to russia, backing the u.k., or if it would be something more hand that european. it seems panic european -- pan-european.
this is a russian yield chart. i 10-year russian yield chart. this is to make the point that we have seen this story play out in a russian assets. those investing in emerging rush -- emerging markets. a number of investors are making the point, we will take this kind of yield. >> you have to be careful in a emerging markets, russia does sometimes have a heavy weight. now you have a russian risk which can dominate the other markets around it. that yield has come a long way down. it is priced in, that is good news. it could spike up again. us,: thank you for joining justin stewart, co-founder seven investment management.
♪ a live shot of new york. it is 1:30 in the morning. the question is, will it endure. bitblog suggests a little of caution. the credit market is not reflecting what is happening in the equity markets. are stronger across the equity markets in the asian session. that is partly off those u.s. features. across the picture u.s. equity markets. we were considerably stronger. we are talking to justin stewart
in the last half-hour. less than 10 days were removed 1% on u.s. equities, he said. look at what we saw yesterday, making back those losses we saw in friday's session. let's check with nejra cehic. nejra: that jump in the s&p 500 was the biggest since august, 2015. asia has picked up on that risk on sentiment. you are seeing green across the screen. japan has been leading. this recovery, it is worth bearing in mind, the index is still 8% below its january highs. risk on in equity markets. let's look at dollar-yen, it is reflecting the risk on intimate we are seeing. the dollar-yen, the worst-performing major currency against the dollar in this session, hovering around its
weekly. euro,take a look at the it is unchanged today, but we , we are at a key point when it comes to these technicals. it is threatening to close above its averages. the 200 month moving average has been a key one to switch between bullish and bearish sentiment over the past 15 years. finally, having a quick check on commodities on the scene of risk on risk off, the gold ratio can give you a good signal of where we are with risk on risk off. has beend for gold more than the demand for copper. a bit of a difference today. gold is flat, but this tells the story for at least the past few months. said themco ceo has
company's shares will be able to compete with oil majors as an investment prospect. in exclusive interview, amin his company will provide value for investors and the competing with the best. we will be, in terms of dividend and in terms of a rate of return, i think that will low investorsupfront with when we can go on our roadshow. the performance of the company, in terms of how much it costs to produce a barrel, how much it lowest in thehe industry. >> can you compete with shell? >> we will be competing with the
best for sure. >> the best would be exxon as well. their return profile, the yield is a 4%. that would put you in line with saudi arabia. i'm not sure if people would take equity risk for the same price as a sovereign risk. >> i say we will be competing with it. >> looking ahead to what this company will be in the future, you said you get refining capacity up to 10 million barrels a day. when? >> over the next decade, we have -- we are just closing in malaysia.0,000 at chinaoking currently.
we are considering others. we are looking in india. jv in looking at a indonesia. we are looking at a refinery in the u.s.. we are looking at either expanding what we have, or getting into nude -- into new jvs. us about whatl the ambitions are? >> we have the biggest refinery in the u.s. we own it fully. expanding and at integrating it more. hopefully, we will have some announcement. we can expect the crown
prince to give us numbers on what the future might hold for that business? >> hopefully, you will hear it during the visit, some plans. >> it is out of your control how much you can produce, but it is in your control where the production goes. tohas tapered off significantly. is that a permanent loss of access to u.s. markets and the production of crude supply to united states, or is it something you can get back? >> i think the u.s. is an important market. that is why we have the biggest refinery in the u.s., and we are looking at expanding our presence in the u.s.. to have it asue an important market. they have additional supply from shale oil.
-- theypany, whether have good customers and a good customer base. to be anwill continue important market. >> many people look at production and the united states , saudi arabia has backed up production, it has been filled from elsewhere. it raises the question whether you can get back into this market, or domestically the supply story will meet that demand. insignificant -- there is significant increases. that amount of import will go somewhere. that increase in production means a reduction from suppliers to the u.s.
continue, and if there is a need for higher demand in the u.s. we will continue to avail it. this is an important market to us. that is why we are looking at expanding our footprint. we have a refinery that has more than 600,000 barrels of capacity, and we are looking at expanding. >> do you see any supply gaps opening up in the next several years in the united states? are you as optimistic on the shale story? >> i think shale will continue to grow. not medium growth that is being predicted. you willsis shows continue to focus on the sweet spots for shale oil. that will give additional supply. 70% in theeclined
last year. you will need to add more capital to maintain the supply, and grow that supply from within the u.s. ultimately, you will run out of sweet spots and you will need to promisingto other prospects within the shale oil. that will increase the capital and also increase the decline. ultimately, it will reach a point with the growth will plateau, and that will take a couple of years. decline.re will be a it will take huge capital to maintain supply. ,anus: that was amin nasser ceo, saudi aramco, speaking to jonathan ferro.
cohost ofg in my bloomberg:daybreak. we have listened to this a couple of times and absorb it. are we any closer to understanding when -- and i think more importantly, the inclusion of the liquidity story . yousef: it is all time together. suchve rarely seen him in good form. this tells a wider story about where we see the saudi aramco story going from here. this is about a crown jewel in the saudi reform program. massive significance. it is at the heart of what they are trying to do. , it heard a few weeks ago is ok if that happens. not with therests folks at saudi aramco, it does rest with the saudi government. .hey will pull the trigger
in terms of where, they are talking to everybody from new york to tokyo. there is no real tangible indicator where exactly. depending on where they list, the biggest pool of capital to tease the highest valuation is something saudi authorities have been saying. figure, istrillion it seen as realistic. yousef: some investors have pointed out that the weight could be waiting for heil -- waiting for higher oil prices. that plan is currently working. bloomberg has crunched the numbers. if you assume $70 per barrel, you are looking at $1.7 trillion. you need $80 a barrel with the same cash flow to yield the trillion dollar mark.
once you get more on the at $65 perde, barrel, assuming a more conservative estimate, you are looking at $1.1 trillion. plenty to consider here in the coming months. the clock is ticking. the expectations are high. also in terms of the reputation that this 2030 program has. anna: thank you, yousef gamal el-din. about the oil markets and commodities more generally. but on aramco do you see the amount of clarity that you need to make judgments on whether this is something to invest into you? >> we are not there yet. we have only had meetings. you see from the analysis the
points that have been discussed, we have heard about the level of dividends. these are the parameters you would like to put into context. it is interesting to listen to what he said. now we know there is a big difference between the u.s. and europe. in terms of cash returns to shareholders. interesting to see more detail on how this stacks up. anna: is this something influencing the oil prices in the market. there is a symbiotic relationship. and their designed to get the ipo away has people thinking that is why. whylind: -- amin: sonja: would they do this now? at $30 to $40 a barrel.
it looks unattractive. we have seen a change in the backdrop. what plays in their favor is it is not one reason, we have a few factors. the talk right now about the extension and changing the framework a little bit helps a little bit. iranlk about the u.s. and deal. there are several factors that .ives more wiggle room in the west north of israel will we talk about $60, what people seem to miss, that is the difference between night and day down here in terms of pricing. if we talk about what is happening with russia, i want to get your opinion. russia is pushed into an isolated position geopolitically, does that push
russia more deeply and entrenched into the opec non-opec a deal? it might well be. i would be cautious trying to read too much into what has not been a lot of response from russia. this inook at isolation. there will be implications, and it will depend on the reaction from moscow, and where the expectation is for retaliation in the form of sending foreign , like for like. we will have to see how this develops further down the line, and if there are implications on commodities and oil markets in particular. manus: thank you for staying with us. what will be the russian response. japan., a scandal in popularityter abe's
♪ is "bloomberg daybreak: europe." it is 6:49 in london. the dollar against the yen on the move. a very strong session and the united states yesterday. let's get a bloomberg business flash with juliette saly. selltte: novartis plans to a 36 .5% stake in its consumer health care venture to rival gsk, in a $13 billion deal. they want to further focus on development and growth of its
core businesses. deutsche bank is reportedly considering canada to potentially replace their ceo john cryan. the head of goldman sachs international is thought to have spurned the overture. the newspaper says deutsche bank -- they declined to comment on the report. the newspaper said goldman sachs -- declined to comment. that is your bloomberg business flash. anna: juliette saly in singapore. shinzo abe has seen support slide into more public opinion polls. the scandal involving his wife and former tax cheat has deepened. there are renewed questions over a land sale.
give us the latest on this. this is a story that seems to run and run. internationally is having an impact. >> this is a scandal that will not go away. this surfaced last summer and was put away as shinzo abe called the snap election, and his popularity went up. internationalists against strong-armed tactics in north korea would rally japan, and it did. this is coming back to haunt him. have testimony again today in parliament behind me. a key former official of the finance ministry who also coincidentally became the head of the national tax office last summer. he is being painted as the sacrificial lamb because he was put in front of lawmakers, and
he played the role perfectly for the fifth inding many accounts, or the equivalent to the fifth, saying he did not want to incriminate himself. the key takeaway was that shinzo abe, the finance minister his former boss, and shinzo abe's wife were not involved in this controversy a land sale, and did not authorize the doctoring of documents, which the finance ministry has already admitted half wait incriminate for them because their names were on these documents that were removed. it is an interesting saga that has international ramifications because the key takeaway is this is undermining shinzo abe, and he could be taken out of office, or at the least, his finance minister who has been a key. scandalow much has this
weakened prime minister abe? he is moving down the pecking order. yes, it is a possibility. officed be taken out of over this scandal. if not this scandal, perhaps other scandals that are in the wings. the opposition has several cronyism allegations against the ldp and his cabinet. if the latest numbers are any indication, shinzo abe is losing popularity fast. has him at 32% approval, down 11 percentage points from the previous poll. manus: thank you very much, stephen engle. sonja laud, is the head of equity, fidelity international.
we have an article on the bloomberg talking about japanese equities. we got risk off data on friday. we got political problems for abe. what is the risk for the yen. you probably have to differentiate between what is happening domestically with the political scene, and what is happening internationally, and the impact the international situation has on the yen. although the approval ratings have dropped, it seems the opposition is not in a strong position that would imply that automatically there could be a change in the political situation in the autumn. i would look at the yen more as a consequence of the international situation. that is what you see more typically, and the yen
strengthening as a safe haven. you might read some correlation into it, but i am not sure if it is a trade war situation, and the on -- international situation. i've got this chart, this is 5643 on the bloomberg. something you are bringing to our attention. it influences the amount of reaction we might see. sonja: the yen is classically perceived as a safe haven. in the context of global certainty. if we are into territory signified by higher uncertainty, that yen will react positively
to any increase of volatility in heightened uncertainty. went to japan in the past 29 years, you would've done extremely well. maybe wea story saying are at a recapitulation moment. we in a recapitulation moment in terms of japanese equities? i would have a closer look at japanese equities, it is the one market where we see a of of -- we know part abenomics is an idea around corporate governance. it focused on the idea that companies should use their balance sheet much better. we know cash is not yielding anything. there is a lot of self-help that is independent of the global story and what ever is unfolding is worth a look. , head ofja laud
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manus: good morning from dubai. at: i am anna edwards. live from bloomberg head in the city of london. concerned u.s. is over trade tensions. the s&p 500 posts its biggest one-day jump since august 2018 -- 2015. anna: more than 100 russian envoys will be set home in the wake of the nerve agents attack on british soil. how will putin respond? manus: defending the ipo as investor skepticism grows.
we -- data will show when where the highest producer, the most efficient, the most reliable. this is a great company. manus: a warm welcome to "bloomberg daybreak: europe." we are set for a higher opening around these markets, stocks are life.g act to there is a strong case that get toars, perhaps we negative but do not get too excited according to mliv. london, paris, and transferred set for a stronger opening. there is a feast of breaking
news. just the top get to negative but do not get too line on akzonobel. $10 billion is the story. the deal will close by the end of 2018. much more breaking news to come. the proceeds will the returned to shareholders. the bond market, $300 billion. $300 billion was coming from the u.s.. the market gobbled it up. these are two-year government bond yields. the most highest and expensive since 2008. you have got prices rising and yields dropping. the bid to cover ratio was 2.91. that compares to the average of 2.8. bonds are nine ticks lower. andhave that big have to the equity market with a little bit of abatement. the buttons are lower by 15 pips but it is all eyes on u.s. trade. more breaking news with you.
keep an eye on akzonobel. also h&m. reporting numbers this morning. the scandinavian retailer operates globally. h&m's first-quarter pretax profit is one point 26 swedish krona. pretty muchrgin is in line with the estimate, a shade below 49.9%. they are still expanding in certain markets around the world. they are talking about the uruguay and ukraine market, they will become new h&m markets in the second half of 2018. an update on the share of sales, this is 17.6% versus 16.9% quarter on quarter. how will the market take that update on the amount of stock that this business had and this has been the key question, how will the get rid of the unsold garments? the business, this
downbeat forecast for the start of 2018. because of this buildup and stocks they had seen, that was compounded by bad weather in january and february. we will keep an eye on h&m at the start of the trading day. numbers looking to be below estimates. u.s., up by 1.4%. we saw some of those indices up by more than 2%. the biggest one-day gain since 2015. the middle of 2015. mnuchin's comments, he was hopeful for a deal on -- with china. china gets to avoid those tariffs if they put enough pressure. this is losing ground against the korean won. as a result of the surprise visit by the north korean leader. something that is positive in
terms of geopolitical risk. putting up nymex. we have a big focus on what goes on in the oil markets as we have been bringing you content with interviewr exclusive with the ceo of aramco. we heard heavy plans to compete with the rest of the best in the industry. let's get a bloomberg first word news update was juliette saly. the u.s. and its allies are expelling more than 100 russian diplomats in response to the nerve agent attack on a former spy in the u.k.. washington alone is ordering 60 people out of the country and the largest such action in u.s. history. theresa mime minister may has hailed the global response. >> we will not tolerate russia's attempts to undermine our values and flout international law.
european nations will strengthen -- strengthen their security. the -- this is the latest in a series of diplomatic power plays as donald trump's donald to lower america's trade deficit becomes entangled with the effort to get came to give up his nuclear weapons. saudi aramco says its ipo means on track despite growing skepticism. prevarication on when and where it will happen. the ceo trolled bloomberg there is much that needs to be done but the plan is moving ahead. saye should be as we always as a company for listing in the
second half of 2018. we are doing a lot of work to prepare the company for listing. we're making sure the company is ready for listing. the deal was revealed last month that included a 180 $4 million loan from apollo global management and a 325 million dollar loan from citigroup. executives from apollo in citigroup have denied discussing the loans with kushner during meetings at the white house. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . jump coming through in u.s. markets overnight. we have not had quite the strong rally in asia, having the best
in two weeks rather than two years but a very solid session in japan, the nikkei up and again starting to give back some of its ground. we saw a lot of movement coming through from the electronics players and the korean market and the one rallying, adding momentum on your -- news we had seen kim jong-il -- kim jong-un making his first visit. the australian share market managed to rebound, the regional index holding at its best level in two weeks. shanghai mentioned having its first gain in five days. a lot of the steel producers in panasonic among the electronic makers also making a comeback especially in the japanese session. jpmorgan upgrading the stock to overweight saying shares are trading at a 14% discount to analyst consensus price and an
upgrade for china yukon -- unicom. this is a telco player listed in hong kong. they raised their price target implying a 29% upside from monday's close, that is on the back of its strong internet business. quite a few big moves and -- movers in the asian region and strong momentum coming through in equity markets in general. thank you. the high this morning, u.s. stocks surged after the biggest drop in two years. posting its biggest one-day jump over theust 2015 all concerns about global trade tensions. they abated slightly. we have our guest this morning, the head of equity at fidelity international and she is with an i in the london studio. can i bring to your attention this chart, 5840 84 our viewers and it personifies the kind of the long of move,
scott burned and the short scott squeezed. we are some -- seeing some heads is spinning. the u.s. bore the brunt of it. are you worried about velocity, i am channeling tom king, the velocity of these moves from friday to monday to today, are you convinced that this is, this is the peak of the storm? to considerve several aspects to understand what is owing on. we had a lot of media attention toward the trade, tensions that have been emerging starting from the u.s. we should not forget we have entered the year on a very strong global rose footing and with the emergence of the labor market data with the surprise upside in the wage inflation, we started a reassessment of
whether the strength of the so-called goldilocks scenario can prevail for 2018. what has been an extraordinary 2017 in terms of the fundamental data and as we heard earlier, the lack of volatility. is question is how normal it, what we are seeing after such an extraordinary calm time and the reassessment not only in terms of the immediate political headlines but the reassessment what are they might be potentially a change in fundamentals and not only in inflation which is the most widely debated part of the goldilocks equation but in growth as well. mix for traders and investors to get concerned flipxplains part of the around current levels. manus: one thing we are obsessed about is the dot plot.
and loretta mester has [indiscernible] it is not only the dot plot. it does play a big role in the should not forget for companies, refinancing costs, we have heard the 300 billion. we should not ignore the impact on the real economy of higher interest rates that it is more the second part of the monetary ising equation which quantitative easing which had a much larger impact on market paper. impact in one direct the question to me is whether we might see a shift with the slow withdrawal and reduction in qe on risk taking behavior and the application for markets. you have two elements that will way that we will have to assess
and to my mind, the dot plot gets a bit too much attention because it is one half of the equation we should look at. so that is on the bloomberg which you will get a a look at in a second. rhetoric bee heightened, could that mean the inflation rate could move faster in the u.s. if we did see tariffs it on by the u.s. or by china and we have the fiscal stimulus and the tax changes, all that could lead to some risk of faster rate rises. has been too complacent about the risk for high inflation. the weekend -- the wake-up call was the kickoff low. we will have to look at this,
maybe we have ignored the idea with the economic tightness and with all the components you mentioned we will add to this economic tightness, maybe this will be inflationary and what is the implication. that triggered a big market reaction in february. do we risk that happening again, halves the market, the market repositions after those events or are they all still there and there is a risk we repeat that kind of move? >> i would suggest there is it -- a risk of a repeat. we have had 10 years of very benign inflation, synchronized global easing and support. this is not unwound in a week or two, even a month. that would be an ongoing reassessment. we should not forget that inflation upside surprise is one element. it is how far will central banks be happy to see and overshoot
happening, will they weigh it against medium-term headwinds that might weigh on inflation? that is what the marker -- market will have to assess. if inflation surprises are coming and we might see this adverse reaction happening because markets are insecure on how to assess this normalization. anna: we have seen some market tightening already. that is the essence of what knocks the consumer. you just see that change in the financial conditions scenario. in the left is another paradigm. talk to me about your assessment of financial conditions, perhaps a more aggressive fed. seen not only
from the fed but the ecb as well and the acceptance of tighter thencial conditions against baht -- backdrop and strengthen the economy. it is an interesting change in central bank medication and perception. again i am pretty sure they will react as we go along and see how the markets or the economy will react to tighter financial conditions. one area we should watch is the credit market. on the realion economy of tougher financial conditions would be earlier in credit markets and that would be an early indicator for us to watch. manus: thank you for your time. glaxosmithkline agreed to buy novartis' stake in a $13 billion deal. are joinedd by -- we by benedict.
a couple of stories to put too. what are the details of this , a surprising turn of events. benedict: it comes at a time when we did not expect it, only last week, glaxo said it would [indiscernible] so they seem out -- came out and are buying our partner. they have this put option to buy out their partner and this is what happened today. about 13 billion. give or take what they might have paid for the pfizer deal. this explains why they pulled out of the transaction last week and went for the next one instead. novartis has indicated up 2.2%. can we turn our attention to the akzo deal.
this has an impact in terms of dividends for shareholders. how did the sale, about? akzo?does that leave akzo saying they are selling their specialty business to the carlyle group. this is the real they have been on for the last year, trying to dispose of this business. this came about after they had a look at a takeover bid that they rejected. that put pressure on them to review their portfolio. paint andping our coatings business and the chemical business, a couple of private equity firms swirling around. we are looking at this asset and it went to carlyle group. where do they put the money back, there are these shareholders who are interested in hearing, the money that you have heard -- aren't here, can
you put that to better use or selling the company entirely and that is the pressure on the ceo to prove that this money he can may --good news -- use, maybe strengthened the coatings business. that will be disturb you did to shareholders, net proceeds 5.7 billion euros. let's get to juliette saly standing by with a bullish bid. , do the -- i might do the business flash. swings made it harder to sell a buildup of unsold garments. operating profit fell in the three-month surfer very. deutsche bank is reportedly considering candidates to replace the ceo according to the
times of london. the bank approached the head of goldman sachs international spurnedns but he has the overture. deutsche bank also considered two others. golden -- goldman sachs also declined to comment. arizona has ordered uber to stop operating autonomous cars after the death of a pedestrian. the governor called last week's fatal incident involving a self driver -- driving car on questionable failure. the company had already voluntarily halted all testing after the vehicle struck the woman in tempe, arizona. cfo said its first wave of electric cars will not be as profitable as combustion
engine models. returns will be better than the previous battery-powered vehicles. the forecast will accelerate by 2020. he made the comments in an exclusive interview with bloomberg. >> they are going to spend $34 billion on electrification, and a thomas driving. we are serious about it. we think it is what the company looks for. we will invest in the optimization of our portfolio. combustion engines make up the majority of the market. considerng number will the task. juliette: that is your bloomberg business flash. anna: thank you. u.s. president donald trump has ordered 60 russian diplomats to leave the country and close russia's consulate in seattle. in response to a nerve at tack.
it is the largest expulsion in u.s. history. good to have you on the program. were you surprised at the of these expulsions and the extent of the expulsions we saw from the u.s. and from europe? was coordinated action likely given the grave nature of the incident and also the fact there is very little appetite for further economic sanctions on russia but some think they clearly had to be done. the magnitude of expulsion from the u.s. is surprising but not on the european side as much. president trump has praised potent for not responding to u.s. sanctions or sanctions of his own. how would you expect russia to
expand -- respond this time around? russian response tends to be reciprocal. tools inso has other its toolbox, those would be economic tools such as imports of or regulatory oversight investment companies. that they willly go beyond diplomatic measures. manus:go beyond very good morni. the conversations we have had the the bloomberg team is these countries that have expelled to for mats for new sanctions is limited and
fairy -- there in lies the abeyance in this story which as to morewe do not go sanctions, perhaps we are at the peak. there is very little interest in additional economic sanctions against russia and we have seen that in the most ration -- recent discussions. we have sanctions on the energy sector. sector, but we also see little interest in putting sanctions on russian sovereign debt and that was the most recent discussion. , this actexpulsions of the play is over. we should be watching out for gaugerisis comes next to
deterioration or improvements between the rest of the countries and russia. manus: what does this do for putin domestically? the prudent media machine. guest: it is going to be the same case as it was before the elections. any actions by countries against russia is going to be interpreted within the context of russia being surrounded by external enemies that are seeking to contain any kind of progress that russia could make as a power in the world. what do you make of the u.s.-russian relationship? citing a u.s. envoy that president trump still wants to meet with vladimir putin. he is not shutting him entirely out into the cold. we have a dual narrative u.s.-russia relations.
measures diplomatic that are getting into a downward spiral. we do get the feeling from both countriesng that both and the leadership of both countries are interested in improving relations. an exceptiont be in international relations. it often happens that countries start to leave those open for talks, once the crisis is over. manus: thank you very much. thank you for being with us. let's leave the show with a quick look at gmm. this is an indication which is from wipe out to rally. asian stock markets rising and likewise yen is falling and the aussie dollar is a little bit lower.
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matt: you come to bloomberg markets. i am matt miller and our london headquarters -- berlin headquarters. is 30en of cash trading minutes away. stocks soar. global equities with higher as trade concerns abate after the worst week in two years. the s&p 500 rises the most in's 2015. deutsche bank drama. germany's biggest lender is looking to lure a new leader