Skip to main content

tv   Bloomberg Markets European Open  Bloomberg  March 28, 2018 2:30am-4:00am EDT

2:30 am
♪ matt: welcome to "bloomberg markets: european open." i am matt miller. the cash trading kicks off in 30 minutes. ♪ tech tanks, everybody's stock suffering worst day in three years, dragging u.s. equities into a late date selloff. sectorn from the tech keeps spreading. the u.s. is weighing a crackdown on chinese investments in tech. will this be the tipping point
2:31 am
for chinese fund managers to turn against treasuries. surprise visit, kim jong-un meets with president xi jinping in his first known excursion outside the country since taking power in 2011. let's look at the action in the markets. there was a lot of it again yesterday. the volatility continues. take a look at the equity ndexed here in the u k we had big games at yesterday following the u.s. and asian trade the day before. the ftse was up 1.6%. in china, you see a drop continuing, 1.9% on the csi 300. keep your eye on what is going on in asian stocks. weakness in the japanese yen. amount a u.s. dollar can buy.
2:32 am
the turkish lira is holding under four dollars at a record low. on the next two columns, look at what is going on in commodities and bonds. we have a look at what is going , we have a oil down. keep your eye on the oil trade. wti dropped below $65 a barrel. as far as bonds are concerned, australia, canada, mexico and japan, it is all about treasuries today. we will look at treasuries in a minute. it's all yields drop below 2.8%. less than a half hour ago to european equities trading. look at what futures are pointing to today for europe and the u.k. after the big drop in tech stocks. we are not tech heavy here, but we have a drop. futures areand cac
2:33 am
down. look at the treasury trade. interesting to see treasuries move outside this 20 basis point they have been trading at and down below. investors are piling into treasuries, weighing on the yield and pushing it down. we will see if that continues. that's get the first word news singapore and the juliette saly. juliette: chinese media has confirmed kim jong-un met with president xi jinping on a surprise visit to china. the north korean leader would be willing to give up his nuclear weapons and hold a summit with the u.s. it was kim's verse known visit outside his country since taking power in 2000 11. the u.s. is considering a crackdown on chinese investment in technology. they will invoke a law for
2:34 am
national emergencies. according to people familiar with the matter, officials are working to identify areas where chinese companies would be banned from investing in semiconductors. it would be the latest step in donald trump's plan to punish china for what he sees as violations in intellectual property rights. they spoke ceo mark zuckerberg is expected to testify before the u.s. house energy and according toittee, an official familiar with the plan. he has been the subject of withering criticism from republican and democratic members of congress, as well as over theparliament company he cofounded, saying he failed to protect privacy. japanese prime minister shinzo abe is likely to meet with donald trump on april 18, according to japanese newspapers, the leaders are expected to courtney strategy ahead of the u.s. president's meeting with kim jong-un.
2:35 am
trumpa said he wants to meet kim by the end of may. been toldcials have to expect new plans imminently from the u.k. on how it plans to avoid a hard brexit. officials have been promised details on what alternative plans theresa may's government has be on the backstop plan. the british pound rose on the news. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. matt: thank you very much. equities in asia declined after a selloff in u.s. tech shares. it spooked earnings. suffered their worst day, falling by 6%. 10 the mega-, including the facebook, amazon.
2:36 am
there has also been a knock on effect for tenure yields tumbling. joining us now is mark cudmore. on the 10 year yield tumbling below 2.8%, how significant is that move and do you think it sticks? mark: i think it not only sticks but there is potential for it to go further. i think it is significant because the market is short treasuries. it is other pain point to add to the other pain points in the last few weeks. i think now we have the technical break, there is a chance for the narrative to shift in treasuries. people might consider the fed is closer to the end of the cycle than they were considering. a month ago they were talking about if that fed might do for our five hikes. they might only do one hike or gnome are -- or no more hikes.
2:37 am
the outlook is deteriorating with trade tensions, political tensions, a downturn in commodities. we have seen conditions tightening immensely. libor is doing the fed's job for them in tightening policy. now we've got the technical break, with positioning outside. we might start pricing in a bence, it will no longer negligible. matt: i've got a chart on the bloomberg. anybody with the bloomberg can accept this. get -- a a massive massive dip. what is driving this. spread blowingor out? it is less the trade war concerns. the libor is part of that.
2:38 am
it is squeezing funding for banks. we had a massive tightening in yields generally. the two-year yields have risen. we have also seen equities fall. we will seep volatility rise. equities, volatility, they are things that feed into these conditions. they have gone the wrong way recently. we are seeing incredible tightening. this is not the time that fed wants to hike rates again. it might pass quite soon. there is a chance in the weeks there's a chance they finished their cycle. it will not become the base case. more that we might consider it seriously. that will be enough to squeeze the treasuries, and cause a slump in yields. matt: what would that do to equities?
2:39 am
chart, 962,t this we have a long way to go if this is an average correction. looks like the average corrections take six months. we should go out to august, if that were the case. if the fed is near the end of the cycle and corporate earnings are getting a goose from the u.s. tax cuts, would that not be great for equities? mark: ultimately it would be a big positive for equities. i think that is what we will see. it is important to remember it does not happen coincidently in terms of the same time as opposed to chance. in terms of when the yield fall, that will cause more pain for equities in the short term. when yields come down, there is more money there and they have to further reduce risk. can come lower with equities coming lower. it is because of the yields
2:40 am
coming lower it provides the opportunity for equities to find a sustainable base. one thing we have argued is that there is not a medium-term low put into the correction of equities yet. yields have not corrected down enough. once yields come lower, investors can him into the market again. in the weeks ahead, we will see equities and yields lower. matt: thank you very much, mark cudmore. you can follow his market insights on the blog. up, gkn urges investors to ignore a hostile takeover. can millrose industries appease all parties? that conversation next. this is bloomberg. ♪
2:41 am
2:42 am
2:43 am
♪ matt: welcome back to "bloomberg markets: european open." 16 minutes away from cash trading. let's get the business flash from juliette saly. it does: tesla had said not know what caused the fatal accident involving its model x car in california on friday. it has not been able to it retrieve the vehicles blogs. the companies working to recover
2:44 am
data from the car's computer. tesla did not disclose whether the driver engaged its security system when the crash occurred. plan to greet the biggest solar project in saudi arabia. it will cost around $200 billion, but that will not be needed in one go. the company will contribute $1 billion. the ceo says a total of 200 gigawatts of power will be available by 2030. the project will create up to 100,000 jobs. >> this is the first big to create the world's biggest solar power. [inaudible]
2:45 am
. juliette: apple has unveiled a low-cost ipad geared toward students to compete with google chrome books. the model has a nine inch screen andcost $299 for students, 300 troy nine dollars for other users. the tablet supports the intel accessory. the company also said it is releasing new versions of its i work apps. that is your bloomberg business flash. industries is offering to keep aerospace if theons for five years $11 billion hostile takeover bid is accepted. the government also saw guarantees on a u.k. headquarters, investment,
2:46 am
workforce, and relationships with suppliers. concerns on national security are to be addressed with the ministry of defense. there is a deadline tomorrow for competing proposals for millrose and other bidders. theceo of ads wrote to partner of business industry saying it would be extremely troubling if the takeover is approved. he joins me now for his first interview of the day. thank you for your time. what is troubling about this takeover if millrose is willing and holdin the u.k. defenses for five years, why is that a concern? >> it is a big issue for our industry. asyou work with gkn suppliers and the customers. i appreciate the commitment from the arose at five years. in theuite significant
2:47 am
aerospace and automotive industry. five years is a short. -- five years is a short period of time. there are issues we were raising with the need to ensure that whoever takes over the business, they have that longer-term view and longer-term commitment to ensure the company can be yearssful over many many as they have the last 250. big bidder is dana, the u.s. supplier. would you support that did? paul: i am not particularly concerned about the who, it is the how. one of the reasons why there is a lot of activity around gkn, and the bidders are fighting so
2:48 am
hard is because gkn is a fantastic prize. it has been a well-run business over a long period of time. there have been challenges in the last year, but they have created a phenomenal business, investing consistently over that period of time. it's customers and suppliers are interested in execution and delivery. the flurry of bids and counter bids is distracting for the business at a point in time when it's major market in automotive going to major technological change, and aerospace ramping up and growing globally at a rate which is incredibly significant. matt: when we hear about these public companies that do aerospace, defense, and automotive, we tend to hear more about the consumer products then the weapons of war. i think of the automotive
2:49 am
products and automotive lifecycles are only five years. it is one lifecycle for auto investment. what are the defense side of the business, what are the important parts they make for the defense side of the business? paul: there are a range of activities. people might not be familiar with the transporter planes. he parts of the wings are produced by gkn. more important, the typhoon fighter and the f-35 fighter are relying on key components from gkn. they are world leader in the canopies that protect the pilots. .hese are key components the product lifecycle for a defense product is many decades. the challenge in aerospace and defense is it is a lumpy investment cycle. you have to invest consistently
2:50 am
of period the returns are even longer. if you look at aerospace products from boeing and airbus, andr products are 30 year 40 or lifecycles. if you are one of the businesses that invested and are supplying to those businesses, your returns are secure over a very long period, in a sector that is growing rapidly. matt: would you be insistent that we get more significant terms, longer commitments from no rose before you agree to any kind of transaction? for me, i donately not get a say in the final decision. i think we would be saying to whoever is running this clark,s, and to greg that he needs to hold the business's feet to the fire. as a country in the u.k. we have supported gkn for a long time.
2:51 am
it is of strategic national importance, and it is important the way in which the business is run reflects the priorities of employees of supplies and customers, and most importantly in the u.k., as well as the short-term of shareholders. to people you spoken let gkn about this? paul: our focus has been talking to customers and suppliers who are part of our organization, rather than the management rec league -- rather than the management directly. matt: thank you so much for your time. ,aul everitt, ceo, ads automotive and aerospace defense company. earlier, we showed a board of tech shares. i want to clarify those names that did close in the red, and deep into the red.
2:52 am
look at these drops that we saw yesterday. the nasdaq down almost 3%. facebook down 5%. facebook has been down nine of the past 11 sessions. they spoke is really taking it on the chin. another one, down almost 8%. it will stop testing for self driving cars after the crash that we saw in the u.s., and after investigations into tesla crashes. nvidia getting crushed yesterday. netflix is also down, previously one of the better performers. netflix down more than 6%. we are minutes away from the open. that's get to the stocks to watch. you are saying on the tech theme today, joe, are we expecting a bloodbath here in europe? , thewe think the tech
2:53 am
reasons you gone over facebook, twitter, and the trump administration possibly clamping down on chinese investments. that is likely to play through into europe this morning. matt: what else are you looking at outside of tech stocks? it is not a tech heavy area. the indexes are not holding facebook, netflix, google. what other stocks are you looking at? companies we are looking at, it is no longer a big company, but it is known, and their pretax profit fell by 50%. it is a big drop. trading conditions are improving, so we will seek how that plays out this morning. cap is another you are keeping your eye on. joe: yes, and a huge american
2:54 am
brokers say their earnings grew quite strongly in the last quarter. , so we will look at the reaction from tp. matt: cap is another you are looking at. joe: cap at a could announce a rights issue. it would not be a huge surprise. any report about fundraising is likely to move stock. matt: even if it did not happen, you could see moves today? joe: yes, it could happen next month, but the sentiment effect on the stock today is definitely likely to have an impact. we are going to be focused on tech stocks. i have a chart to look at for tesla. 927 is the chart. this stock has gotten hit lately.
2:55 am
--rine -- citroen that citroenany puts out, you look out for that, and any short report is exciting. matt: the current -- the concerns are big. they cannot produce the model three fast enough. they got a downgrade from moody's on liquidity concerns. six steps into junk with a negative outlook. joe: it is another negative tech story. citroen, it is a negative and more tech woke's -- more tech woes. matt: thank you very much, joe easton, from the tech team. it can go to first go on your bloomberg. i love watching first go.
2:56 am
it is better than watching the ticker go by because you get more information. bloomberg will be live at the new york auto show, speaking to a number of executives including the ford president of global markets. retail.
2:57 am
2:58 am
under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver.
2:59 am
matt: we are less than a minute away from the open. a big down day in the u.s. yesterday. let's take a look, the s&p, that is all the tech stocks. that is the s&p yesterday in the track -- in the cache trade. here is the euro in u.s. dollars. we are seeing euro weakness against the dollar, not much. rarely any movement there. he could see in oil affect in today's trade. we got a drop to below $70 a barrel. watch any oil related stocks.
3:00 am
watch what effect that has on the producers. the nikkei is down in the overnight trade. the nikkei may be more affected by tech stocks. we will see a lot of european indexes. it is going to affect the sentiment across the indexes. the animal spirits as well. open right now. let's look at the monitor and see what is going on as far as the ftse, the first to open, down 0.1%. the ibex opens out of the gate, 0.8%. a big drop for the spanish index. spain is dealing with the budget and the rest of luge mom -- is also the german-speaking indexes will take longer to open them the others as usual. up.dax is very slow to open
3:01 am
the individual stocks are already starting to trade on the dax and the smi. 1%are seeing drops of almost across continental europe. it is less than that here in the u.k. i definitely -- it is definitely a down day. we are -- we will see where investors are going. there is a lot of red here, but you will see pockets of green. in health care for example, a little bit of green. consumer staples, a little bit of green. a defensive play there. other than that, a lot of red. financials are down across the board. you see a little green part of tech sector. that will be interesting to see
3:02 am
which tech stocks are doing well today. we know it was application software sector that we see some gains. let's go back over here and wait patiently for the dax and smi to open up. we'll see how the other markets are developing. we see drops of 1% on the continent, on the iberian peninsula, in france, and a little less in the ftse. here in the u.k., down about 0.75%. the individual stocks, let's see which ones are gaining and which ones are down. ,f you look at the losers dragging on the index the most, roche. the chip designer is down. what really is a defensive stock, british american tobacco
3:03 am
is off. you see those connected to oil. royal dutch shell, and bp are losers today. look at some of the winners, sap utley a winner. application software is again her. then you see some of the big heavy stocks. siemens, the german stocks are doing well. adidas. volkswagen. all on the up. germany may be doing better than the rest of the regional indexes. last week's selloff, it the click shorts would get squeezed yesterday. now we are in for another round of pain. investors are trying to navigate the market this week. joining us now is our markets reporter dani burger, and patrick armstrong. unusual is it for the
3:04 am
market to bounce around like this? : if you look at 40 day volatility, a couple different volatility,40 day if you look at it, it is the highest it has been in about two years. this is something we have not seen. it is easy to forget about that. it is sometimes normal. you can see that for the s&p 500, the 40 day volatility is its highest since 2016. i want to point out about this selloff, i don't want to say i told you so, but i was here last week saying the market look like it was primed for a momentum selloff. if we look at the action yesterday, it was concentrated in tech, but we did see names selling off.
3:05 am
i am never one to say selloffs are because -- it looks like tore was a quantity flavor the selloff yesterday, just in terms of you had the best selling stock selling off. that is not something we have not seen since december when we had that harsh selloff. there is a sense that this selloff is a little different than what we saw in february, not just in product or structurally driven. maybe more of a rotation that is going on. patrick, how does this volatility affect you? patrick: it can show us how difficult it is to put the cost and consequences on geopolitical. that feed intos, stocks. how do sanctions, tariffs and new administration in the white house affect things? it is difficult to pinpoint the
3:06 am
impact. i think the market is coming to a footing on that. moneydani, who is making in this market? dani: through this type of environment you want to hold and see what is going on. you do not want to react suddenly. a group i like to concentrate on an a lot, they will ride that transition. a the past year you can build falling strategy. you would've done great last year. this year, that is not the case. we are getting the sudden lips. you build a model that is trying to save we are going to buy the dip, you would not go short. in this environment, the strategy are doing better are the nimble ones. when we have corrections, it is hard to remember because it has
3:07 am
been some time since we had continued corrections, the last on average 200 days. if we are back in that environment, some people will have to change up your trading strategies. this is for the data day traders. matt: we are talking about equities, but are we seeing the same volatility across all other asset classes? dani: to the move index, it had been lower. it did not see the same pickup area credit spreads have been widening. yesterday, foreboding what would go on an equity market, we saw the first day for investment credit in the u.s. in two years. you can compare that to february when we had equity selloffs, and credit held up. not the case. you would expect that, because now that you have credit, you have equities, there seems to be more substance to the selloff. matt: aside from the jew
3:08 am
political issues, -- aside from , i geopolitical issues suppose you would buy? patrick: i think the backdrop is supportive for equities. but you have an air pocket on evaluations. the tech stocks are at the extreme end of it. they are trading in the 90th percentile. you do not have a fundamental support on valuation, despite the strong backdrop. i don't think the geopolitical risks are negative at this point. chart thate a great compares regional valuations on the benchmark indexes, and i found it, it is 585. you can see where we were. the u.s. in white. europe in blue. japan, the topic in red.
3:09 am
trading, and now we are down to 1675. that is within historical norms. patrick: yes, you have 16% earnings growth. matt: earning indexes are going up. patrick: i think that is starting to tail off. 16% would be outstanding. very unlikely we achieve those areas it is looking more like 17.5. it is not as extreme as it was. we are going to keep you with us because there is a lot to talk about. thank you, dani burger, our reporter. take a look as we go to break where european markets are trading. we are about nine minutes into the session, down across the 0.5% --om the ftse off
3:10 am
even though you saw all those german stocks on the upside, they may have swung back down. we will keep you up-to-date on these market moves. we'll bring you the stocks that are making the biggest difference, including shire. it is holding things up again -- up a bit. this is bloomberg. ♪
3:11 am
3:12 am
3:13 am
♪ matt: welcome back to "bloomberg markets: european open." guy johnson is off this week. 13 minutes into the trade. let's get the top stories from nejra cehic. nejra: i am looking at three of shireggest movers, trading volume has been surging. it is up 4% right now. it seems to be because of a merger talk in u.k. newspapers that is pushing the stock higher. it is the best performer in on the stoxx 600 at the moment. a.b. foods, morgan stanley upgrades it, it is a buying opportunity. that is up more than 2%. subsea is holding on margin pressure. matt: let's get what you should be watching today, the big
3:14 am
issues that will come up throughout your trading day. we get a host of data from the -- it could be , at least to u.s. gdp better than previous expectation as those earning estimates go up. a rate decision from south africa. the consensus is for a boost. we could see them hold steady. the u.s. oil inventory report will be published. above 70 on the global benchmark, but it has come back down on supply issues. hat trick armstrong is with us. armstrong is with us. we have seen what the tech selloff, investors finally are back into u.s. treasuries, and pushed the yield down below 2.8%
3:15 am
, breaking out of a range. it shows we went down to the 50 day moving average for the first time this year. in fact, the first time in 2018. what do you make of this move? we think it will not be a sharp move higher. the backdrop, we are optimistic on there. you got the deficits blowing out wider. you got the issues happening with china. that was less demand for china to own treasuries. all of these things coming together, we think a slope grind higher in inflation. -- a slow grind higher in inflation. matt: china could selloff because of the heavy issuance,
3:16 am
what about the fed? mark cudmore was saying he thinks the geopolitical tensions as well as a couple other financing factors could mean the fed rate cycle is coming to an end. he is the first person i have heard say that. patrick: i think the geopolitical issues and tariffs are superficial. there is a risk they become something larger. trump puts sanctions on china, the normal response was china would put on reciprocal tariffs. china blinked and said, ok, we will deal with this. it is not too significant. if it stays at back, that will not disrupt anything. there is a risk it could turn into a trade war that would have economic consequences. it is not just hurting growth, it is pushing traces up. you put a tariff on imports costs will go up.
3:17 am
we will talk more about those geopolitical issues and a possible trade war. the trump administration is weighing going even further with a law on the tech industry. patrick armstrong, cio, 1plurimi group, will stay with us. this is bloomberg. ♪
3:18 am
3:19 am
3:20 am
♪ matt: welcome back to "bloomberg markets: european open." we are 20 minutes into the trading session today. it is a bloody one across the board. actually gains across the board yesterday. it is better to say it is a day of volatile trading. take a look at john cryan and lightner.gler -- paul they're looking at candidates to replace the ceo. there are heightened tensions between cryan.
3:21 am
andrding to insiders shareholders the silence from executives speaks volumes about the disarray. since those reports came out, not any comments coming out of at deutsche bank. we have an interesting chart in the btv library. you can judge how old this chart is, and how long these issues had persisted with deutsche bank. it starts at the first turnaround plan presented by john cryan in 2015. each of the yellow lines represents a new turnaround plan you can see the white line is deutsche bank. the blue line is the stoxx 600 banks index. together, --ars all of the tiers outperformed deutsche bank. that could be why they are
3:22 am
looking to replace john cryan. that's bring in patrick .rmstrong, cio, plurimi group what you think about the european financials picture? it is taking longer to turn things around that than the u.s. financials. many got it together, not including deutsche bank. patrick: we like the french financials. you're getting 4% dividend yields. deutsche bank at the other end is much cheaper. matt: is it a bargain? we do not buy it as an equity. anhave enough belief it is ongoing entity, unlocking the shareholder value is going to be trickier. we are not betting it is going bankrupt. matt: is that because you don't believe the german government would let deutsche bank go down?
3:23 am
is too: deutsche bank big to fail for germany. it will not let that happen. matt: let's bring in our deutsche bank reporter out of frankfurt. had fun in his job. what you think he would say today? i'm pretty sure he would say he is having fun, but i doubt he would be telling the truth. it is a troubled time for him. they are looking for someone to replace him. the story has been out for a while. top. is silence from the i don't think cryan is feeling well about this. he has been silent. not only, what would he answer, but how long will he be ceo? mighthe also told us he
3:24 am
consider renewing his contract when it expires in 2021. that is what we heard. when we talked to him last year he did say, i am having fun. if everything goes well, then why not renew the contract? apparently that did not go down well. already at the time he was thinking about replacing cryan. when he says he was to stay on, it makes it more difficult to happy,m. he was not very but the relationship between the two is not good at all. many other things have happened. it is a big thorn. matt: how many ceos have been
3:25 am
overseen since the financial crisis. why would we not get an internal candidate? to answer your first had three ceos. he did not bring in the ceo before cryan. he let them stay on. ofy investors are critical the time it took to say it is over and appoint cryan. he is the one who brought in cryan. to replace them now, is an that his choice was not the best one for deutsche bank.
3:26 am
question,your second the bank is facing big problems. it needs to be solved. matt: thank you very much, steven arons, bloomberg's deutsche bank reporter out of frankfurt. if deutsche bank got a new ceo, would you buy the equity? patrick: you would have to hear the plan. it is a difficult turnaround. you have issues on loans and profit margins, and where it is going as a business. it obviously has enough assets that you cannot -- you can't turn it around, but it will not be an easy job. much,thank you very patrick armstrong, cio, plurimi group. china's leader president xi he is going to visit
3:27 am
toth korea for march 29 march 30. he is also going to meet with trump as well. this is bloomberg. ♪
3:28 am
3:29 am
3:30 am
matt: 30 minutes to your trading day. that just tech tanks, everybody's fang stocks suffering their worst day in three years. the sentiment is leading into european markets. the pain from the tech sector keeps spreading. the u.s. is weighing a tech crackdown on china it will it be the tipping point for china's fund managers to turn against treasuries. the three meter kim jong un met his firstnping in known excursion outside of the country sent taking power in 2011. china confirms that xi will visit south korea in march. i am matt miller in london.
3:31 am
30 minutes into the trading day. let's see how things are shaping up. here are the gainers today and a market that is down across the board -- in a market that is down across the board. you see a couple of smaller stocks. g4s, aib group, alternating today. -- all gaining today. let's take a look at the losers. you are going to see a bigger size. 6.2%, a miss down. -- ams down. philip fighting -- philips lighting down. chipmaker -- chip equipment maker down 2.8%.
3:32 am
companieslot more following further on the downside and indeed more companies falling than gaining by a lot. let's get the bloomberg business flash with sebastian salek. cisco the u.s. is considering a crackdown on chinese investments. invoking a lot reserved for security. among other options, officials are working to identify areas in which chinese companies will be banned from investing such as semi-conductors and 5g communication. china's -- andin donald trump plan to punish china. mark zuckerberg is expected to testify before the u.s. energy and commerce committee. he has been the subject of criticism as well as members of the parliament. japanese prime minister shinzo
3:33 am
abe is likely to meet with donald trump. the two leaders are expected to coordinate strategy head of the u.s. presidents meeting with kim jong-un. trump says he wants to meet kim by the end of may. irish officials have been told to expect new plans from the u.k. on how it plans to avoid post-brexit part borders. officials have been promised concrete details and what plans to resume government -- theresa may's government has. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. matt: sebastian, thank you very much. with a year and wanted to go until brexit division among britain has only hardened. with our reporters visiting my locations to discuss quitting the eu, joining us now, charlotte ryan who conducted the
3:34 am
research. -- youit edinburgh visited edinburgh. any good stories? edinburgh i visited for this project. i didn't want a story that illustrated how divisive exit is. -- divisive brexit is. askeded to couples and how they voted. they never had the conversation. luckily, they had voted the same way. i think that illustrated something we find that this kind of remains a very polarizing issue. what was interesting is that people didn't seem to moderate deposition since the vote so we didn't find many examples of people who have changed their minds since brexit. --ro i talked to only people
3:35 am
matt: i talked to people who only live in london or the financial industry. i haven't heard anyone optimistic about brexit. what is it like outside of this bubble? ? -- charlotte: a lot of people who voted for brexit wanted it to happen, it was very hard to find anyone who is optimistic. the word "shambles" cap coming up. a lot -- kept coming up. they were unhappy with the way it was going. onot of people blame that the current prime minister and her government. matt: people are -- there are times when people talk about a second referendum. it comes up and goes away. tony blair butted up a couple of times -- brought it up a couple of times. would it make a difference? charlotte: i cover currency markets. that is something that gets them
3:36 am
going. it is seen as a positive. what we also found was only under half of the people we spoke to were in favor of a second referendum. given that, we didn't find many examples of people changing the vote. it may you wonder. -- it made you wonder. it was not a scientific poll. matt: it looks fantastic on the web. congratulations on that. charlotte ryan, a part of this story you can check out on quick verification, just quick clarification -- quick clear vacation in china has announced that there will be a two-day trip to south korea starting tomorrow. on aong-un met xi jinping
3:37 am
surprise visit to china. kim would be willing to give up his nuclear weapons and hold a summit the u.s.. it was his first known visit outside of his country since taking power in 2011. kind of a big deal. the geopolitics are going to be the german force. -- to be a driving force. >> the u.s. economy is doing well. european economy is doing well. the only thing that is going to change his the geopolitical issues. you have seen that. you could not have caught -- thought month ago we would have a trade war. i think what you're going to , what you have is an administration is doing -- who is doing different things. the market is constant enterprise and that is not good. matt: still with us is patrick
3:38 am
armstrong. he is saying some of the same things you said. how do you deal with that as an investor? you can't just hide your head in the sand. patrick: the white house is where a lot of this geopolitical issues are coming from right now. you can almost ignore the tweets, but the potential is whenever tweets are followed through, the potential repercussions of rhetoric is so huge, that it is silly to ignore it. a lot of things are said and then not followed through on. the risk is the trump administration -- trump has his ideas. tillerson did not always agree with him. the people he has put in place may magnify some of the volatile tendencies. you cannot ignore things, his
3:39 am
rhetoric right now. you can't treat any statement as this is the way it is going to be. the tariffs that were put in place and then canada didn't have to pay them and europe did not have to pay them. you can overreact to them as well at you cannot ignore them. matt: leaders around the world that have no one moderating their views. they, powerful leaders. -- big, powerful leaders. xi jinping, the biggest power grab. putin. mbs does what mbs wants to do. is that concerning as an investor? answer: -- patrick: did to china, china has a long-term vision now. you have got strong man leaders across different entities but
3:40 am
very different political mindsets. patrick: -- matt: if things go wrong, where do you go for safe haven? where do you think is the best place to put your money? patrick: swiss bank for yen and gold. i do not like treasuries because i think the consequence is going to put a risk when you and a term premium on treasuries. a lot of consequences are stagnation risks. that is terrible news for equities and bonds. matt: last time you on the show, you told guy you are short treasuries. patrick: 30% of our portfolio is short treasuries. the geopolitical risks are certainly there. still very short treasuries. also very short u.s. equities, as well.
3:41 am
about 20% short u.s. equities. matt: do you think four rate hikes from the four -- from the fed this year? the trends in april will consistently go higher. he had a very weak dollar. guess you have had a very weak oh dollar -- you have had a very weak dollar. when you get inflation in the mix, and it is up to three or four this year. .2% month on month, that adds a pretty quickly. people have been lower for longer and the disinflationary forces will change their views if we get a few more .2% month on month rates. matt: patrick, thank you very much. you are going to join us on bloomberg radio and a little
3:42 am
bit. get a cup of coffee and we will meet you in the booth. if you are a bloomberg customer, you can watch the television program using tv . i haven't pulled up here. just about 39 minutes until the open. charts also follow the and all of the graphics that we use on the right-hand side. you can use the blue link if you room.o i.b. the control make a comment about my shirt and tie combo which has received rave views today. .ou can message me directly up next, we are going to bring you some the stock movers, including g4s which is upgraded to a hold at hsbc. today's market is up 2.2%. this is bloomberg. ♪
3:43 am
3:44 am
3:45 am
matt: welcome back to "bloomberg markets: european open." here in london, but you are looking at pictures of new york. after hours. you can see the futures are pointing down, looking at s&p, futures off a third of 1%. after the date he had yesterday due to the drop in fang stocks and tech stocks, you could see another drop again.
3:46 am
movers.t you may cap for that we come back here to test your mid-cap movers. for that we come back over to nejra cehic. nejra: -- it was upgraded to a hold at hsbc. it was down by 1% earlier. report that the company needs a years notice to figure out how would deal with u.k. trading arrangements. the same could see you who has been very vocal about the fact that the u.k. could see a food crisis if we don't get a deal. but itoking at ams stands to represent a lot of the tech stocks in europe. european tech stocks when the best performing sector in europe . today, they are the worst. -- were the best performing sector in europe. today, they are the worst. a miss, the worst performer, down 7.8%.
3:47 am
that's ams, the worst performer, down 7.8%. matt: let's check in on what is going on in the markets across the world map. you can see the banca monte dei paschi on your bloomberg just the banca monte dei paschi -- where mostly focused on europe. you can see that we have some bright red across the board. losses of 1% or candy court and down and italy. the u.k. faring a little bit better, three quarters of 1%. even scandinavia and russia are taking hits today. ouronly gains we really see or, hungarys a gain is a gain or. germany, austria, switzerland, all down. the czech republic is a gain or. -- gainer. we see real losses across the european continent.
3:48 am
let's move to the middle east. saudi arabia has struggled to attract foreign investment ofing a vo of -- during a vo to its emerging-market category today with lead to $5 billion in cash and inflows it all of this at of potential inclusion by msci in june. joining us is sleeping canseco ilipe pacheco. is this going to be passive investments through etf? who indexes? -- through indexes? >> $5 billion coming to saudi stocks, just as you consider passive investors that are tracking ftse indices. if you consider that a lot of to come expecting msci
3:49 am
with a similar decision in june. also all of the active investors that could be making decisions on top of this. if you put all of this together, we could be talking about over 40 the you dollars going into -- over $40 billion going into saudi stocks. it could take a while as well. we are talking about the announcement of the decision expected for tonight after markets closed in new york. the implementation could happen this month or even a year after this. matt: how important is this to a saudi government that has just locked away its biggest billionaire in an incredibly opaque proceeding at the ritz-carlton. good point. very we are talking about an extremely important decision for
3:50 am
mbs and saudi regulators, because this is a confirmation that the country has done everything needed to comply with all of the rules. the framework that is adopted internationally and now investors could have the same. this happens all of the concerns and all of the doubts that the crackdown corruption from last .ear grossed all of the expectations regarding the potential ipo offer. the saudi's said that will happen, no matter -- the saudis said that will happen, no matter what. this would confirm all of the attempts and efforts that the saudi have put in trying to modernize the market. seen as really a
3:51 am
ramp-up to the aramco ipo. really preparation for the aramco ipo. exactly. having the classification given now with make things pretty much in place. would put them in the right way for investors to look at the saudi market and be able to big emerging very markets, such as india, china, russia, brazil. all of them are classified as emerging markets, both by ftse and msci. the decision is seen as pretty much significant to attract such investors. technically, don't think they are not connected. the aramco ipo could happen, even if saudi does not have the emerging-market tag. would this be interesting for the saudi's? no. it would attract a lot less attention to the saudi market
3:52 am
than it could. matt: thank you for joining us. stay tuned to bloomberg. the ceo of the saudi stock exchange will be speaking to us following the ftse decision. that is at 7:00 p.m. new york time. definitely to into bloomberg or check it out on bloomberg go. 12:00 a.m. midnight in london. ceoing in the region, the of the tel aviv stock exchange has said this have been submitted by the entire 72% stake is up for sale. he made the comments in an interview with bloomberg. >> we believe that remote parts of the world are more interesting in regard to the strategic fits that they get to the tel aviv stock exchange, but
3:53 am
you have to remember that because we are running the process, we can choose to sell the whole 72% to one controlling shareholder. we can do it through various institutions that everybody will have minority interest. we can think about other creative ways. matt: tel aviv stock exchange ceo there. take a look at where markets are trading across europe. we are looking at big losses, 1% or more across the board on the continent. the ftse down 1%. rockets down and moving lower -- markets down and moving lower. we will give you the stock of the hour. this is bloomberg. ♪
3:54 am
3:55 am
3:56 am
matt: welcome back to "the european open." we are looking at shires, our stock of the hour. 30 billion pound stock up more than 4% right now. if you take a look at my graphic dashboard, you can see shire and the interesting thing is that again in the down market. it is up, 4.6%. the interesting thing is the volume of trading. you can see when you click into this, we are up over one million shares and the average are far fewer than that.
3:57 am
we are trading up much higher than the average volume on shire and a market that is down across the board. stay with bloomberg television. surveillance is next. i'm heading over to radio. this is bloomberg. ♪
3:58 am
3:59 am
4:00 am
francine: tech stocks suffer the worst day in three years and the effect spread to treasuries with the 10 year yield falling below 2.8%. a chinese diplomat is dispatched to souel.


info Stream Only

Uploaded by TV Archive on