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tv   Bloomberg Daybreak Europe  Bloomberg  May 11, 2018 1:00am-2:30am EDT

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anna: good morning. >> these are today's top stories. >> president trump's historic meeting with north korea kim jong-un will take place on june 12. can they reach an agreement on denuclearization? sanctions threatened to squeeze an already tightening oil market. ♪
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>> welcome to the show everyone. happy friday. let's get to some breaking news. we have first quarter sales coming through. $19.19 billion is what we have. this is upbeat on the first quarter sales. $1.04 billion missing the estimate of 2.36 billion dollars. underlying demand is continuing to grow. market conditions are favorable. that first quarter miss the lowest and -- estimate. we have some -- other numbers coming through. we will pass through and see exactly what is going on there. this is interesting in the context of trade as metal
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tariffs and tensions around that. sector that find itself at the crosshairs of geopolitics right now you -- now. let's talk about what is going on in the markets generally. we's show you where you -- are in the asian section. it seems like we are reassessing inflation over in the united states. u.s. cpi coming in lower than estimates. that lets us stocks going higher up in the united states. could that mean a slightly slower fed? that seems to be the markets thinking right now. heading for a second week of gains. iran, the trump administration stepping away from the iran accord is the big
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influencer there. we saw movement lower in the pound yesterday. was there any sense of hop control? it was not reflected in the fx market. lots of different views about what is going on in the bank of england at the moment. brexit talks seem to be delayed once again in the united kingdom. what you have? >> it seems that he was fatigued with the markets in the news conference yesterday. anything he was saying to sound heart cash -- hawkish, the fx markets were not listening. what we have seen as the relentless flattening of the followinge continuing that u.s. cpi print yesterday. the treasury auction at the longer and, this chart can tell us where we go from here. they are known as the weakest hands of the market.
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the last time this happened in 2017, when the market was that short, the bulls started to come in and we saw that 10 year yield dropped. that has not happened yet. what is different this time? we have all this increased demand in the market. the fed is more committed to its rate hiking. hands in the market, how much longer are they going to hold on and does this mean we could go above 3% if things change from here? or even go further below it. let's get to bloomberg first world news. reporter: thank you. donald trump says he will make north korean leader kim jong-il -- meet north korean leader kim jong-un and singapore.
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singapore has security partnerships with the united states and north korean embassy. announcemente after greeting three u.s. citizens free by north korea, praising their release. >> the relationship is good. world,ly for the hopefully something very good is going to happen and they understand it is very important for them. it is important for everybody. japan, south korea, china, everybody. i think it is going to be a very big success. minister israeli prime is accusing iran of crossing a red line by launching rockets against israeli positions in the occupied heights. itsmilitary conducted biggest rate inside syria and at least 30 years. and targeted what they say were iranian military infrastructure.
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iran says the israeli claims are alive. -- a lie. rally to 100uld prices a barrel next year. venezuela, according to bank of america. that few hinges on outback -- opec reviving of us. malaysia's new prime minister has said he will lead a business friendly administration and seek ways to boost the company's -- country stock market. he said he will focus on growing the economy and reducing debt. he also said much of the money missing from one ntb can be
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recovered and those responsible must be punished. [inaudible] [applause] >> [inaudible] reporter: at&t is said to have paid donald trump's personal $600,000 and asked him to look into his proposed merger with time warner inc. that is according to a person familiar with the matter. the figure is $400,000 more than that alleged by michael of an of stormye lawyer daniels. global news 24 hours a day on
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air and at -- online at twitter. you can find more stories on the bloomberg go. >> pretty solid session here in asia. holding japan's market at february highs as well. a very good showing coming through in hong kong as well. we have seen some weakness in china today. they are pledging further opening up of the banking sector. malaysia still out of action today after that election when -- win. malaysia will come back online on monday. subaru in tokyo under a little bit of pressure. it's operating income few forecasts missed estimates coming in at the lower end of what the market was looking for. you have properties in hong kong rising to a record after it said it could sell its buildings in
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hong kong. that could yield up to 3 billion u.s. dollars. petrol doing well in sydney. rob adams will take over from jeff lloyd as ceo. the market seems to like that move. anna: thank you. geopolitics has been a driving force in markets this week. president trump's administration won the release of three detainees from north korea and confirmed the summit will take place next month in singapore. oil is set for the second week gain and israel said it struck most of iran's military facilities inside of syria. in jodie snyder, live from hong kong. singapore has been chosen and that is the venue for the meeting between trump and kim jong-un. june 12 is the day. what was the sales pitch?
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why singapore? reporter: singapore is viewed as neutral turf for both leaders. the u.s. has long-standing security agreements with singapore. there is a north korean embassy there. it also has strong ties to china. it fits the bill on a number of france. it is viewed as a very secure place to have a big summit like this. they have held other kinds of things like this in the past that have gone successfully. meeting ofy had a the chinese president and the taiwanese counterpart. there is a lot of reasons that this makes sense. it is interesting. some are viewing the fact that the north korean leader is going to go to singapore, which was not his first choice. it is the furthest he has gone as leader. it is a little bit of a conciliatory gesture to the
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u.s., that he was willing to meet them halfway. it is much closer to korea. everybodymething that feels comfortable with as a meeting place. >> we understand the kim jong-un was keeping a close eye on the outcome of the iran nuclear court. president trump now saying that the u.s. is going to leave it. readly we -- what can we by the way donald trump approach that? analysts are telling us that there is concern that president trump is good at figuring out ways to leave agreements he doesn't like, not only the iran agreement at the earlier paris accords. he will leave agreements when he doesn't like them, he is saying he's is going to renegotiate with them. he has not shown a great deal of
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success at creating new agreements. a lot ofre are pressures on this meeting and the whole world is watching, there is not necessarily a sense that they will come away with an agreement. it looks like they will come away with being willing to go to the table and start some kinds of talk. jodie snyder in hong kong. joining us now is the senior economist at behringwerke. great to have you. happy friday. lots of geopolitical news. what in the geopolitical sphere are you most focused on is the biggest risk? >> we have to look at around. -- iran. markets have to factor in. we tend to not see many economic effects. so middle east is solely --
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linked to oil and energy growth. wages are still subdued which means if the oil price were to rise by five dollars or $10 as a result of what is going on in the middle east, you can see these are the sorts of ways in which would expect this conflict to begin. >> good morning to you. shows oilhart that with the possibility of returning to $100. that would be bad news for the global economy. >> certainly. >> but good news for u.s. stocks. look at theake a oil market from a macroeconomic point of view. a lower oil price has concentrated costs to the producers but widespread effects to producers and consumers. if the oil price hits $100 of a barrel, the oil guys would be really happy with that. economic -- and
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macroeconomic effect. is in the u.s. that you see most affected or emerging markets? where you see the ripple effect. a much stronger macroeconomic situation that we were the last time we had high oil prices. we can probably live with slightly quiet -- higher oil prices. we're doing quite well at $70 a barrel. you will see an effect on inflation. would say that every $10 price .015 andn oil adds 0 inflation. you are going to see your .30 most everywhere. real wages are barely tracking past 2%. >> we will talk a little bit
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more about the inflation story in the united states in a moment. research from your colleagues talked about the return of risk. in this context of what is going on in the middle east, it seems like a sensible thing to say. we started the program talking about north korea. there are few people were thecting that after all of rhetoric of last year from the trump that this would come to pass. what are your expectations and terms of how this changes the risk dynamic globally? do you see this as a real positive yet? >> it is unequivocally positive. there is positive momentum behind korea and getting a breakthrough. what has been taking place on the korean peninsula for decades has presented a permanent tell risk for markets. it doesn't play out in the macroeconomic sense. we live with foreign-policy issues. if there is a real breakthrough between the north and south, we
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may see some localized economic effect. consumer confidence will rise because they are no longer living with the threat of conflict breaking out. it may also add to the markets confidence that donald trump, who was then usual president, actually is heading in the right direction. he just has his own way of taking the starting point of these issues. see some change in the middle east of their success and korea. >> he will stay with us on the program. >> coming up the european union's state of the union conference, what can we expect? russian backed facebook ads created a surge of contempt in the u.s. have been made public for the first time. we will give you the details. this is bloomberg. ♪
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>> 6:19 here in london.
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1:19 and singapore. a bit of a reassessment on u.s. inflation coming on. let's go to bloomberg business flash. >> thank you. lvo is working on an initial public offering. they have discussed evaluation in a range of 16 billion-$30 billion. the decision is up to the owner. declined toves comment. goldman sachs will issue apple's new credit card as the investment bank t-birds its push into consumer finance. has an arrangement
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with the iphone maker and would replace its previous deal with the club. the two companies are still formulating the product. nvidia has reported -- generated 28 $9 million in sales to cryptocurrency miners. revenue may fall by two thirds in the creek. period.nt that is your bloomberg business flash. >> thanks so much. mario draghi aren't in the late today for the annual state of the union conference. they will deliver speeches today in florence as the country faces political stalemate.
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theian president gave five-star movement and the parties until this monday to reach an agreement. our guest is still with us. quite at that they are in italy talking about the future of the eurozone and europe. threats to reformers of the eu brewing within italian politics. do they threaten the eminem m agenda?m and >> if you are part of the european union or eurozone, where you share the risks and burdens that come with this currency, you have to work a little harder on euro domestic economy. you need to make sure that your fiscal houston is in order. seen in the eurozone is a series of major reforms across major players. germany in 2004.
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france now. italy in 2010. now italy, if they can form a government, threatened to reduce some of those reforms. this is exactly what you don't want to see. italy can grow above trend in this environment. the wait until the next crisis hits. italy will hit some constraints. because it is the third biggest country in the eurozone, suddenly the markets will think about systematic risks from italy to the wider region. it is important that italy is heading in a good direction right now. that is the key rest. >> is the timing of all this complicated by the fact that we have this looming prospect of trade tension in the potential impact that could have on europe as well? >> when it comes to trade that is mainly the prerogative of brussels rather than a country by country basis. you can see that in the brexit
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negotiations. what takes place now in italy doesn't have a major effect on the eu as a whole. >> let me ask you what is going on in the bond market. cognizant of the risk here. marx was when we saw the election taking place. that was just a couple of months ago. these are not risks that are blowing off the chart. these are levels we have been out during 2018. you don't think that this is something that the market needs to take more seriously than it is doing? >> i don't expect the market to take it that seriously. global conditions are so saw -- strong. in europe you have above trend growth. this becomes an issue during the next upswing. greece only ran into problems during the recovery. not during the crisis.
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in the good years, no one cared that greece was running about fiscal policy. the same applies not italy. a strong backdrop and nobody cares about much. during the next crisis, you will see those costs appear. >> this is the point i was trying to make between trade and italy. you have downgraded your forecast based on the potential impact from trade. it is about the timing that this is coming up now. it is causing, even if it is just psychological, do you factor italy into your eurozone growth forecast at this point are no? -- or no? >> it is more based on trades and other things. we don't see major economic consequences of the moment the aunt a modest it to investment in italy. -- hit to investment in italy.
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political basket case now for a few years. in europe we have learned to live with it. it is only when the question of an italian exit from the eurozone comes into play that we can start to see macroeconomic effects. >> the you very much. he is joining us from their -- denver. we're getting numbers coming through from the italian banking sector. as we are talking about italy, this has been something that has dominated the conversation in italy, the banking sector. we will keep a cross that story this morning. >> up next, stirring america's just consent. thousands of russia backed facebook at have been made public for the first time. we bring you the latest. this is bloomberg. ♪ retail.
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it's a drone! i know. find your phone easily with the xfinity voice remote. one more way comcast is working to fit into your life, not the other way around. >> 6:30 a.m. in london. 2:30 a.m. in as sunny tokyo. you are seeing dollar-yen unchanged there. let's check in on the markets. let's start with asian equities, heading for the best week. >> this was the dow yesterday, turn positive for the year. a little bit softer in china but for the most part asian stocks rallying, heading for the best week since february.
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let's move it on to talk about oil. what it weaken has been. i headed for the second week of weekly gains. look at that oil shooting up. supply and demand set to get tighter as iran and venezuela post supply risk. bank of america out with the new price forecast. bank of america saying it could reach 100 by next year. yesterday saying donald trump is engaging in shenanigans in oil market and is calling him out, saying he is working with some opec producers to keep production down and prices high. oil is one will be watching. italy, itjitters in is starting to get more expensive. this chart shows the cost of options.
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this comes as there will be a chance of a populist government and italy. and the-star movement league are reportedly making strides in forming a government. they're asking the president for an extension to give them monday to complete their plan. these option prices still remain below level of that march vote. certainly one to watch ahead of monday. >> thanks so much. the treasury yield curve is the flattest it has been since 2007. move and markets comes as a combination of weaker than expected u.s. inflation and solid demand for a record bond auction bolstered investor confidence. is still with us. you can see the chart of the relentless flattening when you look at the 530 caliber. does that signal
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that we are going to have trouble having sustained inflation above the target? >> the monthly data is very volatile. the fed will look past one month below expectations. think about the context of the fed is operating in. you have unemployment far below the estimate. you have u.s. growth above potential. you have a fiscal stimulus. usually an environment where the fed, even if it doesn't see inflation pressures, will be thinking, we are going to get inflation pressures in two years time if we don't start. that seems to be of you i hear often. when we get to this inflation level? the u.s. is growing well above potential now. the fed thinks the u.s. potential growth rate is 1.8%. there is very little slack in the u.s. economy. you don't need much more growth before you get inflation. wages, thees to
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headline wage numbers that you would looked at 10 years ago, they're much lower now. the fed will be looking at 3.5% as the risk level or wage growth before inflation pressure could become a concern. u.s. wages are growing below 3%. >> does the fed know what for employment is now? >> no. it is tough across all advanced economies. after the crisis we were expecting his racist where you storisis.i the national rate is higher than before. unemployment is well below what central banks have anticipated. u.s. unemployment could be 3%. we simply don't know. if the fed goes three more times this year and next year, that is
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a very gradual pace given the fiscal stimulus and the economic backdrop and the global economy. i'm not worried about putting the brakes on growth with that sort of taste timing. >> that is for this year in total. is that symmetric? is that allowing the inflation rate to be above target next year? as it rises above target. >> does that has a symmetrical inflation target. inflation expectations matter an awful lot for achieving your mandate of 2% inflation. below target inflation, you want inflation to run above 2% for a while see you correct expectations. is this a bit of a worry for you if it goes too far? a demand-side stimulus at this point would normally be inflation.
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you don't really see wage and price data. inflation damage can take hold fast. they have to be careful of that. financial policy is very competitive in the u.s. and elsewhere. but that is not trying to the brakes on economic growth of prevention overheating -- but prevent a overheating. when it comes to the dollar, we were talking about geopolitical risk earlier. you think some of the dollar strength has been down to a little bit of risk aversion. is that is the case, is that daughter -- dollar strength maintainable? >> that is very good question. what we have observed until february is the dollar weakening on the fed. that is the age of caution after the crisis and investors looking towards riskier assets.
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it reflects the strong global economy and the weaker dollar reflects money coming out of the u.s. is perceived as safe. central banks can act as a buffer. we don't have major inflation risk. wages are not at the level where we would be concerned. if the yield curve would suggest that markets are concerned about economic growth, is that were to materialize, the fed to delay a rate hike or two and act as a buffer. it is exactly what we saw yesterday with the bank of england. >> thank you very much. he will stay with us on the program. i wonder what david bloom thinks about the dollar in view of the cpi data we got yesterday. if you want to hear what yesterday on the dollar and all other things, he is global head of currency at hsbc. he'll be appearing later on bloomberg surveillance. if you want to get in touch with him, go to the tv function on the bloomberg.
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it says, ask the guest a question. put in your question and that will go straight to the surveillance team. of russian backed facebook ads intended to stir discontent in the united states have been made public for the first time. over 3000 ads were released on thursday by house democrats. each at was designed to target americans on emotional issues. joining us now is alex webb who writes about technology. very good to have you with us. with these as designed, what were they designed to do exactly? >> to sell instability. it is not about making donald trump win. about engendering of bead of doubt into the results of the election. that has implications of things back home in russia where they have their own electoral system which might have some problems. the u.s. has its problems as well so everything is fine at home. >> what is doing to ensure this
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doesn't happen again? >> it is using a measure were political ads are clearly vetted and they are it fans to make sure they are of a verifiable background. they have set it is not something they will ever be at the stop entirely. facebook's ad mechanism is fast and largely automated. they're going to have people going through the platform and tried to check for these sorts of things. it is hard to plug that gap. >> it is fascinating the way they talk about this. , by publicizing these ads and giving them with their time, the ideas to inoculate the public against this. to make the public very smart consumers of facebook. where does this take us on the regulatory threat to facebook and the threats to this type of technology? >> if you look at who released it, the intelligence committee democrats. they are more inclined to regulate the republicans. even at the hearing in the senate about a month ago,
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republicans were also talking about regulation. when that happens you are sure it is going to happen. the question is what form it takes. facebook is very keen to push that. the numbers at facebook have gone back to where they were before the scandal broke. it makes you wonder what kind of threat this is. maybe in the u.s. system doesn't have the technology of facebook to really regulated. the mark udall say that facebook is responsible for the morethe election, people are saying, the system is very effective. if you are an advertiser your where you can target your specific the graphics at very cheap. russia did it exceedingly cheaply. more and more people are advertising with them and people are investing. >> thank you so much for joining with us. always love your energy so early in the morning.
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especially on a friday. next week, bloomberg technology has to based in -- heads to boston. our special coverage starts on monday at 10:00. >> something to wake up four. a big week for m&a. billion, are we living in this golden. ? the bank of england has seven meetings. will it raise rates? that is next. this is bloomberg. ♪
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>> good morning everybody. it is 6:40 40 london. 7:44 if you are in paris or berlin. 1:44 in new york, of course. let's go to bloomberg business flash. >> thank you.
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reached ending a bitter three-way feud that has raged for years. inspired allas outstanding shares from the board that family stanley. they bought almost 7% of itself from fwa h, representing 24% for about $2 billion. they have discussed a valuation in a range of 16-30,000,000,000 dollars. a global spokesperson said an ipo is an option at the decision is up to the owner and declined to comment further. presented and severely -- representatives declined to comment.
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goldman sachs will issue apples new cobranded credit card of the investment bank deepens its push and consumer finance. sachs's arrangement with the iphone maker would replace its previous deal. the two companies are still formulating the product. representatives declined to comment. that is your bloomberg business flash. >> thank you very much. it has been a big week for m&a in europe. competition in the telecom sector is heating up as vodafone is buying european assets from liberty media. are missing a golden. for m&a? m&a?lden period for >> i think the most important thing is in the markets right now is transactions happening with the time is right. you don't always get to choose
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that time. sometimes a buyer forces the action. sometimes it is the seller who says, at this point i'm going to sell my organization. that dominates whether the transaction is attempted or not. the regulatory piece is one that you always have to worry about. bitt now it is a little more idiosyncratic than we have seen for a while. unless there is a glaring antitrust issue, that has been proven over time to get the way, i think companies are prepared to take the bet. the environment is as good as it is going to get. regulatory on the spectrum of risk will slide to the bottom. >> one thing that is always talked about his being a driver of good m&a is credit conditions. we have that now for sustained. -- a sustained period. is the strength of the m&a market sustaining the quality of the market? >> i haven't seen that yet.
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in investment grade we have not that aresactions questionable from a credit perspective. we are having big organizations who are very well-funded, the constraints that they face are the depth of the fixed income market. those are transactions that are formative for the industry. and creditconditions capacity of these companies are quite enormous. >> let me just think about that. takeda being downgraded because it is seen as taking on too much debt. we have at&t doing $160 billion of debt. a company is saying, it doesn't matter about our credit rating so much. it doesn't matter if the credit investors are worrying about we are doing. >> it gives you a sense of how
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other priorities are. do you want to move your company forward first are do you want to attend your balance sheet first? against to be as simple as that. when the opportunity is there, you have to grab it. in this kind of market. we have lived in a market for tenure and prejudice were there was all sorts of obstacles. a lot of those obstacles of melted -- have melted away. it is like the regulatory issue. , thisve to risk assess i the consequences are, -- decide what the come -- consequences are. we have not seen this in a long time. >> i know you guys focused on this as well. everything over $5 billion in the moment in the u.s. m&a market, it spreads over 30%. that is a staggeringly high number. what is happening? are they seeing something that
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we are not? i use the word idiosyncratic too many times. it is a very specific investor group gets involved in merger transactions. the long only funds typically don't play the stuff and less they are specialist. the amount of capital that is being applied to the merger transactions right now is as low as i have seen it in a long time. >> that was bloomberg speaking with michael carr, goldman sachs global head of m&a. let's talk about what is going on in the global -- united kingdom today. our guess is still with us. i have lots to say about the bank of england. this is, we saw a big move downwards but that came after a
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big slow move upwards. does it look like the fx market interpreted it this video? -- to you? >> this is what the banquet -- bank of england. i would listen to the bank of england. they thinks it will be 0.3. they put that down -- nothing has changed in the medium-term view. still expected moderate tightening growth above potential. i think it is a hawkish hold. >> a hawkish hold. talked about in the news conference about communication than actually communicating. was talked about in the news conference about communication than actual communicating. made itard guidance monetaryr him to use
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policy to help the households and businesses that he kept bringing up in the news conference? guidance, itrd serves as a useful tool to smooth the transition of policy changes. that is important and the world of high debt levels, high tail risks, slow potential growth. every 25 basis point hike is a big event. the market was virtually prepared for a mate rate hike five weeks ago. thevacant mixing with -- bank of england was expecting to hike in may. mark is slowly reduced their expectations and the bank of england decided, let's hold for now and make sure there is a rebound. in a way that is understandable. imagine if bank of england hike yesterday. what were you doing? use some economic data is bad. it is important that the bank of
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england has a strong economic backdrop. that is all it is waiting for. a lot of the press conference was about this. what should central banks be doing? talking directly to the consumer? in the u.k. that seems what they to -- were talking about doing. should they be communicating with the market which then passes it to the consumer? how should the consumer -- communication strategy work? forecast and look at the underlying assumptions. the bank of england targets 2% inflation. it reaches its target and two years time on the basis of three rate hikes. that was the market implied indicator. that is a pretty good base case to go off of. headsrket always's blitz with central banks. -- always splits heads with
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central banks. slow down, theto market would be worried that something was wrong. it is mainly a sentiment get -- gig. the central bank is in a tough position for the moment. >> me take you to this chart. -- let me take you to this chart. there is not much support until we hit 130. mark carney may reference to the pound and said part of their forecast was seeing inflation fall to target over the next two years. the nazi as much pass through into those import pricing. -- they see as much pass through into those import pricing. the bank of england is concerned principally about underlying inflation. its potential growth instrument is 1.5%.
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the bank of england expects modest gains in underlying inflation risk. when it comes specifically to , i'm not sure that endless policy can do that much. this is thing driving the long-term view on brexit. we have seen the u.k. economy do better than markets expected. has not madeing much headway since it valued after the brexit vote. markets are still pricing in the risk. a lot ofuld do a big, damage to long-term potential growth. part of the conversation is about the customs union. what does this have to do with the debate around the customs union? the tangled up in blue, you have seen this.
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what bob dylan achieved in his hit single, he provided multiple perspectives into one point of view. that is what the artist movement cubism did. that is what theresa may have to do. do.as to she has to integrate all of these views into one nice package. what happens next? we will probably see some fudge. u.k. has dropped all of its illusions about what it will achieve in negotiations with the eu. u.k. tuesdayt the customs union. >> acutest pacing -- painting -- a cubist painting. thank you so much. we will bring your interview with gordon brown at midday
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london time. do not miss that. we talk oil next. this is bloomberg. ♪
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>> good morning from bloomberg headquarters. >> here are today's top stories. >> president trump's historic meeting with north korea's kim jong-un will take place on june 12. can they reach an agreement on denuclearization? says $100 america barrel oil is back on the table as iran sanctions threaten to further squeeze already tightening markets. hithe u.s. yield occurred his flattest and more than a decade on weaker inflation and solid demand at a record treasury opt in. -- auction. ♪
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>> let's take a look at how futures are looking. happy friday. we are just under an hour away from the european equity market open. futures looking pretty subdued. this after we saw a jump in the s&p 500 yesterday following that and changing some expectations our thoughts from the fed. we have seen the strong session in asia as well. we couldlike it -- have a modest rebound from the weakness we saw in yesterday. >> let's see where we are the asian equity session. this reassessment around the inflation story in the united states seems to be capturing the markets imagination over the last 24 hours. u.s. cpi comes in at the low estimate.
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that is something that the equity markets are digesting. trump and can set their day and venue in the market waits for singapore. that is the geopolitical context. one of the things that has driven the price higher over the past two weeks or so -- see bank of america talking about the possibility of $100 a barrel oil. we put it in the pound as well. thet conversation around pound. we are pretty stable this morning. we lost a bit of ground yesterday and the press conference around the bank of england decision to keep interest rates on hold. lots of conversation about the communication strategy over there. meet -- seems to have been delayed for now. >> it seems the market -- if you look at the sterling reaction. react ase gilt markets
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well. does gilt markets will open up at 8:00 a.m. along with the european equity markets. let's have a look at some of the other bond futures. the treasury yields is steady in the session. we trade around 2.97%. some interesting things going on under the surface. we are not getting a lot of direction from the european bond market and the cash market open. the big story and treasuries is the relentless flattening of the yield curve. let's get the first word news. ♪ >> thank you. donald trump says he will make north korean leader conjunction -- meet north korean leader on in singapore. singapore has security partnerships with united states
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and strong ties with china. trump made the announcement after greeting three u.s. citizens free by north korea, praising their release. >> the relationship is good and good isy something very going to happen. they understand it is very important to them, it is important for everyone. japan, south korea, china, everybody. i think it is going to be a very big success. >> is really prime minister -- israeli prime minister is cross -- accusing amram -- iran of crossing a red line. they targeted iranian military infrastructure. iran says the claims are live -- a lie. malaysia's new prime minister has said he will lead a business
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friendly administration and seek ways to boost the country stock market. remarks, he said he would focus on growing the economy and reducing debt, adding that some terms may need to be renegotiated. much of the money missing to be recovered and those responsible must be punished. >> [inaudible] [applause] [inaudible] >> at&t isn't what a donald trump's personal lawyer up to $600,000 for insights and asked him to look into its proposed merger with time warner. that is according to a person familiar with the matter. that figure is more than the
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alleged by the lawyer for stormy daniels who revealed a series of payments to michael: from at&t. space tech has proponent the launch of a satellite. the reasonable rocket is designed to "pull of 10 or more flights with limited refurbishment. yesterday's planned launch was aborted with just seconds to go. powered by more than 2700 journalists and analysts. you can find more stories on the bloomberg at top . >> we're rounding up the training week. japan closing higher. you have australia fairly flat. look in all this green in emerging markets which have been
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hit quite hard. we have seen a rebound in the last couple of sessions. the msci asia-pacific on track for its biggest weekly gain since february. a little bit of weakland -- we can is coming through on mainland china. weakness is coming through on mainland china. this etf in tokyo down by 1% after a 3% fall yesterday. we are seeing health-care stocks very well supported in the region. stocks rising by route 3% in asia. properties at a record high in hong kong on news it is going to sell some of its buildings in .ong kong that could rake in around $3 billion. >> thank you very much. a bit of m&a news roundup the week in u.k.. we talked a lot about this in
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recent sessions. this comes in the technology space. cpg holdings have received an offer from silver lake. in agreed to buy it for 490 pence. 375.2 -- price cold at 3.5.2 -- 375.2. the other headline we are getting is that dmt had made an undertaking to vote in favor and just shy ofy mail, 30% shareholder. that seems to be significant in terms of the shareholders approach. >> we will look for any sort of reaction to this when the market opens. let's turn back to geopolitics.
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it has been a driving force in markets this week. president trump administration won the release of three detainees from north korea and secured a summit being take place next month in singapore. oil separate second week of gains. for more let's bring in bloomberg senior international editor. she is in hong kong. singapore has been chosen for the meeting between president and north korean leader kim jong-il. -- kim jong-un. does this location tell us anything about how the talks will play out? >> singapore represents neutral turf for the leaders. that is important consideration. the u.s. has a security agreement with singapore. north korea has an embassy there. china has to -- strong ties there. it is viewed as something that
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everybody can agree on. north korea's leader wanted a closer to home -- it closer to home. this be the farthest he has he has become later. singapore has been known to host these kinds of gatherings in the past, including historic summits. there is a history of that. there is some symbolism involved in this is well. >> i know a lot of other venues and locations that were in the running. president trump has announced the united states is leaving the iran accord. what is next there? hope of any help -- crafting a new agreement?
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is something new obtainable? said thatnt trump has a campaign rally in indiana -- at a campaign rally in indiana that he also could be a new agreement. that, hetime he said derided the old agreement and call it embarrassing. he said that any agreement would , toire iran to give up denuclearize and would require that the u.s. have inspectors there. these are things that iran is not necessarily going to be willing to go to the table with. even the u.s. allies have said it will be extraordinarily difficult to see a path to a new agreement once the u.s. decides to leave. that he wantsaid
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to see the highest level of sanctions restored against iran once the u.s. leaves the deal. it is hard to see how agreement could be hatched. the one thing that is interesting in terms of timing is that there is a whole winds down. efore the u.s. can restore -- period beforen the u.s. can restore. there is a time. here are there could be some talks. all the parties see it being very difficult. >> thank you very much. joining us now in the studio, etf investment strategist at the ml global asset management. very good to have you with us.
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let me after about your perspective on risk at the moment. i know that you think the big risk is thinking about the geopolitics. us -- you remind us that the big risk is inflation. absolutely. the median market reaction to the exit of the u.s. from the iran deal has been a rallying in oil prices and a weaker daya -- dollar. be most lasting effect would driving more volatility in the oil market. because of rising tensions between opec members and that will become obligated for markets to anticipate -- be complicated for markets to anticipate. market prices translate to more
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volatility and inflation expectation. >> i want to show you this chart which points to exactly what you said. volatility in oil edging up. make america saying that $100 is in play. is volatility and inflation more for concern or the actual level of inflation? >> from an investor point of view, what is important is to -- what level of inflation will endangerengender -- the current path of interest rates? any unexpected rise of inflation would make up -- a more difficult path for bankers to incorporate inflation into estimates. >> last year we talked about, why is the dollar not for --
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strengthening? this year things started to change. are you concerned about emerging markets? i have this map. in flax up some of the useful -- it flags some of the usual targets. are you concerned about emerging markets and their ability to withstand the fed and hikes? >> if you look at etf flows, they have been declining slightly. the result emerging-market equity etf's and the past couple of weeks. most interactions to it decrease in energy markets. looking at the bigger picture thewhat happens at beginning of the year, emerging markets have been resistant to market abilities. better --some
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providing solid ground for energy markets. they are still enjoying very strong global demand. no hard lending in china. prices, aise of oil weaker dollar will benefit emerging markets. as long as the interest rates are rising on a gradual basis and the dollar remains low, this is quite stable out of emerging markets. >> as long as the dollar remains low. people are still unsure of where that will go. recordart shows the short position that we have at and 10 yearn five treasury futures. the last time that happened aslds ended up coming down, we saw those shorts being covered. that has not happened yet. anything in the etf flows that tells you the direction of what we could go on the tenure treasury yield? >> not exactly.
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etf trends are very short. it is not easy to read too much into it. long endonger and -- of the curve, it is insurance by inflation expectations. coming back to inflation expectations. >> thank you very much. she stays with us here on the program. up hundred -- a conundrum as the brexit deadline comes in. we will talk about the u.k. we will bring you our interview with former u.k. prime minister may day at london time. this is bloomberg.
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>> it is 7:20 a.m. in london
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which means we are 39 minutes away from the european equity market open. it looks like we can see a slightly higher open judging from the european futures. the s&p 500 has broken from a bear trend. we have the bloomberg business flash. >> not a bear market. an agreement reached ending a bitter three-way viewed that has raged for three years. sica but almost -- representing 24% in interest for around $2 billion. a strategic dealmaking driven by destruction across industries means this year will be an extra very time if you are making,
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according to the goldman sachs m&a team. >> unless there is a glaring antitrust issue, that has been proven over time to get the way, i think companies are prepared to take the bad. the environment is as good as it is going to get. regulatory will slide down to the bottom. >> that is your bloomberg business flash. >> thank you very much. the window tout tighten volatility before brexit is closing. the bank of england kept rates on hold. economists are wondering if this is enough time to maneuver should brexit go wrong. strategist, you think that is what the bank of england has been about? taking rates higher so that if
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things were to come arrive, -- go awry that there would be cuts available to the bank of england? is that they -- why they have been hiking? >> the important thing is that the outlook of the you clay -- u.k. is quite unclear. the key takeaways from yesterday's meeting is, what is driving u.k. economy is mostly external factors. investments and exports have been the biggest contributors u.k. growth. this is key to look at. on theond point is more revision of this year's real gdp growth forecast.
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just below what the bank estimates. this leaves the door open for a hike are not hike for later on this year. >> would yesterday mark him keeping his options open her was in a hawkish hold or a dovish old? -- hold? >> because the gdp growth forecast has been revised downward, this can be seen as a dovish hold. a slowdown in the first quarter was due to temporary factors. there will be a bump back in the second quarter. the key component to the next year's decisions would be the inflation forecast update in august. because it will include the old increase, it price
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will be the trigger for activity. showing thechart inflation story in the u.k. when is crunch point in terms of the brexit conversation? do you think that later on the is your markets could get nervous? we manage because of the transition deal? bull market stay calm about this until the end of 2020? thehe stabilization of sterling has been a contributor to a lower inflation, coming back faster than the banks previously forecasted. you mention a trigger. when we look at what happened in november, it looks like the upper range of what the bank is ready to tolerate. if the higher commodity price or oil price slide into headline
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inflation's and put in places above to percent, that can be a trigger for the next move. >> you said earlier that they are keeping all options open for 20 team. have you trade sterling a guilt in that environment? cable, theok at the divergence between the fed and what is happening in the u.k. will drive the cable down because of pressure on the dollar. if you look at sterling versus the euro, both regions are sharing the same outlook for economy. volatile duebly be to brexit negotiations. >> thank you very much. that is it for daybreak europe. coming up later in the day, we will bring you our interview with former u.k. and mr. --
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prime minister. this is bloomberg. ♪
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♪welcome to friday morning. guy: this is the "european open." we are live up from our european headquarters in london. cash trade is less than 30 minutes away. ♪ guy: mario draghi on home turf. he speaks in florida this afternoon. will he give crews on winding down stimulus. oil is heading for its second weekly gain. bank of america says we could have $100 a barrel next year.

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