tv Bloomberg Daybreak Europe Bloomberg May 23, 2018 1:00am-2:30am EDT
anna: good morning from bloomberg's european headquarters in the city of london. i am anna edwards. manu: i am in dubai. these are our top stories. u.k. shares in the bank-based decline as much as 6%. rivals are scoping out a merger. hit itsle currency weakest against the dollar this year. investors are weighing the impact of a populist government. get on with brexit. says.k. foreign secretary
theresa may must quit the u.k. trading rules as soon as possible. oris: the plan is to come out of the customs union, to get on with that project with all convenient speed. ♪ anna: a very good morning to you. a busy morning already. just past 6:00 in london. is therisk radar, risk prime word. -pacific, not the full story. down 3/10 of a percent. market low into the nikkei down by more than 1% in this morning session.
what is happening in turkey? north korea, what can be achieved? italy? olivet questions, reflected in some of the strengths we are's -- all of that reflected in some of the strengths we are seeing in the japanese currency. what is going on with the turkish lira. the dollar is up by 2% against the turkish currency. there are a lot of questions. japanese trading is a big story. than thea bigger story general momentum low we are seeing in the turkish currency? manus: this is a witching hour discussion that has gone on. the lira has proven incredibly important. this has becomes one of those self-fulfilling stop-loss o
rders, negative feedback loop, a justign -- is it really margin traders cutting their losses? these are the next positions. net positions. a brilliant line on the daybreak lead this morning. the risk is that the turks could machine-gun themselves in the foot. the risk of capital controls -- who is controlling the lira and the central bank? week,n said clearly last i will take the lead in terms of policy. if currency ever needed a bit of help from the central bank, perhaps this is the moment. anna, breaking news on the stability?
anna: lots of threads to weave. top line numbers to report today. record.nagement at a francs.ion swiss cost income ratio just below 67 -- 16.7%. this business recently talked about seizing m&a opportunities. let's look at the u.s. features. we talked about risk in the as ian session. what do the futures happened store? -- futures have in store? u.s. equities got a boost yesterday, with the tariffs around the car story from china, fading a bit toward the end of the trading day regarding
concerns about what trump will deliver toward north korea. e.u.ll be speaking to the commission vice president. then, iran and e.u. perform. we will speak to the european parliament president at 8:30 london time. we are talking to him about what is going on with facebook. that was the big story in the european parliament yesterday. carlos ghosn during "bloomberg surveillance." let's go to the first word news. forette: the search italy's next prime minister has been thrown into disarray after doubts were cast over the capability of the candidate chosen by populist allies. he is no longer certain of
endorsement by the anti-establishment five-star movement, and mateo of the anti-agreement -- anti-immigrant league. u.k.'s foreign secretary has said theresa may must get on with brexit as fast as possible. boris johnson said she is responsible for ensuring the u.k.'s takes back control of its tariff regime, the strongest a compromise that could keep britain involved in european trade rules for years. : get on with it, that project, with all convenient speed. juliette: donald trump has expressed pessimism about whether the summit with north
korea's leader will take place. the comments came as the south korean president flew to washington amid growing uncertainty about kim jong-un's attendance for the meeting. the regime has been critical of trump's request for total de-authorization -- de-nuclearization. not that happens, you will be knowing pretty soon. juliette: global news on air, 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. you can find more stories on the bloomberg. concerns over turkey flowing through into asia. you have the typical story eiwih the yen and gold rising. a lot of weaknesses coming through the japanese equity market. the weakness coming through in
japan and hong kong today. coal companies being hit hard. some emerging markets are doing ok. bank indonesia is ready to buy more government bonds. just for the close in china it china, we heard bowl cut the import tax on cars. hong kong automakers are higher. china plans to increase coal prices. 10ney has said no to that $10.9 billion takeover bid from the u.s. harbor energy firm. manus: a great roundup. let's turn our attention to the stock of the day. it is exploring a potential type up with standard charter as part
of a contingency plan among pressure from active investors. isndard charter -- stanchart showing a surge in hong kong this morning. russell, good to see you. tell us a little bit more about what is being said. this is very much coming from the chairman of this, looking at back stops. >> that is right. chairman john mcfarlane is ,xploring contingency plans according to the ft. partnerone of them is ing with stanchart. he was quick to say no formal bid is being made. discussions are only taking
place at this point. mcfarlane is keen on exploring this matter in theory. anna: what are the other contingencies being explored? this is despite considerable amount of restructuring in the business, around retail and investment banking. directors are exploring ways to improve shareholder return. they have mentioned publicly they want to find ways to improve that. another is increasing the u.k.tions in the the third one is tying up with other big banks, including deutsche bank or credit suisse.
those are some of the more extreme options being explored. manus: we got up with jeff staley on the numbers a couple of weeks ago, on the engagement of the activist investor. anna was cautious in terms of his response. we are absolutely focused on what an activist investor has to say. but this is the result of share bond, or is this trying to get ahead of the activist calls? >> what is really behind the ft's reporting here -- since edward brandon took the stake in march, that has attracted the attention of executives. taley has expressed a public
interest to work with the shareholder. record ofs had a taking management roles even, and companies he has taken stakes and. -- in companies in which he has taken stakes. the interest in the company is something the bank is taking seriously. anna: russell, bloomberg's asian finance at -- asian finance editor, joining us from tokyo. search for the country's next prime minister has been thrown into disarray after doubts were cast over the suitability of the law professor candidate chosen by populist allies. longer certain of endorsement by luigi demaio of the anti-establishment five-star
movement, and to be leader of the anti-immigrant week. these two gentlemen had proposed him. they said dimaio maybe back in the running. -- may be back in the running. kevin joins us from rome. was proposed as the new prime minister, that there were doubts about his candidacy. what is wrong with him? probably inflicting his academic credentials. s resume is super long and a lot of points are being questions. a lawa political novice, professor with no experience in italian politics or running a government administration. what do we expect to be done, appoint him as prime minister with contingencies?
does the president have the power to do that? kevin: the headlines in all the papers today are conte and his resume. we can assume the president will take the time to make sure he makes the right decision. there have been expectations of an announcement today. powers inrly strong this area and will not just let anyone go through. in, thank you, with the daily update on italian politics. simon, our chief currency strategist at bny. let's talk about contagion. to what extent does this remain and italy story? to what extent is this a broader european story?
varioushis chart on national debt. italy is in the fray, spain and portugal are reacting. what are you seeing in terms of contagion? >> it is largely contained to italy, but people are starting to pay attention to what is happening. the key developments was when we started talking about shortsighted debt being issued by the italian government. many-bonds, which have been characterized as a parallel currency. -- mini-binds, which has been characterized as a parallel currency. when it comes to the euro, maybe
we need to start factoring that in. understand the variety of risk. have a look at the risk reversals on the euro. would you sell the euro? >> absolutely. we consider the best possible outcomes with what is happening in italy. game takingre is a place between the new government and what is happening and the ecb. the ecbdo they believe attack the italians bond market should the italian government go on a spending spree? we could perceive the new government when it is backing
up. then there will be pressure on bond prices. it widens the spread. anna: caution may be the watchword. no one is talking about italy leaving, or "quit-aly." but someone who has been talked about in the past is the finance minister. --me are talking about him but nothing is confirmed in terms of the leadership. it is on his radar, certainly. simon: this draft agreement was leaked so widely last week. there are comments in there about the euiro. going to miss that.
he looks like a threat to italy to be more free in its spending. you have to have that ability. he is looking at the rest of saying, do we want to stick with the current deficit rules? let's find out. never say never when it comes to europe. the suggestion has been about currency.t the single as soon as it became clear with greece in 2015, it changed the nature of the story. simon, are currency strategist. thank you. coming up, president trump is not pleased with the results of the talks with china. the very latest on the global
markets. "notdent trump said he is really pleased" with the results of u.s.-china trade talks. there was a disagreement on and concern over harming negotiations with north korea. simon, there are two things, he is not happy with where things are with china. not where things are with north korea. all of this comes back to the dollar story. as we look at trade war's and political disruption, does this reassert the king dollar? simon: i think if anything, the
dollar goes sideways against a range of currencies. you have a swiss franc that is appreciating. against the euro or lira the dollar started to stage gains. i don't buy the king dollar sto ry. with what is happening with geopolitics or trade, what about yield? slightlyslowerely -- lower in the u.s. right now. will itbuy the dollar the high. the currency will start to appreciate with traditional risk-off assets. anna: the yen went higher this morning, for sure. this chart shows the correlation
between the dollar and yields. caused the correlation to reassert itself? simon: i don't think anyone has a definitive answer. correlations kicked back in in mid april. coincided with 3%. the balancedo with sheet reduction. 3.0486% this morning. we are seeing a little above three percent. what would happen if we saw yields going up? the dollar would hit higher. our yields doing that? whenrisk-off environment,
you see that thing happening, some are turning cautious over the summer months. there is a serious risk-often june -- risk-off in june through august. there be a doveish tilt in the minutes from the fed? simon: i don't. we are still in a hawkish stance. they will probably go into the summer hawkish and hike rates, other than that, far more cautious. us, themon stays with chief currency strategist at bny mellon. next, boris johnson wants theresa may to get on with it.
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palace in tokyo. of dollare -- bit weakness as the lira gets smacke d. vulnerability it didn't markets this morning as president trump thisits -- hitting angst morning as president trump exhibits angst over talks with north korea. liette: i am glad you focused on japanese equities. we are seeing weakness in asia , in japan is very much
underperforming. around the concerns, summit with north korea, and con cerns around trade, and the lira, with contagion in the emerging markets. let's look at dollar yen. we are seeing a little bit of dollar strength in this session. against the yen, at one point jumping the most in three weeks against the dollar. the dollar yen is nearing the conversion line support. speaking of the emerging markets, we talked about the euro against the dollar. it hit another record low. i want to show you the lira against the yen. it has broken the 24 year level for the first time ever. another great chart is to --
showing how traders might start to be seen retail investors. finally, taking a look at a particular stock. reports that it could be an exploration of possible combinations with charters. a range of possible contingency measures. in hong kong, this has risen as much as 6.5%. anna: let's talk about the data. first quarter unemployment rate in france, not really the right direction. up 9%. the estimate was 8.8%. the mainland unemployment rate is at 8.9%, so that doesn't look
great. the number of unemployed pricing 83,000 in the first quarter. macron is making performs to the reformsrket -- pushing to the labor market. manus: he is trying to face down the unions. boris johnson, the foreign secretary in the u.k. has sent theresa may a list of brexit commands, saying she has to take the u.k. out of the european trading route as fast as possible. he spoke explicitly to tim ross at the g20 summit. the prime minister is the custodian of the plan to get on with it at all convenient speed. that is what we are going to do. whattina, peru, chile,
they want to hear from us is that we are getting on with it with dynamism. we are going to take back control of our tariff schedules. that is what they want to appear and that is what we are hearing. tim: for very long? is important for people to have a sense of 18 is going to happen, as fast as reasonably possible. said we should trust the prime minister to deliver on worryomises, there is about a betrayal of vision. can they trust you? what is your bottom line? if you get shackled into some arrangement with the european union, will you be prepared to walk away from the cabinet?
boris: the prime minister has made it clear we are coming out of the customs union, what is entailed by those promises is very precise. we take back control of our tariffs and we run our own commercial policy. we are able to do things differently if we choose when it comes to our regulatory framework. you're not thinking about control of your borders. we want to be emphatic about that. we have a clear perspective and mandate. it is all mentioned in excellent speeches. nna: the u.k. foreign secretary speaking exclusively with bloomberg's tim ross.
our chief currency strategist at bny mellon is with us. he says we need to take back control. i have a great charts that ties in some of the things you have been talking about. this is the vulnerability of sterling. brexit.lk of hard we circled the vote, another period in u.k. history. toon: we are going back 2016. that was the realization we were leaving. indication people had not considered the possibility of any exit. is the octobert conference, when it became clear we were leaving the customs union and the market and theresa may was unambiguous.
sterling lost it over the next several days. there was this bit in the tokyo markets. i think sterling is absolutely favorable with hard brexit talks. -- vulnerable with hard brexit talks. the market is factoring political risks. the final thing the chart shows is the move we have seen in sterling in the last month or so is purely about yield, nothing to do with brexit. anna: the chart underlies if we get more hard brexit talk, the isnd in his home -- pound -- is once again vulnerable once again. simon: we have to think about the june hard deadline but the
european union. manus: the pound has not been good with pricing political expense. rising? i would put it to you that what is being said to the prime minister is, deliver, or you are on your last legs. simon: there is political risk in the u.k. if you want to talk about when that risk could come up, that period around october when parliament comes back is when these issues start. happens with the negotiations with the european union. should something come along to overnment's current position in parliament, you could be moving towards an election.
within the confidence agreement, the last time we had this sort of thing in 1977, this lasted 18 months. of course you could start to see that crumble two years in. we will have political unrest with the pound in that case. us: sterling battering has been on the yield story, not a political story. cpi, 2.1% from 2.3$. -- from 2.#%. could this be another droplet sterling today? you can see an early freight hike from the bank of england. we have already factored in that caution on the yield story.
it undermines that simple guilt idea. it is going to be negative. when you are looking at the yield differentials against the seen thesehaven't kind of yield differentials since the mid-1980's. where do you trade, the pound against the euro? thank you. how do you trade with everything said about italy and politics? then: if i had to, on grounds that the italy ecb story -- someone will blink somewhere along the line. i would prefer to be short of sterling than the euro. simon, the chief currency strategist at bny mellon.
if you are a bloomberg user, grabbed everything anna and i look at drop the show on btv go. catch up on the analysis for future reference. a: is italy a threat to the euro? we will discuss. the european parliament president joins us for an exclusive interview at 8:30 a.m. u.k. time. -- this isk bloomberg. ♪
3/10 of 1% into the close last night. president trump expressed skepticism on the north korea summit. lower,a little bit looking at the risk side of the market. in the meantime, the business flash. juliette: shares in stanchart have adjusted er barclays is exploring a potential merger. the paper reported john mcfarland was theoretically keen on the idea of the combination and was supported by the deputy chairman. europeanerberg left union lawmakers fuming over unanswered questions at the end regarding the was.ny's recent privacy
zuckerberg repeated what he has been telling every audience, his company did not take a broad enough view of its responsibilities and foreign interference in elections, and he is sorry. >> we have heard we have not done enough to prevent these tools for being used for harm. goes for fake news, foreign interference in elections, and developers misusing people's information. we should take a prod enough -- wef our responsibility did not take a broad enough view of our responsibility. zte is estimating losses of $3.1 billion from a u.s. technology ban. people familiar with the matter said the smartphone maker is hopeful of striking a deal. plan in place to swing the factories into action within hours if washington agrees to lift its seven-year moratorium
on purchases of american chips into equipment. -- and equipment. fallen to aro has five month low against the dollar over concerns of italy's next government, and fears around the country's spending policies. commission vice dialogue for social joins us in brussels for an exclusive interview. good to have you. how concerned are you about the budgetary plans you have heard so far from this new italian administration in waiting? just today we issued new recommendations for new member states, including italy, where
our message is italy should continue with a responsible fiscal policy, continuing to reduce public debt. for thethe basis discussions of the italian government. from everything you have seen and heard fuss far, does -- thus far, is what is happening in italy rekindling an existential threat to europe? must respect the process ofitaly and the formation the government is still ongoing. we are not jumping to conclusions at this stage. we have the necessity to
continue with prudent fiscal especially in the case of italy, the second highest in debt to gdp ratio in the eu. nna: your message is that they need to have responsible fiscal policy. does it look responsible? valdis: indeed. jump toot ready to conclusions at this stage as a s the formation of the government is still continuing. we need to have discussions before we jump to conclusions. will be issuing country-specific recommendations, and how much italy should reduce its budget deficit for next year. manus: one of the things that
has been the core of his potential administration in italy has been pushing back against legislation that has been enacted, structural reform. is this a big risk for your -- you, this administration will push back against eu reform?s on valdis: with regards to structural reforms, they are needed in many member states. also in the case of italy, it is having issues with very slow productivity growth. the message needs to be addressed in italy's economy, to address economic growth. ecb has not said much
publicly, or that they are watching the situation. you are concerned about the euro. be doing?d the ebb becbv are you talking to them about things that could be done? an independent's institution. cb's an independent institution. it is clear about price stability and targeting inflation and growth. those are the parameters which determine monetary policy for the ecb. draghi said he would do whatever it takes to secure the euro and stepped into
the breach. if the yields rise in italy, if would yous blow wide, support that sentiment from the ecb to do what it takes to keep the euro intact? the ebc is an independent institution. it makes its own decisions and doesn't have to ask permission from the european commissioner. regarding the current economic circumstances, we are in a very different economic circumstance. we are not in a crisis, the art in the sixth year of economic -- we are in the sixth year of economic growth. we should be looking at how to strengthen the resilience of the
economy to face future crises. that is what we are focusing on and that is the approach the ebc taking. exemption the eu around metals and tariffs runs kind of you hope some agreement can be reached with the united states? valdis: we have concerns. discussions with u.s. authorities are continuing. emphasizing wey have a temporary extension of those additional terrorists. riffs those additional ta
and we have realized we needed a permanent solution to this problem, and then we can discuss trade measures, including reciprocal improvement of the market on both sides. manus: valdis, thank you so much for being with us, the european commissioner vice president for euro and social dialogue. the turkish lira is hitting record lows against the dollar. mark mobius is saying this dying side is coming from emerging markets. mark: the general movement of the market is down. ets, exchange traded funds are big, once the machine starts selling, you get a snowball effect. mobius, speaking
exclusively to bloomberg. kill the it fill or central bank in turkey steps in and does something? i don't know if they will step in and do anything today. erdogan'soncern about policies toward the central bank. value to hangal around, waiting until the currency collapses. the question is not going to be about what they do with interest rates. i had someone talking about capital controls early today. we are going to defend the currency with interest rates. what else?
witching hour in tokyo trading seems to be where the lira risk comes from. waiting a little quieter in fx markets and strnage things -- strange things can happen. how concerned are you about the role of the president? -- it isllar debt, he about the fact you have this interplay between the president and the central bank. that is what the rating agencies were talking about. and oil prices. if you aren't going to hike anyonet rates, why would hang around to find out what happens next? anna: simon, great to have you with us. let's tell you on friday, from the ritz bank's 350th anniversary conference, watch
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manus: good morning from dubai, i am manus cranny and this is "bloomberg daybreak: europe." guy: i am and edwards in london. these are today's top stories. manus: standard charters shares jump 6% in hong kong, trading after the reports the rival barclays is scoping out a merger. the single currency hits its weakest against the dollar this year as investors weigh the impact of a populist government. the turkish lira slumps to another all-time low. get on with brexit, the you k's foreign secretary tells bloomberg theresa may must quit the eu's trading rules as soon
as possible. >> the prime minister is the custodian of the plan to come out of the customs union and single market, to get on with that project with all convenience, speed. that is what we are going to do. anna: good morning, this is "bloomberg daybreak: europe." corporate breaking news. headlines coming out from rio. earlier, we reported that rio tinto is ready to accept $3.5 million for its interest in the giant grass fed copper and gold mine carried that is according to people familiar to read rio tinto shares reacted in the u.s. session and australian session. now an update on that from rio tinto. they confirmed talks with
freeport are taking place. reached, but they are confirming those conversations are ongoing. we have seen some reaction in the share place -- price in the u.s. and australia. we will look at the london market in an hour. uk retail? manus: they are accelerating their closure program, 100 stores to close. marks & spencer's adjusted pretax profit, fighting -- the market had penciled in otherwise. they have had price cuts, a number of issues to deal with,, all about revamping the offering. lowerersus clothing, prices on clothing carried full-year adjusted pretax profit 580.9, that is a comfortable beat on the 568 guidance from the market estimates. significant adjustment item of
514 million pounds in the results. we will dig into this number. marks & spencer's, 321 million pounds will be included for estate closure. originally, it was 60 and it is up to 100 stores around the u.k.. 37 of them sell just food. when it comes to breaking down, clothing and home comparable sales crumbled on 3.4%. the market looks for a drop of 1.3%. pressure on the home and clothing side, food sales dropping .6%, the estimate for around 1%. there is not much cheer in the percentage number they are giving for the fourth quarter. some significant adjustments in terms of the results, adjusting 514 million pounds in the results. we will dig deeper into the numbers.
this is how we look in the markets. sterling, the broadside from boris johnson to theresa may, get on with it. get us out of these deals. are waitingts -- we for other futures to start trading because with a bit of dislocation last night, president trump and things with north korea not going to plan -- a little skeptical on these prices. maybe we will move this along because we have the d opening down by .4%ax -- backs opening down by .4%. down .3% on the asian-pacific session right now. about, getting concerned whether it is expectations around the north korea-trump , a little skepticism, lack of detail around settlements on trade between the u.s. and china him all of that in the mix as well as the italian story. u.s. features -- futures running
the .2% on u.s. futures at moment, feeding into the european futures story. underlying the nervousness, the , the yenwe are getting stronger against the dollar this morning. the dollar against the turkish lira, up another 2.4%, not just according to be why mellon or because of the darker period in hours --s in the tokyo it is the fundamentals we know around the turkish economy. manus: it is. checking in on the bond markets, -- may not be appointed. that is the latest from italy. we just spoke to mr. john ross this, italy should be responsible with their policies. sending out new guidelines reaffirming the debt to deficit
ratios. the message to italy is continue with prudent policies. we shouldn't jump to conclusions about italy. italy must address the bottlenecks of growth -- that. interview wem the did. we are seeing a little more pressure, it will be the spread between the btp and german counterpart. a rise of 23 pips for the bones. -- bunds. this spread is one we will focus on most readily. in the bond market in the u.s., better bid there. the turkish lira getting paste at record lows. the emerging-market angst is permeating. the you buy u.s. treasuries, yen? auctionn the midst of was -- bid to cover ratio
in line with auctions, but the yield the market was offered was the highest in quite a number of years, the highest since 2008. getting these options away is the critical point. btp is under pressure. juliette saly has your first word news. searche: in italy, the for the country's next prime minister has been thrown into disarray after doubts were cast over the suitability of the chosenor, the candidate by populist allies. according to an official, he is no longer certain of endorsement by the intent establishment five-star movement or the anti-immigrant league. they said he himself might be in running for the premiership. the you k's foreign secretary has said the country's prime a list of demands, saying to get on with it. speaking to bloomberg, boris johnson said theresa may is
for ensuring the u.k. take back control of its tariff regime. it is his strongest comment since the team agreed on a compromise that could keep britain tied to eu trade rules for years. >> the prime minister is the custodian of the plan, which is to come out of the customs union, out of the single market and get on with that project with all convenient speed. that is what we are going to do. juliette: donald trump has expressed pessimism around whether the summit with north korea's leader will take place next month. flew tomoon jae-in washington yesterday and it growing uncertainty about kim jong-un's goals for the meeting. regime as that pyongyang has made critical or marks about trump's vision of total denuclearization. as you know, on june 12 in singapore, whether or not it happens, you will be knowing
pretty soon but we are talking right now. the iconic american novelist has died at the age of 85. he burst to it international consciousness in 1969 with a satiric couch monologue set in new jersey, his own town. -- national book award and through his inspiration from jewish family life, faith, and american ideals. global news 24 hours a day, on air and tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . the turkey contagion spreading into asia, asian stocks under pressure for a third consecutive session. it is the typical risk on story, the yen called higher. japanese stocks lower by 1.2%.
weakness coming through in china and hong kong markets today, but the jakarta composite has risen and bank indonesia is ready to buy more government bonds, one of the e.m.'s that has been hit hardest. the worst-performing in asia. turning to stock movers we are watching in the region -- before the closing china yesterday, the announcement china will cut the import tax. a big rise coming through in automakers listed in hong kong. a big fall coming through in cold players in china and hong kong as china is to raise coal prices and the state bank of india doing well in their session. numbery dismal yesterday, bigger than expected quarterly loss. there will be no dividend for full-year 2018, but analysts believe the worst is over for the bank of india. some strong buying coming through in that stock today. manus: great roundup. juliette solly in singapore.
barclays is exploring a potential -- with standard chartered as part of contingency plans being weighed by board members. singapore ands in hong kong declined to comment. joining us, bloomberg's asia finance editor in tokyo. russell, great to see you carry in terms of the report, what do you think has prompted barclays? this sounds like a story coming from the chairman's office. i haven't seen anyone right up jes staley's name in this yet. >> that's right. fromeport, this stems pressure from an activist shareholder. according to the report, chairman john mcfarlane has thought about contingency plans
and one of those is merging with standard chartered. was quick to say no formal bid has been made and at this point, -- might be tina in. -- keen in. but it hasn't been discussed on a formal basis. investors are taking this seriously with shares in hong kong this morning. anna: we have seen the share price go higher in response to the story. what are other contingency plans being explored according to this report? talks with standard charter is not the only story here. .ussell: that's right broadly speaking, directors are trying to find ways to improve shareholder returns. jes staley has stated that publicly. that is a contingency plan. another is to bring the u.k. operations more or increase
that. more hypothetically speaking, another thing being in the report, tying up with deutsche bank or credit suisse or even singapore's biggest bank, bds. those are hypothetical options being explored. manus: talk to us more about the activist investor shareholder. anna and i caught up with jes staley a couple of weeks ago. he didn't want to say a great deal about it, but is this all to do with -- tos would be a radical move bring barclays and standard chartered together on the back of a 5% shareholder? russell: it does seem a radical move. branson is known for his activist role in other companies, including british financial institutions. he has expressed an interest in shrinking operations at barclays
and in start contrast to what jes staley wants to do, he is dogged in his desire to pursue investment trading of that business which has been underperforming. and is an area of conflict we will have to see how this plays out. some barclays and it -- board members have met with the shareholder, so we have to see how that relationship regresses. , bloomberg's ward asia finance editor in tokyo. --clays reaching out to both bloomberg reaching out to barclays and standard chartered and other names on this. standard chartered telling onomberg, we are focused executing our strategy and do not comment on this speculation. let's leave the banking sector for a moment. that italy will name a new prime minister today appears to
be fading as doubts were cast over the populist choice. ofno longer certain endorsement. they said he may be back in the running for the premiership. joining us to discuss italy and the implications, fund manager at -- fund management. your thoughts -- what kind of an investment aren you steering clear of as a result of what we are seeing in italian politics at the moment? ,> after the populist election we have seen the debt reaction, spreads getting wider, but they are fairly stable compared to 2011. there is a lot of room for things to get worse. come andines might
continue to put pressure on the euro, some pressure on italian bonds, therefore we should stay away from stocks which are correlated to the italian debt given that today, you have 2.3 trillion debt, the second largest debt in europe and the fourth largest in the world or fifth. it is seven times more than greece, it could be significant, especially the program from the populist is not funded. you want to lower taxes, increase spending, cut taxes and all of this without real explanation. even give a minimum salary during two years to everybody. if they want to proceed with what they are proposing, are we going to have a problem regarding the debt to gdp ratio and europe as a whole. he is aware of.
we spoke to him earlier. manus: good morning to you. one of our guests yesterday said the issue is about containing the italian story and to what extent do you look at the rest of europe? there is a shakeout on what is going on within italy, but is that an opportunity to add cash to european equities because global growth remains. the numbers bear out that global growth remains at a fairly upward trajectory at the moment. that depends on what the market is going to do today. today, i would rather stay cautious on stocks like financials in italy, highly correlated to the credit spread but on the other hand, there could be an interesting opportunity for europe as long as we don't see deterioration in the news flow.
add to someld stocks that are less correlated to italian problems like oil .tocks or some other area it is too soon to take a decision based on what is happening currently in italy. anna: this morning, the french foreign american -- affairs minister saying how france is preoccupied by the italian political situation. clearly this has a great deal of reach and we have talked about it. at what isyou look happening in italy, there is another country where you have a populist president where the stock market has been doing extremely well since his election. anna: you are talking about? alexis: mr. trump. populists are increasing spending, it is going to be bad
for the credit rating of italy, but it will be good for stock markets. could be. manus: let's see where that one goes. thank you so much, alexis. alexis dawance, mfm mirante fund management. let's get a business flash with juliette saly. juliette: shares and standard chartered have jumped in hong kong after the financial times reported barclays has been exploring a potential merger with rival banks, including standard chartered. the paper reported john mcfarland was theoretically keen on the idea and was supported by the deputy chairman. u.s. house has approved a sweeping overhaul of bank regulations, sending to donald trump a bill that will give him a chance to make good on his about to "do a big number on the dodd-frank act." measure59 to advance a
to soften post crisis rules and sensitive negotiations on capitol hill to attract bipartisan support needed to make it through the senate. that is your bloomberg business flash. anna: thank you, juliette saly. technology, macron of france a number of silicon valley executives in paris today, including the chiefs at microsoft, google and uber. this part of the attempt to push france at the forefront of european tech investment. with ae hyde is nearby guest. good morning, caroline. >> i am joined by the ceo and cofounder of a capital firm in europe. also the cofounder of skype, the real pinup for europe.
you are going to see macron, the president and talk about the company. what do you expect to occur? >> it is great president macron is engaging with technology. ofo, interesting the aspects technology can have positive impact and negative impact to deal with. talk to us about the ramifications and responsibilities of technology. a man who has had to deal with a lot of the repercussions of getting too big too quick. niklas: to take a historical perspective, technology started with the industrial revolution and has created a lot of economic growth and prosperity. it has had a lot of negative impacts, environment, and so forth. newelief is that the technology has a lot of positive impact in climate
change, water and so forth. however, technology is starting to have some unplanned consequences as well. we all need to deal with it, whether privacy, algorithms that have viruses and these are things everyone else in the technology world has to take responsibility for. when you are funding, how are you having conversations to make sure the ethics growing right way? niklas: younger founders are are sponges. they are wondering what we can learn from previous generations? they want to build these things into their companies. when we invest, we talked to them about governance, but also asked the questions about diversity, ethics and all of them are responding very well. there are opportunities to work toward a code of conduct --
conduct. niklas: what about european founders versus american founders? is this a coming-of-age, you back into theing ecosystem. reflection --a inflection point. not a turning point. we have been at steady growth since 2000 and when we described exit in 2005, it was a big thing , we have had 14 $5 billion companies. the scale is getting bigger and bigger. there is no doubt in my mind europe is at the inflection point of continued growth. caroline: we have had different types of exits.
did indeedspotify list. do you wish you had done skype? niklas: when we started skype in 2002, we said we would build a company for the long-term. ais company will be meaningful player in 15 years and we will be happy. it has been around and is doing fine. we are happy with that. we have never had intention to sell, but you also have to look at alternatives. there was really no prospect. that was the right thing to do. we are speaking to our founders havempanies, we want to long-term goal posts. we want them to build independent companies, building something you are selling. great companies may be acquired. if you focus on building a long-term companies, that is the
right way to do it. caroline: skype doing fine, could it be doing better? know, i've not been following it so much. you can always do better. users, but has fewer what is important to me, i still have a lot of people thanking me because they are using skype to connect with their families. that is rewarding enough for me. caroline: what about where they live? every company should aim to go public, europe or the u.s.? if it: i don't know matters that much. i would like to think the stock market is open. i would say that if you are i aming your company, thinking about how we built the ecosystem, whether europe or other locations. you need a lot of things to happen. you need to have really good talent from the top universities we have.
then, you need to have force of capital. in all, we have fantastic institutions which are long-term investor pension funds. if they can get access to the tech companies, it will be positive of an ecosystem. the value created goes back to the european economies. i would love for these companies to live locally. it is a choice. the stock markets in europe are welcoming to tech companies. the last year, four out of the 10 biggest come -- tech companies were in europe. , we have a key philanthropist, venture capitalists, in a founder. niklas zennstrom, atomico ceo and skype founder. manus: great interview with caroline hyde on the ground. stay with bloomberg because friday, st. petersburg international forum.
guy: good morning, you're watching "bloomberg markets: the european open." we are live from london. i am guy johnson. matt miller is off today. the cash trade is less than 30 minutes away. barclays and standard chartered flirting with merger talks. the bank has been in contact, shares at standard jumping in hong kong on the news. the future of italy's government takes another chaotic turn. the euro sinks to its weakest level agaie