tv Bloomberg Markets European Open Bloomberg June 11, 2018 2:30am-4:00am EDT
europeane from our course. i'm mark barton alongside matt miller in ireland. matt: asian stocks shrugging off the fallout in quebec. australian markets shut for a holiday and all eyes on president trump in singapore. the cash trade starts in less than 30 minutes time. mark: donald trump backtracks on the g7 agreement and lashes out at trudeau. the looney gets hit the hardest
as trade war rumors resurface. will trump's combative remarks set the tone for his meeting with north korean leader kim jong-un? we are live from singapore througay. and risk on or risk off, the three biggest central banks made this week as geopolitical tensions hang in the balance. peter oppenheimer, chief strategist, joins us at the open. matt: looking forward to that very much. less than a half-hour away from the open of european stocks. let's take a look at where futures are indicating we will see that open. up across the board, it looks like that japanese trade, which was positive, kind of outweighing the negativity coming out of the shenzhen shanghai and 300. take a look at treasury yields. we had a retreat in yields as investors bought treasuries
friday. this is a three-day chart. we are coming back here as investors sell off treasuries, may no longer looking for safe haven. this could be a risk on day. rk: what a week we've got.? look at all the g10 assets moving as of now. look at japan's nikkei, the spillover into global equity markets isn't noticeable from that big fallout at the end of the g7 summit in quebec over the weekend. look at the nikkei 225, up by roughly .5%. the dollar is trading lower against the yen, down .4%. this is a massive week. we've got the trump meeting, the trifecta of central banks, the massive debate taking place in the u.k. parliament when the u.k. -- withdrawals to the parliament. interesting to see the euro up
.3%. we have ecb thursday. we had some euro friendly comments from the italian finance minister, the new italian finance minister, over the weekend, as well. the effect of the g7 fallout doesn't seem to be apparent across the g7. let's get the bloomberg first word news. here's juliette saly. juliette: mark, thank you. the trump administration stepped up its war of words against canada. that came as the foreign minister condemned justin trudeau. white house trade advisor peter navarro's personal attack on premise or trudeau came from a personal string of tweets from president trump. >> special place in hell for any for later that engages in bad faith diplomacy with donald j. trump and then tries to step him in the back on the way out the
door. and that's what bad faith justin trudeau did with that stunt press conference. juliette: china reaffirmed its claim to be a free-trade leader, criticizing what she's in called selfish, shortsighted policies. his message was in stark contrast to the disarray of the g7 summit in canada. she said the world must maintain the rules of the wto, support multilateral trade, and build an open, global economy. in singapore, donald trump and kim jong-un are preparing for tomorrow's summit. the two leaders flew in amid heavy security yesterday and are set to meet at the capela hotel. an early speaking points of the negotiations is likely to be denuclearization of the korean peninsula. the white house's stated goal for the meeting. kim will demand the u.s. removes its own weapons from the region.
global news 24 hours a day on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> the era of strategic patients with the north korean regime has failed. they will be met with fire and fury. rocket man is on a suicide mission from himself. >> i really believe that it makes sense for north korea to come to the table. >> we're going to make a great deal for the world, for north korea, for south korea, for japan, for china.
matt: u.s. president donald trump and north korean supreme leader kim jong-un have landed in singapore ahead of an historic summit between the two nations set to take place tomorrow. they will focus on denuclearization. stephen engle, north asia correspondent, is in singapore with the latest. stephen? stephen: i'm standing at the venue of that summit that will take place tomorrow morning. really, donald trump just talked about strategic patients. that's a we been having today because it's been a news trickle so far, both sides hunker down and get their ducks in a row before the summit tomorrow. they did have faced to face time. we have the ambassador to the philippines who is also one of
the key negotiators with a note -- the north koreans. he did meet face-to-face for about two ours before they adjourned for lunch to hammer out the final details. they did come out of the meeting glum faced. itan't read too much into but donald trump emphasized the attitude will be critical for the summit to be successful. summit, not be just one it might not be a full day. we don't know yet. we do know that the statement from mike pompeo who put out a statement this morning stating what we already know. he said the president and the entire u.s. team are looking forward to tomorrow's summit. had sensitive and detailed meetings to date, including this morning with the north koreans. the president is well-prepared for the engagement. the u.s. disposition remains clear and unchanged. d.vi position remains to be
verifiable, irreversible denuclearization. th have a long list of demands. we have to hear how much room they can get tomorrow. have inat a 24 hours we store. most asia stocks putting up today. it could be the most pivotal week for the global economy in 2018. the loonie the worst-performing g10 currencies after that fractured g7 summit in quebec over the weekend. the euro trading higher against the dollar today. exciting week we've got in store. joining us, mark cudmore. the damage from the g7 meeting, the ripple effects don't seem to be too bad across mobile markets. c.: no, completely. that's the case. the expectations going into the
weekend was super low. there is a low bar to have positive surprise and it will be hard to get a negative reaction featured to markets. it looks like it was going to be quite positive and then we got the fallout later on. as we are kind of expecting negative going into the weekend, i don't think we will get sustained negative moves in the loonie because of this weekend. matt: should we be less worried, as well, about here in europe, what is going on in italy after he heard the finance ministers comments that there is note discussion about leaving the euro? c: i think we should definitely be in a more positive mood because of his comments. not because they denied the plan to leave the euro. that hasn't been a part of the plan for many months, and not part of the plan they presented a couple of weeks ago. investors need to stop focusing on whether there are explicit
plans to leave the euro. there isn't one. what they need to worry about is if it is sustainable and will they he forced out of the euro. the comments over the weekend imply they are not planning to follow through on the policy proposals that were mentioned a couple of weeks ago. that's a good sign. that means there's a form of compromise. there's a sustainable path for italy to stay in the euro. we shouldn't be discretion by comments -- distracted that there are planning to leave the euro. b.: throw in the brexit debate wednesday and the threat of the ecb. let's talk central banks. how are investors positioned ahead of the fed, ahead of the ecb and ahead of the boj? c.: i think the fed is one of the most interesting ones. we know they are going to hike but the market is torn about, will yields continue to support the dollar or will yields start
the top out here? that might lose dollar support. there seems to be a divide on the dollar market and that's what you get the most winery reaction at the next trend becomes clear -- binary reaction and the next trend becomes clear. it's been stationary for the last couple of weeks. we are looking for the next direction. there has been a rapid change in the ecb in the last week or so. that's because the market is starting to gamble on a hawkish outcome. a lot of people are looking for clear guidance about when qe might be tapered. what is more likely is that they say they've discussed it but the guidance might not come until july. the boj will probably be a nonevent. do afterknow what to these central-bank meetings and lord knows we are used to the brexit debates, but what do we do on the korean summit? if there's a positive outcome, do assets react?
if there's a negative outcome, do people flood the yen? what happens? c.: a lot of excitement in singapore but it hasn't been a market story yet. when you look at markets, this very little movement overall taste on this and that's because investors have a longtime talking about this. you can't hedge for armageddon, so there wasn't a lot of negative stuff raised in when it was bad. now that's it's positive, there's good well. it matters for korean assets. does it matter for the wider region? it might do. but we need to see concrete steps clarified before we see broader market reaction tomorrow. mark b.: mark, great stuff. you can follow live market insights from mark and the rest of the team on the bloomberg l.a. the -- bloomberg mliv. do not miss that.
president trump and kim jong-un both arrived in singapore for the historic summit between the two nations that take place tomorrow. joining us, director of data and polling, thanks for joining us. you won't be so dismissive of the exit debate. denuclearization. are they on the same page or not? guest: that is the big question. going into the senate, the u.s. has been unequivocal. they want complete denuclearization. let's not forget who the national security adviser is. he's always been a hawk on north korea. what does north korea actually mean when they attempt this character front of the united states? nobody knows. we don't know the demands. it's interesting to see trump having rigorously presented this as a silver bullet on this opportunity to save the world has now been tempering expectations. he said this could be a long
process and it might not be the only meeting. fundamentally, what will happen is to see what the chemistry is and whether there is basis to continue the talks. there is a reminder that north korea has done this in the past, very similar situation in the late 1990's under clinton when it promised this was on the table and they pulled back in the last minute. matt: that was an kim jong-un. that was his father. this is a different man. what do you think he wants? will he be happy with just loads of cash and a guarantee of his safety? or does he want more? well, i think the optimist iike to think that perhaps he would be tempted to the table by thawing of diplomacy, the idea that by economic measures, north korea to be brought to the table. i don't think if you look at anything they have said or done that they would change the position.
let's not forget north korea will be thinking of giving up their nuclear arsenal with the recent lesson of history in mind. what happened to gadhafi in libya when he give up his arsenal? and what happened to iran when the u.s. recently -- that deal? i think the mayor promise of to the medic -- mere promise of diplomatic relations going is not enough to make sure north korea will give up its nuclear arsenal, because they will be looking for the survival of their state. of theirthis subject deals, what sort of damage to g7 verbaltrump posed assaults and trudeau done? guest: of course, it's unbelievable. we've never seen anything like this in the 45 year history of the g7. what we areourse,
fundamentally seeing here is the multilateral world order. the westn alliancebreaking down on summoning fronts. donald trump, one of the things he said when he arrived, russia should be back at the table. this shouldn'he g7, it should be the g8. this is at a time where russian interference in the europe and the united states is being investigated. it's extremely damaging and it falls upon china to almost be the guarantor that seems to be on their summit to be the guarantor of the rules of the trading order. donald trump is not so much the cause, but a symptom of an international order, which is under pressure in that western liberal democracies will have to fight with in the years to come to understand what is going on in this context. matt: we did hear the on the benevolent leader of the free will -- free world, angela merkel, support a meeting in vienna.
she happy to get russian gas right now, so maybe that's why she's on vladimir putin's side in that sense. what do you think about justin trudeau's comments? it isn't surprising if you think about donald trump as a loose cannon. it's not unbelievable he tweeted those things and pulled back in the g7 communique. it is interesting that justin trudeau, right after agreeing to sign this pact with donald trump, then goes into a press conference at the g7,, where he was the host and starts badmouthing the u.s. again and promising retaliatory tariffs. i mean, what is his game? guest: it seems like a game of cat and mouse and since donald trump burst on the scene, is not only trump, other world leaders have been playing this the article game of diplomacy around him -- theatrical game of
diplomacy around him. emmanuel macron saw him and there was a lot of handholding, treeplanti and all this seems to be the case around donald trump because he's such an untraditional leader. other global leaders are trying to figure out how they can get one up on him. because of the expectations for the summit were indeed low, it was more about posturing than actual any kind of commitment in the normal way when it comes to g7 summits. mark: in the pantheon of big brexit weeks, and we've had many, since the referendum in 2016, how big is tuesday and wednesday when the withdrawal bill returns to the house of commons? guest: it's very important because the withdrawal bill is the domestic legislation the government has to get through to make sure brexit can happen. we have a few items on that agenda which the government has been putting off for a long time because they were not confident
they could get the votes. one that is very important is the question of a meaningful vote. let's not forget that time is ticking down. we only have 10 months. one of the amendments that the lords have put into the bill in the house will vote on, is if the government does not have a withdrawal agreement by the 30th of october -- less i forget we don't have that much time you and a lot of work to do -- the comments -- comments c over the process more. the few items on the agenda might chip away at more at the government's plan to push through the brexit at once. mark: thank you very much. great to see you area -- great to see you. thanks very much. always appreciate time with nina. we are minutes away from the open. next, we will take a look at the stocks to watch this morning, including dialog semiconductor. they are in deal talks with
mark: minutes away from the open. let's get your stocks. joing us from the equities team, we are looking at bcm. looking at rolls-royce. let's start with dialogue. what is this dynamic kicks deal -- dynamic text deal? >> so yes. if you remember, dialog has been in trouble. apple is a provider for chips for apple and apple has cut its order for chips. withpossible transaction symantec's will allow it to produce its reliance from apple and provide chips for other kinds of technology, for example touchscreens. and to other companies, other clients, for example samsung.
definitely a rationale of the deal there are get these are talks for the time being, no guarantee a transaction will take place but obviously the shares will move and style shares will be called between 5-10% this morning. what is going on? why doesn't it want some sort of combination with aipac's? >> exactly. we've seen an increase in private equity transactions in the u.k. in particular, private equity firms have raised a lot of funds, very big funds, and they are struggling to deploy that capital and they are particularly eyeing those companies in the range of one billion pounds to 5 billion pounds. is a reallyace
attractive company for a firm like a pax and it might the other companies looking into it, as well. you know what, i will just jump in here with rolls-royce, mark. we have been concerned about, or investors have been concerne about durability issues on engines. the company has said because of a request from bowling and the relevant regulators, is going to perform additional tests on the durability parts of the 1000 package be engines that are made for the boeing 787 two continued to fly. it's about 166 engines, it will cost them additional money. you might want to keep an eye on the stocks today because of that. mark: great stuff. thanks for joining us today. you can get the latest stocks
mark: let's take a peek at teachers and what's happening for these for wonderful -- euro-dollar up .3%. the comments on the new italian finance minister,hey were euro friendly comments. sterling is up against the dollar. we have the big vote in the house of commons tomorrow. oil is down, rig count rising to a year high, american production a record. .rude is 76 stoxx 600 to s&p 500 on friday, highest level since march. quick feet at futures. the early indication are we will see stocks rise at the open.
shrugging off what, of course, was a tense and to the summit -- end to the summit in quebec in canada, futures indicating we will see stocks rise in europe and the united states. there you go. there are other figures. that's the one that matters today. as i said, we had a touchy and to the g7 summit. it seemed as if the column and the unity would hold. then trump on his way to korea holdout. there was a massive verbal on slide between him and trudeau and it seemed relationships are back to down there. investors are shrugging it off, focusing on the massive week that is this week. we've got the trump-kim jong-un meeting in korea, singapore tomorrow. boj, exitthe ecb,
debate in the house of commons. .33%, cac 40 is up .2%. let's not forget the stoxx 600 fell for a third consecutive week last week. that's the worstor three months. important to put that in perspective. stocks are rising in the early monday session. let's look at the sector breakdown, give you a feeling of the industry groups moving today on the bloomberg europe 500. it's pretty compelling. .5%. up by pretty much every single industry group is rising today. there really does seem to be "it doesn't matter" feel to the g7 fallout between trump and trudeau. we've got banks rising, insurers, telecoms. what i'm seeing is that they are declining at the open is construction and materials.
what have you got, matt? matt: let's check out the moves and see about the individual winners and losers on the stoxx 600, starting with the breadth. right now, 473 stocks are gaining and only 68 stocks are down. this is a market in which the rising tide will lift many boats. here you see a lot of financials at the top. sent paulo and banco santander up at the top there, adding the most points to the stoxx 600 index. you also see unicredit there, bnp paribas, ubs. so these financials are really adding a lot of points to the stoxx 600, really pulling it up there. and a couple of defensive stocks like see b.a.t. and anheuser-busch. take a look at the losers here. at the top, you have three companies that have gone ex dividend today.
total, ferguson & cobol have all gone ex dividend. possibly the only reason for those drops. although we do see number one, the oil price rolling this morning and num two, a downgrade for sunk upon. another couple of reasons can be added to that. you've got rolls-royce holding holding in first place, falling to present. -- falling 2%. they have cash falling in connection to the engines for the 787. dan: great stuff --mark: great stuff. the european markets opening higher. stocks can only be described as a tumultuous g7 meeting. peter oppenheimer is here. should we be shrugging off that g7 meeting? are you struggling -- shrugging that off?
peter: the key is the underlying fundamentals. it was unexpected, lexa many things we are seeing politically at the moment. but we have had a run of 30 week markets. ak markets. we seeing a tick up since the start of the year. that slowed markets in equities. with think the global growth cycle -- we think the global growth cycle is pretty good and that's what the markets will respond to. matt: are you worried about these trade tensions? if we start to get a retaliation, the likes of which justin trudeau promised at the g7 meeting, if we start to get real retaliation from china rather than the olive branches that they seem to be offering so far, does that foul up your global growth forecast?
peter: i think not really. if we have a trade war that had a major impact on trade growth, that would be problematic. but that's not really our expectation. when you look at the trade embargoes that have been talked about so far, the trade tariffs, they have a relatively small affect overall on global gdp according to our forecasts. it's definitely a sentiment drag, but from what we've seen so far, the size of the tariffs that have been proposed, and not enough to have a meaningful impact on local growth. mark: so we don't worry about sectors? the basic materials industry is an obvious one, just digging a bit deeper in the wake of the trudeau-trump spat. you are worried people talk about auto tariffs. have you rethought your stance on the auto space at all in the wake of that? peter: no, we haven't.
the market responds immediately to these tensions. we've had weakness in the auto sector on the back of tweets we got some time ago, looking at the potential for that to be a target in europe. but i think you have to look at the fundamentals. that's a sector we like in europe. there's a structuring going on. it's the delete correlated to global growth -- it's positively correlated to global growth. matt: are you concerned at all about this summit in singapore? is are going to be any reaction in markets to either a good or a bad outcome? it doesn't seem like asset prices have moved at all in anticipation of it. again,well, i think because it's the difficult thing to call, the fact that it's happening is significant. but i think the expectations that there will be a major breakthrough is relatively low.
both sides will want to show that there is some progress or something positive they can take back with them in terms of being an historic summit. n reallye things' margi affect confidence and we've seen so many different swings and political tensions, political outcomes. the markets are getting used to that and ultimately, what we're really focused on is the fundamentals. for most markets in particular, that comes down to what is happening inh, prospect for profits. although the conditions are much less supportive than they were in the last year or so, which were extremely positive for equity markets, strong soon as global growth with very low bond yields, that margin is deteriorating but not enough really to trigger a sustained downturn in market pricing. stick right want to
now to the trump effect on your laurel, peter. i want to get to your look at stocks and sectors and a moment. of theost interesting things i've heard recently was then bernanke he's comments on tax reform and the effects from that in the future on donald trump on the stock market. listen to what bernanke had to say. >> what you're getting is a stimulus the wrong moment. you are getting hit right a big stimulus which, under current law, it's going to hit the economy in a big way this year and next year. in 2020, wiley coyote is going to go off the cliff and look down and it will be withdrawn at that point. matt: so the wiley coyote visualization is perfect, i think. of course he's talking about the economy and not the stock
haset, but the economy gotten a boost from the reform. are you worried about tey coyote moment for the s&p 500 as well? let's look back at we were seeing strong economic recovery, but we had a backdrop of the loosest financial conditions in the u.s. since the start of the financial crisis. and then on top of that, the avid boost from the fiscal expansion, which is likely to stimulate growth this year in the u.s. by about .7%, relative to what might otherwise have been the case, and .6% next year. you are frontloading strong growth. it's the strong growth i alluded to in the early part of the interview, which is supporting markets. but there will come a time, as you are suggesting, where fiscal
policy might be slowing and rates are rising. we expect rates to be rising more than the markets are pricing. that will be a constraint next year. mark: we will talk about rates in just a second. pete oppenheimer, he stays with us. up next, we bring you the stocks on the move. one of the stocks lower, german auto regulators fighting on improved software in the diesel engines. this is bloomberg. ♪
matt: welcome back to the european open on bloomberg markets. we are about 12 minutes into the trading day right now and we see equity indexes that are up across the board no matter where you look throughout europe. i want to get the individual stocks time those moves. for that, we go to nejra cehic. nejra: some analysts were calling autos lower given the outcome of the g7 and the prospect of tariffs. but the specific story behind time low, down .4% is that -- down 4% is that the german regular found unapproved software functions. euro six d legends according to reports. they want comment on reports but we are seeing the stock open lower 30 minutes into the session. rolls-royce lower 1.2%.
reports and u.k. newspapers about job loss. what is moving the stock is that it sees cost on engine inspections and detected do issues with a further batch of turbines that power boeing's dreamliner. at the unicredit. because we are seeing italian banks outperform lead gains among european equities after comments from the finance minister saying there was no discussion of proposals to leave the euro. we see the impact on bund spreads but italian banks are gaining unicredit's, one of the biggest gains among them. matt: thanks very much for that. still with us is peter oppenheimer, chief global equity strategist at goldman sachs. i want to take a look at the tech sector, an area you are focused on. hillary put a chart together and that i think is amazing to look at. over the last five years, the blue line is the s&p 500 and how
far it depreciated. and you can see the massive, massive gains that have been made by the tech giants here. these are the fang stocks, the fang index, so to speak. is that not a little bit too far too fast? isn't this looking publishes -- bubbleicious? peter: it's an interesting question and technology has been a driver of this market and some of the stocks have become huge, the ones that you mention are bigger than the whole of the euro stoxx 50, for example. they have a market cap equivalent to the annual gdp of the whole of africa. no doubt they are huge. what i would say is that if you look at the performance of the tech sector over that period of time, it's been driven by strong profits. about 90% of the rise we have seen in the last 10 years in the
tech sectors come from profit growth, not from valuation expansion. that's much more significant than the rest of the index. the rest has had about 60% of the returns driven by earnings. the rest by valuation expansion. if we look at the figures companies, they are january -- generating revenue growth five times faster than the margin and earnings growth twice as fast. it's generally driven by fundamentals. we expect that to continue. mark: to reiterate that stat, apple and microsoft have a combined -- than the gdp of africa. 54 countries. so many wonderful stats in your piece of research. thanks for that. just remind us how sectors and stocks can dominate equity market for long long periods.
in the it to periods past where other industries dominate, dominate for how long? peter: it's been interesting question because people look at the way technology is appreciated and become the biggest sector in the u.s. and think it's without residents. -- precedents. it isn't. if you look at railway companies, which became dominant, oil companies, if you look at the s&p over the last hundred years, one for sector becomes dominant -- and this is true for railroad, transport, and oil -- in each case it was for 50-60 years. so far we've seen it dominant for a few years, temporarily in the tech bubble in the 1990's, but that was the different environment where valuations were significantly higher than today. we also looked at the nifty 50. in the 1960's and early 70's
where you had a group of companies that became very dominant. but they had huge valuations. if you look at the long sweep of history, the length we've seen technology dominant in the market is not without its precedent. we seen similar things in other ways, and so to with other dominant companies. if you look at the biggest want to three companies in the u.s. and compare it to the biggest companies in history in the past, the biggest companies have been a bigger share of the market than we had today. matt: i just wanted to bring up another chart here, peter. i like to call it the maga stoc ks. microsoft, apple, google, and amazon. i'm not sure jeff bezos would appreciate that acronym. but they are all heading towards a $1 trillion valuation. maybe i should call it the africa plus stocks.
do you think that these mega- cap stocks still have ample room to run? do you think we are going to see a number of trillion dollar stocks in the relatively near future? peter: well, i think there's no particular reason why a company can't hit that important threshold for the first time. again, it really depends on what their margins or earnings growth prospects are. one thing that is worth noting is that there is going to be a definitional change in september of this year, where a number of these large companies will be shifting out of the technology sector into a communication services sector. and the rump of what will be technology, for example in the u.s., will be somewhat smaller, about 20% of the index. then you will see new companies coming through, which have greater prospects of growing at a faster rate because they are
smaller. i think the technology definitional changes will have a bit of an impact on leadership anthe prosct of that broader sector as we move forward in time. mark: you mentioned earlier how the possibility of more rate hikes than anticipated, the follow-through on the market, sticking to that same theme, can we bring up that chart, guys? this is for the stoxx 600. yesterday, banks are the worst performers for reasons we can discuss. -- andhe ecb this week we will talk about ending the qe program and soon might start to normalize aussie and the process of higher rates -- is it now time, with the prospect of higher rates, to start investing in this sector? peter: i think so. one of the things important to think about was since the financial crisis, there's been a huge performance of the growth
factor and there's lots of reasons for that. growth has generally been weak until recently. it's also reflected the huge dominance of the tech sector we just discussed. at the same time over those years, nearly a decade, we've seen persistent falls and bond yields. and that's been bad for value sectors. these devalue sectors have also had their own particular problems, banks being an obvious example. in europe's case, needing to raise huge amounts of capital, seeing a collapse in interest margins. we've also seen the problems in oil markets and utilities. these sectors make up the dominant part of the value factor. and they are all beginning to see improving prospects of cash returns, which are raising the prospects of dividends beginning to grow. but they all have high vidend yields. our feeling is yes, there is finally opportunity to invest in
included,ors, banks with a are not really a value trap, but they have a value opportunity. in the case of banks in europe, they are sensitive to political risk and sovereign debt risk in particular. they are also sensitive to interest rates. anything that hints at an earlier rise in rates or rise in long-term rates would be very helpful. matt: i want to just give our viewers a rundown or a schedule quickly, because you guys are talking about central bank moves. there are some a policy decisions, so many meetings coming up this week. just quickly, let's kick it off with argentina tomorrow just days after it secured and imf lifeline. we will hear from them and their rates are at 40%. the fed is forecast to raise rates wednesday. if you look at the work function
on your bloomberg live go, the expectations are about 100%. the next day, ecb discusses the asset purchase program in riga lucky a. mark was talking about that. they are expecting to discuss quantitative easing. they will round out the greek -- the week with the bank of japan, which mark cudmore says will be a nonevent, and russia, as well. there will be ample reasons to place that's in one direction -- place that's -- place bets in one direction or another. banks are on the bottom and it's understandable if we start to see rates rising but you are devalueking about sectors and you mentioned oil and gas as one of those. it's already the best performer year to date on the stoxx 600 if
you look at the breakdown on the grr screen that mark showed you. i've got it. as well. -- i've got it up here as well. does that mean you don't want to take profits out of this sector? d.c. room for oil and gas, as well? peter: we do, particular he in -- particularly in europe. of course the oil sector is in degradation so the positive role and carry, oil as an investment, but oil stocks also look attractive without prices rising that much. partly because they are going into a phase where they need to invest less than a decade or so when you see significant rises in cost inflation. a lot of those pressures are beginning to recede and that's generating more cash flow and prospects for dividend growth.
when we look at the valuation of these sectors and the high dividend yield, with think that is an attractive place to be, particularly in the oil majors in europe. mark: i'm looking at the emerging markets piece. we are happy to have you. let's talk again. in january, highest level since 2007. i would say the exact percentage decline but we've come off a decade high. we are seeing across also its of countries, is there something of white there is concern here or these you can -- or are these idiosyncratic stories? peter: the broader issues is the stronger returns we are seeing in the last year and this year really reflected what was very much a goldilocks environment. you are seeing this powerful acceleration and sick tonight will growth last year -- synchronized global growth last year. we were seeing a very weak coming a fiscal boost
forth in the u.s., and interest rates were very stable, very attractive environment for e.m. assets. as we moved through this year, global growth expectations have moderated somewhat. we seen a rollover in the momentum of growth. the dollar is picked up and u.s. rates expectations have increased and then you have specific issues, in particular em countries. our view is that it's harder to look at it as a sort of defined marginal asset class, but we think the selloff is running an opportunity for em assets. many of them look attractive from credit and equity. they don't have the imbalances i had in 2015, and we think the dollar's rise to the emitted and global growth -- will be limited and global growth will be -- mark: peter oppenheimer. down about 10% from those highs
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matt: tariff tantrum. president trump backtracks on the g7 agreement after canada's trudeau calls u.s. field duties -- insulting and threatens retaliation. they get hit hardest as trade blows resurface. give peace a chance. trump's historic trip to meet kim jong-un could end badly in the first 60 seconds or formally and the korean war 60 years after the armistice. we have live coverage throughout singapore throughout the day. plus, rest on or risk off? the three biggest central banks meet this week with em turmoil and geopolitical tensions
centerstage. good morning, welcome to bloomberg markets. this is the european open. i'm matt miller in berlin alongside mark artan and european headquarters -- mark barton in the european headquarters in london. mark: let's see how it's shaping up. g7 meeting, what g7 meeting? stocks are rising, as you say. it's a bit of a cliche, mma monday, but it seems to repeat itself. shares are up 12% today. interesting to see these italian paulo, these in the run-up to the populace government were some of the most beaten down italian stocks on fears there would be another election and on years that would be a de facto referendum on eurozone membership. all sorts of existential
questions were on the hiking industry. we had comments from the italian finance minister they were embracing the whole eurozone project, which would be relief, music to the ears of those who of course backed the entire euro zone project. so those are the best performers. i did see daimler among the decliners, just off the chart. there's a report that they've found some defeat devices in their vehicles. that is according to another report, not a bloomberg report, elsewhere in the media space. as you can see, we've got a greco down 3.3%. georgia. among the big decliners. investors shrugging off the tumultuous and to the g7 summit in quebec and canada. let's get to bloomberg first word news. >> the u.s. has set up his war
of words against canada. in as justin trudeau and germany and france criticized comments. peter tomorrow's personal -- peter navarro's personal attack came from a stream of tweets from president trump. >> there's a special place in hell for any foreign leader that engages in bad faith diplomacy with donald j. trump and then tries to stop them in the back on the way out the door. and that's what bad faith justin trudeau did with that stunned -- stunt press conference. >> china claims to be a free-trade leader, criticizing what president xi called shortsighted policy. his message was in stark contrast to the disarray at the g7 summit in canada. the world must maintain the rules of the btl, support multilateral trade, and build an open, global economy.
president trump and kim jong-un are preparing for an historic summit. they are meeting at the capela hotel. an early sticking point is likely to be the new position of the korean peninsula. kimmel demand the u.s. were remove its own weapons from the region. they plan to change the way banks lend money in a victory for central bank government. he's been a prominent critic that it would make switzerland less attractive to investors. the option would have ended the system of allowing s&p to create money and allow checking accounts to be backed by assets on a direct claim by monetary authority. the millionaire brexit accor who founded -- will be questioned element from his contract -- contact with russian officials and whether he used the money to fund his campaign.
thatollows revelations that he met the russian ambassador. he's one of the biggest owners before the election and was reportedly given more than 8 million pounds to leave the eu. global news 24 hours a day on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. patiencer of strategic with the north korean regime has failed. they will be met with fire and fury. man is on a suicide mission from his self. i really believe that it makes sense for north korea to come to the table. a great dealo make for the world, for north korea,
for south korea, for japan, for china. mark: for more on the kim-trump summit, let's get to stephen engle, whose in singapore. what is the latest? here on central island time he is the capello hotel on the hill where the summit will be held tomorrow at 9:00 a.m. that's what we are focusing on. what will be the dynamic between the two gentlemen when they meet face-to-face, shake hands, and have a brief few minutes chat? that will set the attitude, says donald trump. so far, it has been a slow news day. the two gentlemen have been here ,lmost 24 hours respectively but not a lot of news. donald trump had a bilateral the president of singapore and has
accepted an invitation to come back in november for a state visit. perhaps he will take that onto the aipac meeting in november. this is small news compared to the big story and that's building up to tomorrow morning. we had the two sides meet this morning at 10:00 to just about lunchtime, ironing out the final details ahead of the summit tomorrow. we had the u.s. ambassador to the philippines acting as a key negotiator for donald trump and the north koreans. he attended that meeting. we don't know what was said. mike pompeo said demands from the u.s. side have not changed. matt: do we have any sense of mood here? on the one hand, president trump left the g7 kind of angry after trudeau called his tariffs insulting and promised retaliation. on the other hand, this is an
important meeting for him historically and a win here would make him a star on the i guesstageas far as kim jong-, we just don't get as many reports about what he's doing and what h to and how he feels except for the fact that we did see him in public with leaders of south korea and singapore recently. stephen: that's right. areet with the pragmatist -- the prime minister survey. .e has not been seeing here he's been hunkered down at the same we just hotel at the expense of the singapore government. they confirmed they are paying the hotel bill but we haven't seen him today or gotten any statement on the whereabouts today. mood aald trump, his little bit sedated. not really full of smiles. keep in mind, coming off the battering he took following the
g7, does he want to have another failed summit here? i think he will be all smiles tomorrow as well kim jong-un. but then they have to get into the real, real, real tough negotiatiothat's the definition of denuclearization. north koreans want the security umbrella removed from east asia. i don't think that's something donald trump is going to allow and i don't think kim jong-un is going to give up something his country has fought hard to build, and that's his nuclear arsenal. mark: great stuff. thanks a lot. . we'll be seeing a lot more of him in the next 24 hours. a large corner of the equity markets facing its worst losses in two years. value is a favorite trade among managers, focuses on price chiefly down to the a bellwether for the state of the european cycle. joining us now is our markets reporter dani burger. look at this wonderful chart.
who comes up with these ideas? dani: i have to take credit for the face plant. i didn't get a good on in their this chart is dramatic. these are value stocks, the ideas they are cheaper, a favorite strategy. a lot of hope for it last year. the strategy did pretty well, haven't done well abroad. over the past month, it had its worst losses since brexit. you can see on the tail end of that chart there. matt: what is driving this? we heard a little bit of this from peter oppenheimer, as well. what caused this drop to begin with? dani: so the worst-case scenario is that this is about find the economy because when you think about cheap stocks, what you need for them to realize gains? you need the overall business environment to be doing well
because you need earnings to lift up stocks that have been underpriced. if investors are selling them off, it's a sign that they are saying earnings are not going to be good enough. the economy in europe is not strong enough. we are in an age bull market that will be led by expensive stocks. toward the elder years, we can get more shock that caused more disruptions in the value trade. mark: are there any spillover effects? dani: one aspect of this is that last year you saw a large swath of the european equity markets do well. you could buy value, momentum. now we don't have that anymore. we have higher dispersion among these factors so you have to be more clever and what you pick. remember how we said it's the synchronized global growth that we are seeing? this right here points to a synchronized slowdown, which is concerning. it means managers need to adjust
the strategy they take in investing in equities. matt: thanks very much. bloomberg's dani burger joining us with a look at value stocks. we are going to bring you some of the big movers this morning, including inmarsat's, the satellite company is skyhigh this morning after eating rebuffed takeover from echostar. this is bloomberg. ♪
in the decade for a satellite company. it seems to be rising after rebuffing a takeover proposal from echostar. sticking with the m&a, the marketplace hitting a record high in the session. it's rejected a cash offer from apex. that was in may but we are hearing apex is raising the prospect of a higher bid, pushing bca higher, as well. .6% in deal talks with apt takes. dialogue in general has been facing a challenging year as we chips.s biggest apple it's getting in today's session. thanks very much. let's stick with m&a. is the deals report, saudi arabia, joining us is ruth david . also with us is mcgill acevedo,
the head of investment banking at citigroup and advises some of the biggest deals in the region including abu dhabi national oil company. ruth, with a trump-kim trade summit tensions, what has the most potential impact for middle east finance? >> we were just discussing that earlier and he was talking about how inve uncertainty is the one big factor. something that the emerging market is hot on. how do you see it in the economy? >> emerging markets are more sensitive than any other markets. if you add an additional layer of uncertainty, it's not good news. the opposite must be very good news and that's how i see it. >> what about citigroup itself? he returned to saudi arabia
after more than a decade and there are a lot of other banks and competition. what do you see as the driver of the profit? >> saudi arabia is a very large market. if you look at population, is the only large market in the middle east so that's important for us. we are now back of capital markets license. we are very busy there, both on the m&a and the ecm front. it's an important market for us. we are putting effort, resources, capital, everything. >> they seem to be digesting the signs of increasing oil supplies. more broadly, how is the future of oil prices driving dealmaking in the region? >> i don't think that's the key short-term thing. obviously the whole country, saudi is with a plan for the vision of 2030. that is in a sense to diversify
away from oil. in the short term, you have ups andns but i think the trends are there to stay. >> what about geopolitical -- we've written a lot about saudi --bia and germany and qatar for a bank doing business in the middle east, how does that affect it? >> we are absolutely agnostic to that. we are used to seeing ups and downs in geopolitics everywhere. cities, theng in it's citigroup. we are used to that anywhere around the world. what we also see in the region is very fundamental shifts and so the region became a net importer of capital. so we need to bring investors of the region. there's plenty of opportunities. our role is really to match these opportunities with investors that want to invest in the region and that requires a
lot of work, a lot of marketing, a lot of advisory. that's what we do. >> two of the biggest stories, one in africa, the collapse of steinhoff, in the middle east, the collapse of a barrage, i'm just curious because some of the u.s. banks which made a lot of losses over those collapses, they've changed their landing strategies. what about citigroup? you are going back into this market. how is lending going to go after some of these issues? >> i understand that but it's really a client centric organization. no matter what happens with company a or company b, we are in the region to stay. nothing changes for us really. >> any big deal protections for the year? you worked on a very successful idea this year. >> let me split the twin the two
regions. africa, yes, we will open for more ipo's. i'm expecting this year to be a record year since the financial crisis. the middle east, we have seen ipo late last year the reopened the markets. we are working on an ipo in saudi. we are bullish on the region, both regions in fact. bankingof investment for the middle east and africa at citigroup, thank you so much. back to you. matt: all right, and ruth, thank you very much as well. ruth david from our deals team with an m&a report this morning. miguel, head of investment banking at citigroup. if you are a terminal survivor -- subscriber, check out the newest and biggest m&a news easily and you can look at the league tables, as well. ago, although we
mark: welcome back to the open, big week for the global economy. massive week including tomorrow, proposed exit legislation returning to the house of commons. lawmakers will vote on a number of amendments recommended by the house of lords. if that wasn't enough, the fed forecast to raise rates on wednesday. the next day, the ecb expected to discuss the end of its asset purchases. the miranda announcements -- we round out announcements with japan, russia. and it's also the world cup is weak. we haven't touched on it. matt: i'm looking forward to the world cup, sort of. obviously i find soccer incredibly boring, but these tournaments, they make even a boring sport interesting. let's take a look at the stock of the hour. have you chosen a stock of the hour? should i go with mine?
mark: i tell you what. should i do a quick one and then i know you you can do yours? it's rejected -- a satellite company in the u.k. -- it's rejected and echostar bid essentially. ok at what it has done with the shares. there are 12.77%. i'm just looking at our wonderful gtb function. when you look at the 12 month share price projection, it's five pounds 21. we are about that at 5.22. i imagine analysts will be scrambling to reprice their forecast for their forecast in the next 12 months. matt: instead of the stock of the hour, because we typically only do one so you've taken that slot, i want to show viewers the function of the month here. youssy you be go gives
♪ presidentrancine: trump arrives for his historic meeting with kim jong-un. can he be persuaded to give up his nuclear weapons? the white house steps up its attacks on canada. are we headed towards a trade war? bitcoin slumps, extending this year's selloff to more than 15%. good morning and welcome to bloomberg surveill