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tv   Bloomberg Daybreak Europe  Bloomberg  June 27, 2018 1:00am-2:30am EDT

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>> good morning, i am anna edwards. manus: and i am manus cranny life from dubai. this is "bloomberg daybreak: europe and here are today's top stories. anna: china's market enters a bear market and the yuan has a streak.losing investors await more clarity from the white house as trump takes a less confrontational tone on curbing chinese investment. and iran, oil jumps on reports that the president is .sking allies to increase
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oil support can a run in saudi arabia -- can saudi arabia help with the shortfall? ♪ anna: good morning, everybody. it is just 6:00 you're in london, this is "bloomberg daybreak: europe." manus cranny is in dubai, and menace the equity session is a bit lackluster. another day of learning about trade tensions, no doubt. perhaps the comments from trump have taken the edge of how negative the people expect the news on friday will be taken with regards to investment into technology in the united dates. oil stocks are getting a boost, and this is really a big focus. the yuan slipping for the first time since september to this rate. there have been questions about whether the chinese are manipulative and their currency. a lot of people have been saying .hat no, that this is justified
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we will get some analysis on that shortly. wti, the price of oil has gone up, and people in your port of the world know very well that the u.s. is pressing allies to push up production of crude. manus: yeah, and taking on the yuan theme on from you anna, 2015 is a devaluation like -- people think that the devaluation electronic 15 is perhaps overstating the case. yuan -- andsket of for the yuan against a basket of other currencies, you have the dollar yuan onshore and offshore , and you can see the real push yuan.t the the question is, this longest losing streak on record, is it
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death by a thousand cuts, or is it just a slow, slow grind for this currency? noe banks say that it is longer a source of stability to the region, not a source of region.ity to the the pboc tried to stabilize this, try to go for a lower fixing. but the market for the moment seems to have ignored the pboc. is anything to go by, that is a low blow. it is a basket that tells a much more substantial's sorry about what is going on with the yuan at the moment -- substantial story about what is going on with the yuan at the moment. anna: we will get some fx analysis at: 45 in london, as we go to the trade story. looking at what the future suggest, underlining what we were saying earlier about president trump perhaps being a bit more positive on the market
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perspective, about what we can expect on friday, that certainly is being reflected here. here.a bit more stable morgan stanley talked about our role in correction around equity markets that will in fact, shortly.e u.s. we will be hearing an exclusive interview from the prime minister of greece, joining the bloomberg team. that will be broadcast at 2 p.m. london time on tv and on bloomberg television. the deal he signed with creditors -- his country, signed with creditors, the upgrade to a debt recently, all of that will be discussed in the conversation. here is juliette saly with a news update in singapore. juliette: anna, canada is preparing new measures to protect a less prevent a flood of steel imports from producers seeking to avoid the u.s. tariffs, according to people familiar with the plans.
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meanwhile, the eu is already considering similar measures to word of steel dumping which month.e opposed next >> this is an investigation which will probably take until the end of year before we can get a full picture. but as you say, we are seriously contemplating provisional measures in place, and they could beat it there by mid-july. and exactly what form, that will still be under discussion. juliette: saudi arabia plans to pump a record number of crude month. bloomberg learned that the state oil company plans to push production in july to about 2.8 million barrels per day. wti crude surged as the u.s. said --uld press allies to cut imports from iran to zero by the end of november. speaking to bloomberg, the chairman and ceo of conoco phillips said he is not a lot of
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the supply increase. >> a dozen make up much of the geopolitical impact, or conversely, if demand were to go down, prices would fall. it will be a balance on the supplyemand side, but i don't worry too ch about the increase that opec has talked about. it is really getting back to where we are today. juliette: the foreign minister says the eu's biggest countries will block any attempts by the to block any trade issues with immigration curbs. president trump says that the supreme court's decision in favor of his ban of travel from several mostly muslim countries is a great victory for the constitution. in a 5-4 ruling, the court rejected the notion that the band that the ban exceeded the
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president's authority. agreedity of the court that the president has substantial power to regulate immigration. >> we just have to know who is coming here. the ruling shows that all the attacks from the media and democrat politicians, they are wrong and they turned out to be wrong what we are looking for as republicans, is strong borders and no crime. juliette: global news, 24 hours a day, on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am juliette saly. this is bloomberg. ♪ asian stocks are at an eight month low, the regional index down for our third session. but not like what we saw it this time yesterday afternoon, there is a turnaround. the nikkei is up about .03%, the arecs of by .02%, and we seeing some buying coming through in some of the markets including south korea, where the .1%.he is up about
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generally of course, it is about the bear market in the chinese stocks. the shanghai is off by about. .7% let us look at the stocks, chinese equity markets are coupled with a weaker yuan, which is playing into a lot of the airline and property development stocks. we have seen quite a lot of wethrough from the airlines, and property developers are under pressure in terms of the weaker yuan, and the crackdown of shanty term loans. oracle core japan is up in tokyo after some pretty solid fourth-quarter results. anna? anna: we have seen some m&a and news, which is certainly moving the markets in japan. shall end of this other company are merging next spring according to the nikkei. indonesia's founding family had
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opposed the merger, but according to the nikkei, -- they haveered decided to support the combination of the two oil refiners in japan coming together. up by about 11%, shall shares also trading higher. some substantial moves on that news. manus? manus: yes, big old moves in merger news. president trump signals you may take a less confrontational path towards curbing chinese investment in sensitive american technologies. he spoke yesterday about potentially relying on the u.s. committee that scrutinizes foreign acquisitions for national security risks. >> we have the greatest technology in the world, people copy it and they steal it. we have great scientists and great brains, and we have to protect left, and we are going to protect it.
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that is what we are it can be d. we have a lot of -- through sify cifius, and we have a lot of ways we can do it. manus: good to see our next guest this morning, is this a shift in rhetoric, underlining towards steven mnuchin? how is china reacting to these plans to curb investment in sensitive u.s. technology? >> it is unclear whether they have registered that shift in but ind what it may mean, think it would be pretty understandable that they would be watching this very, very closely, given what is at stake. we got a short statement from the chinese commerce minister today, which in and of itself is quite unusual that they would put something out independent of a press conference or something that is already arranged. they say that they are playing close attention to this and have noticed the debate, and they are
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looking to evaluate how this might affect chinese companies. so it is definitely on the radar. the things are trying to signal, it looks like there are watching. how does a yuan play into this? -- good morning, emma. we --of strategies strategists we talked to say that they don't think china is weaponize in the currency just yet? emma: that seems to be the consensus, but it there is no doubt that the weaker yuan has been an issue for president trump in the past, he has commented it on it around the time of his campaign. he accused china of pursuing benefit ist to exporters, but there are a lot of fundamental factors in play here that are weighing on the yuan. you obviously have negative sentiment from the trade war,
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the economy is slowing and has been expected to since before the trade frictions started heating up. you also have the pressures from the de-leveraging drive which has been underway for the past year, and it is still powering on as far as we know. so there are a lot of reasons for it to fall. he also have the fact that china has said that it wants to push the yuan to be more market oriented. so if we take them at their word for that, then this is a fun about. but we did see what look like a bit of intervention today around the 6.61 per dollar level, that could have been the central bank trying to arrest the losses a tad. emma: thank you very much, desk editor knees with the very best our news desk -- our knees desk editor. we are joined by james now,
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another day, another mess to with. as far as chinese markets are concerned, there are not in a position.t the shanghai composite index, is it telling you that this is an opportunity to get into china? james: protectionism and trade war are potential -- material issues, but there is a real challenge associated with credit . we have seen ratio ductions that we have seen which are all part of stabilizing the banking system. so trade war and protectionism are the big beef, but there are other concerns. are your concerns? james: of course, there is a slowing economy, the deflation, excessive property building, relatively high supply,
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excessive build up of investment capacity and also, huge amounts of credit. unwinding those bubbles is also ing to be tricky. anna: i asked this question because it is not just the u.s. that seems to be on a different page, on some of the trade rhetoric. that eu yesterday talked ab protectionism in china and in russia, suggesting that those other two areas that are headwinds for them in terms of growth, getting over that level? james: absolutely, and the u.s. trade representative produced this 504 page report on trade barriers. included in it, he says that import policy factors as opposed to trade barriers are a very long list of other regulations, controls and standards -- it makes it confusing and difficult to have a policy that is meaningful, efficient and effective. i think mr. trump's change of
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stance to deal with the recognition that trying to solve comex problems with blunt instruments does not work. james.yes, one of the problems china has at the moment, and i want to get your take on it we won't. talk about -- we will talk about the currency later and the show. i have a chart showing the remain be against a basket of currencies, hitting the longest losing streak on record against the dollar. james comer that had fairly magnificent impact in 2015 on global markets -- james, it had a fairly magnificent impact in 20 15 on global markets, is it different this time? i am looking for 6.70 august the dollar, but also, there are fundamental drivers in terms of relative economic growth and policy. i think all of those policy drivers will bring more dollar strength and rnbeakness, which
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will just exacerbate the trade problems. anna: do you think global stocks are living on borrowed time? when we look at how well global stocks have held up, particularly in the united states, and sentiments indicating that now investors are shaken more than markets have then by the trade rhetoric -- also the size of balance sheets, central bank in balance sheets have been coming down a little. is there anything you would be suggesting that equity markets should be weaker? james: i think we should certainly accept more volatility. think asked me what i volatility would be, i think about 19%, that would be consistent with long-term trends. it would be a much noisier market. but i don't fundamentally feel that we are in a bear market in equities written large, because corporate earnings continue to be deeply positive. the structure remains positive.
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for me, it means the s&p 500 death to 3100 points, if it doesn't do that but and of the calendar year, then perhaps by mid next year. i still think that it is going up. anna: james comer great. 20 of 10 to talk about u.s. equities later in the program. with us, and coming up on the program, the u.s. is said to be pushing analyzed and imports of oil from iran. the saudi arabia have the spare capacity? what does this mean for the price of crude? manus: and also, the former bp ceo joins us later at 11 a.m. united kingdom time, and 6 a.m. in new york time. this is bloomberg. ♪
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♪ manus: it is 6:20 a.m. in london, 1:20 at an afternoon in hong kong. you are seeing an overall risk
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in asian markets, asian stocks hitting an eight-month low. no doubt about it, donald trump is donald trump, no matter what up using language of might be used in the last 24 hours. juliette saly is standing by with your business flash. uber has won a, 15 month probationary license in london after convinced in a court it had ticking off its gung ho attitude of the past. the judge had criticized the previous management desire to grow the business come what may. the 15 month reprieve is less than the 18 month approval the company had originally looked for. morale has studied at deutsche bank is even as germany's .argest lender faces years more of restructuring according to sources, an internal survey showed that 57% of employees are committed to the lender, unchanged from last year, which followed user decline. sentiment has been tested by
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three straight annual losses and a series of management changes. the meltdown in bitcoin is proving contagious with the that 80%ina.com saying of about 1500 digital coins have followed in price in the past days. cryptocurrencies overall have lost more than 40% of their value in 2018. yearly economic professor and nobel laureate robert schiller says that it is just a social movement. >> the east coast is less into it than the west coast. silicon valley is really into it. this to me, shows that this is ot a rational response to new information, it is a social movement, an epidemic of enthusiasm, a speculative double. juliette: used-car prices news are weighing on the shares of car giant. analysts cautioned that a glut
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in suvs would undermine the value of their fleet. her shares dropped yesterday ng to this year's losses, and the rental company also faced competition from ridesharing services like uber shares.ertz .hat is it for your bloomberg anna: business flash crude jumped on the news that there will not be any discussion of waivers or extensions before the november 4 deadline. we spoke to the oil minister in ,ienna, and amber spoke to him she is here to discuss that. what is he totally on the subject. >> he was signaling on this subject, let us hear what he had to say on friday. difficultythem have because of the pressure of the
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united states for banks, money insurance and so forth. anne-marie: who stopped buying? shell --ample, total stopped.nd shell, >> how are you managing this, can they received waivers from the united states? >> at a think so, will find way.er >> is there a workaround you can do to keep selling to your customers that exempts them from basically getting in the crosshairs of u.s. sanctions? >> every day, the u.s. administration issues a new regulation. we don't know what will happen, but we are prepared for the
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worst of it. >> he is now saying -- amrita san says that it could be much more, close to one million or 1.5 barrels, so we will see the market get a lot tighter. it is not just a run coming into play, we also have been as well a and libya. so somebody is going to have to make up the shortfall -- we also have venezuela and libya. manus: annemarie, good morning. audi arabia is going to pump lot, make up the slack. do they have access capacity? : this is what our colleagues had said yesterday, but this would be a record for them. but how long can they pump at this record level, is what many people are asking. certainly come a saudi arabia will be the one that needs to pick up the slack if tehran is
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market.ff the people thought they might get waivers, maybe they could import 80% like in 2012-2013, but no, there are getting zero. this is preempted as the oil said before.ng anna: do you see the oil price going er, james? james: i think it will go higher. the reduction actually fell down of an alargely because came off line. i get that venezuela is a huge issue, but as what point do they decide that they will increase production again? anna: thank you very much curmudgeons. we have an exclusive -- very much, james. we have another interview coming up with anne-marie, she will be staying with us. we will be talking about the deal recently done with creditors with regards to greece.
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that is going to be part of the conversation. more on greece later in the afternoon. this is bloomberg. ♪
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anna: good morning everybody. it is 6:30 here in london. 9:30 if you are in dubai. let's have a look at the equity markets. the chinese market is under pressure once again, down by more than 1%. our guest is with us still. >> a lot of the incidents that we are seeing in terms of losses in asian equities are coming from china in the shenzhen -- this session. ofs is sparking memories 2015. not saying it is the same thing are that there are many parallels.
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different reasons for the losses this time. see the shanghai composite has dropped into a bear market. if we look at some of the technicals in terms of momentum, this is the sixth day that the shanghai composite has been in oversold territory. we wait for that to go back above that green line at the by impetus.ve a -- buy impetus. u.n.,re looking at the continuing to depreciate. the longested losing streak in record, 10 days of losses. this is an interesting chart. we have seen this relentless weakening in the yuan, it provided stability in the region, if you look at dollar- forwards, they're looking at stability compared to 2015.
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tradersng that perhaps are not betting on sustained u.n. depreciation. -- yuan depreciation. finally, taking a look at oil. holding the gains from yesterday, we saw been -- wti jump in yesterday's session. we also did get some inventory data that lead to the jump yesterday. manus: thank you very much. let's get your first word news. president trump has signaled he may take a less confrontational path towards curbing chinese investments in sensitive american technologies. his comments aligned with steven mnuchin's approach.
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canada is preparing new measures to prevent a flood of steel imports from global producers seeking to avoid u.s. tariffs. the measures are said to be a combination of quotas and tariffs and of certain countries. the eu is already considering similar measures toward off steel dumping, which could be opposed to month. -- imposed next month. >> the investigation will take until the end of the year until we get the full picture. we are seriously contemplating having provisional measures in place in mid july. exactly what form that will take is still under discussion. arabia plans to pump a record amount of crude next month. it state oil company wants to boost production to about 10.8
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million barrels a day. as the u.s. senate would press allies to cut imports from iran to zero by early november. the chairman and ceo of conical the let's says he is not worried about opec's plan to increase supply. muchf aes not take geopolitical impact to cause prices to go up. i think it is tenuously balanced. i don't worry too much about the increase that opec has talked about because it is getting up to where they are today. juliette: the eu's biggest countries will block any attempts by the u.k. to combine single market membership with immigration curbs. some smaller european countries would accept a bunch of the most powerful ones would not.
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president trump says the supreme court's decision in favor of his ban on people traveling from several muslim countries is a great victory for the constitution. challengerejected a that the band discriminated against muslims. the majority opinion agreed that residents have substantial powers to regulate immigration. >> you just have to know who is coming year. the ruling shows that all of the attacks from the media and democratic politicians are wrong. what we are looking for as republicans, shrum borders, no crime. juliette: global news 24 hours a day on air and at tictoc on twitter. this is bloomberg. manus: thank you very much. u.s. equities have broken out against their global peers in the past month.
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joining us now is our bloomberg intelligence chief equity strategist. good to see you this morning. here in the studio in london. give us your breakdown for the american equity market out there. we saw some pretty big drops on monday. we seem to have steadied armorers -- our nerves for the moment. >> it is more of the same in the united states market. those segments are overbought in the short-term, maybe a bit overheated. investors have flopped into those areas to avoid great trade dress. i would not expect that to change unless the rhetoric on trade changes or u.s. growth shifts lower. anna: good morning. we heard from harley davidson
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citing trade as a real risk. who is going to suffer most from a president trump trade war? withinwithin the -- >> the united states, it seems to be largely the industrial sector. where marginsea are at risk from higher-priced goods coming into the country. it is targeted by some of the tariffs. it has a lot of exposure to sales in china and europe, which we would expect to have followthrough impacts on the negative side. james, we dealt with the global stock market, it had the toughest start to the percent of the year since 2010. if i look at the u.s. equity markets, a great deal of buyback action was in there. $217 billion. does that fade to black in the second half? >> i think we will see more buybacks.
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if you add in the dividends, we get to north of a trillion dollars. there is huge underlying supports. we have a very strong corporate earnings outlook. hundred ofooking for dollars of s&p 500 earnings. i'm not forecasting a recession. we talk about the premise that bond yields will remain largely below the tenure area for treasuries. we will see the s&p 500 get to 3100 points by the middle of next year. manus: we have about -- anna: we have a sound to play you. they were asking questions about the nature of this correction that we are seeing in some markets and how far it goes. let's take a listen. >> we are in a rolling bear market. a 2008not seeing
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scenario where everything is it at once. it is selectively heading markets one by one. it is a rolling correction. anna: a rolling correction. it will eventually hit the united states. you don't see that? >> i don't see a bear market in u.s. equities until we get signs of a recession. and if wee brought get protectionist policies from the trump administration. we are a long way from having a recession. i do not subscribe to the fact that we are do a bear market in this u.s. equities. manus: can i bring it back to you from the point of view? anna and i talk a lot about emerging markets. you will see this tremendous rally in the back cap. to what extent has there been a movement of assets from e.m. to the u.s. markets? is there a transfer relationship we can look at? >> that is absolutely true.
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if you look at etf flows, we have seen flows into smaller etf's this year. a large flow into large-cap etf's. the dollar strength and rising interest rates in the u.s. are attracting capital. most of emerging markets weakness has been value destruction. there has not been a lot of capital transfer. emerging markets have underperformed dramatically. u.s. markets have attracted a lot of capital because the fed is tightening rates. making sense of the past, what are you expecting the second half of 2018? we're almost there. >> more of the same, really. the u.s. stock market is in the best position around the world. we are going to have very strong growth in the u.s., contrary to
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expectations that we would slow down into 2018 -- 2019. i think you have a solid outlook for growth in the u.s.. there are areas of the u.s. that are undervalued relative to the rest of the world. operating margins, for example. are more than one third higher than global developed market peers. are two health care sectors where it is higher than the rest of the world and they are discounted. to the expectation that the u.s. is overvalued, maybe this has gone too far, there are strong fundamental support. deeper, i wantig to take this to james. theyu look at financials, are down for the 12th session in a row.
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that is a record streak of losses. this has to do with the flattening the yield curve. how do you look at u.s. financials and the curve, that symbiotic relationship? >> lots of people have set up the curve is about to invert. matter, the market was seeking to discount a shift to recession. that would likely lead to a bear market. the fed is on top of long-term ation and that is why long yields can be held i relatively shells -- relative levels. it does mean that we get rates that are rising in the short term. i did not see the yield curve inverting. i think the outlook for the best banks remains strong. some of the players within the broader financial community are
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extraordinarily well placed in the global context. my friend who was part of mastercard will be delighted to hear that. thank you very much. great insight into markets. if you are a bloomberg user, you can interact with all of the charts that we bring to you. you can catch up on the analysis and save the charts for future reference. anna: coming up, as china's trade battle with the united states worsens, we will discuss whether the countries policymakers are more willing to temper the currency's decline. joins us david bloom at 8:00 a.m. london time. this is bloomberg. ♪
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manus: it is 6:46 in london. 1:46 a.m. in downtown new york. midtown new york. everybody corrects me on that. s&p futures are unsure of how to the latest signs from washington. what the curve and for -- invert? anna: let's talk about emerging markets. bear markets are spreading across the emerging world. they cite a rollover in global growth outside of the united states as well as ongoing trade tensions. the ceo at ccla is still with us. i have this chart talking about dangerous markets in emerging markets. too simplistic to say
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money leaves emerging markets and goes to the united states? what are your emerging-market hopes and fears? >> we need to unpack what is going on. it is a classic credit cycle for emerging markets. the policy response is not going to be critical. emerging markets will ease policy to ensure their domestic financial situation is not damaged irrevocably. that will be supporting emerging markets. we will see weaker currencies and the me -- in the emerging markets. the policy response will exacerbate that challenge. that will so the seeds of long-term recovery. anna: doesn't that make it harder to pay dollar debts? >> it exacerbates the challenge for those who borrowed in u.s. dollars. whoe are many countries have been issuing their own currency who are now relatively
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well placed and will benefit from the weaker currency. manus: when we talk about the classics, turkey at the bottom, argentina at the bottom. you would say, don't give up yet on all currencies. what a new you -- do you mean by that? see some ing politics, which is supported for the currencies. we have an improving real yield climate. many emerging companies -- economies are better than they have been before. i think that this is a next moment to buy into exposure into the areas where asia does best. companies like samsung, companies where i see excellent long-term fundamentals. so does technology
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weakness?ss outweigh currency .> it depends on the time frame currency weakness in the low -- short term. it is fundamentally underpinned by the fact that we are not going to face a global recession. why is it that some people are bearish or bullish? there is lots of headline talk about relative evaluation. the goes away. correct, i don't think that the valuations of states are not overly rich. i sure the perspective that the u.s. equity market is the best itse -- best placed against development is. we should be picking stocks not geographies. anna: thank you for your time this morning.
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broad church on daybreak. let's focus on the chinese currency again. as anwn was serving anchor for emerging economies. the recent drop in chinese currency has evoked parallels with the deliberate devaluation back in 2015. china watches discount the idea that depreciation is being deployed as an outright trade policy. is our guest, fx strategist at commerzbank. is the run done? good morning. >> good morning. the dollar move was quite significant. indication that it is driven by a chinese authority. the dollar move makes a lot of
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mentality, we have seen a stronger dollar on a broad base. it is not only the renminbi losing against the dollar, it is other currencies. we are seeing weakness against the dollar because of the fact that the outlook for the chinese economy has deteriorated. it is because of the trade disputes between the u.s. and china that has escalated. nervous andestors they pull a lot of chinese markets. this is causing you want chinese, but not the enforcement trying to weaken the yuan. anna: what is the next stage of this story? parts of asia, their currencies, the countries that rely on china for demand. do we see that contagion
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of the week yuan spreading? -- weak yuan spreading? on how the dispute between the u.s. and china evolves. whether this will scale down or escalate further. there is a good chance that they will implement further import i think this will strengthen the dollar further. further import tariffs should be inflationary in the u.s., particularly in the u.s. economy that is running at full capacity. this should strengthen the dollar further on a broad basis. on the other hand, yes, the chinese economy outlook is worsening. i would not underestimate the power that the chinese authorities have over their economy. dampenve been able to any downward spiral in the chinese economy in the past.
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i think they would do so in the future. recently, we suck quite a significant to proceed asian of the renminbi and the chinese officials were able to stop the depreciation because they do not have an interest in an excessively we currency. -- weak currency. weakness may continue but it will not spread further or escalate. manus: with that in mind, we popped into the life read. the dollar.inst the yuan is now rolling over against the basket. what comes next? we have had triple cuts twice, some would say that is for the best situation. you have the fed in hiking mood -- mode.
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have with a retest of the re-- read tether -- tether the currency? >> they have capital controls. ins is basically what we saw 2016 when it started to depreciate significantly. chinese authorities started to introduce capital controls again in order to stop the capital flight. at the end, this will be their most powerful tool. anna: do you think that is likely? are we there yet or is that way off? >> i don't think we are there yet. generally, i don't think that they do not want any depreciation. they don't want it to be excessive, as we saw in 2016 for example. how the dispute between the u.s. and china will investors get more
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nervous and tried up a lot of chinese markets. -- try to pull out of chinese markets. i don't think we are there yet. 2016, where chinese authorities get nervous. there was still a lot of room until we reach this level. manus: thank you so much. fx strategist at commerzbank. there is no doubt about it, you , weaponize thing that you on. what comes next from the pboc? you wonder whether president trump is paying attention to these particular developments, whether he will tweets on the subject anytime soon. i reminder not to miss out on
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our exclusive interview with the prime minister of greece. we will you that on 2:00 p.m. london time. everything you need to know about the state of the greek economy. this is bloomberg. ♪
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manus: good morning from divide. -- dubai. anna: i'm live from london. these are today's top stories. manus: china's currency slump continues. the yuan hits a record losing streak. tensions,trade investors await more clarity from the white house as trump takes a less confrontational chinese techng investments. the u.s. is pressing allies to black iranian imports. saudi arabia and russia make up for the shortfall. ♪
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manus: warm welcome to the show. a couple of big issues for the markets are grapple with. the demolition derby going on with the yuan. is the yuan a canary in the global risk gold mine? is it just a slow death? politics, the united states pushing the customers of a rant to say, we will not take any more of your crew. it is not reflected in our london market this morning. are seeing dax futures drop and paris futures higher. trend, maybeg the want to reflect more on the red in the u.k. story. in an stanley says we are rolling bear market of
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high-quality stocks. exxonve the exxon and -- ceo talking about the reduction in free trade to the major risk in global oil demand. let's roll it over and have a look at the bond markets. we have a little bit of an impact here. u.s., theirthe treasury clients have shifted to neutral from short. this is interesting. do we remake half of that level? the disruption from trade could shift the risk to the downside. pmo says, goodbye 3%. we have been did 10 year government bond yields. aggressive bidders, i love it. they showed up for the treasury bills auction last night. boones are up by four pips.
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premiums over spanish premiums reaching records. there is going to be this unseating in the bond markets between bunds, italy, and spain. a little bit of risk radar? anna: and makes me think about how much burdened sharing will be a part of the conversation. that talk of the bond markets and the fed there. let's talk about corporate news. they are talking about making good progress in preparing cocked up to be emerged. -- cofta to emerge we had a big conversation about activism yesterday. i want to mention i wg. office the short-term renting space, really hot with the presence of we work in the united states. , operatings activity
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profits for 2018 are expected to be below prior views. this is a stock that has been pushed up because of m&a speculation. we will watch for any price reaction at 8:00. stocks will open appeared. let's talk about the risk radar. msci asia-pacific is weaker now. concern about trade. the trade concern lingers on. it is being reflected in what we are seeing in the currency markets. the offshore yuan is going above 6.6 for the first time. we giving in the chinese currency is still part of the conversation. the asian oil companies are going higher. nymex is up by 2/10 of 1%. of greeceminister speaks exclusively to bring blood. we will bring you that interview at 2:00 p.m. london time. go to bloomberg first word
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news. here is juliette saly. juliette: president trump has signaled he may take a less confrontational path to curbing chinese investment in sensitive american technologies. his comments aligned with steven mnuchin's approach, relying on a u.s. committee that scrutinizes foreign attributions for national security risks. new measuresparing to prevent a potential flood of steel imports from global producers seeking to avoid u.s. tariffs. that is according to sources whose book to bloomberg. the measures are said to be a combination of quotas and sheriffs and of certain countries. is already considering similar measures toward off steel dumping which could be imposed next month. investigation will take until the end of the year before we can get the full picture. are seriously contemplating
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having provisional measures in place, mid july. exactly what form that will take is under discussion. saudi arabia plans to pop a record amot of crude next month. wants toe oil company boost production to 10.8 million barrels a day. barrel as the a u.s. senate would press allies to cut imports from a rant to zero by early november. to zero by early november. it doesn't take much of a geopolitical impact to reduce supply or cause prices to go up. i think it is tenuously balanced on the supply-demand side. much aboutry that
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the increase that opec has talked about because it is getting up no matter where they are today. juliette: bloomberg tv will be speaking to the former ceo of bp at 11:00 a.m. london time. 6:00 a.m. in new york. won his party's senate primary in utah. the result makes him one of president donald trump's most prominent critic within the republican party. he is a heavy favorite to win in the midterm election in november. you can find more stories on the bloomberg at top . all that noise, we are seeing noise coming through in markets as well. the bear market in shanghai extending that weaker yuan. u.k. closing lower by a third of 1%.
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in terms of that weaker yuan having an impact into stocks in china, particularly those listed in hong kong, we are seeing a fair bit of weakness coming through in developers. energy stocks outperforming in the region. gettingorp. in japan return after its fourth-quarter numbers. manus: according to reliable sources, that was your private lear jet to pick you up for the weekend. anna? anna: absolutely. very reliable sources. unease is rippling through chinese financial markets. the juan is on track to match its longest losing streak in record. statess between united and china continues. what is really driving the route
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in chinese stocks? the chinese equity market is down once again. >> exactly. have seen weakness in shanghai stocks for most of the year. yesterday, we entered a bear market, nobody is saying we are going to exit it anytime soon. we had some analysts saying it would probably last until next june. what is driving it is not just trade tensions, obviously that came back into focus, especially last week. it is also a home-grown problem. china is in a big deleveraging campaign now. it is squeezing liquidity, causing a credit crunch. we already had red flags in the bond market win corporate defaults were rising. we see thatf hurting economic growth, that is something that china can
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control, the trade war and the effect that that might hav growth is something that is completely out of china's hands. it is basically fighting wars on two fronts, if you will. manus: we are looking at some of the volatility whose. -- boosts. what is the pboc doing, what can it do to calm the market and get the yuan back on the dog leaf? we saw some signs of intervention today, actually. the 6.6 rate that and i mentioned earlier. it does not seem like the pboc wants to prevent a yuan weakness from continuing. a devaluation of a currency, it is market driven. it doesn't seem that the central
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bank really wants to stem this weakness. this could obviously add all whole level to the dialogue in terms of trade war, two years ago we had a whole concern about currency wars. at the we havee messages from officials that they are willing to tweet policy. they might have more than easing policy going forward to inject liquidity into the system. it is nothing to compare to 2015. we do have some pmi data coming out of china this weekend. let's see what that shows is about growth because the decline in the yuan kicked off two weeks ago when retail consumption was not expected -- not as highs expected. does china's economy have the likes to stand if we get a bigger attack from the u.s.? anna: thank you very much.
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joining us on set, david page, senior economist at axa investment managers. i will show you the charts that we have been running this morning. on the chinese cncy and the weakening against the dollar. that is the story. what do you see from the chinese, here? if you dig back to the fundamentals of the chinese economy, how much should the pboc be looking to act right now? how much of that he saying, this is market noise, we should sit tight. >> it is more than that. you have a domestic squeeze anyway. the chinese economy had a rough -- relatively upbeat swing to it. we saw tightening come through. that tightening suggest that monetary policy is above the interests, more restrictive than the neutral they were aiming at. that is helping slow the economy.
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and you have this threat coming through trade. they need to back off of bit and that is what we are seeing come through. you are seeing a natural response, and they are going to let this run for a while. it off since the problems of far, thatit goes too is what they will be watching, there are other ways they can try to add liquidity without having such an impact on the yuan. for now, they will be happy to let that go through. it is a warning shot across about for the u.s. to put additional pressure on the dollar. it provides offsetting stimulus to the economy. it looks like it runs for a while. we will see them continue to try to bolster the domestic side of the economy as well. manus: what did you make, we have had cuts. is that enough to soothe the
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nerves about debt in china? >> absolutely not. that is one of the key problems thatchina going to have -- that china is going to have. the long-term structural rebalance it was attempting at the start of the year and then facing the threat of external they will have to ease back on their longer-term ambitions of rebalancing the economy. you will see more domestic demand. this will help in the sense that easier monetary policy should help pick up consumption growth in china. aturally, we are going to see failing an external demand. it doecrease some of the stresses over the medium term. it makes the job of the chinese a little more difficult. in terms of the growth slow down, it still looks manageable.
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at the start of the year we were considering prospective growth coming in further than the government target. on the course of monetary policy. not like toists do panic. how much do you think this trade panic orcausing you to revisit your forecast? >> it is causing us to do the latter. we had a few that the trade story was about the art of the deal and negotiating. we will see more escalation along the way. we are on the path escalation and it will be difficult for trump to step off of that easily. we are seeing tweets that say he might be wanting to go easier on the trade sector. policy can turn on the time. a month ago, trade wars were on hold. now we're on the midst of it. do not have a lot of clarity about where it is going. the trajectory is causing a lot of risk. manus: thank you very much.
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david page stays with us. england releases a half your financial stability report today. what will mark carney have to say about brexit? what is yet to say about the outlook for the u.k. financial position? did we avoid the beware for most of the program? later, the head of personal investing at lng joins the european open seen. this is bloomberg. ♪
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anna: good morning everybody. it is 7:19 here in london. a: 19 in paris or berlin. 8:19 in paris or berlin.
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inhave seen a flat session the asian equity market. let's get bloomberg business flash with juliette saly. juliette: uber has won a 15 market based very licensed to operate in london after convincing a court it has shaken off its gung ho attitude of the past. shejudge criticized what called the previous managements desire to grow the business, come what may. the 15 month reprieve is less than the 18 month approval they originally sought. morale has steady at deutsche bank. the firm's annual internal survey shows that 57% of employees are committed to the lender. that is unchanged from last year, which followed years of decline. staff sentiment has been tested by three straight annual losses in a series of management changes.
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car prices are weighing on the shares of rental car giants. thatsts have cautions second hand cars coming off of lease will hunter mahan -- undermine the value of their fleet. the rental companies also face competition from ridesharing services like uber. that is your bloomberg business flash. thank you very much. a little bit of breaking news in terms of price moves. we saw this just the other day. this is two days that we have seen 20% of the value of this , in terms of this stock volume. it is quite high on this stocks this morning. volume is surging. stricken skull is down again for another 10% on that stock.
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that will weigh on our markets for sure. anna: let's talk about what is coming up later today. donald trump welcomes the presence of torture -- the president of political -- portugal to the white house. manus: the u.k. bank of england , what is he going to discuss in the financial stability report after its publication? about centraling banks, the dutch parliament after the market moving statements from he and others at the ecb recently. what more can we learn from the ecb? manus: let's get back to david page. he is still with us. one of the charge that we look at this morning was about equity markets, but also tried -- typed essential bank market sheets.
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this is the first time we will see these balance sheets flatlined. ?ave you modeled what that means for growth -- modeled what this means for growth? the only one in play is japan. this policy shift, we see it as part of an expectation for growth to slow down in the next couple of years. on thes of the impact economy, we are looking at stocks. the stock level has picked up. you are not seeing any tightening come through. interesting one is the u.s.. it is unwinding its balance sheet. so far, the experience -- experiment is not working very well. balance sheet has only tightened by about 10 billion,
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far short of the 150 billion it planned. the fed is finding it more difficult top -- unwind. it is the time for you will see -- until you will see central banks unwinding. anna: does that mean the fed needs to go slower? is it more important than where benchmark rates are? >> it is suggesting that the impact of the tightening could be more than anticipated. slower, inve to go the first six months it has gone a lot slower. where you saw a large issuance coming from the treasury, we have seen tightening in the money markets. the fed has responded by easing its balance sheets a little bit, which has upset the longer-term measures going through. they have to adjust that policy going forward or else they won't blast as long as expected.
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we already starting to think, how many more years shall we see this balance sheet and why continue? manus: the bml are out there saying, you are seeing the top of rates. you can see tenure paper come back to 2.5%. maybe we are lost in the weeds. 2.5 is good for the mortgage market. it is holding back borrowing costs for the real people on the sheep -- street. >> one has to consider what is driving this. if we are seeing a top in the market at 2.5%, a means the neutral rate is lower. why? growth is lower in the economy because people are more embedded. -- indebted. it is not a good sign. we are seeing a natural reaction of concern.
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markets are very uncertain about where trade policy leads. , perhaps we are seeing the top. we are not convinced that is the case. the story as we move through the summer is likely to shift back to how high heels will go. certainly expect them to move above 3% by the end of the year. you very much. senior economist at axa investment managers. we continue this conversation on bloomberg radio next. make sure to stay tuned. what will the trade conversation due to the global economy? the eu and china warning about recession and what it does to markets. don't need to overly stressed just yet, they say. manus: not just yet. it is hard to get a real direction. the yuan is the top story but
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oil comes in at the number two. we will have an exclusive interview with the prime minister of greece. we bring it to you what to :00 p.m. london time. ♪
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>> good morning. this is the european open. we are live from a european headquarters. stocks in china continue to slide amid concerns about the brewing trade war. u.s. futures are down as well. the cash trade starts in less than 30 minutes time. ♪ the cash trade starts in less than 30 minutes time. sinking offshore. china's yuan continues its longest

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