tv Bloomberg Markets European Open Bloomberg August 23, 2018 2:30am-4:00am EDT
: good morning. this is the european open. i am guy johnson out of european headquarters in london. matt miller has the day off. the cash trade less than 30 minutes away. ♪ guy: the book bounces. key -- the dollar regains traction. we are live today in wyoming with the kansas city fed president esther george, look for that interview here.
an ipo on hold. saudi arabia said aramco is lifting -- listing, we will have a quote at a time of its own choosing. and 10 years on as we approach the anniversary of women brothers collapse, it is the crisis -- is the crisis triggered close to being over? we will speak to the author of "crashed." this is how european futures look right now. you can see a little softer but not by much. there is a lot of action to happen over the next couple of days. we have jackson hole to get through, the pmi data out of europe is worth paying attention to. there is a lot of sentiment toward europe right now. is that justified by the data? it is soft data but we are -- it is worth paying attention to. we had that interview coming up with esther george. that will move the dollar. that is where we sit right now, fairly flat. it is a ex dividend date for london markets.
let's show you what is happening with the gmm. the australian story is in focus. malcolm turnbull's future hanging in the balance. equities down by .3 of 1%, the aussie dollar down by .61%. the bloomberg dollar index up and the canadian dollar tracking lower. let's show you what is happening in the commodities space. we face in copper is what we are seeing this morning down by 1.49%. softer witha little a big bounce coming through yesterday on the back of inventory data out of the u.s. let's get it bloomberg first word news update. here's juliette saly. juliette: the minutes of the latest fed meeting show the discussion about how high to lift its target interest rate is intensifying as policymakers prepare to raise borrowing costs next month. the chairman has been attacked from the white house with predecessor trump criticizing
rate hikes. we will bring you our interview with kansas city fed resident esther joy -- george. donald trump has denied using campaign funds as hush money to alleged past affairs. prosecutors say some campaign officials were aware of the payment. his statement contradicts a guilty plea by michael cohen, his long-term personal attorney and fixer who said the president directed him to make the payments and they violated campaign-finance laws. >> later on, but you have to understand what he did and they were not taken out of campaign-finance, that is the big thing, did they come out of the campaign? they did not, they came from me. and i tweeted about it. juliette: a resumption of u.s.-china chain -- trade talks.
officials continued a first face-to-face discussions since june. that is even as the next round of tariffs on $16 billion of each other's nations exports to one another took effect at one minute past midnight new york time. australia's prime and asked her is digging in for a fight saying he will only step aside if his chief rival can prove he has enough support to unseat him. of ministerial resignations, malcolm turnbull said he would call a special meeting of the governing liberal party only if the populace challenger can gather enough signatures on a petition. if lawmakers back holding a leadership vote, turnbull said he would not stand. >> when the party is called, i movednvite a motion to be . if the motion is carried, i will treat that as a vote of no-confidence and i will not stand as a candidate in the ballot. juliette: the u.k. will signal
today that he wants life to continue -- it wants life to continue as normal. the brexit secretary will say that individual institutions need to agree to sensible solutions. that comes as the -- as they publish the round of 80 technical notices expanding how businesses should prepare for a collapse in talks with the eu and we will bring you our interview with the international trade secretary liam fox tomorrow. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. guy: thank you. let's stay in asia. stocks reasonably mixed, the dollar rallying for the first time in six days. investors awaiting the annual jackson hole gathering of global central bankers. not signaling tightening in the minutes delivered last night.
i did not mention politics in that run through of what is happening. your view is that the market is being too complacent. mark: i think so. i understand why they are being complacent, it has been a folly to ever trade negatively on these trump headlines and they have been growing, is not as if there are fresh escalations -- accusations. people have learned to ignore politics and that is a broader theme, it is not just trump. in developed markets you ignore politics, it does not tend to have a lasting impact. headline impact in that is about it. surge andontinued to there were a few differences. trump has shown a willingness to lash out in policy terms to take the populace policy stances which may be negative on markets
and on top of that, trump personally seems to have given the credit and claimed the , certainly by many republican party members which means if you know he is phone herbal, you have to assume that a large part, the main reason stocks are rallying has been removed. on top of that u.s. stocks are priced optimistically, they had a great run. i believe in the structurally bullish argument. especially with the trade war going on and with that large vulnerable short position in treasuries that continues to be squeezed a bit more every day. do think the fed would have been more hawkish of there was not trouble in emerging markets? minutes, i do not know if it is a big issue. i am surprised the minutes were dull.
they emphasized the point about the neutral rate. would expect them to be hawkish because the minutes came before most of the emerging-market pain. i do not think we can read too much into them. everyone was like, these are old minutes. what is more important is what -- if we get an update from jerome powell at that meeting. talksre the latest tariff significant? everyone seems to be shrugging $16r shoulders, another billion coming through, we have these low-level talks taking place, no one seems focused on that story but incrementally, the story gets a little bit worse. upk: you summed it perfectly. as we have discussed, this will be a long-running story. it is running longer than many people realized and it has many
months to play out. we will get worse headlines before we get good ones. it has been long expected there should not be in a shock. tariffs andirst fermented, that should have been a shot. now people have learned that this is long planned, we'll get this growth negative and people are looking at how much. the big step is if we get the extra tariffs that are being talked about in september, that would be a real hit to growth and that will be much more negative again. guy: thank you, mark cudmore joining us from our mliv team, the macro strategist running is out of singapore. mliv on your bloomberg create we will bring you an interview with esther george at 12:30 p.m. u.k. time. data out of of pmi the eurozone and we will work our way through those numbers during this program. talk tech my asian tech in
hold. while the move will further delay the ipo, it does not mean the planned share sale is canceled. the can -- kingdom's energy minister said the government amends committed to the ipo. hunt forn is on the self driving technology and recently tried to buy ever our innovations, a driving startup founded by veterans of tesla and alphabet. lowerad talks to buy a was already a partner only to be rebuffed because the company wanted to maintain its independence. declined toa comment. we will bring you an interview at 10:00 a.m. u.k. time. dismissing set to be 100 staff at its asset management division after a business review. are global and range across several businesses in the group. a spokeswoman said the
reductions will be "relatively ."all declining to provide more details. that is your bloomberg is this flash. -- business flash. alibaba next up on deck with its report with first-quarter results do before the u.s. open this morning. obviously a huge stock similar in size to tencent. -- what is the outlook for asian equities? joining us now from sydney, our market strategist joining us from saxo bank. let me ask you a straight up? -- relating to alibaba, with a risk you up to tech story out of china has been so disappointed, will they turn it around? that is the question on
a lot of investors' minds. depending on the results later today could set the bellwether for asian tech moving forward analysts are expecting alibaba's revenue to grow at 61%. year on year. this revenue growth is coming at a cost as their margins have decreased significantly. alibaba have invested heavily to non-ve this growth in -off-line retail and food delivery and a have also invested heavily into ai and logistics and it is whether investors will forgo this margin squeeze in the event of achieving future growth. guy: that sounds like amazon to me but you can compare and contrast the two businesses. chineseof whack is the tech sector versus the u.s. tech sector? in so many ways they are similar
but at the moment they look like they are on different planets. eleanor: you are except the right. traditionally, chinese tech trades at a valuation premium to u.s. tech, we have seen a sentiment and china has been very negative and a lot of the individual tech companies have suffered individual problems like tencent with the gaming regulations and we have seen the growth has not lived up to expectations. we have seen a repricing across the sector. more broadly. has brought the evaluation premium down to levels we have not seen for six years so it could present quite the opportunity for investors now. are there better entry points still to come? eleanor: that is likely going to depend on alibaba's earnings report and that will be a weather moving forward for asian tech in general. it could be a bumpy ride as a
lot of the companies are subject to a squeeze from the trade war. a lot of these chinese tech companies do generate their revenue domestically so it should not be too impacted from the trade war. although it could be a bumpy ride moving forward, this could present a long-term opportunity for investors. guy: i was listening to our correspondent tom mackenzie who joined us where there is a big tech event taking place. the tech superstars are there from china. what he was saying and what he was hearing is that they are concerned that while the trade story is manageable, it is the impact it is half inning on innovation is where they feel the damage will be done and that is where maybe the relations do not reflect how the trade story is going to impact the bottom line. i think you are exactly
right. i do think when it comes to chinese tech, the animation is still there and the chinese fenced thehas industry that we should not see too much impact from the trade war moving forward although it is a sector that donald trump is keen to put under wraps as it threatens the u.s. dominance in terms of the technology space. tencent,nal question, alibaba, these are massive stocks with a huge impact on emerging markets. they make up such a huge weighting in those portfolios. in difficult is it to invest a.m. elsewhere with what is happening with these stocks? with what is happening with alibaba, with tencent, it is dented sentiment and emerging
markets and the tech sector in general especially in china. i think we are seeing valuations in the u.s. market have become very stretched relative to emerging markets and that represents an opportunity for investors to start averaging into emerging markets. great stuff, thank you for spending some of your time with us here at bloomberg. bank.g us from saxo we are minutes away from the start of european cash trading. we will take a look at the stocks we need to watch going into the open, deutsche bank being cut over and it will have a price target on deutsche bank of eight euros, the low we had a few weeks back was nine. we will talk about that next. the open is 10 minutes away. this is bloomberg. ♪
and eight euro price target, wow. >> it is 20% down from the current price which is hovering around 10 euros per share. is fading away, they are saying because it is losing revenue across all three of its units. they are taking a look at investment banking and retail ranking and say all of it is bad. it is pretty brutal. they will say they will not get back and they are telling investors to sell in any rally if they can. look back asking a we prepared for the anniversary of claimants. it is brutal over that time. let's talk about what is happening with kkr. a plan to separate
them and they announced a plan to spin off and lease the unit. --looks that kkr went to went too far. we have to see if they would offer the big check that fiat is asking. the -- is interesting in this era what is happening. playtech? >> this is the company that provides the online software to gambling companies and they have had big problems in malaysia. the unregulated market but it is a big heart of your business. their first half results show that, revenue was up 35%. up revenue including signing for percent. they have had a couple of profit warnings, shares are up 50% off their peak.
while it is disappointing it is no worse than analysts expected so you might expect a slight bounce in the share price as a result. you,thank you, all of covering the big news we may see at the open. you want to dig out all the news you can find on the stock stories, you can find it first on your mobile app and on your bloomberg. coming up, it is the market open, futures pointing to a mixed open. there is a lot of action after the london markets. there is a fascinating story out handlesblad.ad -- what are the applications for boss?ndesberg we have the fantastic interview with esther george and liam fox coming on later on. we will bring you an interview with volkswagen's brand head of
guy: minutes to go until the start of cash trade this thursday morning. the dollar is bouncing, first time in six days we have seen it bounce. euros are trading north of 1.15. toward the single currency at the moment pretty much on the floor. we will see where we go this morning. we are waiting for alibaba out of china. the trade story is ratcheting up. oil bounced strongly yesterday after the united states big draw. today, we are seeing that come down a little bit. the s&p yesterday pretty much flat.
futures here in europe are fairly flat going into the open. it is a big ex dividend date out of the london market. -- i do not think we will see much action. in terms of the actual numbers, let's show you what they are. 7574 on the london market. i do not think the market makers will be looking up from their morning coffee to see what is happening here. 0.1%. up by there is really nothing doing here. ibex up by 0.1%. let me show you what is happening with the imap. this is the story, financials look softer. we are getting numbers out of ahead of thely
estimate in terms of where we were expecting that russian bank to be this morning. , some ofe where we are the metals are off overnight. gas is coming back down. construction is trading stronger. stronger.s a little technology, not doing very much. let's talk about individual movers. we have a long list of ex-dividends trading this morning. in terms of what we have, ryan air. talking about the dutch cabinet had gone on strike. i think there is an argument ryan has to get
through the next few weeks. in the winter season, it takes capacity out of the market. pirelli is trading higher. a lot of u.k. stocks are trading down. there are a bunch of ex-dividends that are affecting the market. we do have numbers out from square bank, we will get the french data shortly and we will bring that to you in a moment. european markets are mixed is the best description. flat is another way of looking at it. it is obvious. we are waiting for alibaba numbers later. how is the portfolio? >> it is holding up. the summer has been busy from a macro perspective. markets are still near highs.
some of our stocks have individually good numbers. we have held up well. guy: is that a surprise to you? no, we run a balanced folio. there are a lot of pitfalls to fall into and have a sharp drawdown. some stocks have had a pullback, tech stocks have had a pullback on regulation. the internet names in particular. but not for us, that is not the way we do it. how are you surprised by the markets are to the political noise out of the united states? they are shrugging their shoulders, they do not care. freddie: it is partly we do not care, and partly we do not know. it is impossible to predict things about donald trump or the trade war.
it is impossible to put it into your numbers. when you talk about ceos, they are not talking about trade wars in their numbers. the more generic ones could suffer export inflation, it is rare saying that will affect numbers. shrugging your shoulders feels like the most rational thing to do, even if you think there is a possibility of a negative outcome. guy: that leaves us with the central banks. freddie: exactly, and back to the fed tomorrow. the big story for the last 18 months, you have had this said normalization, and then they started ramping rates up recently. until the middle of last year, it felt like the rest of the world was catching up. we had think in his global growth. we had the ecb speaking about cutting its program. the bank of japan talking about
toning it down. months, absent the last six days, the dollar has had a big move back up, and that puts pressure on the said. it is a big decision -- it puts pressure on the fed. guy: you start thinking about exiting u.s. positions, the divergence between u.s. assets and the rest of the world, and in particular emerging markets is eye watering. freddie: i agree. the dollar is separate, i personally do think will weaken over the next six to 12 months either in a bullish or bearish scenario. it may trigger a crisis globally, and as our plots come back down, or we manage to get ,hrough with a more dovish fed
dollar liquidity eases back into the system, everyone else rebalances against the dollar. the u.s. market is still a fantastic place to invest for five to 10 years with long-term investors. we do not think about cutting our investments in america, but i would agree places to look for new capital or emerging markets, we are seeing new or ideas for fresh capital. guy: when we think about where and jackson hole, if the u.s. -- do you think the emerging markets slowdown that we are seeing in europe is part of the thinking? how the rest of the world affects the u.s. right now. if the ecb were to back off, the whatever youff,
want to look at, change the narrative, i am wondering -- and i looked at the minutes last they predate emerging markets, but i wonder if we are starting to see caution creeping in to the fed's thinking. freddie: i think we will. this has been the big story over the last 25 years, said policy. greenspan did not move forward with a more dovish tone. have been bernanke more aware of external factors, and in particular emerging markets. china in 2015 etc., and have allowed it to impact policy. the big question is if powell will do that, he is a new chairman, we do not know. there are three concerns, trade, housing, and emerging markets. they were already talking about it on august 1 when they had the meeting.
i believe it will impact policy. it is a circular reference back to the u.s. anyway. if you help out emerging markets and allow them dollar liquidity, you will have better trade and solutions. without a strong emerging market, you are going to lose anyway. you need a strong globe to have a strong america. fors not america first central banks globally. guy: freddie is going to stick around, history professor, columbia university -- cio/founder, latitude investment . we are beginning to understand why we are seeing what we are seeing. significant development with the irish pilots union. we are coming to the end of the summer season as a result of negotiating power of unions is starting to fade a little bit.
we were hearing that maybe we were getting close. it will be interesting to see how that feeds through into the u.k., and how it works. a deal has been done with the irish pilots union. i expect we will see a blueprint. 4.71%, but aading deal has been done. it has been a tough seller for ryanair. there will be fewer cancellations as a result of the strike than the result of the shortages of labor in the previous. period. ryanair is a stock that is rallying hard at the moment. it is a stock we will be watching when we come back. there are a number of others out there as well. we are awaiting the french pmi data. this is bloomberg.
it is seen to likely accelerate the resolution of these european disputes. ryanair over the summer has been weighed down across europe. , it is't as high as 5.2% still up 4.2%, one of the best performers. another year of progress is expected, we got a miss on the first have sales, but the ceo says the first half represents a good solid start. .oday, investors seem to agree on the downside, i am looking at antofagasta. we are seeing minors under pressure. the stoxx 600 is the worst-performing among industry groups. we have been seeing metals selloff in asia and on the london metal exchange. guy: thank you very much. let's focus on europe.
we are about to get pmi data out of the eurozone. we are minutes away from the arrival of the french data. we get germany ending which data later on. -- we get germany and english data later on. we are joined on set. very negative toward the currency and the politics in the financial sector. that might be about to turn. we see more positive news out of germany, especially on the economic front. the overarching issue is the financial sector. you saw the downgrade at deutsche bank.
there is not a deep amount of value. freddie: it destroys value year after year. it is difficult to see how these banks fix themselves. and you have bigger problems in italy and greece. the economic impulses are moving slightly up. there may be a release coming area guy: french data ahead of expectations. the services line coming through at 55.7. we are ahead of expectations. servicesrly on the side. we have an improvement -- it is not a lot to go on. it is the right direction. freddie: it is moving in the right direction. it is slightly ahead.
that tends to lead to earnings growth. it puts you in a position where you are negative on earnings, and at 55 or above on the pmi. it is slightly more positive for the stock market than it appears now as long as momentum continues. guy: were we just wrong when everybody got excited about the eurozone? that finally we were back to growth? was that the blip or is this? .reddie: that was everybody had believed america had solved the problems. it did quantitive easing earlier. it got into a more normal rate hiking cycle. people make this mistake where they assume because america can do it, others can do it. europe is a far worse place to invest than america. america has better regulation, freer movement, better rules.
i believe you cannot transpose what america has managed to achieve on to europe, and that was the blip. there is a lot of infighting in europe. i believe the banking sector is in a lot of trouble. that still need fixing -- that still needs fixing. guy: is there a value play in europe? freddie: there is. i am looking at the high industrial goods. in europe, we have nokia. they meanf tech, internet. some of the more hardware stories can be disregarded. 50% comes from a technology business, which is licensing revenues, licensing their own brand out, settling disputes
with people like samsung and nokia and apple. everyone is talking up a 5g cycle coming sooner than expected. stocks like that or a great place to trade value. the market is very concentrated. there is an upside to a business like that with very little downside. look at europe and think about what has happened since the beginning of the year, and i look at value, it is 10% down. value stocks continue to be absolutely hammered in europe. three month target price doing well, you have been rewarded if you are littering. -- if you are delivering. freddie: this is a key feature
of the market that will not go away. the market will be far more momentum-based. the three month price target changes. freddie: they are all tight figures. you have to be incredibly patient where you hit value traps. guy: how much of what you are picking in europe is a value story? if you look at these businesses, how much of those are value? what are you picking out? freddie: it is more turnaround in value, just value for value sake causes trouble at the moment. the way value is defined, you end up in the longest bull market with quite a lot of the bottom of the market. value is not what you really want to be investing. like,are ones that i
guy: welcome back, we are 23 minutes into the market. there are interesting individual stories out there. one is ryanair, trading up strongly. the irish airline has reached a deal with its pilots union. we have seen a significant amount of industrial action over the summer. a large chunk of it could be behind airline. a deal has been struck. you could argue if the unions are running out of time as summer approaches -- the end of summer approaches. it doesn't need the cruise the same way as in the summer -- it does not need the crews the same
way as in the summer. it was a marathon session, 22 hours of negotiation, ultimately delivered a deal. yesterday, the big one is alibaba. it will report first-quarter results just before the u.s. open. so much is happening around the story. the tech earnings season out of china has been disappointing best far. alibaba is in a different business, but it could be a concern for investors. asialibaba rescue the an tech reporting. freddie, you like tech stocks in the past. many look and feel similar to
the tech stocks we find in china. the valuation gap is amazing. freddie: they do, and you can match them up. there is a large difference. one does not have to think in a relative sense. we continue to invest in the u.s. names over the chinese names, not through any huge worry about chinese games, but the valuation has been threatening, the growth rates have been higher. there is more room for error. even within technology, there is a huge difference between internet names versus hardware names. we are broad in our interest. the main name we have now is google alphabet. we do continue to like the tech sector. from a developed market, internet perspective, we are likely to go through a multiyear
regulation cycle. there will be more pressure on google, more pressure on facebook around privacy. guy: who is most at risk? if you look at the big tech stocks out of the states? freddie: most are at risk in europe first. u.s.pay huge taxes in the so the lobbying will be more successful to keep regulations that they. -- keep regulations at bay. i think google is most at risk in the price. they have been fined a lot of money, billions of dollars for their practices. is one reason they trade 15 times of operating profit. next in line is probably going to be facebook around privacy because we are already halfway there. the biggest one and the problem
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headquarters in london. at a headline level, not much action. at an individual stock action, you are. ryanair has a deal with its irish pilots end of the stock is rising. michael o'leary breathing a sigh of relief. let's take you to the bottom of the market. there are a bunch of ex-dividends. 13 in the stoxx 600 this morning. you have a stocks here being ex dividend. deutsche bank is trading down. belowice target is 20% where we are now. i do not know what the numbers 80% downast year, but from its highs. deutsche bank trading down by 1.57%.
there is a mix of mechanical stocks trading lower. we have some interesting individual names. german manufacturing data is coming through now. the forecast 56.5. services pmi rising. we will get more analysis on that in a moment. let's get a bloomberg news update. >> in the u.s., the minutes of many,atest fed interest rates is intensifying. jay powell has been attacked from the white house, with president trump criticizing rate hikes. we will bring you our interview with esther george.
trump has denied using campaign fans -- campaign funds as hush money. it comes a day after prosecutors claim campaign officials were aware of the payment. this guilty plea contradicts -- these comments contradict the guilty plea from michael:. -- michael cohen. >> you have to understand, what he did, and it was taken out of campaign-finance, that is a bigger thing to come out of the campaign area they came from me and i tweeted about it. >> the resumption of china-u.s. says a trade war can be averted. the first face-to-face discussions continued since june. the next round will be in paris.
brexit secretary will say the individual institutions will agree to sensible solutions. notices will explain how to prepare for a collapse in talks with the eu. we will bring you our interview with the trade secretary liam fox tomorrow. global news, 24 hours a day on air and at tic-toc on twitter, powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. guy: thank you very much area saudi aramco will work on its ipo, delaying sales double push back to 2019. we were told in march that aramco would be ready for the second half of this year. joining us is bloomberg's managing editor.
it is in the deep freeze apparently. >> it has been clear for some time this was not going to happen on the original timescale the saudi's forward. what changed in the last two months is the decision saudi arabia made for aramco to buy the chemical company, and as their statement said, they still plan to, but cannot do do the giant deal now. it is important for two reasons when it comes to aramco, one, it is not the way to channel huge amounts of money to the saudis, by paying to the sovereign wealth fund it does the same thing and that lessens the pressure for the ipo. to do a giant bond issue to get the deal done, and that will require them --
guy: that is going into the debt market? >> companies are facing that anyway if you do a giant equity deal. getting aramco into the market. guy: it sounds like you are saying that does not matter. -- it does not sound like it matters to anybody that they are going down a different financial route. the ipo would've achieved a number of things, but those boxes are all on ticked. -- are all unticked. >> it achieves a lot of what the crown prince set out, without him having to confront the trillionhis two
number. that is avoided. guy: now to south africa. fter tweets by donald trump on the land speculation a possible sanctions. joining us from johannesburg. what people are saying this morning about what has come from the president? are we hearing from the government? yesterday, south african president addressing parliament stated that it would be done in an orderly fashion, and within the constraints of the constitution. the president's spokesperson has come out strongly saying the presidency seeks clarity on president trump's tweet, as well, stating it is unfortunate
that it comes at a time when the president of south africa is trying to drive up investment and increase business. such an alarmist week has not been received well at all by the south african government. that southre a fear africa ends up getting caught up in what is helping elsewhere in the world? trump tweets and follows it up with financial sanctions or something else, is there a fear that will happen to south africa? by the numbers we have seen against the rand, there are those fears of where south africa may find itself as warsteral damage on president trump is fighting. we saw a happened in turkey a couple weeks ago and how their currency was hard hit.
there are other factors weighing on the rand, sentiment seems to be one that drives it. it depreciated 1.7% against the .ollar after trump's tweet this comes at a time when the getident is trying to investment into the country, and he boosts economic growth. it is an economy that has been struggling to grow similar to emerging-market peers. it has been a challenge for the government, and it does not seem to bode well in sentiment in south africa. great coverage. johannesburg.m the stock of the hour, ryanair, we have seen marathon talks between the company and its pilots union, that has finally
resulted in the deal. the stock is trading higher this morning, up around 5%. is 18.6, andigh the 52-week low is 12.86. we are well off to highs just above the lows. the volumes we are seeing in the summer, we are seeing the ryanair stock trade on big volume this morning. at the moment, 12 buys, eight four cells. the bank crisis triggered by the fall of lehman brothers, the anniversary are only a few weeks away. how much has really changed since then? what have we learned? what do we still need to know? join the dots. we will be talking a lot about this next. we will join the author of
ryanair is doing a deal with its irish pilots. that seems to be boosting the stock considerably. it is a good time to talk about historical context that we will spend a lot of time over the next few weeks talking about. we are three weeks away from the anniversary of the lehman brothers collapse. the 15th of september, 10 years on from the pivotal moment. the ensuing financial crisis and the session that left the world in its wake, is still shaping policy today and shaping our thoughts today. ar next guest has written comprehensive history of what those events meet to the world. adam tooze is the author of "crashed: how a decade of financial crisis changed the is history he professor, columbia university. we are three weeks away from the anniversary. what got me thinking about this was, the americans have moved
past it, the europeans are still dealing with it, and asians never felt it. sense.hat makes perfect the impact on europe was more prolonged. that is an unimaginable situation 10 years ago. this is an incredible situation. the italian banks are still limping along. government issues in the eurozone were burst open in 2000 2008. is already -- in asia powers through with its stimulus. the question in china is can they engineer a soft landing? they are dealing with the side -- it was the potent a fallen their exports. the most ambiguous is where the
metastasizeation. the americans if the crisis is with us, and you look at wall street and the s&p 500, the answer is no. the tech story makes everyone feel better. on the other hand, you have trump, and he is seen as the political symptom that the crisis ultimately produced, the disaffection, the inequalities, the sense of resentment in american society. things did not work out as well as they did for those who were bailed, and who the qe was effective for. guy: were there policy mistakes? here in europe we look at the united states and think they made more mistakes than we did. is that a fair reflection? europe is dealing with brexit and italy. i do not know what happens in germany next, but merkel feels
on thin ice. we look at policy mistakes and how they have worked out. is it possible to talk about policy mistakes, and can we divide the world along those lines? adam: you get an appropriate sense of modesty, what folks were dealing with, it was like nothing anyone had seen before. intelligent and highly motivated and energetic people. mistake is perhaps not the right word, but decisions in gone anotherat had way, and lehman is the obvious one. having made that mistake, the americans are energized. 13, and thattober recapitalization of the american banks, and that is the dividing of the ways. that is what does not happen in europe. that is the fundamental difference. at the bottom of the eurozone
crisis, the weakness in the financial system itself makes restructuring dangerous and turbulence in the bond market. that is really the parting of the ways. it comes early and after what we might think is the american mistake, that energizes them and creates the political space to do something that no one in europe managed to do. guy: you draw a lot of lines to what is happening politically. you talk about trump. brexit is another reaction. the policy story that was developed by the ecb and how that change the employment system in europe, and the migration story which the u.k. had to deal with. when we look at what happens next, this is what a lot of people are thinking about. where are we? what are the comparisons? you look at the rise of far right governments, and you start
to compare the situation with the 1930's. that is a worrying story to think about. adam: specifically, the most critical problem is the gop, the republican party. it is the fracture in that party , insofar as we of a dollar-based global system, it all comes down to the political anchors of the fed. this was aspite that republican a ministration, the bush administration in an election year, they cannot whip their own people in congress in line. fannie mae and freddie mac, the republicans will not give their own president of the. if you are looking when the gop becomes a party of protest rather than government, that moment there encapsulates it. going forward, that is the big question for global economic
governance. is the united states still a cooperative player in the game? will it be able to cooperate with china if china comes under pressure the way it did in 2015. protest,ve got this you've got president trump, and china trying to engineer a soft landing. how do those in iraq? adam: -- how do those two interact? adam: it looked like the china boom was going to break that. -- break bad. yellen had a decision to make in december 2015 to raise rates, and she does not. she explicitly justifies this in terms of global credit conditions. the fret internalized china as part of its decision-making process. three years on we have a president who tweets celebratory about the collapse of the shanghai market as a symptom of
his trade war against china. differenttwo political environment. guy: is everything in the same bucket now for trump and the chinese? everything is on a spectrum here, but all in place. adam: that is another thing we see in 2008. not just the financial crisis, but the war in georgia. putin fronted up and stopped nato in its tracks. that is indicative of the way in which geopolitics, which held at bay in the aftermath of the cold war, you can separate the power of politics from economics, and so basically economic growth was on our side and we could relax. that set of assumptions, divisions between geopolitics and economics, all of those are in the melting pot. now, it is explicitly american
national strategy to treat tech as it continuing --military as well. it goes from trade to hard power as a continuum of force in dealing with the chinese. guy: is the multilateral world closed? adam: we are heading towards something that is multipolar. it might be more regional. it is difficult to imagine the big global institutions functioning the way we thought they might united. trade failed before trump came. we moved into integration as a substitute. guy: if trump is a one term president, do we go back? what happens? everyone in the world has to reckon, and this is why i empathize the gop with the fact
that one of the two parties has stood by and watched trump as he engaged in this activity. they produced trump, and were the party that held the american government budget hostage in 2011 at maximum eurozone stress. it may shut down the government. that party, until we see structural change within the party, it seems that the world should assume the united states is not a reliable economic player. guy: what about europe? we need our own payment system to protect ourselves against sanctions, be serious about that imf. that might be one of the good things to come. one of the messages, you cannot kid yourself about the all pervasive -- the europeans are kidding themselves if they can
insulate themselves from them. it affects the e.m.'s. we've gone deeper into a reliance on the dollar as the main basis for offshore lending. that is what we are seeing in turkey and in japan with the bank gorged on cheap dollar funding. in 2015, private sectors in china had huge amounts of dollar funding. it was cheap and an easy carry trade. that is something in which a little tinkering around edges, and 50 billion euros, that is not the right order of magnitude. in terms of liquidity, we are talking about multiple trillions. i do not see any political will in europe for that type of thing. ,uy: thank you adam tooze shed" and "cra
professor of history at columbia university. about theng to talk long story of the day. the aramco ipo is off the table for now at least. what potential investors are close to a on, record in less than a million off the capacity level which is the white line here. 11.5 million. bloomberg is suggesting they could be pumping out even more, 2 million barrels per day if conditions are right. seemingly the price is an issue. they are making a lot of money here, but not enough. about --ave the story if you believe technicals, here i have the relative momentum index for the u.s., asia, and
europe. the u.s. is the only one in the j.p.ought territory area morgan says this to virgins has never occurred before, asia is even oversold, it will not last . guy: i am going with hillary clark, our charts guru. in some ways, you will get aramco ipo in a different place. much appreciated. charts on thehose bluebird. later we will bring you an interview with esther george. that is kicking things off for us at jackson hole. we will be playing it at 12:30 p.m. london time.