tv Bloomberg Markets European Open Bloomberg August 31, 2018 2:30am-4:00am EDT
guy: friday morning. welcome to "bloomberg markets: the european open." from our european headquarters in london. i am guy johnson alongside matt miller, who is in finland today. yeah, i've come to helsinki for an exclusive the governor of the bank of finland. the cash trade is less than 30 minutes away. guy: the single worst trade deal
ever made. officexclusive oval interview, trump threatens to leave the wto. say the wto is the single worst trade deal ever made and if they don't shape up, i would withdraw from the wto. the president also tells bloomberg he thinks the eu is as bad as china, only smaller. we get europe's response. he will be's -- matt will be speaking to the ecb governing council member and former commissioner for economic and monetary affairs. despite an ugly august for emerging markets, credit suiss'' ceo tells bloomberg he doesn't see contagion. >> i don't believe there will be material contagion. in the short term, there is always spontaneous reaction.
less than half an hour from the start of european trade. keep an eye on whitbread. costa, thebuying coffee chain. that will move markets later on. at the moment, london futures are mildly negative. it has been a very tough month for emerging markets. that is where the real action has been. interesting to see how european carmakers open up after trump objects to the idea of zero tariffs and hints there could be paying down the road. let's look at the gmm. see the action in emerging markets once again. africany, the south market absolutely clobbered. -- argentinian currency feels very ftse like in its move
but this line here. there is the peso move. this, despite the big central-bank height. the turkish lira, bouncing against the dollar, but has been quite a tough time. the indian rupee trading a bital higher, but yesterday, we saw a .ig moves the situation where toward the end of the month, you tend to get a flow story out of the emerging market and that has been. ouroday's show, do not miss interview with the legendary investor warren buffett. he talks about financial regulation and the state of american fundamentals and investing. hearing what he has to say a little later in the program. it is a busy program. let's get a first word news update with juliette saly. juliette: donald trump has rejected the european union's removal ofrap
tariffs on cars. his comments came hours after trade-- the committee -- commissioner told european parliament lawmakers the eu would be willing to bring down even our car tariffs 20 come all tariffs to zero if the u.s. does the same. >> nope. because they do a lot more auto business than we will ever do. not justall, it is terrorists. they have barriers to our cars. a will take down the barriers and charge us no tax but it is not good enough because they will always sell more cars. habits,bits, consumer or to buy their cars and not our cars. is currencygentine crisis has deepened as an emergency interest rate increased to 60% failed to stop investors from pulling money out of the country. the peso extended losses after the bank raised its measure to a
global high. the hike, the second this month, was the latest attempt by policymakers to defend a currency that has lost more than half its value this year. indonesia's rupiah slid to a two decade low, spurring intervention from the central bank as investors dumped turkish assets,ntinian countries with large current account deficits like india have seen pressure. the route in argentinian peso and turkish lira, and the recent instability from the four right -- rate hikes may, which has led to a return of foreign funds into its debt market. u.k. companies became more pessimistic in as concerns august brexit will hurt growth increased. according to a survey by lloyds, business confidence at the lowest levels since december with trading prospects optimism toward the wider economy declining. only 21% of the companies intend to increase hiring over the coming year, down from 30% in
july. global news 24 hours a day, on-air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. thanks, juliette saly in singapore with your world national headlines. president trump has threatened to pull out of the wto if it doesn't treat the u.s. better. he spoke exclusively with bloomberg's editor-in-chief saying nafta was the second worst trade deal ever made, surpassed only by the wto. say the wto was the single worst trade deal ever made, and if they don't shape up, i would withdraw from the wto. the president hit out again at china, saying china wouldn't outlast the u.s. in a trade dispute.
his administration was re-examining how to determine whether countries like china are manipulating their currencies. there is a formula, and we are looking very strongly at the formula. as you see what has gone with the won, they are trying to make byfor lack of business cutting the currency. it is no good. you can't do that. joining us from singapore is mark cudmore. bloomberg mliv strategist. let's talk first of all about overall what the president's comments did two markets. i didn't see a lot of reverberation when i looked across equity indexes. they seemed to recover fine in asia, or across currencies as there wasn't a lot of move there. where did you see the biggest reactions? see an initial
reaction. markets were slightly vulnerable because of the em problems already brewing. assets wereket -- already on the back foot, and then we got trade comments from trump. go idea he was ready to another $200 billion against china next week and that caused markets to selloff a bit. it is true we haven't seen a drastic selloff in asia, but partly because we have month end and some portfolio rebalancing flows are starting to dominate short-term trading. overall, the comments did cause a little negative reaction in markets but maybe we haven't seen the full followthrough yet. guy: how should i read this from the european perspective? he talked about europe being as bad as china but smaller. if he iseem as recharging and getting ready to go back after europe. that doesn't feel priced at the
moment. no, it doesn't. it would be a negative shock for markets because there is still a complacency that trump will not move to attack allies like that despite the precedent we have seen over the year where he has consistently done so. if there were severe measures against europe, markets would take a very negatively. part of the reason we haven't seen reaction is because we have seen aggressive rhetoric from the trump administration that is not always followed through. traders will wait to see if we get firm policy measures to move against europe on trade. matt: let me ask you quickly about what is going on in china. the government there is moving to stop new videogame releases. what is this intended to do, this kind of policy? is it really just concerned for the social well-being of chinese children?
i mean, supposedly it is for a lot of reasons. there are quite a few regulatory conditions over how these games are produced and what are the side effects. overall, there are social negatives that might be. the young working male population are consumed by computer games. there is still an effect if they implement this and don't allow the industry to thrive as it has in recent years. also, it impacts high big tech names for the chinese stock market. it has been weighing on chinese stocks. it is a real financial issue as well as being a social issue. guy: is there an angle on this the chinese are concerned some games are being used to move money offshore? they can act as financial conduits.
mark: that's what i was going to say on the element of corruption. maybe the better word is black-market money movement capital outflows issues. that to me seems slightly surprising it is that big an issue but that is a concern being talked about. guy: mark cudmore, thank you. mark and the team on mliv throughout the day. plenty of things to discuss this friday as we come out of august. throughout the day, we will bring you bloomberg's editor-in-chief's interview with donald trump. it took place in the oval office. there is some fantastic coverage around it. we will also bring you matt miller's exclusive interview with this man. the bank of finland governor. it will be his first interview since taking up the bank of england governor role.
markets: the european open." we are about 15 minutes from the start of trading. before that, the business flash with juliette saly in singapore. u.s. president donald trump has said he is considering a capital gains tax break. the change would's work -- would when selling assets like stock or real estate by adjusting the purchase price for inflation. he made the comments in an interview with bloomberg's editor-in-chief. >> thinking about it. i'm thinking about it. i just -- there are a lot of people that love it, but some that don't. i am thinking about it very strongly. juliette: coca-cola is buying cost of from whitbread for 3.9 billion pounds. the british company says that is 16 times this year's earnings before you more to the. whitbread has pledged the majority of the proceeds will go
to investors. apple has set september 12 as the most important day of the year. that is when the world's most valuable public company will unveil the next iphones. topany posted an invite gather around the theater at the apple park campus. that is your bloomberg business flash. juliette, thank you. legendary investor warren buffett has told bloomberg the u.s. banking system is "in great shape" and he is on the lookout for good stocks. that comes near his 88 birthday. >> i am buying stocks. i don't buy them because they are going up next year. they will be quite a bit -- worth quite a bit more money in 10 or 20 years. i do know they are good businesses. you have to measure investments in relation to each other. for most people, fixed income. 3.02% for 30 years.
you'd better invest in a company that is earning 20% on their invested capital and compound. at the same time, some stocks are bargains -- good bargains from your point of view. a bit have gone up quite and you are sitting on a lot of cash. as a practical matter, don't we have to have more fear in the marketplace before you are deploying a lot of that cash? love it for the country as a whole, but that creates prices that make me want to shove the money as fast as i can. we have been shoveling out money anyway and it is not as attractive as when i was buying into thousand eight and 2009, but 1974 was the best year for buying securities in my lifetime. that will happen from time to time, but you can't sit around and wait for it.
keep buying as long as we find something that is attractive to us. a attractive business at reasonable price and i love it is a really juicy price, but i still keep buying. >> health care. i've heard you talk about this. go back to 1960, the gdp in taxes has gone from 4% to 2%. warren: corporate tax. >> you are now involved in a joint venture with j.p. morgan. how will you bend that cost curve as a practical matter? people get the smartest we can working on it. we have a terrific leader on that, and basically give them free reign and not expect something to happen next year or the year after. this is a 3.3 trillion or something industry. every dollar has a constituency and it has all kinds of factors. little't just ship a
here or there. we are not in a hurry. areould like to be, but we not going to try to do something faster than it can be done. >> what is he doing? warren: he is thinking. he is hiring people. not many, but he will be hiring people. he will be focused on the system and thinking, is there a system that can check this growing tapeworm that is growing every year and way higher than any other country. can we do that and at the same time, deliver a better product to patients? it will not be a success if it is just a cost-cutting measure. the cost,ying to bend you either spend less than what you are getting already or get less. how much of this will be extracting monopoly rents out of the system where people are making too much money? how much will you say to people, they can't have the drug for the service? unless al not do it
very substantial majority of the people feel they will be better off under what we are proposing. but you can spend smarter. incidentally, throughout industry, we don't spend smarter all the time. atare so much more efficient making cars, you name it. it is not impossible to think smarter about something, but you get rigidity built-in and self interests, and it is hard to rearrange. it is like a rubik's cube. it is a big challenge. >> that must create dislocation in success. the money has to come out of somebody's pocket? we've been disrupting farming ever since we had 80 for scent of the people on farms deciding tractors were better than horses and maybe fertilizer would help and it wouldn't
happen -- hurt to have irrigation, and now 2% of people are more productive than 80% were 100 years ago. >> you've often said the united states into -- in the 20th century was the best time in history to be born. the united states is undergoing transformation in the political era. we have seen more extreme positions and actions taken. and you see a world where we erode that advantage of being born in the united states at this time? warren: i don't think so. to the late 1960's, early 1970's, we were torn apart over vietnam and had a president resign. we go through all kinds of things. we went through a great depression. we went through a great panic not too long ago but this country moves forward. the luckiest person in the history of civilization is a baby being born in the united states today. >> how much does it depend on to
whom they are born? the difference between the top and bottom is growing apart. warren: we have the problem of a family getting richer and richer, and the market system which works wonderfully in terms of delivering output now gives more and more to people at the top. years,o back to hundred an agrarian society, 80% on the farm. if you were the best farmhand in the world and i was the worst, there was some differential but not 1000 to one. society gets more specialized, more rewards from the market system will float to the people at the top unless we do something about it. chairman atbuffett, berkshire hathaway speaking to david westin. minutes from the start of the european open. let's talk about stocks to watch. looking at old mutual. michael is covering with bread. -- whitbread.
annmarie hordern on the carmakers. announced aal special dividend on top of the $.45 they did it -- dividend it was planning for the first half. it is one rand, 0.0 seven cents -- .07 cents. but it sparks a dispute. ad mutual was involved in four-way break up this year as it separated from its london-based parent after 20 years. guy: ok. interesting angle on all of this. let's talk about what is happening with whitbread. this coca-cola story, fascinating. decided toitbread sell costa for 3.9 billion pounds to coca-cola. this is a huge deal for whitbread on the because they were under pressure from
activists to divest costa. comparison, starbucks is currently valued 13.8 times. whitbread said the majority of proceeds will be returned to shareholders. no doubt investors will be pleased today. guy: what are we looking at with the car sector? he took aim at the european union and rejected the offer to scrap tariffs on carmakers. he called the european union just as bad as china, only smaller. when the market opens, i will look at daimler, volkswagen, fiat, and some supplier -- suppliers like continental to see if they move on the comments trump made in our interview. guy: we will see if those stocks move on the back of that. of you for joining us. you can get the latest stock stories on your bloomberg.
first go. you can also get it on the mobile app. matt? bet: it is going to interesting to see how these markets open up. we saw asian markets stabilize after the initial negative reaction, but no one expected trump to put off these extra tariffs on china. the question is, will markets be surprised that it looks like he is getting ready to go back at the european union again? look at futures trading across european equity indexes and you will see red arrows, even after some asian markets closed up. they are not big. the euro stoxx 50 futures only down .1%, but they are definitely negative. especially dax futures where annemarie is looking at auto stocks. the bank of finland governor will be speaking exclusively with us. i am in helsinki at the bank of
this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today.
until cash trade this friday morning. keep an eye on a bunch of stocks , euro-dollar, nothing much despite what we are getting from donald trump. we are starting to get responses , there is a response to the bloomberg interview, we will talk about that in a moment. month forry tough emerging markets and fx. lowersterday, a little down around the close 0.4%. futures,k at the
broadly and mildly negative, not significantly negative. the dax and be down a little more than most. that may be the trade tension bleeding into the dax trade. numbers, theu the ftse is coming out of the gate. 7516. coca-cola stepping in to buy coffee. ibex will be mildly negative. i wonder if there will be a reaction in the auto sector. a lot of what we learned yesterday is what we already know, but it is the reconfirmation pushing it further along. i think to refresh people's memories about the risk out there. the president yesterday made it clear it is firmly on his
agenda. let's show you what the story breakdown,s of the financials are reasonably well bid. let's look at how it breaks down. real estate is trading higher. that sector got the mold yesterday. -- that sector got pummeled yesterday. parts are the second worst sector in europe this morning. we are seeing a bleed across the auto sector from the trump comments in the bloomberg interview. a look like we are getting a story. ryanair is picking up a little.
in red, the bottom end of the market, pirelli is trading slower. france one of the big movers we are seeing. back to the auto sector, the -- the eu retaliate if trump raises car tariffs. remember, we have this plan in and juncker expects that to be upheld. there were expectations that it was a fragile deal, and a result of which may be there is a risk it will crumble. int is something not priced to european stocks in the auto sector. att: it does seem to be
surprise this morning, they arey after willing to go to zero on car tariffs, all tariffs if the u.s. is willing to do the same. they thought the president would be happy, but he says not good enough to react european markets are lower. we are watching the auto markets closely after this tariffs scrap here. after we heard about it first from our exclusive interview with bloomberg's editor-in-chief. >> not good enough. because they do a lot more auto business than we will ever do. it is not just tariffs, they have barriers to our cars. they will take them down and charge no tax. they will sell more cars. their cars, their consumer
habits are to buy their cars and not our cars. joining us now is kristine aquino good leads our team in europe. the president seems not impressed with the offer to drop tariffs or to drop nontariff trade barriers. he wants european consumers to change their buying habits. price that kind of thing in? >> i think the obvious move today, really what we are seeing , automakers have been at the front of center of this debate. i think guy made a good point earlier today, maybe investors, because they are not seeing the headlines, thought this whole trade situation is cooling down a little bit. the resumption of the headlines and the news is another reminder that this is very much at the
front and center of a lot of investors minds, and a lot of the government's minds. now, we are back from summer markets and it is bound to filter three more clearly. guy: the president has given a nod and a wink on the 200 billion going to china. gameis a significant changer. i spoke to investors over the last week, and they did not believe we did not go that huge step forward in that process. >> that speaks to markets, having a poor ability to calculate risk. thishey willing to believe is actually happening, and as we of what we areon seeing a little today in europe. of whatry telling investors are worried about and where they think the pain points will be. clear we have not
been hearing these headlines with the eu, but we have been hearing them with china. becausepriced in their, everybody from mark cudmore to j.p. morgan wants to get behind chinese stocks? >> absolutely, there is an argument to be made that now that we have seen declines in chinese stocks, it is cheap enough that investors will be enticed back in. the question is, we get headlines filtering through and it serves as a reminder this is a concern, and we have to balance that with the fundamental picture. , marke made an argument cudmore has made this argument, despite negative trait headlines and how that immediately impacts markets, we have the data that does not seem to be bearing out
yet any impact from this. we have decent trade data out of china. the next question would be how does that play into investors minds? how do they balance out the short-term reaction, the knee-jerk reaction to the negative headlines as opposed to what we are seeing in the real economy? that is where we see a dislocation in opinions of whether -- guy: kristine aquino leading our mliv team in europe. a couple of stocks worth we have a big move in whitbread. that move accelerating to the downside. , 18% over the last two minutes, as we get confirmation.
it has long been speculated, it is coke that is buying that business. we have significant moves in this market. it is also worth mentioning that juncker will end daylight savings time. consultationn a process of ending daylight savings time, that will be a big move. europeans chimed in on this than any other issue that the european union has asked for advice on in the past. the citizens of europe are not interested in daylight savings time. what difference does it make? does it really change anything? up next we will bring you an exclusive interview with philippe vallee joins us to talk
session. , let's goock stories to annmarie hordern. buyoca-cola agreeing to custom coffee, that deal giving heavyweight to the stock this morning. daimler to the downside by 1%. president trump calls the eu trading block as bad as china. he is rejecting the eu offer to scrap auto tariffs. daimler, bmw also down as well. as well as auto parts makers, and per really luxury tire maker, down 3.5%. this is not just on trump comments. they cut their targets for pirelli, and said the luxury tire market is oversupplied. ,uy: thank you very much annmarie hordern. president trump has rejected a european union offer to scrap
tariffs on cars. he spoke exclusively with bloomberg's editor-in-chief. they createump: standards that make it impossible. they has standards like with medical equipment, we cannot -- not that the standards are higher, they are just different. our companies cannot get medical equipment into europe. i said you have to change her ways because the european union is almost as bad as china, just smaller. the european union is almost as bad as china, just smaller. we can argue about the math on the smaller business, but it is a significant comparison that is worth dwelling on a little bit. let's talk now to another exclusive interview we have this morning. maker jim altare
-- a company in process of being taken over, gemalto. good morning, philippe. let me ask you how you see relations around the world and end up affecting european companies. the president of united states told bloomberg he sees europe as bad as china, only smaller. there is a significant risk that trade tensions get amped up. is that a threat to your business? is it a threat to europe? something wes is need to look at carefully. gemalto has always served as clients, and we do business with the u.s. and we have our main manufacturing out of canada.
for us, -- what will it take for you to worry about this? we have trade negotiations with canada underway, and the war of words across the atlantic three at what do you need to see to make you start to be concerned? we are gradually escalating here. something iis is -- [indiscernible] licenses or we are within each and every country.
i am not too worried about trade at this point. guy: is everything on track? have to make some concessions to get the deal done . give us some details where you are. all, we havest of to through 14 positions and bodies, we have received the roreign -- we have received fou and only 10 are remaining. [indiscernible] we have the regulations and clearances when it comes to decisions.
we are going through commercial steps. we hope to close the deal by the end of this year. having to make any concessions to get this deal done? not talking are about any at this point, and we do not want to comment on what they have to do. lot.e helping them a i do not see any things to say at this point, normal process and things are ongoing. guy: europe is becoming a you have apple pay and a whole range of different payment options. how does that develop from here? what role do the chinese play? how do you see it affecting you? what is important for
gemalto is that we are ahead of the curve, ahead of the competition. we are digital lysing payments -- digitalizing payments. for the time being, [indiscernible] our digital payment solutions, we want customers to have a 360 degree experience. is thatimportant for me the physical and digital are complementary in our approach. this is what we see in our different markets. in the u.s. and in europe. guy: thank you for your time.
philippe vallee, ceo, gemalto nv joining us out of paris. matt. matt: fascinating stuff indeed. let's get back to president trump. he has threatened to pull out of the wto if it does not treat the u.s. better. he spoke exclusively with our editor-in-chief john micklethwait. he said nafta was the second worst trade deal ever made surpassed only by the wto. president trump: the wto is the single most bad trade deal ever made. and if they do not shape up i will withdraw from the wto. matt: in another sign a trade disputes between the u.s. and its allies are not falling, the president dismissed the eu's offer to scrap tariffs on auto imports. because they do more auto business than we ever
do. first of all, it is not just tariffs, they also have their ears to our cars. take the barriers down and charges no tax, but that is not good enough because they will sell more cars. their consumer habits are to buy their cars, not our cars. donald trump hit out again at china, saying the world second-largest economy would not outlast the u.s. in a trade this view. he said his administration was re-examining how to determine whether countries such as china or manipulating their currencies. president trump: we are looking very strongly at the formula. as you see what is gone, the yuan, they are trying to make up for lack of business i cutting their currency. cuttingof business by their currency, they cannot do that. guy: the president of united
states speaking in the oval office yesterday. let's see how markets are reacting to that interview that we did yesterday. that john mickelthwait did yesterday. the paris market is trading lower, down area did the german market is taking a hit this morning. we have every single stock on the dax trading lower. we have a significant downgrade coming through. volkswagen down by 1.7%, bmw down by 1.4%, daimler down by 1.3%. losses significant within the auto space this morning. yes, absolutely. a lot of reaction here. than anye in europe asian markets, which tells you about what was priced in and what was not. that's get another exclusive
bloomberg, i emerging-market assets are headed for a monthly loss as declines in argentina sparked fears of global contagion. not --suisse's does credit suisse's ceo does not fear contagion risks. >> world managed economies are safe. markets,no emerging economies that have a current account surplus, their public funds are in order. and when people fear contention, -- the countries that have gone under pressure, it is easy to understand why.
it makes them vulnerable. they are emerging markets. thes important to manage fiscal situation responsibly. it is important to have an account surplus. and you will find a lot of emerging economies are in that position. the ones under pressure, turkey and brazil, have more fundamental macroeconomic politics. i was in argentina two months argentina hasar some real challenges to deal with. in terms of the contagion from turkey in particular, -- tidjane: i do not believe there will be material contagion overtime. is a strong and
spontaneous reaction, but not justified. >> and the impact on european banks. tidjane: it is manageable. things are in a different to tuition. back then, you look at the size verye turkish economy, good production in turkey. i'm very positive medium-term on turkey. talking about a reasonable exporter to turkey. suisse have any positions on turkey? tidjane: no. >> in terms of italy, concerns it washeir debt, reasonable for yesterday's auction, but yields have picked up slightly. our markets under pricing the risk out of italy? tidjane: that is a tough
question. -- i thinkcautious we need to see how things evolve in the coming months. >> would you expect the ecb to step in at some point? clear,: the ecb is very i think it will do what is necessary. over time, i think the euro is resilient. , withnever worried portugal, ireland, greece, i was never concerned because history is very important. , and ihas a rich history think we will do what is ever necessary in the end. >> switching focus to the u.k.
and the inevitable question on brexit. it seems like a deadline to come to an agreement has been pushed back, and there are risks for a hard out for the u.k. if there is no deal. you must have gamed through and game planned on this. we were ready to present plans. there will be a reasonable outcome which is in everybody's interest. guy: that was the credit suisse speakingane thiam exclusively to bloomberg's tom mackenzie in beijing. interesting what he had to say about what is happening with the market reaction to out of europe. this talk about the stock stories we need to focus on now. coffeead is selling its
matt: welcome back to "bloomberg markets: european open." made,rst trade deal ever in an exclusive oval office interview, president trump threatens to leave the wto. president trump: i would say the wto is the single worst trade deal ever made, and if they do not shape up, i will withdraw from the wto. the president also tells bloomberg he thinks the eu is as bad as china, only smaller. we will get europe's response we speak with olli rehn, governor, bank of finland/ . ugly augustand
for emerging markets, contagion world cann if the withstand escalating trade tensions. short-term,the there is a strong and spontaneous reaction. matt: good morning, welcome to "bloomberg markets: european open." i am matt miller in helsinki, here for our exclusive interview , his first since taking over the bank of finland. guy johnson is in our headquarters in london. guy: 30 minutes into the trading day, we are trading lower by 0.6%. the car sector is under pressure. and we have a bunch of m&a stories we are focusing on. let's start with m&a stories. ,oca-cola is buying whitbread
it was significant value in that business. we are waiting for them to pull the trigger. the auto sector is on the move. as well.s picking up on the downside, we have the aviation sector well represented. sage is trading down. it's ceo will be exiting. lufthansa, it is not exactly positive when it comes to lufthansa, and the stock is trading down 3.6%. the auto sector is down. france is down as well. we have the interview john mickelthwait did with the president of the united states. there are plenty of other stories we are focusing on as well. let's get a first word news
update as we wait for that to clear. argentina's currency crisis has deepened. an emergency interest rate increase they of the jittery investors from pulling money out of the country. the peso extended losses after hike, the second this month was an attempt by policy to defend the currency that has lost half its value this year. investors dumped argentinian assets, countries with large deficits such as indonesia and india have seen their currencies and bonds, under selling pressure. the route on the argentinian , hasand the turkish lira led to a return of foreign funds.
legendary investor warren buffett has told bloomberg that the u.s. banking system is in great shape. the berkshire hathaway chairman and ceo said he is still buying stocks even amid record wall street highs. u.k. companies became more pessimistic in august as concerns that wrecks it will hurt growth increased. according to a survey by lloyds bank, confidence slid to the lowest level since december before optimistic towards the wider economy declined. 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. matt, guy. president trump has rejected the european union offered to scrap tariffs on cars, comparing the trade policies to those in china.
he spoke exclusively with bloomberg editor-in-chief john micklethwait. creatent trump: they standards that make it impossible because they have like with medical equipment, they create a new standard. not that the standards are higher, just different. our companies cannot get medical equipment into europe, big medical equipment. you have to change your ways, because the european union is almost as bad as china, just smaller. let's hear from one of the eu's heavyweights. joining me is olli rehn, governor, bank of finland. former commissioner for economic affairs. this is your first interview since taking the role at the bank of finland. keep for your time. let me get your response. we heard from jean-claude juncker that he is confident the u.s. will stick to their
agreement in washington, but that the eu will retaliate if the u.s. puts more tariffs on cars. what do you think about this growing trade war? how does that affect the european economy? olli: it is regrettable that from the u.s. side there is a tendency to escalate the trade war, especially with china, but also with europe. serious tot find it compare chinese and european trade policies. the european union is fundamentally liberal international order insecurity welcomee, and i would that the united states do the same. what is your view on the wto? it has been criticized by americans and europeans as far as how long it takes to solve issues that come before it.
a big problembe if the u.s. left the wto? olli: certainly it would damage order and the foundations of the world trade. the wto is not perfect by no ,eans, but on the other hand [indiscernible] we want to reform the wto, and one been active in engaging china and the united states from the side of the european union. matt: what you think about donald trump's claims that china manipulates its currency?
he has made similar claims about the eu, germany. do you see currency manipulation when you look out over the major economies? do you see anyone manipulate their currency? the european central bank certainly is not manipulating the euro. point is based on ,he economic outlook of europe growth, employment, and achieving our price ability target. we do not usually comment on other central banks, other currencies. my reading of the china situation is that the chinese have weakened because of the threat of escalation of the trade war, not because of manipulation of any central bank. expect the trade war to cause risk to the
european economic outlook as well? see a directot impact, and they are unfortunately so far -- on the other hand, we have seen confidence. it is potentially damaging for growth and employment. on the other hand, the cease-fire between the eu and the u.s. achieved by president uecker and trump in late july -- president [indiscernible] we think they would not escalate the trade war's because that would damage the world economically. what you think about the
possibility of going the other direction? it was suggested in parliament that not only could the eu do away with tariffs on cars, but all tariffs could be brought down to zero if the u.s. would respond in kind. how would that affect the european and global economy? , it is any mind important one, and the european union is in favor of free and fair trade. fieldld deliver a playing for u.s. and european car manufacturers, and let the customers decide. let's believe in the market that produces the best cars, best quality cars. it is to the benefit of , and that is the
foundation of nations. matt: i do not want to finish interview without getting too ecb policy. i would love to hear your thoughts, first of all, what mario draghi meant when he said he would keep interest rates at this level through the end of the summer? debate about what that means. is it a promise not to raise rates until september? anticipation on the basis of the decision by the european central bank and it's governing council. markets arethe reading the guidance of the european central bank correctly for the moment. in other words, even if the net asset purchase will be ended by the end of this year, at the payments principal will continue to be reinvested,
and the monetary policy will stay expansionary. also anticipate policy rates by the ecb will stay at the present level through the summer . mindhis has been to my interpreted by the market, and i also hope by the citizens and businesses. matt: the market also expects reinvestment's for another two to three years after the finish of net purchases. i do not know the exact timing, but the governing council has stated and anticipates that the principal
payments on maturing securities will be reinvested in the coming period as long as deemed necessary. , for nowat some point in the near future the monetary expansionary,ay and we will achieve our price stability target. matt: i have to ask you about a personnel issue. mario draghi term is going to come to an end and your name has appeared on shortlist as a possible replacement. would you accept the nomination as the president of the ecb if you were given it? term isrio draghi, his still continuing over a year or 14 months. it is quite early to discuss
this. having said that, i find it important to discuss the challenges of the ecb for the next eight years. it is quite important to discuss this, and the next president of the ecb, she or he will have to to steer the process of sort out thecy and growth and employment, while watching out for stability. also to contribute to european public debate on informing the eurozone in order to help strengthen the foundation of europe.
economics for a strong , andolicy making skills competence in communications. someone with all of your experience and skills, do you think you would be able to do the job? olli: let's not jump the gun. of thee every governor euro area central bank would be able to serve as president of the european central bank. much, wenk you very appreciate your time. olli rehn, governor, bank of finland joining us here at the bank of finland in helsinki. guy: fantastic interview, fantastic answers given by olli rehn, governor, bank of finland, a member of the ecb learning
council. matt miller in finland. we will also bring you another exclusive interview bloomberg has conducted over the last four hours with the president of the united states, donald trump. it was in the oval office yesterday with john mickelthwait. up next we will talk about coca-cola getting into the coffee business. whitbread stock is soaring high this morning. this is bloomberg. ♪
matt: welcome back to "bloomberg markets: european open." we are 50 minutes into the trading day. donald trump has hit out again that china, saying the second largest economy would not last in a trade dispute. the president spoke with bloomberg's editor in chief, john mickelthwait, saying his administration was re-examining how to determine if china is manipulating its currency. president trump: it is a formula, and we are looking strongly at the formula. on,ou see what has gone with the yuan, they are tried to make up for lack of business by cutting their currency. it is no good, you cannot do that. guy: the president of the united states speaking with bloomberg editor-in-chief john micklethwait.
this turn our attention back to the corporate news. whitbread, the u.k. listed stock is surging its most in nine years after it agreed to sell its coffee chain, costa, to coca-cola. the 4 billion pound deal was announced in april. joining us now is european consumer reporter. what does this deal mean for whitbread? this is a cleaner way of doing the costa spin off effectively . >> i was on call this morning, and it was mentioned how coca-cola -- guy: it happen fast. >> that is why we are seeing the price reaction we have this morning. it is also higher sales, and analysts said this was higher than their evaluations. the deal with whitbread is with
the expectation it will generate more cash flow for shareholders as well. this deal come about so quickly? were shareholder activists waying a big part in the this deal materialized? lisa: it is hard to tell for sure. saidon britain on the call they did not have involvement on this deal with coca-cola. they disclosed a stake in , and in a couple of weeks after that disclosure, that is when whitbread did announce the demerger. it does seem analysts think this has increased the pace of whitbread changing course. guy: in some ways in hindsight this makes sense.
the missing piece in the puzzle for coca-cola. they have distribution channels to make this work. they can pay a slightly higher price. was anybody talking about coke being a possible buyer? that it is interesting is coca-cola, and there has been backlash. you are seeing consumer companies trying to diversify their assets and revenue streams. it is interesting that coca-cola is getting into something like coffee. guy: thank you for bringing us the story, lisa pham. let's look at the broader markets to see what is happening now. european equity market is a little softer, but not by much. we are down about 0.5%. in some ways, it is down to stocks like the founds a which is -- lufthansa which is feeling
pressure. the ftse 100 down by 0.2%. by stocksg helped out like easyjet. whitbread is also affecting the u.k. market. watch out for the ratings agencies later on, you could be downgrades news on that could affect the markets. let's talk about what is coming up next. we will address the issues of battle of the charts. we do not have that ready yet, so i will carry on talking for a moment. in terms of what we will be watching the rest of the day, we will roll out this interview that we have with the president of united states. that is not the only interview we have done. matt miller over the last few minutes has been talking to olli getting his response to
what the president of the united states said yesterday about the european union, and it's trade policies, the comparison being made with china there. we also heard comments from tidjane thiam. 's iill be breathing a have relief that the month is over. it has been a difficult month. maybe the flow story will improve in the beginning of the next month. president and his comments on the wto, and his comments on arepe, those comments coming back from jean-claude juncker. matt: i thought it was interesting to see that the trade war with china has in some ways been priced in. we do not see initial negative reaction. in much damage to prices
asia in equities. in europe, we see equities down across the board no matter what index you look at. the carmakers are down. daimler worldw, taking hits. it is not helping the situation is theany, the dax softest. this was not priced in. european investors were not expecting trump to come back so quickly. to not only get rid of car tariffs, but all tariffs if the u.s. wanted to, and donald trump says not good enough. guy: i have 90 seconds to do battle of the charts. , she will beburger involved in this, and annmarie hordern. >> i am licking my wins it yesterday. so let's look at that peso, down 12% against the u.s. dollar, worst performing emerging market
currency of the year, battling with the lira for the worst of the month. they areee here linking even more so, and jumping to parity. this week, one of the highest we have seen this year. the msci index is following it lower. : just how volatile, look at the spread between em, this is the most diverged since 2009, very volatile. we are looking at developed market currencies getting more volatile as well, these tend to be correlated. win this morning. throughout the day, we will bring you bloomberg editor-in-chief john micklethwait's exclusive interview with the u.s. president donald trump yesterday in the oval office. wesaid many markets -- and
designed to save you money. whether you use your phone to get fit. to find meaningful, thoughtful, slightly-weird gifts. or just to know which way you're facing right now. however you use it, your wireless bill is about to cost a whole lot less. ask how you get xfinity mobile included with your xfinity internet. so you just pay for data -- by the gig or unlimited. saving you hundreds of dollars a year. plus, get $300 back when you buy a new smartphone. xfinity mobile. it's simple. easy. awesome. click, call or visit a store today.
♪ francine: the single worst of trade deal ever. president trump brands to leave the wto if it does not shape up. tidjane thiam shrugs off trade tensions. he tells bloomberg that for now the global economy will weather the trade storm. currency contagion. the argentinian peso plummets further. markets --ency emerging markets get hit. ♪ nejra: welcome to "bloomberg surveillance." let's check in on the markets.