Skip to main content

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

1:00 am
x you are watching the best of bloomberg daybreak: middle east. shockeys the jamarcus scandal toashoggi score points. traded tensions have sent the bank rising. oma as asrael is using gatewayn to the gulf. ♪ manus: saudi arabia's top
1:01 am
prosecutor this week visited the kingdom of istanbul where the khashoggi wasa al killed. president erdogan insists turkey will not let go the murder of the saudi writer. prosecutor visited the conflict to talk to officials. said, we have received information the murder was premeditated and people continue our investigation. but people are talking about whether the murder was indeed premeditated, and to ordered it? detained, 15ople people supposedly members of the and there are high profile
1:02 am
these peoplewill be part of the investigation? that has yet to be cleared. how of the chess games playing out in the region? who is trying to get what at this moment? trying to getn clarity on this. information has been released by turkish officials. there are all these reports that they have an audiotape of the murder.
1:03 am
we are seeing ramifications. no one has suggested the conference will have any power in saudi arabia but we have seen pressure from the united states to end the war in yemen this could have a significant impact. we have seen jpmorgan also way and. let's take a listen to what he had to say. if this event took place, this was an investment conference, we did want to be seen in any way condoning this behavior. will this business continue, when you ask the critical question, what kind of business are they talking about?
1:04 am
>> the key question of saudi arabia is getting investments. suggesting that privatization will stop. becomes, will you get any foreign interest in these privatization deals? environment, how easy it is for the wealth fund to say, i want to buy a stake? these are all questions that need to be answered, but at what value to the kingdom? uae.: high gear in the stocks in the abu dhabi markets and the dubai markets have differed. market has seen its
1:05 am
worst-performing index. >> businesswise, maybe they have , andficed some contracts theyvestigations come up, find this is from the top echelons in the kingdom. outflows and the foreign markets are full of uncertainty. a lot of the inflows were taken up by saudi funds and the saudi institutional funds. what is happening now in terms we need to wait
1:06 am
and see which way this investigation goes. the biggest milestone? >> there is the investigation track, and where the case is going. was this premeditated? dismissed officials by the king a couple of weeks ago. them?his implicate pressureolitical , mike on saudi arabia , we want annfirming end to the war in yemen. these are some of the geopolitical repercussions for this.
1:07 am
how the kingdom response is something we will have to see. the americans are now bringing pressure to bear on the kingdom. titus back to the flow of money. utah a dramatic drop in the market. do you agree the longer-term story remains intact? this continues to be steady as we go. surprises,n a lot of but not negative.
1:08 am
some sectors like consumer spending has been affected negatively. this could lead to an outflow of expanses leaving and the some of those services. thosesee some of geopolitical pressures -- to the gccget more markets shortly. joe chemicals announced third-quarter sales. they beat estimates. profits are coming in stronger. what are the prophets in the kingdom at the moment, given the amount of noise? they were meeting expectations.
1:09 am
going forward, there continues to be a capitalist for these companies. -- flow for these companies. they don't benefit from the high kinds of interest rates. ,e have seen a joint venture and building medical and hospital there is a positive. we have about 17% of the index. anus: to compensate for any fdi , we could see the fiscal
1:10 am
.ax be turned on slightly more the 2020 targets are slipping. is there a balance against the legal backlash? -- political backlash? we are expecting 2018. we are trying to offset some of the negatives. manus: next, markets move. president trump predicts a great deal with china on trade. this is bloomberg. ♪ ♪
1:11 am
1:12 am
president trump predicted a
1:13 am
great deal to be done with china on trade. but there was a bloomberg reports that washington was preparing to slap tariffs on .hinese imports let's go to our guests. there was a path to some kind of negotiated framework, here. tariffs oning at remaining goods in december and an increase in january. china can then retaliate.
1:14 am
yousef: tom, i want to get a bit of a sense as to what is going providings of domestic car sales. measure bythe latest chinese policymakers to look at the auto sector. it is the largest auto market in the world. china is bringing out the playbook they used before. they are cutting the sales tax for some of the smaller engines. 70% of theking about cars that are sold. they are looking at the first drop in sales for china's auto market in more than two decades.
1:15 am
we have companies cutting their forecasts for the chinese market. this would be an attempt by policymakers to show up an important sector of the chinese economy. let's pick up that thread. we do have china announcing the various stimulus measures. but it appears the u.s. is digging in for a prolonged period of trade tensions. measures totaking cushion the economy, small and medium-sized businesses exposed to the exports story. measures include rebates for exporters. make it easier for borrowers. >> digging in for the long haul. that was our chief asian
1:16 am
economics correspondent and tom mackenzie joining us. head of asian the trading strategy at citigroup global markets as the guest of the hour. yousef mentioned we are watching the chinese yuan right now, getting close to that seven dollar level -- seven per dollar level. thate have commentary chinese officials are arguing this will not push past the seven per dollar barrier. you recommend something differently. >> we don't think there is anything magical about seven. ina is facing trade tensions and the inevitable conclusion of those trade tensions. matter of managing that
1:17 am
rency, and they don't want to reveal to the market it's a one-way street. that people should not be putting on those positions. market could be hedging against a move in the currency. the question is really how far it goes. there could be a level they do not want to push it to. you have raised the risk of capital outflows. that is one thing china does not want. ousef: listening to comments from the u.s. president, he says china has drained the united
1:18 am
states, so trade deals have to be great. he says they will win that one. what are you betting on in terms of a central case? is it a protracted trade war, or, a bump in the road that will help carveout a stronger, beneficial relationship between the two? >> my view is that the trade war is going to take longer. some people were arguing that. section clearly showed it wasn't. tariffs are up on $517 billion of chinese exports. this may take them until the second quarter of 2019, to play itself out.
1:19 am
the market is reacting to the they arements -- what really reacting to is the headline/by bloomberg -- flash ed by bloomberg. what he said is he is emphasizing the amount of money china has taken out of the united states that saudi arabia is permitting. that requires a significant change in the relationship between china and the united states on trade, as well as a large number of other issues. aside, we areump seeing a bit of optimism creep into chinese stocks. it feels like authorities are having trouble halting the selloff. encouring more
1:20 am
companies to do share buybacks. will that be enough to stem the rout? the time being, it is too little, too late. tax cuts,hina auto it was announced on the one hand, but we found nothing was going to happen in 2018. maybe something would happen in 2019. if you look at the shares of chinese automakers, each time they try to get back all the it hasn't stopped the market from falling. it's too little and not enough. manus: next, sanctions
1:21 am
loom. can iran capitalized on the khashoggi affair? this is bloomberg. ♪ manus: with u.s. sanctions on
1:22 am
1:23 am
iranian oil experts set to resume on the fifth of november -- exports such resume on the there hasovember, been discord between riyadh and washington, especially in light of the jamal khashoggi affair. >> top officials have stayed clear from scandalous remarks. toave been speaking individuals very close to the government.
1:24 am
there is an element of i told you so. there is someone at the helm of saudi arabia, a young 33-year-old. this includes the war on yemen, and leading arab nations. this is a way to say, we have warned deal someone is making moves in the region. going to do rail the progress on the killing? the u.s. had been relying on
1:25 am
saudi arabia as an ally, in order to make up for any shortcomings on the global oil market. we are going to be seeing u.s. sanctions coming into effect. if those tensions escalate between saudi arabia and the will there be an effort to encourage the markets to be stable? trump administration could be encouraged to allow more countries to purchase oil from iran.
1:26 am
revenue --casts forecast revenue fell short of analyst estimates. we have more with tom mackenzie. tom: we are looking for all these different signs to get a better gauge on how this trade war economy is impacting people. forward looking projection, a number expected of 3.8 billion at the top of the range. they said the impact of the economy was starting to have a drag on advertising, particularly around the search engine of baidu. they said is they may see that impact continue in future
1:27 am
quarters -- they may see that impact continue in future quarters. expect revenue to come through on the artificial intelligence platform. >> we're having a great internal debate. are tehhey doing to bring us back in? >> kfc is priced to the upside -- china is priced to the upside in terms of instore sales. china is having to adapt to healthier options.
1:28 am
in terms of pizza hut, there was disappointing sales. ♪
1:29 am
1:30 am
the bank of japan left its monetary stimulus unchanged. inflation meet its target for years two,. we got to more from our global economics and policy editor, kathleen hays. the longer they hold that extraordinary stimulus in place, the negative side effects potentially arise.
1:31 am
they are putting more importance on that, to date. but they don't see inflation hitting 2% until at least 2021. a former policy board member at the bank of japan spoke to us. the bank ofybe japan is signaling a shift that could mean is something down the road. -- mean something down the road. changes from short-term to long-term targets will be an important precondition. they made their famous policy
1:32 am
tweaks back in july. they raised their range from 0.1% to 0.2%. of's put this in the context what we said today about risks. it looks like they're skewed to the downside. it seems like this extraordinary stimulus -- there are lots of questions about this. >> what financial stability concerns are there? their last reporst concluded things areoncluded
1:33 am
stable for the banks. new norm ishinks a e reigionalth especially, because the curve is so flat. they are making riskier loans. this was not particularly mentioned in the policy report today. it is something governor kuroda will probably get questions about. you, ouren, thank global economics and policy editor. let's get back to our guest. he joins us from our studio in singapore. we have another chart. this is the story of the bank of japan, falling behind.
1:34 am
they are falling behind the fed and boe and adjusting some of their inflation targets. >> i think the japanese equity market is still 40% below it's all time high. of things inle bit japan that don't move terribly fast. we have a prime minister in office for at least another three years. manus: are we trapped in qe infinity in japan?
1:35 am
they won't hit this inflation target until 2021. interest rates, as you've seen in other places, are not leading to a faster economy. the opposite is true, you keep interet rates negative, consumers will pull back rather than spend. you don't get anything on your savings. you hold back in consumption. qe has not led to inflation in the real economy. the bank of japan -- they are moving much lower than everyone else. manus: fresh data this week
1:36 am
provided evidence of the pain trade tensions are causing. s manufacturing sector fell to 50.2%. ordersas a gauge in new that fell further into contraction territory. the trade situation is one of the factors that made october a miserable month. we got more on the market moves standardguest from charter private. if you look at the one issue that most people on both sides of the house agree on, they need to have a different stance with china than they've had over the past two decades.
1:37 am
rms of tech, if you look at the earnings reports, the markets are acting as if earnings are doing karen displayed in that sector -- horrendously in that sector. unless you've had strong strongs in q# an3 and guidance, you face the wrath of the markets. perspective,ent this got overstretched, rather than this being a fundamental concern. yousef: we have put together another chart. pmi data.ing the lowest readings since july of 2016. what do you expect the pboc to do about this?
1:38 am
authorities still have the ability to achieve whatever number they want. what are their priorities? is it still trying to reduce debt levels and address the leverage in the economy? or is this lowdown sufficient for them to focus on other -- slowdown for them sufficient to focus on other areas? will get measures supportive of economic activity and injure a soft landing? -- ensure a soft landing? not necessarily. saying we need growth to hold and theyably well,
1:39 am
want to manage the disruption they are seeing in different industries at the moment in china. >> analysts out there reckon this is a short-term blip. we are going to see the impact of those stimulus efforts. we are watching the yuan. this is still hovering closely to that seven per dollar level. lots of people are talking about the psychological importance. what would happen if we end up pushing through it? >> when something has such a big focus, there is the unknown. the impact is fairly minimal. china has indicated they will try and support their mb in the short term. ahead of the trade discussions
1:40 am
we will probably see a bit more stability. the dollar iso going to be key. the short term, we will see stability. manus: next, the lira plunges, bonds fall. turkey announces wide ranging tax cuts, next. this is bloomberg. ♪
1:41 am
1:42 am
s: bonds fell this week after the government announced a wide range of tax cuts.
1:43 am
the central bank of turkey has now raised its inflation forecasts. on this with our chief middle east economist. >> they had published their previous forecast, which seemed unrealistic at the outset. this time, they have become more realistic. that is the good news. their forecast for the 2020 it will remain as almost as high as its target by the end of 2030. the market reaction we saw yesterday, the central bank is
1:44 am
being more realistic, but the underlying fundamentals continue to deteriorate. what are investors looking for in terms of a recovery? >> the lira started to head south yesterday. this was after the announcement on the tax cuts. this was the current rate, to monetary policy. maybe the central bank hasn't caught up with the realities we've been talking about. manus: you wrote this is an
1:45 am
economy built on steroids. getting a grip on the central bank may be getting autonomy again. -- maybe getting autonomy again. rebalancing.y is a trade deficit is narrowing. the lira is stabilizing. that is good news for inflation going forward. the economy is rebalancing. atre is an uneeded stimulus this point in time. economy mentioned the of the turkish central bank. we have seen another spat brewing between the central bank and its government.
1:46 am
n this going to be the new orm, tension between the central banks and its finance ministries? >> you failed to mention the biggest one of all, the tension between the federal reserve and the central bank of the u.s. governments are trying to think about how this is going down with people on the street. coincidence what went on in turkey blew up as we are approaching the election. and we are in the week of the midterms in the u.s. i think it will probably die down, but let's see. manus: a couple fof apparent breakthroughs on brexit.
1:47 am
negotiator thinks a deal will be finalized on november 21. got more with our guest from the mbmg group. there were so many landmines we have to navigate over the coming days. the structural picture is incredibly negative. peopleke up -- the woke up and realized the headwinds out there.
1:48 am
when anything in the short-term contradicts the negative narrative, it tends to rally. we are going back to a downtrend quickly. this is more scary than the worst thing we have seen in six years. manus: what would it take to unseat us again? have a look at what jpmorgan had rolling- a rolling -- bear market. squeeze.urns into a is that what i've been seeing the past two days? >> i think so. this whole story about china, trying to get stimulus
1:49 am
into the economy for a year. that is not working. china,c, authorities in they get live data, and i am sure we don't. they are actually seeing what is really going on in china. it's a much bleaker picture than what is being painted. that's happening in most non-dollar economies as well. account deficit emerging markets are in a real squeeze. we can get short term data going trigger, to be the but those problems are still overhanging. one interesting thing is what happens in the midterms next
1:50 am
week, and therefore what happens to the dollar? this is what has created this headwind. midtermstcomes in the that take some of that pain away, but replace that with a different problem. dollar is at a high level. dollar negative if the house flips? paul: i think so. momentpriced in at the is the house flips, but the senate remains republican. that is largely priced in, dollar negative.
1:51 am
i don't think anyone is expecting the senate to flip, scary.t could be i don't think many people are expecting republicans to hold the house, but if it does, that would boost the dollar. you can get a rally on republicans holding the lower house. is benjamin netanyahu's visit to oman paving the way for new relations between israel and the gulf countries? this is bloomberg. ♪ >> welcome back.
1:52 am
1:53 am
1:54 am
benjamin netanyahu has visited oman, in a move that opens the door to the gulf. to prime minister was aiming push forward the peace process in the middle east. >> this comes with diplomatic efforts in recent years. we discussed challenges the middle east is facing. talks tory important the security of israel. . we are joined by our bloomberg political reporter for more. netanyahu said he spent all might talking with the leaders -- night talking with the leaders of oman.
1:55 am
ministers came for a telecommunication conference. be in oman.z will >> do we have any indication of why this is happening now? maybe netanyahu is trying to distract from some political drama. it is a combination of forces. the domestic drama is the elections. they have not been declared yet. his term goes until november of next year. on -- theforces going
1:56 am
context between israel and the gulf rulers have been going on -- ahe number of years number of years. talks seem to be bearing fruit. people are terrified of the threat posed by iran. and the, saudi arabia, crown prince's problems. the questionleaves as to what this bodes for the arab-israeli
1:57 am
relations, and trump's anticipated peace plan? >> this is always a bumpy trail. caveat.art with the it could look promising and fall apart. the trump plan has not been unveiled and it could be a while until it is. there are some events happening. the plan seems to be based upon a change in strategy, for israel and the arab countries to work together and possibly try to solve the palestinian issue. manus: you can catch
1:58 am
"daybreak" every sunday through thursday, 8 a.m. dubai time. this is bloomberg. ♪ ♪
1:59 am
2:00 am
nejra: good morning from bloomberg's european headquarters. this is "bloomberg daybreak: europe." trump light a fire under global stocks. asian equities, u.s. futures, and the yuan all turn down. apple's curveball. the iphone maker says it will stop releasing unit sales data. shares drop 7%. oil approaches a bear market. u.s. sanctions on iran taken on monday. how low will exports fall?
2:01 am
good morning, everybody. it is 6:00 in the morning in london. let's have a look at how the asian markets are trading. what a difference a few days of trade makes. what a difference a trump tweet makes. asia up by 2%. its biggest weekly gain since april 2016. trump wants a deal on trade at the g20. he is asking the u.s. administration to start drafting the paperwork. the hang seng moves up. bond markets selling off a little bit. markets.ty we saw trump tweeting around
2:02 am
this subject, tweeting he had a good conversation with china and that trade was moving along nicely. we can add supplements that with this scoop suggesting there could be a deal at the g20 summit. futures trade higher. we have views from apple as well. keep an eye on the nasdaq. futures look stronger, but not by as much. the apple story takes the edge off that. apple disappointing on some fronts. morgan stanley cutting their price target. we will watch out for apple and the nasdaq. we are going to be speaking to the bank ceo, not for much longer. it has been his life's work building up this business. we will look at the results with him.
2:03 am
that is coming up at 7:00, the 7:00 hour at least. let's check on the markets in asia. >> where do i start? have a look at how we are doing here. all in all, we are on track for the best day for asian equities going back to the day after the u.s. elections. a good two years or so when you look at a granular look across these markets. the hang seng dropped thousand points. every stock is up. have a look at the cost the index. 3.4%. k pop, if you will. that is a move you don't normally see. that is a cap ski standard deviation move. -- two standard deviation move.
2:04 am
all of the pr after that, which you will talk about. there might be a bigger chance of a deal being struck next week. there is a massive overhang from these markets. a lot of the soft data coming out of china comes back to the fact that these companies cannot borrow money. it is interesting to see how this plays out moving forward. risk on here in asia. anna: thank you very much. the latest on what is happening in the markets. with news the u.s. is said to waiversht countries oil , today we are asking our blogion on the mliv log -- , this is our question of the day, what is the biggest risk for oil traders when sanctions begin? , reach join the debate
2:05 am
out to the mliv team here at iv plus tvy going to on your bloomberg. wants to talk about. word news update with yvonne in hong kong. was heading toward its biggest lost since the be wary. towardhe u.s. is heading its biggest loss since february. according to a bloomberg survey, production climbed to its highest in two years as saudi and libyan output offset the loss of crude. sanctions kick in on monday. donald trump is said to want an agreement with xi jinping.
2:06 am
he has asked officials to begin drafting terms ahead of his meeting at the g20 summit. the push comes after a telephone , thersation yesterday first publicly disclosed calling six months. >> with china we are doing well on trade. where going to make the right deal. a year for years have been coming out of this country and lots of other things. we are going to make the right deal. >> apple shares slumped in late trade on a week forecast for iphone sales. the company's $1 trillion valuation is at risk. investors are worried by the decision to stop reporting how many devices it delivers, with -- annalysts say is in it attempt to hide lagging demand.
2:07 am
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. anna: thank you very much. asian stocks extending their november rally after the roughest month for equities in years. they are headed for the biggest weekly gain in july 2016. the yuan rose. president trump is said to have asked u.s. officials to begin ,rafting trade terms with china and hopes to reach a deal with president xi later this week. let's bring in our guest. let's go first to our senior international editor in hong kong. jodi schneider is with us. speed on this fast developing story.
2:08 am
>> according to people familiar presidentatter, the wants to make a deal, is said to have decided he wants a deal with his chinese counterpart when they meet on the sidelines at the g20 summit later this month. he had earlier said if they did not make a deal he was going to move forward with sanctions on the rest of chinese products that already are not subject to tariffs. he pierced be softening that stance and has asked the official to start to draft that language. this comes days before the u.s. midterm elections, which will determine the control of those chambers of congress. they possibly unanswerable question, does this -- the midterms coming up shortly? >> this is good news.
2:09 am
it is the first we know of the two presidents talking in months. president walked away from a deal in may. there were talks, but nothing had gone forward. in the meantime, $200 billion of tariffs on chinese goods had been imposed by the u.s.. china has retaliated in kind. this is certainly a positive step. whether itn is results in an actual deal. the u.s. has real concerns about china on intellectual property. we will have to see whether those can be resolved. anna: thank you very much. our senior international editor joining us in london. of european equities at aberdeen investment standards. thank you for joining us. this bloomberg scoop suggesting
2:10 am
-- all ofal could be a sudden, november is all risk on. the you buy at? >> it would be positive for european equities. that trade ise starting to drag on industrial production and corporate confidence. anything we could see that would do something about that, this , thatbe substantially would be taken very well by markets. >> when we look at the damage done to the chinese economy, have we seen the full effects of the trade war? do you think they were still to come in 2019? >> i think this is a concern for investors. we have seen slow momentum in the chinese economy. much of that seems to be related more to domestic factors. hasdeleveraging process
2:11 am
brought a credit squeeze on the private sector. we have seen the real estate sector of course. the worry is we are starting to see the early signs of the impact of the trade percent with the u.s. and that that could intensify in 2019. anna: there should be better news than that for china. how are you positioned around trade at the moment? are you positioned in a way that benefits its trade tensions continue? or if there is progress? not say we are positioned around trade tensions, but certainly we suffered during the last month or so from corporate's coming under pressure. in general terms, we would be
2:12 am
positive if trade tensions would come out of the market. anna: u.s. stocks versus asian stocks, this actually we put together before this news broke. u.s. stocks maybe finding support. asia faces resistance. you wonder if that changes now. a considerable downside to asia if these tensions to subside, there surely is considerable upset. >> we see high-quality engineering companies, which have been incredibly weak, we expect those companies to benefit from a relaxation of tensions and improvement in sentiment. you look to areas such as luxury , which were week on concerns of sustainability of chinese sales. is important to say that the high-end of chinese consumption, we have not seen any softness. has been on a crowd the lower end where we have seen that
2:13 am
reduction of credit in the market put pressure on sales. anna: what will be interesting to see, if we do see tensions with china subside and this is taken well by markets at the moment, if we did see this happen, we have to ask what that means for europe. does president trump decided focus on other things away from trade, or on other parts of the world? could expect could be the big concern for european carmakers. a threat hanging over the industry, and concerns there may be a proposal for tariffs to be imposed on auto exports once the midterms are out of the way. i think there will be a certain degree of nervousness. this is more broadly a theection of concerns about overall impact on the u.s. economy of trade tensions. that might be good news for the rest of the world. anna: the impact on europe to be fascinating.
2:14 am
thank you. the head of u.k. and european equities at aberdeen. mark carney warns a no deal brexit could mean interest rate hikes. -- howes this mean for far away is a deal between the u.k. and the eu? and if trade tensions and brexit leave you in need of strong coffee, bloomberg tv will be speaking to the ceo of starbucks , who can be seen here on bloomberg tv just after 1:00 p.m. london time. when you are traveling to work, you can tune to bloomberg radio on your mobile device. this is bloomberg. ♪
2:15 am
2:16 am
2:17 am
anna: this is "bloomberg
2:18 am
daybreak: europe." let's check out markets. they are fast on the move thanks to bloomberg reporting. the msci asia getting a boost from president trump administration, getting ready it seems to pull together the paperwork for some kind of trade deal with china. hang seng responding to that reporting as well. -- nymex crude oil price previously we had seen some weakness. let's have a look at nasdaq futures. that is only slightly different. point 6%, but not as much as other markets in the united states. the apple affect weighing on nasdaq futures. the bloomberg dollar index fairly flat. >> blackrock's european hedge fund is said to have had the worst month ever in october.
2:19 am
sources say the fund fell 8.5% having been of more than 10% since september. the global selloff has hit the hedge fund industry, wiping out most of its games for the year. on the verge of turning a profit. a giant u.s. battery factory operated for tesla makes money on power packs for tesla's model s. it hopes to follow through soon on the model three. tesla hass bet on been a source of concern for investors. >> i have never met a man like elon musk in my life. an always glass half-full man. that solidified my decision. >> google staff walked out around the world in protest about how the company has handled claims of sexual
2:20 am
misconduct by top executives. across andm spreading to the u.s., -- starting in asia and spreading that paying millions of dollars to executives in secret packages. anna: mark carney is warning that a no deal brexit could mean interest rate hikes. crashing out of the eu could trigger a rare supply-side shock that would push up inflation. those comments in combination with reports a brexit deal had been reached helped push the pound toward its biggest rally in 18 months. those reports were dismissed by the eu yesterday. chief economist for americas and europe at standard chartered and the head of u.k. and european equities at
2:21 am
aberdeen still with us in the studio. your thoughts on what had a reaction we might see from the bank of england under a number of different scenarios. the media dwelling on comments about a no deal. a natural the market is convinced if we saw a crash out of the eu we would therefore see rate hikes despite the inflationary impact. >> the market is taking a cue from the brexit referendum, when the bank of england cut rates and restarted qe. what mark carney said yesterday was times have changed. the economy is at capacity and this supply shock would be real rather than something that would be threatened over the next couple of years. i think he wants to make sure assuming the bank of england would cut rates. suggests theart
2:22 am
markets are not at their height until 2019. so much depends on the brexit outcome. -- get a dealid and the deal get through deal andt, or we get a the deal does not get through parliament, in which case we are looking at extreme uncertainty. we don't know what comes next if we do crash out of the eu without a deal. the assumption is there would be a supply-side shock interruption to trade, interruption to supply chain, but there would also be a big demand supply shock. what mark carney was saying is they would have to look at the balance. is the hit to demand going to be greater than the hit to supply? don't assume a rate cut is inevitable. couldthe possibility it
2:23 am
move in either direction. what is your base case when it comes to brexit? >> i think we have been through a lot of base cases over the last two and a half years. view is thatrsonal the government will be able to do a deal with brussels. whether that is able to be passed in parliament is a different debate. there are a lot of factors. the downside potentially could be quite significant. not only would we not have a deal, but we would have a general election and potentially a new government. anna: it might depend on if the proposition is in anyway amendable. perhaps the labour party gets behind it and something could get through parliament. tot about your exposure
2:24 am
stocks that will move on the brexit outcome? where does your concern lie? >> we have been very underweight u.k. domestic for a long time. that's before brexit and since brexit. we have been increasing our exposure to more domestically oriented companies. valuations have become more attractive in that area. they have sold off a bit more expensive in terms of internationally focused areas. it is being german by fundamentals rather than a top-down macro allocation situation. i want to get to the banking sector and reactions we have seen the banking sector result. banks are bracing for results of their latest stress test against the backdrop of brexit outcomes and italy's budget and political moves in germany. bloomberg asked finance chiefs about their targets this year. >> our target is to continue building. we set a target to be at 11% on
2:25 am
a year and 2018. we are already there, but at the same time we believe current conditions recommend having higher than just 11%. we are confident in 250 million, next year we will get single digits. it is really booming and doing very well. >> we start the 2018 share it would be uncertain as to whether we would do anything in 2019. in terms of that it is fair to say we are more preoccupied with being seen as prudent in terms of capital these days then
2:26 am
necessarily handing that capital to the shareholders. dividends weormal still need to pay out between 40 and 60%. bank nielsen of danske ending that wrapup of the comments we have had from bank ceos. that is a very different story than the rest of the banking sector, danske bank. the austrian central and eastern focused bank, their third quarter net interest, $1.6 billion. compared to estimates for third-quarter revenue, in line with estimates. the third-quarter operating expenses also in line. they see growing revenue in 2018. the bank sees growing revenue in 2018. they did previously see slightly growing. the ceo is coming up shortly. he's going to be speaking to
2:27 am
bloomberg, the ceo of first a group.- erste ♪
2:28 am
2:29 am
2:30 am
pres. trump: today i spoke to president xi. great man from china. he is the head of china. i said, we have to make a fair trade deal. they all want to do it. lots of great things are going to happen. >> they are afraid of worse outcomes. good to be -- or is a long-term uptrend so it is hard to go wrong. we have not seen this kind of protectionism

31 Views

info Stream Only

Uploaded by TV Archive on