Skip to main content

tv   Bloomberg Daybreak Europe  Bloomberg  November 5, 2018 1:00am-2:30am EST

1:00 am
manus: good morning from the middle east headquarters. i manus cranny. these are the top stories. oil continues its longest is extreme in six months. protesters chant "death to america." president xi slams the law of the jungle in a veil jab at donald trump's protectionist policies. he says he will cut import taxes. asia traders don't apply the latitude. stocks leading in china, korea, and japan.
1:01 am
he was futures also trade lower. -- u.s. futures also trade lower. ♪ manus: you are getting your dividend from soft tank -- softbank. ¥44, lower than you anticipated. the juxtaposition between their mobile business and their vision fund. the numbers from softbank, let's give them to you. net income, 440.10 billion yuan. the operating income is quite a significant heat, 1.4 2 trillion, the market at 847 million. the operating income comes in at ¥705 billion for softbank, second-quarter operating profits. and what was penciled in was ¥372 billion. of course, the market is poised to understand what is happening
1:02 am
telecom ipo. that's a 3 trillion possible for them. saudi arabia has doubled down in terms of softbank. they didn't go to the big gathering in rehab last week, but they are about to do a deal in the united states in regards to investing. the numbers, its red headline. the operating headline is much bigger than the market anticipated. ¥705 billion. the estimate was ¥372 billion. that is the second-quarter numbers. east of the dividends, ¥44, a little bit of slippage from what you expected. and reordering joins us with -- annmarie hordern joins us for breaking news. annmarie: we are also seeing dividend proposition as well. they are offering $.70 a share. it was also a beat on the fourth quarter adjusted profit.
1:03 am
that came in at 674 million euros. the estimate was for 768 million euros. they were saying they were dealing with currency headwinds. --e-sex they were able to b seems like they were able to beat on that front. they had sales growth in 2019 and i'm looking forward to the interview you will be having with the head of the company coming up in the next hour. manus: we will certainly have those conversations, what are they doing in terms of reallocating part of their industry from china back to journey? -- to germany? montag joins the team later on. i want to give you a quick snapshot of the markets. palpable sense of relief you have, they want to do it. it's like going off and irish ditch, quite literally. larry kudlow put the clinker's on this over the weekend.
1:04 am
nothing moved, nothing changed. fidelity would say, what would you expect? the currency is there to lift the load in bad times and the one, start panicking -- stop panicking everyone. all not the tragedy we suggest. steve wiseman was in dubai saying he's shorting to banks in the u.k. and jeremy corbyn is a trust get. if corbyn wins in the event post-brexit, would pretty much short everything here. we are not in this bad times. s&p futures lower. you're going to push and pull with the 200 day moving average on the s&p 500. it's supporting you on the way down, resistance level on the way up. warren buffett buying back his own stocks. should he?
1:05 am
that's a question. coming up, european commission vice president don brusca's at 8:30 a.m. u.k. time. let's get into these markets. juliette saly joins me from singapore. finally, what did you do to that camera this morning? juliette: [laughter] mannus, butt sure, i am back. kaiser stocks are under pressure, almost like last week didn't happen. msci index down almost 1.6%. most of the weakness coming through from the japanese and hong kong markets. the hang seng having its biggest drop october 23. we seen weakness coming through for most of these markets. the asx 200 was looking like it would buck the trend, but finishing the session lower than .5%. moving in on the stocks we been following, consumer stocks in china hit hard. president xi spoke earlier this
1:06 am
morning. we have seen tencent shares fall. they rose by about 9.5% on friday. down by 4.4% today, which is why you are seeing the 2.4% drop on the hang seng index. this is a korean pharmaceutical start and it is rising on a $1.25 billion export deal with jansen biotech, the biggest jump since listing in 1980. to the downside, ginseng malaysia, a casino. rise inafter we saw a the tax for gaming companies announced in the malaysian budget. manus: thank you very much, juliette saly with the markets from singapore. this is our mliv question of the day. this is what we want to put to you. what is the best asset to measure the ebb and flow of u.s.-china trade sentiment?
1:07 am
visit the bond? visit the currency? is it the equity? what do you want to trade? what is the complexity on the trade war flow? tv is the destination. join the conversation. the mliv team are there to get you through that. let's get your first word news now. juliette saly is back with me from singapore. juliette: chinese president she has hit back on protectionist trade practices by donald trump, where he pledged to cut tariffs and open his countries markets. speaking at the inaugural import expo, he said china would continue to promote globalization and pledged to boost coming -- domestic consumption. >> in a world of deepening economic cooperation, practices like the law of the jungle and winner take all only represent a
1:08 am
dead-end. a conclusive growth for all is surely the right way forward. juliette: sterling could bless through one dollar 35 within two agreed a divorce deal is between mizuho bank. meanwhile, the sunday times reported theresa may has secured concessions from brussels for all of britain to maintain in a customs union with of the eu. the cabinet will discuss the situation tomorrow with members of her conservative party, that she's planning to give ministers and ultimatum to back a draft a deal. kuroda dropped a heavy hand he wants to normalize japanese monetary policy once the boj gets closer to its goals. japan is no longer in a situation where it's best to be implementing a large-scale policy legislation. most economists viewed the boj policy adjustments in july as tapering by stealth.
1:09 am
>> japanese economy and inflation are no longer in such a place for large-scale stimulus. however, it is taking a long time to achieve our press target of 2%. juliette: global news, 24 hours a day on air and at tic-toc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. fulfillsesident trump to ramp up the pressure on the islamic republic. washington has softened its hard-line stance and announced it would grant waivers to allow eight nations to continue buying iranian oil for now. prices have fallen about 15% over the last month and the measures on iran will only climb
1:10 am
the outlook for the crude market. joining me now is our reporter. thank you for joining us. give me a sense of what the sentiment is interbrand. -- in turnaround. how prepared are iranians for this moment in time? obviously, they've experienced sanctions before. the country that's faced u.s. sanctions more than any other. that we know of in history. so then it feels like a really bad case of deja vu. but i think the extent of which the currency has declined and a lesson in shock, many of them still reeling from the impact that had on prices, both on imported goods and stuff that's produced inside iran, as well.
1:11 am
everything manufacturers and producers are worried about, getting their hands on materials they need to manufacture things, simple things like plastic milk bottles and gary makers are worried -- gary makers are worried about that -- gary makers -- dairy makers are worried about that. they are worried about what to do with the alternative, lecture the production line doesn't slow down or go to a halt. there's a lot of coming up with solutions. i'm thinking of ways to work around things. at the same time, the government is expanding its subsidy. the welfare support them for iranians going back to providing food baskets, something that it whenast time six years ago he first became president. there's a lot of this sense of said recessionary deja vu.
1:12 am
but i think there is also -- manus: can i ask you about the political elite and what they been saying over the weekend in regard to the medical supplies and in regard to what this do to thing from thewill iran? it will make the country more self-sufficient. is that pr spin? what is it from the ayatollah that's striking a chord with iranians? >> well, what he says over the weekend was that from his point of view, the past sanctions helped iran become more self-sufficient. and he's very keen on making sure it produces more, manufactures more of its own stuff domestically, that relies less and less on imports. it tries to export to neighboring and from the countries.
1:13 am
he's very much pushing for this kind of self-sufficient economy. there are billboards around town, occasionally, not all the time, but occasionally encouraging iranians to buy iranian shampoos and shoes. they have produced stickers on the tv. whatever it translates to reality is another thing. manus: whole other stories. thank you for joining us this morning. golnar is on the ground along with the team here in the middle east. my guest host is dominic armstrong, co-founder of her radius fund. when i look at this market, i'm preparing the dtv lively. this is the iranian export picture in the gtb library. it's falling in india, your, -- europe, asia, and the u.s. this was billed as the strongest
1:14 am
sections in the history of sanctions. it's not borne out just far -- thus far. dominic: i think what we are going to see is oil exports will continue around 7 million barrels a day, of which one million will probably be more and then we will fit that measure. and we will see the reemergence of the gc official smuggling of oil elsewhere. and that will actually maintain the back door of funding there whilst they went out what's required. interestingly, i think the ancient mage and's take a very long-term view and they have to bed down and wait until the end of trump. i think that's their internal strategic land. whether that's two years, six years, remains to be seen. manus: when you see the hedge funds cutting their long
1:15 am
positions, this is something much more significant to me. this is crude futures. we're cascading lower. there's a direction of travel. i'm seeing hedge funds cut their bullish bets by the longest street on record. that's not just sanctions. that is, i would say, a real concern about sigrid has slowdown -- synchronized slowdown in global growth. what does it say to you? dominic: it's a strategic view. 60% of oil is used in a combustion engine. i've heard this conversation, by the end of 2030, the end of internal combustion engine electric cars, if that's something in the background people will be thinking about. shorter-term, far more important, oil prices usually are stable when it can tolerate up to three crises in any major oil pricing region.
1:16 am
venezuela is obviously a problem. iran is a problem. now the question is, can stability maintained in nigeria? can it be maintained in iraq? can we see russia producing? if you have more than three, suddenly we'll see a directional change again. manus: ok, dominic, stay with me. we have more to dig into. dominic armstrong, cofounder of horatio funds. coming up, a more open china. that's what president xi has china -- promised in his speech. the expo in shanghai. we get more on that story. and japan's top to geomet is gearing up for his countries first -- first bilateral talks in the u.s. our conversation is next. and if you are traveling to work, you can get a global perspective. we're on bloomberg radio on your global -- mobile device in the
1:17 am
london area. this is bloomberg. ♪
1:18 am
1:19 am
1:20 am
manus: it starts tomorrow. we are live at the forum in singapore where we have exclusive interviews. the local is as follows. ceo of exxon mobil, mastercard, and united continental. on the day after, the was midterms. we hear from the cochairman of -- the secretary, hank paulson. and the ceo of goldman sachs, hank solomon. let's get to juliette saly, standing around with business flash. she matters every day. juliette? juliette: thanks. second quarter profits topped
1:21 am
analysts estimates and a solid performance from a sprint corporation. they rose to ¥706 billion after september, far exceeding the 373 -- ¥373yellen averages billion averages by bloomberg. they are shorting to british banks over expectations of a no deal brexit. steve eisman says the u.k. is the biggest threat his watching. but he's not sure which bank he's shorting. eiseman said he has a list of companies he may bet against. market says much of bank and cyb g are the most short of financials in the ftse. the russian aluminum giant sanctioned by the u.s. reported a rebound in third-quarter sales as it recovered. revenue jumped 30%. that's probably as a result of a low base in the second quarter after sanctions were announced
1:22 am
april 6. they benefited from higher prices of aluminum and alumina, which it sells to third parties. goldman sachs is reporting to be announcing new partners. they said fewer than 65 will be named. groupould be the smallest since 1998, one goldman was a private company. the journal says lobbying for promotions is less than in the past. that is your uber business flash. -- bloomberg business flash. manus? manus: japan is expected to host bilateral trade talks, first in two years. january. the relations between the two nations are strained. tariffs on steel and aluminum. japan won't bow to tough talks from the white house. he said any deal must be mutually beneficial. >> any trade negotiation must be
1:23 am
satisfactory or there won't be any agreement. so if we give something to the united states, the u.s. needs to give something to us. so it would be depending on the further negotiation. and i think the prime minister and the president agree that what we can provide in terms of agriculture is limited up to previous epa that japan has agreed to. that u.s.something and japan trying to look forward and create some kind of rulemaking. manus: that was our exclusive with the japanese foreign minister taro kono in tokyo.
1:24 am
president xi opened the inaugural import export expo in shanghai, taking a swing at protectionism and vowing to further open up markets. >> in a world of deepening economic cooperation, practices like the law of the jungle and winner takes all only represent a dead-end. and inclusive growth for all is surely the right way forward. atus: that was president xi the china international expo in shanghai. that takes us to our question of the day. the mliv team is there. this is what we put out to you. what are the best assets to manage u.s.-china trade deal sentiment? is it via the yuan? equities? bond market? you can reach out to the mliv team, plus tv on your bloomberg. let's put the question to dominic armstrong. he's in our london studio.
1:25 am
dominic, where do you think is the best litmus test of risk in trade war as you look across as? -- across assets? dominic: look at the context of these trade wars. you have a cultural mismatch between the deliberative chinese approach. they like to see their leadership signaling what they will receive. they like to believe they will do a deal, things are fundamentally agreed in detail in advance. the relatively quixotic approach, lack of detail, short attention span coming out of the states. details simply don't feature. the chinese are uncomfortable with that. what is trump's history on making deals? he's a new york real estate negotiator. lots of noise, lots of threats, lots of fury, lots of walking out in order to create the ground in which he can then do a deal. i think that's probably where
1:26 am
we've got to now. that's the history of how he does deals. on that basis, equities will be the easiest route in if we see a turnaround in sentiment. manus: in terms of the yuan, we had a great deal. we went from zero to hero in the space of two days. question 365e different ways. the delly says, why are you -- fidelity says, why are you talking about curtsy? it's doing -- currency? it's doing what it should do. would you agree with that? dominic: exactly. this is where the bulk of capital sentiment can be felt. absolutely right. dominic, thank you very much. short, cis ink answer. well done -- sisi answer. well done.
1:27 am
bloomberg radio is ready for you. we are live on your mobile device or dab digital radio in the london area. we are going to talk about the midterms, america going to the polls, record turnout expected. this is bloomberg. ♪
1:28 am
1:29 am
1:30 am
europe.t's daybreak we will get to that in just a moment. iran, breaking news. sanctions are live. let me take you through the map for a moment. it really was a rally too good to be true. this is enthusiasm deflated. oil coming lower, global demand on the ease. the yuan is easing. -- president xi is using multilateral unions. the iran went from its biggest two-day rally in a decade. larry kudlow downplayed the
1:31 am
potential for a quick deal. you also have the propensity for the fed that the data they got on friday, it looks like they could just check in the crawl on thursday. but these markets do not believe in the substance of what donald trump said on friday. . they want to do a deal. kudlow put the markers on that. i want to bring you that breaking news headline coming from iran. talksaid they are open to once trump respects commitments. this goes back to the difference the twin the two nations in -- the to white we have difference between the two nations in records to why we have establishments. and iran, they are saying we will become more self-sufficient. iran are open to trucks with -- open to talks with trump. that's mr. rouhani.
1:32 am
let's get into these markets with more detail. we've got our bloomberg reporter standing by in mumbai. and in london, annmarie hordern standing by. equity markets in india. they are not celebrating the festival in the way you guys are celebrating in indonesia or mumbai, are they? >> no, they're not. you're right. equity markets are not celebrating in the same way. as we speak, the markets are off about 15%, -- .5%. if you look at this nifty, the syntax, all three have corrected. fairly high sums. the currency has come off in the session today. we started off about 25 points
1:33 am
lower than they we were the day before yesterday. if you take a closer look at the components, the banks are still doing ok. all of them doing ok for themselves. information technology doing ok. oil gas and oil economy stocks have come off in the session today. and housing finance companies are in the red. that's the summation of the markets, not doing as well as festivities would love them to. manus: thank you very much. let's get to amory. -- anne-marie. they are slashing and burning. this oil market is moving. annmarie: that's right. it seems to be a guessing game but the bears seem to be in charge. i have two charts for the price of one. i want to look at volatility as the market tries to grasp exactly how much they intimate
1:34 am
-- estimate these sanctions go into effect, 5:00 a.m. this morning in london. the volatility we've seen the most in more than a year. as you're looking at the bears taken control, hedge funds have reduced, longum uti bets and the longest -- longest wti bets. the of this was earlier in year, oil prices were surging. then we have prices really dropping. the impact might not be that much. really, to go along with that on friday, the u.s. said they would grant waivers to eight countries. that possibly is helping the bear situation. very quickly, i'm looking at the yuan. this is the asset to look at when you're trying to take stock of what's happening in the trade sentiment between united states and china. this shows the increase in the
1:35 am
uncertainty index coinciding with the fall of china's yuan, which has dropped 10% since january. as i heard you earlier talking about the bond manager, the market seems to be shrugging off the psychological level of seven. manus: yep, it's a magic number but we shouldn't get so excited about it. great analysis. thank you very much. news.get first word juliette saly is in the singapore studio with that. juliette: chinese president xi has hit back against protectionist trade practices advocated by donald trump in a speech in which he pledged to cut import tariffs and open his countries markets. speaking at the inaugural market, president xi said china would promote globalization and pledge to boost the must a consumption.
1:36 am
-- domestic consumption. >> in the world of deep economic cooperation, practices like the law of the jungle and winner takes all only represents a dead-end. an inclusive growth for all is surely the right way forward. juliette: u.s. sanctions listed as part of the nuclear accord with iran has come back into force today as president trump on whatramp up pressure he calls maligned behavior in the middle east. secretary pompeo is set to release eight countries that will get temporary waivers to import iranian oil. more than 700 individuals, entities, and vessels will be sanctioned. contenders to succeed chancellor merkel as the leader of germany's cdu will crisscrossed the country to campaign ahead of a convention next month. the process agreed over the weekend signals germany is
1:37 am
heading for another inward looking period as the post merkel era takes shape. she will not seek another term as chancellor. global news, 24 hours a day on air and at tic-toc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. manus? manus: thank you very much. millions of americans are already voting to decide the shape of the next congress. ahead of polling data tomorrow. it will help to shape the course of the second half of trumps term. with the democrats hopeful they can grab control of the house and possibly also the senate from the republicans. let's bring in the people that really understand these numbers. peter to blitz is a professor at the london school of economics. dominic armstrong is my guest host, cofounder of her raciest fund manager. let me bring it to you.
1:38 am
welcome to the show. you come up with a very interesting line. as we go to these polls, just how critical is it for the democrats to take the house? you say if they don't, they are under and existential threat. is it as serious as that? yes, io: yes -- guest: think the democrats have put all their eggs in this basket. more than any prior midterm. they've put in more new candidates running, lots of women, lots of millennial's. they really invested their very heavily. they are likely to take the house. i think it would be a huge disappointment if they don't. aseover, donald trump, speaker of the house of representatives ryan said yesterday, tried to hijack the election by turning it into a
1:39 am
voter referendum on immigration. as opposed to running on the economy. basically playing to the cultural grievances of white, blue-collar voters. that worked in 2016, but many wrote it off as a kind of fluke. if it worked this time, i think people would think differently. manus: do you think health care will become a more pressing issue, rather than the visuals of a caravan moving towards the borders of the united states, which it should be said, is still quite a considerable distance away? what is this battle going to come down to? is it going to be the dollars in my pocket, health care, or immigration? what is the battle on the ground ? guest: well, it's really come down to health care or immigration. what are americans most afraid of? losing coverage on pre-existing conditions? four people crossing the
1:40 am
southern border? polls, the single most important issue is health care. 40% of americans to find that as the single most important issue, more important than the economy. toy 5% consider emigration -- 25% consider immigration the most important issue. and those people that are defining health care as a critical issue are primarily democrats, but also independence. and independence are the voters that nobody is talking about in this election because it's so polarized between democrats and republicans. but if independents show up at the polls, it will make a difference. manus: dominic, can i bring it to you for a market perspective? we talked about the existential threat to the democrats. what would it mean for the markets if the democrats do take the house?
1:41 am
i think what we see then is the classic checks and balances coming back in. which in this term, probably means gridlock. ironically, markets like the concept of a proper check on some of the more esoteric and extreme actions that we've seen from the president. and i think markets would welcome that sort of check in place, even if it does mean gridlock on certain policies. that will locked in the situation and we'll have two years at least of predictable lack of the unpredictable. manus: dominic, can i ask you? we have the data on friday and we saw this fairly fantastic set of numbers in terms of jobs, unemployment, 40-50 year low. and wages. peter, i would like you to have a look at this.
1:42 am
wages and labor shortage. this is the reality of the economy, gentleman. dominic, from the federal reserve's point of view, do you think there's any possibility that this kind of data would cause the fed to hold on to their tight language on thursday? dominic: i think short-term, yes. is a chance we will see this continue. but markets are beginning to look ahead to this tightening cycle. if we look six to 12 months ahead, we will find ourselves looking for the end of the cycle and therefore see the strength in u.s. dollar, which has been troublesome for emerging markets this year. it's going to cease to be a major threat to other markets, particularly emerging markets. short-term, yes, the sentiment will continue. but markets are looking further ahead and i think a degree of optimism will arise from that. manus: can i bring it back to
1:43 am
you, peter? we've got the latest cbs battleground tracker. it says 225 seats. 218 is the needed number for a majority. but there is a plus or minus 13 in this data. so there is every possibility the democrats don't take it. what does it mean for america if the republicans hold both houses? what would it meet for trumponomics, for foreign policy? what is the risk if the gop holds both houses? peter: i think if that happens, donald trump will view it as a reaffirmation of what he did in the first essentially two years, and i would then look for republicans to do things like repeal the estate tax. i think we could expect donald trump to double down on the trade war. and i think his hand would be strengthened in dealing with china. and quite frankly, i think we
1:44 am
could expect some very likely firings in the attorney general's office. manus: can i ask you what it means for the hawks, the light heiser of this administration? the trade hawks that are ultimately guiding, some would say, trade policy? is there a risk that we can bolden the trade confrontation globally? peter: yes, if the scenario here is the republicans hold on to the house, they basically hold. the house and the senate. --hink that will strengthen donald trump, he will redouble on the tray question. it will, in a sense, confirm their view that americans actually support what they are doing on trade. and it will put additional -- xure -- pressure on she i jingping.
1:45 am
i don't think trump needs a lot to claim victory. he proved that in the nafta negotiations. but if you get a gridlock outcome, i think the chinese hand is a bit stronger. manus: all you need is one tweet away from a good headline. thank you very much for your analysis. he is with the london school of economics. dominic stays with us. there's more to extrapolate. more conversations. former campaign mentors are for -- manager for barack obama joins bloomberg this afternoon london time. politics, that's what we do. let's take a quick break down of softbank's second-quarter results and the outlook for its tech fund polling. and if you're traveling to work, don't worry, we're with you on bloomberg radio. we'll get you and you can get us
1:46 am
on dab digital radio on your mobile on your desktop. we are in the london area. this is bloomberg. ♪
1:47 am
1:48 am
1:49 am
we're live in singapore with exclusive interviews. we've got the ceo's of mastercard and united continental joining us for those conversations of the state of play in the world of aviation and oil. and on the day after u.s. midterms, we get the perspective from the cochairman, the ceo of goldman sachs david solomon. what does it mean for wall street? and the former u.s. treasury secretary. he's got a lot of supply coming to this market this week. really interesting week for the
1:50 am
bond market. what is trending in the bloomberg universe? let me take you inside the tictoc world. we have a new feed built for twitter. india has one of the most polluted cities and the cost is not only felt on its citizens, the pollution is costing it 9% gdp. bloomberg finance ministers gather in brussels today to discuss the sendoff with the eu. and their place, hong kong increases interest rates for the first time in 12 years. experts see signs of a housing market downturn. second-place, steve eisman is shorting two u.k. banks over a no brexit deal. blastslace, president xi donald trump's trade practices. he did not name the trade war's.
1:51 am
softbank second quarter, profits topped estimates. solid performance from sprint corporation. joining us from tokyo is peter, the managing editor. it's amazing when you look at this huge headline, we were building up for a doom laden report. we didn't get that. peter: well, softbank is a company that has been difficult for people to understand for quite a while. telecom.background in many think of it as a telecom operator. yet it has a $100 billion vision fund. what we saw in this quarter's results is that the founder of softbank is beginning to show the potential for profits from some of these enormous investments he's been making. this quarter, we saw the vision fund poll in profits that outstrip what people were expecting. less quarter was strong, but
1:52 am
this quarter was stronger. that came from investment gains and a couple different areas. some of the notable ones are in the chipmaker, and an india hotels website that has been growing quickly, and valuation has gone up. something is able to record these profits on its balance sheet. sprint had a solid quarter. there's a combination of factors. there are outstanding questions for the company. saudi arabia is in issue. another issue is they want an ipo for japanese wireless operator, and that remains a better question mark, too. manus: we have tliv on your bloomberg. all the editors are there. we're waiting to hear from masayoshi son. i'm waiting to hear what he might say about saudi arabia, if
1:53 am
at all. saudi arabia doubling down. into the vision fund. it's a big keynote from him, isn't it? peter: well, saudi arabia is the biggest outside investor in the $100 billion vision fund. they have said they want to put in another $45 billion into the next bond. amid this controversy over the killing of journalist khashoggi, there have been questions about whether softbank's relationship with saudi arabia will continue the way it has been so far. masayoshi son did go to saudi arabia for this controversial conference. he has not said anything proactively about the relationship, but he will get those questions as the earnings are reported today. it's not clear what he's going to say. manus: peter, thank you very much. the tliv is on your bloomberg. softbank, there's a great stat.
1:54 am
softbank outperformed the broad nikkei for the last three years and you see that pretty substantial outperformance. it may be coming closer together at the moment. let's visit to the u.k. now. the big short, steve eisman earmarkedtwo british banks as targets. the u.k. is the biggest threat globally that he's watching but won't say which banks he's shorting. that's according to markets. metro bank and cybg are the most shorted financials in the ftse 350. we have no indications these of the stocks eiseman may be interested in at all. let's speak their about that. eiseman added there's a potential for 50 u.k. stock shorts he may bet against if germany corbyn becomes prime minister. dominic is the comanager of the hoatius fund. the one thing that caught me when steve eisman spoke, he
1:55 am
spoke about one of the biggest mobile threats. -- global threats, brexit. others don't talk about brexit in the middle east or asia, very much a tertiary issue. is there something quite telling because it one of the biggest global risks? he's, the think unraveling that begins from brexit, if we're unable to do a deal from here, as a major force of major long-term partner for europe. if we cannot do a deal, than that is obviously going to be the beginning of the breaking up of a very important block. with merkel entering the lame-duck phase, any german led component of a policy across the eu is no longer necessarily going to have -- the concerns of italy might diminish. a deal to be done on brexit needs to be done soon if it's
1:56 am
going to have any -- within it. there's a much bigger issue, and this is one that has been touched on, the threat of an alternative government in the u.k., a socialist government that brings with it, as far as the world is watching, marxist credentials for the first time in british history. that would be, in economic terms, an extra ordinary threat to the stability we've enjoyed for the last 40 years or so. manus: sterling reclaimed of the high lands, up above 130 on cable. we've gotten a shot in the arm from the positive in sessions. time is running out for the day, dominic. let's see what happens. let's see if steve eisman is correct, shorting to banks. he's got a list of 50 if mr. corbyn comes to power. dominic, thank you for going it alone in london, the cofounder of horatius fund.
1:57 am
we're going to get in the next half hour. we have a ceo conversation. for the first interview. this is bloomberg. ♪
1:58 am
1:59 am
2:00 am
manus: good morning from dubai. this is "bloomberg daybreak: europe." the u.s. reimpose us sanctions on iran as oil continues its longest losing streak in six months. ,hina's xi jinping slams the quote, law of the jungle in a job that donald trump's policies -- jab at donald trump's policies. asian traders don't buy the platitudes. stocks slide in china, korea, and japan. u.s. futures point to a lower opening.
2:01 am
warm welcome to daybreak europe. we started the year with synchronize growth and acceleration. what are you looking at? paris, and frankfurt all indicated lower, taking their lead from the chinese market and the water that larry kudlow poured all over the effusive rhetoric from the white house in regards to china wanting to do a deal. larry kudlow poured water over that. nothing has changed. london, paris, and frankfurt indicated ever so slightly. we had the best week since 2016 in european markets last week. to a certain extent, there is a natural moment for pause. the shorts got squeezed and here you are taking the pulse. where going into the midterms.
2:02 am
it's fed week. sanctions are live. let's have a look at the bond market. this is where you begin to see risk. there is a huge amount of issuance coming to the bond market. treasuries are at the bottom. a seven-year high our countries of yields. a proposition to wanting to pick up that yields, the fed is said to give their message on thursday. it will be this statement. could that have an inkling of dovishness? or something more substantial in terms of balance sheet reduction ? those kinds of runoff are the juxtaposition we are looking at. in italy arends rising. the league accelerates its to mystic internal squabbling rather than pan-european squabbling.
2:03 am
let's have a look at some of the three big movers. the yuan traded lower. we've got to the high ground. we are above 30 for cable. theresa may possibly has gained some concessions. steve eisman says sell, sell, sell, and sell more if jeremy corbyn gets the power. let's go to juliette saly. she has the markets that are driving this morning. it is certainly about hong kong in japan today. that short rally you saw in hong kong at the end of last week coming up today, the hang seng is off by over 2%. the hong kong dollar has dropped the most since 2016 as we see that rate divergence between the u.s. and other asian economies. the nikkei down by 1.6% on the close. you're seeing widespread selling across asia.
2:04 am
the biggest drop on the msci asia-pacific index since october 25. it's like that rally we saw last the asx 200len off in sydni closing lower than 0.5%. a drop of 0.3% in india. let's switch and have a look at currencies. i mentioned the hong kong dollar dropping the most since 2016. mark cranfield from our mliv blog saying the u.s. dollar may struggle to snap out of this range traded mode as we see this trade talk, attention back on the table between the u.s. and china. there is a little bit of data coming through out of new zealand today. , growthsury department risk. you have the kiwi down 0.25%. the pound is rallying on the expectation of a breakthrough for prime minister may over the brexit deal. the pound up by 0.3% leading gains amongst g10 currencies. manus: i should have changed my
2:05 am
money last week. the very latest on the markets there, credit singapore. the iranian singapore says he is open to talks. comments come as iranian oil sanctions were listed as part of the 2015 nuclear accord officially came back into effect. washington has softened its stance and announced it will grant temporary waivers to eight nations to allow them to continue buying oil. china and india are two of those nations. ranreporter in to run -- to -- tehran joins us now. death to america was the chance. protests, the annual yearly demonstrations that takes they at the u.s. embassy,
2:06 am
are very much supporters of the islamic republic. it happens to coincide with sanctions being reimposed. people here -- there is a sense of fear. they areme time, looking to see what the europeans can do. many iranians have this idea that the united states is globally isolated. they might find some comfort in that. thank you very much, the very latest from tehran. xi against straight tensions. he pledged a further cut in import tariffs. stephen engle is in hong kong
2:07 am
with the latest. what stood out? was it him trying to regain that in terms -- high land of the globalists rather than the protectionists? absolutely. i am here in shanghai for the international import fair expo, i should say. we did listen to xi jinping's speech and number of the visitors, some 3000 companies are represented from 172 different countries. they were hoping perhaps for more specifics to open up this first annual event. maybe they came away a little bit disappointed. there were no firm pledges on any time frames for reform. he rolled out old promises and some sort of vague new promises. let me just highlight them
2:08 am
reflate. -- briefly. he said they will continue to support globalization. he also said they will further cut import taxes for the chinese economy, also develop the free-trade port. imports willd good exceed $30 trillion over the next 15 years. from anpped that earlier pledge of $24 trillion. this is what he has to say to the delegates. deepeningorld of cooperation, practices like the law of the dungeon -- of the jungle and winner takes all only represents a dead end. >> as usual he did not name the united states or donald trump, but he has several veiled jabs at the united states and is
2:09 am
protectionist policies. reportedeech he had no import deals to announce and also he had no new stimulus measures. perhaps that is why the markets are giving a big shrug. manus: thank you very much. a big shrug. our north asia correspondent, stephen engle with the latest. slightly missing profit estimates for the fourth quarter, but raising profit goals. it is betting on an increase in sales. its new diagnostic system. let's get to frankfurt now. we have the ceo of siemens health and ears. great to have you with us. on atellica to give you
2:10 am
the winning formula. how big could become for you? >> thanks for the question. atellica is an exciting product. we have a superstrong imaging business. a very successful first fiscal year. foundation, also our diagnostics business with more than 990 shipments. picking up growth momentum in our diagnostics business because of it over the year. for any of you out there just coming to terms with what siemens healthineer is, just think mri machines, big lip oratory equipment. -- laboratory equipment. you have already moved some production from china back to germany. my question is, how easy is it
2:11 am
for you to reverse that? what would it take for you to reverse that and take your production back to china? have an effort of production, we have -- we are a triple -- a truly global company. we have twin factories in germany and china. we can balance demand depending on where we ship the product. , also depending on logistic costs. we have operations a macron china and germany. germany.na can maneuver that quickly, yes? >> this is two different indicators.
2:12 am
locations, one in germany and one in china. where is your biggest growth market? where are you seeing the biggest growth for your products? upthe biggest catch potential in health care is the emerging markets. we see the biggest growth in latin america and china and india. and in terms of the therapies business, it is still the smallest of the three. is there any possibility you may build that? how do you look at that part?
2:13 am
segment is founded because of image guided therapies, we are seeing more and more precise treatments possible because of the integration of treatment with imaging and information. we want to grow and will grow this business organically, but it is also a very good platform for acquisitions. manus: can i ask, obviously you have identified your biggest potential growth markets. to manyhe big issues european corporate's we speak to has been the piercing beto took in emerging-market currencies in their reporting schedule. are you hedging? em fx risk?sk is hard, but it is more
2:14 am
about handling the topics with the right care. if you look at the market, the most important emerging markets , india, brazil. thee are not necessarily markets we have the biggest concerns about. the impact of what's happening in argentina and turkey, these are markets we really like. on the other hand, on a global scale, they don't move. the impact is rather limited. manus: can i just ask you about brexit? hard brexit, no deal brexit mean for your business?
2:15 am
>> of course, i'm watching the situation closely. hard brexit means to be sure the ,ogistics chain of our products and here we have put in a lot of -- we go through scenarios. ,e have factories in the u.k. manufacturing some of our diagnostics factories. we will keep them there. we will do everything to make sure we don't run into problems. manus: thank you very much. everybody is brexit hard and soft ready. we want to bring to your , in turkey we saw the central bank standstill last
2:16 am
week in terms of their monetary policy action. but this is the inflation situation. month on month, 2.67%. that was 6.3%. the estimate was for 2.5. above the estimate, that is for sure on the cpi for october 2018. just looking at the lira you can see softness going into the numbers. year on year takes you to 25 points to 4%. in 25%.ets had penciled a little more volatility for the lira to contend with on the inflation side. from 24.52% in september. that is a surprise. coming up in the show, as the threat of sanctions looms, ministers will discuss italy's populist budget later today. we will talk to the italian budget.
2:17 am
later we speak to the european commission vice president. that is at 8:30 london time. if you are traveling to work you know what to do. bloomberg radio on your mobile device. this is bloomberg. ♪
2:18 am
2:19 am
2:20 am
manus: this is where markets are going to open up this monday morning. you've got stocks in europe set for a slightly lower open. the biggest and best week since december 2016 last week in europe. 10 year yields, a slew of paper coming. seven-year highs on 10 year yields. crude is better off.
2:21 am
$1.30.s above futures indicate just very lately they were down by six pips at the moment. one area where we have risk is potentially with this gathering, the euro area finance ministers are gathering in brussels later today. they're going to dress italy's escalating budget standoff with the eu as the eu waits for the government in rome to respond to the unprecedented rebuke it received two weeks ago. maria is on the ground in brussels. good to see you. the italian government willing to deescalate tensions. how do we assess the risk? morning. the euro group meets today in brussels. all eyes will be on the italian finance minister.
2:22 am
this man is in a difficult position. he has lost the trust of the markets. he has been unable to rein in i.tteo selby -- salvin the budget commission thinks there is a concern when it comes to the deficit and public spending. we have heard from you time government many times, this budget is a budget designed to grow the economy out of stagnation. you should see it as a fiscal boost. the concern is instead we are going to get reforms. investors are watching out for that. -- for debt. the credibility of the budget is down to the gdp targets. is italy going to be able to grow by the pace they think they will? we saw in the third-quarter the economy was flat.
2:23 am
there is tension which will most likely say the budget has got to be revised. manus: let's see what happens and what way european stocks fly. let me gets my guest host. hermesenior economist at . good morning. storm inow more than a a political teacup. this is a full on challenge from italy. had you see it playing out? >> that is a very good question. it will depend on the triangular interaction between the european commission, the italian government, and financial markets. the entire government has been -- italian government has been defiant. they are willing to stand some pressure from financial markets. they also suggested there is a
2:24 am
pain threshold for the spread italian and the german ten-year yields. which is about 400 basis points. theg forward, depending on town of the interaction between the u.k. commission and the italian government, we might see further pressure from financial markets. that might to find their reaction of the italian government. , we might seem a basically crisis and a new election sometime next year. real is the risk of new elections? is that a tale risk or a very real risk? very realind it is a
2:25 am
risk. it is also because the balance within the government coalition has changed in terms of popular consensus. released said the supportad doubled its since the elections in march. salvini has a good chance to become the next p.m. after new elections. the window of opportunity is quite narrow given that these problems and financial markets might actually have a real effect on the economy. manus: one of our economics ecbs, they say actually the has reduced how much italians at
2:26 am
the households of italy own and increased what they own because of bond buying. when does the ecb show at hand, or how? hand, or how? >> that is a very good point. both italian households but also foreign investors are showing lower appetite for italian bonds. years, the ecb has basically picked up the slack with its qe program. it has bought 360 billion euros , which is bonds around -- manus: that they are absolutely the holder of risk, it just depends on how political mario draghi wants to be. the clock has ticked down. thank you for joining me, that is the senior economist at hermes. we have exclusive interviews
2:27 am
with the rollcall. the x on -- the exxon mobil ceo. they too it is all about the politics. fashion day to -- ♪
2:28 am
2:29 am
show me movies a grinch would love. [ bark ] nu uh, i'm picking the movie tonight. [ whimpers ] be sad, i enjoy it. show me grinchy movies. oh, goody. [ whimpers ] mmm, fine! show me movies max would like. see the grinch in theaters by saying... "get grinch tickets" into your xfinity x1 voice remote. [ laughing ] uh oh. something in my throat.
2:30 am
>> good morning, welcome to "bloomberg markets the european open." edwards. anna: caution in asia. stocks drop despite president xi's pledges to ease trade barriers. u.s. restrictions on iran come into force. oil continues its longest losing streak in eight months. the big shorts steve

34 Views

info Stream Only

Uploaded by TV Archive on