tv Bloomberg Markets European Open Bloomberg November 30, 2018 2:30am-4:00am EST
>> good morning, welcome to "bloomberg markets: the european open." london.ive from i'm anna edwards alongside matt miller in berlin. >> asian stocks are painting a mixed picture this morning after a rally in u.s. stocks faded late in the day on thursday. the question is, can president to thetrump bring an end trade war? the cash trade is less than 30 minutes away. anna: trump-pence at a trade
truce ahead of his meeting with -- trump hints at a trade truce ahead of his meeting with xi. we are live in the argentine capital. powell's dovish tilt in the fed minutes. theresa may says voting down her deal with the eu would cause greater national division as barclays indicates it is prepared for a very hard brexit. we will hear from our interview with the ceo. matt: we are less than a half-hour away from the european open. take a look at how futures are trading. we saw u.s. futures actually down after they drop yesterday so much with the powell put. futures on the ftse also down. dax futures unchanged. take a look at treasuries. this is the three-day chart, as i always show you. you can see the powell action yesterday and the dip in yields.
then we come back and are trading pretty much even here. three point 03% after yesterday going below 3%. where let's have a look at the we stand at the moment. you have been highlighting treasury markets and we will discuss that through the program. equity markets in asia and beyond not moving all that much. essentially, we are fairly flat as a whole across asia. even with this interesting inflection point we seem to be a with regard to the fed story and the g20 on the horizon, the markets waiting to get clarity on g20. will we get some kind of roadmap ahead for trade talks? negotiating parameters are principles? that is something that equity markets are kind of waiting to hear about. markets, a little bit of
weakness coming through. as you say, treasuries back over 3% after the dip in yesterday's session. matt: we are waiting to hear about trade. the real show is happening on the sideline. the main event will be the planned meeting between as theyt trump and xi try to hash out a cease-fire in their trade war. mike mckee is on the ground covering the summit. emea alsoeader for joining us. mike, let's go to you first. will trump do a deal with china? the big question. unfortunately for all the -- mike: unfortunately, they are not going to be able to do anything on the markets until new zealand opens markets on sunday night because we are
talking about a meeting on saturday night between president trump and xi jinping. donald trump landing last night at the airport here in a blaze of tweets. one canceling his bilateral meeting with russian president putin and another praising himself, saying as long as he is on the job, the american people are well represented in the meetings will be very productive. the real question about that is whether they reach a trade deal. there are some reports that the sides have been talking about a deal in which trump would hold off on further tariffs in exchange for the chinese buying more american stuff in the two countries setting up a framework for further negotiation. earlier this week, donald trump said there was almost no chance they would reach a deal here. yesterday on leaving the white house, he sounded more optimistic. president trump: i think we are very close to doing something with china, but i don't know that i want to do it, because what we have right now is
billions and billions of dollars coming into the united states in the form of tariffs or taxes, so i really don't know, but i will tell you that i think china wants to make a deal. i'm open to making a deal, but frankly i like the deal we have right now. , this is a dinner on saturday night before we know anything about the trade to chew asian -- situation. he will participate in the plenary session and have some bilaterals. he and the president of mexico and the prime minister of canada will finally sign the long negotiated nafta 2.0. anna: interesting. there could be news on trade him and not necessarily the type everyone in the markets is waiting for. that spring christina in. in.et's bring christine which assets will move most on a trade cease-fire? is that the base case the market is going with, a pause in
hostilities and what are the assets we are watching? >> that seems to be the base case, that there is going to be a little bit of an adding in the trade barbs -- ebbing in the trade barbs between the two countries and maybe not a complete end to it. in terms of the assets that would be most vulnerable to the developments, we will have to take a look at which assets have been affected the most since the so kind of came to the fore over the summer earlier this year. uan.: the ya >> all of the cyclical assets. they stand at a bit of a juncture because they are at your today to extremes or near year to date extremes. any developments on this side would certainly be key to the next direction for these assets. matt: mike, let me ask you about president trump's statement. he is saying you may not want to make a deal because we are
making so much money on these tariffs. i thought his original aim was to lower the trade deficit, but he doesn't seem to be able to get any traction there, so is this what he is going to fall back on now, getting money from taxes and tariffs? mike: well, it is a rather on way of doing it if that is his strategy because the people who are paying the tariffs are american corporations and american consumers. so it is just transferring from one pocket to another. increaseffective tax on americans. not sure if the president understands that, but that is the reality. the big budget deficits drive up the trade deficit. the president may be able to lower the bilateral deficit a little, but it will not affect the overall u.s. trade deficit. hard to see were donald trump thinks he actually wins except he could win in the headlines if
he can come out of there saying that he reached a deal even if the deal has no substance. anna: in terms of the european assets to watch, i suppose the stocks that you mentioned, the carmakers, those big export stories, that is going to be very crucial. one of our colleagues writing that one of the most notable reactions to rising trade tensions is on the yuan and the euro. i saw some very high levels of import prices into germany which could have a currency dimension. are we expected to have to watch the euro as a result of this? kristine: absolutely. it has been very exposed to trade situations for sure. there is also the dollar side of that equation. it has been a very interesting development to the dollar side of things. the euro is at a bit of a crossroads. in terms of drivers dragging it down, it may be ebbing a little bit.
the jury is a little bit out as to whether the recovery from that will be a big renaissance or more of a slow burn. mike mckee, think you so much. kristine, a pleasure having you on. mlivthe debate on the question of the day. give your answer. which assets do you think stands to benefit the most if we got a trade deal out of the g20? let's get the bloomberg first word news with debra mao. federal reserve officials have signaled a more flexible approach in their fragile interest rate increases after a likely december hike. minutes of the november meeting say almost all participants agreed another rate increase was likely to be warranted fairly soon. but they also said their language regarding expectations
for further gradual increases may need to be modified at coming meetings. merkel'sr angela arrival at the g20 has been delayed after her plane suffered an emergency. a serious electrical malfunction forced pilots to return to germany, where the plane landed heavily in cologne on a runway surrounded by fire trucks. no one was hurt in the incident, but the chancellor said it was a serious issue and she is glad the pilot was highly experienced. the first official gauge of china's economy in november shows factory activity continued to worsen. the manufacturing pmi reading fell right on the divide between contraction and expansion. factoryast, japan's output expanded at its fastest pace in more than 3.5 years in october with a recovery in autos and electronics powering the expansion. in korea, the central bank raised its key rate for the first time in a year, choosing
to focus on record household debt and the widening gap between korean and u.s. rates. the bank lifted the seven-day repurchase rate to 1.25%. president has ordered a 150% increase in the monthly minimum wage. the sixth hike this year. the country is in the midst of its worst ev economic crisis, with acute shortages of food and medicine, and an annual inflation rate of more than 199,000%. at the black-market rate, venezuela's new minimum wage comes out at $9.50 per month. global news 24 hours per day on air and on twitter. powered by more than 2700 journalists and analysts. this is bloomberg. anna: thank you. debra mao in hong kong. coming up, theresa may reiterates that her deal is the only deal.
barclays is preparing for what could be a very hard brexit. we will hear from her interview with the ceo of barclays coming up next. when you are traveling, bloomberg radio is available to you live on your mobile device and on digital radio in the london area. there you see the team. this is bloomberg. ♪
anna: welcome back. this is the european market open on bloomberg tv. 16 minutes away from the start of the equity trading day. theresa may says national divisions will widen if lawmakers don't back her brexit deal in parliament. she rolled out a second referendum once again and said the alternative to her deal is simply no deal. the barclays ceo says his bank is prepared for a very hard brexit come march of next year. he sat down with david westin for the latest episode of "big decisions." >> if there is a real hard brexit, where there is not an understanding between the european union and the u.k. on an orderly separation of the rules of trade, i think the governor, while it is very hard to predict, i think that is as good of an estimate as what might happen. i think you are seeing it in where the sterling is trading. seen in thes
uncertainty of the equity markets in the u.k. this is a dicey time and i think the sooner we can find clarity as to how the exit will occur in an orderly fashion, i think it is very important for the united kingdom's economy and i don't think the governor is exaggerating and i think we all need to listen quite carefully to that. david: as ceo of a major bank, how do you plan for that? do you have to a plan for a hard brexit no matter what? >> the sunday after the referendum vote, which was on a thursday, the whole executive committee meeting, all executive committee met preparing for a hard brexit almost two years ago. we have been hoping for an organized separation, but we have been preparing for a very hard one. we had a bank subsidiary in ireland. what we did is we significantly expanded the capacity of that bank subsidiary in dublin.
we are in the process right now, almost done, of relicensing all of our branches in europe, from madrid asto milan to branches of our bank in london to branches of our bank in dublin. it is about 1200 people. we will move 1200 people from a british bank to a european bank without moving a single body. and whether it is contracts are capital, we are basically set up so comfortably in front of march of next year, if there is a hard brexit, we will be able to do tomorrow everything we were doing today with our client base across europe and the u.k. were a hardere brexit, recognizing that is not your first preference, how would barclays look different? we have been told by the bank of england that the banks can survive it, that they are in good enough shape to survive it. but surviving it and looking the same are two different things. >> whenever we have -- like when , wereferendum vote occurred
had created what we call a situation room or a war room, where we bring together people, lawyers, risk managers, technicians, etc., from all over the bank and think about what might happen if there is some sort of economic shock like the referendum was or like a hard brexit would be. we are doing that right now. so what happens if we are financing a restaurant chain in the u.k., which is importing fresh goods from farmers in europe, and all of a sudden those fresh goods arrive at the border and cannot cross the border, go bad -- you is responsible for that and what do we do and what is our risk? what industries will be particularly hurt? we are very large provider to the agricultural industry in the u.k. loanf every agricultural in the united kingdom comes from barclays. every farmer today gets a subsidy from the european union. that stops in a hard brexit in
one day. how do we do with that, how to the farmers deal with that? as a bank, we are in very good shape. as the stress test showed, we have capital to whether almost anything. we mindful of where the risks are. we have been prudent since the referendum. but we want to be here to help the united kingdom go through whatever comes its way, hard brexit or not. anna: that was the barclays ceo speaking to david westin. you can catch more from bloomberg's "big decisions" on bloomberg.com. is selling its stake for 1.8 billion euros. stake of justa ftth for onesfr point 8 billion euros. let's get it bloomberg business flash for you. debra mao has the headlines for
you. debra: goldman sachs is set to be facing more scrutiny over allegations that some executives dodged internal controls while investmentaysia's fund raise billions that later went missing. the federal reserve is stepping up its investigation of the bank and some individuals. the fed does not have the powers of a criminal prosecutor, but it can sanction people involved in banking scandals. goldman has previously said it believed the money it was raising would be used for development projects. softbank has set the preliminary price for its upcoming telecom , whicho at ¥1500 a piece would to the japanese company raise 2.4 trillion yen before sales on over allotted shares. businessny's cash cow is being listed and it has 34 million mobile subscribers. that is your bloomberg business
flash. matt: all right, thanks very much. debra mao in hong kong with your world national news headlines. we are minutes away from the open. next, your stocks to watch, including unicredit. the italian bank is selling at small and medium enterprise. nonperforming loans portfolio. this is bloomberg ♪
anna: this is bloomberg markets: european open. six minutes to go before the start of the equity trading day. we are looking at unicredit. the italian banking sector. details from our equities team on oil stocks. and we are focusing on rocket internet. there. anna: what is the latest on the italian story? the sale is not really huge by their standards. they are still interested buyers. that is a positive for banks across the board. many of them are still trying to get rid of still large piles of bad loans. anna: we know that this new
specifically broke before the end of trading yesterday. we will see whether there is for the reaction today. let's get from one sector to another. oil. what have you got? >> european oil stocks this morning, oil is crashing this month. putin same time, vladimir is supposed to meet the saudi enos aires and possibly agree to new curbs to the supply, which would raise the oil price. anna: and what they have to say this morning? annmarie: a slight beat. a pop of 1% or 2%. 196 euros for the nine-month period. if you look at the past five days, tech has been on a tear.
anna: good morning, less than a minute from the start of cash equity trading this friday morning. let's look at markets as we approach 8:00. for the euro, weakness coming through against the dollar. some inflation data out of germany. we will talk about where the ecb tltros a little strength in the oil price this morning,. we dropped down from big figures yesterday. as is the picture in asia. the chinese market looking to buck the softer pmi data. to the futures, looking
to tread water as the asian session. butftse 100 called lower, flatline for europe. the fed's story and trade story loom large over markets this morning. let's look across equity markets at the trade story looming large because we are all emotionally in mariano rajoy -- emotionally in buenos aires. lots more on the trade story to happen. the official signing of the north of smith -- north american trade deal that's been agreed. fed also. are we at an inflection point in the fed? will communication suggest more flexibility, more data driven, less predictable path for the fed? for the european equity markets, while we wait for big developments at the g20 and elsewhere before more conviction
in market. the cac up .2%. a bit of a mixed trade for industry groups right now. we see about six of them gaining and five of them falling, so energy and materials as well as health care, leading the way up. energy doing well. oil has come back. wti crude we saw below $50 and it went above 52 by the end of the session. we see utilities down and financials, a big red block of financials and consumer discretionary and consumer staples, also doing poorly. i think you will see fairly low-volume trade today. that is what we saw in asia overnight, as everyone waits for the result of the g20 meeting and really the sideline dinner
happening on saturday night. anna: that will certainly be in focus. the stocke into specifics, though it is not a day for stocks pacific's. -- specifics. upside.rj's to the operatesag, because it in a different business, metals and hardware. cobham had an upgrade, just in the top 10. to the downside, a mixed bag. cyb g, another volatile one. day for spot -- stock specifics. upgrades and downgrades moving stocks around but elsewhere, we are waiting. -- waiting with regard to what happens at the
g20. matt: volume pretty low, attention really on the g20 summit. everyone is wondering which way the dinner between president trump and president xi is going to go tomorrow night. are they going to try to hash out a cease-fire? donald trump didn't seem like he necessarily wanted to. it ties into our mliv question of the day. what assets will move most if there is an agreement on trade? now, the global head of flow strategy and solutions at socgen. welcome to the program. what is yourask thought about whether or not we get a trade deal? consensus is for a deal to be struck because both sides would definitely benefit. china growth has been slowing the last few months and there
has been a rapid number of corporate defaults, so clearly easing tension will be key on the chinese part and from the factors --ctive, sectors have suffered from the trade war. the recent correction from the s&p. this is pretty much what we should be expecting at the g20 summit. so if you are an investor and you think you have an edge, you are taking the view there will be a deal, what assets do you buy? kokou: i think the hse i would be an obvious low on -- obvious one, chinese markets have andered in the past months it would be a great way to take advantage of the positive outcome.
material is cheap and the entry point is quite attractive. about whatt to ask happens to the chinese currency because if you suggest there will be a deal, goldman sachs says continued escalation is the most likely outcome from the g20. if we saw continued escalation, yuan the one suffer -- suffer? where would it head? kokou: it will continue to underperform. the problem is if there is no the character go from 10% to 25% on chinese imports, it could be more damaging for the currency. this is where you would take a negative outlook and that -- at that point, it is difficult to see where things could go but it will clearly be a lot worse from here. we've got a bloomberg client writing in with a question for you.
i'll put it to you straight away. delay in tariffs on a further $257 billion in the price of equities? what do you think is priced in here as far as trade is concerned? kokou: that is an interesting point because if you look at the correction in the currency and do a quick map, you would realize a lot of it has been priced in. $267 million has with benefit to the chinese economy and there is positioning into it. this is why the path of least recession -- resistance would be for the currency to continue if a deal were to be struck. you have to consider positioning and that is why volatility is great in that situation. are we looking for actual signatures on paper or just a
schedule of meetings to come? some sort of structure? some sort of parameters to the conversation? what would look like success from the g20? kokou: i think success could be truce, because it would give certainty to investors things are unlikely to get worse and this is probably the most respectable outcome because it is difficult for them to say, we will undermine the tariffs we have put through. theme forset the something more concrete going forward. matt: kokou agbo-bloua will stay with us, the global head of flow strategy and solutions at socgen. you can join the debate on the mliv question of the day, type us tv on your bloomberg.
matt: welcome back to "bloomberg markets: the european open." 11 minutes into the trading day. let's get into our top stock stories. can reorder has been combing the stoxx 600 looking for anything moving as investors sit on their hands a bit. annemarie: i'll tease -- let's start with altis, up nearly 14%. stake, the 1.8 billion euros transaction expected to occur in the first half of next year. unicredit, up slightly. a loane selling off portfolio that consists of italian exposures. before the market, we were seeing priced higher.
unchanged. nokia to the upside. nokia had pretty big days this the youer the ft saying k's national cyber security center issued a public warning ei before they can be used for british networks. u.s. officials were asking allies to stop buying equipment. this just means more good news for nokia and ericcson. anna: watching how the geopolitics rubs up against the corporate world. fed reserve officials in signaled a more flexible approach in their gradual interest-rate increases after a likely december hike. this is in the minutes of their november meeting. a rateticipants agreed increase was more attention. but language for further gradual hikes may need to be modified at
coming meetings. kokou agbo-bloua, global head of flow solutions at socgen is still with us. take us into your latest fed thinking. are we at an inflection point where the fed hasn't hit the pause button yet because maybe one more, but will they hit pause fairly soon into 2019? desley: our house view -- kokou: our house view is the cycle will end in q1 of 2020, so therefore, our view is the fed is close to neutral. the market is pricing one hike in december and another one in march, and i think this is in line with our thinking. the interest rate cycle has essentially peaked and the other interesting point is the market -- the overall the u.s.be
administration is unlikely to be as aggressive in stimulus in the next two years as they have in the past two years. matt: where is the 10 year yield going? i was here at the beginning of the year, some forecasting as much as 6%. really smart people like jeff dlach.uck -- gun is it now 3% or lower? kokou: it would peak at 3.25, 3.5 would be the peak on the tenure side of things because you have to bear in mind the biggest owner of treasury is unwinding its balance sheet, the fed. when you think about the amount of treasury issuance required for the deficit in the u.s., the rock to be enough supply of treasuries out there to upset some of the slowing cycle and growth expectation.
anna: let me ask you what this means for stocks, because i'm fascinated by this chart. this is the s&p 500 versus 2019 fed rate hike expectations and you would expect them to move in opposite directions if the market thinks there is more hikes coming, maybe we sell equities. i detect movement downwards. rate hike expectations coming down? does this play to jay powell's defense that it is not rate hikes putting the s&p under pressure, but the global growth story? kokou: i think it is both because with stocks, it is a mechanism of discounted cash. you have a growth element baked into equity prices, but a discount rate. the fact equity prices have been going up simply tells you the market is bullish and there is more growth coming and the fact that now they are coming down , going to jay powell's
argument we are close to neutral and the market is expecting lower growth and equities are suffering. see in theething we equity-bond correlation where both are moving more frequently together and it is a conundrum and headache for multi-asset managers because you are losing the diversification benefit. where do you see the u.s. economy going? on we hear news like general motors shutting down factories, is that a one-off in the economy? is the othe -- economy otherwise doing well? kokou: general motors had said they were low in cost -- lowering costs to prepare for turn, but itn is interesting some companies are taking measures for the slowdown in global growth,
matt: welcome back to "bloomberg markets: the european open." 20 minutes into the trading day. a check on the world map. we see red arrows across the board. one day after the powell put, everyone was worried the fed was raising rates so fast, it was hurting equities, and a little relief yesterday. it didn't and positively for all indexes yesterday. we are now all down. so much for that. there is not a lot of volume. everyone is waiting for the argentinian meeting, dinner meeting to happen tomorrow night between trump and xi. let's recap german gdp data for the quarter. that may be responsible for red arrows. questions mounted further over europe's economic strength as
swiss contracted, shrinking by .2%. that came out yesterday. germany, in line with expectations with a contraction of .2%. confidence in the euro area weakened an 11th straight month. kokou agbo-bloua from socgen is still with us. is europe's economy slowing down? should week the -- we be preparing for a recession? presumably, europe is still at the midpoint of its cycle whereas the u.s. is further ahead. in germany, there is a labor shortage issue and this is a driver of the slowdown in gdp. if you look at france or of the -- other periphery, growthless solid. it is probably less of a trend clear hiccup, but it is the mixed data in terms of is putting questions into
the recovery story of europe. i think the path of least resistance should be further growth in europe, particularly when you think of the plenty of liquidity provided by the central bank. anna: sticking with growth story and the data story then, our colleagues and bloomberg economics talking about inflation may fall in the eurozone. a passing distraction, they say. mounting price pressure is the big story partly driven by the labor market. dynamics stillt give confidence core measures will accelerate. is that still the path? inflation still picking up in the eurozone? but one risk is the oil price that has come under pressure and this could should be view is it transitory and clearly, inflation expectations have improved materially from the
andncial crisis to 2011 2012. ending feels confident qe in the end of the year and raising rates in 2019. matt: markets are not pricing in a rate hike from the ecb until march of 2020. even then, only 15 basis points. what do you think of that? kokou: it is consistent with the lower growth expectation from the u.s. field curve where the view initially a few months ago was for three hikes next year and it is down to only one hike. betweenthis is a debate whether the u.s. is going to go into recession late 2019 or q1 2020 and that will ultimately drive europe growth with it, or whether there will be coupling
between the u.s. and europe. at this stage, this is part of this big complex business cycle that is ongoing, but the view is that europe should continue to see strength in the medium-term and we will have to see if the tactics have gone too far and get a synchronized global slowdown in the u.s. and europe. that is there a danger rates don't get off the floor in europe? kokou: this is a risk and time as aworrisome central banker because rates are negative in the euro area. fore just gotten off to he the corporate bond market and sovereign bond market. if we hit another recession, the ability for central banks to enact policy could be put at risk. the alternative could be equities doing what the bank of
japan does, buying equities. would be a weapon of last resort. staley was talking b corporateisk of bb bonds on alledge. if they get downgraded, that is a real problem. is it a bigger problem for the u.s. than europe? kokou: today, the credit cycle in the u.s. is worrisome when you look at high-yield and small-cap because these companies have essentially engaged in massive bets on the trade buyback and the ratio for u.s. small caps is at a worrisome level and even worse than 2007 at 2008. any indication we start to see credit defaults could be a major concern, particularly as rates are now higher. anna: thank you very much. kokou agbo-bloua, global head of flow strategy and solutions at
socgen. let's get to our stock of the hour. altice, selling half of its french unit. 49.99% for around 2 billion u.s. dollars. steak in thel this -- to a group of infrastructure investors for 1.8 billion euros. the telecoms carrier is seeking to cut debt. selling up to half of it. interesting they are selling it to non-competitors. they are not selling it to people who operate in this space. next on the program, goldman sachs faces more scrutiny over its involvement with one mdg -- 1mdb.
my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. matt: 30 minutes into your trading day. off the bloomberg terminal trump hints at a traders ahead of the meeting with president xi. we are live in the argentine capital. a flexible path. tilt,nutes with a dovish setting the pace for slower rate increases through 2019. and theresa may says voting down her deal with the eu would cause greater national division as barclays indicates it is prepared for a very hard brexit. welcome to "bloomberg markets: the european open." matt miller in berlin
alongside anna edwards at our european headquarters in london. anna: let's talk about markets. it is not a day for stock specifics. the g20 on the agenda in argentina. we look ahead to trump meeting xi. that is the big theme in markets. amongst that, we tread water on european equities like in asia, waiting for guidance of some kind. let's check the gains. more volatile names we often talk about on the mov function. news flownside, some surrounding businesses that have been on the move. downgrade, down by 4.7% or so this morning. the health care business is the biggest fallers. updatelet's get an
on the bloomberg first word news with debra mao. a: president donald trump says he is very close to doing something with china ahead of a planned meeting with president xi jinping at the g20 summit this weekend. officials from both countries have been working for weeks on the contours of a possible deal to be announced following the leaders' dinner in altice --buenos aires. without a deal, china faces $250 billion worth of export duties. forstigating a reason cutting theresa may's visit short. investigators are looking at causes following a german media report the incident is being examined as a possible criminal act. a serious electrical malfunction on the airbus force the pilot to return to germany where the plane landed heavily on a runway surrounded by fire trucks.
says he isbarclays confident the bank will begin to continue doing everything it does today, even if the u.k. crashes out of the european union without a deal. a new interview with bloomberg tv, jes staley says barclays is ready for brexit, set to take place in less than four months. jes: we had been hoping for an organized operation, but have been preparing for a very hard one. whether it is contractor capital, we are set up so comfortably in front of march next year, you will be apple to do tomorrow everything we are doing today with our client base across europe and the u.k. debra: global news 24 hours a day, on-air and tictoc on twitter, powered by more than 2700 journalists and analysts in .ore than 120 countries this is bloomberg. anna: thank you very much. debra mao joining us in hong kong.
goldman sachs is said to be facing scrutiny over involvement with malaysia's 1mdb. reports the fed is stepping up investigations that some in -- executive dodge controls all helping 1mdb raise billions that went missing. in europe, pressure piles on deutsche bank. in as been embroiled program related to the panama papers days after being drawn deeper into a scandal at don skin bank. -- danske bank. our managing editor for finance and investing joins us now. good to have you with us. what does this mean? that the fed is stepping up investigations? >> according to people familiar, the bank has pinned the alleged wrongdoing to the former head of the southeast asia business who has pleaded guilty. to hear mores want about in the coming weeks and months is, does the net widening
and how much of a cost will this be to goldman in the financial ofts and reputational cost these potential allegations and how this translates into business it needs to win across the world? matt: i want to know where is joe hiding. let's get to deutsche bank. what can we expect to happen now? enter the agents headquarters and fred for yesterday, police cars all over the place because of the panama papers. what does this probe tell us about the state of deutsche bank as we see it today? the panama papers aren't something investors have been focused on in recent weeks. the focus had been on potential involvement in the danske bank money laundering so it came as a surprise. the purchase was supposed to continue in
frankfurt today. we may get more from the prosecutors during the course of today as to what they may or may not have found. the question is how it affects top management? christian sewing came in in april and it seems some of the alleged wrongdoing happened right under his watch potentially. investors will want a readout as to how it affects him and potential other changes in management being reported. just as the bank got to be focusing on the top line. not a particularly good time. anna: thank you, elisa martinuzzi our managing editor for investing. kokou agbo-bloua is still with us. when we saw the fed raising interest rates and this was going to be great for banks, 2018 hasn't felt so good for the banking sector. so many issues coming out of the
woodwork. kokou: the view for european banks was that as the ecb moved away from negative interest rate, it would be good for net interest margins, but he still had emerging-market turmoil, credit lending, etc. and it has been a constant series of drawbacks. valuation, it is clearly at a discount compared to other sectors. you have a lot of things that sector go right for the to start to see outperformance. this is where it is more of a long-term play as opposed to a short-term tactical strategy. matt: what is going on here? arebanks committing more -- banks committing more crimes or are regulators cracking down on things they weren't looking at? kokou: it is tough to say
because a lot of these announcements are not predictable, but it is part of the cost of doing business and in the environment of regulatory tightening as opposed to an era of easing precrisis and this is too something not specific the banking sector carried you have seen other sectors go through fines and investigations. of ans actually part unfortunate series of events, but i think it is clearly part of the risk investors will have to face when looking at the sector. anna: jes staley at barclays was talking about the bank running free and that is how it feels in the sector. they want to run free from legacy issues. a broader theme i know you have mentioned this morning. diversification is no longer a safe haven. explain what that means to investors who are clinging to it in a time of uncertainty. kokou: the view is something we
have noticed over the past few months and years. diversification in terms of diversified multi-asset portfolio has essentially timeed to show more at a when investors do not want it. it is a consequence of the instability in the cross asset correlation. put simply, the traditional portfolio construction would be to have equities and bonds and both assets being negatively correlated would give you caution because bonds have been acting as a shock absorber. today, you are seeing more seeodes, this has led us to the fact of diversification being thought of as a concentrated bet on being short correlation. putting on your eggs in one basket. kokou: if they are all in the
same truck, you are not that diversified. longer rely on bonds and negative correlation to risk assets. if you think about forward volatility, both in rates and equities, stabilized multi-asset qe andio, because the distorted asset classes have essentially distorted correlation, as well. matt: thank you for your time today. we appreciate your insight on a difficult day to determine outcomes. kokou agbo-bloua, global head of flow strategy and solutions at socgen. next, we will bring you stock movers this morning. and far between, but this is a big one. altice selling half of its french cyber to the home venture for more than $2 billion. this is bloomberg. ♪
event will be the planned meeting tomorrow between u.s. president donald trump and xi jinping asent they try to hash out a cease-fire in their trade war. michael mckee is with us. he is international economics and policy correspondent and joins us from buenos aires. the big question is whether we get a deal between trump and china. i suppose you have to did fine what a deal would look -- define what a deal would look like. just a roadmap ahead, some agreement to keep talking, a truce? all things could be possible. michael: all things could be possible and that is usually the way it is with donald trump, but the roadmap idea that two sides would refer a framework for negotiations and trump would hold off on raising rates -- tariffs further and increasing the rate to 25% at the end of the year. we don't know if that will happen. trump said he didn't think there
was much chance of a deal at all and leaving the white house yesterday said we are close to a deal. i just don't know if i want to do it. both are here in buenos aires and will meet tomorrow night. matt: thanks very much. michael mckee on the ground, reporting in buenos aire argentina --buenos aires, argentina. president trump decided to cancel a meeting with vladimir putin over the capture of ukrainian ships and sailors over crimea. the formerfrom kiev, minister of economic development and trade. thanks very much for your time this morning. in do things stand right now your dispute with russia? >> kiev is sunny but cold, -10 degrees and the whole country is
on theg the situation sea, where ships have been , which ledr months to this provocation on the russian side. we have three ships kidnapped by russia along with 23 soldiers and this is the first time we have seen where russian troops have been directly involved in shooting at ukrainian troops, so men,re polite little green it is open provocation, open war , therefore the president and parliament announced martial law , putting the army on high alert. strengthening the borders. anna: good morning. is the ukraine getting enough
support from international allies on this? we heard president trump has canceled his meeting with president putin. what support are you looking for from europe, for example? kokou: it is a symbolic and aportant -- aivaras: it is symbolic and important gesture for president trump to cancel this meeting. it is certainly appreciated, even a twitter feed yesterday saying this is what world leaders do. europe, our closest anyes including stopping construction projects, which given the recent events demonstrates this particular pipeline is nothing more but a geopolitical project and imagine, once built, when russia rushes to defend their interest
in neutral waters. we have seen this times before. this can happen in the future. to standurope needs strongly behind ukraine and certainly stop this geopolitical project, which undermines ukraine's economic interests, as well. matt: what are your expectations for that, mr. minister? has pursued a cold tone publicly when talking about mr. putin and his transgressions. on the other hand, germany needs the gas and i think they are terribly unlikely to cancel the project that she has stood so firmly behind. aivaras: recent events put the whole project in a different inspective and yesterday berlin, there was a large ukraine, german business formed, opened by angela merkel and the
prime minister and i'm sure the pipeline project was a key in their bilateral discussions. colleagues from angela merkel's tall -- party a few days ago make some positive remarks toward ukraine and negative against the project, so and wet a finalized yet to be speakinge out loud about it and western support. anna: president has spoken out against the project in the past. the focused is on levels of violence at the moment, but can i ask about the impact on the economy? the impact on the ukrainian economy? are criticale ports for ukraine's economy, 25%
are still exports last year but the largest steel companies have been exported from the port. they are critical and russians know it, so their actions are aimed directly at undermining ukraine's economy. this aside from ukraine was already on a good footing in terms of economic growth after massively protracted recession carried we had 36 months of industrial output and gdp growth . for 3.5% gdpurse growth, single-digit inflation, business climate at the highest level in seven years, so things after aomewhat positive recession. here, we have russian provocation which in the
short-term, has undermined already the bond market, the this to, but i expect change within weeks if we do not see more provocation on the russian side. matt: thank you very much for your time. former abromavicius, ukraine minister of economic development and trade, coming to us via skype out of kiev. i want to update viewers on the situation at deutsche bank. we saw a raid by german prosecutors in frankfurt. it continues today. according to prosecutors, they are collecting evidence. yesterday, they put 170 agents in the headquarters and deutsche bank confirmed they were there and at other bank locations throughout the country. the raid, in connection with the panama papers, unrelated to launderingbank money
drama. those shares are down another 2% today to 8.12 euros. ghosn,he fate of carlos his detention is set to be extended by another 10 days so we know he was arrested and it seems he is going to be detained for longer period. bloomberg terminal users can interact with all the charts on bloomberg tv. you can use the g tv function to do that. use it in your own analysis. next, battle of the charts on bloomberg. this is bloomberg. ♪
matt: welcome back to "bloomberg markets: the european open. " 55 minutes into the trading day, but we are waiting for dinner tomorrow night in argentina. it is time for battle of the charts. annmarie hordern is going head-to-head with alex longley in what promises to be an oil versus oil. >> that's right. two oil charts today. i am looking at oil in november. it is going to be the worst month in a decade for wti. yesterday, below $50 a barrel. since the highs of october, a
crash some 30%, the worst since 2015. a lot of that is going into fears over the global supply glut with saudi arabia and really in or miss u.s. stockpiles. ist: all right, there anne-marie's fright night chart. what have you got to bite her? >> part two of the oil battle. the worst month for oil since 2008 and here is the question of what is next. this is the december spread, a spread of hedge fund traders in the oil market. upk at the green building over 2018. that is bullishness taking hold and then in recent weeks, down into the red zone. worried abouty supply, pretty worried about demand. when we look at what is next, traders say the fall off a cliff in market structure that got people worried and to an extent, opec will have to surprise the market next week in order to
♪ francine: dinner and diplomacy. is at the g20 in buenos aires. and, fed minutes. jay powell setting the stage for further rate increases. and, we hear from the chief company, as this theresa may pushes for support ahead of that december 11 vote by primary. ♪ -- vote by parliament. ♪ francine: welcome to "bloomberg surveillance,