tv Bloomberg Markets European Open Bloomberg December 24, 2018 2:30am-4:00am EST
matt: this is the european open. i'm matt miller in london. euro points lower after a mixed trading asia following friday's deep losses in the u.s.. germany, the nordics, and switzerland are all close today for the christmas holiday along with much of eastern europe. cash trade less than 30 minutes away.
stocks tumble as the nasdaq slips 20% below its high for the year. asian equities drift lower. the longest will market in history is on life support but since it's christmas eve, we brought to these adorable bears rolling down the hill. the new chin to the rescue? the treasury secretary attempts chairmanconcerns that powell be ousted in trump's future. and deadlock in washington. the u.s. government shutdown could last into january as the debate continues over president trump's demand for a wall between the u.s. and mexico. we are less than half an hour to the european open. we want to look at where futures are trading. stocks just opening up the last 30 minutes because japan is closed for the market holiday as well.
you can seefutures unchanged. ftse futures have been down all morning. about cac 40 futures down 0.75%. looks like futures are pointing to a negative open. take a look at what's going on in other asset classes. as far as equity indexes concerned, there was mix of trading asia. as far as forex is concerned, one of the things you see a consistent theme across at least g10 currencies is the dollar is losing ground today. you see that against the euro, against the pound, against the yen. other currencies are up. as far as commodities come we see gold trading at 12's the -- 12.63.
we see markets slid deeper and deeper into bear market territory. we do see gold continuing to climb. concerned,onds are we see a lot of people buying the perceived safety of government debt. let's go to the first word news. the number of people killed in the invasion synonymy has risen to 281 with more than a thousand injured and dozens more unaccounted for. wereof the victims tourists killed by two giant waves on saturday thought to be triggered by a nearby volcano. this comes ahead of the peak holiday season and may hurt the tourism industry and put further pressure on repair. reported to be making plans that will keep her in office for more than two years after brexit. she would continue as u.k. prime minister until 2021 before being
replaced as conservative leader less than a year before the next scheduled general election. she survived an attempt to oust her earlier this month. it's a least populous government has pushed its revived budget bill to the senate. confidenceent held a vote which is often used in italy to ensure swift approval for legislation. it needs to meet an end of year deadline. oppositions despite politicians accusing the government of ramming through the legislation last-minute changes. it's reporting that police investigating the gatwick think it's possible there may not have been any genuine drone activity. they are leaving open the possibly of the sightings may have been mistaking. a couple arrested after the incident have been released without charge. jimoing defense secretary
mattis when i leave this -- the job two months early. announced inve was a tweet and followed bipartisan criticism of the president's sudden change of course on syria and afghanistan. former shanahan is a boeing executive that joined administration last year. getting closer to attacking the kurdish stronghold in syria. the country's military has employed hundreds of vehicles and troops surrounding the town of manvich. troops in the region were a major obstacle to carrying out the military operation. president trump's decision to withdraw leaves kurdish forces exposed to the operation. is capped a record year with deployment of a new gps satellite.
they are breaking the previous high set in 2017. it was delayed several times because of technical issues in bad weather. spacex's valuation has risen. it's not right to the third most -- most valuable startup after uber and airbnb. global news 24 hours a day have a more than 2700 journalists and analysts in more than 123 countries. this is bloomberg. thank you very much. the shutdown in washington is expected to drag into the new year. republicans and democrats at odds over paying for president trump's border wall. meanwhile, white house officials tried to reassure markets that jay powell job at the fed is safe. he comes after a report that president trump and discussed firing the chairman. >> i think he put out a tweet last night specifically saying
he realizes he does not have the ability. secretary mnuchin told him that. >> he did mention that to me. joining us now is a u.s. government editor kathleen hunter. mary christmas eve. thanks for joining us this morning. let me ask about the border wall that president trump had promised. let's not forget the mexico would pay for it. the government is not go to shut us to payse he wants for it according to the u.s. congress. now we are looking at a protracted shut down last into january. trump is playing to his base once again. 2020,ws coming to immigration is an issue that motivates the base. i think with the problem is, in
terms of getting a resolution, is that the leverage will increase significantly when the democrats take control the house. there's a real sense that tother side has a motivation reach a compromise in the next couple of days. we could see the sun shone shutdown continue through the christmas season. the shutdown continued through the christmas season. matt: it's not like they will for cap another $5 billion for the continuation of a wall between mexico and the u.s.. the stock of the fed issue. that's a little more important to markets right now. markets like stability. firing a fed chair is not some in the present of the united states maybe even can legally do. what was the story? about whether he was able to legally do that? some conversations
about whether or not he's legally able to do that. it's raise lots of eyebrows. if you were to take an action or try to take that action, that would have a profound effect on markets. what we saw yesterday was steve mnuchin trying to reassure markets the trump is not going to take that action. part of what happened and this underscores part of the danger is when mnuchin did that, he also tried to reassure the markets that there wasn't any problem with liquidity in the markets which is something that hadn't been on investors minds to begin with. there's a fear that even talking about this issue, it could backfire. matt: surely that will no want to draw everyone's attention to the fact of these markets have fallen so far so fast. thanks for joining us on this christmas eve morning.
next, with oil deep in a bear markets, opec members are pledging further cuts in the block has even started implementing its last agreement. we will discuss how they could go longer and deeper. remember, when you're traveling to work bloomberg radio is live or on dabbile device digital radio in london. this is bloomberg. ♪
matt: welcome back to bloomberg markets. this is the european open. we are about 18 minutes away from the start of cash trading right now. let's take a look at the futures picture. number that germany had another of other markets are closed for the christmas holidays area we do have ibex futures down about a half percent. about -- down about 0.6%. let's get the bloomberg business flash. euronext has approached the board the board of the coming and operates the european stock exchange. it seeking its support for 625 million euro cash tender. they have already secured
support for vps shareholders. u.k. telecoms company bt will remove the quitman from the cork medications network of the police force and other emergency services having already pulled gear from its own core production. they had inherited quitman made by a chinese company after the 2016 acquisition of the mobile carrier. bmw is facing a criminal probe and south korea after investigators concluded the company concealed fire hazards that led to recalls. they are being final was $10 botchedfor allegedly response to engine fires in south korea. the transport ministry says the carmaker to the really tried to cover up technical issues.
bmw's korea branch has apologized and said it will cooperate with ongoing investigations. that's your bloomberg business flash. matt: thanks so much. merry christmas. as we head towards the end of the year, bloomberg intelligence analysts give us their take on the biggest themes that will dominate markets in 2019. today is china's economy. >> i think china shipping is the story of 2019. i think things can be negative for shipping. gold, --t's iron or >> a looming chinese consumption slowdown but how much of a slowdown?
potentially, look into macau's business in the future, there should be some growth they're given there is a vast market segment growing up in ramping. >> metal demand would be impacted by the economic slowdown of china and more than 50% of metal demand is coming from there. we think the demand slow down would be coming from the early cycle metals and then move on to the late cycle commodities such as copper and aluminum. we think luxury profits will slow in 2019. we expect competition to as luxury goodna brands cut prices after china lowers import taxes for merchandise into 2019. stay tuned all day for
more from bloomberg intelligence. but stock oil. opec hasn't started implementing its new six-month agreement to cut output in already members are responsible -- members responsible for most of the reductions have promised to suspend or deepen most the cuts. week,climbing 11% last the most since january 6 -- 2016. our energy editor is just back from the opec meeting in kuwait. -- owapec meeting in kuwait. many of the opec members are there. opec has delivered on its promise to trim supply at its last meeting. agreement that cut
allowed oil prices to rise little bit? i think we just saw also than the package that preceded this. there were fears of an economic slowdown and if we see demand declining next year, and we also know supply has increased very rapidly in the united states, u.s. shale production has increased. turning it back, how deep will the cuts go? that's of the opec members who are at the meeting yesterday were trying to reassure the market. they will come in, they will take out 800,000 barrels of not more, and are ready to have extraordinary meetings if necessary to reduce supply further. if they did have an extraordinary meeting, they would either extend the cuts out agreedthan the six-month and even deepen the cuts. when we thinking?
1.2 is the number we got last time. 1.6? they did not get any -- give any indication of that but the way they broke down the figures was interesting. saudi arabia itself will cut production to 10.2 million barrels a day. then there will be natural disruptions, maintenance, geopolitical shocks that the opec members are betting on that will bring down the production and kind of prop up the prices to a level they can continue to invest and keep their economies running. matt: x-ray much. bloomberg's middle east energy editor join us out of dubai. we are minutes away from the start of stock trading across some of europe. up next, we review the stock stories of 2018.
team. let's talk about what went wrong. a was eventinent worse than in the u.s.. >> pretty much everything went wrong for european stocks. andtarted off with banks investors being bullish on european stocks. they expected it to be a great year and unfortunately it didn't come true because everything went wrong from politics, brexit, italy, turkey. economies started slowing down. profit was only a fraction of the growth we saw the u.s.. banks in the u.s., financials are actually in bear market. was there a recurring theme? you had big negative stories like deutsche bank, credit suisse still struggling to make a turnaround. wasall, the big problem
that the ecb said they wouldn't hike rates until next summer. they were looking forward to that first rate hike and immediately they went to the red and have stayed there. lot of debate over what it means. now it seems a be further away still. banks did look nearly as bad as oil has looked in recent weeks. the drop has been unbelievable. moreere more pain to calm opec calm or will these collusion's affect the price? since has been crashing september. brent is down about 40%. that, oil stocks have been under pressure as well. this year, oil was the sector
with the most growth in europe. is expected to go down. adjustments, still these oil services company's are going to be hurt by this. to be a's going difficult one for the oil industry next year. what about the trade team? it was so dominant. -- dominant. , there'sbanks automakers. that's the second worst. that's typically a trade story. unfortunately because of crazy trade talks and negotiations, china's slowdown and auto and miners have been under a lot of pressure this year and that will likely continue next year.
matt: we are less than a minute away from the start of cash trading equities on this christmas eve morning. let's take a look at the charts and see what we can find. you will say dollar weakness against most of the g10 trading partners. euro strength here a little at 113.78, cable up to 126.70 against the dollar. reduce the oil bouncing a little, but still 54.08 on brent, so low you think it's the vti when you look at that. the csi 300 closed up a little bit and china. japan was closed and
it's a mixed trade in asia. we see futures in europe pointing down. get ready for some coal in your stocking. ftse futures are off .7%. we have cap features down .8% -- cap futures down 8 -- cac futures down .8%. the dax is closed. are humane enough to actually take a holiday on christmas eve. why don't the rest of us follow suit? i don't know. the ftse down .25% right now. you'll take longer for the cac and the ibex. istanbul up .4%. we're seeing drops on the cac and the ibex, down about 1%. very light trading. a lot of times when trading is
lighter, you'll see more volatile swings in asset prices. that may be a case of what you'll see today. again, i ask the question, why don't more countries take christmas eve as a holiday and stay home? since most people do that regardless, especially in the markets. take a look at the imap on the bloomberg 500 index. red across the board. we have big drops in financials. we have big drops in consumer staples, as well as materials right now. oil doesn'tunce in look to be helping too much. most stocks out of the gate are down. as i said, the dax 30, they're not trading so they are not involved. three stocks down, 50 up. here are some of the gators. -- gainers.
that's mainly because i've got this organized by points so we can see which companies are moving the index the most. these companies are huge. help.4% move is going to move, lift the stoxx 600. you see astrazeneca and shire as gainers this morning. let's take a look at the losers. a lot more losers this morning. it's negative. the big companies at the top, hsbc taking the most points away. it's down more than 1%. the geo is down 1.5%, which is odd on christmas eve. that's when you grab some of their products the most. a.m. to mel is off almost 2% this morning. santa fe down more than 1%. all of these stocks, even though they are the biggest stocks ticking away the most points, are down by more than 1%, some of them down by more than 2%, like imperial and bt. shouldn't you be calling your
mom on christmas eve morning? hopefully, you're actually home with her. let's take a look at european markets opening lower than the nasdaq, actually, last week hit a bear market, just adding to the list of the many indexes that are now in bear market territory. you got the dax there, the topics there, oils, u.s. financials. futures pointing to a modest rebound in the u.s. as the white house officials moved to reassure markets that jay powell's job is safe on the fed. here's how investors reacted. >> it's unlikely powell would get fired. that would be unprecedented. nothing is off the table with trump. but it would be unprecedented and would have severely negative implications, because one would question the independence of the fed. >> starting next month when the democrats take over the house, we've already had a glimpse of what that relationship would be
like. they didn't want to look them in the eye in the oval office. it's going to get uglier from no one. >> that leaves us into uncharted territory. on the fundamental basis, markets are looking at good value. on a political risk basis, i don't know yet. >> risk for meeting in every corner of the globe. that doesn't play out well. this malaise in washington as to the negativity. markets are about perception versus reality. perception is so negative, it's hard to shift investor sentiment into a positive bias. >> is a disconnect between the market and the fed, and that has been the worrying point. not so much to do with president trump and steven mnuchin: the banks to ensure to ask if everything is ok. obviously not everything is ok. matt: joining us on this christmas eve morning is the chief fx strategist at socgen.
just talking, first of all, about the fed. even if donald trump is now aware he can't fire, i assume he can't fire the fed chairman, at least from the board of governors, he was asking questions about it to multiple advisors. does that make the market a little jittery when it comes to the dollar? guest: i guess. markets are learning how to seasonally adjust to comments from the president in terms of what he's actually going to do relative to some of the things he talks about. it does mean that the message from the white house to the fed that we don't like these rate hikes. it's a ramped up to as high of volume as possible. some of it sticks, right? the fed is nervous of making a mistake by hiking or taking the blame for equity markets. even someone as run shoulders as -- broad shouldered as jay
powell we are not going to get more rate hikes as a result of this. matt: let's take a look. i'm only looking at g10 currencies. today, everybody but the swiss franc up against the dollar. there's a drop-down menu here. if i look at this drop-down menu and i put up year-to-date, we can see what's happened to the dollar in 2018. and it's incredible to see almost everybody is down against the dollar with the exception of the yen. is that all about the fed hike story? kit: sort of. it's a fed hike story and u.s. growth surprises. i did a chart using the bloomberg, consensus expectations on growth versus the rest of the world and the u.s. 2020,verage 2018, 2019, put the dollar index against that, you get a nice fit. we revised growth forecast in
other places. we revise growth forecasts up in the united states throughout the year. the u.s. economy has done better than people thought this year. that's the mistake people made. bond yields one up, the dollar went up until just this last bit of the year. matt: now we're in a position where the fed is getting more dovish, even if some think powell is hawkish in his last meeting i saying the balance sheet productions are on autopilot. seemsropean central bank intent on raising rates at some point, normalizing, even if the data doesn't push them to that. how does the euro-dollar look to you? kit: i think it could shop around for several more months, probably because while the fed sounds more dovish, economic data hasn't fallen off a cliff. it's the equities market hit, not the data. matt: this is interesting.
a lot of people have started to come out and agree with donald trump. they think the fed made a policy error. doesn't someone you think that. kit: not yet, no. i was trying to think this morning, but this is more like 1998 when the equity market fell. the fed cut rates, the economy when gangbusters. then we had a recession. how much should we pay attention to markets when some bits of the equity market have gotten over hot? i don't know. the broader challenge is this, how much of this year's growth is borrowed from the future because it was just largely a function of a fiscal sugar rush that's now over? matt: that's a great question, one that investors are contemplating, as well as jay powell. kit: the more is temporary, the more it's borrowed, sure the euro went down and the dollar went up, we'll just reverse as
it becomes clear. i just want a euro-dollar,: 1.25 next year, but most of that move doesn't happen at the beginning of the year. matt: that's very interesting. we'll talk more about europe next, as well as what's going on at the ecb. i want to thank kit for coming in on this christmas eve morning. i'm sure his got a lot of shopping to do, chief fx strategist at socgen. maybe put euros in your stocking. we will take a look at what's on the move. the british say per joe. auto stocks in europe have had a 10 fear and it could continue -- a tough year and it could continue. the stock is down 1.33% in paris. this is bloomberg. ♪
matt: welcome back to bloomberg markets. this is the european open. 12 minutes into the session, red arrows across the board. some markets in europe are closed for the christmas holiday, including the german dax and a lot more eastern european markets. k, we're open here in the u as well as the cac and the ibex. the ftse mib also all down. let's get our top stories with
dani burger. dani: starting off with euro only up a measly .25%, but the cac is down's .7% so this is an outperformance. now that they plan to purchase the also bores exchange for $625 million cash tender option, they are the traders of this would give them a wider reach. they have the top shareholder approvals. on the downside, which today is mostly downside, peugeot down more than 1%. over the weekend, wilbur ross gave an interview saying auto tariffs are still on the table and trump has flexibility to exercise some of those. also getting negative headlines about bmw and a south korean fine they face. some auto nerds concentrating in peugeot today. down more thanat
1.5% after facing shareholder rebellion over the bonus plan that shareholders say is rewarding revenue over profit. one of the shareholders writing a letter, expressing that sentiment to two of their top shareholders, also endorsing that letter. matt: thanks for those movers, dani burger with those stock movers. let's talk about italy. they push the revised budget bill through the senate. the governor held a confidence vote, often used in italy to ensure swift approval, and now needs to measure to the lower house to meet the end of the year deadline. the bill passed, despite protests from opposition politicians, who accuse them of ramming it through legislation. joining us is our milan bureau chief. what happened at the italian senate? lengthyl, it was a
dramatic session that ended at 3:00 a.m. sunday morning rome time, essentially because of the delays in putting the changes that italy was forced to make during the negotiations with brussels into a compact, what they call maxi amendment, that was then put to a confidence vote. the italian prime minister said in an interview that blamed it on the lengthy negotiations with brussels that delay this process and obviously gave the appearance to the opposition that this was being rammed down their throats at the last minute. matt: so what is the outlook? italy is a country that has a shaky, political stability. does the government look strong or is it on the edge? dan: certainly the prime minister came out of this stronger. he stepped into the middle of these two warring populous factions and started getting
involved in the brussels negotiations. i think he looks much stronger than before. however, you've got this problem in that the european elections are only a few months away. i can see both mr. demaio with the five-star and sell vini -- leadni with the right wing continuing his campaign mode, jockeying for positions. salvini is still the most popular politician in italy. matt: thank you so much for your time. dan liefgreen talking us to the situation and rome. -- in rome. kit is still with us. you've got the situation taking care of a but there's still shakiness around europe. some people are expecting snap elections in germany sometime .oon, sooner than expected
you've got the brexit situation unclear. you are talking to me about 1.25 on the euro. how could we see that climb with shakiness on the continental? kit: when need to get the shakiness out of the way. in terms of economic impact, we've had trade in china in the mix with the lows of the german car industry which you know all about. the best christmas present the euro could get would be a sensible resolution to brexit. the best christmas present it won't get. at least italy is out of the way. calm the political situation and move that out of the way, get clarity about european leadership. once we get the european elections out of the way, some of the german issues move on because it shifts focus to the european parliament and where european politics is going to. you're right.
we've got all these challenges to european growth, very disappointing economic data in the last three months, assurances from the ecb this is temporary. we're not going to get a significantly stronger euro until they get to the other side of that. matt: will the ecb raise rates next year? kit: i think so. there's an intellectual position in the ecb that says raising rates back to zero isn't about tightening policy. got toout saying we've one day undo these measures we had. we're not in an emergency anymore, just a matter economic situation. matt: they don't consider that raising rates, getting back to zero? kit: they would like us to think about that differently. matt: let's get back to brexit. what can you price in when you try to forecast out the pound, for example? what can you price in? what's certain, if anything?
or even close? kit: what's certain is that economy isn't going to do well for a very long time. what is certain is this doesn't have to calls a massive recession, but it will cause the economy to have a lower rate of productivity growth for a significantly long time. you can make it better, soft brexit, worse, hard brexit, bad, sudden stop brexit. you can move those pieces and we don't know. matt: what are your odds right now? right now is no deal brexit is still the least likely outcome. i did suggest to someone that let's call it 33%, 33%, 33% each. it's not quite that bad. the least likely is the no deal brexit. the most likely is some deal will come. a second referendum is probably more likely than a no deal brexit at the margin, both of
them less likely than some kind of a kick the can down the road extension sort of move. matt: still, no visibility really. billiton you can see is the economy -- the only thing you can see is the economy is going to suffer for it. kit is going to stick with us. i'm going to take a look at the sectors year-to-date as we approach the end of 2018. this is the grr, the group ranked returns on the stoxx 600 index. thanks, the worst -- banks, the worst performer. auto stocks not far behind. this is bloomberg. ♪
matt: welcome back to bloomberg markets. 23 minutes into the trading day and we are down across the board in markets that are open. it is christmas eve, so some of the more civilized countries stop trading for the day. december's stock selloff capped a really tough year for investors, especially those long equities. easy gains have been few and far between. stocks across the world have entered into bear markets in various indexes. in the world of fx, the yen and the dollar have been the standouts. what should we keep an eye on for 2019? kit juckes is here, luckily for
us. right now we were showing the wcrs screen again, although we changed it to a euro base and put in major currencies. the yen is the biggest gainer, up 7% against the euro year-to-date. the dollar not far behind it. that seems like a defensive position. kit: and if you look back at this year, defense is the word. cash has been king so far. the surprise that the yen hasn't gone up more, certainly from the start of the year, dollar-yen not as low as i would have guessed if you told me where the s&p would be now. that may be due to the fact we had a weaker chinese yuan across the sea. matt: a lot of people are focusing 1.06 on the yen. kit: it's a popular trade. at some point, we will get the yen back on the move.
it's going to come on a day when but anot looking for it, move seems to make sense once the fed comes over the hill once we look past the last hike and particularly, if we remain concerned about some equity markets. i think it will slow down. the end will outperform. i would be surprised if we don't see the yen outperform the euro in 2019. matt: what are some of the other calls you have? the swedish krona has been a great story, horrible if your long it, obviously. has to buy gifts for christmas. what do you expect for the krona this year? kit: i think is going to go up next year for a simple reason that it didn't in 2018. they're going to raise rates. the economy is doing fine. the currency looks historically pretty cheap here.
what caught everybody off guard was everybody was bullish at the beginning of 2018 and the central bank, rather than following fundamentals, where the economy was going, were resolutely stuck to this massively negative interest rate and effectively shadowing the euro. i think we've turned the page on that story, and it will be domestic fundamentals. it's a big, strong current account for currency to be this week. matt: we didn't get to the riel and the rand as the worst performers, and i assume if you put them against the dollar, a dollar base, as well. we didn't get that, but i got you as a guest on my radio program in just about 30 minutes time. that's a tease, our viewers will tune in, for sure. for if you've got a bloomberg terminal in front of you, you can type in radio to hear more from kit.
matt: 30 minutes into christmas eve trading day, let's get your top headlines. barely breathing, stocks tumble as the nasdaq slips percent below its peak. open markets below sink, as well. the longest bull run in history may be on life support. that's a bear rolling timmy hill. concernsries to quash jay powell will be ousted. you was futures point to a modest rebound after more than 400 point drop on friday. the dow jones industrial average. deadlock in washington. -- u.s. government could
shutdown could last until january as donald trump demands u.s. taxpayers fund his border war with mexico. welcome to bloomberg markets european open. i'm matt miller at bloomberg's european headquarters in london 30 minutes into an admittedly low-volume trading day. here's how things are shaping up. we've got about three stocks down for everyone gaining on the stoxx 600. i say stocks 500 tickets are could be 100 closed this morning, the dax among others, is not trading because of christmas. you can see the gainers here. shire is one of the big gainers this morning, and we also see astrazeneca up this morning, a couple of pharmaceuticals trading up. glencore is also a gain or as well as bp. you do see some of the miners and oil stocks trading higher and helping to keep the stoxx 600 close to level.
take a look at some of the losers and you can see which ones are weighing the index down. the most points off the stoxx 600. 1.9%.s down, you can see some of the luxury stocks are falling. definitely on christmas season, something you need to have. anheuser-busch falling this morning. onbe people aren't too merry this christmas eve. let's get first word news with desley humphrey. desley: the white house has moved to try to calm the markets after the recent losses. steven mnuchin spoke to the six largest u.s. banks over the weekend and was told they have ample liquidity for lending to consumers, businesses, and other operations.
they insured financial markets jay powell is safe after reports president trump discussed firing him. >> i think he put out a tweet last night saying he does not have the ability. >> we haven't heard directly from him. >> i did speak with the treasury secretary last night about a bunch of things, including the likes of appropriations, and he did mention that to me. desley: china announced another round of tariff tax. the finance ministry said some export tariffs will be cut as part of the effort to open the economy. the tariff reduction will come into false -- force at the start of next month. killed in theople tsunami rose to 281, with more than 1000 injured and dozens more on accounted for. most of the victims were thought to be triggered by a volcano.
the disaster comes after the peak holiday season and may hurt the tourism industry and put for the pressure on the rupee are. makingof theresa may are plans to keep her in office for more than two years after office . she would continue as prime minister until 2021 before being replaced as conservative leader less than a year before the next scheduled general election. she survived an attempt by colleagues to oust her earlier this month. it's reported police conducting the gatwick airport investigations a there may not have been genuine drone activity they said they are leaving open the possibility that he may have been mistaken. a couple arrested after the incident, which disrupted travel , have been released without charge. turkey is edging closer to
attacking a kurdish stronghold in syria. the country's military employed hundreds of vehicles surrounding the town of men beach. they have valid to capture the syrian towns but it was a major obstacle. president trump's decision to withdraw leaves kurdish forces exposed. global news, 24 hours a day on air and at tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. i'm desley humphrey. this is bloomberg. matt? matt: desley humphrey in dubai with your first word news. picturetly seen mixed in growth. france saw its final reading revised downwards for gdp. germany shrank for the first k exportse 2015 on wea and thinking auto sector. could we see further weakness
next year? for more, we are joined by jimmy murray. kit is also still with us. are we still seeing -- we were talking about the ecb -- are we seeing a positive growth picture? guest: no. growth has slowed, momentum is fading. normal.that is part of it is more troubling with external headwinds. the question is, does it matter for ecb policy? possibly not. there's been so much progress. wage growth has been strong enough. matt: that's the narrative mario draghi is pushing although he wasn't quite as bearish as you are in the european economy. kit and i were talking about the european auto sector. that has been a huge thing.
you painted it as one possible shining light because we could see, after the w ltp admissions test they had to stumble through, a little bit of a rebound in auto sales. is that going to happen? guest: at the moment, we haven't seen a huge amount of it. if i speak to my colleagues, they tell me for the -- down the supply chain, not good news. we are cautiously optimistic but we haven't seen any evidence yet. matt: i always forget what the acronym stands for. for a long time, volkswagen, bmw, mercedes, they were able to meet customer orders and they still have delivery times. what do you see for the european economy in 2019?
we've talked about your take in the british economy. kit: the biggest problem is this series of headwinds. we shouldn't underestimate the fact the trade war is hanging over europe. if you turn around as a currency guide answer the chinese u.n. is 24% of the basket of the euro, it tells you trade is 40% of the economy for europe, and here we are with 24% of that with uncertainty. remove the uncertainty, good news. just the ability to get the cars to custom. the positive on the car industry is that there's been income growth but not spending. some of that is pent up demand from people who would like to buy a new car they can't get a hold of yet. so take away uncertainty, brexit uncertainty one way or the other, and you should get some acceleration. i think, that seems to me the
right starting point. it's going to get better enough that we have to understand we've got multiple headwinds hitting at the same time. how good? i wouldn't want to be too optimistic. matt: and it could go, you feel the ecb could have missed the curve, or missed its chance. they could go the other way with trade. right now, the u.s. is focused on china. there's been shots across the bow for europe. what is the trade picture look like for 2019? guest: surprising things happen on trade, don't they? i wouldn't be surprised about the possibility the auto tariffs in europe. that would have a big effect on germany. i think one thing with possible upside is, say china does a big stimulus, double-shift away from consumption back to europe.
there is -- it's not all doom and gloom. we have trade wars between china and the u.s., something good for germany in the end. matt: right, because the problem with chinese tariffs on autos or vice versa is a lot of german carmakers push their product through the u.s. there are still companies that export correctly from europe to china, obviously, and companies that work in china, as well. it will be interesting to see. thanks for your time. merry christmas to you. jamie is our chief european economist. kit will be joining me on daybreak europe, live on london dab digital in just about 20 minutes time. you can catch that by typing radio on your bloomberg. let's take a look at mid-cap movers. dani: one of the few stocks trading higher today is micro focus, up nearly 2%, after they announced a been purchased
shares as part of their 400 million euro buyback. people like that just because they announce it, doesn't mean it will execute it. the other two stocks i have, these are both negative tax stories. playtex, the first one done here, 5%, more than 5% rather. this is after news the italian budget that was passed the other day is going to include taxes on online gambling company. playtex said their earnings are going to take a hit from those new taxes by about 20-25,000,000 euros. another tech story here, the french insurance company. they say french authorities are reassessing their taxes over their subsidiaries and putting a larger charge on them. the company says they are contesting that charge, which is 69.8 million euros. matt: thanks very much.
into the trading day and equity indexes that are open are down on this christmas eve morning. companies have been traditionally held accountable for one bottom line, the profit of the company. but a growing number of investors want to add more measures to that, the social and environmental impact of the business. how prevalent is this lease-based investing? mark carmine says -- mark carney says the number is growing. was $25 trillion in assets under management falling for this. the passports comes out of -- the task force says this is how we should do this disclosure. now it's $100 trillion, more than global gdp looking for three quarters of the systemic banks. the major sovereign wealth funds, pension funds, looking for the type of information. now what i think happens is the
private sector does what it does best. companies are starting to disclose. provider throw away stuff that's not useful. they focus on what is useful. then you get that cycle of better disclosure, better capital allocation, and real progress. >> what are the frictions you're feeling people don't want to disclose? think the best companies across a range of industries and geographies, look, part of what came out today is the survey of the top companies around the world. and you see that all of those companies, the vast majority, are disclosing some aspects of climate related risks in their may reports. they're moving. this is a process by learning by doing. trillion going00 to run in order to make capital allocation decisions? i think the key thing we're
seeing now on top of static disclosure, was my carbon footprint, if you will? you're getting boards in management more involved, thinking how it affects strategy. if i can use an awkward term, strategic resilience. how resilient are you to changing climate policies? >> how difficult is it to measure data when it comes to air pollution, water? >> i think actually what is relatively straightforward to measure is the static carbon footprint. what is your carbon footprint in the so-called scope one in terms of your production? if you have a plant, what's the footprint of that? is easy to then go and say my energy use, was the carbon footprint of that? the thing that stuff is to look at the supply chain downstream, to look at the product after its started, and the components that come in. you moved to the first bit, that
tells you an awful lot. the more the market is disclosing, you can fit upstream and downstream because it got the information. matt: that was bank of england governor mark carney speaking to bloomberg's francine lacqua. don't forget, bloomberg terminal users can and iraq with the charts that they see here on bloomberg television. just type gtv on your terminal. you can browse the recent charts we brought up, catch up on key analysis, and save the charge for future reference -- charts for future reference. this is bloomberg. ♪
>> it's unlikely powell would get fired. that would be unprecedented. nothing is off the table with trump. but it would be unprecedented. it would have severely negative implications because one would always question the independence of the fed. >> starting when the democrats take over the house, we have a glimpse of what that relationship will be like. they didn't want to look at him in the eye in the oval office. so, it's going to get uglier from now on. >> that leads us into uncharted territory. i would think on a fundamental basis, markets are looking at good value. on a political risk basis, don't know yet. >> we've got risk permeating at
every corner of the globe and that doesn't play out well. this malaise in washington at to the negativity. markets are about perception versus reality. it'sption is so negative, hard to shift investor sentiment into positive bias. >> there's a disconnect between the market and the fed and that has been the warring point. not much to do with president trump and steve mnuchin calling the banks asking if everything is ok. obviously not everything is ok. matt: those were just some of our guests today on how uncertainty in the u.s. will affect markets. the number of companies targeted a shareholder activists hit a record high in 2018. some of the more aggressive movers included elliott management launching a proxy fight, and taking stakes in buyer and turnover card. here to discuss the climate in 2018 and what can we expect is with david, bloomberg's senior
european -- ruth david come up bloomberg's's year european reporter. why do we see this rash of activists across europe? that it was some talk carmine came back from talking with president bush, and push for higher prices. but it wasn't just that. it was activist investors not only did they have the most number of campaigns, they also won the most number of board seats, and they've come so strongly into europe. you spoke about her know, which is this this classic old europe company. they're pushing for change. who knows whether they will succeed? they are coming in their. who can forget telecom italia, one of the most public campaigns that elliott waged? and they won. they got both seats. they got the ceo out. you see in them in so many more
of these. and there's something else interesting. we're hearing about this phenomenon of wolfpack's, were activist funds get together and try to push for change. we could see more of that next year. matt: the just thing thing is, in the past when this happened, you had a real political push against it. we haven't seen that. we haven't seen politics -- politicians get involved. ruth: seems like politicians are slightly busier this year. matt: they have other things to do. ruth: whether that's germany, u.k., the u.s. but if you look at shareholder registries, is a lot of american investors. they are used to this model. you have the americans coming into europe. you have them succeeding in these pretty public and, you know, well-publicized battles that they are waging against some of the largest companies. if is a small company with a big
investor, it doesn't make a difference. they want to go up to the big names. it's likely they see a lot more of that in 2019. matt: you mentioned carl icahn already well-known, but elliott is not just well-known, but very experienced internationally. it makes sense elliott can leave these wolfpack crews around europe. are european companies may be more vulnerable? are they not ready for this? ruth: they are spending more time shoring up defenses. they are spending more time -- we often speak to ceo's that say, we are the activists, so we don't need activists. they're working on their messaging that way. today, we had a story on telefonica. telefonica is the second most indebted companies among the tele-companies in europe. there was a rumor, do they do something at telefonica?
they denied it. the company, the ceo, the management are so aware of this. not only that, not only the will ask, you're seeing investors get together and talk to the activists and say they're not listening to us. can you push for change? matt: just looking at the stock here. as far as what's happened here today, it's come back considerably in the past few months, but still down about 10%. very interesting pick there, and it will be interesting to see what activist investors do. thanks for all of your help this year. ruth david from our deal steam. if you're a terminal subscriber, you can check out the news and the biggest m&a firms, league tables and everything on m&a go, one of the oldest and most popular functions on the bloomberg terminal. let's check in on the stock markets as we get to the end of