Skip to main content

tv   Bloomberg Markets European Open  Bloomberg  February 8, 2019 2:30am-4:00am EST

2:30 am
anna: good morning. i'm anna edwards alongside matt miller in berlin. matt: today the markets say, what happened to the new year rally? stocks across asia stop -- slumped as trade tensions sour the move. he was futures also point down. the cast -- u.s. futures also point down. the cash trade is less than 30 minutes away. ♪ anna: back with a whimper, stocks slump as president trump
2:31 am
says a meeting with his chinese unlikely.t is europe also looks set for losses. theresa may leaves dublin -- brussels with little to show. can dinner with layover akzo harold a brexit rate through? and nearly $4 billion write-down on his luxury gale are unit. good morning. matt: good morning. we are less than a half-hour away from the start of trading. first off, with what's going on in treasuries, as you can see, the yield has come down. this is a three-day look. investors are buying the paper to be safe, pushing down yields to less than 2.65% right now. also take a look at what's going on in futures. we see red arrows across the board. futures are trading further and further down throughout the morning.
2:32 am
we now have dax futures off down .02%.futures you may see a mixed trade at the open. what are you seeing in gmm? anna: weakness in asia. that's essentially the trade we're seeing. interesting moves and currency markets. the pictures in equity markets, negative because trump won't meet xi within the time scale. there in mind, usb -- bear in mind, u.s. futures point weaker. let's look at foreign exchange markets. the weakest currency in the asian market down .7%. politics loom large, elections in march. south african rand, we heard from the president with regards to energy businesses. the australian dollar being here. what we heard from the rba,
2:33 am
reducing estimates for growth and similar. let's look at the other side of the gmm. you see the appetite for government debt. i want to draw your attention on the new zealand fixed income market, new zealand yields heading a record low. talking about how far they have spread. hong kong back in business, losing appetite for hong kong debt. iron or consider use -- iron ore continues to surge. matt: asian stocks down, especially in japan, on concerns u.s. and china won't reach a trade deal before the next round of tariffs is set to kick in. the aussie dollar is sinking after the central bank. and the volley crisis intensifies, sending iron ore futures to the highest level since 2014. let's get into markets right now with mark cudmore, our bloomberg
2:34 am
mliv strategist in singapore. interesting we didn't see, across asia, the same kind of drop. in fact, if this is really due to trade tensions, i wonder why hong kong equities were little changed as japan was down 2%. mark: i think there's been new wants to the interpretation on the comments trump made about the delay in trade talks. people started to realize this means most likely it will be a prolonging of the deadline rather than the worst-case outcome. that prolongs uncertainty. it's not necessarily good news. it's a marginal negative, but it's not drastic. there's a chance this interpretation can take another shift. we might get more clarity, exactly what the situation is out of the u.s. certain people are arguing it shows how wide the gulf is between china and the u.s., and shows it will be unlikely there
2:35 am
will be a trade deal. event interpretation takes hold, there might be another slump. hong kong was catching up after several days holidays. the u.s. dropped back out to those gains. it wasn't like hong kong had so much to get back to play catch-up. anna: i was checking that out, where it closed up on friday. let me ask you about the australian story. rbaeems we talked about the and stick to the dovish side. once again, we see reason to do that. the growth story ways on australian assets. these cut the forecasts we've seen from the rba. mark: cut the forecasts from the rba was shocking. the most shocking part was how bizarrely high the forecasts were in the first place, 3.25% for the year ending totals in 2019, which is bizarrely high. the consensus was 3%. 2019 was
2:36 am
the fact they had forecasts of 3.25% was bizarre. they had cuts, which seems bizarrely negative suddenly, but it needs to be in context. the large slashing because they were topped out in the first place. there have been a few bits out of negative news in the rba. it has hit the aussie badly. that's one currency i got wrong. i thought the aussie was starting to build a base. it is starting to be very negative. that ways into the iron ore story. aussie is trading so badly, given the timely export is many ways , is saying the currency market doesn't believe the move higher is going to sustain. it means it's a temporary issue and in the weeks ahead, iron or will come back higher. it's unlikely this divergence is sustainable. matt: mark, i want to get to you on the mliv question of the day, which is, one will bund yields
2:37 am
drop below japanese yields? and by the way, is a chart there, but hillary put together a better chart, the actual spread between bunds and a japanese generic government ten-year debt. here we can see it's about 13 basis points because japanese yields are negative and bunds are yielding a big, fat, juicy 10 basis points. what kind of responses are you getting? mark: well, i think someone pointed out that the europe situation is bad at the moment, but not 20 years of stagnation. extraordinary qe in japan is more expensive than the ecb pursued. japan is showing no sign of getting near that target. plus, shrugging population makes it less likely they will get wage pressures. i think generally, investors believe on yields may not cross
2:38 am
below. i think we will see them cross in the next month or so. but it won't sustain below. i understand the arguments why it is not sustainable below, but there is a deterioration we've seen in data, really incredibly shocking. i think the negative growth outlook for europe is not fully priced in, including the bund yields. anna: thanks so much, mark cudmore, bloomberg's mliv strategist. remember, you can join the debates. get involved in our question of the day. one will bund yields drop below japan? you want to get your thoughts to the team, use the ib+tv function on the bloomberg. you can speak to the tv team. let's get bloomberg first word news. annabelle journalist has that in hong kong. annabelle? annabelle: thanks, anna.
2:39 am
a secret brexit working group has a plan. the financial times have reported a strategy to refine the u.k. economy in the case of a no deal. meanwhile, the prime minister leaves brussels without a deal and heads to dublin as she races to get changes to a brexit deal before time runs out. and president ramaphosa has announced a plan to revise the lagging south african economy. he wants to attract more tourism and step up the fight against corruption. he aims to remove red tape and rise up on the rankings of the ease of doing business index. >> we have set for ourselves the target of being among the top 50 growth performers within the next three years. and we are going to get there. annabelle: one of the highest profile members of the tylan family has announced to run for prime minister. it's a significant shakeup before the election.
2:40 am
the -- she isr of the sister of the current monarch. she relinquished her royal title in 1972, when she married american peter jensen. and amazon boss jeff bezos is accusing the national enquirer of extortion and blackmail. the tabloid published an expose on his alleged relationship with tv personality lauren sanchez. he hired investigators to find out if it was politically motivated. he now says they threaten to publish revealing photos if he doesn't stop the program. -- the probe. venezuela's embassy supports nicolas maduro. mexico, argentina, and brazil appear to temporarily switch sides. each published a statement online in support for opposition leader juan guaido. but they now say their sites were hacked. 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. this is bloomberg. anna, matt?
2:41 am
much,thanks very annabelle in hong kong with the first word news. up next, president trump says he won't meet president xi before more tariffs on chinese goods are set to kick in. can they avoid an escalation of the trade war? we'll have that conversation next on bloomberg tv. remember, bloomberg radio is live on your mobile device or on db -- dab digital radio in the london area. you can see markus karlsson with hannah george hard at work. tune in by typing radio . this is bloomberg. ♪
2:42 am
2:43 am
2:44 am
anna: welcome back to bloomberg markets, the european open. 16 minutes until the start of the cash equity trading stay. a lot of this -- trading day. a lot of this has to do with trade and what we might or might not see from the leaders of the world's two biggest economies. donald trump says he won't meet xi jinping before the deadline to avoid higher tariffs on chinese goods. the president previously said he plans to meet his counterpart in late february. joining us from hong kong is bloomberg's chief asia correspondent. good morning to you. one of the -- what do these latest comments mean? we were saying it's interesting
2:45 am
the hang seng doesn't seem fit to fall further. how much significance to we fromhed to these con -- donald trump? conclusive -- a it's important to hold off until we have a conclusive trade agreement signed. president said he would meet president xi soon. but by all accounts, it's not going to happen this month, which means those tariffs may yet increase on market -- march 1. the talks seem to be making some progress by virtue of the fact they are happening at all. we have another u.s. delegation heading to beijing, but nothing is expected to sign off until we get president xi and trump together, at which point it may signal something of a longer-term truce in the trade war in both economies. matt: so what should we expect
2:46 am
enda from the next talks in beijing? are we looking for maybe an extension? anything in the way of concrete details would be helpful. they will be looking for any signs progress is made. there are more complicated issues around companies that want to protect technology in china. and those that want to operate with joint ventures. there's a shopping list of complaints we know about from the corporate side of things. there will be an expectation that they will be looking for at least signs of making progress. if that's not the case, trade talks perhaps aren't making anticipated progress. it will again put a focus on the march 1 deadline and with or not mr. trump will increase tariffs by march 1, or whether or not we get into some tariffs, whereby the deadline is extended and we
2:47 am
push into a longer-term framework. there's still a lot up in the air and a lot at stake on these negotiations. enda, thank you very much, chief asia equity correspondent. has a lot to do in the next couple of months. let's take a look at what's going on in terms of futures. we've got 13 minutes ago, a little bit less until the start of cash trading across the continent and in the u.k. we had seen cash futures pop up. they had been down. dax futures continue to fall further and further as we had towards the open -- head towards the open. let's get a bloomberg business flash. annabelle? annabelle: thanks, matt. jeffrey gundlach has hit out at general. federico day has no idea what he's doing accept running the bank into the ground.
2:48 am
the bank shares fell to a six-year low. it announced it was shrinking its market business and targeting massive cost cuts. sony has sort after announcing a share buyback worth almost $1 billion. it will run from tuesday until march 22 and be the company's biggest ever. sony last sold shares in 2004, $6 million worth. last week, they cut company forecast. in sevenell the most weeks after giving a lackluster first quarter sales forecast. the giant also recorded tepid user growth, suggesting changes to improve the service haven't yet attracted a wider audience. the cfo says the priority is to create value. >> we're not trying to get people to come to twitter monthly. twitter is a place where newsbreaks, were conversations are happening around sports, politics, entertainment, things
2:49 am
people care about. if you're coming monthly, we're not doing a good job in helping you find value in twitter. annabelle: the british government is set to sell a partial stake in the bank of scotland. there is no news on the timing or size of the sell down. there might be a discount reflecting uncertainty around brexit. they injected almost $60 billion into rbs during the financial crisis. they reported a for your revenue above estimates -- for your revenue above estimates. companyish construction also unexpectedly cut dividends to six swedish krona per share, saying it wants to continue to grow, the remains financially strong. that's your bloomberg business flash. matt, anna? anna: thanks so much. minutes away from the start of equity trading. up next, we take a look at the
2:50 am
stocks we're watching. outbreak of flu. -- thed have further longer this particular shutdown lasts. this is bloomberg. ♪
2:51 am
2:52 am
2:53 am
matt: we are just about seven minutes and change away from the start of stock trading. let's look at the issues you need to be paying attention to. jan-patrick barnert is looking at deutsche bank. paul jarvis covering the u.k. bookmakers, and dani burger on l'oreal. jp, what's the latest on the merger pressures? jp: we couldn't possibly and the week without a story on the merger saga. the latest we got was from a german weekly. they are reporting the german government wants to have a preliminary position in may before the eu elections. this also tells the weekly they are considering an asset wind down at the g4 banks that might include state aid and attract eu competition authorities. 1% and i'mstock up
2:54 am
pretty sure there will be more mergers coming up in the next couple of weeks. about what'salk going on with of the u.k. bookmakers. i know this story excites you. let's get the latest. we saw bookmakers fall on this yesterday. paul: that's right. yesterday morning, we had surprise news that it had been canceled for one day because of an outbreak of equine flu. bookmaker shares fell as a result of that. later in the day, as markets were closing, the bha announced that cancellation would be extended until next wednesday at the earliest, or wouldn't resume until next wednesday, which of course means further loss meetings. i believe that's 23. from a stock market perspective, we're looking at holdings, william hill, all those shares
2:55 am
fell 2.5% plus yesterday. following the announcement of yesterday, we can expect them to fall further today. the main thing is, how long will this continue? they said wednesday would be the earliest. if they come out monday and say there's a further delay, then this could be a big problem indeed for the industry. matt: yes, well and great britain. i hope you get your betting on horseracing back online as soon as possible. dani burger on l'oreal, what's the story? dani: another beat from a luxury goods producer thanks to china. shares surging past estimates. the story is sales in china. their luxury products, skincare, perfume, all of that selling very well in china. you can see double-digit growth for their sectors. also, online growth driving a lot of this. the concerns today that we've seen may weigh on the overall markets.
2:56 am
it's still positive. anna: thanks to all of you. thanks for joining us for the stocks we're watching. first go is the function to use on the bloomberg. the big picture is on trade selling in asia. this is bloomberg. ♪
2:57 am
2:58 am
2:59 am
anna: a minute from the open of cash equities trading. this is how the markets look friday morning. the euro against the dollar. we have the french data out. not too much to see. so that beat a little bit. global growth the story. risk off over in asia and all that take the edge off oil prices. with risk off in asia: is the picture of the nikkei. that's mature hang seng. saw at the start of the week, as a result we see the trade picture plane out intriguing fashion for those asian equity sessions.
3:00 am
the pound is fairly flat against the u.s. dollar as theresa may makes her way from brussels to dublin. to see what can be achieved in regards to brexit. we are expecting to go little bit weaker. u.s. futures have been weak through the evening session in asia. that's important. the markets open up this morning. green on the screen that will see if that last. we are expecting to see modest losses. we did factor in some of the weakness around trade yesterday. see thoseg to pointing down once again suggesting is about the -- another day of selling to do with that trade story that could be ahead of us. across.icture than the ibex down by 0.3%. the cac down by 0.1%. let's have a look at sectors. not quite the same earnings. the earnings story has been very
3:01 am
pastof a we talked on the two days we do not have that going on today. we have financials in red. german space for banks. no day goes by that we don't see talk about germany. energy stocks moving lower. inery good run for energy regards to the earnings season. staples gain a bit this morning. a mixed picture, health care in the red. mixed picture for sectors. how about the individual stocks? i had the same feeling in terms of the orient -- earnings flow. we don't have the same impact as so i change my move screen from looking at percentage changes in companies to looking at the effect that these traits are having on the stoxx 600. to look at the index points instead. as far as gainers, there are
3:02 am
fewer. almost 200 are up, 400 are down. the most points to the stoxx 600. unilever up there as well as nestle. some defensive stocks. adding points as well. kind of a defensive day, consumer staples are the only gaining industry group on the stoxx 600 this morning. a look at the losers, you cbp, shell, total all among the biggest point deductions on the stoxx 600 as energy and tech are the biggest losing groups on the stoxx 600. names, you seeh asml and sap. tech and oil hurting. weighing on the stoxx 600. the defensive stocks are those
3:03 am
that are keeping the index of from a bigger loss. we are to see the stoxx 600 down about half a point. anna: autos and parts is the biggest falling sector write-down. almost 1%. we saw profit warning from leone and their shares falling 60%. we saw profit warning from them earlier. that's a sector to focus on once again. us talk about the big picture for european markets. open lower, as president trump says he is unlikely to meet his chinese counterpart before march the first tariffs are set to more than double onto an billion dollars of chinese goods. joining us now is sandra crowl from carminac gestion. let's talk about the global trade story. weekehest await the next
3:04 am
for real news stories around trade but the comments from president trump called the markets offguard a little bit. in a gloom about trade this morning. isdra: the march deadline coming very quickly in this is typical of the roller coaster of headlines that markets have been reacting against. we can't lose hope given we have a high-level trade meeting and that is coming up. no doubt some pretty firm decisions. we believe they will be made in the next few weeks. tariffs will be removed -- we don't anticipate tariffs moved completely. that would be too helpful. onking decisions intellectual property, on some of the really thorny issues that have been the real crocks of these trade talks. -- matt: do you think will
3:05 am
get before march 1 some kind of extension to the deadline that would force tariffs higher? sandra: he had an extension. with the first of may, march, sorry. anticipate there would be some type of agreement on some of the important points. such that will continue to look environment better as far as the trade is concerned. it's hard to say that now. it's hard to be sure about this. point guard is seen the chinese government put quite a deal of measures in place. on the consumer side, not so much on the investment side. it's not going to affect the rest of the world but we feel
3:06 am
with the important congress meeting coming up soon, china really is in need to negotiate with the u.s.. think need given we growth will be five anna: percent in china today. a measure -- 5% in china today. anna: uncertainty on the rise in this particular chart. it does suggest we are seeing a point.p at this i heard somebody say the longer the tensions last between the -- china in the u.s., the better mexico does. where do you think the hyzaar from this particular point of tension? fewra: the rest -- the last quarters we have been investing in sectors that give us good visible earnings that are not seeking into the economic cycle. in tech, some financials,
3:07 am
insurance. also, in some of the stock exchanges, doing very well. a very good defensive play. also, if medication services, health care. is constructed the most positive part of our portfolio away from an company that is very close to the chinese trade environment. away from automobiles, for example. matt: we are looking at an earnings picture that shows 149 companies have reported out of 452. so far, we'd beat the street by about 8.5% on the bottom line but the top line is missing. how do you judge the european earnings season so far?
3:08 am
sandra: i suppose it depends which sector. banksy, financials and most particularly have really missed in regards to their ability to create future revenue sources. some of them are still weighed down by their strong large component of nonperforming loans on their books. with the pretty sluggish growth playingent, it's really on the more cyclically oriented companies. we've had all these idiosyncratic risks or so. ago these four companies like basf who haven't been able to transport some of their raw materials. there's been a bunch of idiosyncratic issues in europe that is really played negatively along with the cyclical slump.
3:09 am
clearly comes from the back of the exports coming out of china. i find myself when do these specific ricks that's risks at up to a headwind. thank you, sandra crowl. up next we will bring you the stocks on the move. methods, -- including hermes, sales seeming slowdown. china's this is bloomberg. ♪
3:10 am
3:11 am
3:12 am
matt: welcome back to bloomberg markets. this is the european union -- open. 12 minutes into the trading day we do actually have some green arrows. cac, and the ftse mid are up all fracture early. the dax is off but only 0.1%. in terms of individual stocks stories, let's go to dani burger with some of those movers area did -- movers. >> hermes is one of the biggest gainers on the stoxx 600 up 1.5%. in line with analysts but the real story here is china. china sales still coming in strong. growth slowdown story
3:13 am
not yet hitting french deluxe producers. on track for a biggest gain since 2008. let's open the company here, black friday sales helping its they backs of the competition from online. they are doing well there. finally fsa the downside today. lower by 1.7%. earnings came in just fine but the issue is the standstill. it's their capacity markets and they can't receive income for that unit into the and of the financial year. anna? matt? anna: bastad on the politics and brexit. theresa may travels to dublin today for an attempt to solve the breakfast -- brexit deadlock.
3:14 am
tense meetings in brussels, may and eu officials agree to further talks by the end of the month but you has insisted it doesn't want to reconsider the irish backstop. for more, maria tadeo joins us. the prime minister didn't get the concession she wanted. but did she get anything out of this? she didn't get the concessions, she did get the legally binding beverage she needs it wasn't a complete failure. especially if you take into account everything that went down everything -- the day prior. there was a suppression of the prime minister was almost walk into a trap. that was not the case. -- did didn't agree agree to reengage with for the uk's good news. the you had said as far as they were concerned the negotiation was done but now they are back
3:15 am
in the negotiation. we don't see much progress because the eu says we can't change the backstop we can't put a time limit on it. the primus or is nothing new to offer. -- prime minister has nothing new to offer. matt: the comment isn't that brexiteers should go to hell but there's a special place in hell for those who backed brexit without a plan. right? without a plan. great they said the devil would let the men. a bit of banter which normally british people appreciate but in this case they seem terribly upset by it. about it.lake he let's get back to the prime minister. she is in dublin today. can she bridge the backstop gap there? leo he and leo rat car --
3:16 am
radcar come up with an agreement? inthe irish government brussels feel very secure. they think the eu has its back in the irish said at the start of the week that the european parliament would not clarify it would not ratify the deal without a backstop. is a poll today that the majority of irish people do want to have that backstop. so he really does have them into the way. does feelargue if he comfortable with changes to the backstop in the eu will probably run along with it because of the end of the day, both sides want to get a deal. if i could say very quickly, you are very right. said thele in brussels comment was inappropriate that he did step ahead of the line. and prime minister may is under so much pressure, no need for any of that and she is very
3:17 am
respectful to the eu and it was uncalled for. saw it coming, didn't he. thank you for a much maria. the latest on the tense negotiations in brussels. the action moves to dublin. is still with us. but step away from the politics. i want to talk to you about gilt markets. appetite forthe say markets are increasingly increasing in a no deal. beena: certainly it has the case in these last few weeks that we see not only the gilt market but also the german bond market price and more political risk with brexit. also, the much lower level of growth that they aren't dissipating this first quarter and perhaps it is the second quarter, particularly in a no deal heart break situation that
3:18 am
will really exacerbate the growth scenario as we are seeing. the revision down to 1.2. the curve's religious reflecting all of these aspects. of course, we still searching for yield. we still have the reserve managers, the institutional investors that need to hold u.k. assets. fromare in fact shine away the equities and are needing to buy because it clearly is a safe haven in reflection of whether you are buying equities or fixed income. matt: i'm looking at the pound and of gone back to the brexit vote. right now we are looking at 12940 which is far off the lows.
3:19 am
the high of 144. do you think this make sense? the pound of the dollar 30? in light of the fact that we could see a hard brexit? it makes sense today because the low valuation of the pound come historically, really brought in some bargain hunters. it was really quite a devaluation. we are not short of a recession, that's clear, but we still have some problems in the u.k.. we clearly have strong businesses that they are on hold. your sterling acids today, to be selling pounds, it's probably fraught with a little bit of risk. because we are so close to potential decisions. it's a little bit hard, to be sure but that's not without same we could still see some pound weakness as we go to these negotiations. particularly against the u.s.
3:20 am
dollar. not so much against the euro because any negative result out of brexit, harder and are deal, will affect the euro as well. we will see that fall through until weaker euro. anna: is there any appetite for u.s. stocks then? mark carney talks about how the fog of brexit is hanging over the u.k. economy, delay investment decisions. in the bank of the ones assessment is that even with a deal, the growth is going to be the lowest in the decade. quite phenomenal, isn't it. in that atmosphere, any reason --invest their it sandra: invest. sandra: we have been staying away from domestic stocks in the u.k.. we only are invested in european portfolios in the u.k. in companies that are showing this growth.
3:21 am
we are investing in some e-commerce sales. those the ones that are getting the revenues coming outside of the u.k.. they are global first. that's where we have been invested. ,f i take the global portfolio we are staying away from the u.k. completely. will stayra crowl with us. a lot more to talk about. more than brexit today. the sectors moving in the stoxx 600. across the continent, as well as in the u.k., anna told us automakers and auto-parts makers the biggest losers. you can see down on the day. also construction materials, banks, and oil and gas are following. household goods rising as well as real estate in food and beverage. the defenses sectors are gaining in pretty much everybody else is
3:22 am
falling right now. up next, state of the nation. south africa's president announces plans to revive the country's flagging economy. opportunities in emerging markets. this is bloomberg.
3:23 am
3:24 am
3:25 am
matt: welcome back. this is the european open. right now about 24 minutes into the trading day. not a lot of action in terms of size moves on the index. a ton of individual stocks stories but you can see the ftse, cac, the ftse med, and the dax are met -- are barely changed. there's so much talk about in terms of individual stocks. marketsf emerging central-bank decisions also saw a hold of halls. one unexpected rate cut from india and a string of downbeat commentary about the global economy. the next rate decision comes from russia today. it's also widely expected to be a hold. emerging-market currencies are on the longest slide since july but the rand's paring losses after south africa's president unveiled plans to revive his flagging economy. sandra crowl still with us.
3:26 am
what you think about him right the federalring reserve? than inmore positively october of last year. now somee do have relief that we are at the end, close to the end of the interest rate hiking cycle in the u.s.. that will give a breather to some of the central banks in emerging markets. toy would need to continue raise rates into what is a slowing growing environment for them. of course, if we look at any emerging markets, you'll be highly sensitive to global trade. with a tariff issues, the trade wars, the and priests -- increased protectionism, this is not good news for a majority of emerging markets. we have to be very selective here. increasing,nitely trying to look for opportunities
3:27 am
to move back into emerging-market equities. not only equities. also bonds. anna: think you very much. with us.owl stays as france recalls its ambassador to italy, we talk about tension between eu countries. this is bloomberg. ♪
3:28 am
3:29 am
3:30 am
matt: 30 minutes into the trading day, let's get your headlines off the bloomberg terminal. back with a whimper. stocks labor -- we were in europe as president trump that's a meeting this month with his chinese counterpart is unlikely. the u.s. futures trade goes lower. theresa may leads brussels with a little to show, except a new deadline for further talks. can dinner with leo varadkar held a brexit breakthrough? and jaguar meets the bears. the company slumps, the most in 26 years after a nearly $4 billion write-down on its luxury jlr unit. we are live in mumbai.
3:31 am
welcome to bloomberg markets, this is the european open. i'm matt miller in berlin, alongside anna edwards in london. anna: 30 minutes into the trading day, autos and auto parts story, we talked a little bit, it is on the downside. a scandinavian flavor going to the upside. they beat estimates. businesses bounce back continues after wirecard. by 1.5%. they had numbers out today confirming that the luxury company in paris. let's move to the downside and look at the movers lower. movingsome of those lower, down by 2.5%. this is for the companies that supply the auto sector, the warning keeping that story on the front pages from a business perspective. rockwell is a danish building materials business.
3:32 am
they missed estimates, that stock is weaker. down by 7.7% on the back of their dividends policy. that seems to have captured the market's imagination. the big concern is around trade. we also have passenger numbers out with that particular airline. news get a first word update. annabelle has that for us. president trump says he won't meet his chinese counterpart ahead of the deadline for the new u.s. tariffs. this intensifies assumptions but they will not set a deal -- that they will set a deal. the white house is expected to equipmente telecoms from using u.s. wireless networks. politico reports trump will release the executive order before the mobile congress. this comes as the u.s. warns its allies that any country using huawei or other chinese technology could face u.s.
3:33 am
countermeasures. a secret brexit working group has a plan. the financial times reports the group is putting together a strategy to revive the u.k. economy in the case of no deal. meanwhile, the prime minister leaves brussels without an agreement and heads to dublin, as she races to get changes to the brexit deal before time runs out. one of the highest profile members of thailand's royal family has announced her intention to run for the office of prime minister. it is a significant shift before the election. she is the sister of the current monarch and eldest child of the former king. she relinquished her title in 1972 when she married an american. amazon bus jeff bezos is accusing the national enquirer of extortion and blackmail. they published a next was a on his alleges relationship with -- they published an expose on his relationship with a journalist.
3:34 am
he says the inquirer has start to publish photos if you does not stop the broke -- the probe. global news 24 hours a day on air and tictoc on twitter, and powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. annabelle drillers -- and about with your first word news. france has recalled its ambassador fighting middling in its affairs. it was a surprise move that drives relations between the eu allies to a more than seven decade low. johnng us from rome is plane. am i exaggerating when i say seven decade low? that seems like an awfully long time. the last time was in 1940. that was the last time he was recalled from rome, and that was wartime. this is a new low in relations between the two. the relationships between france
3:35 am
and italy paying the price of the ongoing permanent election campaign, which the populist leaders in rome are fighting. they are taking potshots at the european establishment, and that means also president macron. from an italian perspective, why is rome in the populist government happy to target france in the comments they are making? john: because the two deputy premiers are allies in the coalition, but they are rivals ahead of the european parliament elections due in may. we have local regional elections happening this sunday. they are both trying to become champions of italian populism against establishment, against the eurocrats. they are banging against france on a scale of its used, from migration.
3:36 am
they are divided on whether to go ahead with an alpine link. they are against german dominance in the eu. plenty of dossiers on which to attack france. matt: how does this affect the european union? they are supposed to get along and agree on taxation and monetary policy, yet if one country pulls i am ambassador from another, that is a really bad signal -- pulls an ambassador from another, that is a really bad signal. john: i think everything will be on hold and this battle will keep going, at least until the may european parliament hich both, w leaders say they will be for in that. the elections, if they give a strong performance for the populist nationalist parties, they count on shaping the executive on the commission later in the year. that is when they will bring
3:37 am
their agenda for changing the european union to brussels. anna: thank you very much. commission has its forecast for the euro region's major economies. it also wants a brexit and slowdown in china and threatens to make the outlook worse. let's talk about the economic picture for europe. to drew our attention exports from germany to china, the weakness in those numbers, and what that tells us about germany's exposure to the trade tension. if you were to point your finger at one of the things that is weighing on the eurozone economy right now, would it trade tensions? brexit? a lack of reform? sandra: definitely trade, and definitely the fact that china has pulled back from its external demands. the fact that they are moving toward much more local production, this is particularly
3:38 am
the case with the automobile, where they are moving toward electric vehicles in this next decade. behind really leaving some of the european constructors who perhaps will not be able to move as quickly, and will definitely have to have a deal of new financing into the electrical vehicles. key negativet the for europe today is definitely on trade. the economy is an open region, and that is affecting germany significantly. matt: i want to put the mliv question of the day to you. we were talking about it earlier. hillary put together a great chart for this, qotd as well. when will bund yields drop below japan's? they are at about 11 basis points. japanese 10 year yields are negative. this is a spread going back to
3:39 am
2014. we can see it drops in 2015 and 2016 until it is inverted. do you expect that to happen again? sandra: it can actually happen again mainly off the back of forces.ces -- two one is inflation is going nowhere in europe and we can see further compression, and further need to purchase german assets and other fixed income assets inside of the portfolio. we second obvious reason why would see that germany has gone into negative is it we are indeed in a hard brexit or a no deal situation. create thiseally rush to say -- to safe havens. but we are close to a japanization of europe with a continuing visibility of low
3:40 am
information -- of low inflation. anna: i read in your notes that you expect a better second half for 2019. why so? sandra: because of the idiosyncratic issues of the german car production. it is perhaps not back to his usual rhythm, but it is not as it was last september. we also can see some of the growth of fact of the fiscal stimulus in china feedthrough to a better second half cyclically, and that will help europe. and we may have some of these political -- we do have some of these political issues out of the way. vestsample, the yellow protests in france. some resolution on budget trade control -- budgetry control in italy. now that we have low growth, we
3:41 am
can blowout our budget in italy by about $6 million. -- by $6 billion. always good to hear that german car production may bounce back, that car sales may bounce back. that would be a great sign for the economy. not only this country, but globally. sandra, thank you for joining us. sandra crowl is a senior executive at carmignac gestion. she will continue with us on the form -- in the form of radio. she will be live on london dab digital to carry on the conversation. from the bank of england to brazil, more of the world's central banks veered dovish. the shift has all but erased quantitative tightening fears. instead, money managers are wading into the fringes of the fixed income market. we bring in dani burger. have had a lot
3:42 am
of traders hoping for dovish central banks. we have gotten it, especially this week, and we are living with the aftermath. one of those is a world awash in negative yielding debt. you can see how this has taken off, and we have australia, india joining in on that. it erases this quantitative easing trade we saw in 2018 with lower levels of negative yielding debt. $9, it stands at nearly billion, the same level it was at in 2019. we see the bond sales still going strong. the other change we are seeing that is an accelerant from what we saw earlier in 2018, it is junk. junk stampedes here. dovish signal banks reinvigorating investors, thinking they might prolong this business cycle. u.s. junk is at its highest level on record. this yellow bar is the average
3:43 am
line. we are five of -- we are far above that. the biggest game in seven years. -- the biggest gain in seven years. what will win out? a goldilocksin period, or are the economic concerns we have been hearing about going to change this picture? anna: thanks very much. dani burger with the analysis. up next, we will bring you some of the stock movers, including a swedish construction company trading down this morning after they unexpectedly cut its dividends. more on that in a minute. this is bloomberg. ♪ ♪
3:44 am
3:45 am
3:46 am
good morning. welcome back to the european open. 26 minutes into the trading day, and what a difference 45 minutes makes because we ended up in negative territory. now the stocks are fairly flat. we see modest gains coming through in london and paris, and also in italy. let's get to another stock that is the focus for us, and certainly on the move in the indian session. a motors company has posted its biggest drop in a four years after the company wrote down its jaguar, land rover unit. its large exposure to risk -- to brexit risks through. joining us from mumbai where we
3:47 am
are watching the indian trading day is our guest. what led to these huge losses in china -- what led to these huge losses? china, brexit? guest: this is a shocker for the indian markets. this is the biggest record loss in the indian economy in history. this is an impairment, which owes to the market in china. , the increasing cost of debt. these are reasons they are fighting. and also china's markets is slowing down. a disorderlyns, brexit is also causing concern for tata motors, the parent company of a luxury unit. anna: it is injured -- matt: is
3:48 am
interesting because in the u.s. they are still posting record sales numbers. there is so much interest in the jaguar ipace. i think they will have a supercharged v8 in the geneva motor show, a new range rover. ast is the problem for jlr far as products is concerned, and what is the road ahead for the relationship with tata motors? -- p.r.: tata motors, that is the critical product for them, and they are doing well. is chinacal markets and the market are not doing great for them. they have to fix the problem. they are tweaking the strategy in china by improving a push
3:49 am
strategy, which would mean they are encouraging a host of new motors. what management is telling us is this could bring back some kind of demand in chinese market in a few months. they are not giving us a clear iteline for that, but since has been done, they hope they can start from a clean slate. the companies are doing well after the turnaround strategy. they are hoping jlr could also come back in a few months once china his a crucial point. the will have to fix china issue by hook or by crook. anna: it is interesting to see the s&p weighing in, saying the will unlikely affect the credit model. it will the interesting to see what happens from this move. thank you very much for joining
3:50 am
us. let's get our top individual stocks on the move here in europe. dani burger has the run through of some of the stocks. dani: the main equity benchmark may have turned around, but i am still looking at red across the board. starting with skanskaab, down 7.7%. that is its biggest decline since october. the country said they are downgrading the outlook for the swedish residential market. this is a change, because they did see a stable 12 months ahead , but that change in outlook is sending shares lower. also one of the stocks moving to the downside. keep an eye on semiconductors today. two things hitting -- things hitting it. impacting itss competitors. we had the japanese chipmunk -- chipmaking company with
3:51 am
disappointing sales. the urseracing tracks in k closed down for at least another week with an outbreak of equine flu. horses are being kept in, they need to be tested before they are cleared to race again. until this clears up, not sure how william hill will trade as the betters are taking a leg lower in this news. matt: thanks for that. a great look at some of the stocks on the move. we will also get from dani in a moment, a great chart. you can see all the charts we use by using gtv . you can catch up on the analysis and see the winners and the heres in the epic battle on bloomberg television known as the battle of the charts. it is up next. i will one again -- i will once again take on this powerful foe,
3:52 am
dani burger. this is bloomberg. ♪
3:53 am
3:54 am
welcome back to the european open. 54 minutes into a training day that has turned itself around a bit. we are in positive territory for european equity markets. let's get to battle of the charts, and we revisit the showdown, virginia versus ohio. dani burger goes head-to-head with matt miller. dani: virginia in the house.
3:55 am
it is strange i am taking australia, very far away from my home date, but here is the thing. slidee had this massive in australian bonds, bonds in new zealand. you can see how big it is comparing it to u.s. 10 year yields. the u.s. is here in the blue. the gulf between them is headed to the whitest in decades, now wider -- to the widest in a decade, now wider than after the crash. we have the decision moving the bonds lower, and growth scares. interesting developments today, bonds moving a lot, so keep an eye on this. the spread is very interesting. anna: what have you got, matt? to point out, i used to have this virginia versus ohio debate with my former co-anchor brian sullivan because of ohio actually has more presidents than virginia. in fact, more than any other state in the nation.
3:56 am
i think that is an important difference. i have a chart that shows a junk stampede. that payment we are talking about recently -- the pivot we are talking about recently from the central bank has pushed more people to look for return in junk debt. this is the barclays u.s. corporate height yield index -- high yield index. if imax this out, because it only -- if i max this out, it climbs higher and higher. we are now at a new level spurred by jay powell. anna: i think you will find in the rules of that love the chart, any attempt to site that your state has more presidents will be deemed as trying to sway the judge unfairly, and i will have to rule against you. i am going with dani on this one. i like the australian reference, because i have been kept on my toes in regards to the strength or weakness as the australian
3:57 am
economy goes. that is it for the european open. up next is "surveillance." this is bloomberg. ♪ the latest innovation from xfinity
3:58 am
3:59 am
isn't just a store. it's a save more with a new kind of wireless network store. it's a look what your wifi can do now store. a get your questions answered by awesome experts store. it's a now there's one store that connects your life like never before store. the xfinity store is here. and it's simple, easy, awesome.
4:00 am
♪ francine: meeting in doubt. president trump says a summit this month with his chinese counterpart is unlikely. will we see a trade deal? theresa may leaves brussels with no real concessions. canned in yet -- can dinner with the irish prime minister hail a pleasant breakthrough -- brexit breakthrough? the amazon ceo accuses the national inquirer of trying to blackmail him. ♪ welcome to "bloomberg surveillance." i'm francine lacqua here in london. these are your markets.


info Stream Only

Uploaded by TV Archive on