tv Bloomberg Markets European Open Bloomberg February 18, 2019 2:30am-4:00am EST
>> welcome to "bloomberg markets: european open." the trade is less than 30 minutes away. ♪ anna: consensus in principle. stocks in asia balance after beijing and president trump signal a productive end to trade talks so far, but it doesn't look set to continue into european trade. asia on the road ahead. european carmakers are in the
crosshairs as the u.s. is said to double auto imports. leaving on a high. strong growth in the year and seeking a successor to the ceo. good morning, everybody. welcome to "bloomberg markets: european open." this is the picture for european equities. exuberance in the asian session picking up what happened in the united states on friday. it doesn't look like it will translate into exuberance on monday's session here in europe. let's show you where we are. over in the asian equity session, the highest level since october. this really echoes what we saw on friday in the united states where we saw equities doing very nicely, hitting a 10 week high. remember, it is a holiday in the united states today. president's day. keep an eye on volumes.
optimism around trade. it is the gift that keeps on giving. we did get those comments out of the chinese delegation and president trump has been tweeting about things have been developing. we see some mixed response but, in general, we are positive. chinese markets getting a boost because of some of that. didcredit data, how much you want more credit in the chinese economy? the dollar is flat negative this morning. the gmm thisk at morning. let's talk about the broader picture in markets. backed by optimism on trade, stocks in europe are rallying to the highest level since october. the u.s. and china signaling they may reach a deal. let's get more on the markets from our life strategist in singapore. mark, it really is the gift that keeps on giving, the trade
delegation. this time, we have had positive comments from the chinese delegation and, to some extent, from the u.s.. once again, it lifts stocks. how long this continues, we ask. makes sense they have this optimism across asian markets today. talking about the last couple of weeks, there are two big macro uncertainties. that is whether china will work to get growth back on track there, and also how the trade talks will go. this morning, we got positive news on both fronts. a positive comment on trade from both sides. both china and the u.s. administration giving people optimism. we also had that credit data on friday which is implying we are letting some of that impact the economy. it is very hard to kind of judge exactly how much to value this credit data. it is very seasonal.
particularly going into the chinese new year, this is the period when you might expect a big surge. it was an extraordinary search. it does show there was some real lending going on there. this is good news on both fronts, on both trade and the chinese economy. that's why chinese stocks are surging and that is leading a general -- anna: thinking about what we heard on trade from both sides of the delegation, if we do ca togetherment, a coming , then many people will be quick to ask what this means for europe. we are getting some clues as to the u.s. administration's stance toward europe in the shape of what they are saying about autos. if the u.s. designates auto imports a threat to national security, which they could do, will not be a tipping point for the ecb to offer banks new long-term loans.
that banks need more cheap funding. mark: i think it will be a tipping point. i think the ecb may already be over that tipping point. i think there's a good chance that, by march, they will be offering new lending. in many ways, because we have been focused on the u.s.-china trade war, we seem to be underestimating how drastic the slowdown is in europe. obviously, the data there has been terrible over the past several months. the deterioration has taken many by surprise, how strong it has been. if we get a u.s.-china trade deal, there are a couple of things to think about. enough forpensate growth in europe such that global growth starts rising again, or will they sort of balance each other out? a secondary issue, will china
and the u.s. reach a deal and suddenly europe will be the new victim, sort of the one left out. whatever happens this year, europe is likely the weak link. the big issue, will it be the weak link in an ok global aonomy or the weak link in globally deflated economy if they don't reach a deal? anna: you wonder how much oil prices will hurt any kind of stabilization attempt. we saw oil prices higher this morning which is lifting some stocks in your part of the world. the collapse in october until the end of december was extraordinary in oil markets. i think it reacted to the downside. it is important to emphasize that oral it -- that oil is very much a supply market at the moment. overall, the people believe that opec will reduce supply.
it is one of those weird scenarios where if there is a positive demand story, oil rises a little bit. when there is a negative demand story, people say, it just means opec needs to cut further and be more resolute in supply controls. it is one of those weird scenarios where bad demand news is good for oil, good demand news is good for oil. ona: i'm also keeping an eye the pound this morning. we have theresa may going back to brussels, essentially to do more talking. i have a chart here with the options market. months pound-dollar, two risk reversal. it takes into its orbit the period in which the u.k. is set to leave the eu. this shows that sentiment is most elevated since november. looking a little shakier for the pound. mark: absolutely.
theresa may is playing a very high-stakes game of poker. is that this would ultimately work out ok in terms of that there would probably be a long extension of the brexit process or they will be a deal signed, but there will not be a no deal brexit. as we get closer to the date with no resolution, it gets riskier and riskier. until we get to the deadline and until we know what happens next, i think that will be the case. the base case means that sterling will have a large rally in the next month or two when we get an extension or a deal. but there is that sizable tail risk. cudmore, bloomberg strategist, joining us from singapore. team on yourthe bloomberg and tell us what you
think about auto tariffs and any links that has with ecb policy. interesting one for this monday. let's get a bloomberg first word news update with olivia how. olivia: the global tech war is seeing business come under pressure from both the u.s. and china. the question is whether chinese equipment should be banned from a network. >> the united states has also been very clear with our security partners on the threat posed by huawei and other chinese telecom companies, as chinese law requires them to provide beijing's vast security apparatus with any data that touches their network or equipment. we must protect our critical telecom infrastructure. >> people should not and cannot be misled. , isei, as a company cooperating very closely with european countries.
in the fourth industrial revolution, we should all work together. chinese law doesn't require companies to install backdoors or collect intelligence. theresa may is appealing to conservative party colleagues to unite behind her brexit deal. she's preparing to go back to brussels for more talks with eu leaders. gaining headway could depend on whether she can show a united front at home. airbus said a no deal divorce could be "catastrophic." billionaire bill gates says boosting the capital gains is the best way to collect taxes from the wealthy. he said he is increasingly worried about the high budget deficits being run by the u.s.. he said that increasingly marginal tax rate to 70% wouldn't be the answer because there are ways that people could shield the income.
reports that mohammad bin salman wants to buy manchester united. saudi information minister calls the report completely untrue. global news 24 hours away -- when he four hours a day on air and on tictoc on twitter. this is bloomberg. anna: thank you very much. bloomberg, angela merkel pulls the handbrake and tells donald trump that german cars do not compromise u.s. national security. more on that, next. remember, bloomberg radio is live on your device or in the london area. ♪
around trade that boosted the u.s. and asia. that's talk about automakers. european carmakers are in focus today after the u.s. probe is expected to say that car imports pose a risk. this could lead to the u.s. imposing tariffs. german chancellor angela merkel disputed the notion that the cars compromise u.s. national security. >> those cars are built in the united states of america. those cars, which are no less a threat than those built in bavaria. anna: joining us from berlin is bloomberg opinion columnist chris brian. good morning. tariffsld those u.s. mean for the european car industry, an industry that produces in europe and globally and still finds itself in the crosshairs of this?
chris: i thought those comments from angela merkel were strong. normally, she tries always not to make waves and what she said. in this, she singles out the idea that german cars are a threat to u.s. security, pointing out that this is absurd, which i would agree with. ,e don't know what will happen whether trump will impose tariffs. it looks as if the germans think something is on the horizon and they are, of course, worried about it. they don't produce a lot of cars in the united states but a lot of them are imported, and that would hurt them. they are dealing with a lot of challenges right now and they don't need this one on top of everything else. anna: angela merkel looked quite animated compared to how she normally looks in these appearances. will we see car sales in china
continue to decline? this seems to be bad timing for an industry that is already in trouble. we saw week car data and the assumption was that the chinese car authorities would -- the chinese authorities would do something to stimulate demand. chris: right now, it is not happening, and that is clearly a worry for the industry. the figures right now are bad, and it appears to be getting worse. u.s. carmakers have invested a lot of money there. interestingly, not all carmakers have been affected as badly. example,nd rover, for huge decline in sales. ford, very big decline. the chinese economy is very weak at the moment by historic comparisons and, as a result, consumer purchases of cars aren't happening. there is a hope that the chinese
government would do something like they've done in the past, but right now, that hasn't happened. anna: there are other sore points for the industry at the moment. the auto industry facing so many headwinds, not least of which, dieselgate, which kind of pushed the door in that transition to electric vehicles. it required an enormous amount of investment and there were new competitors on that front. chris: that's right. in the past, western carmakers were relying on their cash flows from china to fund all these huge investments they have to make in the coming years, notably in the field of electric vehicles. if that cash doesn't turn up, that creates huge problems. the valuation of the carmakers ,ight now in europe, 5, 6 times the stock market is saying that these carmakers don't have a healthy future. things could change, of course,
if china turns around. so far this a rally year and some of the carmakers. a lot remains to be fought for. hopefully merkel can do something on the tariff front and the chinese government can do something on the tariff -- can do something. thank you very much for joining us, bloomberg opinion columnist kris bryant. let's get the bloomberg business flash. citigroup is said to be in talks to buy a tower in canary wharf. themberg has learned that u.s. bank wants to purchase it. wasskyscraper's owner considering a sale of more than 1.2 billion pounds. nissan's government committee
may recommend a new board structure. appointl recommend they a director. key would still be the point person for partners. sold some 360 million euros of shares, reducing its ownership to 6.3%. hna has long been a controversial shareholder. the former ceo initially refused to meet with its executives. that is your bloomberg business flash. away fromre minutes the start of equity trading here in london. we will take a look at your stocks to watch, next. the german regulator band further shortening of the stock. that and other stocks that could be on the move, next.
wirecard. this morning, the german andlator bafin came out made a prohibition on any new short or existing shorts. withirector justifies this a serious threat that is posed to market trusting germany. it is active immediately and will last through april 18. the regulator also said they are looking further into the shares and checking if there has been any wrongdoing or market in the file should. we sheesh -- we see shares up 7% this morning. anna: it certainly has been a volatile one. let's get to joe. we had an update this morning. four-year outlook is better than expected. the market was expecting about 3%, so that was positive. ,aking a look at the margins
they declined around 40 basis points. that is actually a lot better than the market was expecting. costs are rising and prices are coming down. some analysts were expecting margins to climb around 100 basis points. it looks like a positive report, and there should be some upsides in those shares. anna: danny, let's get to you on the banking sector. we reported earlier that deutsche bank is reducing its stake. also, barclays. >> pressure across the board for some major european banks. hna, once the biggest investor in deutsche bank, now completely exiting their stake. this has been a long-running process. then we have tyler global also pulling out of barclays. 2.5% of shares outstanding. the fact that they are pulling back really is a blow to the ceo and his plans. anna: thank you very much.
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anna: we are a minute from the open of the cash equities market this monday. let's see what we have in store. let's see where the markets are positioned as we head toward the start of the european equity trading day. it is a holiday in the united states so keep an eye on that in terms of volume. oil prices at nearly a three month high. optimism over trade and a talk of some supply cuts. we will see how well those two rub against each other. lending data out of china and the optimism around trade talks with the united states, how much can we really read into the lending data is the question.
the pound is a little bit stronger as we wait for theresa may to head again to brussels. futures looked flat for the start of the trading week. friday was strong in the united states. this morning, very good in the asia sector. perhaps we feel that we don't know what it means for europe quite so much, so european equities looked to be at something of a standstill this morning. a number of interesting stories. certainly the banking sector, the auto sector, both of those in focus. as expected, not far from the flat line this morning. the big picture around trade is certainly an optimistic one if you take at face value the comments we've had from the chinese delegation, talking about agreeing in principle on many fronts. president trump's tweets suggesting that the talks were very productive. sector picturee
and have a look at the imap on the floor in our studio. a divergent picture, really. on a day where the markets are flat, we don't see many clues as to where we are heading. energy a stronger, materials are stronger. financial is some green i can see. so we do see some strength in financials. we have had reports about shareholders selling their stakes. in the financials, round, moving higher. globally, we see equities higher, i suppose. health care is one of the weaker sectors this morning. let's have a look at the movers. individual stocks that are leaving it up and down. one of the biggest gains, as we put in our headlines, they seem to be speaking quite optimistically about what they can achieve for the full year. nestle goesthat higher as well.
-relatede of the oil businesses also moving higher. to the downside, metro is the biggest fall or on the stoxx 600 , the retailer over in germany. this car partsm supplier look to be better than anything that goes into cars at the moment, get -- at the moment, given this report given to president trump about security threats with the auto industry. auto-related businesses, some strength in health care. european markets starting the week fairly flat. that is as the u.s. and china send signals that they may reach a deal to end the trade war. joining us to assess, daniela russell from hsbc. good to have you with us. let's talk about global risk appetite.
we see yet another day where we come into find headlines about global stocks going higher on better news about trade. we've had news from the chinese delegation and president trump. how long do we keep trading higher, do you think, on stocks? >> if we take a step back, we have come at this after a season of downside growth and inflation surprises. we've had a complete capitulation of monetary policy expectations. now we have reached a point where we are kind of running out of bad views. areds of optimism like this kind of a welcome reprieve. it may be the market starting to get ahead of itself and thinking about rate cuts in the u.s., and maybe we do get a little bit of better news, or maybe it is just a ceasing and the bad news we
have seen. anna: the market direction from here, how much do you focus on the trade story and how much is still the fed? set to the fed seemingly hike price this year than, all of a sudden, no, not at all, pausing. not even going from two to one, but stopping. how much does the market have a firm grasp of where the fed goes? >> that is the key question for the next couple of months. we've seen a real disconnect between what is happening in credit markets, which started the year very strongly, reversing a large part of those losses that we saw in the fourth quarter of 2018. markets haven't been selling off. if this was a real kind of risk on rally, we would be expecting bond yields to move higher, but they haven't. the markets are kind of looking to the fed now in terms of the
direction of rates. the market has been very quick to price in rate cuts. anna: why do you think the equity markets have been happy to go with this narrative and bond markets have not necessarily? maybe the fed will pivot again if mobile trade is really going to be a positive driver for equities soon. maybe we get the fed, ok, we paused, now we are back to hiking. >> and optimism that you are going to see more liquidity coming in the market. that has really upheld -- you saw the start of disconnect which has caused credit markets to really have a boost in the early part of this year but bond markets are just not convinced yet. at the moment, the fed is still tightening its balance sheet. it needs to stop that first before we can really start to consider them cutting rates and reversing policy. anna: we are focused on the
balance sheet and fed policy, clearly. we started this conversation talking about better news around global trade. here's something that isn't better, seeing the data. the singaporean economy is about more than just the singaporean economy. this is about global trade flows. we have some weakness coming through. the weakest since 2016. how much damage do you think has the train tension taken off the global growth story at the moment? >> it gets all the headlines but i think taking a step back and looking at the impact of china, it has been going under this deleveraging process. the trade tariffs come at a terrible time, quite frankly. we are seeing the data now kind of reflecting the trade tensions. we've seen the fed started to pivot toward neutral. other central banks we have seen it over the past few weeks with
australia, india cutting rates. we have seen other central banks starting to respond. that is going to be key. the currency in the fx and rates markets going forward. anna: the move to the dovish side, we will see how him long that lasts. thank you very much, daniela russell from hsbc stays with us. up next, we will bring you our stocks on the move so far this morning especially in household goods maker. stock is up by more than 3%. 3.2% higher. this is bloomberg. ♪
welcome back to the european open, 10 minutes into monday's trading day. mixed across european equity markets despite the level of optimism we saw expressed in the equity session in asia. msci asia-pacific up 1.1%. let's get to your top individual stock movers. trading at a four-month high. betterpany has seen growth than some had seen, about 3-4 percent for the full year in like for like sales.
morgan stanley is saying that this is better than many had feared in the market. it also puts them on solid ground as they search for a new ceo. car manufacturers are the worst performing sector. off some of its lows from right at the open, down only now about 0.4%. friday, we had the disappointing european car sales data. today, it was china, sales declining again. a report on auto imports and potential threats. we don't know the results, but perhaps some hesitation for autos when that comes out. wirecard, a big gainer today. banning additional short positions. it kicked off with a report that there were perhaps something in its singapore unit. then, information came out that
short-sellers perhaps knew in advance of this story. whenever that is, new bands could be putting it into the market. anna: wirecard continues to deny any wrongdoing, saying this morning that it welcomes measures to clear up matters quickly. let's talk about the broader european economy. european carmakers are the biggest drag on the 600 this morning. the u.s. probe of auto imports raises the potential of new tariffs. underperforming german manufacturers are particularly at risk. if we see tariffs flat on automakers, i would say there are a lot of stocks to join up there but that is suggesting that these tariffs could weaken the european economy to such an extent that the banks could need more support.
how likely? woulda: the simple answer be yes but the situation is a lot more complicated than that. they watched over the past few months as the data has come in very weak -- the soft data has come in weak and the hard data has confirmed that weakness. italy is back in recession and germany narrowly avoided it. this is another burst of bad news that the markets in the europeans didn't really need. already been very much reflected in valuations. bund yields back down at 10 basis points. we have had comments from ecb members about various stimulus options that they could kind of pursue. i think the first would be the extension may be a soonest in march time. anna: ok, so we look out for comments from ecp board members. talking about how they are at
least discussing this. you mentioned germany avoiding recession, how low do we go on boone yields? i have a chart here that reflects one bank's view, at least. how weak do you think, or how low do you think the yields on the boone get -- on the bund get? daniela: when you have a stream of bad news and more bad news, it is easy to find ways to be negative about the outlook. we are not too far away from negative territory once again. endust slashed our year bund yield forecast. it is really now seen as a given that the ecb is really going to struggle to get any window of opportunity to raise rates. to a large extent, that is how that has been reflected in valuations. atittle bit expensive here 10 basis points and maybe it is
kind of time to wait and see, look at the data, and take a little bit of a breath. what was being suggested over the weekend, that they need to look at the data and there is perhaps some room to reassess into the future. do you think the ecb has missed that window or we just don't know yet? daniela: it looks that way with what we have seen over the recent months. the key point of focus for them, i think, now, is around the lending data and therefore, the focus turns to the -- the question for markets, does that bring you the kind of hunt for yield that we have already started to see signs of? it is interesting that the heavy supply we have had in government bond supply at the start of this year, and also in credit markets, has been very well absorbed. it feels like the ecb once
again, you've got that accommodative monetary policy that has encouraged people to kind of step out and search for yields. anna: thank you very much. let's have a look at the markets. this is the world map, just zooming in on the european side of things to show you where we are on european equity markets. not so bad as perhaps it was suggested we would be. up by 1/8 of 1%. corrupt -- making the best of the gains of the majors. looking at the companies that are lending support to the stoxx 600, one of those spoke to the market this morning, gliding a little bit higher. wirecard also gains on the regulatory news. up next, may heads to the mainland to seek concessions from the eu. tory ministers revolt over the process -- over the prospect of a no deal brexit. this is bloomberg.
to avoid the no deal brexit, reiterating the irish position, the eu position, that there will be no reopening of the withdrawal agreement. also saying that this will be another difficult week in brexit. theresa may is pleading with conservative party colleagues to unite behind her brexit deal as she prepares to return to brussels for yet more talks. the prime minister is dispatching ministers across europe to try to get the eu to make concessions ahead of another parliamentary vote on february 27. danielassell with -- russell with hsbc is still with us. what you think about gilts very much depends if you are looking at things from a u.k. asset perspective ouray global perspective. daniela: absolutely. as things stand, gilts are very much following the no deal playbook. as we get closer to march 29 and a deal has not been agreed and a
no deal has not been taken off the table, gilt yield grinding lower toward 1%, inflation still relatively elevated, so kind of following that path. , we've heardrexit from the bank of england over the last couple of weeks and they have really changed their tune. they have joined the kind of dovish shift we have seen among central banks. no longer do they seem so confident that, even if a deal is done, they think the economy will bounce back strongly. they seem to be very much in wait and see mode. it seems to me that this is asymmetric in terms of new gilts right here. even if a deal is done, maybe it won't selloff quite so much as people were previously expecting because the bank of england is no longer in such an urgent kind of rush.
anna: the bank of england, no doubt, pouring over the headlines as they cross the bloomberg. david merritt is here to talk us through it, news director for the european region here at bloomberg. teresa may heads to brussels again, more talking about this backstop. this conversation over the weekend has once again been dominated by just how much change needs to happen to the backstop in order to satisfy parts of her party. ofthat's right, what parts parliament are saying they need, what europe is potentially offering. we are into this period where it is largely about more diplomatic efforts from the may government to try to get more concessions. today, the foreign secretary traveling around. they want to speak to every leader across the eu 27. nextext crunch vote -- the
vote in parliament on the 27th of february. at that point,an mp's will try again to wrest control of the process. we've seen attempts to do that already, which have failed. we will have to see what sort of things come out of it. we'll have to get a read on some of the conversations over the next couple of days. anna: i wonder when crunch time is, when is the crunch vote. it seems that, on two occasions, theresa may is taken the wind out of the sales of people who want to stop a no deal brexit by saying to them, don't vote to stop no deal now because you will have a future chance to do that. you wonder if she still might say that at the end of february. david: we've got another month to go. we used to be saying by last year that by now -- we seem to be at the point right now where the deal could be struck right
at midnight before the actual exit day. summit then council week before brexit day. some expectations are that is the moment where we will finally get that last-minute concession. weekende, news that the , pressure from business. an airline collapsed and there were multiple factors but they also cited brexit. that pressuresee building as well. we just been talking about the economic slowdown suit -- slowdown that we are seeing across europe as well. we've got to try to get some sort of resolution. daniela, when you talk to clients about assets, what is the international perspective for what is going on?
are they saying, i'm avoiding u.k. assets at the moment? daniela: the strategy people of taken, the headlines move around all the time. if it is not your home country, it is sometimes very difficult to follow, even for us at home. international investors, unless it is part of their foreign tohange reserve, they need have assets largely on the sidelines here waiting to see how it plays out and acting accordingly. anna: that's the international perspective, but when you treasuries,s versus you see reasons to buy gilts. here, a very long perspective. a necessary plate to the point you are making. where do you see them looking pretty cheap? daniela: i think, actually, gilts, that's dread -- that spread can widen.
we kind of talked about the u.s. side. to 260, 265.ose it is difficult now to be particularly bullish on treasuries as we are waiting to see what happens with the fed and its balance sheet. you've got to have high conviction that the u.s. is going to cut rates and i think it is too early for that. on the u.k. side, you've got this prolonged. the economic data continues to this point. we are seeing the impact of global factors and domestic and political uncertainty, what that is happening on the economy. at the same time, as inflation is back below target in the u.k. . anna: thank you very much to daniela, and also david. daniela russell, rate strategist at hsbc joining us over the last
anna:anna: 30 minutes into your european trading day. here are your headlines. stocks in asia bounce off of beijing and president trump signal of a production -- productive trade talks. but it does not continue into europe. the german financial regulator bands new short positions on the stock. and leaving on a high. strong growth in the year ahead as it seeks a successor to its ceo. the stocks gain as much as 4.5%. good morning, welcome to bloomberg markets european open. i am anna edwards here in london.
30 minutes into your trading day, let's have a look at things on the equity space and how we are shaping up. this is the stoxx 600 making modest gains across european markets. the futures suggested we would be flat. we have a slight move to the upside. one of the biggest gainers this morning. if you look at things from a two of ourpective, big stories from a corporate perspective are up there. we also see the banking sector very well represented in terms of these moves to the upside. the optimism around global trade and a read across into global growth, we see things across the equity markets. let's look at the downside. investors are getting into banking and maybe coming out for some of these health care names. lower. roche moving health care one of the sectors moving to the downside this morning. we have a few of the banking -- other banking names in there.
despite the headlines, barclays and deutsche bank are selling. let's get a first word news update. olivia: theresa may is appealing to the conservative party to unite behind her brexit deal she is preparing to go back to brussels for more talks on eu leaders. but it could depend on if she at home.a united front meanwhile, airbus says a no deal divorce could be catastrophic, and are reconsidering u.k. investments. bill gates says capital gains is the best way to increase tax election dust tax collection from the wealthy.he says he is worried about the deficits, but increasing the marginal tax rate was not the answer because the wealthy could shelter incomes. president trump says last week's trade talks in beijing were very productive. the u.s. and china are sending
signals they may reach a deal or extend talks. there is a fear that the u.s. will ramp up tariffs when the deadline hits on march 1. besides continue talks in washington this week. the ecb is keeping his eye on the data. the current slowdown is "significant," and the bank could change its guidance if it becomes clear the situation is not temporary. the combat -- the comments are another dovish signal as they prepare for a new central bank president. saudi arabia has dismissed a report that ben zalman once to buy manchester united. the crown prince could be prepared to buy the club. the saudi information minister called the reports completely untrue. 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. thank you.na: the rally in crude oil rose.
the highest level since november on trade optimism and tightening supply from saudi arabia. in precious metals, an all-time high. and the south african producer has kicked off a heavy week of commodities earnings by upping its dividend. joining us is will kennedy. to you.d morning we see once again oil prices going higher, not far off of three months highs. it is not just oil. commodities in general rallying. what is driving this rally? on the one hand, we see optimism around global growth, then we cite production cuts. you wonder how long we can wish for both of those at the same time? will: we may get both of those for some time. clearly, they have been driven higher by this sentiment on prospects of a trade deal, which would be good for oil demand. but it is important for people to understand how quickly supply
is being constrained. seeing saudi arabia follow through on the production cuts it promised at the end of last year. last week, the minister signaled march production would be below 10 million barrels a day. at the same time, you have the impact of sanctions on iran, and that sanctions on venezuela, which seem to be having a real on their ability to export crude oil at the rate they were beforehand. taken together, it is a bullish picture for oil right now. then you have palladium, a stunning rally. anna: what is going on with palladium? we have not talked about this one for a while. will: the main use for platinum converterss is in and cars, technology that takes the worst in missions out of exhaust. buts a little complicated, platinum is better for diesel
engines, palladium for gas engines. that is why people are turning away from gas engines. there is a deficit in palladium, but there is very little other things that carmakers can turn rally.ce this strong i was speaking to one major producer last week, and they say there is no real reason to carry on. we are seeing that this morning, how beneficial it is. anna: don't engine makers use one versus the other depending on the price as well? will: that's true, but we may see some switching back to platinum. but it takes a long time. it takes aew designs. good year or more to do that .in the short-term, the outlook for palladium is strong. anna: we have mining companies reporting. we have bigger mining companies such a report. what are we going to be looking for? will: they give us as much insight into other companies into the chinese economy.
they are bullish about quantities demand inside china. helde metals prices have up pretty well in recent months. one thing we will want to hear about is iron ore. they have been forced to stop exporting as much of their zion. in the earnings report, but i think people will be looking for commentary on how they see the market developing and what it will do to earnings. that is a huge part of the for these australian miners. anna: iron or prices another one that was strong this morning. thanks for giving us your thoughts. will kennedy, bloomberg's managing editor for energy and commodities. let's get a look at the individual stock stories. dani burger has those. dani: the markets may be flat,
but i am looking at the biggest losers today. the biggest one is casino, falling more than 3% after a downgrade from deutsche bank to a hold from a buy. this is about valuations. deutsche bank saying the current sense atile makes more this level, given the high leverage at the company. kindred group another loser today, down 2.5% about. this comes after a report yesterday that a norwegian gaming authority has banned some of the online gambling companies, kindred being one of them, saying those are based in malta. six of them have been operating illegally. as badtems down 1%, not as the others, but still a developing story coming here. this from a report saying the u.k. is concerned after germany banned some weapons sales to saudi arabia, bae in some of
those planes. the u.k. is working with the company to see if they can still put their engines in those planes. right now, it does not seem so sure. anna: dani burger with the latest on the market movers. good to get that story in there. let's turn to the global security situation. very topical over the weekend. munichnce's speech in resulted in a silence from delegates. theighlights a growing risk between the u.s. and its old world allies over on unwinding of their shared values. joining us is jodi schneider. this highlighting once again the areas of policies when the u.s. and europe do not see eye to eye. the list is fairly long. we have iran, which they talked a lot about in munich. the situation with the car sector looks set to inflame tensions even further.
pence'sce president speech did not go over well. than 600e more delegates in the room, leaders from all over the world, and there was just a little bit of a plus. there was more -- of applause. there was more stunned silence. he made the case that president trump has had more leadership on the world stage than other presidents have, and this is a renewed era for leadership. many of the delegates did not agree with this and were concerned that these remarks were being made in this international body. the vice fact that president tried to convince germany and the u.k. and other countries to go along with the withdrawal of the u.s. from the 2015 iran nuclear agreement was concerning when these countries, including france, had made the case for the u.s. to stay in the agreement, had lobbied hard to do that.
seemed to bee saying, it is your turn to come with us. of not onlyfair bit disagreement with his remarks, but concern about what this meant, and concern about the trump administration's isolation on many international agreements and international bodies. anna: and get it seems europe is far from deciding they would like to go it alone in terms of security. the u.s. security umbrella still too valuable to europe. despite these disagreements over iran, which increasingly look to be very deep. it is interesting to see the americans make this plea once again to europe to follow their lead on iran when the europeans have been busy trying to work out how to sidestep u.s. legislation around iran. jodi: that's right. that is a very interesting case,
but you are absolutely right that these u.s. security arrangements are something the rest of the world and the european countries want to see continued. it is extremely valuable. trade is another issue. european countries are trying to work out trade agreements with the u.s. president trump complicated the trade picture, removing the u.s. from the transpacific partnership. to tryre is this desire to work with the u.s. in the security area as well. anna: thank you very much. jodi schneider tracking the security headlines coming through from the munich conference. bloomberg's senior international editor. let's tell you what is coming up on the program. next, deals report. tiger global has sold its stake. how much of a blow is this? investment banking under the spotlight. we will have that discussion next. this is bloomberg. ♪
it is presidents' day, which means the u.s. markets are closed. it is m&a monday, so time to focus on deals.let's take a closer look at the deals driving markets in europe. joining us is bruce david -- ruth david. says thatting report last year was a record for private equity activity in the secondary market. tell us what is going on here. ruth: it is interesting because they were saying some had gone downward. the numbers had fallen. they are about 58% more than the previous year. mirroring thee overall m&a market in terms of a very interesting europe that is busy, but not as busy as the u.s. in the secondary market, getting sponsors. it is a little hard to deal with transactions that did not get done. steps in the more
primary market for private equity, where private equity is flush with cash. they focus more on europe, are coming back to companies that are not doing so well in the public markets and saying, we knew these businesses, why don't we take them private again and run them the way we best know how to, and maybe bring them back to the markets in five years time, 10 years time? it is a very interesting trends. anna: we are keeping an eye on that. what about the banking sector? this is some of the stake sales we are seeing. very interesting. tiger global selling its stake in barclays. what do we know about that? ruth: they are fierce rivals and reported they have sold it. the interesting thing is because tiger global was one of the big supporters of turning the bank remember,ich if you
the investors have been opposed to. he is trying to get a seat on the board and has been fighting them. if the report is true, he loses one of his supporters. people have been talking all about how hard it is to do any changes to investment banks by activists, because there are so many capitals. it is not like they can say, get rid of that, and improve your margins here. but he has been digging in his heels. let's see how this helps him, if the report is true. anna: what does this tell us about the future direction of barclays strategy? let's talk about a big mover on the stoxx 600. that ceo, who is leaving, has done a lot of deals. what do we know about m&a for this business? ruth: it is interesting because two years back when he bought it, and then right after the
deal the business was not performing very well and the company that he has run since 2011 and has been the darling of the stock market, we saw the shares go down in 2017 and 2018. it seems like a turnaround is slowly coming back, and investors are cheering that. they split up the home care business. there is a lot of talk about, what did they do with that now that they are running it separately as two business units? that unit seems to be doing well as well. withe keep asking this, activist investors circling, do they look at the big conglomerate structure? or do we see consolidation in those markets? i think this is a story we will be talking a lot about in years to come. anna: thank you very much. team,avid from our deals
joining us with the latest on the m&a stories. if you are a terminal subscriber, check out the latest m&a news. m&a . one of the big movers is wirecard. the share price is up by 8.7% for wirecard. this, as we see the german regulatory body, the financial regulator, taking the unprecedented step of banning --rt sales of wildcard sales of wirecard sales. they say the recent volatility was undermining the broader stock market. the stock surging on that restriction on shorting activity from the german regulator. function, the dashboard function. you see how that stock is performing today versus its peers. coming up, an election delay threatens to rally in africa's biggest economy.
is seeing optimism. that european equity markets are entirely flat on the stoxx 600 right now. we are without the united states, which means we could be directionless into the afternoon session. let's talk about politics and africa. nigeria has delayed its equity -- it's elections.equities have risen by more than 7% in the lead up to the election, but will the delay knocked the stock rally? we see that eurobond yields rising. for more on what this means, our reporter joins us. very good to have you with us. this delay came out of the blue, a delay to the election in africa. reporter: the electoral commission postponed the election six hours from when it was supposed to start. citing logistical reasons.
they say it is not able to get about six hours, so they postponed it. they are saying the decision was a difficult one, given the for what it is meant for, nigerians. does this mean for the main candidates we are showing on the screen? does it play equally for both, or is there a delay? delaythey are saying the could probably affect them on saturday. if voters do not go to the polls people will come up to showcase their anger. iss will show that abubakar
going to win the election. anna: we have to wait for stock market reaction, i guess. going to market is open in about 30 minutes, so we will see what that will give us. it is possible the markets are negative. we see a retraction. yields wee eurobond can also connect to the development of the weekend. perhaps investors demanding a higher yield as a result of this uncertainty lingering longer. thank you very much. final look at how european equity markets are trading this hour. a fairly lackluster session. it is presidents' day, which means we are without the u.s. in terms of bond market and equity market trading. and shortagen that of volumes. in terms of the sectors moving, autos and auto parts the biggest