Skip to main content

tv   Bloomberg Daybreak Americas  Bloomberg  February 18, 2019 7:00am-9:00am EST

7:00 am
anchor: seven k labour party politicians resign over jeremy corbyn's brexit stance and alleged anti-semitism as theresa may tries to save her deal. stocks in asia rise to their highest since october after president trump calls high-level trade talks between the u.s. and china very productive. sluggish european growth. weak data takes ecb policymakers by surprise, with one governing councilmember seeing a significant slowdown of the european economy. welcome to this special edition thisloomberg markets" on monday, february 18. public holiday in the united states, so we are live in london over the next few hours to take you through these markets, and we are awake and trading here in london. let's have a look at some assets on the move and have been on the move overnight.
7:01 am
we saw a lot of optimism around trade building. that asia-pacific number up by more than 1%. the shanghai composite lifted from the chinese trade delegation and president trump's s and data out of asia. we are fairly sluggish in europe. one thing not directionless appears to be the pound. the pound making further gains as we see further fragmentation of u.k. politics. we will talk more about why that is happening. 129.35 across the atlantic on cable. a quick look at was coming ahead for you this week. u.s./china trade talks resume this week in washington as both sides push to reach a deal before tariffs increase on $200 million worth of goods. on tuesday we get u.k. labor with wagetistics,
7:02 am
growth expected to rise and the jobless rate excepted to hold steady. wednesday in the united states, the fomc will release minutes from its january policy meeting, with investors looking for any signs of a dovish pivot by the u.s. century bank. thursday, we will get full year earnings from barclays and what will be an important moment for the ceo's battle against activist investor edward bramson. barclays reportedly reducing its stake in recent days. let's get back to one of our top stories this morning. that relates to brexit and u.k. politics. seven opposition labour party mp's have quit over jeremy corbyn's brexit stance. meanwhile, theresa may kicks off a last-ditch effort with the eu to save her brexit agreements. jeff joins us now. good to have you with us.
7:03 am
remind us why we've seen these seven opposition labour party mp's step away from the party, and specifically the party leadership. reporter: that's right. all of the seven mp's have their own reasons for leaving the labour party. has come under a lot of pressure from people within her own party. she's faced anti-semitism accusations from people within the party. one is definitely opposed to brexit. he says politics is broken, and the current political policy in westminster doesn't reflect the complex tapestry of our society. they feel so strongly about this, that their leader jeremy corbyn doesn't reflect their views and isn't going to be able to reflect their views, that they've broken away as independent lawmakers. anna: they are independent, they
7:04 am
say. they want to represent those who see themselves as politically homeless. that was a phrase they used quite a few times this morning when they launched this new movement. what do we know about what difference this is going to make to brexit? what kind of difference will this make to the arithmetic around theresa may's deal? reporter: they are appealing not just to other members of the labour party to split away, but others as well. it will be interesting to see if anyone in theresa may's tory will join them. this will put more pressure on jeremy corbyn to proceed his ambitions around a second referendum. he's been quite unclear about whether or not he actually backs that. it will put pressure on him to do that. anna: away from the opposition labour party, back to the government, theresa may is going
7:05 am
to brussels again and seeking support from eu leaders across the 27. what are we expecting this week in brexit? heard from think we inside government that she is likely to go around the middle of this week, possibly wednesday, to brussels, where she will be meeting with jean-claude juncker. it is at that point we will know whether there's going to be any real breakthroughs on her ambitions to reform this controversial backstop in their divorce deal, or whether it is just going to be more of the same. people have talking about how she seems to be running down the clock till march 29. i think around the middle of this week we will start to get whether there is anything on that front. anna: and we will face further votes in the house of commons. thank you for your time today.
7:06 am
klemanergs jess shan joining us on brexit. thoughts? it has been a busy day around brexit surrounding the actions of the opposition labour party. what is your base case around brexit, if it is possible to have one at the moment? guest: it is indeed difficult to have one at the moment. this stage is at still possible. obviously the fragmentation in the parliament is not good for a negotiation with the eu. remainedowever, has quite united in it stance. it is a big question of what theresa may can really get from brussels this week. obviously the latest attempt to
7:07 am
get some flexibility, especially on the irish border, have not led to any breakthroughs in this space. it is very uncertain, and the clock is ticking, so investors should continue to hope for the best scenario while still preparing for the worst. very uncertain time, and indeed, a very limited timeframe at the moment for most market participants. clarity as soon as possible, but the only thing we can do at the moment, we had the case of a no deal brexit a thise of weeks ago, but scenario is gaining some traction. in another base case, we continue to expect a negotiated deal, but obviously this has become a bit more uncertain as we are nearing the deadline. anna: we near the deadline.
7:08 am
domestic developments have been as the seven members of parliament from the labour party are getting a lot of the attention here, and some suggesting this makes a no deal more likely. i've seen this line from mizuho today, for example. does this feature in your investments, or is it too early to say? guest: the distribution of probability has evolved slightly more towards this scenario, but again, it is not our base case taylor: but it is true -- our base case. but it is true the clock is ticking and we have a very fragmented u.k. parliament, so hardertheresa may's job to negotiate with european union institutions, which are very clear in their state and united. this makes the negotiation a bit tougher for the u.k. at the moment. would have the
7:09 am
probability of the last couple of weeks, but i don't think it is in the interest of europe politically and economically to get to a new deal scenario, so i still hope in the coming weeks we find some technical possibilities, solutions may be, to the irish border, which are in theory to be defended in some way. we are, like you, expecting news and reassurance from negotiation talks this weekend brussels. anna: meanwhile, market participants have to assess the risks of no deal. i'm looking at two months of pound still at risk reversals, and suggest the bearish sentiment over that kind of time . it takes into account the brexit date.
7:10 am
the bearish sentiment around that period is the most elevated since november. clearly there are people nervous about where the pound heads. guest: definitely. it is true that since the beginning of the year coming negotiations have not moved to be right direction -- moved in the right direction. the bank of england has said it was also worried about the situation, delaying its rate hike or linking them to progress in brexit talks. we've seen also very weak gdp growth in the u.k. in december, even contracting in the month of december. growths.e weakest no one is happy with the current currency situation or with a new deal brexit.
7:11 am
it is obviously something which is still important economically speaking. a lot of businesses need to be prepared for both scenarios, meaning they are investing in something to be prepared, so this is slowing their ability to invest elsewhere in things which are more productive. i can tell you that across europe, it is a huge topic in the business industry due to the , which the market obviously don't like. anna: a lot of people have talked to us about avoiding u.k. assets because of the uncertainty around brexit. do you have specific companies in continental europe you would say are worth avoiding because of brexit risk? guest: no, i wouldn't highlight any.
7:12 am
but obviously, across all havers, european companies a good export. too simplistic to simply avoid a company that is active in the u.k. i believe that would be damaging to the european economy. the u.k. will still be a great economy, so businesses in europe need to make sure they can still worry.ness without which will be sustainable even in case of a no deal brexit. on the other set, you have businesses in the financial industry which need to be for the to serve
7:13 am
country, so we continue to serve our clients even in that scenario. anna: we have seen recognition of counterparties just this morning. no deal planning happening on both sides of the channels. thank you very much. vincent juvyns stays with us. let's get an update on what is making headlines outside the business world. our first word news update. reporter: the white house is sending more signals of the u.s. and china will either reach a trade deal or agree to extend talks. trumps said last week -- president trump said last week's negotiations were very successful. president trump has received a
7:14 am
report that could lead him to impose tariffs on incoming cars. the president now has 90 days to decide. both foreign and u.s. automakers are opposed to the tariffs. the pressure is building on automakers in china. wholesale passenger vehicle sales plunged almost 18% from a year ago. nigeria, the chairman of the ruling abc party accused of election collection of commuting with the opposition to delay saturday's vote. it will take place this coming saturday. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more
7:15 am
than 120 countries. death -- i'mod riddick a good death -- this is bloomberg. anna: why one member of the ecb is worrying about weakness in the european economy. we take the pulse of the european economy and its slow down. this is bloomberg.
7:16 am
7:17 am
♪ back, everybody. this is a special edition of "bloomberg markets." 12:17 in london. i'm anna edwards. let's talk about what state we find the european economy in. the slowdown is significant. that is now the review of the
7:18 am
ecb governing council member. we started the program talking about what you see in the u.k., a lot of brexit headlines. let's talk about the state of the euro zone more generally. regrettably here policymakers on the ecb acknowledging the slowdown, acknowledging the extent of the slowdown. what time horizon do you look at now for some kind of shifting language from the ecb? clear the most useful tools that the ecb has in place at the moment is for guidance, and as we approach the summer we need to clarify the position first on interest rate development, because in theory, interest rates would still be high because at the end of the summer, which no one expects at the moment when you look at the aspect ofarify this --ir monetary policy and
7:19 am
[indiscernible] it could put some countries or banking sectors a bit more at risk from a balance sheet perspective. obviously on the watchlist of the ecb. the demand is increased and .omewhat naturalized in europe anna: if policy remains easy, if the slowdown has accelerated, how low do you think bl -- get? bund deals
7:20 am
how low do you think bund yields get in a slowdown environment? guest: we should recognize the slowdown in europe. we are definitely not heading to a recession. different --had a we had an especially difficult word in fourth quarter -- third and fourth quarter. the curve would be driven by the fact that the ecb stopped quantitative easing at the start of this year. we need to monitor the effect on the long end of the yield curve of this decision. if anything, i'm not looking at spending for 2019. i would be prudent towards european duration, although at the start of this year there are
7:21 am
terms of risks in return than upside risk. quantitative easing, normalization, probably a bigger force than the redefining thing rate at -- the refinancing rate at the short end of the yield curve. i would not be so bearish on bunds. but at least it is not an ideal environment. it will stay this way at least it hopefully helps europe in this respect. get also for government to -- anna: we will watch the chinese growth story and the fiscal policies of these european governments. thank you very much, vincent juvyns. coming up, political risk in europe on the rise.
7:22 am
we will talk spain's upcoming election and the markets. what do we expect to see? that is coming up next. this is bloomberg.
7:23 am
7:24 am
♪ anna: welcome back. here in london. european equity markets going nowhere fast today. spain's election campaign has begun. let's talk about that was bloomberg opinion columnist marcus ashworth. very good to have you with us. we were talking about italian political risks, we forgot to focus on spain. now it seems the catalan crisis has not gone away. still there are some unresolved issues from that, which means we find ourselves heading towards a surprise election and spain. how are the markets on this? guest: they don't seem to care, and the reason is because it all seems to focus on the catalan
7:25 am
issue, which is not their fault. in that sense, it is about spain's growth. it is one of the best in europe. as long as that continues, spain bonds are set well. the question is if we do get a clear government out of it, which is unlikely. it is more like it is going to be more elections in a hung parliament or something. it might actually be good for spanish bonds, which will catch up the bit of ground they lost to portugal, for instance, and maybe even italy. anna: when you are talking rivalry in the bond markets, i want to focus on this trend. -- btp top to spain spain. now we find the drama unfolding in spain and we are unmoved on this particular spread. does this stay here for now? guest: if we get a clear
7:26 am
election, i think spain will outperform. it is the low risk proxy of italy. it has proper growth. italy has no growth. it has a budget that is relatively in-line. italy doesn't. badink spain will hold in news pretty well. and good news, it will outperform. anna: thank you, bloomberg's marcus ashworth. german carmakers could feel the brunt if president trump decides to implement new auto tariffs. the auto sector one of the biggest losing sectors on european equity sectors this morning. more on that next. this is bloomberg.
7:27 am
7:28 am
7:29 am
? ♪ anna: welcome back. this is a special edition of "bloomberg markets." i'm anna edwards come alive in
7:30 am
london. time now for a check on the markets. standing by, bloomberg's dani burger. reporter: u.s. may be closed, but still the futures market not really doing much of anything, only dropping two basis points. perhaps taking cues from the european session. ftse and dax the two markets that are underperforming. the overall index is flat, but 1/10 of 1%. meanwhile, the dax down 2/10 of 1%. trump weighing tariffs on imported autos. perhaps that is why we are seeing some losses there. but a lot of the inability to
7:31 am
advance today also has to do with what currencies are doing. i want to go ahead and show you what some currencies are doing as well. euro and pound both gaining. that is putting a cap on just how much those other indexes could move. even though we have more dovish ecb speakers coming out, still seeing gains in the euro. pound a similar story. and tradel growth optimism really helping the emerging currencies taking off today. they've really been able to hug on to these gains up to 1/10 of 1%. u.s. stocks not really doing much. i have a clue of why, and that is because of what happened friday. this index right here is basically the difference between stocks that have advanced and those that have declined. on friday, a record some of stocks ash a record -- a record sum of stocks traded higher than
7:32 am
lower. this means investors were optimistic, not really worried heading into the holiday. that means there was already a lot of optimism priced into the market with this big ramp-up we see here. we won't really get traders changing their position or taking views in the futures market. finally, another bullish picture i want to show us is what copper did today. copper, of course, a big macro growth play. we can see that over here get a sudden spike up today, trading higher. just broke through its 200 day moving average. much.thanks very commodities in general pretty strong today, and lending strength during the asian session overnight. let's get up-to-date with what is making headlines in the world of business news. london, seven numbers of parliament are quitting the labour party and will become independent. they are protesting labor leader
7:33 am
jeremy corbyn's position on brexit. they are also unhappy about alleged anti-semitism and bullying within the party. one of those quitting says labour has been hijacked by the politics of the left. on capitol hill, there may be enough support in congress to disapprove of president trump's emergency declaration, but there won't be enough votes to overturn is expected veto. he declared an emergency so he could divert certain military funding to build a wall on the border with mexico. billionaire bill gates says that looking at capital gains is the best way to boost taxes. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.
7:34 am
ritika gupta. this is bloomberg. anna: thank you very much. president trump has received a report it could lead him to import tariffs on imported cars. german autos could be affected. kris bryant joins us, bloomberg opinion columnist. we don't know yet how the president is going to respond. he's got some months to make his decision based on security concerns. this has to do whether imported cars are a security risk. arerter: the question is imported cars, specifically german cars, and national security threat for the united states. the commerce department has handed its report to the president, who has 90 days to decide whether that threat exists. we don't know how mr. trump is going to decide, and it is quite likely given past form that he
7:35 am
will try to use these as leverage in order to get his way in other matters, notably agricultural tariffs. there is huge worry in germany that they will impose the tariffs. we had chancellor merkel in the last couple of days saying she was shocked at the idea that german imports are a threat to u.s. national security. she clearly think that tariffs are a possibility, and of course, it would be terrible for the german auto industry, which, despite having a lot of local production in the united states, continues to import a lot of vehicles. anna: we talked about how she seemed to be quite animated on the subject for chancellor merkel. she was quite energized, annoyed even, by what she was hearing. tell us about how this falls to ermany possibly over other european countries. there aren't many french
7:36 am
automakers that export to the united states, are there? reporter: no there aren't. peugeot and renault don't really export much. there's a lot of capital in the form of local production. of course, they don't build all the cars they sell to the united states within the united states, and that is the problem at hand. mr. trump seems to take it as a personal affront when he's eased german cars on the roads in the united states that aren't built there, and that is what you want to change. it remains to be seen what happens. the german automakers are clearly making a lot of the fact that they have a lot of jobs in the united states and continue to invest there, and therefore shouldn't be punished for doing so. in contrast, french automakers have fared a bit better in the stock market lately because they haven't had that kind of investment and aren't exposed to those kind of risks. anna: thank you very much for bringing us up to date.
7:37 am
we will continue to watch and see what president trump decides to do. chris bryant joining us from berlin. from paris,s vincent juvyns. do you see a disparity between which automakers are going to suffer from tariffs from washington? early.we are too the show yesterday is quite telling of. the divorce is possible, so we will see what the white house do about it. the u.s. would use this to leverage on european to get concession av on other fronts. we have seen that the import of soybeans has increased quite notably in europe, so there may be a solution outside of the auto industry, the german car
7:38 am
industry. also the impact of the deals .ith new co2 emissions if we were to have higher tariffs on cars coming from europe, it would be best for the whole industry, no matter the country. a french country may be less exported, but french cars are well exported in asia and china, and there we see some issue of lower sales of cars. in china so all across the indus -- sales of cars in china. all across the industry there are many strategies ahead, but a new front opens in this trade war, this time between europe and the u.s.. this will obviously add some volatility and uncertainty on a very difficult situation already for the car industry, but the whole european economy.
7:39 am
we said earlier on in the show explanation was linked to trade. this may intensify a bit given this recommendation of the u.s. commerce department. on top of that, we have a beginning of the domestic component, which is concerning as well. this possible new front of the trade war is not very positive for europe at the moment. anna: we certainly saw those disappointing car sales numbers out of china overnight, adding to the headwinds for a sector that faces so many. in terms of global growth, i was looking in particular at singapore's export data. i'm looking at a chart. pace sincet a weaker 2016. this is about being a bellwether how hopefulrade
7:40 am
argue that some kind of breakthrough will reverse the worries that have set in about global trade? deal: if we have a trade very soon, it is unlikely to reverse this movement immediately ritika: -- immediately. when you look at pmi across the globe, especially those importing countries in asia, they are very weak at the moment , linked to the great weakness we seen in china, which was published at the start of this year. we will be looking at improvement on that front somewhere in the second, third quarter. be likely that we have a first part that is difficult, and a second part which is a let more positive.
7:41 am
[indiscernible] in theory, it would lower upward pressure on the dollar, which would be good for the market. some of the uncertainties would be clarified. by then, we should at least know where we are heading on trade. china will also be a very important government this year as quite a lot of monetary measures could boost the economy again, which are gradually maturing, and we could have a which, inpolicy, syria could help the state of global growth momentum. at best, this would also start in the first, second, and third quarter. obviously we are seeing a downturn in global growth, likely below trend, but there is some light at the end of the tunnel for the second part of the year. anna: vincent, thank you.
7:42 am
you are the second guest today to tell me to watch out for fiscal stimulus. of jp morgans management staying with us. geopolitical tensions a hot topic at the security conference. this is bloomberg.
7:43 am
7:44 am
♪ anna: this is "bloomberg markets ," a special edition for this u.s. markets holiday.
7:45 am
headlines surrounding norwegian air, low-cost aviation business here in europe that had been rapidly expanding. somewhat troubled, and they decided to price an issue today. the norwegian air shares dropping as much is after they priced their issue of shares -- as much as 15% after they priced their issue of shares. another headline in the u.k. over the weekend of seeking assistance. leaders from the round the world are gathering for the annual munich security council. bloomberg's matt miller spoke to the german defense minister, and this is what she had to say. >> we came quite a long way. we have increased our budget by 36%, which is a lot, and we will 2024, the decade
7:46 am
after wales. this will be a rise in the budget by 80%, but we know for our goal, we have to go to 2024. it,rter: how important is aside from what the u.s. wants or the rest of nato, for germany and europe to be able to defend itself? only allows us to invest more in our forces, and they needed. there has been a long period in europe with decreasing the fence budgets because we thought it was going to be more peaceful around. then the annexation of crimea, the rise of isil, it is clear we have to invest more in our armed forces. we have to modernize them from cyber threats. it is a good investment for the servicemen and women who are in
7:47 am
the missions and fighting for us. --hor: are you forcing much are you enforcing much closer cooperation with european partners? >> we have a huge fragmentation in europe where weapon systems are concerned. we are establishing the european defense union, and the crucial part within it is the european defense fund for common procurement and training, and possibility to deploy together. ispping forward as europeans very important for us. reporter: will you be buying more aircraft soon? have you already put in orders for more aircraft? >> we do have the euro fighter and the tornado. the next generation of aircraft fighter jets, but also unmanned platforms, will be the future
7:48 am
air systems we are developing with our french partners, and which will be a european development. in between, we will need a bridging solution. it is either going to be the f-18 or the euro fighter. it depends on the certification process. the decision isn't made yet, but we will need a bridging solution. reporter: what about in terms of troop transport planes and transportation for the chancellor, for example? >> we had quite a problem airline, we needed trip transportation for a long old 160.had the now we have switched to the modern a 400m. now we will double the amount. they are flying to afghanistan, to mali. now we have the most modern
7:49 am
transport airplane in the world. reporter: let me finally ask you about huawei. there's been an issue on the corporate side. are you concerned about german corporations and businesses using chinese technology in terms of security? >> this is a topic which is getting more and more important, and we are in a deep discussion process now of how to deal with that. we have to act on that field. we have to figure out how we weure our communication and make sure that whoever is supplying it is confident and trustworthy. therefore, we are at the beginning of this process. reporter: would you feel comfortable using chinese technology for german military can indication? >> we don't do that. we invest in research to have our own devices, our own communication systems. independent and
7:50 am
have that risk that somebody else is getting into our communication. matt that was bloomberg's miller speaking to the german defense minister ursula von der vincentill with us., juvyns of jp morgan asset management. it seems there was a very long list of things that the u.s. and europe disagree about, whether iran, nor stream two, may why wh -- maybe huawei, and the auto sector. does this complicate your investing strategy, this seeming questioning of the world order by the u.s.? is globals instability, definitely something which is a priority for investors.
7:51 am
the fact that there is no trust anymore between u.s. and europe, in this case, but indeed we have a lack of trust also with china helping with globalization, the best way to achieve high-level growth. definitely a fragile economic environment is an issue. obviously it has been challenged by a traditional partner in this, the u.s., against a lot of european recognized stents of extent. to some the imf recognized there were some good foreign events that had a lack of reciprocity in criticized so it was
7:52 am
really to ground itself. that everybody disagrees on that. be more and more vigilant for cyber trade and whether or not chinese companies represented right or not. definitely the security aspect is key as well for a lot of businesses. anna: we continue to watch nokia and ericsson. thank you, vincent juvyns. coming up, we'll talk about politics in africa. nigeria's last-minute vote delay. the decision rattling investors and that nigeria's citizens. this is bloomberg.
7:53 am
7:54 am
♪ anna: welcome back. this is a special edition of "bloomberg markets." i'm anna edwards.
7:55 am
in nigeria, the president says the election commission is incompetent after elections were delayed several hours before polling was supposed to start. take us through the latest on this. the election has been delayed for a week. what's the latest reasoning? reporter: the electoral commission postponed the ,lection barely six hours citing logistical reasons. it says it was unable to transport election materials to some states, so was asked to postpone the election for a week. the president has said the election commission is very incompetent and they will look into this after the elections. anna: how have markets reacted, briefly? reporter: so far the nigerian stock exchange has declined close to 3%.
7:56 am
the banking stocks are not spared from this bearish sentiment. we are still monitoring to see how this is going to go, and also, the 10 year bond climbed seven basis points today. towill keep monitoring due -- monitoring to have the decisions of investors today. anna: thank you, bloomberg's tope alake joining us from lagos. also thanks to vincent juvyns of jp morgan. coming up, a euro ethics strategist joins us for -- euro fx strategist joins us for "bloomberg markets." the latest innovation from xfinity
7:57 am
7:58 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.
7:59 am
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. ♪
8:00 am
seven u.k. labour party politicians resign over jeremy corbyn's brexit stance and alleged anti-semitism. theresa may kicks off a last-ditch drive to save her brexit divorce deal. optimism on trade. stocks in asia rise to their highest since october after president trump calls high-level trade talks between the u.s. and china very productive. sluggish european gross. week data takes european alicymakers by surprise, with significant slowdown of the european economy. welcome to this special edition of "bloomberg markets." let's get first word news. here's riddick a group to that upta.s -- here's ritika g ritika: seven numbers of the u.k. labour party will become
8:01 am
independent, unhappy over alleged anti-semitism and bullying within the party. one of those quitting says labour has been hijacked by machine politics of the hard left. the white house is sending more signals the u.s. and china will either reach a trade deal or agree to extend talks. president trump says last week's negotiations were very productive. the u.s. has threatened to more than double tariffs on more than $200 billion worth of chinese goods if there is no deal by march 1. president could impose tariffs on imported cars. the commerce department investigated whether those pose a threat to national security. the president has 90 days to decide. both foreign and u.s. automakers are opposed to the tariffs. american companies have built their supply chains to take advantage of countries with low duties. pressures building on automakers in china. car sales there kept falling
8:02 am
last month after be first for your slump -- first four years slump in more than a decade. that leaves carmakers with few places to go for growth. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. ritika gupta. from new york, this is bloomberg.
8:03 am
8:04 am
♪ isa: -- ritika: this "bloomberg markets." in germany, the financial regulator has timber early band hast-term sales -- temporarily banned short-term
8:05 am
since a wire card "financial times" report alleging fraud. ,.s. hedge fund taiga global according to "the financial times," has sold its 2.5% stake in barclays. it has been one of these druggist supporters of the plan to revise barclays investment bank. that is your bloomberg business flash. leaders from around the world gathered for the annual munich security conference. bloomberg's matt miller spoke to germany's defense minister. take a listen. >> we came quite a long way since whales. we have -- since wales. we have increased our budget by 36%, which is a lot, and we will reach 1.5% in 2024, the decade after wales.
8:06 am
this will be a rise in the budget by 80%, but we know to which the 2% goal -- to reach goal, we have to reach it by 2024. this 2% is our will to invest more in our armed forces, and they need it. inre has been a long period europe with decreasing defense budgets because we thought it is going to be more peaceful around us. then the annexation of crimea, the rise of isil, d civilization ilization of africa. therefore, it is a good investment for the servicemen and women who are in the missions and fighting for us. reporter: do you foresee much
8:07 am
closer cooperation with your european union partners? >> europe has to get its act together. we have fragmentation in europe where the weapon systems are concerned. therefore we are now establishing the european defense union. the crucial part in it is the european defense fund because this is a strong incentive for common procurement, and this means, and training and the possibility to deploy together, so stepping forward as europeans is very important for us. reporter: will you be buying more aircraft soon?have you already put in orders for more aircraft? >> we do have the euro fighter and the tornado. ,he next generation of aircraft fighter jets, but also unmanned platforms, will be the future air system we are developing with our french partners, and which will be a european
8:08 am
development. in between, we will need a bridging solution. it is either going to be the f-18 or the euro fighter. it depends on the certification process. the decision isn't made yet, but we will need a bridging solution. reporter: what about in terms of troop transport planes and transportation for the chancellor, for example? >> we had quite a problem needed new airline troop transportation. for a long time we had the old 160. by now we've switched to the modern a400m. we have 25 of them. we will double the amount. they are flying to dorton, jordan,tan, -- two afghanistan, mali. reporter: let me ask you about huawei.
8:09 am
it has been an issue on the corporate side. are you concerned about german corporations using chinese technology in terms of security? guest: this is a topic which is getting more and more important, and we are in a deep discussion process now how to deal with that. we have to act on that field. we have to figure out how we secure our communications and how we make sure that whoever is supplying it is confident and trustworthy. therefore, we are at the beginning of this process, but it is an urgent one. reporter: would you feel comfortable using chinese technology for german government communications? guest: we invest in research to have our own devices, our own communication systems. it is very important for us to be independent, and we don't want the risk that someone else
8:10 am
is getting into our communication. bloomberg's matt minister speaking to german defense minister ursula von der leyen. let's get to our top story around u.k. politics. seven labour party mps have quit in opposition to jeremy corbyn's brexit stance. meanwhile, theresa may kicks off a last-ditch effort with the eu to save her brexit agreement. nomura's chief affects strategist just chief -- chief fx strategist, and our bloomberg opinion columnist. the long view is that this is the biggest exit us since the early 1980's, even if seven doesn't sound like a big number. reporter: it is very significant that seven mps have decided they can't live within the labour party, a party that has always
8:11 am
been a broad church that encompass to and leftists. it is a moment of reckoning of sorts for jeremy corbyn because he has lost these mps. does it pose a threat to corbyn? it depends on how many others they can cause to peel away. there were a whole range of questions that were not answered today. do they have a leader? not yet. is there a platform? not yet. do they have a name? . not yet. anna: they just know that they are independent from the labour party. jordan, how much does this change any brexit dynamics? guest: this sort of event is happening more recently than we think. we look back to when the stp did it back in the 1980's. if you just look at what happened in the build up to 2016, you had reckless and douglas carswell leave, and you even have nigel for raj starting
8:12 am
the new break -- nigel farage starting the new brexit party. is split the vote in certain constituencies enough to worry leadership such as david cameron in the leadership to 2016, or even jeremy corbyn or theresa may now, to say i am losing mps on these policies, they be i should shift my stance. when the parties are so far left and right, it is hard to see how a party like this in the middle will do well based on polling. but you look at what impact it had on these conservatives, they had 16% of the national vote and only one mpn parliament. how did that lead to the referendum?conservatives built up to david cameron making that monumental decision to hold one.
8:13 am
these numbers may shift the needle. whether it is on jeremy corbyn, i doubt it. whether theresa may softens her brexit, i doubt it. but something has to move. anna: so you don't necessarily have a majority to guide policy. -- the tail wags the dog in many situations. we know many of them are anti-brexit. reporter: ith think this is the key question. we know a couple of them are in favor of a second referendum, and that was the default labour policy decided at their party conference. jeremy corbyn is desperate to avoid a second referendum. he steered his party to a slightly different position. a couple of the rebels are very upset about that. it is not a clear that all of the rebels are united in that approach, or that any others that would leave the labour party to join them would have one position on brexit that
8:14 am
would be so much further from where corbyn is, which is to demand a customs union. that is one thing that remains to be seen before we know whether they would push the needle on brexit, but they are parked more in the center of politics, which is jordan rightly said, is an open field right now. guest: no man's land. anna: they want to interact tell of those mps and voters that they say -- they want to attract all of those mps and voters that they say are politically homeless. this does differ from the french matem, the arrival of cron. guest: did we take macron seriously? but he builds momentum and got a lot of smart people to join his party. they haven't actually given
8:15 am
themselves a leader, hoping that maybe they get some bigger names joining them to make it a broader church. with sir of open policy not yet defined, it is yet to be merged in be shaped, it is quite exciting for mps to be involved. the: they talked about future leader of the labour party at one point. conservatives may look at the and say, actually, is this a gamble too far if there is no leader or party platform they can unite behind? will they have conservatives who were thinking of jumping holding back? if we look at the early 1980's and the stp, there we had real political giants taking the leadership. these were politicians who had served in government. roy jenkins had been a leader of the european commission. i'm not sure we have anyone of
8:16 am
quite that stature at this point. if we got a heavyweight conservative mp, ken clark or someone, to peel off, then i think we are in a different ballgame. anna: back to the bread-and-butter of how we trade this is markets, i've got a chart here, the pound-dollar to month risk reversals -- pound-dollar two-month risk reversals, at its most elevated. guest: the downsides are is an election called, and leads to months of uncertainty? even during the campaign period, the pound head lower on that. if you have sort of that delay to article 50, is it delayed by a few weeks? do we just kick the can? holdss the main reason to
8:17 am
protection is because of a no deal brexit and he sort of complications we could see by not being, for of the single market anymore. the customs union, the financial markets, we have no preparations being made. that is the market mindset. anna: would you describe the wo -- is facing t two binary outcomes? guest: there's loads. there's so many venn diagrams of how the deal could get through parliament. i always simple if i it down to three scenarios. deal, no deal, or no brexit at all. then you have how do you get there. is it an election or a referendum? does theresa may resign? we can't rule out theresa may resigning after the conference vote? the moment him for a referendum
8:18 am
just doesn't seem to be there. the possibility for an election this year is there. increaseelop its today a chance of a no deal brexit, but perhaps it is seen as strengthening the hand of those who don't want a brexit deal at all. there are many ways you can look at this. reporter: it is such a hard one to call, and that is the key question. are we headed toward no deal, or something else? any option is better than a no deal brexit. that seems to boil down to what people think theresa may is willing to do, how far she's willing to push. those who think she would dare to go to no deal to appease her own party or because she think britain is adequately prepared, that is one school of thought. the other is that she wouldn't do that, that no sitting prime minister would take that level of risk. i would probably agree with the latter schools scott -- letter school of thought, but we are
8:19 am
not going to know until the last week of march. we may know something next week if parliament tries to ensure that she avoid a no deal outcome, so we may have some idea, but we don't really know what she's -- where she stands. guest: attorney general geoffrey cox has been in brussels and upland, talking -- and dublin, talking to his counterparts. 's speech tomorrow might be of interest. he will probably give an outline as to what he wants to see changed to the backstop. hopefully he sets the bar low enough that that is achievable by the eu. anna: even though he had misgivings about where that would lead the u.k. -- guest: i don't think anyone was convinced by it. if he sets the bar low enough just so that he can be happy with it, perhaps that brings party back on board. anna: thank you both very much. let me bring in another headline into this conversation because it is relevant.
8:20 am
this coming from oh day asset , renewing shores against the pound on no deal brexit concerns -- shorts against the pound on no deal brexit concerns. this is a cable call. 2921 is where we continue by about 0.25%. thank you. jordan stays with us a little longer on the program. coming up, an unprecedented move. new wirecard short sales. this is bloomberg.
8:21 am
8:22 am
anna: we just had some breaking
8:23 am
news across the bloomberg. bloomberg scoop with regards to -- crispin odey, renewing his short position against the pound on a no deal brexit concern. he clearly has concerns that no deal brexit can materialize from here. we talk a lot about this and the way the latest news flow plays into that, or does it. he took that short position against the pound last month, and today we understand he is renewing that. i don't know whether that came after the labour party news or before. we are digging into that bloomberg scoop for you. 1:23 here in london, 2:23 in germany. and germany, the financial regulator has temporarily banned short sales of wirecard. the stock's recent volatility threatens the broader market. shares have been on a roller coaster ride in the last month since a series of reports in "the financial times" alleging
8:24 am
fraud. wirecard has denied any wrongdoing. we are joined by jan-patrick barnert. the latest news flow surrounds this blocking of any news positions -- any new short positions in wirecard. what has the reaction been in germany? reporter: as you said, the stock is going up. that shows there is some positive reaction here, but it is soft a little bit. i'm not sure we can talk about a short squeeze here. it gives the regulator a little bit of time to look into the matter, to see what is going on, and we can wait for what singapore police and authorities are flying out -- are finding out. still, it is unprecedented, and voices out there wondering why the regulator is taking that step. some arguing if everything is
8:25 am
alright with wirecard, the companies is not need protection from the authorities -- company does not need protection from the authorities. anna: interesting to see what is behind this fairly unprecedented move. other news where you are, and moving to the banking sector from payments surrounding deutsche bank. sales of a stake by the biggest shareholder in deutsche bank who hasn't always seen eye to eye with management. reporter: that's true, but i wouldn't read too much into that right now. we know that it is a little overleveraged in the last couple of months, not only with deutsche bank, but with a couple of other positions. they have quite a high deposition and need to reduce their position. they've implemented an option structure to limit their losses. what happened is that these options did what they were supposed to do to limit their losses, but have to get rid of the division. that's what they did.
8:26 am
anna: thanks for the update. jan-patrick-- there. headlines coming out of the munich security conference over the weekend. the eu and the united states shaking hands. at least, germany and the u.s. but not on the same page when it comes to iran, tariffs, and even on huawei perhaps. will we see fallout between these more recently allies? we will hear more about national security, next. this is bloomberg.
8:27 am
8:28 am
8:29 am
anna: welcome back. i am anna edwards live in london. 1:29 in the afternoon in london.
8:30 am
time for a check on the markets. the cash market might be closed for the u.s. but take a look at what futures are doing. down only four basis points. falling late at that big rally on friday. traders not wanting to step in. ftse 100 and dax both underperforming in europe. this is up from the lows we saw earlier. the pound and the euro strength hitting both of these markets. that is helping with stocks as the pound comes down from the highs. autos were the worst performing sectors. they are off the lows again as we are getting more positive headlines about u.s. and possible tariffs in auto imports not being an option. i want to show you the picture
8:31 am
across assets. the dollar weakening. this starting at the beginning of the day where we had those better trade headlines. moste dollar is weakening g10 currencies rise against it. a big risk on day, crude trading at -- nearly at a high in the past six months. em currencies up .2%. it has been strong for the entirety of the day. something to keep an eye on. i want to take you into my terminal and show you some of the commodities. i showed to the dollar weakness earlier. one of the effects we have seen is gold which i have's -- which i have in the blue. trading at its highest since april. the real standout when it comes to precious metals is palladium, now trading at a record high. this is the metal they put in a lot of cars to help offset some
8:32 am
of the omission concerns. the market is tighter, more liquid which is why we are seeing some of those bigger gains. i want to show you a good measure of risk appetite. that is the g fsi fund flow. this index, when it is lower, that means there is more risk appetite, risk-taking. this measures fun flows from em funds as well as high-yield. this plunge is now the lowest in about a year. this is massive inflows. $40 billion to be per size -- $40 billion coming into em funds. that is why we are seeing the rally and risk appetite doing better. anna: thanks so much. bloombergs dani burger with the markets on this u.s. public holiday.
8:33 am
check on what is happening outside the business world. >> on capitol hill lawmakers say there may be enough support in congress to disapprove president trump's emergency declaration but they admit there will not be enough votes to overturn is expected beat up. the present dashes -- is expected veto. says boosting capital gains is the best way to increase tax collection from the wealthy. cnnmicrosoft cofounder told he is increasingly worried about the high budget deficit being run by the u.s. but he says increasing the marginal tax rate to 70% is not the answer because there are ways the wealthy could shelter income. in indiana central bank is the government-- is desperate for cash to fund
8:34 am
populist pledges ahead of the national election. it is the second straight year the reserve bank of india has made an advance payment to the government. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. anna: thank you very much. the hedge fund manager crispin owed a renewed -- crispin odey renewed his wager against the pound. heightened concerns the country may crash out of the european union without a deal. we are joined by bloomberg's hedge fund reporter hot from this scoop. good to have you with us. this is not specifically tied to break away parts of the labour party. it is tied to the bigger picture whether we will see a no deal 's assessment of
8:35 am
that. >> absolutely. he put on the back sometime last month, just a few weeks before , ford unwound this trade which he has been frequently criticized on twitter. twitter has almost abused him for this bet that he supported brexit. now he is here shorting. he had this bet running for a and heard quickly put on this bet again. anna: it has not moved the pound all that much. we had suggestions this was coming. >> it could be because the fund is smaller now. on the brexit day he made 200 and 20 million pounds on one day . , iterms of real investment
8:36 am
is not huge enough to move the market. anna: he seems to of placed a lot of -- whenever he sees a tail risk increasing and likelihood, that is where these calls come from. previously it has been around second referendum, no deal. >> that appears to be the case here, absolutely. anna: thank you for much for joining us with the latest on odey and his strategy with regards to the pound. president trump has received a report that could lead him to impose tariffs on imported cars. german autos could be affected. bloombergs oliver joins us. tell us more with what we could see from the trump white house with regards to tariffs on imported cars? oliver: there are a couple of theories, but what is in the report, the german government has not seen the contents, but
8:37 am
there are two versions of tariffs we could see. one is a 25% and one is a 10% on cars and auto parts imported from the eu into the u.s.. those are the biggest options that are being floated around in german media. as you say, we do not know the contents of the reports that has landed on trump's desk. he has a couple of months to decide if he wants to impose these terrorists. the impact would fall .isproportion -- these tariffs the impact would fall disproportionately on german automakers? r: every automaker would feel some of this, including the americans. every automaker imports the parts they used to make their cars from other countries. if you look at the percentage of the cars that are imported, the only one 100% are tesla. even the big american automakers
8:38 am
are hurt. german automakers import cars and parts. they would be hit worse. revenue couldthe be hurt by 33%. considering if they do not pass that down to consumers. that is the base number you can work off. anna: oliver, thank you very much. the latest on the auto sector being buffeted by global trade. still with us, a g10 fx strategist. let's talk about how global trade is faring under the trump administration. the auto sector seems to of been hurt a lot. it has a lot to deal with. stick to the currency market? does it start to stick to the euros as it spreads out across the german industrial complex that has dodged recession? >> it has already had an impact.
8:39 am
we did have tariffs on china, we quickly when the first round came in, we did see imports into china from the u.s. dropped dramatically. there has been some front row to , but mark carney in his latest speech was pointing out the decline in imports against china from the u.s. because of these tariffs. there is not been an impact for global growth -- there has been an impact for global growth. germany's surplus has been falling. that does have an impact on euro if the powerhouse of the european union, with germany's slowing it impacts the rest of europe. we saw the slowdown over the past year, did it continue in january and into february? we have seen stimulus measures in china that have given some
8:40 am
hope to the market as to perhaps this is not the end. this is not the bear market. if january pmi's continue to fall, a recession does rise in probability. anna: their idiosyncratic factors to blame. when they add up to something more than idiosyncratic -- this is export growth. this is seen by some as a gauge of global trade. there is no surprise it is struggling. the weakest pace since 2016. you see places where you can hide from the travails of global trade or do you just tied elsewhere and not go to asia? maybe india? >> for investors, you have to invest outright. asia does have the benefit of if the stimulus measures do kick in in china, if they do credit easing and fiscal spending, that
8:41 am
should support the global environment. the second half is when it kicks off. in terms of those idiosyncratic factors, we had those mission standards in germany, it will take a lot more than just being patient for things to improve. right now we are in a treading water phase. a painful rally for a lot of people in the s&p. if we can find some clearer -- is this eureka moment -- has china come out guns blazing? that is when asia will outperform. anna: i was going to ask you about your top trading ideas at the moment as we sit here discussing all of these issues surrounding global trade? are there currencies you see looking more stable? jordan: euro is probably one of the more interesting ones despite being less boring. euro, there iso been arrange for a long time
8:42 am
when it has not moved must. we really -- we nearly touched 1.12 on the friday exchange. it is easy to paint a picture for euro negative a. european parliament elections in may. yet the slowdown years not just in italy but in germany. it is easy for the euro area to follow. we have known this for six months. the slowdown has been entrenched but the euro dollar has not gone lower. the ecb has been dovish. riskig risk is that suddenly does well and euro-dollar goes higher. there seems to be unexplained factor that stops euro-dollar going lower than where we are. anna: we will talk more about the euro in a moment. jordan rochester is staying with us. coming up, the world's biggest retailer posts earnings tomorrow. we highlight what you need to know before the event and what
8:43 am
you can expect from walmart. this is bloomberg. ♪
8:44 am
8:45 am
>> this is bloomberg markets. "-- a group of senior british lawmakers has recommended tougher measures to keep companies like facebook in check -- after agong year-long inquiry into fake news and its impact on elections. overrulewas willing to
8:46 am
privacy settings. the struggling chinese conglomerate saved itself some pain when unloaded a chunk of its deutsche bank stock. --h ms. -- both of its bloomberg has learned the company plans to eventually dispose of all of its stake. hna once owned almost 10% of deutsche bank. -- comparable sales rose a better expected 4% in the fourth quarter and the british maker of household and food products expect full-year growth of 3% to 4%. reckitt benckiser is seeking a new ceo at the end of the year. that is your bloomberg business flash. anna: thank you very much. the world's biggest retailer reports results tomorrow.
8:47 am
it is the first time we hear from walmart following the crucial holiday quarter. unlike many retailers, it is not preannounced the extent of its sales performance. emma chandra takes us through what to expect. emma: walmart is the biggest , notching upvenue more revenue than china petroleum or bp. is fromarch revenue overseas. the key measure investors will be looking for his u.s. same-store sales. walmart has seen 17 consecutive quarters of sales growth but the holiday quarter is crucial and analysts were expecting a gain of 3.1 percent, excluding fuel and foreign exchange. sales, they were up 43% in the third quarter. investors expect high growth as this part of the business is not yet profitable.
8:48 am
that makes operating margin another number to watch. it has been on a downward slide. walmart has had to spend to grow its online business and keep rice is competitive. forare facing pyrex benches -- higher expenses for wages. walmart is battling amazon for market share in india e-commerce. india has just announced new e-commerce regulations that favor homegrown retailers. expect lots of questions about this on the analyst call. anna: mo chandra talking about -- emma chandra talking about what to expect from walmart. jordan rochester is still with us. let's talk about the strength or weakness of the u.s. consumer. i've a chart that underlies the u.s. retail sales plunge we saw last week.
8:49 am
you have had a little time to digest the data. do you dismiss it as a glitch or do you think this does augur badly? glitch, we have seen a few as the chart shows. perhaps it is one of those. the holiday season with black friday in november than december, the shift to online, perhaps it is not reflected in the numbers. there is a whole cottage industry about the changes in how we collect the data. you can always find a way to excuse it. it was a pretty bad number. it shaved a few tenths off of the gdp forecast in q4. when it comes to this, we've had the physical expansion in the u.s. and we may conceive -- the fiscal expansion in the u.s. and we may see more. to getonald trump agrees his border wall funding. maybe that leads to -- or there
8:50 am
is a pickup in china. ,hen it comes to trading this in the slowdown -- economists are not great at predicting recessions nor they great at predicting above trend. they're great telling us what the average growth is over 10 years. if you short the s&p, you smash it in december. in january you dealt with a 16% rally. it has been trading -- it has been painful in terms of trading shorts. the market is not saying it is the end of the cycle. we are in the slowdown phase in the u.s.. europe is a different matter. u.s., acomes to the slowdown is not necessarily a time to sell the s&p, it is not time to buy the dollar. anna: you might not be near the end of the cycle yet. the definition of the end of the cycle ranges a lot and you might miss out on the upside that
8:51 am
comes at the end. jordan: the fed taking a pause and limiting its approach, that is helpful. anna: it extends the cycle? jordan: it can help us get through. a lot of people bought the fed was on autopilot and that was driving risk on action. we have not seen credit spreads widening out significantly like 2007 and 2008. if we saw that, the game is over. we are not there yet. the message we're getting from the fed in the market -- anna: how long is a pause? jordan: it depends how quickly the data rebounds. tradedoes it depend on deal with china? jordan: i do not think the trade deal would provoke the fed to do anything. you start strong employment. -- you still have strong employment.
8:52 am
that might see them do a rate hike in the second half of the year. ata: some analysts looking that inflation target and talking about how much they are allowed to exceed the target to the upside or allowed to undershoot it on the downside. thank you in much, jordan rochester stays with us. coming up, the slowdown is significant. talking about europe. isle one member of the ecb warning about weakness in the european economy. that is next. this is bloomberg. ♪
8:53 am
8:54 am
anna: this is a special edition of "bloomberg markets." let's talk about the ecb. governing council member says the current slowdown in europe is significant. let's get final thoughts with jordan rochester. you think the ecb is dovish
8:55 am
already. you think some of the comments we've already had have been dovish. do they need to do more to manage expectations? jordan: their forward guidance on rates is rates will be on hold through the end of the summer. the market is not addressing a rate hike this year at all. rate hikes,talking we're in steps of 10 or 15 basis points. because the ecb is at the lower -40 of interest rates, with basis points it is easy to price in hikes. the market does have hikes in the curve, which is different from the u.s. the ecb could do more. -- could do more to flatten the front end of the curve. that will have an impact on the fx. euro-dollar could break low on 12 if -- could break below 1.12.
8:56 am
tros,uld hear about tl r whether they are willing to extend that sort of bank funding. we have already seen the to ants last week that led risk on and bank stocks doing well. i think tell tro's -- i think tl tros is in already. anna: thank you so much for joining us on this special program. jordan rochester with us in london. thanks for watching this special edition of "bloomberg markets." trump'sp, president trade talks with china. this is bloomberg. ♪
8:57 am
8:58 am
8:59 am
9:00 am
guy: 9:00 in new york, 2:00 in london. u.s. markets are closed. it is presidents' day. ando have trading in europe trading in u.s. futures and bond futures. over the weekend it was worth paying attention to the fact president trump received a report about whether imported vehicles pose a national security threat. the u.s. commerce department did not offer any highlights on the findings. angela merkel rejected slip suggestions -- rejected suggestions that the car compromise u.s. security. >> those cars are built in the united states of america. those cars are no less a threat than those built in bavaria are suddenly a national security threat to the u.s. that is a shock to us. guy:


info Stream Only

Uploaded by TV Archive on