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tv   Bloomberg Daybreak Europe  Bloomberg  March 4, 2019 1:00am-2:30am EST

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nejra: good morning. nejra cehic alongside manus cranny in dubai. this is daybreak europe and these are the top stories. the yuan and global stocks advance ans the u.s. and china are said to near a trade deal. donald trump takes a swipe at jay powell overrate policy. he's simply talking down the dollar. >> we've got to ask ourselves why he's commenting on the dollar. he clearly wants it weaker. nejra: and refreshing the deal as to resume prepares to return her brexit plan to parliament,
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hardliners outlander conditions for support. ♪ -- outline their conditions for support. ♪ manus: welcome to daybreak europe. the yuan is rising. at what juncture does the rally pose a threat to the chinese economy? that's the question i have for our guest host. in the seeing a shift chinese aside, china ready to abolish case-by-case approvals in terms of foreign investment. yuan is rising. when does that become risk? it is barnstorming. now, volumes are also high. jpmorgan and goldman sachs make the case you want to buy more china, but you want to be overweight stocks and you want to be overweight that you want
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-- the yuan. you have to be selective in terms of jpmorgan. and wti is also rising, as well. you've got a risk on mood in the market because of the potential for trade deal. we could be disappointed. don't forget. there are tripwires out there. barclays hold their call on brent. they say the biggest source of uncertainty is the u.s. is not the u.s., but opec's response to u.s. policy decisions. nejra, good morning. nejra: good morning. talk about risk on, you mentioned the tripwires. for now, markets ignoring those as u.s. futures point higher. futures on a firmer footing. the big question is what kind of comprehensive trade deal does the u.s. and china come to? we might not get a further escalation, but are we going to see a rollback enough for markets to gain even more on the tariffs so far?
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you have president trump talking down the dollar, saying it's too strong. theaw it dip a little, right now pretty much unchanged on the index. we spoke to people on the show who talked about the fact the dollar should be weaker, but it is holding up so far in 2019. is it just there are not any options out there, particularly in the g10 with high yields of the dollar being appealing? if you are watching technicals, keep an eye because the dollar index is poised to make a bearish desk. meanwhile, cable on the front foot, up 2/10 of a percent. some of the hardline brexiteers may be considering options to support theresa may. headlines on perhaps some sort of flexibly around the backstop, which could help negotiations. let's check in on markets in asia. juliette saly has more. run us through the risk on in
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today's session. juliette: certainly is risk on. we're seeing japanese market close higher by 1% on the nikkei. news crossing the bloomberg, the yield on the 10 year note in japan is at zero for the first time since january, 31. really focusing on markets. the shanghai pushing past the 3000 point level for the first time since june. chinese stocks entered bull market territory last week, now trading at eight-month highs. aussie, and kiwi rising. we have seen a switch out of semiconductor players. this is the first time korea is reacting, plunging almost 2% when the had a wife summit ended thursday -- hanoi summit ended abruptly thursday.
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a lot of the video content afterors and china beijing unveiled a four-year development plan for that sector, made for a very popular app in china, up almost over 11%. management goes after investors to back his plan. they will vote on that march 22. in australia, similar in new zealand, you some milk operators rise today. bellamy is up 12% as it looks like it's planned to get into the china market is pushing even closer. nejra: thank you so much, juliette saly in singapore. the u.s. and china are close to a trade deal that could lift most or all american tariffs. that's if beijing follows through on tariffs ranging from better protection of ip rights to buying more u.s. products. joining us from the for benin city is tom mackenzie.
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great to have you with us. run us through the various options on the table for where we go from here in terms of not escalating the trade war, but potentially reaching a trade deal. are we getting too optimistic? well, maybe around getting a comprehensive, long-lasting trade deal that's fully implemented. one thing we are hearing is we have taken a step to getting that deal as early as the end of this month. what we heard from sources in washington, a deal was getting closer. part of that was around a chinese demand that tariffs are removed and the u.s. is considering that. the disagreement, or debate in washington is how quickly they remove tariffs. they can do it in phases, or get rid of it straight away. that's the chinese preference. they want some leverage to
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continue to have potential tariffs put in place should a deal not be implemented as quickly and substantially and significantly as they hoped. the threat of tariffs will remain as a tool the u.s. can use. we heard a senior official coming out at the start of the congress, saying yes, there had been suspended -- substantial moves and progress around trade with the u.s. that was adding to the optimism here. manus: you're there in the for benin city. cityple lines -- for benin -- what is the most important line? the bandwidth for growth? tom: a bit about growth, a bit about foreign investment environment. it could go some way to addressing concerns about a stronger intellectual property regime and banning force text transfer. we will be listing policy that
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support growth and we are looking particularly on growth measures. you could get tax cuts of valued at billions of u.s. dollars. manus: thank you very much in the forbidden city. we will be tracking the moves. we have at mliv question for you. what is the trade truce worth for global stocks? you know the destination, i.b. tv plus go. having malik is our guest host, our investment advisor. welcome to the show. good to see you. we are really risk on so without we would take global equity markets. this is the rally you had since the start of the year. if you benchmark it back to late last autumn, it really isn't as an amazing, almost back to par
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on some markets. if we do a trade deal, have we got another capacity of 4% higher in the s&p, 10% higher in china? china markets are rocketing out. guest: at the moment, you're right. you mentioned the csi 300 seems to be on fire. i do strongly feel a lot of the trade war optimism is priced in the markets. i'd be careful adding more positions at this moment. having said that, i do think the rally might have more legs, but not as pronounced year-to-date. nejra: great to speak to you this morning. thanks for joining us on the show. so, if you were to add risk and equity markets, where would you prefer to do that? would it be in the china a-shares if you are looking at emerging markets, and we do see a move towards conference of trade deal? -- comprehensive trade deal? guest: good morning.
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that's a good question you raise. i think most of the rally, we've already seen. there was a lot of enthusiasm around the msci, including the china a-shares, raising from 5% to 20%. i think that news is priced in to an extent. to give you an idea of how they arent this is, going from 2.5% to 10% in asia next japan. the increased from 0.9% to 4%. and the emerging-market index rose to 3.3%. in some cases, is been fourfold. while china news has been great, i would lean more towards the hong kong lifted names or if the clients want to be interested in the market, i would recommend going through diversified etf's rather than place because let's keep in mind the market is really a retail investor market and a lot more volatile than the
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conventional. manus: that runs along with some of the big cause with j.p. morgan on how to be discerning. we got the yuan and chinese equities. let's talk the bond market. chinese bond markets are beating treasuries. seeing bondwe're markets in china rally splendidly on the futures side. this is the size of this market. foreign ownership is 8%. to what extent do you look at chinese treasuries? how do you play the bond exposure? ali: we're bullish in china property, bullish in asian high yields. we think it underperformed at -- latin america from longtime, especially last year. when we talk market in asia, a major part of it is china. also last year, starting to performing seamier. we believe as the trade war
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stimulus, there's more liquidity -- trade wars diminish, there's more liquidity. we see more power in property names. nejra: you were outlining earlier why you may be prefer hong kong over china, because of the volatility in asia, particularly with regard to policy changes. if you are looking at hong kong equities, would you be thinking of broad-based buying or selecting's it -- specific names but waiting for a bit of the dip before taking this opportunity? ali: i would go with what you just said, waiting for it did and being very careful -- dip and being very careful because the market has gone too high. in the arena, i do mention some of the hong kong names do offer compelling reasons. gba, thele, the greater bay area initiative, connecting two regions, hong kong and macau, with one dong,
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those are two names that can be put in perspective. economy. trillion to have a blueprint for 2022 and 2035, what they want to see the region leading the aspect of it. i think some of the names there could be good and it's going to excite the hong kong financials to get access to all of this. some of the names that come to mind are aia, bank of china, hong kong, of course the hang seng exchange, with all of these bonds, north of 70 billion coming into msci shares. names, you property can look at hong kong names, which have a significant land bank in the macau and hong kong region. entertainment, we
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can look at a couple of casino names. manus: very interesting names there. abouto me, we're talking the reward at the moment. the upside in stocks, upside in equity, etc., and the currency. at what gesture does the u.n. strength turn into -- yuan strength turn into a hindrance? i look at it as an intricate risk. tradeee, i think while negotiations are going on, i don't see the central bank intervening a lot with how the yuan is doing. just as president trump is not happy with the dollar appreciating, the chinese are not happy with the recent appreciation in the renminbi. but they wouldn't want that to be a talking point during the trade wars, and i'm pretty sure they are not going to let u.s. dictate their ethics policy going forward.
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as soon as there are talks about president trump seeing xi jinping at the end of march, once this is settled, i do see renminbi weakening afterwards and the chinese central bank potentially intervening what they've been accused of for many years. nejra: great to have you with us. you stay with us for the hour. right now, let's go to live pictures of carlos ghosn's new lawyer giving a news conference in tokyo. remember he has been detained since november 19. if you want to follow the developments, we do have a tliv blog on the bloomberg. let's get bloomberg first word news with olivia how in london. >> president trump has repeated his view the dollar is too strong. he hit out at jay powell as somebody who is "likes raising rates."
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he said the u.s. economy is doing well despite the action of central banks. president trump i want a strong dollar, but i want to dollar great for the country, not a dollar that is so strong that it is prohibitive for us to be giving with other nations and taking their business. korea u.s. and south agreed to end their military drills in a bid to ease tensions with north korea. that comes days after donald trump and kim jong-un failed to reach an agreement. south korea's defense ministry said the decision was made to pursue permanent peace on the peninsula. theresa may is announcing a 1.6 billion pound boost for areas of the u.k. it was an attempt to buy support for brexit deal. the telegraph reports that it attorney general abandon attempts for the irish backstop. spacex has taken a giant leap forward with a docking of its capsule at the international
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space station. no humans were on board. the only passenger was ripley, a life-size dummy. in 2014, nasa gave spacex a contract worth more than $6 billion to fly to the space station. global news, 24 hours a day on air and at tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. nejra, manus? manus: olivia, thank you very much. coming up, ignore the u.s. at your peril. the co-ceo of life averaging says a trade war with china remains the biggest threat for investors. we bring you our exclusive interview. and if you're traveling to work, you know to do. listen to bloomberg radio. nejra: we get -- we both want to talk about radio. we love it so much. live on your mobile device or dab digital radio in london. this is bloomberg. ♪
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manus: this is bloomberg daybreak: europe. i'm manus cranny in dubai. nejra: i'm nejra cehic at our headquarters in london. manus: let's bring you our exclusive interview with of the ceo of standard life aberdeen. martin gilbert says the u.s. stock market and economy are doing well. he also weighed in on president trump's comments on america's currency. ourselvesot to ask why he's commenting on the dollar. he clearly once it weaker, of course, to boost exports and continued growth in the economy. i think the u.s. is doing fine. growth is good there. say in fund management, you ignore the u.s. at your
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peril. it continues to do the stocks that do continue to do well. >> speaking of stocks doing well, you said equities for the best investment for 2019. we are seeing a healthy correction. do you still stand by that call? >> i think so. hopefully we will go back to more normalized markets now that quantity easy is -- quantitative easing is sort of finished. i think that brings back stock pickers. business like ours, bottom-up stop picking -- stock picking style, more tended to value rather than growth and quality, had a tough time the last few years until the last quarter of last year. so the market's i hope are turning back rather than a passive style of management. >> does that continue when we start seeing that u.s. china relationship is closer to some
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sort of agreement? >> yeah, i think hopefully we will get some sort of agreement. i think trump would like to reach an agreement. i think it's where we can now take the hawks, the more hawkish members of his own government tend more tolly, being anti-china that he is. juliette: is that still the greatest risk, or the fact that we are march 4, march 31 is very fast approaching, brexit a greater risk? martin: i think china is a bigger risk than brexit. brexit is a more localized risk for the u.k., clearly. probably a bigger risk for ireland than anyone else because their supply chain comes in through the u.k., and you see predictions that there is a hard brexit, island could see a significant slump. but it is a risk.
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and it's a risk for europe, as well. a lot of their exports go to the u.k. there's a big parade deficit, as you know, with the u.k., which is very significant. juliette: what about in terms of what businesses are going to do? if fund managers stay in london, is that 8 -- martin: what we have done is locate businesses in dublin or wherever, and we already had whichsses and luxembourg, is where our funds business tended to be located. so as far as funding managers are concerned, they are reasonably well prepared for a hard brexit if it came to that. juliette: what happens to sterling then? martin: i think sterling weakens a bit. i don't feel there's anything in sterling towards a hard brexit.
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i think most people in the u.k. still think some sort of deal will get done. most deals, as you know, they get done at the last minute when they have to reach negotiation. nejra: that was the co-ceo martin gilbert speaking to us, exclusively. now let's get the thoughts of ali. i want to pick up on the comments from president trump about the dollar being too strong. we're not seeing it weaken anymore. manus and i talked to so many people on the show that say the dollar should he weaker. it's also on the cusp of a death cross patent if you look at technicals. but are there any compelling reasons to own other g10 currencies over the dollar? ali: it's actually turning out to be more of a g10 ugly contest, is how i would look at it. you start the program by rightly mentioning the dollar is higher in the g10 bucket, and economic
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data that keeps coming out of the u.s. is still pretty strong. we had a quarter for gdp numbers at 2.6% growth, which beat market consensus of 2.2%. unemployment numbers are record lows in the u.s. inflationh is decent, is around target level the fed would wanted to be. -- want it to be. while the dollar is over owned and we have been calling for a weakness for quite a while, it's not facts, more fiction at the moment because there's nothing to stop it. we just don't see the same results we've seen for strengthen dollar in 2018. the only thing that could come in the way is growth ticking up in the eurozone or clarity around brexit. we'll talk about those a very shortly. as stays with nejra and i
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our guest house monday morning -- guest host this monday morning. the era of outperformance is largely over. it was a 48 year career. itself. -- speaks for itself. ♪
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manus: dani burger taking a closer look at trade uncertainty. tariffs could possibly be removed. will they all be removed? that is the question. >> well all of them or most of them be removed? take a look at how markets in asia are responding. certainly they are pricing in optimism. the csi 300 up 0.2%. it is moving closer to raising its 2018 -- we also have hong kong as well as japan higher, as well as lifting u.s. and european futures. the yuan jumping on this news.
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it is rising to the highest since july for six years. oil and cotton and wheat in terms of agricultural, as well as metals like zinc and steel. to stay in commodities as we look at how far commodities have fallen around the uncertainty of the trade war. soybeans have suffered the most. they fall to a 1977 low. this is of course because china is the topsoil importer. it has largely shunned u.s. supply. if we have any trade deal, we could see these commodities be lifted. for some perspective, last week chinese buyers did come back to the market. no deals were done. if we see a deal in earnest, when will rates start to rise? when will we see them really gain back some of these losses they have had over the past year?
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anne-marie? ok. thank you very much. we are waiting with bated breath. well done. it is monday morning. i am off like a race horse. --se trade talks are really have galvanize the markets. the question is whether all the tariffs get removed or whether -- i'm referring to them as the lighthizer tripwires. maybe some of them get left behind and we are overly bullish they are all going to be removed. nejra: exactly. is the market expecting we could go back to where we were pointing to before this began? what does it mean for the long-term? are we going to get any copperheads of trade deal? i'm trying to work at what the market is pricing in. then it becomes the question of
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how you want to play it if you do see a good resolution here for the market. do you want to get u.s. exposed china stocks or china exposed u.s. stocks? that is a question to ask yourself. what does it mean for the yen? a chorus of investors, strategists, analysts calling for a stronger yen. we have not seen that so far. those are the goldman sachs in jp morgan calls. -- and jp morgan calls. you want more regional exporters. ali malik, you want maybe offshore names to be involved there. jp morgan say if anything you want to be longer equities than the cn why. that was his take. nejra: exactly. ali malik also pointing out to get exposure to china you have got to be careful with the foreign investors. that a share market could be more volatile. maybe get it through hong kong. you have got to be diversified. manus: don't forget, it is npc
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week. your first word news, olivia echo -- olivia? lift most deal could or all u.s. tariffs as long as beijing follow through on pledges ranging from ip protection to buy more u.s. goods. removing understands levees is a key requirement. suing canada. she has claimed her constitutional rights were breached and she is seeking damages for what amounts to false imprisonment. china has accused canada of political prosecution of huawei. -- persecution of huawei. the u.s. and south korea have agreed to end their drills in an effort to ease tensions with north korea just days after donald trump and kim jong-un failed to reach an agreement on
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denuclearization at their summit in vietnam. south korea's defense ministry says the decision was made to pursue permanent peace on the peninsula. president trump says the congressional hearing of michael cohen contributed to his decision to walk away from negotiations with kim jong-un. he tweeted it was a new low to open the hearing during an important summit. it remains unclear how the testimony impacted the talks. a giant leap forward with a theessful capsule at international space station. no humans were aboard. the only passenger was a life-sized -- devices. nasa gave spacex and boeing contracts worth more than $6 billion to fly cruise to the space station. to the space station. 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. manus: thank you very much.
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the very latest round. let's take a look at what you should be watching. annual national people's congress opens in beijing. the premier will announce economic growth targets. what will it be? >> thursday, the ecb rate decision. it could be revised lower. officials may discuss new long-term loans. friday, job day in the u.s.. it may haveow increased by 185,000. the investor who does -- defined his career by beating benchmarks says the air about performance is over. he spoke to bloomberg prior to his retirement. >> i think there are things to look at that still exist in the arket that can generate little bit. the probabilities of generating historical outcomes the same way
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are much less than they were. gross.that was bill speaking to bloomberg. . let's go back to our guest for the hour, ali malik is still with us. how are you advising clients to search for yields? feel because of how much asian creditors lagged over the last few years, we are telling them to focus on the chinese high-yield credit. there were three years and -- reasons why we believed the chinese high-yield did not perform well last year. there were a lot of worries around the u.s.-china trade wars . there was diminished on shore liquidities. the technicals were poor. our view is changing this year. we have five reasons we believe it is changing. first, valuations have become
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attractive. china credit was down 3.7% last year. when you compare this to latin america or india, valuations look attractive. company balance sheets in asia are improving. corporate governance is improving. net supply should be curtailed. bank of america merrill lynch research say they are expecting high yields. there's going to be supply as well. and more dovish bed and a weaker u.s. dollar. fed and adovish weaker u.s. dollar. 2%, that's not too bad. these four or five reasons make it very compelling for us to look at chinese high-yield in particular. in the property space. manus: that is probably the most
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cogent constructive reasons i have heard on the show in a long time. this is about breakevens. you say we have consistent -- the data says we have undershot on inflation. cumulatively over the past years. i was obsessed by these breakevens. tends, andl on twos, 30's, all climbing a little bit higher. some nascent inflation in the united states of america. >> it is tricky. you say that, and i think all central banks, not only the fed, they are very focused on inflation. a pointit is almost to there might be other key indicators of the moment. ,he fed really focused on 2% symmetrically focused, which means undershooting is as bad as overshooting. i believe we are in an era of
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longer patients. i think how they are trying to go about this new policy greater for ah longer period. nejra: i want to circle back to the chart manus just showed. i have asked many times on this show and elsewhere if the market has gone too far in out pricing the fed for 2019 in terms of another hike. if you look at breakevens and you see them coming back, is this a market to your point beginning to anticipate a new framework of a fed targeting average inflation? which means we could see the overshoot. can. absolutely including a payback period, cumulatively they are looking at 4.2% in inflation for the payback period. i agree with you that we could actually see inflation overshoot
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, which might just result in the rates playing catch-up afterwards. i do agree we can see that. matt: it's going to take time to rise and then it's going to take time to overshoot. does any of that play into your: gold? you so you have your call -- into your call on gold? >> that is based on a couple of things. first of all, the flows in etf's. we did see gold plummet all the way down to mid 1200s. we feel people have been looking for diversity in the portfolio for so long. hedge, we just a believe we raise our price target because we feel that gold can actually fill that hole. you will have to come
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back. i have some any questions for you. let me ask you about this. we were talking about the rally and whether it can continue. i want to know what you think is needed for emerging markets to outperform. we have touched on the dollar here. what's more important? is it what the fed does? a weaker dollar? or stability from china? >> i would pinpoint better growth and stability from china. the market is already pricing in part of the dovish bed. some rates analysts are calling for a cut. china, andut of china's going to do all it takes to propel the market. they are prepared for the fiscal stimulus. we all know things move very fast with china. india has overtaken china as the fastest-growing emerging-market economy. i still feel china has a lot of
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tricks up its sleeve. trump was -- a. system that will allow him to build bridges and roads the chinese. will continue his conversation with us on radio later in the day at 7:30 a.m. u.k. time. coming up, signs of compromise from the conservative hardliners and the eu. we will ask our next guest what the u.k. companies want to hear from exit. we speak to the london deputy mayor for business. tuning to bloomberg radio live on your mobile device or on dab digital radio in the london area. ♪
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nejra: this is "bloomberg
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daybreak: europe." let's get the bloomberg business flash now. >> elon musk says tesla will unveil its model one profits. the new model will have normal doors. the model y will cost 10% more than the model three and will be 10% bigger. the chief executive of huawei has stepped down the minor is under scrutiny for failing to prevent another disaster in brazil. this was 18 months after the promised a down break would never happen again. understands enduring resources have expressed interest in operations.
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these could be worth as much as $2 billion. bp is paring its business following its purchase of share fields last -- shale fields last year. manus: thank you very much. to brexit now, less than four weeks to go. michel barnier says the eu is prepared to provide further guarantees the so-called irish backstop is only temporary. meanwhile, the u.k. trade secretary welcome the compromise by pro-brexit conservatives to set out there conditions for backing theresa may still in parliament. -- theresa may's deal in parliament. >> we can have common territory in the run-up before the 12 march. manus: joining us now is the deputy mayor of london for business. he is in berlin to sign an agreement between the two cities. great to have you with us.
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when you see the news flow over the weekend, some would say the detail and michel barnier talking about an interpretive document, is the atmosphere getting better in regard to brexit in a short period of time? >> the next few weeks are very important. what happens or means to be seen -- remains to be seen. i'm very excited to be signing a partnership deal between london and berlin to bring entrepreneurs together, to bring trade and investment, strengthening more and more. there is so much in common between london and berlin. i think there is a real possibility in the tech sector for the cities to work together. nejra: good to speak to you this morning. tell us what your counterparts in berlin have been saying to you in terms of appetite for
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these ties with london? is there any concern, or just optimism? clear london is open for business. london is open for german investment. germany is the fourth biggest investor in london. there are a lot of ties between the cities, right from the traditional all businesses all the way to the new startups like m26, which is a fintech business. hello fresh, which is a great start up which has expanded rapidly in london. they see no political boundaries, regardless of the outcome of brexit. i'm very confident london and berlin, two cities will work together with a lot of enthusiasm here in berlin. . manus: what is the single biggest question everyone is
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asking in regards to brexit there? >> actually, of course, everybody is curious about brexit, because no doubt they have created uncertainty for businesses, but at the same time , it's very clear when it comes to london, everybody seems to absolutely love london. the ties between london and germany are very strong. german a large number of londoners as well. there are quite a few londoners based here in berlin, too. the relationship is very positive. saya: positive, and you there is appetite among entrepreneurs regardless of what happens with brexit, so if brexit is not forming a huge part of the conversation you are having, what also you talking about in terms of the outlook for both economies in the euro zone and the u.k.?
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>> we are talking about how we can help entrepreneurs, how we can strengthen trade and investment. we are looking at some of the new sectors like artificial intelligence, fintech, and so on , where we can bring entrepreneurs together. how can we help berlin based entrepreneurs and businesses to expand into london and likewise london businesses to come here in berlin? i think, frankly, regardless of the outcome of brexit, if we can't help facilitate ties between the two cities, that would be a great outcome. that is what entrepreneurs want. that is what businesses want. nejra: thank you so much, the deputy mayor of london for business. let's turn to our guest, ali malik investment advisor at bank of singapore still with us. i just wanted to pick up one small point rajesh was making in terms of ai.
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i noticed your investment for the first quarter 2019, one of them is the industrial revolution for point out. are we not far for that -- industrial revolution 4.0. are we not quite far from that given where we are with 5g? >> we have been in -- advocating industrial revolution 4.0. we are not there yet, but we are in the right direction. it is all about analytics. it is all about internet of things. it is about fintech. what we have tried to do is specify certain stocks globally, not only the u.s., that we feel will benefit from these things. --t to give you an idea of we did a cloud storage area. it was a company we liked in the beginning. it was a little volatile. a market cap close to $90 billion if i'm not mistaken.
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we identified names without thought would benefit from the cloud. shale force was one that came up. we really liked amazon's cloud storage system. a lot of people only thought of amazon as a e-commerce player. part of amazon's most profitable segment of the business is there cloud storage. microsoft stock has done really well as well. these are three names we felt played on that cloud theme. manus: can we circle back to the brexit discussion? there is this palpable sense in the currency trade. there is this sense that theresa may may be galvanizing the far right of the party. i want to bring back to markets, because domestic companies, we theretv in the library, has been this -- it is maybe at the top of its most recent rally
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, but there is the sense that if there is an extension, if there is a deal, we seem to be moving more toward those camps that a hard brexit. maybe there are plays to be had domestically in the united kingdom. >> i would agree with you. i would also agree with you that the most likely scenario is moving towards an extension. perhaps a deal per se. the ftse has done really well your today. he has been a pleasant change in europe, not only the future -- the ftse, but euro stoxx 50 doing well, too. there are names we do like in the u.k. as well. i think the dumbest market should benefit. manus: thank you. that is ali malik. up next, the u.s. and china are said to be close to a trade deal. we are live to beijing with the
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latest on the ntc and the markets. there is the forbidden city in beijing. this is bloomberg. ♪
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manus: good morning from dubai. this is "bloomberg daybreak: europe." fresh rally. the yuan and global stocks advance as the u.s. and china are said to be near a trade deal. we are live from the forbidden city ahead of the national people's congress. a fresh complaint. donald trump takes another swipe at jay powell over his rate policy. aberdeen's martin gilbert says he is simply talking down the dollar. >> we have got to ask ourselves why he is commenting on the dollar. he clearly wanted weaker. -- wants it weaker. manus: theresa may plans to
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return her plan for brexit. party hardliners outlined their conditions for support. nejra: it is just on 7:00 a.m. in london. we are just over an hour away from the start of cash equity trading in europe. the shanghai compass at closing above 3000 for the first time since june. what we are seeing is the risk-on rally given the trade headlines. the prospect of some sort of deal between the u.s. and china. let me bring you the turkey inflation data. we were expecting a slumming in inflation year on year for february. the expectation was 19.9%. what we actually get is 19.67%. a little bit slower than expectations. in terms of month on month we come in at 0.16%.
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weaker than the expectation of 0.4%. president aragon -- president erdogan, a statement came out saying to supporters turkey does not deserve double vision inflation and price needs to be curve -- double digit inflation and price needs to be curbed. the dollar dipping against the lira. -- 5.3730. 5.3 730 u.s. futures have been firmer overnight after we did see the u.s. close higher friday. we could see europe open higher as well. jackson cac 40 futures up by about the same. -- dax and cac 40 futures up by about the same. we could get some kind of a deal with tariffs to be rolled back. is that going to be enough to
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see a longer-term rally in these risk assets? manus: it's a question of whether the tariffs will be revealed -- will be removed. breaking news coming through on ted baker. this is the fashion chain. the ceo ray calvin has resigned. it is immediate effect. the acting ceo has agreed to continue in his role. we are just seeing a number of ted bakeraspects of fell 17% last week when we saw -- two weeks ago when they warned on adverse profits on currency moves. this is a series of blows we have seen at ted baker. the ceo is to go. in terms of his performance, let me just click in. been in for 31
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years. during that time, i haven't got the total return, but he has been there 31 years. big changes. let's have a look at government bond markets. japanese government bond yields you can see down over 37%. it is all pressure to play for in the fashion retail space. bonds, backernment to zero. we are back at zero for the first time in more than a month. they have altered their purchase program for the first time in months, given themselves the option to buy fewer. it's not exactly battering or bruising the bond markets. i found that interesting.
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the csi rocking it out in terms of the market. we saw the saying hi -- the shanghai compass it up. --shanghai compass it composite up. let's check on the markets in asia. >> it's really about what we are seeing in chinese markets a week ago when they entered bull market territory today. the shanghai comp closing above 3000 for the first time since june. according to goldman and j.p. morgan, the run not over yet for china. india is closed today for a public holiday. elsewhere, broad-based buying. japanese stocks higher by 1%. the last time korean stocks traded was on thursday when the hanoi summit abruptly ended.
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today we saw semiconductor stocks higher. the kospi up by 0.2%. having a look at what we are seeing in the currency market is optimism about the fact the u.s. and china could be close to reaching a deal has really lifted both the on and offshore yuan today. you've got the offshore up by 0.3% against the dollar. the aussie dollar as a proxy on this relationship also getting abused. traders start to look ahead to the decision tomorrow. watching the japanese yen is pre-much off its low for the day down by 0.1% of the moment. saw not much, we appetite for safe haven assets. nejra: let me bring you a breaking red headline. ceo from march a
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of 2019. this is what we know. speculation in the u.k. newspapers as to who might get this role. it has been confirmed, naming maurice tulloch ceo. shares had the highest level in 15 weeks. manus: if you talk about inmoting in, he joined aviva 1992. that is all about settling the transition period as mr. wilson was leaving the business. our top story, sort of about trade. u.s. and china are said to be close to a trade deal. it could lift most if not all the american tariffs if beijing follow through on its pledges ranging from protection of ip
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rights to buying more u.s. products. beijing isnow from our china correspondent, tom mackenzie. positive headlines. it is all about opening up the chinese market. it is the start of a big week. >> it really is a very big week indeed. we are expecting more policies around trade tensions addressing those concerns and underpinning the economy. what additional policies are going to be rolled out. from our sources, we heard the u.s. say we are getting closer to a deal. as part of that deal, the u.s. side would remove the vast majority of tariffs on $200 billion worth of goods. the question being mauled in -- washington, a removal of tariffs would be good for
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sentiment. we heard at the start of this national people's congress saying there have been significant progress on the trade front, welcoming the talks continuing with the u.s., sounding upbeat. they outlined additional measures that could boost foreign investment here. along the economic front, because a key point is how they're going to manage the slowdown. we are expecting additional policies and we might get that. particularly around fiscal measures. issue is to support infrastructure spending in particular. that selloff in 2018. we are looking at the response to the trade war, the economic slowdown, whether they can manage to do this without exacerbating financial risks. it is squarely focused on what's going to come out of this congress over the next 10 days in beijing. nejra: we are coming back to you for more details later in the week. thank you to bloomberg's china correspondent tom mackenzie joining us from the forbidden city in beijing.
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asians -- asian shares climbed. advancing on trade news along with u.s. and european futures. today we are asking the question on mliv. what is a trade truce worth for global stocks? you can join the debate at the mliv team, ib+tv on your bluebird. joining us -- on your bloomberg. good to have you with us. you are neutral equities globally. as you see these trade headlines come in, are you thinking about shifting deposition toward overweight? >> to be -- shifting of that position toward overweight? >> i do nothing it's going to make a massive difference. there is a reduction of trade risk. a lot of it is pricing in what is really good is for china, for emerging markets, but for markets, almost everything is
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priced in. manus: one of the pieces i read this morning was if it is a real trade deal, the bottom line earnings growth for companies could grow. by real, they mean tariff reduction. the full monty of a deal. you talk about earnings growth this year globally, to percent to 3% versus the consensus of 6%. you are worried about earnings 2019. >> i'm worried especially in the u.s. already, a significant reduction in terms of expectations. five percent. the dollar is strong because the economy is weaker and the tax cut -- it is more than the trade war. it is something more general. the trade deal can provide something, but i don't think it
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will change the dynamics of the global economy. nejra: what is going to change things for you in terms of the dialogue and how you shift your asset allocation? >> the question is what is going on in the u.s.. we all expect the u.s. to be strong. the reality is we see in terms , we start to see companies getting more cautious. there is a? on investment as well. the u.s. economy will do well this year. for next year, there are a lot of question marks. they make us feel a little bit uncomfortable on equities in general. manus: you are certainly sitting on my side. luca, can i ask you about buybacks? it was one of the bolstering factors of 2018. we have a lovely story this morning. we are seeing buybacks topping for the first time -- topping
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pex for the first time since 2008. that, for me, is a negative story. buybacksnot forget have been strong since 2008. what companies have done is to buy back shares instead of investing in productive capital. it is all about productivity at the end. if you buy back your shares, productivity does not go up. in the short-term, it could be positive. it is becoming more positive -- manus: can i just ask you then, i get it. i am a pension fund holder so i understand. what i'm talking about investment for future. if you are doing buybacks, you are not investing the kind of tech capex you need.
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that is the risk side i'm looking at. >> that is why i think for the economy, too much buybacks is negative. isn't a positive impact on productivity. if you look at the global economy, the weaknesses mainly residential. it's not that simple. buybacks in general, i don't think they're going to help productivity growth from the global economy. nejra: if you are underweight u.s. equities, one of your biggest calls is you like e.m. equities, particularly china h-shares. -- a-shares. why china specifically as well given the volatility? >> let me say we are bullish in
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general. think -- good valuation. flows coming back, a trade deal. chinese, special case. you have a trade deal that will benefit china the most. consumption, china's consumption is for the next 10 or 20 years. the end of last year was the perfect time because of valuation. luca, you stay with us. come.iews to we have breaking news coming through on bank of cyprus. the man that was interviewed on many occasions is john patrick, he is to leave the group.
2:16 am step i just want to keep an eye on it. they are to start the succession plan and the search for a successor. . that is news coming through from the bank of cyprus. let's get the first word news. >> president trump has repeated his view the dollar is too strong. he also hit out at jay powell as someone who, quote, likes raising rates. the president says the u.s. economy is doing well despite the actions of the central bank. >> i want a strong dollar, but i want a dollar that's going to be great for our country, not a dollar that is so strong it is prohibitive for us to be dealing with other nations and taking their business. >> bill gross has defined his investing career by beating benchmarks, but he says the era of outperformance is over. yields are much lower in the
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spreads between treasuries and maturities are razor thin. gross says a central banks have changed the game. >> i think there are things to look at that still exist in markets. the probabilities of generating historical in the same way are much less than they were. is missing ay boost to areas of the u.k.. immediately attacked as an attempt to buy support for a brexit deal. this comes at the telegraph reports the u.k. attorney general has abandoned attempts to the irish backstop. 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. nejra: thank you so much. with the great day of
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central-bank independence behind us. we will discuss that next. manus: if you are traveling to work, tune into bloomberg radio. this is bloomberg. ♪
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nejra:nejra: 7:21 a.m. in london. we are 40 minutes away from the equity market open in europe. let's check on these markets. the shanghai composite is rolling higher. above the 3000 level. that is incredibly important. being want to belong -- -- be long, the yuan
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strengthens, does that continue? nymex higher. the issue is what opec does with regard to american politics, not the other way around. nejra: let's talk about the dollar. president trump saying it is too strong. we are steady on the bloomberg dollar index. it has been defying the bears, although we are heading for that. cable on the front foot. that lawmakers are moving toward supporting theresa may steel. european futures on the front foot as well. that's the risk-on rally we are seeing. let's get the bloomberg's newsflash now. -- bloomberg business flash now. >> the new tesla model will have normal doors. cost 10% morell than the model three. it will be 10% bigger.
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haschief executive of vale stepped down. bobby oh schwarzman came ceo in schwarzman -- fabio became ceo. he promised a -- would never happen again. thank you very much for the roundup. michel barnier says the eu is prepared to give further guarantees the irish backstop is only temporary. has offeredcretary a compromise offer. pro brexit conservatives have laid out there conditions. let's get to the chief strategist at an asset management company. luca, the relief is becoming more palpable. a delay to brexit more likely or
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a soft brexit, theresa may's version of brexit could gather momentum. you would say the u.k. market looks cheap on valuation basis. you are looking at the dividend yields. how does it come out as cheap in a relative sense the? -- sense? best is one of the available in financial markets. you have the performance of u.k. stocks being at the lowest level since the 80's. we are not making big predictions for brexit. i do not think it is likely the u.k. will crash out of the eu with no deal. the valuation is one thing. negative flows out of the u.k. in the past few months, also the u.k. mark -- market is very defensive. the cyclical side of the market
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is commodity related, which is very obviously dependent on china. which is looking much better than a few months ago. your globalts with themes where you are favoring global defensive equities. you pointed to the cyclical nature. in terms of that overweight for the u.k., is that something you are going to hold regardless of brexit given the intrinsic market you just talked about? the poundhe reason would ultimately collapse. on the others, there is a positive element. everything made in the u.k. will be up. assumingwill do well
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our call on global is right. manus: with that bullish call in the base case, the bullish cal l on sterling, are we unleashed in terms of the potential impact of sterling? >> we think the dollar is pretty much weakens now. we see the fed pausing. itmp mentioned how expensive already is, between 15% and 20% expensive. the growth differential is shrinking because the u.s. is decelerating more than china and europe. there is a lot of reason to expect the dollar and the pound .s the one because of valuation nejra: thank you for joining us this morning.
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that is it for "bloomberg daybreak: europe." one in to bluebird radio your mobile device and on dab digital in the london area. ♪
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anna: welcome to "bloomberg markets the european open." i'm anna edwards alongside matt miller. matt: markets say there is still room to run. optimism for u.s.-china trade deal drives asian stocks higher. u.s. and european futures point against. the cash trade kicks off in 30 minutes time. anna: reconciliation in sight.


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