tv Bloomberg Daybreak Europe Bloomberg March 6, 2019 1:00am-2:30am EST
nejra: good morning from bloomberg's european had orders. this is "bloomberg daybreak europe." washingtons head to to try to keep car tariffs at bay. is a sweeping trade deal possible by year-end? dovish turn. it could take several meetings to determine whether risks are getting worse. 10 year treasury yields lower. europe's dirty money scandal widens. moneyanks drawn into laundering allegations centered on russian funds. ♪
nejra: good morning everyone and welcome to "daybreak europe." just under two hours from the start of cash equity trading. not a lot of directionality when it comes to markets. yesterday the s&p 500 closed slightly over. futures on the back foot today off by 0.25%. caution coming into the equity markets. money going into 10 year treasuries. that 10 year yield dips by a basis point. the bloomberg dollar index on its sixth day of gains. we are up 0.2% in today's session. following the gdp data out of australia, you are seeing the aussie come under pressure. what are the implications for monetary policy? could a cut the in the cards? let's see what cable is doing. a little weakness when it comes to the pound. concern over lack of progress in
discussions in brussels. cable trades at 1.3137. u.s. inventory jumps, stirring fears around the potential oil glut. trading at 56.04. what can you tell us about the picture today? >> a little bit lackluster. we are seeing flatlining on the msci asia-pacific index, which dropped to 0.2% yesterday. we kiss coming through in japan on yen strength. retreating.dex mixed movement in chinese stocks. australia's market did very well. , it'sg at september highs best gain in a month despite that disappointing gdp and weakness in the aussie dollar. let's look at stock movers. we are seeing quite a bit of
weakness in chinese drugmakers today. sector the biggest drag on the csi 300 as the government cap's insurance payments in the h-share market. a-share e market -- market. we start to see a number of downgrades amid earnings risks. hello kitty. coming to the big screen hollywood has finally got rates for hilly -- hello kitty to be made into a movie. sanrio up 7% on the close. negotiations to secure rights to develop hello kitty took more than five years. nejra: what makes you think i like hello kitty? think you so much. juliette saly in singapore. eu trade commissioner will meet u.s. trade representative's today.
the goal, progress toward a trade deal before year-end. a sweeping u.s.-europe agreement hit a roadblock a year ago when 25%united states slapped tariffs on european steel and aluminum. this prompt that a retaliation on goods. in july, the sides agreed to a truce. considering the large trade surplus europe had with the u.s. , this was no small feat. germany had the most to lose from u.s. imports levees. the european commission president up to the anti-saying ped. auto tariffs -- up t ante saying u.s. auto tariffs -- autos retook the spotlight, we got views from the autoship -- auto show. >> we hope we get an agreement.
cope with a lot of issues. this is one of them. we will manage. >> that is a very serious topic and we are watching what will happen. the u.s. andng on we will find a solution. >> we really would look for a future in which the trade barriers are less everywhere in the world. we are in favor of not having distinction. >> i don't think we have to protect our european companies with an import tax on american cars. it is just not necessary. we are competitive. nejra: those are some of the leading voices in the auto industry. will the eu be able to get a deal before the deadline for punitive action is up? maria tadeo is in brussels.
great to see you. what can the eu offer to stop trump from raising tariffs the echo -- tariffs? >> european carmakers now get charged 2.5% tariff except for pickup trucks. it is a market the eu would like to not see protected, but the americans are strict on that one. technically if president wanted to he could make 25% standard. that has big implications for european exports. has victim legations for jury -- german carmakers. -- it has big implications for german carmakers. is if this isere enough for the u.s.. trump could really use cars to get a bigger deal and go into areas that until now have been a
redline for the eu. that is the concern. will this be de-escalated? will be see a bigger push from the eu? nejra: if the u.s. uses cars to negotiate a broader deal, what sectors what they want to gain access out of the eu? >> this is no secret. president trump said many times he does think the u.s. gets a bad deal from the eu and he does like to go into negotiations. we saw that in mexico, canada, now with china. one of the areas the americans have really liked to get into is agriculture, but that is a redline for the eu. they would have to change european standards. farming is already a very competitive and crowded trade in the eu. this is one area where the eu is just not willing to play ball. the one glimmer of hope if any
for the europeans is obviously trump is locked in negotiations with china. he would want to avoid a war on two fronts. nejra: thank you so much. maria tadeo in brussels. joining us now, head of rate strategy at -- international. the u.s.-china discussion still ongoing. you can see equity markets still in a holding pattern. the real question is over where we go from here. is the going to be to do with currency? >> i can understand why you say that. renminbi hass, the been appreciating in value. i don't think there is too much either party can say concerning the currency. if you look at domestic policy from china, it is all about
applying domestic stimulus. i don't see anything that would be too much of a concern about international policy. on the other hand, if anyone is really trying to do something to their currency, perhaps it is the u.s. president with his comments about fed policy, about wanting to cap the dollar from depreciating too much. sure it is fair to label either party as doing anything contravening international norms. >> the dollar not doing what trump might wanted to. latest data out of the u.s. giving a lift. we've got the dollar on a sixth they have gains. remembering be weakening -- the renminbi be weakening?
think low growth target is an implicit reason for the currency to weaken. i do think the expectations and the likely delivery of more stimulus should be something that puts the currency back onto a slight weakening path. yes, i would see that, but i would see that as being something which is entirely justified. for what it's worth, i think the currency can go back to test that seven handle. if i think forward by about two months, i think we are going to have more dollar appreciation here. i think that's going to be the real driver of markets. you can extend that and think about, what is the impact going to be? what is it going to be on e.m. more generally? you mentioned the u.s. data. u.s. data are going to be strong the next 2, 3 months, probably longer. i assume that's going to change
the expectation going forward. i do not think the fed is done hiking rates. it is not priced into real and -- real rates at the front end of the curve. if real rates go up it's going to take the currency with it. there is something being missed at the moment. nejra: to come back to the trade discussion, how does this translate into your world of rates? is it mainly that you look at it via the prism of the euro? >> i think the euro is suffering a discount at the moment. that's helpful for the real economy in europe. the dollar also is suffering a premium because the longer the trade tariffs expectations go on , this is something that is causing appreciation of the dollar. president trump could mitigate risks of dollar outsized by coming to an agreement.
the euro is a very good way of expressing whether the trade talks finally turn into a resolution. thatuld be expected then external demand from the euro area could bolster. that should appreciate the euro. the impetus for dollar weakness going to come from a resolution of some sort to the trade talks the ako -- talk see? >> we have trade talks and then we are onto the weakening dollar. ako >> it is a -- why? >> the longer-term pictures are prevalent. it is corporate deleveraging. be a is likely to resolution to the trade talks. we will discuss more
coming up. peter chatwell stays with us. let's get the first word news with debra mao. ghosn is set to be released on bail after an appeal by prosecutors has failed. he has now paid his bond. he will be released soon. the auto industry tighten has been locked up since november. tokyo prosecutors have the option of extending his detention by arresting him on new charges. statements to be released today may show the u.s. trade deficit with the rest of the world has topped $600 billion. by whichhe main metric donald trump judges countries to be winning or losing. it would mean it will have grown by more than $100 billion. .he aussie dollar has weekend the number came in at 0.2%. to lowerill need
interest rates. has ruled outner a run for the white house. the 77-year-old thinks he would beat president trump what understand how hard it would be to win the democratic nomination. bloomberg says it would be better to spend time and resources on helping the u.s. moved to renewable energy and raising the debate about gun violence. nearing a fix-it hopes will clean up one of the shady is corners in finance. some firms have been accused of by -- bondy payments. news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. breaking read headlines
on the bloomberg on mizuho. book charges on portfolios. it is recording ¥500 billion, losses on fixed assets. it is also slashing its net to ¥80forecast 86% billion, citing past investments in foreign bonds in the portfolio. a loss on the restructuring of sections of the portfolio. it is citing management accounting enhancements for the revision. on,read headlines to focus charges on fixed assets in the portfolio, it is slashing its net income forecast, maintaining its dividend forecast.
questionare asking the on mliv. what are the lead indicators to watch for the next bear market? we are very far from that at the moment. what are the indicators that could tip the scale? reach out to us and the mliv team on your bloomberg. coming up, how will europe's groups play into mario draghi's thinking? this is bloomberg. ♪
there is a mixed picture in the asian session. the nikkei is lower by 0.6%. meanwhile, crude on the back foot. that largely on some inventories news coming through. down a basisield point after comments from -- comments on where the fed goes from here. the dollar on a sixth day of gains following data out of the u.s.. let's get a bloomberg business flash now. china is putting high-tech on the menu to tackle the slowdown in the world's biggest consumer market. china is pushing ahead with plans to open two out today -- outlets a day.
>> the urbanization, the growth means there is still another 1000 cities in china that do not have any kfc. considering a merger with a rival insurance company. on iserg understands a preparing to submit a bid. that is your bloomberg business flash. europe's economic growth picture is in focus. tomorrow sees the ecb meeting with the bank likely to cut projections. there is continuing speculation whether week data will warrant new stimulus or a change in draghi's path to normalization.
peter chatwell is still with us. your first thoughts on what to expect out of the meeting tomorrow? tltros.ust a hint about there appears to be some positioning in securities on the curve. hints are going to emphasize the ecb is dovish, downgrades to the forecast is also a dovish ecb. the uncertainty is they are not going to change their forward guidance at this point. what they are going to be doing now that we have the new chief economist, we know who the new chief economist is, we now know who the new president is going to be. we have a leadership change coming up. that could mean all the policy tools get reviewed. the insufficiency of each one
can get reviewed. that could mean uncertainty for the market. nejra: i'm getting chatter in my ear from the newsroom. the director needs to sort my audio out. let's talk about rates. you are talking about the fact we could see a bit of dovishness. what do you expect to happen with the deposit rate? >> i do not think the deposit rate can go down. i think there was a good risk the deposit rate goes up. it is not an obvious conclusion to come to. it's all about something which is called the reversal rate. it's got a lot of commentary in japan. being from a japanese bank, i understand this better than some others. the head of the bank of japan has made explicit reference to the reversal rate. i think there is evidence the reversal rate, which is the
cost, the unintended consequence andegative interest rates extreme monetary easing, it can grow over time. longer the deposit rate stays at -40, the greater this cost can be. there are problems this causes for the bank, particularly in germany. if you look at the ecb data, bank name is very compressed. what this means is the ability for banks to make profit and therefore the ability for banks on monetary policy, something that needs to be called the transmission channel, we think can be deteriorated. if the ecb sets out to say we are not going to be hiking rates this year, possibly not next conditions will deteriorate because expectations will be banks are going to become less profitable in europe. that can impair the credit
channel. some are saying they think the calls are unjustified for the ecb to actually raise rates. they expect the ecb to keep rates negative for the foreseeable future. they are not actually finding that argument in terms of the overall impact on the banking system of a negative rate policy. think actually the impact on the bank is as you say. there is a counterargument to that. what does this shadow rate have to do with that? you are actually -- your measure is even lower than this. >> hours is based on the deposit rate. this must be based on some rate which is currently positive. the point is, the ecb monetary policy is not all about interest-rate policy. qt, ltros, these have made
interest rates quite lower. is, if the ecb want to reduce pressure, downward pressure on the bank, they could reduce the deposit rate by 20 basis points. wanted to keep monetary policy equal, they could put the rates up by 20 basis points and could offer another tell true. -- tltro. interest rate at the end of the year could keep monetary policy more sustainable. nejra: peter chatwell stays with us. we have live pictures of carlos ghosn. we are waiting for him to potentially leave the detention center.
nejra: taking a look at the world map. the msci asia-pacific index is flat. you can see some movement. weakness coming through in japanese markets. gains on the hang seng and in china. let's get the bloomberg first word news with debra mao. debra: data may show the u.s. trade deficit with the rest of the world has topped $600 billion. the shortfall is the main metric by which donald trump judges countries to be winning or losing. it would mean during his time in office, it will have grown by more than $100 billion. the aussie dollar has weakened
as australia's fourth quarter gdp missed growth estimates. the number came in at 0.2%. traders have lifted wagers the rba will have to lower interest rates. theresa may could be on course for another brexit defeat in parliament. whiprime minister's chief has warned he is not confident he has the numbers to get her deal through. mark carney says there have been constructive developments in readying for a note yield brexit. inthere has been progress preparedness, and that reduces the level of the economic shock. reducing the potential for material shock. what we can do about that is make sure the financial sector is there to help offer it. -- a
buffer. it. >> a legendary tycoon has passed warren buffett as the third richest person in the world. he is now worth $83 billion. the bloomberg billionaires index become the has youngest self-made billionaire. 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. this is bloomberg. nejra: let's get a check on the markets around the world. joining us from our bloomberg partner in mumbai here in london is bloomberg's annmarie hordern. we are seeing a little bit of green on the screen in indian markets today. >> absolutely. indian markets building on a move we saw yesterday.
the positive here is the rupee above the 11,004 the first day in weeks. there's a lot of improvement in sentiment. advancingg index also . as far as the indian rupee is concerned, there is a strengthening there as well. ofrently at the strong mark 71. the small-cap has seen quite a recovery. it is also rendering its -- registering its sixth straight day of gains. smaller names performing well. nejra: thank you. let's turn to you and marie. -- annmarie. >> a struggle for direction this morning.
we did have the csi in china turn positive. hang seng is positive. we are seeing weakness in the nikkei and the topix as well as the kospi. it's all about the aussie dollar this morning, dropping to a two month low. areou can see here, we seeing a lot of dollar strength. the dollar is up for a sixth day . aluminum, zinc, iron ore, copper all down. iron ore specifically. investors weigh the curb in china. crude and brent softer today. a massive increase in stockpiles over in the united states putting pressure on the prices. i want to talk about equities again. look at the hang seng. the benchmark try to overcome this 29,000 level this past week. it has failed to get through this.
we are seeing resistance. this is where it has recouped half its losses from january 2018. the question i'm asking is, since we have seen it flirt with this 29,000 point level, when will it finally break it? will it be a trade deal? what is going to break it to bring the hang seng past this level? tora: the s&p 500 struggling hold above that 2800 level. thank you so much. let's turn to turkey. turkey's central bank will have to choose its words carefully as it charts its course toward interest-rate cuts. with annual inflation below 20% and the lira under pressure, a reduction is unlikely to be on the table when the monetary policy committee gathers. according to bloomberg economics chief middle east economist, this inflation is not yet convincing. the bank will want to avoid the risk of a surprising rate cut,
especially ahead of local elections later this month. great to have you with us. what are we expecting around the language? it is very clear the central bank needs to be careful in terms of impacting the lira, particularly volatility, which has been rising with any comments around easing. >> absolutely. we do not spec -- expect a rate cut today. the language will give us hints about possible timing of this monetary easing. the key to that is two sentences in the statement. any tweaks in these sentences, that will basically increase our conviction that the theral bank will start monetary easing in the first half of this year. that is the key thing to watch.
there were two sentences in particular. what are those? basically thatg central banks can maintain tight they seepolicy until inflation outlook coming down. the second one is basically saying risks to the central , the next move for the central bank is likely to be a rate increase. if you see tweaks to these statements, that will indicate the central bank will be ready to cut rates. thank you so much to bloomberg economics' chief middle east economist. at 10:00 a.m. u.k. time, interim economic outlook.
look for any readout on european growth ahead of the ecb meeting at 7:00 p.m. u.k. time, the fed releases its latest beige book. look for comments on trade and the strength of the u.s. economy. rosengren seems to be turning dovish. . he says it may take several meetings to determine whether the risk to the u.s. economy will clear up or hamper growth in 2019. kashkari and of neel -- long time dove neel kashkari has also weighed in. >> the best thing we can do is keep expansion going, keep the job market continuing to strengthen, to draw more people back in. it's good for them, it's good for the businesses. nejra: peter chat well head of rate strategy at mizuho is still with us. do you expect a pause and hike later in the year?
fomc is going to be full on dovish mode emphasizing they are in a pause. if you look at the hard data, india, look at soft data, -- indeed, look at soft data. financial conditions are back to where they were. they are back to a neutral level. what this means is a combination of equity markets have recovered. the dollar has not depreciated excessively. all in all, the fed, if they choose to after this next meeting, they can go back onto a path of attempting to tighten one last time. we think they are going to be compelled to do so because the hard data is sufficiently strong. if they are to use conventional tools, it is back if you look at how wages are accelerating. i think this is going to prove to be compelling if they are
looking at stopping the balance sheet reduction by the end of the year. nejra: is this already priced into the front-end? we are not going to see much flattening if we see the hike you're talking about? i think you are calling for steepening. >> it is complicated. we are looking at one last hike. that hike in june is certainly not in the price. it is not in the price on euro-dollar. it is not in the price on the level of short-term rates we expect. we are also looking a steepening in the long end of the curve. the fed is close enough to the end of the hiking cycle for the long end of the curve to be continuing to steepen. we think the deleveraging of the corporate sector is going to be causing a recession for 2020. we have two things going on here. the fed is going to find it irresistible to move back into
their hawkish path in the near-term. that is going to be essentially what moves the market toward a recession in 2020. nejra: on deleveraging of the corporate sector, we have seen spreads come in quite a bit. to your mind, was what happened at the end of 2018 a better reflection of where we are and what could happen from here? >> a repeat of that is not going to come until after we get tightening or further evidence that this corporate deleveraging is having a negative impact on equity markets, and essentially growth expectations. you cannot have the corporate sector deleveraging as much as we think they should without a negative impact on growth. corporate spreads can remain relatively tight.
the worst issue is they are likely to be the ones that suffer the market pushing them out or demanding a higher risk premium. nejra: the dis has put out a warning over those. morgan stanley revising down its forecast, revising down its 10 year yield seeing it will drop to a 235 handle by the end of this year compared with the previous projection of 245. talkre a person to monetary theory with. i want to show you this chart. debt has been surging. this is no surprise to any of us. as these discussions swirl and everyone has weighed in, even jerome powell, what does it mean as a bond investor? theou buy into the mnc and
bond yields can stay low as a result? >> we do not buy into mmt. powell's comments on mmt along the lines of what is mmt, they are very important. i think we can still have bond yields rising over the course of this year. not because of the economic situation, but in the near term we are going to have a repricing of u.s. rates higher. the constant we have is the deficits. the u.s. is not going to reduce its deficit over the medium term. under president trump, that deficit is going to remain in play, and that is likely to be pushing yields down. it is going to be difficult to get u.s. ten-year rates down to the level some people are looking at, and think purely because we don't have the change
in fed pricing to justify. i think we can only get those levels of long-term yields once we are fully pricing a recession . and once we are actually pricing the next move from the fed being cut and that cut being very nearby. it has got to be within the next three months or a lot of the market dynamics change to support long-term yields really rallying and falling down to those levels. nejra: the title of your research is the central bank liquidity trap, a.k.a., by bonds. ds.buy bon >> by the end of this year, we think there is still a lot that has to play out. the fed, if they do stop balance sheet reduction, they are going to take off a lot of pressure, which they had been previously time to bond markets and u.s. financial conditions more broadly. they could extend the economic
nejra: let's check on what's trending. on tictoc, where is the world's dirtiest air? themost polluted cities on globe are in india according to a new study. on bloomberg.com, dirty money. is europe's resistance to joint policing of its financial system coming home to roost? and our most read story on the bloomberg terminal, how one that -- betes a 211
. a trump set to preside over 100 billion dollar jump in the trade deficit? let's get into the discussion of what self-made billionaire means. there's been enough of that. money laundering allegations drawing in more european banks, originally centered on deutsche bank. lost half itss market value over the past 12 months since admitting its role in on money laundering scandal. let's bring in bloomberg's managing editor. just give us an update on how this story developed this week. >> good morning. he keeps getting bigger. tomonday, investors woke up
the prospect of having a big report. there was a panic selloff. investors were slightly relieved. the numbers did not seem as bad as they feared. there was a much bigger report released simultaneously from the organized crime and corruption reporting project. that was a huge data dump. it became clear this is much bigger than the nordics and the baltics. this is a europewide issue. day, another bank in the crosshairs. there shares fell 12%. it just keeps growing. nejra: what are the next steps in terms of the allegations? thehe big question at moment is what europe is going to do. there is a european banking union, created with the biggest
fear of the time was that there would be a taxpayer bailout. banks did not envisage this kind of issue. we do not have a framework in europe that deals with this kind of challenge. businesses are trying to figure out what to do. in terms of specific allegations, danske bank does remain the biggest at the center of the scandal. they are being investigated by the department of justice and the sec. they are also being investigated in denmark, estonia, the u.k., and other prosecutors. tos is going to take years get to the bottom of these allegations. stay tuned. nejra: thank you so much. now let's get the bloomberg business flash. debra: yum china is putting high-tech on the menu to tackle the slowdown in the world's world's biggest
consumer market. ahead withs pushing plans to open two outlets a day in china and sees potential for at least 11,000 more. in 1200 citiesdy in china. the seems like a lot, but growth means there are still another thousand cities in china that do not have any kfc. aon is considering a merger with willis towers. the companies have helper limitary talks. aon is preparing to submit a bid. that is your bloomberg business flash. nejra: thank you so much. arey we are asking, what
the lead indicators to watch for the next bear market in the s&p 500? reach out to us and the mliv team on your bloomberg. peter chatwell, head of rate strategy at mizuho international is still with us. how do you approach this in terms of lead indicators? you have talked about the fact that 70% of the rally in the s&p 500 was due to qe. >> exactly. qe was an enormous impact in inflating asset prices. we are in a qt regime. that is something which is putting downward pressure on the level of equity valuations. says we are going to continue with qt, we are going to stop at the end of this year, there is still going to be downward pressure on valuations. this corporate deleveraging
story is going to be very high probability and eventually, the middle of 2020, that will mean we have equity markets substantially lower than they currently are. simplistically, the nonmanufacturing is a very good lead, we think. moment, that can justify the s&p 500 staying around current levels and justify the fed trying to be more hawkish. if the s&p -- sorry, the ism nonmanufacturing eventually , signaling a loss of confidence in the business wetor and loss of appetite, should see the s&p 500 coming lower. you were telling me you are looking at the s&p 500 in some ways, your rate strategy as well. let's move it over to the bond markets. there is a great story on the bloomberg talking about the death of bond volatility.
it has pimco hearing for europe's future. fearing for europe's future. euro about -- euro-dollar volatility has plunged. we were talking about the ecb. you have said bonds are structurally cheap. how can that be true when you're looking at 10 year bund yields below 20 basis points? 30 year germany between 70 and 80 basis points, that is structurally cheap, because over a long-term horizon on these long-term bond yields is that there is likely to be in europe another round of qe. if you look at all the tools the ecb has, it seems almost inevitable to us the ecb at some beginning infuture
2021 will be back in the game of buying bonds. these bonds are scarce. it is very evident inflation expectations are extremely subdued in the euro area, and rightly so. bonds will trade more like a commodity rather than anything that relates to nominal growth. the old relationship is about long-term bond yields. you can throw those into the been. -- the bin. nejra: you expect the 10 year -- great to have you with us this morning. you will be continuing the conversation with us. trade tensions continue. could another turbulent year be ahead for the auto supplier? we speak to the ceo.
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>> from bloomberg's european headquarters in london, i'm nejra cehic. this is "bloomberg daybreak: europe" and these are today's top story. eu officials track to keep car care if saturday. is a trade deal possible by year-end? it could take several meetings to determine whether risks are clearing up or getting worse. europe's dirty money scandal widens, more banks drawn into money-laundering allegations centered on russian funds.
good morning, everyone and welcome to daybreak europe. an0 a.m. in london, just hour till cash equity trading in europe and the equity market a little lackluster. yesterday, we saw the s&p 500 did a little bit. underutures coming pressure today but it looks like we are seeing fresh impetus for markets. ftse futures, under a bit of pressure down .2%, dax futures go nowhere. futures off-- cac .2%. a fifth day of gains for the dollar index. dollar strength feeding into that. the aussie under pressure, cable under pressure. the 10 year treasury yield, dipping lower following comments from the fed yesterday. oil, also dropping in today's session.
markets in on the asia. juliette saly has more on the asian markets in singapore. we've just seen china's market close higher by .8% and also seeing a line on the bloom -- bloomberg that turnover has turned to 1.1 trillion yuan. interesting to see these positive moves into chinese markets as the npc is underway in beijing. india's market higher, australia closed up .8%. what weightings down in the region today was losses in japanese stocks. the topix coming off the 2019 highs we reached monday. you have seen money coming into the em, so the philippines looking solid. when we look at currencies, the aussie dollar is in focus today. we had the rba leaving rates on hold yesterday. today, weaker than expected to gdp numbers.
all of this pointing to the fact that the rba may have to cut rates. you could see a 50-50 chance by august. the aussie dollar at a two having month lows. the philippine peso steady against the dollar but we did have to drop after the biggest plunge yesterday's 2013 on the surprise announcement of a new governor of the central bank. the korean won is the worst performing asian currency today, falling for a fifth session against the dollar. seen a lot of funds sellout of stocks in korea. that is weighing on the won. sicilia mouse trump will meet robert lighthizer today. the goal, reach a trade deal by year-end. there was a major roadblock a year ago when the united states slapped 20 not -- 25% tariffs on steel and aluminum. this called retaliatory tariffs.
agreed to a truce, putting auto tariffs on the back burner. considering the trade surplus with the u.s., this was no small feat. germany had the most to lose from levies. jean-claude juncker has upped the ante, saying auto tariffs could see the bloc purchasing fewer soybeans from the united states. . has become a key destination for u.s. soybeans after china scaled back. autos, we've got the views of some of the world's top carmakers at the geneva motor show. quite happy with what we are seeing, obviously and we hope that we get an agreement. >> it is a challenge. automotive is transforming. we have to cope with a lot of issues and this is one of them. we will manage. >> the u.s. market is important for us so it is a serious topic and we are watching what will happen.
on our friends in the u.s. and at the end, we will find a solution. for awould really look future in which the trade barriers are less everywhere in the world. --are in favor of not >> i don't think we have to protect our european companies with a 10% import tax on american cars. it is not necessary. we are competitive. nejra: those are some of the leading voices in the auto industry at the geneva motor show. some live coming through from just eat. full-year adjusted coming in at 173.9 million pounds, beating the estimate of 172 million pounds. it is a beat on the full-year for just eat. maintaining its 2019 view, full-year revenue coming in at 779.5 million pounds.
estimate, 778.6. it beat on some of the numbers and maintaining its 2019 view. u.k. revenue, up 27%. joining me, jordan rauf chester -- jordan rochester at nomura. let's get back to the trade discussion. we heard about the latest. u.s.-chinae whole angle to talk about. in your world, does this translate to more dollar strength as the uncertainty continues? you've seen six days of gains, some of that driven by the data from the u.s.. jordan: the data in the u.s. is stronger than the rest of the world. the fed is trying to do more dovish. it is time to be out doved by the ecb and japan. when it comes to trade wars, if we saw a u.s.-china trade deal break apart in terms of talks, if they broke up with no deal, that would late -- leads to
dollar strength, renminbi weakness. when it comes to euro, i don't think we will see tariffs on european auto cars because it would be april or may. i don't think markets will be strong enough for trump to feel he has the ability. when he puts tariffs on china, there was a long-term strategic goal with made in china 2025, but markets were going through the roof and corporate earnings. it is a different situation. a more fragile state. we've had a reason to bounce in risk. not that strong of a bounce, but i don't know how confident donald trump would feel targeting auto manufacturers at this stage. nejra: some have said this is the most underpriced risk when it comes to the euro and you have admitted or bias for euro strength has been a painful one. are you holding on to that bias for euro strengthened what do you need to see for it to play out? jordan: there is no immediate reason euro should strengthen materially right now. there is no material reason it should go lower. it is quite cheap.
we have been in an annoying pain trade of a range. nejra: we talked about the vol, hello it is. jordan: -- how low it is. jordan: rates at multi-decade lows, implied volatility for next year for fx and rates. the frustration -- there is frustration for euro traders. by year-end, the chinese growth story. in the second half, chinese growth might boost back. we are already seen total social financing pickup in china and that sort of impulse from the authorities in china would see the trade improved and lead to growth. that rescues good euro and we see a move higher. nejra: you talked about the death of bond volatility. there is a story today, pimco fearing for europe's future. the price in the rates market plunging. pimco saying lower eurobond
yields my last forever. you talked about the japanification. our euro rates going to stay lower forever? surely not. jordan: the phrase japanification of europe is what happened in japan years ago. we have seen the east -- the qe program. just as soon as they want to raise rates, pca market pricing in little chance of that. the data is not strong enough. it is a cyclical story and a structural. the structural is demographics. type in the population of countries around europe and the chart is going down. populations around europe and the aging of demographics. that leads to affect -- excess savings and that is the japanification of europe. when it comes to bond volatility, it will go up when the ecb decides to raise rates. is that this year? is it next year? we think next year, but we need to see that growth in the second half.
nejra: vol can go up but how much can rates? i was ringing up the point that zero bond yields could last forever. in terms of where we see it, it is definitely higher than where it is now. negativeproaching territory on the long end of the curve. the sort of range for tenure bunds, 40 basis points is not really a call. to see it going beyond that because the market is not going to price and aggressive ecb hiking cycle. in long end rates, it is tricky. nejra: let's talk about cablenejra:. q got interesting calls. -- you've got some interesting calls. keep talked about how the positioning has been negative so far. what does that mean in terms of cable? resistance of least higher, even though we have seen it all in today's session? jordan: we have been trading this since 19 your sterling. when you are at decade lows, it might bounce off the lows. we've had the long sterling
trade for some time now. however, if you look at the positioning data, we've seen the shorts in sterling being taken off the last couple of weeks because of the brexit hike cycle. just when you think we will have we know whatoment, brexit is and mps might have taken over the process and we have a softer outcome, you have your hopes dashed. theresa may sets herself another date for the end of the month when it comes to the summit. is sort ofit short-term guys come hedge fund guys put their long eureka trades on and if you have signs of that not happening, you see sterling weakness. the short-term timeline, this weekend will see some progress. last night's news, not great but we had a sign. sunday, theresa may flies to brussels.
will it convince people? 50-50. i see positions want to climb down. what geoffrey cox secured is enough for me. if it is the same thing, sterling will trade softer but then we have mps amendments and might seem second referendum hopes. nejra: what does this mean fornejra: vol? s, realizel volatility is rising. jordan: we've had disparity between where it implied volatility was in sterling versus realized. it was expensive to hold that exposure when the pound wasn't moving, but we had to hedge for hard brexit. now because of the idea of article 50 being extended, you don't need to own and march dates as you did before. it is the tap on the shoulder moment. if your job is to hedge yourself and you didn't hedge brexit, what were you doing? with article 50 being extended,
when will it be extended? when is the new hard brexit date? we've seen a march premium come off and people trying to apply the premium to wherever the article extension could be. butill learn more next week volatility has fallen because you don't have the hedging demand anymore for the end of march date as you did before. nejra: great to have you with us. -- jordans texture rochester at number of every that get the first word news with debra mao. carlos ghosn is set to be released on bail after an appeal by prosecutors failed. he has paid his bond and could be out of prison as soon as today. the auto industry titan has been locked up since november. option ofs have the extending his detention by arresting him on new charges. data may show the u.s. trade deficit with the rest of the world has topped $600 billion. the shortfall is the metric by which president trump judges
countries to be winning or losing. it would mean during his two years in office, it will have grown by more than $100 billion. theresa may could be on course for another brexit defeating parliament. the prime minister's chief whip has reportedly warned he isn't confident he has the numbers to get her deal through. sayshile, mark carney there has been "constructive developments in readying for a no deal brexit." inthere has been progress --paredness and that reduces and i would emphasize this -- reduces the level of the economic shock. we do see potential for material shock. what we can do about that is make sure the financial sector is there to help buffer it. abra: wall street is nearing fix it hopes will shade up -- clear up one of the shadiest corners of finance. some firms have been accused of
making money by enticing companies to miss bond payments they would otherwise have been able to make. we are told wall street names have agreed to a plan to ensure any defaults are legitimate. 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: debra mao in hong kong, thank you. as theup, 900 job cuts german auto supplier drops its 2020 target. we will explain -- speak with the company's ceo next. traveling to work, tune in to bloomberg radio on your mobile device or dab digital radio in the london area. i'll be there from 8:00 a.m. london time. this is bloomberg. ♪
europe. let's get a check on the markets. a mixed picture in asia. the msci asia-pacific index not going very far but gains coming to her in china. stronger green on the screen, up 1.6% on the shanghai,, above 3100. dollar-yuan not doing much. the nikkei, coming under some pressure. oil on the back foot, wti traits that -- following the data on u.s. for the of gains bloomberg dollar index. yesterday, the isn manufacturing index posting its biggest gain in the year. polish strength has been a story for a lot of this year despite the bear calls because of a lack of alternative in g10. you are seeing some in the g10 coming under pressure today. the aussie and cable among them. zero stoxx 50 futures off a little. we saw weakness in u.s. futures and today, as well.
let's get the business flash with debra mao in hong kong. debra: young china is putting high-tech on the menu to tackle the slowdown in the world consumer market. it is introducing ai and robotics. yum china is pushing ahead with plans to open two outlet today in china and sees potential for at least 11,000 more. there are ready in 1200 cities in china. that is a lot, but the urbanization, growth in china means that there is still another 1000 cities in china with no kfc. debra: general electric has tumbled the most in three months after its new boss warned of it additional -- of additional problems at the ailing company.
industrial operations will be negative this year but the shop from 2018 when the maker of gas to bunds and jet engines brought in $4.5 billion. that is your bloomberg business flash. nejra: debra mao in hong kong, thank you. a turbulent 12 months for the global auto industry but how our suppliers faring? germany's schaeffler says it is to cut 900 jobs and is abandoning its 2020 targets. joining us for an exclusive interview from the company headquarters is ceo klaus rosenfeld. great to have you on the show. thank you for joining us this morning. condi's headlines about the abandoning of 2020, the cutting of about 900 jobs, there are indications the shares could open lower in about 40 minutes. what can you say to reinsurance investors? : good morning. thank you for having me. first of all, i can't say that we met and achieve our targets
for 2018. that should give investors assurance that we are delivering what we promised, 3.9% growth, 9.7% margin and 384 million free cash flow. that is more than what we promised so that is on the positive side. on the negative, that is group level, we have not achieved the auto targets due to the situation in europe and china, but on the contrary, the industrial division over achieved what we promised. than inin is 3% more 2017 and it shows we are well-positioned if we put in efficiency initiative to stabilize the margin. that is what we want to do next on the auto side. that is why we announced this morning the program raise. and portfolioncy optimization on the automotive side and yes, it comes together
with some measures on the efficiency side. we will look at our european client network to consolidate clients there, reduce the operating leverage and there will be some headcount reduction. on the other hand, it is not only an efficiency program on the cost side. wherea portfolio program we want to pave the way forward in mobility and hybridiza tion. in the next years, we want to improve our auto tint -- intake in these areas. i am optimistic for what we plan for the next years. nejra: i understand what you are saying, that the industrial over achieved. most of the concerns on the auto side of things, you outlined steps to offset that. is, do you to you see further deterioration in the
auto market and if so, will the steps you are outlining be enough to offset that? well, the auto environment will remain turbulent. outlookautious with our and we see there is low visibility. that is also the reason we said we will skip the 2020 targets. in the year 2020, we will address this again and come back when we have revisited all the long-term plans. you also saw that we announced a change in our team. yes, we are preparing for a difficult environment and the measures we just mentioned will certainly be only a first phase. the program is a more long-term program with three different phases. the first phase is targeted to achieve a 90 million profitability improvement, 100 basis points in terms of the margin. and as wefirst step
have shown on the industrial side, as soon as we need more, we will putting another phase. nejra: and of course, looming over all of this, the discussions between the u.s. and eu in terms of auto corrects. -- tariffs. how does that factor into your present -- preparations? well, that is part of the more difficult to judge environment. we are preparing for these discussions by further localization. we hope these discussions will come to a positive result. that's also why i said we need to be careful with the environment. it is difficult to read. visibility is low and we need to be flexible in your response. arguablysibility might below when it comes to brexit. in terms of your preparations have original equipment
manufacturers and asking you for extra parts to prepare for brexit? well, we were one of the first companies -- we will take action in the u.k. sadly enough, we have decided to reduce our planned network there quite dramatically and bring jobs back to germany. on the other hand, we have a task force in place in many months preparing, as good as we can, for what is happening at the end of march. we hope this will a folding a way that is positive for everybody or as positive as possible. it is clearly on uncertainty that we need to deal with, but we are as good prepared as you can be. nejra: thank you so much, as prepared as you can be for brexit. klaus rosenfeld, the ceo of schaeffler group. that is it for "bloomberg daybreak: europe." "bloomberg markets: the european open," is up next.
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anna: welcome to "bloomberg markets: the european open." we are live bloomberg's european headquarters in london. i'm anna edwards alongside matt miller in berlin. matt: today, the markets say it looks dodgy up down under. the dot -- aussie dollar 62 a two-month low. the u.s. rises for a sixth straight day. european futures pointed lower at the cash trade open, 30 minutes away.