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tv   Bloomberg Markets European Open  Bloomberg  March 6, 2019 2:30am-4:00am EST

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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. anna: driving forward, eu
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officials headed to washington to keep car care of saturday. is a sweeping trade deal possible by year-end? sterling sinks after a report brexit talks in brussels ended without a deal. will may be forced to extend the deadline? talks continue. scandal dirty money widens. dutch media reports ing's moscow branch was involved in the so-called troika laundering. matt: let's look first off at the pound. because if the pound we are concerned about theresa may's deal passing next week, it will weigh on the pound. above 1.33 a couple of sessions ago. keep your eye on futures right now. we are looking at negative
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futures pretty much across europe. red arrows, although slides, on the dax, cac, and ftse. -- alle, often about .2% off about .2%. what do you see on your gmm screen? all very green from this perspective, but the picture in the asian section has been a flat one. struggling for direction. looking for some actual facts around what is going on with regard to trade talks. that seems to be something we are waiting for. there are some asian equity markets that have made outside moves to the upside. solid strength is a feature of today's trading session. there is weakness in the pound and the australian dollar. you said in your market summary that something dodgy perhaps down under. that seems to be the case with the gdp number weaker than anticipated and forcing participants to rethink rate
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expectations in australia. on the other side, let's look at where we are on sovereigns. the australian story writ large and we have the continuation of the npc in china. oil prices, down .8% on wti. insaw another set of data terms of stockpiles, a bigger than expected increase weighing -- oil prices moving lower in that context. matt: asian stocks trading mixed after u.s. peers struggled to make headway in the session before that. the dollar is gaining for the sixth straight day, and they australian dollar sinks after a weak jdk that -- gdp data. let's get more with mark cranfield in singapore. it is interesting that we watched the u.s. dollar rise for a sixth straight day. our markets starting to expect
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the fed to move toward the possibility of a hike? mark: i don't think we are going that far yet but a lot of this is a haven flow. the euro is doing badly, the yen, the aussie is doing badly. it helps we have this whole yuan support at the margin, supporting this theme that yuan and dollar are dominating other currencies. pictures, the euro-yen is clouded by everyone looking at the dollar. you have yuan and a dollar strength and everything is suffering. he rate hike will start being priced backing in the u.s. for the fed this year, but there is no immediate pressure. conditions aren't quite uneasy yet and there is no inflation threat yet. it will come at some point, but slowly. anna: let's talk about the australian market.
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tee shot the gdp number worse than expected and now the australian dollar down .8%. rethinking about rate expectations. mark: the australian data has been terrible recently and the other story in australia is the deteriorating relationship with china. more than 35% of its trading exports go to china. it is a completely china dependent economy. it is as commodity dependent and china is a commodities importer. with that deteriorating relationship, there is more concerned about domestic issues. we might get chinese yuan stability with a trade deal which means less outflows from china and less money coming into australia's property market. the property market has been looking weak for some time but if we are curtailing chinese money into that market, australia is in trouble. suddenly, rate cuts are a consideration on the table. theher bank today joined
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call for two cuts this year, 50 basis points. rates have been on hold for a long time in australia. we are expected to the next move would be a rate hike only until a month ago. notthe market is saying only a rate cut, we might get two cuts in the next year and that is why australian dollar looks to have more weakness in the days ahead. matt: i've got to ask about the mliv question of the day. what are the lead indicators to watch for in the next bear market? we asked because -- is today the tenure anniversary of the -- 10-year anniversary of the 666 y low? mark: the 10 year anniversary of the intraday low. 10 years ago, it hits the 666 number, the devil handle worrying people. we are more than four times higher today. when will we get the next panic?
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when will he get the next that market? one thing people have been excited about, the yield curve is still a good indicator. people get too worried about when the yield curve inverts. it is more when it starts steepening after inversion we need to worry. there is quite a bit of lead time. at the moment, it is not flagging a recession in the next 12 months, but it is important to watch. liquidity and the central bank balance sheet. those are the things to watch. anna: mark cudmore, thank you. breaking news from tokyo. carlos ghosn has been released from a tokyo jail. he is still in the building. we are showing you live pictures in tokyo where we understand he has been held. we are not entirely sure whether he has left the building or partially released. anyway, this is where he was being held in tokyo. we will bring you more details. he posted 8.9 billion -- $8.9 million bail. he says the accusations against
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him are meritless. he spent 108 days in jail. next, he will face trial. let's get a first word news update with debra mao. data to be released today may show the u.s. trade deficit with the rest of the world has top $600 billion. the shortfall is the main 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. north korea is reportedly restoring facilities at its long-range missile site. that comes from a south korean newspaper. kim jong-un's losing had dismantled the site last year as part of steps toward disarmament. warned north korea must be willing to give up its nuclear weapons or face even tougher penalties. hasry tycoon bernard are no passed warren buffett as the 50
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richest person the world, making 14 point have five -- $14.5 billion and is worth $83 billion. the billionaires index says kylie jenner has become the youngest elf made billionaire. she is worth just over a billion dollars. 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. debra mao int: hong kong. coming up, we speak to nigel wilson, the ceo after the insurer's full-year results. this is bloomberg. ♪
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anna: welcome back to the european open. we are 18 minutes from the start of equity trading in london. legaland general group -- and general has reported profits of of analyst estimates. the challenge will be how it squares growth ambition with dividends, which it has raised for the ninth straight year. and general. legal we are joined by the ceo nigel
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wilson. great to have you on bloomberg tv once again. let me ask about your earnings, when he reported. it looks slightly better than anticipated. what are the positive drivers behind these numbers? nigel: we had an amazing year in terms of pension and annuity business which did 10 billion in volumes last year, more than double long-term historic trends. we see that as a big growth opportunity forward -- going forward. it became the one trillion -- first one trillion pound asset manager in the u.k. operatingpy the division is up 12%, group operating profit, 10%. 22% return on equity and dividends and earnings grew 7%. strong financial numbers. matt: i've got and rbc capital markets note here. they say, although it is not a consensus view, 2018 is expected
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to be the worst year for deaths this millennium. explain to me what that means to legal and general and your bottom line. nigel: it is a very sad outcome in one sense. we have all underestimated the rate at which people are dying. there are all sorts of trends causing that. we recently thought it was a blip and it turned into a trend. the assumptions were wrong we were using for the rate of improvement. it means we can make big releases. this year was 433 million, last year was 332 million. 2016 tables, but we haven't seen the data, which means we have further releases to come in future years. we are reinvesting those proceeds to drive economic growth largely here in the u.k. in towns and cities and new businesses and that will create
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real jobs, real wage increases. in this rather sad outcome, resulting in a positive outcome for economic growth. ask a question about legal and general investment management? there had been talk in the press, allegations of trouble in the culture. i know you pushed back against that. we have seen management changes. you have hired a new ceo. what do you think she can bring to the business? nigel: this is a long planned move that mark would step down, having done an amazing job working closely with me over the past eight worth seven years. michelle will bring some different skills. she is very strong in operations, very strong and risk. we've positioned the business with lots of opportunities for growth in the u.k., very important in the united states, but also in asia.
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she is going to join a business that had 40 odd billion of net inflows last year. very confident we will perform strongly again in 2019. we are definitely heading forward at a tremendous rate. renewed energy to help drive the growth and a vast variety of skills across the whole of not just fund management but operational risk and risk management skills across the group. matt: you have the biggest investment management business by assets under management in the u.k. and of course, a lot of how you invest is fundamentally tied to u.k. growth. how does printed affect that? -- brexit effect that? are you set up even for a hard brexit? nigel: we are set up for it. we have had long-term planning, regulators have been involved. a good job at the
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bank of england making sure we are in good shape if there is an outcome we don't expect at the moment. the interesting thing is that the towns and cities across the u.k. have been leaning into and encouraging more investment in the respective communities. constructive collaboration has gone on in terms of the city's right across the u.k.. glasgow, edinburgh, manchester, birmingham, bristol, we are seeing that everywhere. are prime cambridge examples of huge opportunities for future growth. anna: i noticed legal and investment inmade electric vehicle infrastructure. we have been talking about this a lot recently. what opportunities do you see for infrastructure investment in electric vehicles or other parts? our futures part of cities program. electric vehicles will play an important role going forward.
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we have started including those offices, ouruses, retail developments. it is just a natural evolution of the market and we want to invest in relevant things that will help drive economic growth and lead to better societal outcomes. examplesne of many that we have across legal and general of modernizing the business by investing in future economic growth. we are not huge fans of share buybacks. we would rather companies like ours invest for long-term growth. matt: speaking of long-term growth, we are not seeing a lot of that here in europe right now and i will head over to frankford and the ecb tomorrow. on the one hand, you want economic growth. on the other hand, low rates are bad for insurers. what do you want from mario draghi? we've had low rates for a long period of time. we had double digit growth with
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a 20% r.o.e.. performance has been pretty good in a low interest rates environment. we have this incredible backdrop, a huge infrastructure deficit. people like draghi should start talking about the real economy and stop worrying just about the financial economy. the banks are in good shape. firms like ours are in fantastic shape. we need to have investment led growth. europe has fallen too far behind the united states and asia. very exciting things are going on in asia. america has much stronger growth. europe has to respond by investing for growth and we haven't seen that anywhere the last few years in europe. politicians, businesses, and community leaders all need to step up, work together and figure out how can we compete on a global level by investing more in our economies, in our people? in physical assets and in digital assets? anna: with interest rates as low
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as they are, thank you nigel wilson, joining us from the london stock exchange. let's get a bloomberg business flash with debra mao in hong kong. general electric has tumbled the most in three months after its new boss warned of additional problems at the ailing company. he says cash flow from ge's industrial operations will be negative this year, a sharp drop from 2018 when the maker of gas and jet engines brought in $4.5 billion. yum china is putting tech on the menu, introducing ain robotics to position the -- kfc and pizza hut as fun brands aimed at china's growing brands. yum china is pushing ahead with plans to open two outlet today in china and sees potential for -- out let's a day in china and sees potential for at least 11,000 more. >> we are already in 1200 cities
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in china. that seems like a lot, but the urbanization, the growth of gdp and capital in china means that there is still another 1000 cities in china with no kfc. debra: that is your bloomberg business flash. matt: thanks very much, debra mao in hong kong with your business flash. we are minutes away from the open. next, your stocks to watch at the open including ab inbev after the birth's chairman resigned. -- brewer's chairman resigned. this is bloomberg. ♪
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matt: we are six minutes away from the start of european trading. let's look at your stocks to watch from around the newsroom. tom lavelle is looking at shiffler, paul jarvis from the equities team covering ab inbev, annmarie hordern focusing on just eat. what do we hear from schaeffler? >> they decided they can't reach their 2020 financial targets. they did reach one particular one, but the rest are very hard -- far behind. with the car market has week as they are worldwide, they don't expect they will make them. the announced a oforganizational margin
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improvement program today which will include 900 job cuts. anna: we will keep an eye on how they trade at the open. ab inbev? >> this morning, there are two bits of news. first, the chairman is standing down. he will concentrate on his roles at geb -- jab. a- said they might cut their rating because of the leverage being significantly more than expected. what that means for the shares, they have rallied quite hard since they fell after the heinz kraft news and they are close to being technically overbought. we may see a reaction this morning. matt: henry, take us out on just eat? >> they beat estimates. they are keeping the 2019 view.
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it is an interesting time for them because they are seeing growing competition within the industry, including over its. we will -- uber eats. this is bloomberg. ♪ you.
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anna: one minutes ago until the start of cash equities trading day this wednesday morning. this is how the markets are positioned. future suggesting a little weaker in europe but things fairly flat in asia. not so for the chinese equity market. that has been outperforming for another day. we saw yesterday, finishing a number of days with chinese outperformance. the people's congress continues. the euro fairly flat as we go towards tomorrow's ecb meeting. oil prices weaker, responding to the output from the u.s. the pound is weaker against the dollar. interesting to see the reports of what has not been achieved in terms of the talks between brussels and london.
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let's have a look at the futures. the talks to continue in brussels today. let's have a look at the futures, we are expected to go down in the start of the trading day. european equity markets gets set for a fairly sluggish start. looking for details, facts, looking for anything material around trade. that seems to have been a market preoccupation, rightly or wrongly. that is the big story for markets at the moment. as we don't have a great deal of news, we are kind of treading water. big news in australia, and that was of interest. we will talk about that to our next guest. we will get to him on the growth story globally and the australian angle on china. let's check what is going on the markets as they open up. down 1/10 of a percent in london. pretty much as expected. modest losses, including what we
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saw in u.s. futures overnight in the asian session. talking about the broader picture, let's see where we are. a lot of red going on on the screen, suggesting this is a broad-based selling, and maybe some appetite for health care. some of the more resistant stocks, more defense of stocks. selling in energy, financial services. generally, a pretty red picture across the map. matt: absolutely. really only consumer staples are putting up gains today. let's take a look at the move screen on the stoxx 600. we have 232 gainers. 346 losers. not a lot of breath. a moved to the downside. you see ds smith and british american tobacco here. the biggest gainers and additions to the stoxx 600.
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legal and general down 3%. the biggest loser in percentage terms. trading,e 600 stocks legal and general the biggest loser. anna? anna: ds smith, the packaging system has been selling assets. we will return to some of that detail shortly, but let's get back to the big picture. european markets opening pretty flat, that has the dollar continues its run. a little bit of strength in the dollar for the six-day, entr'acte opposed -- on track to post gains. good morning. good to see you. we have a little bit of dollar strength over recent days. the dollar is flat the positive this morning. what is behind that dollar strength we have seen in recent days? >> one simple story. instart to see yields rise the middle of last week gently.
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the dollar starts rising at the same time. the equity market rally started to stall. i think that is it. in a nutshell, that explains the world of 2019. anna: we can stop talking now that. >> yes, the fed did an astonishing good job of reviving equity markets. as soon as anything comes along to the third the story, risk settlements become negative. it puts the fed in a difficult increasednd an physician for economic data. it could be a negative. matt: this is why we see the japanese yen so weak as well. 112 for your dollar is not a bad deal. simon: yeah, it is interesting. the only time the yen has actually moved over the course of the last few weeks is again when you saw a modest shift in yields. last week, when all the negativity around the collapse
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of the summit came along, yen fairly moved. there was no safe haven whatsoever. one shift in yield, we have a bigger in dollar-yen. that brings us back to does this moving u.s. yield going to be sustained? i struggle what that a little bit. we could see a far more substantial move. that is where the boj is going with policy. anna: what do we do with fx volatility at the moment?a lot of distances would like to have limited volatility. may be in the fx market like a little bit more. i have a chart showing global current volatility dropping with the dollar. this is the more long-term trend, coming down. this lower volatility, is this the story you are tracking? simon: absolutely. if the volatility goes any lower, you might as well have the euro in currency union with
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the dollar. the reality is this measure is what central banks are doing. if you flood the world with liquidity, surprise, currencies go towards very low levels of volatility. if you end up with a spike in yields, if we feel that we can support high yields and hire equity markets, maybe that changes. right now, again, just look at was happen in the last few days and the negative reaction, it feels like we are in perma-easy money. we continue with low volatility. matt: it sounds almost like a reference to m.m.t. simon, do you think -- when you look at this debate around modern monetary theory, do you think that the fed is starting to get in line? simon: i think so. let's consider the last 18 months. itsfed started winding down
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balance sheets. within a space of six months, we have the u.s. equity markets doing a decent impression of what they were doing at the end of 2007, the end of 2000. in the face of that, the fed suddenly moves back towards the idea of the fed push again. the idea of where we are with the balance sheets is where they are going to be for a long time, i think is to me, pretty straightforward idea right now. the does not seem to be any pressure on central banks to change that. in terms of actually moving meaningfully from where we are in monetary policy settings more generally, do we really think the ecb is going to move significantly this year, or ever going to get into policy territory? anna: thank you. we will wait tomorrow for clarity on that. we will talk about europe in a subsequent conversation coming up next. simon derrick stays with us. we will bring you the stocks on
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the move this morning. the auto carmaker scrapped its 2020 target, falling by more than 10% as you can see on the big numbers. that is the biggest drop since february 2018. the company moving away from its 2020 target. next, this is bloomberg. ♪
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matt: welcome back to bloomberg markets.
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this is the european open. we are about 10 minutes into the trading day. we are looking at a mixed picture as far as the european equity indexes are return -- concerned. gaining 1/10 of 1%. the dax falling about 2/10 of 1%. let's get to the top individual stocks stories with annmarie hordern. annmarie: let's start with d.s. smith. it is leading the stoxx 600, up more than 4%. they are showing up their plastic division ii partners. the downside, more than 4% even though they had a decent quarter revenue. they beat estimates. in the u.k., they have really strong demand. 27% increase in revenue but seeing a lot of competition.the likes of uber eats. a lot of chatter in the market. one of the investors pushing them to make a merger. scheidler to the downside. this is one of the biggest auto parts industry suppliers. they are abandoning their 2020
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target and cutting about 900 jobs. earlier today, we spoke to the ceo. take a listen. >> the auto environment will remain turbulent. we are cautious with our outlook. we see there is low bu visibility. that is also the reason why 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. annmarie: the ceo talking about the consciousness in the industry. anna: a sector we have focused on a lot as of late. thank you very much. commissioner meets robert lighthizer in washington today to keep the threat of car tariffs at bay. a trade deal that roadblock last 25% with the u.s. left tariffs on steel and aluminum.
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the two sides agreed to a truce. that was no small feat considering the large trade surface europe has with the united states. the european commission has upped the ante saying auto tarif fs could see the eu eyeing fewer soybeans. china scaled-back purchases of american farm products. autos reenter the limelight. here's what some of the world's top commenters have to say at the geneva auto show. >> we are not quite happy with what we are seeing, obviously. we help we get an agreement. >> it is a challenge. the automotive is transforming. we will manage. >> the market in the u.s. is very important to us. that is a very serious topic. we are watching what will happen. we are counting on our counterparts in the u.s. and in the end we will find a solution. >> we really would look for a future in which the trade barriers are less everywhere in
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the world. we are in favor of not adding dissension. >> i don't think we have to protect our european companies with 10% import tax on american cars. i think it is just unnecessary. we are competitive. matt: will the eu be able to get a deal before a 90 day deadline for punitive action is up? maria tadeo is in brussels for us. what can the eu offer to stop trump from raising tariffs? maria: good morning. this is the state of play. on know it is at 2.5% tariff the small european cars. 25% on the pickup trucks. president trump can't make 25% standard of you thinks there is a national security concern. for the europeans, obviously, this has big implications on the exports and for the german carmakers which is such a
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strategic sector for germany. there is a very strong economic case for them to get the steel . the eu wants to get a deal done. we understand they can have mutual recognition on a number of sectors and bring down tariffs on industrial goods. the big question in brussels is whether this will be good enough for trump, or he will use the cards to get a bigger trade deals. those are some of the red lines of the year. anna: if the u.s. does use cars to negotiate a bigger and broader deal, which of the sectors with a want to gain access to in the eu? products in agriculture is always a hot topic. maria: that is right. we heard from trump many times, he does say the u.s. the docket a fair dale from the eu. he does like to get bigger trade deals. the one sector is agriculture
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and food. this is a big red line for the eu because that means they would have to change their standards, but also it is a very crowded sector already in europe. it is a sensitive political issue. it is difficult to see how the eu could sell this back home politically. that is a big question. there is this idea of tit-for-tat tariffs. the eu will tell you we are not trump,o be bullyeied by the that remains a question to be seen. matt: thank you very much, maria tadeo, continuing to cover this story for us in brussels. us inderrick still with london. simon, how optimistic are you for a u.s.-eu trade deal? simon: i think you summed it up very well. that europemains does not want to push back on
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the agriculture side. i think that makes it difficult. the problem for the european side is we have discontinued story of slowing growth kicking in. i think a lot of that has been related to the china slowing growth story. it makes it very difficult, but ultimately, you will have a standoff. anna: if the growth story in europe is tied very much to china, we saw some improvements in some of the data yesterday. the, said pmi, some of it looks better than anticipated. is this reason for hope or does this change nothing? >> if you got china talking gdp, 6% to 6.5 cent caution for this year is the reality. simon: i think where we are right now is kind of a perma-hold on monetary policy. i think it will continue to go into european numbers.
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i expect that yesterday was just a blip. i kind of struggle to believe the ecb will do anything dramatic in terms of policy this year. matt: you don't think that they will go in either direction. what about job owning? will be here some of that from mario draghi tomorrow? simon: i don't know. i think we probably get something from mario draghi dropping some hints about tiaras -- tro's. i expect he will possibly give himself a little more flexibly on the talk about the rate hike, maybe start to suggest there is a little more flexibility further down the line. but equally, the reaction of the market so far in the ecb has been minimum. they don't really seem to care. anna: talk about that low
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volatility story, how do you play the euro at the moment? you joke that there should be the currency union with the dollar, better is that little volatility. where do you see more volatility an opportunity? simon: you have to ask yourself what has moved the euro over the past few years. the only things that move that have been clinically related. go back to 2017, the rally that took us from 106 to 124. that started exactly on the sunday of the first round of the presidential elections when it became clear that la pen was not going to get in. winded the euro start climbing? coincidingt year, with the rising tensions in italy. right now, you are generally looking for a move to develop. he's probably not going to be on the back of ecb unless they do something truly dramatic. it could be the european elections. i suspect it will be around italy again. that is where the key story lies.
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right now, i think volatility will be with us for a while. simon derrick will stay with us. we have a lot more to talk about with him. i want to take a look at the sector movers in the stoxx 600. i have my screen up and we are starting to see a lot more sectors gaining at the top of the hour. we only saw consumer staples up. now we see basic resources gaining, as well as oil and gas up. you see telecoms and utilities. bottom line is you see a lot of defensive sectors gaining today and that may not be necessarily a long sign. yuan volatility in the slides to a nine-month low. e being helds to keep the currency stable? we will discuss. this is bloomberg. ♪
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anna: welcome back to european open. 23 minutes into the trading day, things looking more positive since the start. we were entirely flat on the stoxx 600. getting the best of the gains. the dax down by 2/10 of 1%. auto-parts very much under pressure. the yuan has gained more than 2% against the dollar this year. keeping the currency basically
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stable ashtray talks with the u.s. continue. they might point to the basket of currencies and suggest a different perspective, but now offshore volatility has had the lowest since last june so is the pboc following through on its promise? simon derrick is still with us. talk to us about volatility in the yuan. the u.s. wants to talk about this a lot and don't want the chinese to devalue their currency. have the chinese been allowing more volatility or no? simon: i think in the long run, yes, they have. where we were two or three years ago, and in terms of overnight moves, generally speaking, you are seeing a rise. equally clearly over the past three weeks, it has become more muted. let's focus on what has happened over the course of the last four months. huge concerns going into november about what would happen in terms of volatility for the yuan and retail markets should
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the dollar be unscented -- u exactly when the point came through, we have the fed emerge from some i suggest those are connected. certainly, it helped take the pressure off. that hints coming into late january that maybe the yuan will move beyond 6.7%. guess what? we are in a 6.7 world. they have done it pretty decent job in maintaining that stability. it's interesting to me that the hints about greater support for the economy and greater liquidity into the system and generally make life easier monetary has come of the point where we started to test the bumper the yuan. think they will try to keep it in that range, frankly. that theseems then
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haveand the party in china 30 strong control over the course of the yuan. what about the economy? they want to use the economy as well but it is more difficult for them to do. simon: i think the idea that they are just going to keep leveraging up seems to be the key story. certainly, the stuff that was coming out yesterday when talking about increased fiscal spending. they don't seem to have a lot else going on. i expect try to keep the currency competitive is a significant part of easing the story for the economy. the problem is right now the issue of currency is from the trade talks themselves. anna: how much -- of the theme to watch is this? simon: i don't remember, maybe i am misremembering, but i don't
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currency -- remember currency be explicitly part of trade talks. in my entire career, currency has been central to the politics of debate between china, the u.s. and japan. go back to reagan in the 1980's, clinton in the early 1990's, and again in 2000. think about the policies toward the dollar from 2001 onwards. all of it has been about currency and competitive devaluations. there is no big surprise it is front and center, just it is more explicit this time around. matt: we have a little more to talk with you about, simon derrick. he is going to say with us. let's check in on the markets quickly and take a look at how they are doing around the world. not a lot of change in u.k. stocks or italian stocks. we see some red arrows in germany, france and spain, but even those are not that strong. looking for direction in terms of equities right now. next, cruising for a bruising?
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bloomberg sources say theresa may's chief whip is not sure she has the numbers to pass the brexit deal next week. this is bloomberg. ♪
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matt: 30 minutes into the trading day, let's get the top headlines. driving forward -- the eu officials head to washington to keep car tariffs at bay. is a sweeping trade deal possible by the end of the year? no progress. sterling sings after reports that brexit talks in brussels ended without a deal. will may be forced to extend the deadline? europe's dirty money scandal. focus turns from the nordic to the netherlands as dutch media reports the moscow branch was involved in the so-called troika money-laundering scheme. the stock falls an instant them -- in amsterdam. i'm matt miller in berlin
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alongside and edwards in london. anna: let's take a look at the details and some of the stocks that are moving. not moving the overall industries very far, but fairly flat. some interesting stories under the hood. british american tobacco up by 5.5%fe. change of the fda could mean better news. the new guidance for that business, up by 5%. imperial france rising on the botc or he-- bat story. they are selling some of their assets. as a result, that is being well received by the market. let's flip to the other side and show you the downside, what is weighing on the stoxx 600. the italian electronics business down 6.5%. we saw that company suffering a downgrade. legal and general, that stock down by 3.4% after numbers from
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them. group down by 3.3%, downgrade to sell at goldman sachs. out with numbers later, down by 2.4%. talking about them not feeling too much pressure from competition from other businesses in the u.k. let's get the bloomberg first word news with debra mao in hong kong. debra: carlos ghosn has been released on bail after more than 100 days in jail. his lawyer says he will not brief the press today. ghosn left the jail surrounded by police officer's. he had been detained since november and tokyo prosecutors still have the option of rearrested him on new charges. wall street is nearing a fix that will clean up one of the shadiest corners in finance -- the $8 trillion market. some firms have been accused of making money by intensity --
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enticing companies to make payments. a plan to ensure any defaults are legitimate. hard-liners in the german government are reportedly fighting for power to keep huawei out of 5g networks. bloomberg understands there are concerns the tech giant could help china st eal secrets from german companies.it has become a lightning rod of tensions between trade and foreign policies. global news 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts. this is bloomberg. matt: thank you very much, debra mao in hong kong. theresa may could be on course for another brexit defeat. bloomberg services say her chief whip is not confident she will have enough support in next week's vote. the pound tumbled for a fifth day, the longest losing streak in a month. simon derrick is still with us.
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the pound down five days in a row but we are still at 131.31. isn't the market confident that we are not going to see a note yield brexit? simon: i don't think the market is confident of anything right now. 130,ink if you look at the that is the average price for sterling since the referendum. i think being around 130, we just don't know price. i think if we look right now and what drives the market, first things first, i think the idea that they will struggle to get the deal through next week, i think that has been there for a few days. i don't think they will see huge surprise. i think the real issue now is that third vote that is supposed to take place which is about the extension of article 50. if you look at sterling's performance over the course of
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the last two months, it has been largely around that extension debate. believe therees, is going to be an extension, and comes up when they think it is going to be an issue. at the moment, there is a reasonable likelihood that parliament will vote in favor of that extension, but what we don't know is whether the eu is comfortable with providing an extension, how long that extension would be, and how parliament would react, whatever that number is. anna: let's think about next week. how will the pound respond if theresa may fails to get a deal through? on the one hand, passing it would provide certainty. on the other hand, a delay may trigger a pound rally. how does the pound respond next week? simon: i suspect the market will be particularly focused on the size of the defeat. if it is only a modest defeat, that suggests maybe something can be done over the course of the next few months. there could be another vote.
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i think that matters. sterling'slity is reaction beyond that will be modest on the back of that. what will really matter will be the next days the witches a no deal. i think most people believe that is unlikely to go through. therefore, the real focus will be on the numbers around the extension. that i think is going to be the key story. we will spend a lot of time and finding out exactly where the support is. at the moment, it is uncertain even within the hardliners, there are different views. i have seen some arguments that maybe a 21 month extension is better than the prime minister's deal. therefore, vote against that and be prepared to accept a deal.i am not sure all members believe that. i think we have to get more clarity on what people within parliament are looking for in terms of an extension and then we can make it clear. anna: matt?
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matt: i just want to quickly ask about -- the u.s. dollar is of course the world reserve currency, but a lot of people go to britain for hard money, for trustworthy cash. if we get into a situation where it is kicked the can down the road, typical european issue with there is an extension, an extension, an extension, does that diminish? simon: if you look at the data that comes up from the imf on foreign-exchange reserves, there has been no meaningful shift in the holdings of sterling. suggesting that actually people are looking for far longer term story. i think the issue in fairness is there is a derth of credible reserve currencies out there. all of them have fundamental flaws. it is ironic if these are going that particular road, some of the most significant shifts in reserves has actually been
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towards things that are not currencies. the by -- buying of gold. maybe that is a real teller of what people think about currencies. anna: that is a bigger conversation. simon derrick, really great to see you on the program this morning. that get to the individual stock movers this morning. and reported has a few. annmarie: british american tobacco on the rise at more than 4%, alongside imperial grants. the commissioner is leaving and could leave the regulatory backdrop in the u.s. british american tobacco gets 40% of its products -- profits from the u.s. prysmian is down more than 6%. although the revenue yesterday be the highest analysts estimate, that is putting pressure on the stock. are very on the downside, another downgrade -- burberry on the downside, another downgrade.
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they are saying they need higher incremental investments to sustain the brand momentum. matt: thank you very much for that. carlos ghosn has walked out of prison in tokyo. the former car tighten was scorted out of the detention center. his release now means he can start mounting his defense from the comfort of his home. although, cameras will be reporting -- recording his every move and is not allowed to accept many outside visitors. joining us now from the detention center is karumi mori. what was the scene like when ghosn finally walked out? >> yeah, carlos ghosn is finally on bail after 108 days of being held at the tokyo detention house behind me. when he came out, waiting all morning for this event, the cameras almost missed him because he came out with a group
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of police personnel wearing similar colored dark outfits and an orange vest, a facemask, a baseball cap and glasses. somewhat of it is guys. he walked into a van and drove off. behind that van was another black are and it carried some of the futon mattresses from what it looked like, along with some black bags which may be his belongings. presumably, the is now with his family in the comfort of a residence somewhere in japan. anna: let's talk about what comes next for him. he has been released on bail, but the trial is still ahead. right. right, that is the trial is likely months away. because of that, his bail has many strict conditions. that includes cameras to be installed at the exit and entrance of his residence. he also can have no internet
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access, limited access to a cell phone. he also can have no contact with any parties associated with this case. he cannot leave japan. matt: thank you very much, kurumi in tokyo, talking to us about the very beginning of carlos ghosn's release. next, adding the accountability to the account. we will talk ecg with the head of sustainable investment at socgen. this is bloomberg. ♪
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anna: welcome back to the european open. 24 minutes into your trading day. european trading fairly flat. let's talk you about the stocks of the hour. we picked this auto-parts supplier, car manufacturers around the world. we can see from the screen on this particular stock that it is down by 9% in today's session. we spoke earlier on to the ceo of this business on bloomberg daybreak about the conversation they were trying to do. they dropped the 2020 target, they had to abandon that. a great deal of uncertainty and a lack of visibility. trade tensions, the diesel scandal, all of that hangs over the car sector and the auto parts suppliers as well. the management also talking
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about brexit and suggesting they have done everything they can to try to prepare for this. of course, stockpiling is one part of the conversation. theiring -- abandoning earnings target for 2020 and cutting 900 jobs, part of a restructuring program for the struggling auto parts business. this is the latest sign of the strains on traditional automotive companies with a shift to electric vehicles and the other challenges they face, political and otherwise. matt? matt: take a look at the markets right now. we are 45 minutes into the trading session and we are looking at a mixed picture in european stocks, although it is starting to point a little bit to the downside. little changed in london.t he dax in frankfurt down a -- .3%.ore than 11%
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this is the 10 year anniversary on the intraday low of the s&p 500. if you take a look at futures as well, you will see that u.s. futures are pointing down. of course, march 9 is really the day that the broader stock market picked up in the u.s. and started to rally. now, worth four times what it was 10 years ago. next, the dirty money scandal widens. russian laundering allegations. find out who is at the center of the latest claims next. this is bloomberg. ♪
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matt: welcome back to bloomberg markets. this is the european open. 50 minutes into the trading day, we see a mixed trade although equity indexes are starting to move a little bit lower and we do see futures pointing to a negative open for the u.s. more european banks are being drawn into the russian money-laundering allegations. sweden,y centered on allegations of suspicious transfers involving dirty russian money have widened this week. it has lost half of its market value over the past year, admitting its role in the money-laundering scandal. let's bring in bloomberg's nordic managing editor to see how this could affect the other banks. story hadhow this
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developed over the last few days. >> good morning. it just keeps growing. on monday morning, investors learned there were apparently fresh allegations around money-laundering published by a broadcaster. 6.5% ases tank about investors panicked. when that report came out about 4:00 local time, there was relief by the investors that it was not as bad as they feared. but that happened what was there is a larger report by the organized crime and reporting project that made clear this is not just a nordic issue, it is the european issue. suddenly banks like ing were drawn into the same story. anna: now the conversation is very much around joined up regulation around europe. what does this say about european regulation? i have read many pieces
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suggesting for the european 27,n as a whole, 28 or there needs to be coordination across these regulators. tasneem: exactly. the irony is during the european banking crisis, the biggest fear was taxpayers would be called on to bailout banks. the main thing the european banking union focuses on is settling between governments and banks so taxpayers don't have to be drawn onto bailout banks, but they do not envision this dirty money crisis. there is no really robust, across all the european framework that deals with this. legislators in the region are waking up to this now and hopefully discussing how to come up with more meaningful regulation. matt: what are the next steps in terms of the allegations? tasneem: as we keep learning about more banks, it bears repeating that it is the biggest
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scandal in terms of what we have seen so far. about $230ious flow, billion and magnitude. they are already under investigation by the u.s. justice department, u.s. securities and exchange commission, and several prosecutors across europe. that is the most advanced case of the current wave of allegations, but it will take years. there are potentially -- a long period of uncertainty for a lot of these banks. anna: thank you very much. thank you for joining us, bloomberg's nordic managing editor. really fascinating about the lack of regulation across the european union. let's talk about what is happening on european equity markets. we have pretty much no moves at the headline level, but plenty of interesting stories beneath. the stoxx 600 as a whole is fairly flat. down by 3/10 of 1%. if you look at the dri function,
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that tells you it is otto's and auto-parts suppliers that are by far the worst performing sector in europe. that is disproportionately in germany. autos and parts down by 1% this morning. time now for battle of the charts. annmarie goes head to head with matt. annmarie: i have something very different for you. given the news that kylie jenner has become the youngest self-made billionaire at 21 years old, i want to look at these deals we saw last year, not just her company coming to actual stores or online but ulta beauty which is huge in the u.s. it is kind of like a cheaper version of sephora. up 14% was that news -- once that news was brought to market. after that, a board member selling stock, about 9% after the stock was able to recover. s, looking into
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exactly how she made her money and so quickly at such a young age, i wanted to look at one of these deals that helped boost her. anna: thank you. let's go to matt. matt: first of all, i have to say i find it hard to buy that she is the world's youngest self-made billionaire. surely, there are many more from drug dealers to heads of state, in the history of the world, right? give me a little bit of a break. secondly, a lot of people take issue that she is a self-made billionaire. your parents and you tens of millions of dollars to start a business, are you still a self-made billionaire? annmarie: it is a really good question. this has obviously been a huge debate on twitter and social media, but the way bloomberg and forbes looked at it, she did not inherit this company. she made this company and that is where her funds are coming
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from. matt: all right, it is an interesting debate. , frankly, you got to give credit where credit is due because even if she got $20 million to $30 million handed it to her, she turned it into $1 billion. your startup capital is not easy to do even if you kardashian orr or whatever she is. 128 million instagram followers is a real feat. a want to check on the market and look at my chart. the s&p 500 is stuck in the range. this is fascinating because it is march 6. 10 years ago today, the s&p 500 fell to 666. right now, we are looking at 2789. more than four times what it was then. the question is can it run further or will it turn back around? the bottom of the chart, you see the rsi.
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it looks like we have gone to an overbought level. the question is does it turn back down or can it continue to go? a lot of it relies on the possibility of a trade deal. anna: i will go with your chart, matt. sorry , annmarie. i will go with the bread and butter of market. i did like the tangent off the kylie jenner story. that was a maverick move and well done. i'm interested in the fact that matt was not impressed why the premise but had a lot to say on the subject, so we maintain some level of interest. matt, let's get back to the markets. tell us what is happening this morning. matt: we are seeing markets start to turn down a little bit. kind of a mixed trade. we do not see a lot of direction out of asia in terms of equity markets. we do see investors buying up treasuries. that is a risk off sign. check it out. the u.s. futures are starting to fall.
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europe really not moving very much at all. we will see in a few hours time what happens in new york. this is bloomberg. ♪
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francine: the u.s. trade deficit rising by 20% and president trump failing by his own metric. sterling sinks after report talks in brussels and without a deal. and kylie jenner becomes the youngest self-made billionaire. ♪ francine: welcome to bloomberg surveillance. i'm francine lacqua in london. we return to catalysts to what markets will latch onto later on. for the moment, they are

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