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tv   Bloomberg Markets European Open  Bloomberg  March 7, 2019 2:30am-4:00am EST

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anna: good morning. welcome to "bloomberg markets: european open." i am here for the ecb meeting. we expect the european central bank to cut fairly drastically its growth expectations as well as its inflation forecast. the question is, will it start again, and for how long? and for how much?
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anna: huawei sues america. the chinese smartphone maker ups the ante. it says washington should not play judge, jury, and executioner. some employees in new york and london could receive zero payouts. and the investor who has made a career out of exposing corruption files a criminal complaint against a swedish lender. good morning. matt: let's take a look first off at the markets this morning. after asian equities sell this morning, we have seen futures here in europe as well as the u.s. pointing to a risk off session as well. not huge drops. last i looked, we saw dax futures and ftse futures down about 0.4%. we will check where they are
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right now as well. here you see dax futures down more than 0.5 percent. ftse futures also down about 0.5%. consistent with how they have been trading. investors are buying treasuries as well as the yen. anna, what do you see on the gmm? anna: a little bit of weakness in the asian equity session, picking up from the concerns around growth that permeated the u.s. equity session yesterday. in the u.s. we had facebook downgrading their description of -- the beige book downgrading their description of economic strength. global concern about growth. a real lack of detail on the trade story. all of that means we don't go anywhere higher on equities. we slumped a little in the asian session. we are weaker in asia. the dollar stable. we have seen it gaining in recent days.
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the canadian dollar was the big story of yesterday. you were talking about the potential for cuts. talk about dovishness seems to be catching on further. we've got the ecb as you know very well. let's have a look at the other side of the gmm. we don't have the oil price featuring two highly. it has done of late. we have seen the oil price heading higher. it has stalled north of the $56 mark.el we are continuing to focus on moving parts in the oil story. let's get a bloomberg first word news update. debra mao joins us from hong kong. a: huawei has sued the u.s. government, aimed at a law that blocks government agencies from using the tech giant's equipment. the tech giant argues it is unconstitutional to exclude a person or group without a trial.
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>> huawei is a business. we have never received requests from any government, including the chinese government. to do that would be committing suicide for a business. we will also refuse to take such a request in the future, be it from the chinese government or any where in the world. >> the u.s. economy cooled in the first two months of 2019. the fed says growth was slight to moderate. consumer spending was held back by harsh winter weather. the central bank can still afford to be patient. risks out there right now at all.
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suggesting we don't tighten monetary policy is much as we previously thought. european officials are pessimistic about the chances of a breakthrough in brexit talks this week. bloomberg understands they are increasingly concerned that whatever they offer will not be enough to get the deal through parliament. to shift itsuctant decision without certainty it would help to get an agreement over the line. 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. thank you very much for that. debra mao with us. asian stocks are following their u.s. peers down. growth concerns resurfaced. as the picture darkens, every major risk on asset classes not only in the green. it is beating inflation. growth is holding up, but is not strong.
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how long can this goldilocks rally last? christian, things for joining us. conversationle about the goldilocks, but we have questions about whether goldilocks has already left the building. what is your assessment? >> the fact is we had a goldilocks rally. the macro backdrop is not goldilocks. when you have a goldilocks rally like 2017, you had global accelerating growth which will sink are nice with inflation. what we have seen so far is markets have priced goldilocks and that's partially the reason we get the setback. we regularly see that. it doesn't always end with a question mark. his growth going to pick up? you see significant recovery.
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equities have pretty much the strongest start of the 90's. are turning away from the inflation and rates side inflation pressures in the u.s. are limited. will you exley see growth pickup? more importantly, was the fed ?ight to ease as quickly and growth is worse than most people thought. goldilockswe see a central-bank scenario? we are talking in frankfurt about tltros. some people are speculating on more drastic moves mario draghi could make. in the u.s., no one is expecting the fed to raise rates anytime soon. not in the first half. maybe the dovish pivot could be the reason markets are rallying.
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>> the problem is we have already seen a lot of that. we expect from the ecb some type tltro announcement, but not details. we do not know if it will be a small message. it is more likely you seen as a result of the downgrade a reasonably dovish message continuation from the last meeting, may be more dovish. the problem is the market is already there. the question is how much can the ecb move market expectations? the same is true for the fed. that is the disconnect we are facing right now. you have the losses for q4, but if you look at fed rate had expectations, the next 12 months, there is no hike price. for the next 24, there is no cutprice. you see the inconsistency. if there is a cut in the next few years, one has to have the expectation growth justifies that. why is the s&p rallying so
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strongly? this disconnect is there and i sidet think the right gives that much more support. >> i want to ask about your longer-term perspective on equities. to underline what we saw in january and february proving .ositive, this chart shows that in terms of that longer-term picture, you are neutral on equities over a three-month horizon. more positive over the 12 month. why do you see that positivity? >> we downgraded equities to neutral just last friday. the rally is a bit too strong. it is never good to extend the rally much. you feel like you have a bit of
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a pause. we still think recession risk is unlikely. we still think we are leaning that thetoward goldilocks scenario will be validated, but it will take time. the question mark is how much growth is priced, and how much growth will be get? our fear is markets are overpricing the growth exhilaration. -- acceleration. it is different from 2016 when you had a strong china recovery. it is different from previous cycles we have had. deliver returns, and compared to everything else, that is still the best asset class. asset allocation should always be done -- anna: in a low interest rate
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environment, they are not bad. matt: i wonder what you think about contrarian theory that has been floating around. the trip will be issue everyone was so worried about, that all these companies more than ever in the u.s. are on the brink of being downgraded to junk possibly is actually good for equities. that means those companies are going to do everything in their power not to be downgraded. do you see that as a positive for stocks? >> i don't know. what is good for credit is not necessarily good for equities. if you want to protect your credit rating, you stop share buybacks, you protect the balance sheet, arguably that is not good for equities. what we have seen in the u.s. has been an equity friendly capital structure management where corporate's are incentivized by the equity and as a result of that have done
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share buybacks. i agree with the statement that you do see signs of leverage coming down. when you look at -- it has actually come down. i'm not sure if that is a reflection of downgrade fears are just growth. usually the deleveraging is possible if you do have growth as you had in 2017. it alleviates are concerned that you have large-scale downgrades. the risk is not significant. interesting about high-yield, you are dealing with a lack of supply. were worriedople about the is supplies. high yields are having a strong bid because the fed was tightening. at the same time, there was the search for yield reversal. the searches back. high-yield has outperformed fundamental more materially than
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equities. >> thank you for your time this morning. managing director of portfolio strategy at goldman sachs. huawei sues the u.s. of banning its equipment amid claims of espionage. will the tech companies more aggressive stance pay off? yourberg radio is live on mobile device. this is bloomberg. ♪
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matt: welcome back to "bloomberg markets." this is "the european open." we are looking at a negative picture for futures. it could be a risk off session in europe like what we had in asia overnight. let's get the bloomberg business flash. for that, we go to debra mao. ra: blackstone expects to reach $20 billion when they complete the first phase of capital raising for its flagship fund. the firm has yet to set a limit, but they told investors the first may, in march and april. blackstone is benefiting as the private equity market outperforms other asset classes and hedge funds. totsche bank has made cuts 2018 bonuses. some bankers may be getting
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nothing. the overall pool has been cut to less than 2 billion euros. moreank is making selective payouts in an effort to keep more -- howard is having a rough start to 2019. bloomberg understands the master fund has declined over 8% in the first two months of the year. erodes the macro fund's 30% gains last year. that is your bloomberg business flash. anna: thank you very much. let's check futures. we are 13 minutes away from the start of the cash equity trading day. futures point lower. u.s. futures pointing down. euro stoxx 50 futures down by 0.3%. ftse futures down 0.4%.
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we are expecting to see the negativity we have seen in asia. we are expecting all of that to infiltrate europe. the u.s. picture looks weaker. u.s. futures down by 0.4% this morning. the host of earnings reports out. we are going to be talking to the management of a german company later. the first full-year profit since 2016 on mark. we will talk about that with management later. matt: and that with the rhine river levels falling. looking forward to that conversation. let's get to the top story. the most read story right now on the bloomberg. to tell you the huawei story, and we will get to that in just a moment. but we are going to take a quick break before we do that. minutes away from the open.
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next, a look at your stocks to watch this morning. a cement maker beat its cost savings target. very interesting stuff. ♪
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matt: let's get to the huawei story. the clash with washington is getting more aggressive.
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china's tech darling is suing the u.s. government for borrowing its equipment from certain networks. joining us now is peter ahlstrom, bloomberg's executive editor for asian technology to talk about this. huawei is basically saying this is unconstitutional, referring to the u.s. constitution. >> that's right. they are suing in u.s. courts. huawei is making the case they are being unfairly punished here . what happened is congress passed a law that barred huawei and another chinese company, cte, from supplying equipment for certain kinds of networks. they said there are concerns because of national security. huawei is making the case they have been singled out unfairly because they have not been able to go through due process. there has not been a trial. the u.s. government has not produced proof their equipment
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is not safe. they are pushing the u.s. to produce more evidence, or at least allow them due process. it is very much a longshot they are going to be able to get any traction with this lawsuit. they did have a very big press conference. we talked with their legal can't -- counsel also. it is a longshot for them to be able to make these demands with the u.s. government, which has a lot of latitude to decide which kinds of companies are able to supply equipment and other sorts of things to government agencies. have seen other governments and technology companies weighing in. peter elstrom, bloomberg executive editor for asian technology. let's get our stocks to watch. john lau men is looking at mark -- merck. annmarie hordern is focusing on lafargeholcim. had to say?ck
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>> an increase in earnings for next year. the big story right now is they are pursuing new deals. they have been looking at buying materials to bolster their performance materials unit, which is their smallest unit. they also entered a deal with glaxo to develop one of their drugs. they are trying to bolster these units that have not been performing as well as their life science unit, which is responsible for most of their growth. ont: tell us the story swedbank. >> good morning. the criminal complaint has been filed against swedbank. this was largely expected, but
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this is a reminder the allegations are serious. tax fraud linked to a death of a lawyer. another thing worth noting is swedbank has promised -- swedish media blocked a whistleblower channel employees at the bank had been able to use to get through. anna: thank you. i was taken bym, the strength of the dashed coming from the ceo. i read comments saying it was better to take a ride on this stock. >> orders have not slowed down given what is going on with the global economy. they expect that to reflect in the first quarter. while the first year earnings was in line, first quarter net sales were weaker. that could be reflected when the stock opens at 8:00 a.m.. matt: thanks very much. we appreciate your time. you can get all the stock
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stories from our equities team by typing first go on your bloomberg terminal. you can also get it from the mobile app. the open on the others have this break and we are going to speak to the ceo? -- the ceo of -- ♪
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anna: a minute until the start of the cash equity trading day for thursday. this is what we're handed by markets around the world. the euro, pretty flat. pcb data, matt miller is in frankfurt. above $56 andding barrel wti brent. twice to moving recent days. is the chinese equity session looking lackluster and that applies to asia. weakness in the asian sector, worries about mobile growth. lack of detail on progress on trading deals, as well. the pound pretty flat.
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not a lot of confirmation, but chatter about what could happen next week. could theresa may do a speech today -- this week? this is the picture on european futures. we are expected to follow asian equities downward. .1 and .5%. let's see how european equity markets open up. the concern is returned to the global growth story and the lack of progress on trade. we've talked for many weeks about the potential for a trade deal, how much of that is pricing for markets yet we don't see it coming through yet. we don't see confirmation or a meeting between trump and xi. issuesils on how many that lie between the u.s. and china could be resolved in the short-term. this is where we are on the equity markets. 1% -- .1%, the cac down .1%.
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glancing at the imap, the picture on the sectors looks fairly mixed. energy and materials moving lower, health care and industrials lower. financials a big spread on this image. a mixed bag for the sector picture this morning. is theook at mov, this function on the stoxx 600 which tells us what stocks are on the move this morning. interesting to see how many are up and down. a quick gauge of the level of conviction. downean equity markets .2%, but evenly divided. slightly more stocks to the downside, 330. 220 to the upside. let's stick with the upside story because one name,
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dcdecaux, we spoke to the manager on bloomberg tv. that stock up 7.4%, given the troubles the advertising agencies have had, competition from social media. that looks like a strong move to the upside. let's get to the downside. a mixed bag of stocks to the downside. weaker, a whole host of different sector companies. theng a look at some of stocks we had in focus this morning. we had a fairly strong move in countrywide, a small u.k. real estate business, down four point 8% this morning after they talked to negatively about the brexit impact on their company. ofwill talk to the manager -- down 1.6% and get more on the movers later in the program.
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frankfurt because the ecb meets today amid a gloomy backdrop for european growth. officials will cast economic forecast, enough to justify another round of loans. they've cut these growth forecasts, justifying more cheap loans to banks. will they deliver those cheap loans today or keep the market waiting? the expectation is mario draghi won't be talking about tltros today, but he will cut those forecasts and expectations .or growth pretty drastically the ecb will cut its forecast growth to 1.2% from a previous forecast of 1.7%, cutting its inflation expectations to 1.3% from 1.6%. inflation expectations are
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expected to be cut for 2019 and .021 we get the rate decision at 12:45 p.m. and in the press conference about 45 minutes later. 1:30 d u.k., 2:30 in frankfurt. that is where we will get the forecast, first of all. those are not official until mario draghi releases them. that is when we could get talks. we will get a lot of questions about tltro's. yesterday, the fed was looking s, theitations for tltro loan durations and interest-rate charges, but we are not expecting to get those minute details yet today. that is what the market is waiting for. anna: it will be interesting to see -- we get reduced expectations around growth, but to have that conversation and
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here mario draghi's reflections on how weak the story is and how transitory some of these factors are or are not. that had been the narrative about germany. a lot of factors weighing on growth have been transitory. now people saying those seem to be adding to something more sustained. matt: it depends who you talk to. would say we are in a slowdown but will get through this and growth will come back. he is the bundesbank president. that is the german view. italy, there is concern this could turn into a downward spiral and get out of control. the italians are forecast -- at least by the oecd -- to have contraction in growth for the full year. the italian view is clearly that they need more help than the german view because the germans don't feel they need more help. it will be interesting to see how that plays out.
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speaking of germany, next, we will talk to hugo voss. excel a rate, the ceo says. we will ask him about whether or not he will be able to supply goldman sachs bankers now that they don't have to dress well for work. this is bloomberg. ♪
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anna: welcome back to the european open. eight minutes into your trading day. european equity markets down .3%. the ftse 100 down by .5%. let's get your top stock movers. anne-marie: let's stock with -- start with the biggest gainer, up more than 2%. they are boosting their dividend. they hired a bunch of new heads for m&a. looking at more m&a possibilities. up 6%. reported full-year earnings 2018 above estimates and goldman sachs calling it a strong beat with no further deterioration in maritime trends. axel springer down nearly 6% this morning. morgan stanley said h-shares will be underperforming given a tepid revenue outlook for 2019.
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that is putting pressure on the stock today. thanks for that. annmarie hordern looking at your individual movers. let's look at which sectors are doing the best and the worst in terms of the stoxx 600 today. we have a risk off session this morning, so it is interesting to which are these best performers and which are the worst performers in terms of the industrial sectors. , foodks like real estate and beverage, telecoms, and utilities are doing well as well as consumer staples. that is not necessarily a good sign because you have these very defensive sectors doing well and everybody else is doing poorly. that means investors are trying to batten down the hatches to some extent. not only are stocks dropping, but we have investors buying the
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most defensive stocks they can find. is dipping slightly in the market this morning after its full-year results. itury fashion retailer said expects profit to rise by a high single-digit percentage point this year with asia, a strong region for growth. where is the disconnect? on the phone from germany is mark langer, the ceo of hugo boss. this could be a case of buy the rumor, sell the news if investors expected good results and are cashing out on that. what to do you think you need to tell investors to get the stock up? mark: we're giving any positive outlook based on the 2018 result. we have seen broad-based growth across all regions and sales channels. especially saw -- strong growth in the asia-pacific, resilient
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into the fourth quarter. also in e-commerce, with partners we have seen a strong acceleration of growth through 2018. we are quite confident 2019 will be the first year we see over proportional growth in earnings compared to sales. anna: good to have you with us. i want to ask about something you told us in november. the first quarter was going to be the first scorecard to dictate tangible progress toward targets. how do you think you've done? it is a 2022 plan and 2019 is the first year to deliver against that. the first quarter, we see some momentum, carrying strongly into 2019 so we continue to see good results in our e-commerce business. we also see the third quarter of 2019 with the toughest compared to 2018. you might remember a lot of benefitedoods brands
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from the tax break in the u.s. in the first quarter where the double-digit like for like growth in the first quarter of 2018, which is clearly elevated based on the total year, i am confident we will see good progress and grow our top line -- earnings stronger than our top line, which we expect to grow at the mid-single rate in 2019. is your level of concern about the slowdown in the chinese economy? i know you sell a lot of suits down there. youryou seen it affecting sales or do you expect it to be a weak point this year? mark: we have a confident --look on the chinese mainland chinese market and in total because we see we are benefiting from a unique price positioning, which is repatriating a lot of consumption from chinese consumers. very confident we have
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seen no decline of fourth quarter momentum in the chinese market and we are happy with the performance we have seen through the ramp up and execution of the chinese new year. this remains our single biggest opportunity from a market perspective. in our november meeting, we expect to increase the share in asia by more fight -- than five percentage points and are on good track to deliver against these objectives. anna: you obviously sell a lot of suits. we have seen a change in guidance at goldman sachs about what employees of that wall street institution should be wearing to work. less of an emphasis on formal dressing. if that continues to be more of a trend that it already is, how much of your business will be suits in the future? mark: honestly, we see ourselves as a beneficiary of such a trend. your male colleagues will move dressing the pieces,
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smartly becomes more sophisticated. people are turning to hugo boss because this is a brand that will help you dress a suit with a cool, casual turtleneck sweater or the right sneakers to combine it with so the for sick -- so the sophistication of smart tailoring is a strength of our company, which we are benefiting with this looser regulation when it comes to dress codes in professional environments. are quite young, mark, but you have seen this in history. there are cycles of companies requiring employees to dress more formally and then to casually cool it down a little bit. when is the last time you saw this kind of cycle in the finance industry? mark: well, you are right. we have seen these trends go back and forth but i would say
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that is a longer-term development. i don't see us returning to the very strict dressing rules that were prevailing in the early 1990's. generation entering the workplace have grown up in social media so for them, the way they look is very important employer have to adapt to that. these rules are less strict. however, there is a strong focus on sophistication of the product in terms of material. the sustainability of product is of increasing importance, something we see potential in our collection and people want to look smart in their outfit, male and female customers and this is a great business opportunity for us. anna: last time, we talked to you and discussed sneakers made out of pineapples. i know you produce a lot of garments in turkey.
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any plans to change her manufacturing bases? plans to bring more manufacturing to europe because of the political troubles and volatility in markets in turkey? mark: we have seen a stable environment in turkey, so from an production sourcing distribution, we have not seen fx from the political tension from our perspective. industry is trying to become quicker in their ability to pick up on market trends. we see production will come closer to targeted markets. already with a higher share of automation, we-- are benefiting from that because eastern europe, turkey, north africa are all production markets -- sourcing markets for us which are closer to our core european market. the relative share of asia over
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the next year, i would expect to stabilize or decrease because new technology will move production closer to the markets. matt: let me ask you, first of all, how happy you are with inventory levels. investors were concerned about that in the last quarter. and how many stores will you open internet terms this year -- in net terms this year? mark: the fourth quarter has improved compared to the third order, which raised eyebrows. our development was not infected -- affected by the inventory. objective for 2019 that we highlighted in our guidance this morning is that we were further -- will further improve our inventory levels so we see further room to improve, which is helpful to our cash roll development. the other development you our renovation and
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new openings. majority of vast our retail investments would go into upgrading, renovation, relocation of existing spaces. there will also be, especially in asia, some selected openings for the hugo brand as we grow our footprint in this region. anna: thank you for your time. mark langer, the ceo of hugo boss on the phone from germany. we are live in zurich next where we will speak to the cio for ultrahigh net worth at ubs. where are the high net worth worth individuals putting their money these days? this is bloomberg. ♪
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matt: welcome back to "bloomberg markets: the european open." i'm matt miller in frankfurt today for the ecb meeting and ahead of that meeting, we see investors selling off european stocks. we are about 22 minutes into the session. the ftse, down .4%, the dax down as much and attack down -- the cac down half. how will markets react when we get the press conference of mario draghi and figure out whether the ecb will make a more
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dovish turn in the markets expect? joining us from the blackrock symposium in zurich is the cio for ultrahigh net worth at ubs. let me ask what you expect from the ecb in light of the weakening european economy that we have witnessing of late? simon: we are in line with consensus, further indications of easing coming. hikesbutell to be pushed back into next year which is following my narrative , what we saw from the bank of canada, further policy support for a generally waking economy. for aboutave talked
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an hour about whether the goldilocks situation in markets that seemed present in january and february lives on into march. , supported by that more dovish takes from central banks globally? simon: yes. it has been an interesting cycle. we've oscillated between policy driving markets and fundamentals driving markets. we're in a policy driven state right now. it is what led to the selloff in markets in november and december. concerns over trade wars, brexit, and the impact it had on the european union, etc. the close down in the u.s. government. now, there is more positivity. we've had various reports we would have a settlement of the u.s.-china trade situation. there has been various progress with respect to britain's positioning and exit. if wet that environment,
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look at the first two months of this year, it has been the highest rise in the s&p 500 since 1991. somewhat ironically, when we have had positive january and inruary price appreciation the s&p 500, which has happened 27 times since 1950, 5 times we have seen appreciation over the calendar year. goodst the backdrop of news continuing with the u.s.-china trade situation, the general easing from the ecb, from the fed, the support from the chinese economy we saw this support for further risk markets from here and equity markets drive higher. matt: where are your clients primarily putting their money right now, simon? in terms of regions, is the u.s. still the best game in town? it is interesting. we did see outflows from current it -- client accounts or
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portfolios, in particular in november and december. there is concern markets would deteriorate because of policy concerns. it was baked into fundamentals we would see a downturn. with the turnaround in markets, we haven't seen the same level of participation. i am speaking to are still wanting to see further confirmation of these policy concerns being alleviated before reinvesting back into markets. the one area we are seeing a lot , the one area we have seen continued inflows all of assetear is our across sustainable investing portfolio. the last interview you did, you talk about pineapple loafers and even mark, the ceo of you can boss -- hugo boss is talking about sustainability. when we talk to our clients, sustainability is an increasing part of their portfolio.
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anna: simon smiles, joining us from the blackrock symposium in zero. tot, the ecb expected announce its economic forecast. what else will they say? ♪
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matt: 30 minutes into the trading day, let's get your top headlines. america.- huawei sues the chair says washington should not play judge, jury, and executioner. the cuts at deutsche, the biggest bank dips after flashing bonuses for underperformers. some employees in new york and london could receive zero payouts for last year. investor who has made a career out of exposing corruption files a clinical -- criminal complaint against swedish lender. welcome, i matt miller here in
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frankfurt for the ecb alongside anna edwards at bloomberg's european headquarters in london. anna: 30 minutes into the trading day, let's have a look at the details. 446 stocks on the stoxx 600 moving to the downside. that is more than we saw at the start of the day, so things turning negative, broad-based in the retreat on equity markets let me talk to you about some of the moves to the upside. making moves despite weakness in the market. uni group is the top gainer up by 6.9%, better than expected. melrose is interesting, up by 4.9%, analysts saying it was the profit number, but also the debt management that helps to give the positive reaction. four and a half percent higher on the back of those numbers, coming in ahead of estimates. moving to the downside,
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interesting moves for a host of companies. rio tinto is the biggest mover to the downside. away from the earnings season, the real focus on global growth and the focus on downgrades from brokers potentially is moving the entire sector. bhp not doing all that well either. down by 3%. sorry, that is a different sector. but bhp down by 3%. from seeing a retreat these basic materials companies, the biggest losing sector. springer had numbers out, so we see other companies that have reported also in retreat. let's get a first word news update, debra mao has that in hong kong. huawei has sued the u.s. government. the action is aimed at a law that blocks government agency from using the tech giant equipment. they argue it is unconstitutional to single out a person or group for penalty without a trial.
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the chief legal officer says the company has never been asked to spy for china. brexit uncertainty continues as talks in brussels yield few developments. reports theh cabinet is expecting the cabinet deal to be defeated. warninge, to yard is they may and manufacturing in the u.k. if the country crashes out of the eu on that term -- bad terms. reviseors are ready to proposals for volcker rules on trading. this comes after a provision drew fire from wall street lobbyists. regulus initially called for new standards that should be banned and are backing off after bankers complained. global news, 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. and met -- anna and matt. bit of breaking news from
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china, we often pick up on their foreign-exchange reserves. trillion against an estimate of 3.088. not all that far away from estimates, i guess. this is been this seemingly psychologically important level. we are seeing reserves maintained above that level for some time and the number comes in above. here's a look at what to watch up for. releases latest policy decisions, watch for any downgrade on economic outlooks and comments on long-term loans. mario draghi then gives his policy statement, stay with us for live details of both. mac miller is in frankfurt for that very reason. the managing director for ts lombard joins us here to discuss. give us your top three things to
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watch if you get. -- can. what is the big picture story? >> if i have to narrow it down to three things we are looking for. it will be first, the downgrades, not just to growth members, but also deflation numbers. we would expect the central bank to push back its rate hike expectations again, we know what everyone is talking about now. will the ecb actually announced measures in march? or will it pushed back to april? anna: what is your expectation? the ecb should strongly signaled that it is coming. the announcement could happen as early as today. the details might be fleshed out later, a group april were even in june. but i guess the announcement should come in march, at least that is what we are expecting
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their -- expecting. matt: we have been stuck in a tight range in a loss of currency pairs, but the euro is notable, for sure. today we are asking the question if what a shift from the ecb to fresh stimulus revive euro volatility? guess it depends to a great extent what sort of stimulus, or rather measures the ecb goes for. what kind of dovish guidance it goes for. more than what markets are expecting, clearly it will put downward pressure on the currency. having said that, a lots of negative views have already been priced in. a lot of this dovishness has been priced in. mario draghi will have to go way out of what markets are expected to drive the currency lower. let's bear in mind that the eurozone is running a massive
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service. from the fundamental point of view, the currency is not trading, it is undervalued, so speak. -- so to speak. so the hurdle to go lower is quite high. , everyone isose talking about that. what other tools are viable use, ifw for the ecb to >> the to use that that ecb does have options. but the most important thing to emphasize is that, given a lack of proper fiscal stimulus, anything the ecb does will have limited impact. going through the options it has, it can restart qe, but what assets would they buy? they would have to compromise on various constraints they have put on themselves for its buying
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program, for example t constraints. if it does not, then there are not enough assets they can buy your dashcam by. -- can buy. they can go for a fed style operation twist while shorting at the short end. effectively flattening the curve and giving some boost to the economy. again, unless you can easily constraints on the buying scheme , you cannot really get a lot of stimulus kicked in for monetary policy. anna: interesting. you mentioned what they can do on monetary policy given the fiscal situation. if you were to see more fiscal stimulus, where would you wanted to come from? people talk about maybe germany has the depth in their pocket to do it, but it is unlikely.
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so where would you expect to see more stimulus. shweta: well, i don't know. , germany isly said where we desperately need to see proper stimulus. there is some movement toward stimulus measures, but clearly not enough. italy is another economy that needs fiscal stimulus. we are seeing some stimulus coming in in france, but outside of france, the eurozone outlook for fiscal stimulus looks ready constrained and that limits our optimism on the eurozone expansion. anna: thank you very much. shweta will be joining us on bloomberg radio, matt and i hosting that our. let's get our individual stock movers. >> let's start with royal university. -- unibrew. ands beat the consensus they are initiating a share
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buyback program. and i want to look at bhp and rio tinto. both of the stocks are down after downgrades. important is that the stoxx 600, the miners are the worst falling sector. these companies are weighing it down. miners are at play today of these are the two that were downgraded by socgen and are under pressure. matt: anne-marie with your individual movers. has reported first profits since 2016 as the company doubles down on its multibillion-dollar hostile bid for a performance material company. up next, we speak to the ceo. this is bloomberg. ♪
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anna: welcome back to the european open. acrosslook a negative european equity markets, down by .4% as you can see on the ftse 100. mercktalk about germany's and what they said, forecasting the first annual's earnings growth in three years amidst strong demand from services. without an mind, but speak to management.
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joining us from germany is the ceo of merck. thank you very much for coming to talk to us. you are forecasting your first annual profit growth since 2016. how much of this is thanks to progress and life sciences? stefan: 2018 was a year of transition and the year of investment for merrick -- maerk. the top line of all of our businesses grew. we had invested heavily in our and d -- in r&d. some headwinds from currency developments and saw the negative development when it comes to the prices of our liquid crystal business. we now projecting a healthy growth in all key parameters for our company for 2019. matt: it looks like your
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forecast includes the multiple sclerosis drug which is not yet been approved in the u.s.. is that, first of all, am i right in saying that, and you that confident you include the drug in your forecast that would be approved? it is impossible to speculate on decisions of regulatory agent -- agencies. our assumption is that the drug has been approved in europe in ande a few other countries, therefore, we have positive expectations for the u.s. market. anna: positive expectations. it also seems your forecast includes contributions, can you be more specific about which drugs you are talking about? what are you factoring into this new guidance? in quite aare
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favorable situation when it comes to the quality of our health care. learned, we have several other deals. we have recently announced a .ajor deal milestones and other incoming part of ourome model. income is a regular part of our business model now. can you give us some on youron the progress attempt to buy there some? how far along have you progressed? stefan: i think you can
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appreciate that we are at a fairly tight regulatory and legal framework here, so i can only refer to what you have said of the click so far. homeink we are the best with the highest benefit for all stakeholders and shareholder employees and customers. our 40th dollar offer represents a substantial premium that is a 51.7% over the last undisturbed share price. it is truly combining the economic portfolios. think our combined research and development capabilities would enable faster innovation and that is what is really needed in the semi conductor and electronic industry. we are fully committed to the
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proposal. anna: you are fully committed, you believe you have the best offer against a rival offer. but your stocks fell on the day you announced this. some shareholders might be should be using the capital to shore up your drug pipeline. stefan: we don't comment on short-term stock market reaction as a matter of principle. we have received fairly positive .eedback growth matt: where do you see the most growth? the best growth opportunities in 2019? maybe 5-10 years in your pipeline. we have a different business market model, different innovation models.
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but they are all based on science and technology and we see a lot of growth potential for our health care business, and i think it is reflected in the guidance. we see continued excellent growth in the life sciences and we expect that 2019 will be a year for our performance materials business. are very, very convinced that material iny solid the material space. anna: that is interesting. thank you very much. uawei is heading back against allegations that the company was involved in bank fraud, and technology draft. they are suing washington from barring their equipment. legalmpany's chief officer says he is confident they can win the case and spoke exclusively to bloomberg's tom mackenzie. hope the u.s. courts will
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declare the section ruling in participated in fair competition and brought our advanced technology into the u.s.. >> i spoke to a legal expert who said that the chances of success were very slim indeed. where do you think the chances of success lie? and is this more about messaging, ultimately? >> i don't think our chances of winning are slim every case begins with detailed facts. we have ample evidence and the chances of success are high. >> how much has the congressional ban of your equipment cost the company? this case has damaged many aspects of always business. productslose further -- projects and opportunities and our partners may stop working with us as this damages
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our global reputation these are huge losses. >> given the opposition in the u.s., is there not an argument for just cutting your losses in the u.s. and focusing on other markets? the u.s. accounts for 20-30% of the global communications technology market, so it is very important we will have a fair chance to compete in. we have not considered fully exiting the u.s. your help to keep partnerships with our clients take part in market competition. we want to continue bringing value to the u.s.. clo: that was huawei's speaking exclusively with tom mackenzie. and don't miss a conversation with the u.s.'s ambassador to china. up next, the plot thickens.
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bill router adds to european money laundering allegations adding a criminal complaint against swedbank. this is bloomberg. ♪
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anna: welcome back to the european open. a negative session underway in europe. dealing with growth concerns in the u.s. into asia.
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weighing on europe and in particular the basic resources sector. i should also mention that be a -- rio and bhp were lower and partly slammed why we are seeing weakness. there is another twist to the money-laundering scandal that is parading europe. borwder has -- followed -- filed a criminal complaint against swedbank. to our correspondent joins us now. swedbank? targeted >> good morning. this allegation is interesting for a number of reasons, first of all, because there was a back-and-forth during the ceo of swedbank saying browder had told her he was going to file. he has rejected that claim and has filed as expected.
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it is interesting because we have had swedish broadcasters allege that they have handled about $6 billion in suspicious bonds and browder is now focusing on the specific case and has identified $176 million he says link them to the tax fraud associated with the death of magnitsky. matt: thank you very much for joining us. bloomberg's nordic managing editor helping us get caught up on this developing story. that's it for the "european open." i'll be headed over to the ecb and just a little bit, in under four hours from now, they will be releasing their state. -- statement and then doing a press conference. up next is "bloomberg: surveillance." a little later, tom keene will join francine lacqua. we are headed to bloomberg
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radio, which you can follow if radi.our ati go -- this is bloomberg. ♪ you.
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all of you. how you live, what you love. that's what inspired us to create america's most advanced internet. internet that puts you in charge. that protects what's important. it handles everything, and reaches everywhere. this is beyond wifi, this is xfi. simple. easy. awesome. xfinity, the future of awesome. francine: ecb may cut forecasts
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for inflation again, while fed officials say they can't afford to be patient. huawei sues the u.s. government for banning the equipment, saying america should not plate judge, jury, and executioner. we are live at the black walk symposium will speak exclusively to our guests. ♪ francine: good morning, everyone. good afternoon if you are watching from asia. welcome to

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