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tv   Bloomberg Markets European Open  Bloomberg  March 20, 2019 2:30am-4:00am EDT

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♪ let's get a look at the world map. we see the msci asia-pacific index overall unchanged. as we look ahead to the fed, as some concern comes through about u.s.-china trade talks. the market so dovish we positioned going into this fed meeting, you have to wonder if they will close the gap today. what happens with that 2020 dot as well as the balance sheet, of course? manus: let's just get to zero. the debate is what way the data goes. we have got volatility.
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the bank of america merrill lynch index is the lowest on record. my question is, nothing, no market that reaches that extreme a point can stay there forever. what causes the next vol -mageddon? nejra: what could be the wildcard out of this meeting? is the wildcard that there is no change to the dot plot at all? manus: on that same article about the wildcard, i love it. they talk about what you trade on fed day. it's actually euro-dollar. when the dots move down, you get much more alpha from euro-dollar than you do from treasuries and s&p's. we will put that to sebastian in a moment. let's talk more about the markets now. we have the team standing by.
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our partner in mumbai. dani burger is standing by. the market showing conflicting signs of recovery. how does it play out for markets? well, as we have seen in the case of the last week and a half, we continue to see a lot of traction with respect to investment, especially from broad. that has actually lifted the markets higher. the nifty is a little quieter today, considering it is trading largely flattish. we see gains in your banking index as well, to a certain
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market. a bit of a posiause after seven straight gains. we have seen the rupee strengthened. we see it at a little bit of a disadvantage playing out for the information technology sector. if you leave that out of the equation, we certainly have seen that sentiment, that positive sentiment. thank you so much. it's not just fed week, but central banks throughout asia are meeting. what is filling the vacuum as investors await these positive test policy decisions -- await these policy decisions? >> we see a lot of fluctuation on the main asian equity indexes. in fact, some of them still in the holding pattern. china was lower earlier.
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one market i think is interesting to keep an eye on i think will be indonesia. some of the big moves are coming from indonesian assets. they have a central bank meeting. they are expected to hold rates but should any dove his tone come out, we could -- dovish tone come out, we could see bonds do better, prices falling as yields go higher. i heard from the rba with some concern over housing prices. i want to talk about currency volatility. i know this is something you have been really interested in. uanant to zoom in on the y specifically, because we have seen implied volatility for the chinese currency fall to the lowest since december of 2017. a holding pattern and waiting for the fact -- in waiting for the fed. there is a structural issue here. if you are trying to buy volatility, you are going to get crushed, because it keeps falling.
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there is no premium to be had. g7 volatility pretty low. manus: indeed. great analysis. thank you to our partner for the roundup on the markets. let's get first word is with the debra mao in hong kong -- let's get the first word news with debra mao in hong kong. >> google will give android users in europe a choice of alternative browser and search apps. this just hours before it is set to get a third eu antitrust penalty over another advertising service. google has already attracted record eu fines of 6.7 billion euros. relief workers are struggling to deal with the devastation in the wake of a cyclone which has now killed more than 200 people in mozambique. helicopters are being used to rescue those stranded and drop water purification -- the death toll could exceed
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1000. former vice president joe biden has reportedly decided to jump into the 2020 democratic race. he would be seen as a front runner in a diverse field of candidates. the 76er old has led in early polls -- 76-year-old has led in early polls. he could announce his candidacy in the coming weeks. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. much. thank you very angela merkel promised to fight to the very end for an orderly brexit. the german chancellor also said she is committed to ensuring a solid relationship with britain after it leaves the eu. she spoke exclusively to our bloomberg editor in chief at the global solutions summit in berlin. >> we will very carefully follow
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events, follow what the british government is going to say with regard to -- to say. with regard to what was said yesterday, i will not say anything. >> we have to presume she is going to come and ask you for an extension. do you have any prejudice on your side? would you like to have a short extension so it does not affect the european elections? or would you like to give than a year to sort out the problem? >> i absolutely want to. i am very interested in having a good relationship with britain, even after they have left the european union. ands in the german interest in the interest of the 27 member states as a whole. i take theresa may very seriously when she says britain will stay in europe. we have common interests because
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of our geopolitical situation. britain has always been a country that has felt very much committed to the principle of multilateralism. we have close cooperation insecurity, internal security -- in security, internal security, terrorism, so on. provisionsre we make for the citizens to have as clear a legal situation as possible, even in the event of no deal. that will be the second best solution. we are working on this until the very last hour of the 29th of march. i will fight for an orderly brexit and orderly leaving of britain. we do not have that much time left but a few days. i must say that i am not in position to speculate what i will do on thursday, because it depends on what theresa may will tell us, what the situation is. we will adequately and together
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as 27 react to this. the less each and everyone is speculating in public, the easier it is. was the german chancellor speaking exclusively to bloomberg editor in chief global solutions summit. less than 10 days until the u.k. is due to exit the eu. theresa may goes to brussels on thursday to ask for an extension on negotiations. eu leaders are likely to tell the prime minister that she must decide by mid april whether to extend brexit to 2020 or risk leaving in three months without a deal. she will request a short delay, according to reports. sebastian raedler is still with us. this is what sort of -- this is sort of dominating at the moment. how important is the length of delay to your equity strategy in the u.k. with the rest of europe? sebastian: there are obviously
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different options. i don't think it is important engthsinks you get -- l you get. there are several possibilities that can still happen. if that were to materialize, it would change a lot of things on the equity market. the most likely scenario in what is a very uncertain and fluid situation is still that the withdrawal agreement will be passed, it either this week or , either thisd week or next. political uncertainty will be lower from the very elevated levels. manus: just how uncoiled a spring as the pound -- is the pound? we see some interesting position changes. the call options, there is an
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explosion in the options market. that is huge ratcheting higher on the recent moves. curlingiled a spring is -- sterling on soft brexit? sebastian: in the event of the withdrawal agreement getting past, the sterling could rise to .38-1.39 against the dollar. it has a number of important implications. scenario forch a sterling strength that is consistent with the ftse 100 underperforming the rest of europe, it is extremely sensitive to moves in sterling. they have further to rebound if stronger sterling and
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secondly, a reduction in domestic political uncertainty. nejra: we want to move to europe in just a second but i want to ask about the miners. i think to remember that last time you were on you had a call that actually the pound could be more important to minors rather than the copper price? does that still stand. sebastian: the copper is by far -- stand? sebastian: the copper is by far the most important driver for miners. the way we think about it, the main driver is copper, the second driver is pound sterling. it has gone from extreme has missed them in 2018 two access pessimism in 2018 to xcess optimism. we say underweight. manus: we have one trade in a
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graphic this morning. this is the uncrowded house, which is long year up relative to -- europe relative to em. the you think the action taken by the ecp lays the groundwork for a reprieve in europe that -- do you think the action taken by the ecb lays the groundwork for a reprieve in europe? sebastian: my answer is no. you are up 16% from the trust in late december -- trough in late december. you are already priced for growth momentum in europe to rebound strongly. we have sent consistently euro area pmi's are too low. it is the lead indicators that will be bound by two to three points. we saw a pickup in euro area pmi's for the first time since august. the stoxx 600 is a ready priced rebound by five
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points. that seems too strong a rebound that is priced. we think the economic optimism has already been overpriced in europe. in the emerging markets on the other hand, it's the key question, what is the main driver for trade? what really matters in the emerging markets is the dollar. weakens the dollar will fall -- we believe the dollar will fall. if you have a falling dollar the emerging markets should be outperform is. s. outperformer why have the overweight while the ecb is still in negative rates? sebastian: what matters for the banks is the rate of change in growth momentum and secondly, the movement of bond yields. we think bond yields have not priced for better economic sentiment. in a nutshell, if pmi's are falling and bond yields are
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falling, banks are suffering. that's clearly what we have seen. we expect the pmi's to pick up by two points. the bonds need to raise. that should help the banks. manus: indeed. just a question of whether if you are -- whether you are brave enough to have deutsche bank in your portfolio. you won't put you on the spot and i'm. coming up on the show, 2019 is shaping up to be a year for african bonds. we speak to the finance minister about raising capital in africa's forward fastest-growing economy. manus: tune into -- nejra: tune in to bloomberg radio. i will be joining the team and you from 8:00 a.m. london time. this is bloomberg. ♪
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this is "bloomberg daybreak: europe." manus: i am manus cranny in our dubai studio. let's get your business flash with debra mao in hong kong. sony and nintendo shares are both falling after google outlined a major push into video games with a new service called developers tolows put games on a streaming platform for players to access online, skipping expensive consuls or computers. google will not -- would not say how much it would charge users or whether it would be funded through advertising. nissan is reportedly cutting a future target for china car sales by about 8%, signaling a downturn in the world biggest car market, maybe an extended one. passenger vehicle sales in china fell 6% last year, the first decline since the early 1990's.
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investors are after a piece of america's second-largest ride-hailing company. lyft's ipo next week is reportedly oversubscribed at the current price range. a list of executives and bankers see demand far exceeding the list of available shares. it could exceed the valuation it is seeking. that is your bloomberg business flash. ghana sold $3 billion of eurobonds yesterday at the dovish term by central banks is helping appetite for high-yield holdings. west africa's second-biggest economy needs money to help finance its 2019 budget. investors are concerned about the weak currency of ghana and concerned about its finances. to talk to was we are joined by ken ofori-atta, finance minister of ghana. thank you very much for joining us. let's talk about the $3 billion
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eurobond sale yesterday. can you give us an update on how oversubscribed it was an out the sale went -- how the sale went? ken: good to be here. i think yesterday was overwhelming, not only for ghana, but for africa. fory the imf board sits hopefully the successful conclusion of ghana's program and therefore an exit, and therefore the market, in our mind, has overwhelmingly endorsed the policies that have gone through the past two years. going forward him of the country is in a good position to do well -- going forward, the country is in a good position to do well. three tranches of seven-year, 12 year, and 31 year and all of those were overwhelmingly oversubscribed, as you mentioned. at some $.22 billion and then
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19.9 in which we closed for 3 billion. manus: good morning. appetite,kind of good i am bound to ask you, will you come back to the market in 2019? and maybe even more so, would you even consider or deny that he will go for 100 eurobonds -- you will go for 100 year bonds? ken: it certainly gives one reason to pause. years are years in which countries -- there is speculation that election years are years in which countries sort of bust the budget. right now we are comfortable with what we have done. we understand market sentiment. we usually have a midyear review to see how we are doing on the budget. those are when we make decisions for that. as you know, we have some
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financial restructuring that we have to do with the micro-finance institutions and deposit institutions such as savings and loans. we will see how we finance those. nejra: can i briefly confirm, is the possibility of a century bond off the table for good? ken: i don't think anything is ever off the table for good. the issue is that the market has told us that they are comfortable with 31. we have some very long-term restructuring things to do in terms of infrastructure. so we have to work with the market to see whether they are interested in a longer bond for us to do that. it would be a unilateral decision. it would be a decision that makes sense for the market. we don't need to call it century
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bond. maybe it's a 50 year, something, if that's what the market cause for. manus: let's talk to you about the currency. let's make sure we have the right pronunciation. there was a real collapse. was the rate cut a mistake? do you expect more pressure to come to bear on the currency or are we fine with the level? ken: you know, it cannot be a mistake. our central bank has been quite clear about protecting the domestic environment, and therefore, the inflation target that we have done. markets wereat the strong outside, which means that people may look to externalize. the fundamentals, as the governor will let you know, has always dutch have always been very strong -- have always been
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very strong. we call this the speculative bubble. the issues that came to bear was ghana was leaving the imf. there was a certain amount of cynicism from that. so that occurred, and then of course, a few bond holders wanted to externalize their dividends, and all that collapse was the emerging-market tightening. that's really what occurred. as you can see, as quickly as it came, so quickly is it going. nejra: yes. you mentioned the imf. since 2016 you have cut the budget deficit in half and brought debt down. is ghana prepared to go at it a load -- alone? or do you still need imf assistance? ken: i think we really have proven over this time the clarity of of our president's
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vision of a ghana beyond aid. the principle of going alone, being sovereign and independent is very clear. however, we have had a great relationship these two years with the fund. four.e back to article it's now a 12 month review in which they come in every six months. they establish a committee. the imf as a trusted advisor is something that will go on. etc. willof reviews, continue and i think that's a healthy relationship. manus: thank you so much for joining us this morning. it's been a great conversation. well done on the bond auction. let's see if we can get a few more. coming up on the show, it's going to be a bloomberg
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conversation you don't want to miss. the ceo of generali, philippe donnet, joins us for an interview after 7:00 a.m. today. ♪ 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. manus: good morning, this is
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bloomberg daybreak: europe. plotwill the latest dot look like and what does a pivot of patients really mean? day. fed decision that -- pushback from beijing on american demands, despite continued optimism from president trump. , theresaon both fronts may distracting a request for more time from the eu. this is as reports of a tory the pressure.
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♪ nejra: good morning, everyone, welcome to "bloomberg daybreak: europe." they are confirming their medium-term revenue growth goals. one of the lines coming through. a recurring operating income comes in a 2.5 billion euros, a bit of the beats on the four-year recurring operating in them. ofy're proposing a dividend 4.5 five cents per share saying they are confirming the revenue outlook. the four-year operating margin is meeting guidance.
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the company forecast was close to 34% and the ceo is saying no change of trend from chinese consumers. those of the lines coming through from hermas. manus: that is incredibly important, given the last conversation we had. i want to bring you some a german data, this is on the ppi. 2.6% from aces, year ago in february. 2.6% is the number that given us from a year ago, this is actually a little bit worse than the market had anticipated month by month, a decline of .1%. fairly negative on the month on month, certainly below the estimate we had out there. let me show you what is going on with bond markets, fairly pragmatic bond market, it is the u.s. treasury market, volatility is at its lowest in its lifetime.
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trade as it take to volatile reaction? the view you get a cut in the dots, that's the plot, is that over actually going to get? how do futures look? nejra: you talk about bank of america, i talk about their fund manager survey, because the most crowded trade is short europe. these equities are just under one percentage point from recouping the losses from 2018. -- the dayst gains of gains, but looks like we can get a break. futures lower, led by dax futures. let's check on the market, juliette saly has more. >> on a headline level, we are in a bit of a holding pattern, but also with the latest headlines on u.s.-china trade. >> it has certainly dominated the sentiment, although we have
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seen a bit of a turnaround. flat,closing out fairly even though we are not getting too much detail on u.s.-china trade. india also looking flat and a weaker yen pushed the nikkei higher. south korea is also flat on the close, although we did see some weakness, indicating a challenging year. australia was a weaker performers down .4%. certainly, after a day with , the close is .5% looking mixed ahead of the fed. let's have a look at some kurds who moves, we have been watching this move in aussie dollar . yields looking unlikely. the aussie is on the back foot again, down by .1% as the housing slump deepens. weaker against the dollar ahead of an interest rate decision there, no change expected to the 1.75% in thailand.
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the rupee is coming back after yesterday's loss, up by .25%. we have been told by traders it is mainly due to foreign banks selling dollars today. manus: thank you very much. breaking news through, this time from kingfisher. kingfisher has launched the process to find a new ceo. the ceos departure date had not been decided yet, the chief has been inficer place for 4.3 years. in terms of performance of that ceo, let me just click it on the bloomberg and i'll give you a quick reflection been -- reflection. relative to her peers, in the process of launching a succession plan. new ceo aplenty. what's going on with buyer?
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nejra: from kingfisher, it is one of the few big u.k. companies that not only have a female ceo of a female cfo. so the change of the top will be interesting to see. let me give you the line on. bayern. indicated down 10% versus the sectors close after the news had lost its first phase of the trial around and is now to face liability. also, we saw them downgraded to neutral, definitely a stock to watch. manus: that is a pretty big move. losses, thehose question is tried to put numbers around that. lawsuitsup to 11,000 over cancer in the united states of america. plot,talk about the dot
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thickening. a dovish revision to the federal reserve's dot plot is widely expected after a two day meeting comes to a close. beyond interest rates, markets will also be looking for details .n the balance sheet nejra: mizuho head of european will says that the fed struggle to reach a compromise between adhering to a pause for a long time and technology underlying data has remained resilient. strategies head of says they also need to get specific on the schedule or the market a be disappointed. the communications front, the pimco portfolio manager suggests the fed would likely steer clear of any action or communication that would disrupt the most recent improvement. bank,ile, over at radel they say that on balance, we may thel see a hike for 2019
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chance of no more hikes is considerably larger. a former fed governor's advice is to take the dot plots with a grain of salt. >> i do think it is likely to come down, but i don't think the markets should misinterpreted. that -- misinterpret it. the fed will be can patient for quite some time. manus: now, derek is one of my favorite guests, european head of global market research at mufg -- musg. in my mind, the thing they have got to do is avoid a taper tantrum. they've got to avoid the 2013 moment, a taste before christmas. is that the most important thing before -- for the fed? >> i think consistency of message is crucial here. are reminded of the 19th
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of december the the shift at the fomc that to the fourth of january how gave his first indication of the changes, that shift has been dramatic. abrupt, quickt shifts i can think of going back a long period of time. the crucial thing for today is to remain consistent in relation to that shift. in other words, emphasizing the scope for a pause, that will be done in a number of different ways. the statement will be toned down in the description of the economy. the forecast will between a little bit lower for gdp and inflation. of course, crucially, the dots profile, in terms of there being three dots for this year and next will definitely be lowered. whether one. or two dots is the debate. nejra: what is the scope for the reaction in the dollar?
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not just for 2019 but 2020 as well? >> definitely, if we go from three to one. next year, all you need is one of him oc -- fmo see member to drop lower and the whole medium comes down. the barriers quite low for next year. certainly, if we go from 3 to one, there will be a reaction. ishel weisz, the market beyond that and we are priced for marginal cut. that is not worrisome, because the history of the markets is that they have always been less can't -- confident. there is always that gap and there will be tonight. manus: it is interesting how the three of us are obsessed over this one., two. move -- one dot
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, two dot move. they do drop, they should be buckling of themselves in with guided. don't leave yourself that much latitude. personally, the safer bet is that it will be one this year and two next year. that is consistent with having time to pause and assess the economic outlook. , it has been referenced in your comments, is terms of balance sheet. remember back to the 19th of december, the equity market plunge was in relation to powell's indifference to the fact that the balance sheet was continuing to shrink. that obviously has changed. will we get more explicit guidance this evening? i'm not sure we will get an informal statement in great detail about how it comes to an end, but we may get in the patience -- indications that are
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little more explicit than in the past. that would also help to maintain the current favorable financial market conditions. nejra: having read your research, it seems to me that we do still have one for 2019, that could be dollar supportive. whether it raises volatility is another question. i've got a great chart. fx volatility falling to a five-year low when you look at g7. what we need to see for this to pick up? derek: it is remarkable. for example in dollar-yen, the two-year volatility level is the lowest going back to the heydays of 2005. remarkably low levels. how to recite ourselves out of this? obviously, the fundamental background to this is that the fed has shifted to the sidelines
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. not only that, it was followed by rba, rbnz, bank of canada, and the ecb. period ofthis long stability across the g10 space. if there was some remarkably strong data on inflation on wages, that kind of question that view, that would -- some volatility backup see some volatility pick up. but that has been going for some time, and see a new crisis something big and global and macro would have to take place to shake us out. we arethe argument is heading into japan education -- japanification. time for that later. exit is really under time pressure. -- brexit is really under time pressure. a short extension is the biggest
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risk of all hard brexit much more precipitously to the four -- the fore. derek: yes and no. a short extension without markets knowing much about why where that leads us, that is not positive. extension a short with a very open, clear evidence that there has been a shift in parliament with maybe the dup announcing, that is obviously different than the context is quite positive. so we need to know what the plan is in relation to a short extension and that is very crucial. it is remarkable how much the pound is being supported about and every sb to just say whatever happens, there's no way there will be a no deal. and i agree, but we could go right up to the 28th if this rumor of a sauna is taking place is true.
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we go to that point, what i be confident of the markets conviction on a no deal will remain steady through that point in time? i would not have that confidence. as time tricks by, the risks are we to get a correction to the downside. nejra: the u.k. government spokesman is saying theresa may want to seek that long delay. we wait with bated breath. the european head of global markets research is staying with us. up, we speak to the ceo of generali. that miss that interview next. this is bloomberg. ♪
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manus: 7:18 a.m. in london, 32 minutes away, 41 minutes away, cap subject, from the start of european trading that. -- day. nejra: i am they rotated in
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london, i also -- i am nejra cehic in london. a holdingin a bit of pattern, some concerns around the trade discussion. it is the 10 year yield and two-year yield you want to watch. dollar-yen goes nowhere, weakness in the aussie, it did fall earlier after comments from the rba. manus. manus: they are worried about has prices, aren't we all -- house prices, aren't we all? stronger, the bit uae getting to 100% compliance everybody is a little bit cautious on day-to-day. . year for18 was a good generali, reporting a rise in four-year profit boosted by
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asset sales and improve margins. they also increased dividends by about 6%. they are banking on digital expansionon and an and asset management. for more, let's speak to the man at the head of italy's largest insurer, joining us for an exclusive you --exclusive interview. you are absolutely right, you laid out the strategies of where generali sees itself. i'm delighted to be joined by the chief executive pay for giving us some of your time. we were just talking about some of the transmission generali has gone through. what are your priorities? , we closedery happy a good year and achieve all of the targets of our previous plan. this puts us in a good situation to start our new plan, which is a new, ambitious strategy.
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it is all about growth and transformation. we have three pillars in our strategy. profitable growth, finance management, and the third is digital transformation. it is an exciting strategy. >> is it new markets are selling more to existing customers? >> it is everything, we want to grow in europe because it remains the main market. we want to grow significantly beause we will no longer doing insurance and asset management and we will grow as well in the high potential markets such as brazil and asia. >> how committed are you to dividends? will it be a pillar of your strategy?
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>> absolutely, we have set clear targets and will grow every year. dividends moree and more sustainable. >> you are an international company, but still make a lot of your profit in italy. what kind of economy do you need in italy? italy represents one third of our business and we are in theating international diversification of our group. we are growing faster out of italy they have italy -- our of italy.han in it is solid and resilient. italian economy has good fundamentals, good basics for two reasons. , the greatest sms.
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they also have a wealthy people, italy is a wealthy country. it makes a good economy. for us, thanks to the diversification of our business, we are resilient. economy is growing, our property business is growing. if the economy is slowing down, people are spending and investing less, they save even more. this is good to our life insurance and asset management business. >> are you worried we are in a slowdown phase, and could potentially see a recession starting in china or the u.s.? us, this is not a real issue because we are also in the savings business, the money management business.
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once again, when economy is slowing down, people are saving more. what is important is the trend for our business. people are wealthier and some parts of the world and people are aged. -- aging. this fact creates many business opportunities for us such as health care, pension management, long-term care. so the trend for our businesses are very good. too many insurance companies around the world? are we going to see a consolidation phase? you look at europe, you have 4000 insurance companies. many of them are small or medium and most of them are local companies. i think that there will be some consolidation with those small
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and medium companies that may integrate larger groups. i am not sure that mega insolidation will happen, don't believe this would be good for customers, and i don't believe this would be good for the safety of the business. i don't believe regulators would view it as good. on the other hand, to see a small, local company integrating , i think this might happen. >> are you looking to buy some of the small companies? anything you are targeting? said, our new strategy and plan is not based on m&a. would grow earnings by something between 6-8%. m&a havingot rely on said that, if we have good opportunities for accelerating
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growth, we would look at it. we're looking at opportunities both in insurance and in asset management. >> what is a good opportunity look like? a segment you don't have -- oring that looks cheap something that looks cheap? for example, something we like is to further strengthen our market position in a country where we already are. we prefer to stay in our core expertise and market, so we would rather look at retail, sme's, and professional business. we don't want to grow aggressively on the corporate business, so this is something we would like, some opportunities with synergies. build up in some european countries. if we can find
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opportunities to accelerate the growth of our asset management business, we will look at it seriously. >> they give very much for joining us, the chief executive of generali explaining to us the strategy. we talked about consolidation. ♪
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nejra: welcome to bloomberg: markets, the european open. i'm alongside matt miller in berlin. embracee market say yourself, or brace yourself, i should say, don't embrace yourself, or do embrace yourself. pointingfutures are downward as ethics volatility holds. ashtrays starts in 30 minutes time -- cached trade starts in 30 minutes time -- cash trade time. in 30 minutes ♪
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anna: theresa may is set to ask the eu for a quote short brexit extension, raising the risk of a no deal exit over the summer. mixed messages, stocks fall as u.s. officials are said to see pushback from beijing on american demand. but president trump is still optimistic. >> china is going very well. thank you, everybody. bayer loses the first phase of its round of trial and the company faces a second phase to determine liability and damage. the stock is decimated in premarket trade. matt: good morning, anna. less than a half hour away from the start of european equities trading. take a look at what i have got here, the treasury yields over the last three sessions. very little changed.
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and you're not seeing volatility anywhere across the markets over the last couple of days and weeks, certainly not here. see if the fed can check that out. index futures, we kicked off the session this morning with a very difficult trade. dax futures were down .9%, now down .7%, they have not recovered much. it looks likeff, we yet a negative start to trade this morning as we await the fomc meeting and press conference that follows. anna: let's talk about the asian session. gmm shows us we are mixed in the asian session as we wait for the fomc. just how dovish will the fed be? we get into that little bit here. catchingt see the fed
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up in markets and expectations for rate hikes, will that be seen as dovish or not? the foreign exchange markets, weakness in the us trillion dollar amidst talk over whether the rba will cut rates. downess in the pound and .2 percent as we see theresa may say she will ask for a short extension, meaning there is a tougher deadline looming to avoid being thrown out of the eu if we do not participate in eu elections. let's look at the other side. a standout move in iron ore, down by 4.4%. this has to do with whether we will will not see the reopening of a brazilian mine. let's get a first word news update. theresa may is stuck between the demands of her divided
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government as the reality of what the eu is willing to offer. the question is how long the but the ceo still says they are still concerned about what a hard brexit could mean. they are exploring new routes for car parts. all of this will help to ease it to a certain extent. >> the u.s. department of transportation will ask for a review of the certification process of the boeing 737. this audit is separate from the general probe that the is also conducting. grounded by the federal aviation administration after two crashes in the last six months. google will give android users a
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choice of alternative browsers and search apps and outlines changes to the way it displays ads for shopping. is sets hours before it to get a third eu antitrust penalty over another advertising service. google has attracted record fines of 6.7 billion euros. bill gates has again passed the $100 billion threshold and joins jeff bezos is the world's two largest billionaires. more than $35ted billion to his foundation and says he intends to give away at least half of his wealth. 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. matt: thanks very much. debra mao in hong kong with your first word news.
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asian stocks have addicted this morning and futures point lower. this comes as investors adopt a cautious stance. nows get into the markets with our mliv strategist out of singapore. s, what do we expect from the fed today? good morning, everyone. i keep saying stocks could rise off the fed. i see a lot of people saying that the real reason they switched to this policy was because they did not want to see another big selloff of stocks like they saw in december. that suggests the fed still has time. market will almost certainly stick to this language of a patient monetary policy. jerome powell will say things in his press conference that are bullish for stocks, focusing on
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the strengths of the u.s. economy. i think it is all a recipe for a positive backdrop for stocks today. certainly, there are some who say that the earlier dovish tilt was because of the weakness for stocks. but talk about another bank and what they are up to. to heartarting suggestions that the rba might cut interest rates, something to do with the housing market, i understand. yeah, another reason for the fed to be supportive of market. looking at australia, there are more and more calls for the central bank to cut interest rates. the market is in trouble and we had an official today talking about risks to financial stability. the reason we should care about australia is that it is a proxy for china, a proxy because of the strong trading relationship
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between australia and china. signs of trouble in the us trillion economy can be a broader warning sign about china and the global economy. from australia, a warning sign of the global economy. china's central bank will probably cut reserve requirements for banks in the second quarter again. why is this important, isn't working so far? -- is it working so far? wes: we already mentioned concern about china's economy. that is something that should help keep bond yields down and prices up. a lot of economists think the reserve bank is going to cut bank reserve requirements. the central bank in china has refrained from cutting official interest rates, but it has got this targeted easing program to cut these requirements lesser
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year and will probably do so this year. last, then forget the chinese government bonds is going to be added to blake barclays aggregate bond index in phases, but starting in april. that is something that should help bring foreigners in. yields will stay low and prices can go up. anna: we should ask you our question of the day, we been asking it overnight. what canfollow to -- wake of volatility from its slumber? started,here we something the fed it says could fedt volatility, i guess -- says could wake volatility, i guess. wes: if the fed can't, i don't know what can.
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the lastking at meeting and the s&p 500 rose 1.6%. it has not risen or fallen that much since then. maybe the fed will make things up again today -- wake things up again today. matt: wes goodman, thank you. i want to point out this chart that was put together earlier. volatilityfects of sliding to the lowest level since 2014. to see helloting little volatility we have in foreign exchange, and the question is whether the fed can wake it up. remember, join the debate on today's question of the day. what can wake volatility from its slumber? reach out us on your bloomberg terminal. up next, next messages on trade.
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messages on trade. some worry, but trump strikes a vaguely optimistic tone. we are live in beijing next. ♪
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anna: welcome back to the open, 60 minutes away from the start of the equity trading day. looks week in europe. -- weak in europe. the u.s. rally ran out of trade and we need to price that in. ,eep an eye on north hydro which hold you about the cyberattacks they were announcing. now we have got an update, and they say they have made progress in securing stable operations. most operations are now running. they've seen limited operational impact in their products. they go through some of the impact you have seen come and say it is too early to estimate the operational and financial impact on norsk hydro. matt. matt: there are conflicting messages on the state of trade talks. bloomberg sources say u.s.
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negotiators are concerned for china is resisting of american demand. president trump said things were when answering a question on tuesday. china is going very well, talks going very well. thank you everybody. matt: he did not sound terribly himself. joining us is tom mackenzie, bloomberg's china correspondent in beijing. his china taking a tougher stance? tom: that is what we are hearing from sources in washington. indeed, chinese negotiators are taking a hard line. to whatently boils down they have seen as steps in intellectual property, having pushed through a new policy. they turned to their counterparts and said will you now agreed to remove tariffs? apparently the answer was not yet, we can't commit to that
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yet. we know that from the u.s. side, they're looking to use tariffs as a way to enforce any future deal. . now we are hearing the chinese side has walked back on previous agreements around things like data protection for u.s. pharmaceutical companies. that has caused concern, but it depends on who you speak to. some say this is just a classic form of negotiation. concerning ands they fear it is a strategy by china to take some of their pledges off the table. anna: something else the chinese might be tried to walk back is a commitment to buy specific u.s. products, including boeing aircraft. join the dots between the seemingly disconnected stories. they have very much been connected, having played? -- havent they? absolutely.
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we have heard as part of their purchases oflude boeing aircraft, in the mix 737 aircraft. in light of the accident, the chinese are rethinking that and wondering whether or not they want to strip out the 737 max 8 orders from the pledge to purchase altogether or if they switch up the model. clearly, it will be tricky to meet the numbers, because the chinese have already said they pledged by up to $1 trillion of u.s. good. significant have a number of boeing aircraft, it is hard to make it a number like $1 trillion, which many have said is ambitious anyway. this part of the discussion has added a new layer of complexity. matt: what should investors be watching for next in these negotiations? tom: the good news is the conversations continue. that a u.s. trade
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representative, along with the treasury secretary, will be here in beijing next week around march the 25th. they will continue high-level talks, and we are hearing the vice premier is expected to travel to washington to continue the negotiations were what the sources are telling our team is that this is a matter of weeks, not months. there aresing in, but clearly significant issues they need to get over before we get to a point with the two presidents sit down to sign off. matt: thanks very much for joining us. tom mackenzie is bloomberg's china correspondent, joining us out of beijing. let's get the bloomberg business flash in hong kong. sony and nintendo are both down after google outlined a major push into video games with a new service. it allows developers to put games on a streaming platform for players to access online,
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--ing expensive consuls consoles or computers. google did not say how it would be funding. chinese car cell targets are being cut, signaling a downturn in the world's biggest car market. 6%, ther vehicles fell first decline since the 1990's. ongoing trade tensions threaten demand even further. are after a peace of america's second-largest ride-hailing company. 's ipo is currently oversubscribed. bloomberg understands they see demand far exceeding the number of available shares. the could be set to exceed billion dollar -- multibillion-dollar investment there seeking. anna: minutes away from the start of equity trading, 11
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minutes, in fact. up next, we take a look at stocks we are watching ahead of the opening. -- including bayer, that stocks slumping in free trade. this is bloomberg. ♪
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matt: welcome back to bloomberg: markets.
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this is stocks to watch from across the newsroom. ms -- hooking at bayer, ermes, and others. what is the story? now,r the second time bayer has lost a big trial related to whether their best selling weed killer might cause cancer. this just came in last night from california. last time this happened, it cost them $78 million. there are 11,200 more cases pending against them. and raises questions about whether they will have to pay maybe more point, than five, up to $10 billion in settlement cost. anna: we will see how much it drops. what is the story with ms -- with hermes?
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>> they said their performance lester was remarkable. numbers came out ahead of results, but more importantly, the message on china was reassuring. investors are looking at china for luxury stocks, in particular product -- pr-- ada slumped. in a bitosts starting and potential problems to come on the violence in paris on the paris onies a -- in whether it has had an impact on our -- or not. matt: what have you got? >> they are said to surge of the open, receiving a $3.3 billion offer from a group of pe and pension funds. this represents a 24% premium from yesterday's close. the date there, april 16, is when a firm offer needs to be made.
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but look to see if gains day can rival best number. anna: thank you very much. thanks for joining us with your stocks to watch. get the latest stock stories from our equities team by going to first go on bloomberg and our mobile app. quick word on the pound, it is moving lower down by .25%. confirmation this morning from a government spokesman that it is going to go -- theresa may is going to brussels to ask for an extension. perhaps that means the end of june is the date, perhaps that is a harder date of them the 29th of march ever was. perhaps there is no chance of extending without an entirely different proposition because of the looming elections. when will the next about happen, we don't know. -- vote happen, we don't know. it does not necessarily mean next week. coming up, the market open.
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futures pointing downwards, we will have to recap some of the end of the session he for we can move on. . this is bloomberg. ♪ want more from your entertainment experience?
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just say teach me more. into your xfinity voice remote to discover all sorts of tips and tricks in x1. can i find my wifi password? just ask. [ ding ] show me my wifi password. hey now! [ ding ] you can even troubleshoot, learn new voice commands and much more. clean my daughter's room. [ ding ] oh, it won't do that. welp, someone should. just say "teach me more" into your voice remote and see how you can have an even better x1 experience. simple. easy. awesome. anna: welcome back, a minute to
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go until the start of cash equities trading. let's look at how markets are positioned. the euro is a little weaker against the dollar, the real focus is on the fed later on. how dovish will they be? all they have to lean in different direction, given we have seen a bounce in conditions of late. big move in commodities and iron ore as talks of reopening mines in brazil. asia not moving far, treading water. headwinds on the trade front. that seems to take the edge off of u.s. equity markets.
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the pound retreating. this is the picture for equity markets, looking for a week start on the day. looking to factor in the weakness that happened because of concerns around trade into the european markets. this is the start of equity trading wednesday morning. let's see if we do move decisively to the downside. interesting to keep an eye on u.k. assets. we do have weakness coming through. theresa may saying that the government is going to ask for a short extension. we don't have the exact details or know when the next book will come, and that is the implication there will be another meaningful vote. does that mean the choices now between her deal and a hard brexit? if you dots to join up before we make that conclusion exactly. let's talk about where we are on the markets about weaker by .3%. ftse

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