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tv   Bloomberg Surveillance  BLOOMBERG  March 21, 2019 4:00am-7:00am EDT

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little bit weaker as theresa may heads to brussels. check out what the futures are doing, the ftse 100 higher, the dax lower. this as bund yields yields lower and futures are unchanged. london, u.k.ity of futures and market set to open. did seeghtly higher, we asian equities get a boost early in the session. optimism began to fade a bit. ibex opening to the downside in spain, down .2%. of course, in europe, the big story is brussels. theresa may heads to brussels asking for a short extension. opened,are run just still waiting for that. dax futures selling some weakness. let's take a look at what industry sectors are doing.
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i'm interested in telecom and information technology, as we said before. micron has reported earnings but they are also cutting production. asml, also,on energy in the greek. delete about $60 a barrel since the first time -- for the first time since november. this is good for energy stocks as well. also, miners. they settles are higher, gold the highest in three weeks. the hp higher in australia, so we will look for that as well matt, what are you seeing in individual movers? matt: we are looking at a brett that is fairly evenly split. look at thea winners and losers in terms of moving the markets, it is really .he miners in oil companies
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rio tinto, bp, and total all adding the most points. otherwise, bhp is rising, glencore is rising, angle america, royal dutch shell. heavyweights holding the s&p back. taking a look at the losers, exotica down almost 5%, currently the biggest point deduction. if also that banco santander down, as well as british american tobacco. bonds and i think the chart is striking this morning. the 10 year german yield falling closer and closer to zero. now it is 0.05, so only five basis points for lending our money to the german government for 10 years.
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at least, you know, it is a solid that since the germans have a pretty decent surplus. painting a mixed picture on the open as the federal reserve signals no rate hikes. powell says interest rates could be on hold for some time as price pressures remain muted. here is what a bloomberg guest had to say about the fed decision last night. >> what has changed in the economic forecast and what they are reading, i think that has given investors pause. the focus is now clearly on the downside, the possibility of a downside surprise with elation less than they want. are worried that they end up with too low expected inflation over the longer term and that they had in the direction which they ultimately are being dragged in on places such as japan and europe. got this almost a synchronized a dovish tilt by central banks, which for asset classes, is really good. >> i would underwrite the fact
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that you would see a significant rally in rate. that being said, it is relevant to whether data is. bit moree a little range spicy. anna: reacting to the fed comments yesterday. at naomirmstrong, cio wells joins us. the muted reaction, does that suggest the market is little more concerned about global growth? and what is that the fed is so dovish about? more concerned about that than being comforted at the presence of a fed push -- it? -- pivot? this creates a stronger euro, which is a negative consequence for europe. this is a reiteration of the dovish home, continuing to move more dovish. i was in the camp, we expected a
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hike in q4 of this year, i don't think there will be a hike now. but i do think there will be a lot of questions now. if we do get a weaker dollar, dotsonsequence of the getting lower, i think inflation pressures will start to build by q4. i want to quickly ask the mliv question of the day. rising, the 10 year rising. sluggish, toare say the least. what is holding equities back from showing the same as he is -- enthusiasm? patrick: they have come so far, so fast. you had 50% move on a lot of markets. markets need a bit of opponents, but there is a double move from the fed.
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all of that has driven markets higher and it is now priced in i think you will start to see some economic followthrough that they slid the fed has gone dovish and probably a little more dovish than the economy dictates you might see a leg up from equities , but the reason they've come so far so fast is the reason for the disconnect. was interested in listening to jay powell speaking at the press conference. of course, you can join dots by how much do you think the fed is stretching its mandate? do you think they have a goal of getting the stock market to not selloff? byproduct ofod having jobs? patrick: it is the market selloff that has created the dovish tilt.
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i don't think the economy has weakened markedly from where we were looking. there were some warning signs in december. the economy has gotten weaker. i don't think the shift that we have seen is justified from the deteriorating market. reaction from a fed that is going to hike regardless of some slowing measures. powell changed his tune on that. the interest rate policy being patient make perfect sense to me. i think it is a policy mistake to not hike if we get inflation past 2% the american economy is driven by consumer. i don't see that changing right now. i think they are leading to dovish. that we may have gone the other way in the two dovish fed that is supporting markets rather than looking at the economy. matt: how important is the u.s.-china trade deal?
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if the outlook changes in the event of a good outcome from the u.s.-trade talks, although i have to say, my optimism for that. just as a viewer, is kind of diminishing. patrick: i am of a similar view. i don't know if it is going to be a good outcome, but i think we have removed some of the tail outcomes with things with progressively getting worse. in december, we did not know if the rhetoric would get worse. we are in a stage where we did not know if tariffs would be increased, trump is indicating he will keep tariffs even if we get a deal, which may be just a bit of an open gambit. there's going to be an all-encompassing resolution because the issues are two bit. but if we do get an escalation, that arose a potential headwind from economic growth. markets respond, but they should not get too enthusiastic everything will be solved does this is not something that can be solved.
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you can import markets if you are in china, but you are in an economy where the average citizen makes $4000, relative to the u.s. with the average citizen makes $40,000. of course they will be importing markets. -- more goods. anna: patrick, thank you very much. up next, we bring you the stocks on the move this morning. metuding ted baker, which estimates, but investors are selling amidst an investigation into the founders misconduct. this is bloomberg. ♪
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matt: welcome back to the market open. ,ust want to quickly show you angela merkel heading off to brussels. she is addressing the german bundestag and basically pointing out the painfully obvious to the members of the german parliament. we still have no definitive answer for brexit. that is pretty clear if you follow the news flow that whatever the opposite of a definitive answer is is what we have got right now. she is informing her constituency of that. it -- after three sessions, you
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can see they are going down. 0.06%. basically, no return in exchange for lending your money to the german government for 10 years. you get.k., at least 1.1%, and in the u.s., 2.5%. so if you weren't concerned about currencies, it is pretty clear where you would investor money. and if you thought the dollar was getting weaker, it might be an even better idea to buy treasuries. let's get to our top individual stock stories 13 minutes into the session with dani burger in london. chipmakers, ar little bit of a runoff from a u.s. story when micron says they're going to cut action. that actually signals the end and the bottom of the chip cycles. again, ted baker, not a good day for retailers. following more than 5%.
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the earnings are in line but the outlook has analyst concerns. there is a typical environment and the weather has not participated well, also, a lot of competition. then, next group. they did see online e-commerce sales that stepped up and help them out. when we look at an environment where ted baker is also falling. e-commerce does not seem like it is enough to get investors excited about the shares. matt: thanks very much. anna: dani burger there with the movers. theresa may standoff with the european union is driving the u.k. to the brink of divorce. the prime minister has formally asked for an extension, but as leaders meet today and tomorrow about the blood conditions for meanwhile,delay jamie dimon has weighed in on the deepening political crisis. quests cannot remove
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uncertainty apple only way the odds of a messy divorce. he adds a hard brexit would be a huge negative to the u.k. and much less so what europe and the united states. patrick armstrong is still with us. the twists and turns continue to , at aith vast frequency great price here, patrick. the risks of no deal and tailwinds seem to increase. how much would you put the chance of a no deal at now, given what we know about the stakes for next week? patrick: it is hard to say. i would say everyone is against a no deal, essentially everyone overwhelming does not want a no deal. they have voted not to leave without a deal. but there's going to be a bit of brinksmanship to try to run out the clock from the heart brexiteers maybe even force that no deal as being the default. you can't rule it out.
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i'm surprised sterling is up where it is given what's happened in recent days. you would see 10% selloff in sterling very quickly. the uk's probably moving into a recession in that environment as well. it should not be anyone's base case, but is now at the point where you can without. -- cannot rule it out. matt: do you take any action on that? smith, whoin duncan assured me without exception that they will leave on the 29th, do not feel it is prudent to bet on the future price of the pound? if we see any strength on the news that europe grants them an extension, that is where i would starting -- starts to sell it again. that is what we did when we thought may would get her deal through somehow, that has not come to pass. the downside risks are definitely there.
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the uk's in a funny situation where, on march 29, they've got to deal with the default, to leave, actually a revocation of article 50, because that is the only thing they control that point. a revocation may be an alternative that pushes some people even that way. that is another tale event that is even less likely, but something you have to consider. anna: yeah, plenty of tell risk. we don't know exactly what happens if theresa may fails next week. as you said, she did skip through parliament, but there has not been much talk of whether there would be a long extension. but could there be? want to ask about whose voice you will be listening to. will it be ireland who holds sway westmark clearly how it there is a lot in it. or will it be the french? they seem to be one of the most vocal suggesting they would not mind that much if no deal came to pass. i think france probably
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would not mind, but ireland suffers from you pointed out. u.k. is the second biggest loser. france has come to the point for they didn't want to punish ireland to such an extent and allow an extension not to happen. but if theresa may does not get her deal through a short-term extension is meaningless. what is anyone working to that point the summer theresa may has said she does not want a long-term extension, but that might be something that is forced. the conservatives are even talk to a general election. they will many twists and turns in the next week and the short-term extension only makes sense if we get a deal where parliament supports the deal that is there. the: or, i would think european solution would be to have a short-term extension that leads to another short-term extension. so on and so forth. and then this never happens.
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patrick armstrong is going to stay with us on set in london. up next, we run through the latest forecasts where the latest players are expected to european indexes to trade by year end, this is bloomberg. ♪
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matt: welcome back to "bloomberg markets: european open."
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we are 22 minutes into the trading day. a mixed picture across europe. i want to quickly take a look at deutsche bank and commerzbank. those two stocks trading in frankfurt are now trading lower friday, there on day before we got, or last trading session, before we got an announcement they were going to officially go into merger discussions. it is interesting to note that chancellor merkel has distance herself from the possibility of this merger, really, it would be a takeover of commerzbank by deutsche bank, as it becomes even more politically unpopular in germany. interesting, especially, because it was her finance ministry pushing for this, not even clear the executives were interested. but olaf schulz certainly was.
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pouring cold water on this trillion dollar european stock recovery. if you have noticed in the last few weeks, they have been shooting up, the stocks europe 600 broader index is now expected to lose 6% from wednesday's closing levels by the end of 2018 -- 19. it has gained 13% since the start of the year, but according to the average projection and the latest bloomberg poll, investors are bearish. this comes as marshes bank of the shortow that european stocks is the most popular trade globally. it looks like it has come into vote since we had these gains. joining us to discuss is bloomberg's european stocks reporter and patrick armstrong. what are forecasters expecting to happen, or rather, why are they expecting european equities to tank after big gains we've
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seen so far? >> we have seen this tremendous rally. european equities have been beating msci, up 13% unfortunately, forecasters don't see much reason for them to go on rallying. there are many factors to this. european equities have been rising because of a dovish fed and optimism of the trade deal. ,oday, they are retreating saying that there are concerns trade talks will fall through. there are too many bits and pieces and earnings growth is still underwhelming in europe in order for equities to continue rallying as strongly as they have. patrick, let's bring you into the conversation, still with us on set in london. do you see any reason to keep buying european equities? as we were to say, it doesn't seem like the investor community
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in general does. patrick: it would be a contrarian play to buy european equities. we have not been buying since early january, but it is still our biggest overweight. we love the integrated oil companies, but less than we did in early january. the french banks, we still think have another 3-40% to go as they are incredibly cheap. earnings are deteriorating, the very marginally. we are in the camp that europe is still good value, still a contrarian play. we not moving into a recession we don't think, but growth is meager. fading the rally a little bit, not buying, but not selling either. matt: there was a hot headline this morning that bps health care is reconsidering its london listing due to brexit. it could list somewhere else in europe, but what does the european ipo data tell us about
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the first quarter for equities? data has beenpo quite sad, unfortunately. this is the slow start to western european ipos as the financial crisis of 2009. that is pretty dramatic, and it has been a pretty bad quarter for investment banks, especially equity capital market divisions, because the markets have been so slow. areite the route, companies refusing to enlist because they're so concerned about a potential downturn and are not able to sell their companies at like.luation they would enia, thank you very much for joining us. thank you for joining us, patrick armstrong. always great to get some time with you. we will bring you the latest decision from the swiss national bank and the reaction in the currency markets. that is next, this is bloomberg. ♪
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♪ matt: welcome back to bloomberg "markets." 30 minutes into the trading day, fed's dovish -- said -- dovish double take. now corporate america is at risk of shocks. game,ace the blame playing into lawmakers as she heads to brussels to delay brexit but lawmakers say she has -- washington will only remove duties assuming china is
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complying with the deal. welcome to bloomberg markets. this is the european open. i am matt miller. , wehe south in switzerland are getting headlines across from the swiss national bank maintaining its deposit rate at 0 -- -0.75%. holdingted, the snb is its deposit rate well into negative territory. action ine big today's markets is in the bond s.rket, especially in bund 0.04% look at this board, is what you get for lending your money. -- 0.045% is5%
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what you get for lending your money to germany for 10 years. u.k. --t 11% in the 1.11% in the u.k.. andany has a budget surplus the other two are looking at significant deficits. anna: we have seen action in the bund and bond market. action on the fx with regard to sterling retreating on the basis that the latest headlines we have heard, theresa may doubling down in dramatic fashion to explain to the nation why she has missed her own deadline in terms of exiting the e.u. that was preceded by donald tusk in brussels where he said the u.k. might have a short extension, but theresa may will have to prove she can get her deal through parliament.
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back to focusing on the 29th of march and what happens if she fails, that is the question. what the e.u. 27 push the u.k. over the cliff? more positive tones from the spanish and germans, but other members of the e.u. 27 would not mind pushing the u.k. over that cliff. theresa may has to persuade them to give her that extension. let's get a bloomberg first word news up they just update. with thea may standoff european union is driving the u.k. to the brink of a no deal. the prime minister has asked to delay brexit until june 30 but this is onlys possible if she can get her deal through parliament in nine days. if not, the choice will be a prolonged delay or crashing out
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of the e.u. >> we will now not be on time with a deal on the 29th of march. this delay is a matter of great personal regret for me, but i am not prepared to delay brexit any further than the 30th of june. >> new zealand band semiautomatics and assault rifles. this is in the wake of a terrorist attack that left 50 people dead. the ban is taking immediate stockpilingevent while legislation is drafted. tariffsrump will keep on china until he is complying with a trade deal. the nations will agree to roll back duties in a lasting truce to their trade war. hong kong chief executive carrie lam warns more issues lie ahead.
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i am afraid we have to prepare that this is not the final solution. there will be other deep-seated problems between these two big economies. >> 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. anna: thank you very much. , jaying the deflation trap powell says interest rates could be on hold for some time as price pressures remain muted. at his press conference after slashing projected rate of global20, signs to slow the decided drawdown of bond holdings in may before ending them in september. the market reaction was seen in
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bonds where 10 year treasury yields fell to the lowest level in more than a year. the conversation with hat trick armstrong in the last half-hour -- patrick armstrong in the last a view sharedis by a lot of investors. matt: it has also probably worried previous fed chairs. ben bernanke and janet yellen avoid looking like they were playing into asset prices. , justr huge story, boeing weeks after the lion air 737 probe was begun on the faa approval of software and why boeing did not flagged this feature -- did not flag
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this feature in the manual. thank you for coming in. i know lufthansa has almost no 737s and certainly no 737 max 8 jets, but i wonder what the german policy and procedure safetyvetting aircraft and airplane software safety. do you just take planes the u.s. has approved? thomas: there is not a german story, it is a european story. we have an authority that will certify all these planes. it is obvious it is not a positive note that a plane could be constructed somewhere else in the world and afterwords they will disassemble it and analyze it. there is a cooperation between
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bea and faa -- between the ea and faa. there has been trust in the past and we will see what happens. matt: that is what i am wondering about. has that trust been damaged by what you are seeing in the u.s., what we saw in ethiopia and indonesia, or do you take the faa's word for it? considering a probe into this procedure? thomas: we would have to analyze the process and evaluate if it is the right process in the future. said to start grounding the fleet. they want to be certain there is not problems anymore and i want to make their own certification of this. i think it is the right mood they are in. on the other hand, it is pretty complex to analyze all the
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software problems. this is a huge challenge for all the authorities to make a valid certification. matt: anna? anna: thomas, good morning from brussels. we are talking about tragic events, but the fact that boeing will be facing this difficulty may be throws up the opportunity for airbus. is the german government talking to airbus about ramping up production, to produce and sell more? , nobodyi have to say wants to take an advantage at of the things that happened, the scary things that happened. end, we will see what the market will look like and how they behave. we are glad airbus has a clean our certification
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process as far as we know, is good, and we do not have any problems or issues. matt: let me break in for a second because we have breaking news. tencent putting out fourth-quarter net income that misses the street's estimate by a mile. we were looking for 17.5 billion in atnd the income comes 14.3 billion yuan. arechinese company, there companies with huge holdings in tencent that will be interested to see that move. on me get back to thomas airspace issues. i -- aerospace issues. the german government and airbus had a bad relationship years ago. there were issues with the helicopters and now a frenchman
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is getting the lead spot. how is the relationship today, especially amidst the canceling of the 8380? thomas: this is an issue with both governments. it is a company that is mostly privately owned and the government of france and spain and germany have a share of 25% together. in the end, we have seen that airbus is going more and more -- it grown up and it is acting like a private company. not everybody in the governments like that, but i think that is right. there was a single company created from two companies and they are very successful in the market. there are always issues between the government and such a big
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companies when you have private -- common projects. this is something where we are muchy eager on working how we can get back from airbus. taxpayers,rom german we will evaluate the contracts that have been made from 2002. we have lawyers that look at the contracts and we will find out how much can we get back on that, and we are eager. matt: do you have a time period in mind? thomas: there was a contract from our lawyers and they are evaluating. matt: anna? anna: you mentioned this is a private business, but i'm sure that any government in europe will be keenly trying to create jobs locally. with brexit looming, clearly a lot of swings produced for
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airbus. are you pushing to get more of that production from the u.k. onto the continent and in germany? that could be a problem for the logistics chain of airbus and it is a very efficient company. as far as we understand, they will maybe get a problem with the production in the u.k. as it comes to an unregulated brexit. nevertheless, the decision has to be done by airbus. if they decide it is not possible for them to produce in the u.k. anymore, we will have the german government create new spaces in our country. matt: thomas, thank you so much for coming. up next, we will bring you some
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of the stock movers in this morning's market including ig group which is slumping after reporting lower third-quarter revenue. this is bloomberg. ♪
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♪ to "thelcome back european open."
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this is where we are on european equity markets. gains being seen. environmental, social, and governance investments, companies have been traditionally held accountable but investors want to add more measures, hence asg investing in impact investors. joining us now from the paris bureau is isabel -- isabel -- milan. if you were to divide up investors you talk to about est investing, how many fall into the category of investing because of their values and how many see it as a way to extract value? isabel: generally, they all want to do both, so do good and do
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well today globally. $23 trillion are invested with some form of bsg -- esg. there are many reasons and motivations for that. cheer one, wethat now have mounting empirical evidence to show that these investments have performed equally or in a superior manner to traditional investments. the rightose criteria, it is for instance what societe generale's research has done. pickselect the top 10% over the past five years. it has outperformed its european benchmark by over 10%.
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, i see a growing focus of consumers and investors to sustainability. they want their investments to deliver a positive societal impact, so it has to be both a good as this opportunity and an opportunity to do good. matt: this is a key point, and i wonder when you look at bsg -- ,sg investments and companies where is the outperformance coming from? company better at earning money than a company that is not concerned with the environment and societal issues, or are esg investors striving up stock prices because they put so much importance on these issues? there are two aspects
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to the outperformance. the first one is with esg performance, companies are protected against some forms of downside risk and scandals and controversies. sustainable investing was mostly about splitting a certain -- excluding certain controversial sectors from your portfolio, but more and more, the story has a positive spin. investors are seeking to seize growth opportunities because those companies which are well-managed from an environmental, social, or governance standpoint are also well managed,. period soll-managed they outperform. growing sectors of the economy, i can take an example that the united nations have set
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ambitious development goals to isieve by 2030, and that trillions of dollars of investment each year. those companies that are transitioning and positioning themselves in these sectors are bound to see growth opportunities. anna: thank you very much. thank you very much for being with us. it was the busiest earnings day in hong kong since 2017 with some of the biggest companies reporting figures. tencent net income this estimates. pet -- petrochina had a mess as well. , a mess.nson a miss -- petrochina had
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as well. ck hutchinson, a miss. this is bloomberg. ♪
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"the welcome back to european open." we are about 55 minutes into the trading day, the dax down one third of a percent. other indexes are little changed. it is time for battle of the charts. off.marie, kick things jinping kicks things off today. with has a trading surplus italy as you can see in the yellow, but their deficit in terms of germany, this might be one of the reasons they are so keen on signing this mo you -- mou. matt: danny, what have you got? >> the pound has been stuck in
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its middle range since the uk's triggered article 50. if we look at the fibonacci ranges, we are smack dab in the middle. when you think about some of the losses in the pound, traders think they can jump in and get an edge, but nothing has happened, not much trading. matt: not much trading, but i believe you are using fibonacci, which is an automatic win. plus, i feel like i ripped you off yesterday because you did not win with your platinum chart and in hindsight, you should have one, so dani burger -- should have one bank, so danny , so danink -- won burger wins. you can see yesterday's
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palladium chart by typing g tv on the bloomberg terminal. in brussels and bulls stay there until the u.k. leaves the european union. ♪
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♪ >> fed's dovish double down.
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miners warns corporate america is more at risk of economic shock. ,ay plays the blame game playing into lawmakers as she heads to brussels to delay brexit, but the e.u. says she has to get her deal through parliament before an extension. president trump says washington will only remove duties when it is certain china is complying with the deal. this is bloomberg "surveillance." i am anna edwards live in brussels, accompanied by taylor riggs in new york. we need to get to central banking. taylor: today is about the norm is bank raising their benchmark rate by one quarter of 1% to about 1%. we are awaiting more headlines. interesting they are not seeing
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the disinflation or lack of inflation the rest of the world is seeing and they are looking at core inflation well above 2%. their key rate is 1.2% in the third quarter, a little bit higher than 1.11% that they saw. the key headline as they are raising the benchmark rate by one quarter of 1% to a full 1%. anna, you will be speaking to the governor of the nordisk bank bank later. it will be interested to see them going ahead with that hike, departing from the dovish tone we have seen elsewhere. we will speak to the central bank later on and more hawkish from the central bank into the future because some of the banks had in expecting a more dovish
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tilt. that is not the case. theresa may arrives in brussels focus onwe will whether the e.u. 27 will talk with the u.k. or we'll push them out if they fail to get a deal through. here is viviana hurtado. banning new zealand military style semiautomatics an assault rifle's less than a week after a deadly attack on two mosques. it takes place immediately to prevent stockpiling. the prime minister will establish a nationwide buyback of the weapons, the opposition our dutch party welcoming this announcement. theresa may heads to the e.u. summit in brussels looking for a one-month, three-month -- one time, three-month delay but they cannot have that until she
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persuades parliament to back her brexit agreement. otherwise, there could be a disastrous no deal divorce. are likely to vote unanimously to hold the benchmark interest rate at three quarters of an interest -- three quarters of a percent. the boe is in terminal test turmoil -- turmoil. jerome powell is signaling a prolonged applause on interest rates, saying it may be some time before the outlook on jobs and inflation calls for a change in policy. >> my colleagues and i have one o.a.t. -- overarching goal, to sustain the economy expansion for the benefit of the american people. the u.s. economy is in a good place and we will continue to use our tools to keep it there. viviana: 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.
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i am viviana hurtado. this is bloomberg. , it is all mentioned about jay powell today and i want to look at how the markets are reacting to the decision. after they lower were lower about 3/10 of 1% yesterday. we thought equities would rise but we wondered if they were seeing something in the economy that we were not, and the equity markets get concerned. we are going back to the lows of january 2018 and the bond markets are getting what they want. that is translating into yield curve inversion. fives are down. barrel, aoil, $60 a little weaker today. to see thatsting
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the positive interpretation for stocks from jay powell, the subject of the fed avoiding the deflation trap. jay powell says interest rates could be on hold for quite some time and they slash their rate zero.ses 20 -- to they decided to draw down bond holdings in may before ending them in september. 10 year treasury yields fell to the lowest level in our than 10 years. taylor: that is where i point to start out. joining us is john built-in -- bilton. the fact that the 10 year had so much of a reaction yesterday, does that mean markets were caught offguard? john: possibly.
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for a been telegraphed while the fed is starting to look at the level of reserves that are appropriate for the balance sheet. the market has not been over focusing on the fed's rate policy and under focusing on how important the balance sheet is. yesterday, we saw the fed reconfirming that we have ongoing programs within europe, the u.k., japan, and that has created a global bid for duration. the fed has signaled returning to that stock of demand. this is an environment where we are seeing relatively muted growth, probably trend like or sub trend this year. with monetary policy easing and support at the back end of yield curves, kerry assets like credit and duration will perform carry assets like
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credit and duration will perform strongly. may have been caught offguard and the calculus is about the supply-demand than necessarily the nascent risk of inflation. taylor: you mentioned inflation. the sameanley said thing, favoring duration and credit assets. where on the yield curve are you liking the duration, 10 years out or five? john: the fed says they will begin to roll down their program and they will be looking to replace their mortgage-backed securities with treasuries. crucially, they noted they will be matching the existing maturity profile, and that means we will follow the playbook we saw when she we was in full flight -- qe was in full flight.
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liquid portion will feel the impact most strongly. that is the simple way to play this. anna: i am interested in your thoughts on the balance sheet. listening to jay powell yesterday, he said they like to think of interest rates as monetary policy and keep the balance sheet separate. it is that conversation that spooked the markets in november/december. hard to disentangle the two. the notion that you separate them is reasonable if i think from jay powell's perspective, i imagine the shorter, higher frequency tuning one can do at the front end of the curve with guidance and communications will be the favored tool.
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ultimately, the big leveler from a market volatility standpoint as the back end of the curve. while i understand his statement , it is hard to disentangle them as being both very important lift toot just a monetary policy but longer monetary intent. anna: john built-in stays with us. coming up, as norway's central bank hikes, we speak to the governor of the bank. 10:30 londonhat at time, 6:30 new york. ♪
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i am anna edwards in brussels with taylor edwards -- taylor riggs in new york. xi jinping is expected to arrive in rome today where he and the italian government are set to sign a controversial memorandum of understanding on the belt and road initiative, making italy the first country to sign after loud warnings from the u.s. minister attempted to quell concerns. >> we always encourage chinese companies to actively engage in international cooperation and encourage them to follow commercial principles in market rules, and abide by local regulations. say, them pleased to
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ministry of economic development is joining us. he is the official who has been working to establish global links with china. can i ask you, the u.s. is concerned about this, do you understand why the u.s. is concerned? >> yes, i understand why they are concerned. i also understand why some of our year the and cartons -- european partners are concerned. we have a constant dialogue with all of them. the fact is that already, almost half of european countries have signed the mou. italy is not the first. all of european countries have signed and put money into the financing arm of the belt and road. , ande the first g7 country
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because of that, we are less likely to fall into problems such as the debt trap or chinese overinvestment. we are large enough to shoulder any potential hot money coming in. we need a little bit of investment. anna: yes, indeed. it was a very large bond market. are you hoping the chinese will as part of theds bells and road agreement? -- belt and road agreement? >> not necessarily. the italian bond market is one of the most liquid in the world. the secondary market is open is any country wishes to purchase the italian btp, but that is not a direct relationship government to government. taylor: the u.s. has not been quiet about their concerns about chinese telecoms, mainly huawei.
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huawei,ly plan to ban or what scrutiny where the -- will there be if they come into italy? >> let me clarify. the mou we will sign this weekend has nothing to do with 5g. there are no names of specific companies said the name huawei is not mentioned. neither is mentioned any of the italian or chinese company names. this is just a framework that establishes how italy and china would wish to cooperate into the development of infrastructure along the silk road. project in asia and africa, there's will be needed. , thetechnical economy development of infrastructure is at the basis of every country's
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economic sustainable development. many of the countries along the silk road lack infrastructure. you mentioned other partners concerns, we are happy to take on board any suggestions. we have not had any alternative .o this silk road project if there was any, we would be happy to participate. i think italy leading the remaining countries along silk road will entice other countries to join and maybe form a strategy,tratus -- vis-a-vis other countries along the silk road. salvini has been outspoken about trying to limit agreements as china come in.
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are you concerned about china trying to buy influence? you say you can prevent against hot money. how do you say that is clear? >> over the last 10 years, china has a total accumulated stock of 22 billion in the u.k. -- stock of 22 billion. in the u k, this is 80. if we look at the map of european ports, china owns greece, maintaining marseille, ao, istanbul, bilb gibraltar, the silk road is already in europe. fromrain to china leaves s bring and these mou' all that has been so far, all
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the chinese investment in other and now that they complain italy wants to join this initiative. strongeste of the power mechanisms that is managed by the office of the prime minister, one of the strongest in europe, that events predatory m&a -- prevents predatory m&a from coming into italy. field ofallowing green m&a, which has happened in the past. anna: thank you very much. the silk road is already in europe. the topic of chinese money in e.u.e could attract leaders as they gather for the council meeting, but brexit tops the agenda. theresa may gambles on a
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desperate basis to get her deal through parliament. as the time ticks down, can she persuade mps to sign onto her deal and avoid a long delay? ♪
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>> i believe that people in finance and accounting functions know the most about the inner workings of the organization. cfos should be transparent with the benefits it rings to businesses. s to businesses. ♪ i am anna edwards in brussels with taylor riggs in new york. the day off and francine lacqua is on assignment. theresa may heads to brussels to push european colleagues for a three-month brexit delay but she
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will not get the extension unless she can persuade the u.k. parliament to accept her brexit deal. a delay over how long to delay the exit plunges the company -- still with us is john bilton. down tohis all boils what you think on what donald tusk said yesterday, whether the out 27 would push the u.k. if theresa may fails next week. david: we are just a week away from that. you are seeing the markets take a more sanguine view. we had some comments from mrs. merkel a few minutes ago where she said she will do everything she can. despite some of the rhetoric
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particularly maybe from the french side, everyone expects the e.u. to agree to this extension. we learned yesterday there is a condition that she get a vote passed in parliament. that is looking unlikely. she made the statement in downing street where she attacked bmps she is trying to persuade -- she attacked the mp's she is trying to persuade. do we expect the e.u. to force a no deal or will there be a chance for a further extension? this is going right down to the wire. andre only eight days away people are starting to scratch their heads, where can we go from here? mrs. merkel talking about it is unbelievable we still do not know which way this thing is going. undersecretarygn
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is trying to roll back the criticism of the mp's given that she needs them. that begs the question whether a long delay could be possible if she fails to secure a short delay. david: she was clear in her comments yesterday she would not allow brexit to be extended beyond june 30. does that mean she would go for no deal at the end of june? does that mean she would stand down and leave it to another prime minister? the truth is, we have no idea. seemed to be, i will threaten a long delay and that will bring the brexiteers back on our side. she caved in to demands earlier this week and that strategy is in tatters. if she can persuade the brexiteers to vote on her deal, many of them are happy with the idea of no deal so they have
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little incentive to come back to the table. taylor: we will get more on all of the brexit news with john bilton, he will stay with us. thank you to david merritt. i want to get a check on the markets. europe is translating into some red on futures in the u.s.. dennis -- dovish central banks are trying to give us help but we wonder if they are seeing downside risk that the markets are not seeing. that is driving the rent on the screen. -- red on the screen. this is bloomberg. ♪
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from septemberg suggests growth is slowing, just as strong global growth was a tailwind, weaker global growth
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can be a headwind. we do not see data coming in suggesting we should move in either direction. we should remain patient and let the situation clarify itself over time. inflation was below our target. headline inflation will be meaningfully below our target because of lower oil prices. data we have shows a slowdown. we see the fundamentals for growth this year as positive. tom keene has the day off and francine lacqua is on assignment. anna, you heard it from jay powell, talking about inflation expectations below the 2% target. doing a classic five year breakeven here. powell said the fed may have to get more creative figuring out
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ways to convince americans it is on track to meet its 2% inflation target. an economist at jp morgan wondering if the fed is starting to lose credibility. we are not getting the 2% inflation we would like. anna: let's stick with that subject. markets liveour question of the day. what do you think is holding back equities from showing some of the same enthusiasm we see in other assets but no set hikes in 2019. is it because equities are saying what does the fed know about the state of the economy? why so dovish? thing.s one simple it is growth. one thing that was said
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yesterday, growth is oh k, but it is not spectacular. he gave a nod for slowing global growth. the household sector is in rude balancegood levels of sheets. wages are beginning to drift upwards. this economy looks good if you are a consumer in the household sector. when you look at the corporate sector, we see a slowdown around trade. that is affecting corporate earnings and confidence. if you look at the american economy, it is two thirds households, so it looks all right. the s&p 500, taking between a third and 40% of its revenues from overseas, geared towards oil and the industrial complex tradeared towards these and corporate confidence bankers. these are not showing much signs of lives. we are seeing low earnings
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growth expectations for the s&p 500. if we think about that being the center of the global equity universe, when growth expectations are not high, that will act as a topside cap on where we see equity markets going. will get more soon. morgan stanley is coming up saying earnings estimates are too high. i want to get a check on bloomberg first word news. semiautomaticyle and automatic rifles are now illegal after new zealand deadly mosque attack. the prime minister says the ban goes into effect immediately. 737 maxwo boeing crashes.
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officials want to know why regulators approved a software system linked to the accident. not asked why boeing did flag the system in its pilot manual. trump is renewing his attack on the late republican senator john mccain. he had a long list of grievances. among them, he was not thanked last year for mccain's funeral. he says mccain harmed u.s. foreign policy and american veterans. navyane served in the u.s. -- john mccain served in the u.s. navy and was a prisoner of war. 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. anna: analysts are boiling cold water on the stock recovery.
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the stoxx 600 is expected to lose 6%. that is according to the average projection in the latest poll. lynch fundas merrill manager survey shows being short in european stocks is the most popular trade globally. joining us is the bloomberg stocks reporter. backstory.e of the what is the explanation for how gloomy investors are. is it about politics, chinese trade? investorsnalysts and alike. we see this rally of 13% with the european index beating this year. the main reason for that was global. it was the dovish fed and that the u.s. and china will bridge a
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trade deal. both factors can end quickly and things can go south for european equities. growths have cut profit for european countries since august and they are not stopping there. i imagine this comes as no surprise to you. europe is your least preferred region. to change it take that view? john: let's get the facts out. wherere in a position they are not liked globally. we have to be mindful of that. in a longer-term downtrend, you can get uncomfortable squeezes. we have to set our position size accordingly. issue in terms of domestic demand growth. it faces an issue where it has negative rate policy, which is
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trapping banks into a week earnings cycle -- into a weak earnings cycle. europe does not have as developed a high-tech sector as the emerging markets or the u.s. what europe has is a lot of older economy sectors, autos, resources, oils, et cetera. is a producer of the capital goods that factories and manufacturing hubs of the world use and a consumer of the output they create. as a wealthy region, generating fromtic demand to de-gear a slowing industrial cycle is a challenge for europe. i like your comments in the last segment talking about earnings revisions. in the u.s., we have many
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discussions about earnings recession, which is different from an economic recession. in europe, do you see an earnings recession? how are you forecasting downward revisions to earnings for european corporations? john: let's differentiate from an earnings recession, where earnings growth estimates go territory toative when they are simply slowing. we are still seeing aggregate expectations sitting above earnings growth expectations for the u.s. this year. this is a region that has more of an underlining -- and underlying general domestic growth. there are headwinds for earnings. that sits around cyclical sectors geared into the global economy and the financial sector. if we has some support
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are in a world where we are getting lower rates at the back curves, it is probably not as bad as that has looked this year. isn we look at europe, it less about aggregate earnings. we think there are impediments, but we recognize within europe, there are good stocks and less good stocks. this is an environment which is more bottom up driven than top-down. european stocks relative to bonds. lower,elds taking getting closer to zero. thank you. john stays with us a little longer on the program. up next, we are talking about brexit today. theresa may is on her way here. action continues back in
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england. mark carney has his hands tied because of brexit. day fort on this big central banks. this is bloomberg. ♪
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today i have written to donald tusk to request a short extension of article 50 up to the 30th of june. >> the question remains open as to the duration of such an extension. proposal ofer may's , it creates ane series of questions of legal and political measure.
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leaders will discuss this tomorrow. very last hour of the 29th of march, i will fight for an orderlybrexit, leaving of britain from the european union. we don't have that much time. >> we will not leave on time with a deal on the 29th of march. this delay is a matter of great personal regret for me. ending there with theresa may with an address to the country yesterday. that does not happen that often. here is a look at what we are watching out for. plenty more on the brussels beets. leaders arrive for the eu summit, starting at 1:00 p.m. london time. brexit on the agenda. xi jinping is expected to arrive in rome as part of his european tour, signing the belton road
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agreement with italy. the bank of england's rate decision in london around lunchtime. is ar: joining us now political risk advisory president and still with us is john bilton. in brussels, too. good thing you are in brussels, holding down the fort with us. we see her speaking and we will bring you comments as the day comes. brexitto talk about the tap dance. what is the biggest risk right now? theresa may is in brussels. you wonder what is next, what is the biggest risk for brexit now? decision would say, time is not this time, it is next week.
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we have been saying it is going down to the wire. the biggest risk is miscalculation. theresa may has played this not well. the speech yesterday was not constructive. she needs cross party support. around, the way brexit remains low at this stage. misor: within the calculation you discussed, jeremy corbyn is making the case for an alternative plan. what would you like to see as an alternative plan? wolfango: what he actually wants. the line of jeremy corbyn has been at best ambiguous.
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clarity, i don't think we are going to get it from jeremy corbyn. the labour party is as divided as it always is. i would keep the expectation side low.y corbyn's we need a robust number of mps to make sure there is a majority. we will keep an eye on the labour group, rather than expecting something from jeremy corbyn himself. anna: let's put a market perspective on this. how much probability do you attach to a no deal brexit? it seemed the tailwind around a no deal brexit was reducing. ight,we have heard overn they have raised that probability again. look at howve to
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markets are responding and recognize markets are used to watching european issues go to the wire. this is no different. where the miscalculation may be is to think that means the 11th hour the eu will capitulate and give into demands. that has never happened. the eu will do what is best for the eu. if that includes an extension, that is potentially on the table. what the markets are doing, they are looking through this gap to no deal risk and recognizing what is best for the eu primarily and the u.k., would probably be some form of extension. the form that takes is difficult to see at the moment. if we look at pound sterling, we argue against the dollar. it is probably discounting a
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small, but not insignificant risk of a gap to no deal, which could take pound sterling down to the low 1.20 against the dollar. it leads to some form of deal, which is probably pound sterling supportive pushing it to the upper one .30. 1.30.er it is resetting those two different modal outcomes. currency is not pricing to an average today. it is trying to differentiate between two different outcomes. ismy colleague mentioned, it something that comes to the back end of next week before we get clarity on that. markets will trade skittish ly. taylor: i love those pound calls.
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i am hearing 1.3 five, upper 1.30 from you. have you staying with us. we will talk to john delaney at 11:30 a.m. in new york. 3:30 p.m. in london. this is bloomberg. ♪
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taylor riggs is in new york, tom keene has the day off. francine lacqua is busy on assignment. trump, hewarning from will keep tariffs on china until beijing combines with any new trade agreement. they do not want trade conflict. we spoke to china's ambassador to the eu. >> consultations have made progress, but yet to be finished. i think such consultations china andl benefit
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the united states, as well as the international community. we will stick to it. taylor: still with us is wolfango and john. want to start with you about the difference of balance of power within these trade tensions. the united states champions the fact tariffs or hurting the chinese economy and taking the credit for that. some are saying china's economy is showing a rebound of improvement. does that tipped the balance of power in china's favor as these negotiations keep going? wolfango: it is a question of time. trump does not need to be --
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trump has the election, he has pressure from all sides. from the chinese side, they have the question of time, kicking the can down the road, making a random concession to keep the negotiation going and playing for time. that is the difference in my view. look what does success like from a market perspective on trade? it is about a broad set of issues which will be difficult to reach agreements on and will take a long time to implement. john: it is a removal of uncertainty in some progress along the road. january and february, markets were getting ahead of themselves in terms of pricing a full conclusion for this, thinking we are going to roll everything back. it is unlikely that will happen. where markets are beginning to focus is can we get a sense
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things are moving forward and what will china do in response to terms of domestic stimulus? there is interesting calculus here. we are not seeing big infrastructure style, industrial le china has done in the past. we are seeing targeted measures. likeal chinese proxies, australia, manufacturing hubs in asia are not necessarily catching the tailwind as china responds to the tension on trade with stimulus. the markets, the way in which we need to watch this unfold is, some movement reduces uncertainty. that will build confidence. that is important for corporate earnings around the globe. but understanding the nuance, are we in a situation where we see china able to reenter trade unencumbered or are we going to have to discount that for the longer term for the north
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pacific region? taylor: thank you to wolfango and john. great conversation throughout the hour. coming up today on daybreak america, a conversation you do not want to miss. bruce platt.and stay tuned for an exclusive interview. they will discuss brookfield majority stake in oaktree. this is bloomberg. ♪
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"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. taylor: bond markets get what they want. a dovish fed said it's done
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raising rates for the year. the brexit standoff takes the u.k. to the brink. theresa may goes to brussels to bargain with the eu. in the norway central bank hikes .ts rate it speak to the governor of the bank. good evening. this is "bloomberg surveillance " live from new york. surveillance" live from new york. major market reaction from the fed yesterday. i'm dying to get a sense of what the tension is like in brussels. anna: the leader of the opposition, jeremy corbyn, is on his way to beat michel barnier -- meet michel barnier. he was in a meeting with me
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yesterday and he showed up and left, but the big allow a is will the eu short extension to the brexit process. if may is not successful in getting her deal through parliament next week, will the eu would hit that button and allow the u.k. to leave without the deal or will there be some sort of extension offered as a lifeline. more on that index the hour. let's get the first word news. a new ban on semiautomatics in us all rivals less than a week on the -- less than a week mosques.attack on two new zealand's main opposition party is welcoming this announcement. may is heading to the
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european union summit in brussels. she is looking for a one-time, three-month delay to the uk's departure, but eu leaders say may can't have that until she persuades parliament to back her agreements. otherwise, there could be a duress or us -- disastrous no deal divorce. the bank of england is expected to stand still. there are expected to vote unanimously to pull the bench point. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. taylor: i want to take a look at those aty markets little bit a softness and s&p futures after they were off yesterday. markets lovedity
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the punch ball, but now some concern that jay powell sees downside risk to the economy the markets are not yet seeing. take a look at the 210 spread. 15 is also inverted by about 15 basis points. we have a small inflation problem and crude oil is not helping us. the $60ipping below level, down below $60 per barrel. anna? inflation -- an inflation problem of some sort. let's bring you the fed story. jay powell said interest rates could be on hold for some time. the fed slashed its rate increases this year to zero. some are even betting the fomc's next move could be cuts. officials decided to slow the bond holdings, starting in may,
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before ending them in september. they also changed their growth forecast for this year and next citing trade, slowing china as its growth weight. taylor: jay powell also sounded the alarm "calling week global price pressures one of the major challenges -- calling week global -- weak global pressures "one of the major challenges of our time." the fed chairman says it may be time for the outlook for jobs in clearion called for change in policy. there is no signal suggesting either direction for me, which is why we are patient. the policy is neutral, the economy is growing trend, inflation is close to target. it's a great time for us to be
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patient and wait and see how things evolve. taylor: it is like we planned it, because joining me in new chiefs the bloomberg interest-rate strategist. was the big move, heading down to a 251 in the 10 year, maybe was that the market was caught offguard? >> the market wasn't prepared on how dovish the fed was. one of the things that has happened that we've noted is that the ones fives or twos fives curve has inverted. one of the things that that tells you and has been telling you is that the fed's next move is likely to be a cut than a hike. distribution still. we don't know, how over the next nine months, the economy will develop. we don't know if the fed will hike or ease in 2020. the market is toward between
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those two, but it is edging on the idea the fed will cut to next, not hike. taylor: does the inverted yield curve continue? the 210 andabout recession coming, but we have inversion. how concerning is that? ira: it's been three of the last five times it has done this. [laughter] ira: it's a 50-50 shot. when you look at the yield curve and you look at it as a signaling mechanism, it's looking at what the fed is going to do, not what the economy is going to do. if the fed gets this right, then the fed could be on hold for 2, 3, 4 been years. then, if you have an economic they can't. -- cut. they can cut five times, for example, and the market could be pricing for that, but to not
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until 2023. until 2023. anna: helped me understand the significance of what we heard from jay powell yesterday. some people latched onto his comments about the one gold of the fed is to support the inflation. you hearinglike for them talk in those terms about what the fed is? ira: he didn't say anything that is particularly new. the thing that surprised most people is they didn't leave optionality to hike later in the year. economists, including hour on bloomberg economics team, is optimistic that growth and inflation might come back in the second half of the year after a first and possibly second-quarter slowdown. a significant rebound and inflation rising and growth
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rising, it securely with employment as good as it is, you would think -- particularly with employment as good as it is, you would think the fed wouldn't push too much against it. now, what they are telling us is you can be convinced that we are not going to hike until next it isand that is only if clear and obvious that economy -- the economy and inflation is better. anna: we're getting comments coming through telling the party line and sticking with the messages we have from the eu 27. he's the chief brexit negotiator speaking in brussels to reporters right now saying it is impossible for a brexit 23 --ce in to go past may extension to go past may 23.
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we will see if that gets ironed out. back to the fed. listening to jay powell yesterday, he was giving markete that maybe the should focus less on the dots and more on communication coming through from the fed's statement. do we draw too much from the dots still? ira: a little bit. lookrily because, if you at the definition the dots have given themselves, this is what the members of the fomc think this will be given their own forecast. if their forecasts are wrong, the dots are wrong. i wouldn't be surprised -- and they are doing a review of the dots right now. i would not be surprised if, by the end of the year, the dot plot went away. the market has not paid attention to it over the last six years. important signaling tool during the financial crisis, but today, it's
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usefulness is significantly less. much ira jersey. bloomberg raises its interest rates for the second time. we speak to the governor of the largest bank. that interview is 10:30 a.m. bloomberg. ♪
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viviana: this is "bloomberg surveillance." today, shares of levi strauss traded on the new york stock
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exchange. the retailer raised $623 million in its ipo. shares sold above marketed range. levi strauss is benefiting from a rebound of the global genes market. ion air triggered a crisis and bloomberg learned the airline is preparing for an ipo. -- raise aise an billion dollars. hospitalational operator is having second thoughts about lifting in london because of brexit. bloomberg learning the company is considering u.s. and singapore. they plan to push back its ipo until next year. that is your business flash. anna, taylor? you very much. theresa may heads to brussels to push her european colleagues for three-month break to delay. the eu said she won't get the
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extension until she can persuade the parliament to support her deal. the deadlock over how long to delay britain's exit plunges the country even deeper into a political crisis. theresa may is expected in brussels a little later on today. is the us from london executive editor for international government for bloomberg news. the big question is over whether the eu 27 will really pushed the u.k. over the edge and into that no deal brexit scenario at the end of next week, if theresa may fails to get her deal through parliament. people are talking about a short delay, but we don't know what happens if theresa may fails. i'm sure you hear us say this every day and week, but tensions are particularly high for theresa may today. she wants a short delay to brexit at the end of june and she is going to say i need a
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short amount of time to get a deal. european leaders are skeptical. they want to know what that delay will achieve. the question is whether they grumble of it today but eventually line up behind it or if they turn her around and say go back to london and try to get your deal through parliament again next week, then come back to us and we will give you an extension was you have a deal. it's all about how much she can persuade them that she really needs that time and she can achieve something by having that delay. as we've been hearing at the top of this hour from the european parliament, even if she delayces is them for the -- convinces them for the delay, theresa may once longer than they are offering. rosalind: exactly. this is caught up in the messiness of the european parliament elections held in late may.
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if the u.k. is still part of the eu at that point in time, does the u.k. have to participate in those elections or can they opt out? that is really muddying the water. that is the question about may versus june. thereal risk is getting to and of march, if there is no deal or extension, we are in no man's land. we are talking about the prospect of a no deal brexit. taylor: within the prospect of the no deal brexit, the headline , within ation today no deal brexit, who has the most to lose? rosalind: companies have spent many months are for this scenario. financial companies have contingency plans, some companies announced they are moving operations offshore or looking to do so. we've also got the government saying there needs to be preparations for continuity of
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services for health care, education, workers. what are the arrangement for foreigners in the u.k. and brits in europe? the real question is how much said preparation can translate into action because we won't know what a no deal brexit looks like until we are into it. taylor: thank you. that was rosalind mathieson. coming up on "bloomberg daybreak: americas," the head of is at 11:00 a.m. in london. this is bloomberg. ♪
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>> the role of the federal reserve is to take the punch bowl away as the parties getting going. not --s like they have they have basically returned the punch bowl, encouraging everyone to have a drink. i think they swung too far. taylor: that was guggenheim partners scott minor. he is not the only one on the street puzzled by yesterday's surprise. the senior vice president of s i.t. investment associates said the economy was good, but actions speak louder than words. they just started raising -- stopped raising rates.
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economist --ancial the director of institutional equities and global market ft stone says in this probably isn't good for banks. they threw their hands up on this one. rosalind mathieson is still with us -- ira is still with us. morgan stanley is coming out note, themilar n long duration. ira: i think it is short duration and longer-term. if the federal reserve once the ,conomy to improve and presumably, that will help expectations rise, as that occurs, you will see steepening in the yield curve and maybe a
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selloff. i don't think this means the 10 year will go to 4%, but we can selloff from these levels. ultimately, at year-end, i think we will be closer to 3% than 2.5%. anna: he didn't sound like a fed chair in a hurry to get ahead of any inflation pressures. wages, he saysut wages doesn't concern him as far as inflation is concerned. do you see upward pleasure -- pressure from inflation? ira: one of the issues with wages is, what is the impetus to push against that inflation terms. if you look at services inflation, it has crept higher. that is mostly wages. have beenation, that
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one of the big drivers of the big drivers a few years ago, is now tamer. with a lot of uncertainty, businesses are less likely to increase wages and increase employment in the near term, but the employment situation is going to be key for this. they were spooked by the employment number we had last month. maybe they have foresight that the next couple of months will be weak. looking at financial conditions, they have eased. easing, we are at an inflection point and we could be seeing some of this weakness will stabilize. if that stabilizes and the economy does better, inflation can start to climb a fair bit. taylor: in your last answer, i heard you talk about the tenure hitting a 240, which is about 10
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basis points lower. what drives your call to push the tenure lower? ira: i think that's the idea the fed will not hike and the fed funds rate might be lower three to four years from now. that ends up pushing yields lower and flattens the yield curve a little bit. that is more tactical near-term call, whereas our forecast remains 3% or close to 3% for the end of the year. we are not likely to change that in this environment. what the fed did should be better for the economy, as opposed to worse. that should mean you should have a steeper yield curve rather than potter -- flatter. anna: relative bring viewers up-to-date with what we are hearing on the brexit front. this is the northern irish party that helped theresa may proper government. p samuelson says we are no
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closer to backing theresa may's break a deal. but only have 10 mps theresa may relies on them to get her policies through parliament. if they don't back her, a task becomes more difficult. taylor? taylor: and we will get more with ira jersey for the rest of the hour. i'm wondering if 2.5 percent is the next 2%. the next drug that helps women goes through fda approval. we will speak with a representative. this is bloomberg. ♪ 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.
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this is beyond wifi, this is xfi. simple. easy. awesome. xfinity, the future of awesome. >> today, i've written to donald shorto request a extension of article 50 up to the 30th of june. >> the question remains open as
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to the duration of such an extension. proposal ofer may's the 30th of june, which has its merit, creates a series of questions of legal and that -- legal and political nature. hour of thery last 29th of march, i will fight for orderlyly brexit and an leaving of the european union. we don't have that much time left to us. >> we will not leave on time with the 29th of march. this delay is a matter of great personal regret for me. the u.k. prime minister speaking there. i'm in brussels. taylor riggs is with me in new york. on keene and francine is
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assignment. party thatn ireland props up theresa may's government has confidence in her but does not seem to be supporting her with votes. -- they are no closer to backing her deal. she might need to rely on the dup. downl is taking it dipped from those lines. taylor: was the tension on the ground? is he getting better? anna: there's plenty of it. we are waiting to see whether the eu 27 can agree in principle to give an extension if theresa may manages to get her deal through parliament next week. these things are contingent.
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even if they do decide to give a delay, how long the delay should be is a point of contention. can it be the end of june? that is what theresa may wants. and twists and turns lie ahead. let's get a first word news update. a military style semi automatic seneschal rifles are now illegal in new zealand after last week's deadly mosque attack. willovernment establish a buyback of the weapons. the prime minister says the ban goes into effect immediately to prevent buyers from rushing to stockpile the gun. crashes,o boeing 737 bloomberg is learning the u.s. began an investigation after the first crash in october. whycials want to know regulators approved the software system link to the accident and asked why boeing didn't flag the system and its pilot manuals.
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donald trump warns it won't be enough for the u.s. and china to agree on a new trade deal. the president will keep tariffs on china until he assure sure beijing is complying with any agreements. that is dashing hopes a deal would lead to a rollback in the duties. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. hurtado.na this is bloomberg. taylor: the first rug for women suffering from post poll of depression received approval on tuesday. the approval of the medicine was expected, but the price of the drug is higher than bloomberg economists and investors expected. bloomberg analysis remains largely positive. they see sales reach about $20 million in 2019 and see them hitting a peak of $700 million.
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joining us is the therapeutics ceo. jeff, great to have you here. the jpmorgan health conference and thought we might get the approval. it is still a milestone. are you happy with the milestones you have achieved this year? jeff: first, thank you for having me. we are really excited about producing the first drug ever approved specifically for the treatment of postpartum depression. this is the leading medical complication of pregnancy. if you look at the leading cause of death in pregnancy is suicide. the opportunity to treat women with this terrible disease is exciting. taylor: talk to me about drug pricing. our analysis had a coming out to $35,000. our analysts said that was higher than expected. what are your thoughts? jeff: we thought a lot about pricing. when you think about pricing you are thinking about access.
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we spend a lot of time, proactively, with payers. if you think about the profile, rapid acting, one course of treatment, resolution of symptoms within hours and completion within two and a half days, plus the fact that postpartum depression is a multi generational issue. we have gotten positive responses through the range you mentioned. even in our d -- even at our price, better showing progress. -- we are showing progress. taylor: how are you able to forecast sales? jeff: we haven't forecasted it exactly. we have a range and it is in the range. the drug won't be launched until june until regulators act sooner. this is dependent on when we can launch. taylor: you have a very busy year. we are headed into the first quarter and we are expecting
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other announcements from you. what kind of your will this be for you? jeff: this is just the beginning for sage. itare excited for what offers to women and we are excited about the business. talk about ourf oral model which has completed two phase two studies. we have the fourth -- third one targeted by the end of the year or the beginning of next year. behind that, we have other drugs and those will be reported this year as well. we will have a busy year this year. so much in the biotech world is the pressure between investing in r&d, the drugs, and turning at a profit. no one expects you to be profitable because you were investing so heavily in these drugs. i think you said about one billion or over $1 billion, you
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just completed a new fundraising round. i you happy with the cash on your balance sheet right now? jeff: i'm a ceo and i want more money, so let's be clear, but we are very well situated. when we think about cash on hand, and in terms of profitability, i look at our long-term value curve. we have done a great job of that and continue to do that with milestones. taylor: any plans to go public? i think i ask you this in january. could that help you achieve even more things? jeff: we are public. we have been public for quite some time. our ipo was three years ago. financialas to create decisions. taylor: tell me more about the risks you have seen with
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postpartum depression as we bring this. call and talk about the milestone achieved by getting this first drug through. thatare the numbers characterizes the audience behind postpartum depression? jeff: in the u.s. alone, there are probably 400,000 women per year that suffer from this. it is so stigmatized that less than half get diagnosed. this is maybe even more important than the drug. mental health is so stigmatized and women are embarrassed to get treatment. the opportunity to have a drug that correct say disorder like this in 2.5 days, it changes the way people think about this from a condition to an actual disease. it's not the woman's fault. taylor: and i knew you were public. week so up at 130 oh i'm going crazy. thank you for bearing with -- 1:30 all week so i'm going
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crazy. thank you for bearing with me. coming up, howard marks and brookfield asset management joins bloombergtv for an exclusive interview. the two will be discussing brookfield's stake in oaktree. this is bloomberg. ♪
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viviana: this is bloomberg surveillance.
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let's get your bloomberg business flash. the largest maker of memory chips is cutting production. projected sales of this quarter will fall 30%. is rolling back his ambitious plans for china. bloomberg is learning the ceo is by 8%g a feature target and that revision signals the downturn in chinese auto sales. maybe an extended one. we end with news creating a buzz in our newsroom, the beverly hills outpost of barney's opening a store to wealthy marijuana lovers. the clothing store is opening a department called the " hig -- the "high end." that is the bloomberg business flash. taylor, anna? thank you very much.
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rates are on the rise in norway. -- one bank hiked. us for more on this is the governor of the bank. thank you for joining us, governor. you hiked rates today. to have been seems more hawkish than the markets have anticipated. why did you want to be more hawkish than the market has expected? >> we don't use the term hawkish, but you are right in saying we first increase to the policy rates. that was expected, but then we ,tabilized a slightly faster further increase in the policy
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rate during the following year. the path forhand, the interest rates is lower going further into our periods. internationally, especially in ,urope, we see lower growth uncertainties of different kinds, but for the norwegian underlinesformation growth in the norwegian economy being stronger than we foresaw. growing, the wage growth is coming up, and so forth. there is no longer a need for the no rates we still have.
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meanwhile, central banks are either cutting rates or turning more dovish. see frankfurt and stockholm, a more dovish turn. how do you think the norwegian trendss to the global that are causing other banks to turn in a different direction? the norwegian economy is dependent on what is going -- what is happening abroad. the increased uncertainties of some kind explains the policy path we see going forward, but on the other hand, we have to react on the information as regards to [indiscernible] balance we seek to have in our decisions and
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forward guidance. your news, your guidance in particular sent the norwegian krone higher. is that something that worries you, governor? gov. olsen: no. extent, we lifted our policy rate path in the short term. less, thed, more or impact in the stronger direction we have seen. also, looking forward, given the strength in the norwegian economy and the fact that we are proceeding to raise policy rates slightly faster than our neighboring countries, we do strengthening of our currency. that is more or less expected. give me your thoughts on
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other central banks and why they struggle to raise inflation at this point. they want some of what you have bank.on at the norges in thesen: the situation different economies are different. the norwegian economy has benefited for decades from revenues and the impacts of the increasing activities in the petroleum industry. we are still in that situation. the much higher investments in our oil industry this year and next year, it tells you that oil is still a growth engine in the norwegian economy. that is one reason.
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anna: we saw the government taking decisions to reduce the exposure of the sovereign wealth fund to the oil industry. the government didn't go as far as your central bank recommended. are you disappointed with the actions taken there by the government? i'm not sure if you can still hear me. it looks as if we may have lost the line. gov. olsen: i can hear you. it's anna: good to have you with us if you can still hear us -- anna: it's good to have you with us if you can still hear us. a fascinating story there, taylor. hiking today. not only hiking but lending more hawkish guidance into the mix
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which is pushing its currency higher. taylor: like you said, maybe the one area or region that doesn't -- ian inflation problem inflationll get to an discussion next. softness inttle europe translating to a little softness in the u.s. markets. we had mostly dovish central banks coming out, trying to help us. perhaps we are seeing concerns that may the markets haven't quite priced in or are getting a little red on this green here. coming up, avoiding the deflation trap. we will speak more on the fed's dovish of it next. this is bloomberg. ♪
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>> data arriving since september suggests growth is slowing more than expected. just as strong global growth was a tell wind, weaker global growth can be a headwind to our economy. we don't see data coming in
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suggesting we should move in either direction. it suggests we should remain patient and let the situation clarified itself over time. inflation that is below our target, particularly headline inflation, will be meaningfully below our target because of oil prices. the limited data we do have shows a slowdown. we see the underlying fundamentals for growth as very positive. taylor riggs in new york. anna edwards is in brussels. tom keene is off and francine is out on assignment. i'm going to hold on the four tier -- fort here. powell,d it from jay inflation expectations are meaningfully below our target. i'm taking a look at the five-year breakevens. ira is on double duty doing my job and his job.
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,hat type of inflation disinflation conundrum are we in? ira: inflation has not been a problem. almost everyone agrees we haven't seen the type of inflationary pressures that will be meaningfully high enough that the fed will have to hike significantly in the future. being the things that is -- i don't want to say misunderstood but is important to note, is what the fed did yesterday by being dovish, this is a management tool. we are worried that we might have disinflation and we certainly have not seen the type of inflation we expect, given the length of the economy where the employment situation is. we would rather deal with higher inflation later, because we know how to deal with that. we know we can hike interest rates quickly if we need to. let's air on the side of caution now so maybe we don't have to
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cut and do quantitative easing from 2020 or 2021. i was going to ask you to what extent you are confused or concerned that the fed might be putting too much emphasis on retail sales data when they in value eight inflation pressures -- when they evaluate inflation pressures. others point out with the syrup down, it's difficult to read anything into the data. -- youe fact you have don't have the fiscal response you had when you had tax cuts and some of the fiscal stimulus from when trump first made his fiscal plan. with that dissipating, with the fact you don't have really meaningful drivers of growth, you should hope the consumer continues to buy. if you see slippage in the consumer attitude, that is
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something the fed has to take into account. one of the things that happened earlier last year was, with higher interest rates, you did see a slowdown in the housing market. it's not only retail sales. it's everything to do with the household sector, which makes up a vast majority of the economy. taylor: thank you. that is i were jersey -- ira jersey. coming up, howard marks and flat joinst -- bruce us 8:30 a.m. time in new york. this is bloomberg. ♪
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fomc sees no hike this year.
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jay powell says it may be some time before they adjust monetary policy. dude, where is my equity rally? u.s. yields reported 14-month low. a conditional extension. why theresa may is back in brussels where she make it an that ifn on brexit, parliament passes her deal in the next nine days. avid: i'm david westin regiment alix steel. march madness begins. i have done my bracket. alix: let me guess. duke? daved: no. there is a great piece about the extent to which the ncaa relies on the tournament for their money. they don't make money on football because they don't own the playoffs. this they own.

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