Skip to main content

tv   Bloomberg Markets European Open  Bloomberg  March 22, 2019 2:30am-4:00am EDT

2:30 am
>> i hope we can all agree we are at the moment of decision. i will make every effort to ensure we are able to leave with a deal and move our country forward. best.have done our completes. >> i believe everyone must be and is aware this is an event of historic significance. we must proceed carefully. >> it is a democratic crisis. this crisis is british. in no way must we become stuck in this. nejra: some reaction from
2:31 am
leaders after the eu gave theresa may two weeks to work out what to do to avoid a new deal brexit. let's check on the -- a no deal brexit. let's check on the market. indian markets back online after yesterday's holiday. how are they doing? you.od morning to marginally in the red. day is a bit of an off compared to the recent past. on the benchmark indices. -- theee is trending bond market contracted. a lot of people predicted bonds across the world would come off. we don't see quite that happening in the indian bond market. the bonds are reacting as well.
2:32 am
jet airways, one of the principal carriers in india is going to double in size. if there is one pocket to watch out for, it is the aviation pocket. in india have had a fabulous time the last couple days. jet airways is going through some tumble time -- troubled times. are watching for some resolution to this aviation crisis. morning.e news monday i would watch this very closely. thank you so much. we have been talking about global bond yields continuing to collapse. the u.s. 10 year yield near the lowest in more than a year. a lot of action and asia.
2:33 am
what are you focusing on? what else is going on besides this collapse in bond yields as this possible and to normalizations or's flight to the bond market? australia at one spot 83, near a record low. we are seeing a record low in yields for new zealand. this is the first time we have ever seen yields below 2%. and of course, japan falling even further. you have to imagine this is going to push investors up the curve. they are not getting paid to hold sovereign debt. we are seeing the topics slightly higher this morning. one thing counterintuitively helping shares here is a flight from foreign investors. foreign investors have in the blue here. you can see we have had a massive exit is from investors outside of japan. that usually signals a rally is to come. they are not good at timing this
2:34 am
market. you can see it happened in september. shares go higher. stocks just become more attractive. nejra: thank you so much. today we are asking on mliv, will brexit break the euro out of its range? reach out to us and the mliv team on your bloomberg. now, the bloomberg first word news. >> the european union has granted the u.k. a delay to brexit. until april 12y and if the prime minister can get her deal through parliament, this is extended until may 22. if she can't, she has until the april date to request a further extension that could see britain taking part in the european elections. donald trump says it is time for
2:35 am
the u.s. to recognize israeli sovereignty over the golan heights. the remarks break with decades of u.s. policy and could prove -- persuasive of voters. the international community never recognized sovereignty over territory captured in 1967. donald trump's trade team is headed to beijing for a meeting before china's vice premier is set to travel to washington in april. u.s. officials are saying a deal is not expected until president trump and president xi meet. a date has not been set. the largest corruption investigation and resolves -- brazil's history remains a powerful force. the car wash probe has brought down swaths of the nation's business and political elites. global news, 24 hours a day on air and @tictoc on twitter
2:36 am
powered by more than 2700 journalists and analysts in more than 120 countries. bloomberg. nejra: thank you. here is a look at what you should be watching today. manufacturing data out of europe. factory pmi for france. later, germany. at 9:00 a.m., eurozone manufacturing. time, watchlondon for policy moves after the federal reserve turned more dovish. the u.s. is refusing chinese capital and the eu is imposing a vetting process for chinese investments. toe european countries close insolvency a decade ago have been more welcoming. xi jinping meets officials in rome. italy is set to be the first g7 nation to participate in china's infrastructure project. annmarie hordern has more. >> let's go back.
2:37 am
seven centuries ago, marco polo sent from venice to the far east. that is the start of the silk road. now, another northeastern -- eagerlyy is eagle preparing to be a port city for china. a new master plan for the port has a wish list of one billion euros in improvements that would speed the movement of goods into the continent. not everyone is on board. attempts to cozy up to president xi are drawing criticism from inside and outside the country. the u.s. warns italy about siding with its trade rival. a security council for the white house said it lends legitimacy to china's predatory approach to investment and will bring no benefits to the italian people. italy's deputy prime minister matteo salvini said a potential deal that does not want foreign powers colonizing the country.
2:38 am
let's look at the numbers. what italy stands to gain his curly are. -- is clear. there is some room for growth. us, carl fromith northern trust and diana from j.p. morgan. really interesting, this development. what implication does it have for investors? areor infrastructure you always welcoming if someone wants to bring money in. i think the track record is interesting. it is a grant plane with a lot of great features, but it has had roadblocks. a couple countries that have taken financing from china have ended up defaulting, claiming it was underwritten with the knowledge they would default, which allows china to take control over the assets. there are several countries who enter the program who have
2:39 am
decided to withdraw from it. be very careful when you take money from somebody who may have more than altruistic motives at heart. nejra: diana? >> i was reading a piece likening this to italy's -- china's trojan horse into europe. there are two things underlying this. the need for investment in italy's pushing policymakers to be more aggressive seeking closer ties with china. skepticslly, the euro within the italian government would want to be able to demonstrate they are able to get bilateral trade deals in place, that they are not dependent on the euro and traditional allies to get growth going. is a short-term strategy that could work. i think the medium term risks will be there for italy. nejra: if we look at the broader trade picture, the latest we
2:40 am
have heard from president trump's tariffs are going to stay until china complies with the deal. this is one of the big sticking points to deal with enforcement and compliance. sitting where you are at northern trust, carl, how are you allocating or advising investors to position when markets seem to be pricing for a deal at the end of all this? >> cautiously would be the summary answer. by the middle of the year there will be a deal announced. both sides are motivated negotiators. theyhinese, because tariffs are causing difficulty as they try to keep their economy in delicate balance. they have had to take stimulative measures to keep their growth rate at acceptable levels. on our side of the ocean, politics or driving things more than anything else. i think the administration would like to see some yield shows they are able to conclude these negotiations, at least build momentum into presidential
2:41 am
campaigns. they need a victory, having lost out on negotiations with north korea. nejra: how are you approaching investing in china? a lot of people say even if you leave, there's going to be a slowdown. putting moneyd into china. >> i don't think you would want to. i think diana will have plenty to say. the market that has potential to grow is one you can't ignore. we have an office in china. we are excited about the possibilities going forward. nejra: there are three things that matter when it comes to investing in emerging markets. the fed and china are two of the big ones. what is your outlook on china? >> more constructive than three months ago. trade is one thing in the expectation that a deal will happen at some point this year is very much in our core view. that will see some of the drives
2:42 am
we have seen in manufacturing starting to fade out of data. the policy response is starting to see through. we are starting to see a pickup in credit growth. we are seeing more fixed asset infrastructure spending coming through whether we are looking at infrastructure or targeted measures around consumption. there are signs that all the incremental easing the chinese government did last year is finally starting to pick up. we expect growth in china will be marginally higher than what we had coming into the year. carl and diana stay with us. coming up, uber is said to have picked the u.s. -- the new york stock exchange for its ipo. tune into bloomberg radio live on your mobile device. i will be joining you and the
2:43 am
team there from 8:00 a.m.. ♪
2:44 am
2:45 am
2:46 am
nejra: let's get the bloomberg business flash. >> telecom italia's feuding shareholders are open to finding a compromise. elliott management and vivendi are not holding direct negotiations, but an italian state lender is helping resolve differences. shareholders are set to vote on vivendi's request to remove five members of the board. the world's largest sportswear company delivered strong earnings. it outpaced expectations in each of its other regions.
2:47 am
that is your bloomberg business flash. uber and the race for a ride-hailing ipo. it is likely to be the biggest public offering of 2019 and the overall valuation could hit as much as $120 billion. it could be one of the five biggest listings of all time as to startt looks trading on the nasdaq next week. bloomberg's emily chang takes a closer look. >> 2019. the year so many highly anticipated tech companies planned to go public. among them, two standout. focus versus frenzy. frenzy being uber. engaging in rapid global expansion and retreat, food delivery, self driving cars, and flying taxis.
2:48 am
bankers assayion could soar to $120 billion. lyft may be described as focused. cofoundersut of its startup with connected college students looking for rides. it is focused almost solely on growth in the united states, going from less than a dozen cities in 2009 to 95% of the country in 2019. lyft claims it controls 39% of the u.s. ride-hailing market and it is starting to go international, luncheon in toronto and ottawa city. launching in toronto and ottawa city. it is also working on self driving cars, buying blue vision labs, beefing up staff working on autonomous technology to over 300 people. lyft has cornered investors in
2:49 am
japan. as it prepares to go public, it is trying to lure more, hoping to impress by doubling its right count from 500 million in 2017 to one billion in less than one year. yearue jumped up 541% last from just 343 million in 2016. with an estimated value. of 20 to $25 billion despite losses inreasing to $991 million 2018. while lyft was a second to launch, it is first to go public, weeks or months ahead of uber. will hails investors lyft's ride. . nejra: joining us for more is bloomberg asia deals reporter. great to have you with us. just round up for us what we -- hubert huber's ipo.
2:50 am
ipo. uber's picked the new york stock exchange for its ipo. they are planning to file publicly in april, several weeks from now. they have already filed confidentially with the sec. we are seeing that there is a shift between the exchange because new york stock exchange is not typically the venue for newer economy stocks. we have seen apple, google, microsoft, all trading on nasdaq. picked an unusual an because an executive executive at uber used to work
2:51 am
at the new york stock exchange. they wanted to differentiate themselves from lyft. they want to be as different as possible. the similar dynamic happened chinese online retail this is part of their strategy. we should expect that filing very soon. from there we will see what the price range is going to be for uber. nejra: thank you so much. now let's focus on the world's largest economy. stocks on the s&p 500 rose to a five-month high yesterday. bond yields slumped. the 10 year yield at its lowest in more than a year. the fed signaled no more hikes in 2019.
2:52 am
-- still with us, carl and diana. carl, i have read so much interpreting why the fed did what it did. some people were saying don't focus on the dot plot. you spent four years at the fed. give us your insight. >> this has been dissected. there are a couple of details i think we should watch going forward. it's not just the end of normalization. they will be shifting from agencies into treasuries and into shorter-term treasuries. this will have the effect of steepening the yield curve a bit and has positioned them to take action going forward. it's easier to maneuver when you have more short-term holdings. around the fed meeting there has been discussion on how they will implement their target. they have been sending out all kinds of signals about how they
2:53 am
might formulate it going forward. it sounds like they will be lower for a little bit longer in the new operating regime. i think it is important to note there are uncertainties that were cited in the press conference. brexit, the china-u.s. trade deal among them. the fed at midyear will have an interesting set of conversations to have. that will determine whether they think further about a tightening or if they are in the position where they're going to vote under the expansion. there have been different moves in different parts of the curve. where would you be wanting to take opportunity? is it based more on the dots or the balance sheet? sentiment,ral risk the balance sheet is becoming more of a headwind.
2:54 am
if the fed are changing the way they view inflation, given how the u.s. curve has behaved, i don't think the market by that. if they are saying we are willing to let inflation run higher, because over time we want to hit our inflation target expected to see more in the yield curve. this coupled with the balance sheet measures they are taking, the reverse operation on the front end would support that. arguably, what is weighing on is ultimately the fed is no longer on selloff treasuries. they are shifting away from securities, which means you will have the technical bit to the curve. sayinge the large buyer we intend to be buying more treasuries going forward.
2:55 am
i would say risks are to the downside. nejra: that begs the question in terms of carrying fixed income. i was having a conversation with one of your colleagues yesterday. what are you doing about that at northern trust allocating across fixed income? >> we are looking for opportunities outside of the united states. i think the other thing we need to note about treasuries is it is a destination for a lot of global investors. the fed might like to see steepening with all the uncertainty in the world. for better or worse, even with a $22 trillion budget, treasuries are a popular control asset for local investors. earlier you were talking about investment grade. are you preferring credit at the moment in the u.s. given what we heard this week?
2:56 am
at this point, late in the u.s. cycle, i agree, we are not calling for a recession this year. but we are late in the cycle. having an allocation to treasuries makes sense for any risk portfolio. within the credit space, we think markets have been unduly concerned. the fact the fed is slowing down on tightening, when you look at u.s. triple be much maligned space, it has been a huge amount of focus. these companies have longer to deliver. we continue to like em local markets. securities is actually looking interesting again. nejra: thank you for joining us this morning. tot got a couple of lines break to you coming through from blackrock.
2:57 am
it is said to near a deal to acquire bridge point c front. -- e front. coming up, we will discuss more about frexit. ♪
2:58 am
2:59 am
want more from your entertainment experience? just say teach me more. into your xfinity voice remote to discover all sorts of tips and tricks in x1. can i find my wifi password? just ask. [ ding ] show me my wifi password. hey now! [ ding ] you can even troubleshoot, learn new voice commands and much more. clean my daughter's room. [ ding ] oh, it won't do that. welp, someone should. just say "teach me more" into your voice remote and see how you can have an even better x1 experience. simple. easy. awesome.
3:00 am
nejra: good morning. i'm nejra cehic. this is daybreak europe. these are the top stories. kicking the can. the eu gives theresa may two weeks to get the brexit deal over the line. will she end up back in brussels asking for more time? china as officials downplay the prospect of a trade deal with beijing, president xi finds an ally. uber could choose the new york stock exchange for its ipo, turning its back on the nasdaq. it could be one of the biggest listings of all time. ♪
3:01 am
nejra: good morning. just gone 7:00 a.m. in london, an hour away from cash equity trading in europe. the s&p jumped more than 1%, hitting a five-month high. softer on u.s. futures, looking at ftse 100 futures, down for tenths of a percent. maybe some of that had to do with cable. dax futures struggling for direction. yesterday, the stoxx 600 closed prematurely. interesting to see -- pretty much flat. a little bit of a mixed picture, which is also what we see in asia equity markets. the big story is in bond markets. let's take a look at futures. the 10 year yield is continuing to edge lower. of course, what we've seen is
3:02 am
that it hit its lowest in more than a year following the fed. but also, we've seen the yields hit a 10 year low. australia approaching a record low, new zealand dropping hello 2% for the first time -- below 2% for the first time. that said, looking at the future on bunds and btp's, it looks like a possibility yield could edge higher after we saw yields drop across the spectrum in europe, particularly on gilts, dropping nine basis points. i'm just going to bring you some breaking news here. deutsche bank pointed out somewhat weaker market conditions. this is an annual report hitting the tape, deutsche bank saying it is working toward tangible equity target. it sees 2019 revenue slightly higher compared to 2019, excuse me, compared to 2018. that's what we're seeing from
3:03 am
deutsche bank in terms of breaking news on the bloomberg. for now, let's get a check on the markets in asia. yvonne man in hong kong has more. great to see you. big story in the bond markets in terms of yields. what's going on with equities? yvonne: you mentioned relentless buying into fixed income. we're seeing that here. that might be impacting the rich rally in asia. stocks really fading here today after that dovish fed meeting. it seems like we are focusing on the fundamentals, with earnings season well underway. we are seeing large caps in china flat. we sawmarket stall after a 24% gain this year. japan, and the kospi and soul, also flat. slightly lower by 1/5 of 1%. day,alia sees end of the
3:04 am
up .5%. slightly lower on the benchmark. super thursday aftermath we've been focusing on the last 24 hours. seven of the big large caps reporting results in the last a or so and it really has been quite busy for our reporters. maybe a fifth of the weighting of the large caps on the hang seng. so far, results a mixed bag. we saw the biggest slump on record when it came to profit. china and freezing of gaming approvals weighing on the core business. aac technologies, this came out a couple hours ago. it was a miss on earnings, for the companies say it's well-prepared to much itself into a promising era. they were saying they were expecting the prices of lenses to rise on-demand. keep in mind, this is an apple supplier. julie otto, up 5%. record profits in 2018.
3:05 am
razr, the gaming hardware company, that stock flying 12%. they did miss when it came to earnings, but the loss was narrowed from a year ago. they also announced a partnership with tencent on their mobile gaming business. nejra? nejra: yvonne man in hong kong, thank you. let's recap some of the headlines from the top of the hour. deutsche bank pointing out somewhat weaker market conditions. it says it's working toward its return on tangible equity targets. it sees 2019 revenue slightly higher compared to 2018. it does also see 2019 litigation costs significantly up. andees 2019 civ corporate investment banking revenue slightly higher. it sees 2019 sales and trading revenue rising. these are lines coming through
3:06 am
on this annual report that's hitting the tape. deutsche bank suggesting a dividend. let's get to our top story. eu leaders agreed to give theresa may two weeks to work out brexit. they told the prime minister if lawmakers don't endorse her deal, she will have until april 12 to decide whether to leave with no deal or request a much longer extension. >> the cliff edge date will be delayed. the u.k. government will still have a choice of a deal, no orl, a long extension, revoking article 50. >> i hope we can all agree we are now at the moment of decision. and i will make every effort to ensure we are able to leave with a deal and move our country forward. brussels,'s go to where we can speak to anna
3:07 am
edwards. great to have you with us. walk us through the new timeline. anna: yes, seven hours of discussion with theresa may. after she left the room, the eu 27 deep in conversation, rushing through options. what they delivered is a reprieve for theresa may, two weeks until april 12, the cliff edge goes away. then it's decision time. she still plans to hold the meaningful vote next week. we'll wait for confirmation. if she gets that through, the u.k. leaves the eu on may 22. if she fails, the questions as to whether we go with no deal or whether she or someone else tries to seek an extension or longer delay. that would mean holding eu elections. nejra: can theresa may actually win the vote next week? anna: yeah, the question whether she can.
3:08 am
some of the european leaders were skeptical. theresa may told them she thinks she can win. donald tusk of the eu council and emmanuel macron of france seem skeptical, according to our reporting, whether she can achieve this. the threat of a longer delay might be able to win some of the brexiteers. but the dup, who have also been hesitant and reticent because of the backstop, didn't make hopeful noises. we heard from theresa may. she was giving a more conciliatory tone to lawmakers compared to 24 hours previously, where she angered a lot of mps. she probably realized she needs their support if she wants to get the steel through. some of that tone was different. it was more friendly and it was more collaborative. one thing we mustn't lose sight of, you could interpret what happened here as the eu giving time and space for theresa may to fail for another plan to emerge. we know jeremy corbyn was in
3:09 am
town meeting with michel barnier. if theresa may does fail, she has said she won't ask for a longer extension. she doesn't want to do eu elections for the u.k. which he change her mind on that? would you take the u.k. out with no deal? we would be in uncharted territory. or even bigger change ahead. nejra? nejra: bloomberg's anna edwards in brussels. thank you so much. joining us from zero for the hour is marcaine early, of you bil -- wealth management. great to see you. thanks for joining us. we just heard all the possible outcomes here going from here on brexit. will theuestion being, prospect of no deal have increased or lessened? what is your view? mark: well, i think that the probability kind of changed. the biggest one now is with theresa may perhaps threatening
3:10 am
to resign, rather than carry this forward to a new state. there is blood in the water. probabilities have changed. i think when you look at the fact that the eu, after saying no extension or very limited chance for an extension, i think it's right that they've indicated they don't want to be the one that pushes the u.k. out. is, we the big question don't know how exactly this brexit piece is going to end. but as we looked longer-term at the u.k. and u.k. assets, its 2.5% of global gdp. do large asset allocators decide they just don't need this exposure in their portfolios? that's why we have an underweight to u.k. equities for the longer-term in our portfolio. nejra: an underweight to u.k. equities make sense. what about the prospects for the
3:11 am
pound? do you see the prospect of further gains if we do get the extension? or is it not that clear cut that on longer extension will be positive for the pound? mark: well, i think that of course if you take the tail risk of crashing out of the european union out, that should help the pound. we just haven't done that yet. nejra: [laughter] certainly not. we're taking it day by day trying to find out where we go next. looking at equities, day by day, and it's really interesting we didn't quite see that gain straight after the fed in u.s. equities. but it came yesterday, a jump more than 1%, hitting a five-month high. have you made any changes to your allocation to global equities since we last spoke? mark: yes. we are now taking down our exposure to equities a notch.
3:12 am
we're still overweight in risk. but i think for us, having participated in this very large rally, we can take a little bit of a pause for a variety of reasons. i think the last time equities were up this high, as you've noted, bond yields were also much stronger. the 10 year was up at 3.2% for a while. now it's much lower. i think the time to get excited about the fed was when they blinked in january. and now they've come out with this statement and the dot plot. it's a little bit of a crossroads, where they are saying we're pulling back, we're a little more dovish, because there are some signs the global economy is a slowing, and perhaps slowing more than they thought. we'd like to see a little more of a resolution, confirmation growth is coming through, maybe get through an earnings season,
3:13 am
which is likely to be not as strong as last earnings season. of course, there's a pause for stock buyback. and then we would expect our base case to be bond yields would adjust a little bit and the equity markets would continue to do well. nejra: yes, it's interesting you're getting a touch more cautious. some say the fed extended the party and we want to join in even more. we'll discuss more in just a second. mark staying with us. swedbank is saying their chief executive will continue in the job based findings of the pulmonary allegations. the scandinavian bank allowed transactions to be made. swedbank allegedly let $10.2 billion in questionable flows move through its accounts between 2007 and 2015. for more, kathryn broner joins us from copenhagen.
3:14 am
great to have you with us. what does this morning's report move the story? >> good morning. just remind you, swedbank is sweden's oldest bank. when the danske bank scandal erupted, the next question was, who else might be exposed? lots of people are questioning whether this bank might have had any. they were adamant in denying those allegations. but the swedish media uncovered allegations suggesting they handled $10 billion. they started this review and they hired a firm and they had three weeks to look into this. today, we didn't get a number. we didn't get a lot of information. it was slightly redacted. what they did tell us, they will conduct a bigger probe. the take away was, based on the contents of the review, the ceo gets to keep her job. nejra: so tell us what we can
3:15 am
expect next, and also what swedbank has said so far. tanseem: so, the context is interesting. if we compare with danske bank, the conducted the review a little more over a year. that was a massive document. and there were the ones who revealed how big the suspicious transactions were. the result of that was, aside from the initial shock, the market was left with a feeling there probably aren't more skeletons and doubts cut's -- dansk is closet. the market will be content this is doing a thorough job. we don't know when the second phase of the review will be delivered. we don't know if it will be the same consultancy. there are quite a few questions unanswered. next week, swedbank will be facing an agm, facing shareholders. so, no doubt shareholders will be asking questions than. tasneem, thank you for
3:16 am
joining us. coming up, u.s. government debt climbs past $22 trillion. could it be time to spend and borrow more? with a dovish fed, we'll debate one of the economic hottest topics next. when you're traveling to work, tune into bloomberg radio on your mobile device or dab digital radio in the london area. this is bloomberg. ♪ loomberg. ♪
3:17 am
3:18 am
3:19 am
london, 40 in minutes away from the start of equity trading. deutsche bank revealed its annual report. it sees 2019 litigation costs significantly up. it sees sale and trading revenue rising. the management board will
3:20 am
receive a 2018 bonus. quite a few important lines coming in their. it sees 2019 revenue higher than 2018. that's the red headline on the bloomberg, also planning an 11 euro sent dividend. let's get a bloomberg business flash with debra mao in hong kong. given aredit suisse has 30% raise after he delivered the first annual profit in four years. his pay for 2018 rose from $12.7 million. a large part of that was to compensate him for a pay cut in 2017, designed to comp shareholders. levi strauss had its first day of public trading in more than three decades. in just over 100 years, the founder's $6 million estate turned into a $5.6 billion fortune. the ceo told us what risks he sees in the global economy. >> u.s. wholesale mons is almost
3:21 am
a third of our total business. we grew at 8% last year despite the melting iceberg of midtier department stores. that was a headwind. another headwind was china tariffs, which still is an uncertainty. it was less about the impact on cost structure, and more about the impact on consumers. debra: and that's your bloomberg business flash. nejra? nejra: debra mao and hong kong, thank you. another big corporate story is uber and the race for ride-hailing ipo's. the group is said to pick the stock exchange, the likely biggest public offering of 2019, and the overall evaluation could hit more than $120 million. they could also be one of the five biggest listings of all time and comes as rival lyft looks to start trading on the nasdaq next week. now, let's focus on the debate raging among economists. according to theory, a country
3:22 am
with its own currency doesn't have to worry about too much debt. it can always print more money. those say the only strength on spending is inflation, assuming the government can spend pretty much what it likes. the theory is detracted, and there are many, derived as the magic money tree. let's get the view from mark. i'm excited to talk to about this. that description was very much the cliff notes. it's quite complicated. even some experts are struggling to understand the issues around it. if you manage a portfolio, what do you advise clients to think about right now in terms of implications of nmt on your portfolio? mark: thank you. it is fascinating, whenever these academic debates spell out into the wider world. i think your line, magic money
3:23 am
tree, that's a good one. i'm going to steal someone and say it's not monetarism. it isn't a theory. to your point, it doesn't really matter what i think or what prominent people around the world think. what matters is the impact it has on the portfolio. i think what we see, if you look in the u.s., you have people on is left saying that mmt something that can help finance some of the social projects and investment they would like to see. you also have larry kudlow on president trump's team saying growth policies don't need to access about the deficit -- of sus about -- obsess about the deficit. that's an application that if you print money, you don't necessarily get inflation. that means we think deficits will continue and the spending
3:24 am
will continue. and so for portfolios, it means two things. you can't assume any more the cycle is necessarily going to reach an end anytime soon if we have low inflation and easy, dovish set of central banks, and fiscal stimulus, that could extend the cycle. and the second piece for portfolios is -- yeah, go ahead. nejra: no, go ahead, mark. mark: sure. the second thing i think is important, these are all experiments. is experiments are in different amounts of spending, and how much it stimulates growth, and how much deficit you run up. your portfolios are exposed to them. since all these experiments are probably not going to end equally well, this is a time to diversified around the world and to different currencies. nejra: subkey to think about the extension of the cycle and
3:25 am
diversification. one of the core principles of conventional economics mmt challenges is an increase in budget deficit will raise interest rates. mmt argues interest rates could stay low and we talked a lot about how global yields keep falling. the 10 year treasury yield, jgb yield hitting a 2016 low today. are you positioning for lowered yields globally? mark: well, you know, i think we have our base case, and then we have some hedges in the portfolio. i think the base case is that there will continue to be low interest rates, low-inflation, and room for some stimulus coming through. and that is reflected in an overweight in risk. but there are a few hedges that are pretty cheap to put on. one is to be underweight and the japanese tenure, for an example.
3:26 am
because it could be the monetary risk will strike back and it turns out all of this tremendous deficit, for example, 240% debt to gdp in japan, will start to spark inflation and cause the need for higher rates or drive the higher rates. do you think that the data is going to confirm a bottoming out in the global economy anytime soon? four are we seeing increasing risks of a recession? mark: well, you know, i think as people digest the fed's statement, they're going to realize they sell some risks in there. maybe that does give equities a pause. in our pace case, we do see some shoots bearing fruit and the china stabilizes going forward. but that process of it bottoming out has just kind of started.
3:27 am
we would expect maybe in six to eight weeks, we have a better handle on that. global cio of ubs wealth management, always a handle on the market. thanks so much. this is bloomberg. ♪
3:28 am
3:29 am
3:30 am
anna: good morning, welcome to bloomberg. i am live in brussels for the european leaders summit alongside matt eller in berlin -- miller in berlin. : bonds jumped to multi-highs as investors anticipate the end of the global tightening cycle. fallequity index futures and the cash rate is less than 30 minutes away -- trade is less than 30 minutes away. ♪ anna: may's last stand, the eu
3:31 am
but chileit a pause, has two more weeks to get a deal over the line. squeeze bank and credit payout despite a turbulent 12 months. they vowed to make good on their long anticipated turnaround. ducking the nasdaq, bloomberg learns that uber is lining up the new york stock exchange. it could be one of the biggest listings of all time. matt, good morning. matt: good morning to you, anna. let's take a look at the pound. you are in brussels where theresa may has gotten a reprieve. it does not show through in the cable rate. this is a three-day chart and you can see we came down to 1.3 flat yesterday. we have not made it under concern of hard brexit.
3:32 am
the pound has not made it back to the 1.32 or 1.33 level we have been seeing. so why aren't markets pricing in this delay in a better way? let's take a look at futures. we have u.k. and ftse futures down this morning, even as the rest of europe is trading higher in terms of the futures picture. ftse futures up .3%, bucking the higher futures trend. ftse was up yesterday and the rest of europe was down. anna, what is going on in brussels? few hours we every have a different story coming out of the european capital. anna: yeah, it is a bleary-eyed brussels this morning. conversations went late into the night. seven hours of conversation
3:33 am
between eu leaders and theresa may. and when she left the room, they all had dinner and came to conclusions. the cliff edge from next friday goes away, instead, we introduce a new cliff, the 12th of april. faces tryingsa may to get her deal through parliament next week. it seems she plans to hold meaningful votes number three next week. if she fails, then decisions have to be made over whether we got with no deal in april or whether we ask for a longer extension. that raises even more questions than it answers about what brings it starts to look like after a long extension -- brexit starts to look like after a long extension. -- mayan theresa way when the vote next week is the question right now? can she get the vote without circumstantial changes?
3:34 am
anna: as you say, circumstantial changes. changes in what has been agreed here in brussels, will that add up to enough change to convince the speaker to put it into the house? that is part of decision-making for next week. you also have to persuade all of these mps to back her. a longer delay is now on the table, maybe with a few of those over. seem to bedon't hopeful that she can get this through. one way to look at this is with all of the new dates and a bit more cushion around the states, it seems as if the eu is setting things up as what they can do and how they can manage the fallout if theresa may fails. if she does fail, we don't know who will be leading conservative party. she has suggested she does not want to ask for a longer extension. matt: very interesting stuff.
3:35 am
i think we are all honestly riveted here, waiting to see what happens next. you will be on the ground covering that for us. bond yields slumped to multiyear lows and asian stocks have a bit of a mixed session. assessmes as investors prospects for the end of monetary policy organization. let's get into the markets with our bloomberg mliv strategist in singapore. what do you think is behind the global decline in yields? it is amazing, for sure. from the u.s. to germany to japan to australia, yields are falling. today in japan, the 10 year yield got the negative, below zero. with jay powell and his comments
3:36 am
this week, he discussed low inflation, one of the major challenges of our times. central banks around the world are either doing things, like in the case of the federal reserve, taking policy steps, or saying things like in the case of the bank of japan. tilt, to bes dovish more accommodative and take steps to support their economies. that means putting downward pressure on yield, and this is really shaping up to be one of the major themes of the year. anna: certainly a major theme. let's talk about the u.k., because 10 year yields are about to fall below 1% after the central bank hailed interest rates unchanged, of course. what is your take on the outlook for u.k. rates customer --
3:37 am
rates? wes: for pound traders ripping their hair out over every move, the bondholders have been quietly making money. the central bank met this weekend held interest rates and they will hold rates while the cloud of brexit hangs over the economy. inflation is in check in the u.k., so that is a good recipe for bonds. 10-year gilts will be below 1%, and by the way, you're asking about why isn't the pound doing better. that may find some of it if interest rates are low, the 10 year yield is only 1%, maybe a little more. perhaps people are looking for higher interest rates somewhere else. matt: that is a very good point. there are other reasons for things than simply brexit, or it could be a brexit affect also
3:38 am
through the fixed income picture. let me ask you about a stock question chinese stocks were down, it looks like they have turned around. to some extent, with the down .1% of the 300, and other indexes are now gaining. what is going on? wes: they were gaining and down most of the day. the point is that they are not getting much of a list or kick out of the fact that the s&p 500 did really well yesterday. going back the idea of central banks, the pboc has been quiet through all of this. you can definitely argue they have a dovish tilt. while other banks are out there in the spotlight making comments and policy changes, the central bank in china has been quite. perhaps people are not getting the idea that the central bank is really moving this week in the way others are.
3:39 am
explain whyp chinese stocks are lagging behind and did not participate in the big rally we saw in the u.s.. thank you very much, wes goodman. debate orin today's any other question. will brexit break the euro out of its range? that is one of the questions we have been asking today, so get involved with that, if you wish. let's get first word news, debra mao is in hong kong. ebra: donald trump says it is time for the u.s. to fully recognize is really sovereignty. the remark brakes with decades of u.s. policy and could prove decisive in swaying is really voters. it is likely to draw a rebuke from the international community , which never recognized
3:40 am
israel's sovereignty over the disputed territory captured in 1967. the trump administration has given tacit approval to taiwan's request to buy fighter jets. this reversal is likely to provoke ire from china and could it raise tensions in the trade dispute. bloomberg has learned that white house advisers encouraged taiwan to submit a formal request, which it did last month. this inflation gauge has crept up lower to 0.7%, offering little evidence to back up the bank of japan's claim that upward price momentum remains intact. it faces growing questions about its commitment to 2% inflation. japan's in manufacturing sector has also contracted for the second straight month. corruptiont investigation in brazil's history it a powerful and unpredictable force. r because the second former
3:41 am
head of state to be arrested by the so-called carwash probe. it has brought down many of the business and political elites. global news, 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. , anna hazmat.erg andhis is bloomberg. anna matt. matt: coming up, we bring you more on the brexit delay as the eu gives the u.k. two more weeks to come to an agreement and leaders arrive for day to of the summit in brussels. also, remember that bloomberg radio is live on your mobile device or dab digital radio. tune in for more from markus karlsson. this is bloomberg. ♪
3:42 am
3:43 am
3:44 am
anna: welcome back to the european open, 60 minutes to go until the start of cash equities trading. ,utures looking fairly mixed perhaps some upside for many of these equity markets. let's get to an interesting stock story, and ongoing concern. now,ank ceo is safe for the lender said that she will continue in her job after a politico review into the money-laundering allegations. deeper called for
3:45 am
investigations. where are we now with this story? >> good morning. the interesting thing is to compare the review we have just received with the review we got from danske bank. the allegations are money-laundering handling in the baltic region. danske bank spent a year looking into that and came up with a huge number. swedbank has now spent three weeks, and we have a report with no numbers, the information having been redacted. we are hearing that some of them are still wondering what else might come. there is an agm next week with a will have an opportunity to ask more questions. matt: what has swedbank said so
3:46 am
far? we see they have put out an update on customers. this is following a report on swedish television in february where they had allegations that 50 clients were essentially the same client involved in the estonia scandal. a subsequent report has said $10 billion in suspicious transactions have been handled by swedbank. on the back of that report, swedbank hired this consultant. they have looked into those 50 clients. they give the impression this was not enough time. they now say they need to do a second probe. we do not know how long that will take. they were unable to provide corroborating numbers. essentially, there are still a lot of questions. but the board says they have
3:47 am
enough information for now to say the ceo can continue in her job. anna: writes, she continues for them, but you say it raises other questions. the next step is to see what the reaction is at the agm. another peace of the puzzle is that there is an investigation being conducted by the economic crime authority because swedbank allegedly provided advance notice to its biggest shareholders of the ftc report. there are questions about relations between shareholders and management but also need to be looked into. separate from this report that arebank commissioned, there investigations being conducted by the financial supervisory authorities of estonia and sweden. some are saying that is much more important than whatever swedbank can provide.
3:48 am
the case is very far from closed. bank, itw from danske continues for an awful long time. ultimately, the u.s. department of justice and securities and exchange commission are investigating the case. ,att: thanks very much bloomberg's nordic managing editor talking to us about this wide-ranging money-laundering case. let's get a bloomberg business flash with debra mao in hong kong. has reportedly picked the new york stock exchange for its imminent ipo. bloomberg has learned it could take place in april and could devalue them as much as $120 billion. to floatd only have about 60% of shares to make the top five listings of all time. -- 60% of shares to make the top five listings of all time. that theyunderstands
3:49 am
are not holding direct negotiations but that an italian lender is helping to resolve different. shareholders are set to vote on vivendi's request to remove five directors from the telecom italia board. years, ther 100 founder's 6 million dollars estate has turned into a $5.6 billion fortune. the ceo told us what risks he sees in the global economy. >> u.s. wholesale alone is a must one third of our total business. we grew at 8% despite what i'm calling the melting ice heard -- iceberg of midtier department stores. another headwind is chinese tariffs. it is less about the impact on cost structure and what kind of impact it might have on consumers. >> credit suisse has given their ceo a huge raise after
3:50 am
delivering the first profit in four years. a large part of that increase was to compensate him for a pay cut in 2017 designed to calm shareholder objections. that is your bloomberg business flash. anna: thank you very much, debra mao in hong kong. , wenute away from the open will take a look at stocks to watch at the start of trading. deutsche bank pledges to end to shareholders after years of declining lending. this is bloomberg. ♪
3:51 am
3:52 am
3:53 am
matt: seven minutes from the open, let's get your stocks to watch. annmarie hordern is looking at deutsche bank, eric equities team covering adidas and dani burger focusing on ing. came out with their annual report, and while they are saving -- saying revenue will be slightly harder, they are joining the chorus from other banks warning of a difficult start to the year. they are cautioning about this market environment. we also know the management board received their bonus, even though the bonus pool was cut. matt: interesting stuff on deutsche.
3:54 am
it is also interesting how it ties into the credit suisse story. people getting paid more who lost investors a lot of money. what have you got on the shoemaker? shares are expected to be under pressure after results missed estimates. but it is not all negative, because in north america, it looks like they are making up some ground because nike is weaker in that region. that said, nike seems to be gaining more market share in europe, a key market for adidas, so they can be under pressure this morning. also, keeping an eye on jb sports, a big partner for nike. at last report, there shares rallied, but their stocks to go a different way this morning. matt: it is fascinating news in the. -- indeed.
3:55 am
i will point out it is pronounced nik-e, just about we are all on the same page. we rely on you for far more important intelligence and that -- band that -- than that. >> luckily, there's only one way to pronounce this. ing securing a 3.1 billion yuan joint venture with the bank of beijing. this could be a significant breakthrough. stake,n 51%, a majority and it would focus on digital banking. if approved, this and be the first foreign firm to get a majority stake in a chinese on short company since china has changed its ownership regulations. joe, -- amarie, annmarie, joe, dani, thanks.
3:56 am
coming up, it is the market open. futures are pointing up for the most part, but down for the ftse. the open is next, this is bloomberg. ♪
3:57 am
3:58 am
3:59 am
matt: good morning, one minutes away from the open of stock trading in europe. let's take a look at the markets with annmarie hordern standing by. euro-dollar trading just below one spot there the mliv question is can brexit break the euro out of this trading range? equities, asian equities were higher, the msci asia-pacific had its second weekly gain. -- oil drenched relatively unchanged, wti higher. the pound is higher, though not as higher at the range we were
4:00 am
seeing earlier in the year. this is theresa may granted another lifeline. futures are shaping up. dax futures are up, .3% in france. just ahead of the market open, it is 8:00 here in the city of london. the ftse will be in focus as theresa may is granted another lifeline, a short time to get this deal through parliament. is the third time the charm? anna edwards is in brussels bring us all the drama. spain opening higher. interested to see how the italian market opens as xi jinping heads to rome to bring italy into the belt and road initiative. it is very interesting to see what is actually said and what gets signed in the italian capital today. let's look at how sectors are shaping up. relatively green across the map. one thing i am par


info Stream Only

Uploaded by TV Archive on