tv Bloomberg Markets European Open Bloomberg April 29, 2019 2:30am-4:00am EDT
anna: socialists win in spain. pedro sanchez to return as prime minister, but he may have to rely on catalan separatists. bayer's board back since the ceo after a shareholder vote against him. lawsuits against month santos. tick markets tech -- higher, but will a week of rate decisions and an extended holiday in japan see volatility on the rise? we will talk about that with our markets live team. matt: we are less than a half-hour away from the start of european trading. we still don't really see any movement in currencies. i was looking at a number of different ones, including the 111 which still has a handle. this is the pound at one to 9.34.
2934. it seems we have almost forgotten brexit is going to happen. take a look at futures. we see for the most part a positive trade on european futures. interestinglys were trading slightly down this morning. we do have dax futures in cac futures fractionally higher. ftse futures up by 0.1 percent. what else do you see on the gmm? we are fractionally higher if you take all of the asian equity market data and put them together. in extended holiday. the lack of volume, what will overnight?treasuries certainly to japanese equities.
we see the south korean kospi doing well. the euro does not feature here, which is good when you consider fallout from spanish elections. we are not seeing much. will we have to wait until later on this week to get u.s. inflation data? later this week from the fed we get another rate decision and jobs data out of the u.s. on friday. lots of data coming. will we have to wait for more of that some of these markets? i want to remind you something that happened on friday. we are seeing bonds coming through in italy. btp's as we look back to what we s&p on friday, they reaffirmed their rating on italy, and that is seen as positive. yields falling, something i know we will talk to mark cudmore about. let's kick it off with a look at asian markets.
we don't have japanese markets trading, they are closed for 10 straight days. here we have the euro-dollar. oute's a lot of data coming of the euro zone. french and spanish gdp numbers tomorrow. we have an interesting call from goldman sachs. the chinese economy is going to help with european growth. let's get over to mark cudmore. mliv our bloomberg managing editor. what do you think about the possibility of second half rebounding the european economy spurred by the engine that is china? >> that is the base case we have been discussing. we will probably see an uptick in european data in third quarter because the chinese data appear to bottom out in the second quarter.
we expect european growth to pick up by september time. we think that means there will be a more positive stance toward the second half of this year. it is important to emphasize the's going to be a positive .urnaround it is not that europe is going to be going gangbusters. it is that we are going to remove the negativity that was there. europe tends to be positive on the chinese economy. that is why we have seen europe so negative the first part of this year. it is a carry on from last year. it will pick up later on. let me ask you about the politics we have seen in europe. we see the appetite for italians at this morning on the back of that reaffirming of credit rating on friday. we will be talking about spain. it seems italy a little more market moving.
so. think the spanish election was never that big of a market event. there was no surprising french party that was a serious chance of getting the majority. there were nuances about which party might be better for the economy. there wasn't that big a divergence. the result is market neutral to marginally negative. repeat ofng like a the italian election. i think spain has been largely a nonevent. perhaps a marginal negative. there has been quite a negative story there. s&p global ratings did not downgrade the country. italian yields are very low compared to averages even though the spread for germany, which is normally the side people look at, is very wide. because global yields overall are so low, this means italy is
rolling its debt in cheaper and cheaper rates all the time, which means the risk of italy entering a negative spiral is diminishing. even though you have all this doom and gloom around italy's economy and politics, the tail risk of it being blowing up the euro zone is diminishing all the time. that is a positive. matt: today you are asking on the mliv blog, will the long asia holidays kill global market volatility or lead the flash crashes? one way or the other, i think japan starts to kick off a 10 day holiday. china is off wednesday. what are you hearing? >> people have a little bit of sympathy for both views. when china has an extended holiday, it killed global market volatility. so much of the macro scenes are dependent on china.
it looks like we have the answer , but at what rate will it start re-accelerating? the other is the u.s. china trade story. have the that, you extended japanese holiday, the longest in japan since world war ii, which is important for cash market trading at treasuries. it is also a time when the u.s. and japan are having trade negotiations. treatys a chance for a with president trump that may cause some alarm. did see a flash crash in the end. people are a little bit nervous. the consensus is we will seek subdued volatility, but there is a chance for jerky movement which will be disconcerting for people which then provides a little bit of a negative stance overall in risk assets. and people are uncertain where there is confusion, it breeds a little bit less risk appetite.
it gives us some dark periods where we don't know what's going on with u.s. treasuries. thank you very much. can join the debate. will the long asian holiday kill market volatility or lead to flash crashes? team would love to hear from you. let's get a bloomberg first word news update. u.s. sanctions could push iran's inflation to 50% according to the international monetary fund. it would only be behind venezuela and zimbabwe. to white house is aiming crush iran's oil exports to zero. later today we will be speaking to the man behind the imf report. don't miss that interview. the next round of the u.s. china
trade talks get underway this week. bloomberg has learned submit -- significant issues remain unresolved. the possibility remains donald trump may walk away. the trade team is set to begin discussions on tuesday. former commodity futures commissioner bart chilton has died suddenly. he called for higher regulation of swaps. he had been a critic of high-speed trading. has smashed game box office records with a $1.2 billion opening weekend. it earned 300 50 million in the u.s. and canada alone, blowing through the watermark set by infinity war. with marvel and star wars, disney boasts the top four spots for opening weekends in north america. 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. matt: next, spain votes for pedro. the socialist party manages to win the most votes in a snap election with the far right set to enter the country parliament for the first time since the 1970's. we will bring you the latest from madrid. bloomberg radio is live on your mobile device. tune in. ♪
anna: welcome back to "the european open." 16 minutes away from the start of the equity trading day. futures a little higher but not much. those futures have come down a little in the last half-hour. one of the things we are going to be looking for reaction to his the results of the spanish election. spain's pedro sanchez is said to return as prime minister after the nation's third election in four years. the socialist leader is close to a majority, though he may have to rely on catalan separatists to govern. sanchez addressed supporters after the votes were counted.
>> the socialist party has won the general election, and with it, the future has won in the past has lost. anna: in its worst election -- itthe pp won only govern spain after it was -- until it was dumped from power in last year's no-confidence vote. me from in front of the spanish congress is annmarie hordern. good to have you with us. sanchez comes out on top. >> he comes out on top, he is known in spain as the great divider. this is him defying his critics yet again.
he has come out on top. really two scenarios can happen. is theblem with this leader had to campaign on the fact they would not do a deal with sanchez. the second route he can take in terms of a coalition with podemos and other smaller parties, and that would mean reaching out to catalonian nationalist. the numbers would work. many say it would mean a more stable government. we could see structural reform. while they may be doing deals behind closed doors, no party leader is going to come out for at least a month in terms of talking about working with their rivals. they are still campaigning for regional elections in the european union in may. we are not going to see anything
for at least a month. matt: we have left-wing populists in power in spain for a long time, now you have right wing populists in congress as well. should investors be worried? >> it is a good question. this is the first time we are seeing spain not being exempt from right-wing populism we have seen sweep through europe and the u.s. as well. the fact they came into power might concern some investors. they do have seats in parliament. the numbers they were expected to get were so much higher. many are saying really the right wing are contained at this moment. one thing we found really interesting, you look at populism in spain, it is similar to hungary or matteo salvini of italy. at one point well
was in communication with steve bannon. even some of their election slogans in madrid say make spain great again. it is very interesting to see for the first time since the hit,this right wing party spain has seen this before but with the other side of the spectrum. we are going to get more from annmarie hordern throughout the day. right now we want to go back to olivia for the bloomberg business flash. to cut staff plans at tokyo headquarters by half. japan's biggest bank has concluded many of the functions can be automated. the report says some will be handled by software and artificial intelligence. many staff will be relocated to the u.s.. warren buffett's real estate brokerage expanding to the middle east. time when thea
emirates property market is extending its slump. to says it expects prices fall as much as 10% this year. the government of japan have rejected rental's appeals for merger talks. this follows an already tense relationship after the arrest of carlos ghosn. that is your bloomberg business flash. to watch up next. minutes away from the market open. next, we will bring you those stocks we are keen to focus on, including bayer. the board is standing by its ceo after investors voted to remove him. this is bloomberg. ♪
the supervisor board has provided its support for the ceo after it lost a nonbinding investor confidence vote at the annual meeting last friday. shareholders are unhappy since , withkeover of monsanto litigation in the states regarding roundup. on theet's come to you spanish banking sector. be a socialist government and what that means. also, bank results. >> that's right. night seeson last prime minister sanchez stay in office. banking, i'm sure you remember this, after the financial crisis, the spanish government still has stake in it. it is sensitive to changes in government. party said they
would consider a special tax on banks. allies have said they would be keen in keeping the stake. the concern is we might not get a fully private bank, at least not under this government. story on've got the phillips. what is it they are? -- what is it very? like electric toothbrushes help push the stock outlook. it might be cloudy this morning facing growing consumer demand in china and the ceo spoke with manus cranny this morning saying that growth in europe, that environment is going to be challenging. >> europe is in a challenging situation. you have european elections coming up. uneven.cross europe is some countries are doing well. others don't. see a flat to low
single-digit market growth in europe. >> that might be the thing that weighs on shares this morning. anna: thanks to all of you. thanks for joining us, taking us through the stocks we are watching. first to go is the function on your bloomberg and your mobile app if you want to look at the individual stocks the team is keeping an eye on each morning. it looks like we will be flat positive on these markets. the ftse 100, we are expecting to see a little bit of upside coming through. negativity on the ibex. we will look for any weak spots. will it be fast banking? we have these crosscurrents of bank earnings and the results of the socialist victory in the election. absolutely keep your eye
>> committed to go. cash equities trading week here in europe. after we saw spaniards go to the polls to give us the latest election results. generally not much movement in euro-dollar. all coins are little weaker. trump calling for lower prices. a better picture in china in terms of the equity markets. flat deposited for the asia session. we are without japan for all the week and without china for wednesday. the government insisting over the weekend they have not given up on their plan to avoid holding european elections later in the month of may.
we will see if they end up having to hold those. wondering if they will go a little negative. might the banking sector come under some pressure? the overall narrative around the socialist government but also that particular bank. also look for a little bit of positivity coming on the 5100. are on there we markets right now. open up so far. let's focus on what is going on in london. -- sorry,r the dax the ibex. that looks more likely. ibex down by .8%. looking for any read into the banking sector. ftse 100 fairly flat. let's have a look at the sector
picture for european equity markets. financials actually positive as a whole. some key areas of red could be over in spain. i.t. stocks looking weaker. health care one of the green sectors. generally speaking we are pretty divided on sector perspective this morning. not much of a clear view of what is going on from this particular graphic. what do you see in the individual stock movers? matt: i see a pretty even split as far as the brexit concern. 250 down. in terms of the winners, phillips is one of those i see right on top, gaining more than 2% this morning. we also see wpp up a little bit we --l as the names are not the big ones with the exception of phillips. on the downside we see a lot of
companies that have gone ex dividend. down about 2% this morning. i was looking for bayer. they are ex dividend today as well. it will be interesting to see how the markets react to the shareholders, the owner of the company voting out the ceo and then the board saying no, he can stay. anna: looking for those spanish banks as well. the bayer share price i think is not open yet. that could be what we are waiting for. 2.3%, atshares rising least after their first quarter earnings. european markets opening mixed with spanish stocks losing after the socialists were victorious this weekend.
this comes after weeks of data releases. ofning us now is global head flow strategy and solutions. great to have you with us. we will go to madrid and get more details in a little while. but as sort of an overall something people generally thought was going to happen. there was an expectation sanchez would be back with another government to try again. are you surprised by the reaction or is this what you will you would have foreseen? guest: it is pretty much in line with the pattern of event risk that currently has been quite muted in terms of market reaction. we have been through a lot of different ups and downs or the ebb and flow's of political uncertainty. with italy and spain it is not new news. so, a very muted reaction.
i think the plan is clearly to sort of keep the budget deficit under control at 2.5% to fight unemployment. to causeno new news major market gyration at this stage. matt: what do you expect to move markets this week? it is going to be a focus on economies, on gdp. china'ssachs said economic growth could help europe. kokou: i think the macro landscape is clearly going to be the major focus point in terms of what the fed is likely to do. fear inook at the , a very of last year strong rebound year to date.
now we are starting to see macro data improve, which was a bit of a surprise because the central banks, the fed and the ecb almost had a preemptive strike by being dovish. whether we see this macro weakness being reflected at the economy level and seeing macro trends going forward. yes, macro and china clearly be the focus point for investors. anna: where do you see the dollar heading? it was fairly strong during april. matt referenced goldman sachs. global growth will not be strong enough they say to boost emerging markets much. that leads to continued strong dollar. is that what you see? kokou: our view is the odds of a recession in 20 are increasing. and therefore we should go into a rate cutting cycle. under that scenario, the dollar
trends should essentially difficult to sustain. anna: even with that growth number we saw on friday, more disappointment on consumers. even with that leeway you still see rates coming? kokou: what was interesting with the growth data is they were followed with weak inflation. weak inflation should keep the fed under a panic button, if you will. ease mandate is clearly to policy when inflation data continues to disappoint. our view is with a recession odds increasing next year, particularly when you look at rising debt, the odds of having a sustained gdp growth data is unlikely. matt: you are going to stick with us. we have a lot more to talk about. next we are going to bring in the stocks on the move so far this morning including bayer.
a little weaker. generally we are flat across the european equity markets. the ibex is down by .7%. we have around nine stocks. some energy businesses following the most. after we digested the results of the election for the banking sector, that is the biggest gaining stocks. let's talk about one corporate in focus on germany. by its ceoanding after an unprecedented shareholder rebuke. voted to remove him over bayer's takeover of monsanto. they also demanded answers over the company's market cap. now is bloomberg's berlin bureau chief.
walk us through what happened on friday because this meeting went on late and it continued to generate headlines over the weekend. guest: it was a raucous board meeting. it went on for about 13 hours and investors eventually voted against the ceo. that is pretty unprecedented in germany. we were talking to matt earlier. normally if it is an 80% vote in favor that is considered bad. this was a majority vote against him. after that figure came out friday night and the supervisory board had an emergency meeting, they had to do something. so they came out in support of the ceo, but really quite unprecedented territory. matt: first of all, i have never seen this happen. i have never seen a majority of the shareholders vote against the ceo. essentially the owners of the company voting against their
agent to run it. and then, completely unprecedented, must be that the board stands behind the agent, in effect against the owners of the company. how can they justify that? chad: and let's remember that the deutsche bank ceo, he had about 40% against him, and he ended up having to step down. we may not be at the end of this process. we were talking to investors on saturday off the record and they were very unhappy with the decision from the board. so, ultimately we will have to see where the board goes from this. investors were telling us they want a strategy review, they want to look more closely. one of them being a potential split up of the country, which is something bayer said they do not want nor intend to do. anna: chad, thank you very much.
let's get to the individual stock movers. [inaudible] those were in line with expectation. seems to impress some shareholders including electric toothbrushes and image therapy. shares up about just a percent this morning. italian banks via large are also rallying today. this one up 2%. s&p keeping it elite with a triple b rating. the fear is they would downgrade them but italy seems to have avoided that fate. sas lining nearly 4.5%. this will be -- declining nearly 4.5%. there is a strike going on. they had to cancel
and tomorrow. it has been going on for about four days so we are continuing to see pressure in those shares. matt: thanks very much for that. looking at what is going on in the individual corporate, beyond the bayer story, which is dramatic to say the least, what do you see when you survey the earnings picture across europe? consensusyou look at estimates with earnings growth, most estimates have been downgraded over the past few months in response to the weak macro backdrop. what will be interesting is to see whether the weakness we have seen in the macro picture is corroborated by weaker earnings. what is interesting is to also realize the fact that since you have earnings estimates in beatraded, the hurdle to these estimates have also been lowered. in theory it could be an interesting paradox of having
weaker estimates being beaten and therefore sending positive signals at the market level. anna: let me pull up the eea function on the bloomberg. far 166 stocks reporting so in terms of the amount of data we have. we do not have the full picture. the caught my eye eye, bottom left. earnings surprises. seems we have been surprised to the downside. oil, basic materials are two areas where this has been truest, if you like. how surprised are you at some of the negative coming through? if it holds that expectations have been downgraded? kokou: this sends an even more bearish message. banking resources obviously sensitive to global growth. we saw china downgrading its growth prospects a few months
ago. and i think this is where we also need to look at guidance. some investor will mention declare fact that this is backward looking and reflects the sort of 2-1 growth prospects. if the guidance is downgraded as well it sense this sort of confirmation message that growth is clearly slowing down and central banks were right to panic and become aggressively dovish because this is what companies are feeling. anna: it was appropriate panic. thank you very much. interesting anyway. coming up later on bloomberg tv we speak with the ceo of blackstone. do not miss that interview at 3:30 p.m. london time. next, u.s. stocks hit another record. yield conversion is a distant concern it would appear. we talk central banks and
.7%, the day after we saw voting in the spanish elections. socialist party trying to form another government. let's talk about oil. we see weakness in the oil price overnight. fromsing a takeover occidental according to the financial times. the deal would be a blow to chevron which had previously agreed to buy them. joining us is the executive editor for energy and commodities. will this battle be settled this week? >> i will not make that prediction. i will say it will be complicated and they have made things difficult to themselves. it changes the math behind it. it seems anadarko just has to go
to occidental. it is so much bigger that even if you throw in issues about they are financially sound -- even with it there's so much more cash. anna: what multiple higher is it? stuart: it depends. you have cash and shares over here and over here. the question is what are you getting at the end of it. what does the balance sheet look like, and is it strong enough to fund these ambitious projects order the assets get sold off in which case, what is the point? matt: last week brent crude went up to $75 a barrel and now it is below $72. when i am asking why it is because donald trump tweeted on oil. from -- for how
often he mentions oil on his twitter feed. it is over 30 times since he has become president. why would the market all of a sudden react to donald trump tweeting on oil when it does not typically do so? stuart: two main reasons. one is there is only one country which accounts in opec, saudi arabia. donald trump he called opec but he did not, he called saudi arabia. saudi arabia has a lot at stake and it is very reliant on the u.s. relationship. if donald trump is calling the king of saudi arabia and saying undiplomatic things by all accounts, there is a sense the saudis may feel they have to react faster than they said they would. by that i mean they publicly said they would wait until they saw a decline in supply before they increased their own production. with the phone call from trump
suggests is they need to get on with it now. that will bring supply faster than expected which in turn leaves you to think oil should be lower than where we were last week. matt: all right. looked like some people may have been taking profits as well. stuart wallace is a bloomberg's executive editor for energy and commodity talking about a potential huge deal and the president's continued tweets on oil possibly moving the price. was on theme kokou program he said markets were going to the five stages of grief headed for the final stage of acceptance. but the first quarter saw a surprising turn around from the signs of recession. the s&p 500 closed friday at an all-time high. the pivot to dovishness from central bankers stopped the business cycle before and ahead of the fed meeting later this week. looks like they are doing it again.
what do you think about the acceptance phase? one thing that surprised a lot of investors is the aggressiveness in which central banks have reacted. some have questions if the central banks had more information in the markets had. we simply talk about this concept. it is a greek word which means chrono, time, and movement. the central bank is distorting the natural flow of the business cycle bought slowing down something i like to characterize as the indivisible. we are one of the business cycles of history when you look at the u.s. this comes to intervention. ultimately it slows down its progression. facilityhere we see effectively being extinct in environments where the cycle is being expended. that this is interesting
central banks can extend the cycle, stop time almost. isn't the extension of that that we therefore never get another recession because central banks always save us? always can save us? isn't that a dangerous assumption? kokou: this is where you have to look at the collateral damage. of first one is the buildup that on small-cap and high yields in the u.s. some are calling this the next prime crisis. corporate debt having to be refinanced at a much higher level of interest rates. and the second element focus on his inflation. one of the things that has bailed out central banks is the continued weak inflation. if you look at five year break inflation in euro or dollars, over the 10 years they have been in freefall. this environment of low inflation sort of gave them time
to pump liquidity as much as they can. matt: financial conditions look like they are easing nonetheless already. if you take a look at this chart we have on the bloomberg, 8935, you can see u.s. financial conditions index in blue. yellow is euro zone, and white is global. what do you think about this? if financial conditions continue to ease, they do not really need to cut, do they? kokou: clearly not. the key reason is simply because the fed has decided to keep its trillionheet at $3.5 which would represent 17 percent of u.s. gdp. it is not a surprise that financial conditions ease as a result. the main question is refinancing. ultimately as you build a huge amount of debt, it has to be refinanced. the question is whether capital
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matt: 30 minutes into the trade. let's get your top headlines. socialists win in spain. the prime minister will return but he may have to rely on cattle on separatists for a majority. 's board backs its ceo after an unprecedented shareholder vote against him. attention now turns to more than 13,000 u.s. lawsuits against monsanto. the calm after the storm. european stocks are muted after a fresh record on wall street. decisions, of rate economic data and an extended
holiday in japan see volatility on the rise? good morning and welcome to bloomberg markets. this is the european open. anna: 30 minutes into the trading day. let's look at the markets. higher, the rest lawyer -- lower. not moving anywhere very fast on the overall. the spanishkness in market and positivity in the banking sector. that is far and away the biggest gainer in the european markets. bank, bank, another bank. just looking for the stocks that are not banks. than 2%cks up by more are from the banking sector in europe. let's go to the downside and have a look at what is weighing it down.
both of those weaker. ex-dividends complicating things. it was an eventful weekend with that emergency management meeting at bayer and support being given to the ceo, and as a result it was seriously under fire from shareholders. notscandinavian business one we talk about often. numbers earlier this weekend. it is a rubber and plastic business. exposure to the auto sector catching up with that particular company. let's get a first word news update. olivia: u.s. sanctions could push iran to 50%. this grim outlook would put the islamic republic nation -- it would only be behind venezuela and zimbabwe. the white house is trimming to curb them by cutting oil exports to zero. director --
orders aregnals growing at a double-digit pace in some markets. instead of offering discounts, phillips has expanded its range to cover all budgets. they have also stepped up largest to help battle a slowdown in john -- in china. >> some countries are doing well, others don't. see a flat to low single-digit market growth in europe. olivia: avengers end game has smashed box office records with weekend.llion opening it blew through the previous record. disney now boasts the top four spots an opening begins in north america. 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. bloomberg. only a few major european lenders are left to report this season including bmt and hsbc on friday. already the group is lost even more ground to its u.s. rivals in the first quarter. lackluster results sent european firms slumping the most in a month last week while u.s. traded at a six-month time. here with more is dani burger. dani: part of the reason of what you saw it is european banks suffer from a toxic brew of structural problems. competition from a crowd with smaller institutions, u.s. rivals, high-cost, a tricky political landscape. particularly dramatic when we compare it with their american rivals. top five u.s. bank profits in the white. they surpassed $100 billion over the past 12 months. europe is in the blue. i doubt a third of that amount.
part of this is aggressive monetary stimulus and europe. it squeezes margins for the eu banks. before the financial crisis you could see earnings estimates beat that other u.s. piers in the blue. the gap is widening in the opposite direction. estimates for european lenders the lowest in a year. in the u.s. you have capital markets that are providing the majority of funding, so that allows banks to concentrate on earnings. in europe, 70% of financing comes from plain-vanilla blank lending. when we have rates below zero they will track the yield curve because lenders are forced to pay interest to attract depositors. there is hope m&a could shake things up. commerce bank getting bought, talks of continues. as long as yields remained depressed, so will bancshares. anna: really interesting when we see bank shares going higher in europe. they are not getting specific.
they raised the baking sector to over way over j.p. morgan. really interesting insight. the spanish prime minister is set to return after the nations third election in four years. the socialist leader is close to a majority, although he still may rely on caalan separatists to govern. the socialist party has won the general election and with it, the future has won and the past has lost. anna: the far right party vox won 24 seats. sanchez came out on top and said the results of the election, can he pull together a government, though, that is the question.
>> that is the big question this morning. sanchez making another come back. real options for him to form his majority government. the problem is their leader campaigned on the fact they would not do a deal with sanchez but investors would like to see that kind of coalition. the second, what people say is more likely come is simply mean up with the antiestablishment parties, a few other bit of a hodgepodge. that would include catalonia nationalists. we have regional elections in spain, eu elections at the end of may. leader will outright publicly try to team up with their rival head of the european union election because they want to make sure they secure those votes. matt: you mentioned the left-wing populist.
we now see right-wing populists in power as well in vox. is this the kind of thing that should worry investors? annmarie: i think investors were much more worried ahead of the results. they got twentysomething seats, where polling was as high as in the 40's. in one sense they were contained, but it is the first time we have seen a right-wing party enter congress since the 1970's. one thing we should keep in mind when we look at populism sweeping across europe, they are dear -- they are very different than what you would say from italy or the u.k. because they are not euro skeptics. they wanted to campaign on domestic issues for spain. defending liberalism, defending against liberals, against feminism. that is what their party was about, about national unity within spain. while they may want to tweak the european union they were never
euro skeptics. while they are a far right wing populism finally hitting spain as we have seen sweep across the eu, that one note makes them very different from the others in europe. matt: absolutely. a special story to spain. kokou is still with us. i wonder what you think about the rise of populism. it seems to have been muted recently across europe. of course vox is a very spanish-specific story. are you concerned about populism in europe right now? kokou: i think this is transit we are seeing globally, sort of the result of inequality and qe creating this bubble in terms of asset prices and yet wage inflation being under pressure, and therefore you have a
corporation not taking part in this expansion and global growth. is a trend this worrying for long-term investors. in terms of short-term market dynamics it is something that is less impacting at the prices. ona: we also saw overnight, friday we saw s&p reaffirming italy's credit rating. on a day when we talk we were talking very much about spanish politics, it seems italian assets are getting a reprieve. we talked earlier about appetite for spanish debt and yield coming -- italian debt and yield coming down. risks, seem as if some italy has drifted into the background. kokou: italy was the elephant in the room with the markets being under pressure, particularly last year. the triple b rating is just a notch above junk. if italy were to be downgraded to junk, that would create a
negative feedback loop and get us into another round of debt crisis for the euro zone. this clearly is not a scenario in the short-term. that said if we get a slowdown or recession in the next two years, the question will be how will net jet to gdp in italy sort of justify an investment grade rating. ant is still not look -- outlook hanging over europe and the banks as a result. matt: just to get away for a moment from the actual markets and to get to something behind them, what do you think about the possibility that he could become the new the next ecb head or that germany may have to field someone else if they want a candidate to follow? kokou: this is an interesting point. if you look at his policy actions, he ultimately decided bybox the next chairman launching --
it is something the italian banking sector desperately needed. so ultimately i think the next chairman mandate will be to support the euro zone data and low inflation. of the eurocious zone being the number one concern. anna: kokou, thank you. kou will be joining us at the top of this hour on the radio. let's look at some sectors on the move. the u.s. versus european banks. banks very much the focus this morning. the banking sector far and away the biggest gaining sector. jp morgan putting out a note saying they are going overweight on the banking sector. they were not specific about the
regions in the coverage i saw, but certainly that is look -- worth looking into. health care also moving higher. . utilities to the downside. some spanish utilities i saw were under pressure. next we will bring you some stocks moving this morning, including goldman sachs seeing more downside as copper extends is losing. this is bloomberg. ♪ omberg. ♪
anna: welcome back to the european open. 45 minutes into the trading day. fairly flat although a little more up than a half-hour ago. between 18 sent to tense this morning -- let's take a closer look at some deals driving the markets in europe. uber. ask you about more last weekt and over the weekend about how the ipo of this business is going to go. >> they are in london today. top-secret location.
meeting investors in new york and san francisco later in the week and trying to make the case that investors should put money into this company where growth is slowing. talking about revenue slowing. growth improving but profitability is lower. but they are saying believe in the promise of us. they are trying hard to not be compared to lyft, which had a great trading debut and then the stock crashed. it will be interesting to see how that all plays out. mind is weo keep in were talking $120 billion valuation. that number has now gone to about $91 billion. there might be demand by let's see how it trades. anna: let's see how the lyft aftermath affects this one. matt: let's talk about the
anadarko deal. the board endorsing occidental rather than chevron. why and what does this mean? ruth: if you just look at the pricing, the occidental offer came out at about 76 compared to chevron about 65 a share. shareholders have been pricing the anadarko's shares at higher than the offer price. for both of these companies, anadarko has been one we have been hearing much speculation about for years. investors are making the case that there is demand for you. assets we both really want. why don't you run a full-fledged process instead of giving it to one country? chevron can make a counter offer.
that occidental could come back in three days. but it seems like this is not over. anna: what happened? talk to us about deals and lack of deals in terms of m&a in europe? last year -- week we saw a big deal fall apart. portuguese utility from china also fell apart. ruth: europe was having a really bad year. there are a few factors coming together to make this happen. we are talking about slowing growth in some of europe's largest economies. the brexit factor, which is why the u.k., usually seen as the dining table of the world, is going slow. there is this nervousness around chinese acquirers. which is why it would have acquired -- required approval for some u.s. businesses. that deal is slowing. it definitely seems like there what regulatory
pressures and you're are talking about foreign acquirers coming in, they are slowing the deals down. emerging markets are going down faster. that was the biggest in europe. matt: thank you very much for joining us. if you are a terminal subscriber you can see the work that ruth and her whole team do for us every day. incredibleor an overview of mergers and acquisitions. let's get to our top individual stocks stories as we are 50 minutes into the session. dani: covestro is declining today. full-year forecast coming in below the range of estimates from analysts. the second quarter is really alarming even know other investors see mixed feelings.
aurubis, investors finally getting the opportunity to price that in. shares down 4.5%. bayer we have been watching all morning. affectingd is also the share price decline. anna: next, battle of the charts. you can see and interact with the winning and losing charts on gtv go. you can also browse all the charts we feature during bloomberg tv programming. catch up and save the charts, use them in your own research, a really helpful tool. this is bloomberg. ♪
matt: welcome back. this is the european open. we are 54 minutes into the session. a mixed trade across europe, although the ibex is down .5% after the spanish elections. let's get to the battle of the charts. we have a strange confluence in the u.s. stocks. not an all-time high but dollar is still gaining. seems through all that noise the prevailing bet is that easing interest rates. you have the spread of put and call open interests on september dollar futures.
all of this year those bets have plunged near a low over here. this is essentially saying we are going to increase our bets. that is a contrast for calls. traders really do see easing interest rates, easing policy coming from the fed. matt: all right. what have you got, maria? have a striking call from the international monetary fund sees a risk of inflation coming in at an average of 50% for iran. that is the white line in my chart. a lot has to do with sanctions from the u.s. government. if you look at my line ec iran is in now in line with argentina which clearly has a chronic inflation problem and in the midst of another economic crisis. really striking goal from the imf. matt: very interesting stuff. i am going to have to give it to dani.
i like the euro-dollar call and i think traders be watching this very closely. but thank you everyone for participating. maria, i cannot believe he did not bring a chart on spain. i was really hoping to see something. why don't you come back with a spanish chart tomorrow. i think we will get the gdp figures out. looking for 2.3%. and you are looking at bayer as we go to break. anna: let's keep an eye on the share price. there is the battle over whether monsanto and the deal that bayer was a good deal. the ceo under a great deal of pressure, caused an extraordinary meeting on saturday. after which we saw an extraordinary event. the chairman coming out on the side of the ceo despite pressure from shareholders. fascinating conversations. bear in mind we have great interviews coming up.
socialists win in spain. we are live in madrid. buyers board backs chief executive after a shareholder vote against him. avengers and game smashes the box office. the superhero flick earns $1.2 billion setting a new record high for opening weekend. good morning, everyone. good afternoon if you're watching from asia. this is "bloomberg surveillance." i am francine