Skip to main content

tv   Bloomberg Markets European Close  Bloomberg  September 27, 2019 11:00am-12:00pm EDT

11:00 am
left in the european trading day. the europeanis close on bloomberg markets. guy: let's see where we are. volume isn't a great. we continue to see these volume days. the story out of europe is the pound on the move, but not for breakfast -- for brexit reasons. wen if we get a brexit deal may need a rate cut. miners are well bid today. brent crude down .7%. basically, there was a headline earlier on suggesting that maybe we are going to get a partial peace deal in yemen. that sent prices lower and we closed the gap between the spike higher that we saw off that the saudi attacks to where we are now. vonnie: in the u.s., prompting a lot of movement in the equity
11:01 am
markets overall we have pushed higher the s&p up .2%. there are plenty of individual stocks on the move, including wells fargo as the best performer in the s&p onward that it will have a new ceo. that ceo has a lot of banking experience. a couple of little quirks. generally, people are happy with him as that wells fargo ceo. micron is down, disappointed and a big way when it came to its earnings and growth forecast. some analysts are being easier on micron saying this is the lowest point it will see, the bottom. also, expectations were too high. citi is saying expectations were too high. ,uy: the stocks are fluctuating investors may be looking past the political drama in
11:02 am
washington, trying to focus on a mixed bag of economic data. we also have the chinese stories still rumbling along. how do you price this? that is the challenge. price the political risk right now? it is on both sides of the atlantic. it is enormous. it dominates the headlines. thetrying to figure out, if pricing mechanism is trade, domestic policy in the united states, the consumer? how does it bleed across the membrane? >> i would argue that the most important thing is trade. that has been driving everything over the year. we are seeing a slowdown in europe. we have horrible numbers out of europe earlier this week. the question then to your point is does it feed its way into the consumer? that is what everyone inks is
11:03 am
the bright spot and everyone is pointing at as the reason we don't go into a global recession, the u.s. consumer. they are seeing small signs it is having an impact. if they get the next round of tariffs in december, that's going to be more focused on the consumer and the goods the consumer buys in the u.s.. that is what we have to keep an eye on. guy: everything hangs on the u.s. consumer? that is with the trade narrative and the political narrative feeds into. if the u.s. consumer hangs in there, and i appreciate you saying the data shows a few cracks, but not many. iain: there are a few. we had discussions around impeachment and treasury yields went lower. it took one comment that maybe we will get a deal done soon, and suddenly treasury is up 10 basis points. that is what the market is focusing on. they would like to see some form of resolution on trade, and that will be important. vonnie: is 170 where we stay
11:04 am
until we have some sort of a trade deal? iain: it feels that way. we have had daily volatility, but we have been stable this week. major through some pretty central bank events. we had the ecb, the fed, and now the focus is on this round of trade talks that is supposed to be happening early october. obviously, at the moment there is scheduled to be an increase in tariffs october 15. that is what the markets will focus on. for now, i think we had the big rally during august. we had a backup in yields in september. i think we probably stabilize here until we get more information. hadie: yesterday we highlighting the labor chair of national income which is pretty low and not feeding into inflation. who are the members of the fed board that you are watching to see any signs of future movement ? what do you anticipate over the next several months from the
11:05 am
federal reserve? iain: markets are starting to isce in more than the fed expecting. there are seven members of the fed that we believe we will be seeing lower interest rates later this year. we do feel the core, the jerome powell, the williams, in that group. the core are the ones that will really drive those decisions. we had some comments during powell, saying that there is more to be done. it feels like we are likely to get one more cut this year. our expectations are that you could see if the data continues to weaken. guy: the feds are divided, but increasingly the ecb looks really divided. resigning this week. trying to find a german that can stick around the ecb is becoming more and more difficult. what does that tell you about the future policy path for the talentout qe, about what
11:06 am
is christine lagarde will be facing? iain: i think mario draghi has done christine lagarde a favor getting the package through. it will be hard to roll it back. we have quantitative easing starting on the first of november, 20 million euros a month until they get to a point that they feel rates can rise. that is baked into market expectations and hard to roll back, especially when you look at the data this week. i think that in a sense that is here to stay. you can make an argument now that based on what we saw earlier this week, has mario draghi done enough? guy: the challenge is to do more. i'm wondering what is priced in here? what else can christine lagarde do? she has a deeply divided board. the french art on board, the germans clearly aren't on board. i agree that draghi may have done quite a lot already, but can christine lagarde deliver more given the divisions that exist? iain: it will definitely be
11:07 am
challenging. if you see the data weekend, she will probably have the ammunition, but i think mario draghi said, almost passing the pattern onto governments and saying, we are not quite at the into what we can do, but we have done an awful lot. the fiscal you on side. how bad does it have to get for governments to start on the fiscal? the endgame is ultimately where we come out. vonnie: what will cause any kind of structural change or formidable change in yields? the german 10 year yield got so. as much as -70 or we traded as low as 140 or so 170.whate at makes the difference over the next six to 12 months? iain: i think it is all about trade. if you do get a rollback of tariffs, that is definitely going to be pushing rates
11:08 am
higher, particularly in the u.s. if we continue down this path and we get the increase in mid-october and the final round tariffs in december, and maybe the levels go up further, or we talk about tariffs on europe, that will push yields lower. it is the rhetoric around trade and that is what everyone is focusing on was that that has been driving markets. it just takes a quick comment and we have seen rates back up 10 or so basis points. guy: is it the u.s. or is it actually germany? we have to leave it there. thank you for seeing us. international cio a fixed income. onnie: let's get a fix global markets. abigail: investors are tired on this friday. look at the relatively small gains for the s&p 500 and the stoxx 600. criticalfter a lot of
11:09 am
drama and trade headlines. stock trading feels a little tired. we had action in oil. trent down .3%. at the low, brent crude had been down more than 3%. this is on a possibility of a cease-fire or a truce between saudi arabia and yemen. saudi arabia continuing to encourage, or make traders feel like the supply is coming back on. oil has given up almost all of the gains created on the attack on september 14 on the saudi oil facility. we look at the chart in the bloomberg, we will see oil on pace for its worst week going back to the middle of august for basically the worst week in two months. this is brent crude. you can see on the year lots of volatility up and down, trading tightly and arrange. investors waiting for more fundamental news to break the range. in the u.s., wells fargo, this is the top stock for the s&p 500
11:10 am
on pace for its best day of the year as charles scharf was named the ceo. investors seem very pleased by the fact that wells fargo has finally found it ceo. in germany, commerzbank is up .8 percent. this is after they provided a growth outlook they cut. a sobering cut, but realistic. investors, long and short, liking it. on thethe big stories day, micron falling. sincee for its worst day 2015, which was a brutal year for the company. they cut their profit outlook citing trade tensions. it is weighing on the entire sector. the chips underperforming on the day. vonnie: do remember the function gtv on bloomberg allowing
11:11 am
you to browse the charge featured on bloomberg tv. catch up on key analysis and a savior favorites for future reference. this is bloomberg. ♪
11:12 am
11:13 am
vonnie: live from new york i vonnie quinn. guy: from london, i am guy johnson. close" onhe european bloomberg. courtney: senate majority leader mitch mcconnell is trying to shield republicans from trumpial fallout from the impeachment inquiry. he criticized democrats for pursuing what he calls a never ending impeachment parade in search of a rationale. he has yet to offer a vigorous defense of president trump and his interactions with the
11:14 am
ukrainian president. he allowed a passage of a resolution that urged the white house to let lawmakers see a whistleblower complaint about the president's actions. puerto rico has taken its first major step cutting how much he does. a board that oversees the islands finances released its debt restructuring plan. the proposal is a key piece within the island's bankruptcy, introducing almost $18 billion in debt. a british flag oil tanker held by iran since july has left an iranian port. iranian state media says the vessel has entered international waters. news came shortly after the tanker began transmitting its location for the first time in weeks. iran said that legal proceedings against the vessel finished, and it was free to leave will stop prince harry following in his mother's footsteps wearing body armor walking the mine field in angola. princess diana took a similar
11:15 am
walk-on 19 97. the field where diana walked is now a busy street. the southern african nation is hoping to be free of landmines by 2025. global news, 24 hours a day on-air and on tic toc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. vonnie: african development bank president akinwumi adesina warns that the country is moving backwards, de-industrializing. development and financing from the bank and building technology .ubs from rwanda to senegal we are joined now. thank you for joining us, president. the african development bank has about 1.5 billion in projects. where are you in that process? comes thet
11:16 am
climate finance we doubled on the continent. $25 billion by 2025. we are currently investing $25 billion in highway culture. africa has the most land of all of the arable land in the world. make sure that africa actually becomes a powerhouse in ag. energy.y on you can't do anything on energy. investing $50 billion in energy. a lot of work on energy and agriculture. vonnie: what you said at the was honestly a little terrifying. it has been very difficult. are you still investing in
11:17 am
ascom? how much? ascom, africa provides energy for the rest of the southern africa region. ascom is a very important company. about $5nvested billion in ascom. we would ask them, the south african government, are they doing the right thing and how to restructure ascom to be more efficient to make sure in times unbundled toon make them more efficient, and also make sure that they carried structures are cost reflective so that you can attract private sector investors to go into that space? i think we are doing the right in trying to reengineer the institution to make it more efficient and more dependable in terms of power. good afternoon, good
11:18 am
morning, guy johnson in london. what comes after ascom in africa? that strikes me as never getting an answer. you fix ascom, you stabilize ascom, but the infrastructure is poor. the country is suffering brown out and it's hard to see -- brownouts, and it's hard to see how that will change. how does south africa get more to put into generating? if the economy is going to thrive it needs to .0. akinwumi: if you look at south africa you have a lot of structural challenges. they have to reduce inequality. they have to make sure that they address the issue of power. when they had the economic downturn it was because they didn't have stable power. i have a lot of confidence in south africa.
11:19 am
economice in the strategy the president has laid out. i think you see that he is trying to mobilize $100 billion in capital to go into all kinds of things. we invest massively. we will help them a lot and agriculture to create special agro industry zones where they can do agriculture as a business and get young people into that. the township area needs to be revived to create more economic opportunities and reduce economic migration into the urban areas. in south africa the african investment forum, we try to mobilize capital to the continent. we were successful. we mobilized $38.7 billion in two hours. into all types of infrastructure. one is $2.5 billion investment skytrain. a lot of opportunities will have to deal with structure.
11:20 am
i have given the president my assurance we will help them do that. of: one of the big themes the last few years in africa, and it is hard to talk about africa as a single entity, but the chinese have been huge investors. the chinese economy is slowing down and there is a clear shift in china's attitude towards africa and the way that it invests. vonnie talked about in the beginning the risk if africa industrializing is. is that because china is not investing as much as it once did? akinwumi: i don't think that is the case. i think it is africa was exporting all the time. that is why you find africa gets explosive blowback on volatility. it is more to do with the strategy. the african development bank is driving something called
11:21 am
industrialize africa strategy to add volume to everything it produces. mineral, oil, gas, agriculture products. to add value to it. that is part of it. the deficit is contributing to a lot of the industrialization. what can you do without energy? you're doing quite a lot of that. last year we connected 16 million people to electricity. that is why i launched an initiative to bring back power that would provide access to electricity for 250 million people. by the power of solar. it will be an investment that we are going to work with our investors. without power, you cannot industrialize. look at cocoa beans, for example. 75% of the cocoa beans in the world and gets 2% out of a chocolate market.
11:22 am
africa has to do that. when it comes to the case of ' isa, i think that africa attitude is significant. it was $61 billion. trade with china was $116 billion. the issues to worry about for me when we have global trade tensions, that affects africa. in terms of the export of africa. in terms of development of africa, and investors that may want to pull out of and emerging-market just because of uncertainty on global economic growth trends. those are things we are keeping an eye on. when it comes to the issue of infrastructure and debt, with the african development bank is doing is helping african governments not to get into deals they shouldn't be getting into. have your glasses on and make sure you read every single line.
11:23 am
make sure every action is transfer and, fair, and respects environmental and social issues, and you do not trade the future because of the benefits of today. vonnie: when other developed nations are turning away from multilateral free-trade you are embracing it in africa with the african free continental trade area. you are at the bank providing 4.8 million dollars to forward their goals. what conditions are attached and what goals do you hope to be forwarded? akinwumi: there are no conditions at all. it was something long coming. the african continent free-trade area will create a market of $3.3 trillion. that is the largest free-trade area in the world. million, and we will continue to invest to make it work with the infrastructure, energy, building capital markets, and other things to
11:24 am
make it work. vonnie: we look forward to an update. thank you for your visit. this is bloomberg. ♪
11:25 am
11:26 am
guy: nearly done with friday's trading in europe counting you down to the close will stop mining stocks are doing well. we have the pound under pressure moving the ftse higher. lag, maybe aof a little bit of a break. european close is coming up next, full coverage. this is bloomberg. ♪
11:27 am
11:28 am
11:29 am
guy: 30 seconds until the end of regular trading this friday in europe. markets positive from equity point of view. london standing up to the upside.
11:30 am
that is to do with the mining stocks. what kind of week have we had? in reality, not a very exciting one. look what happened in the middle of the week. deep downdraft. that was the politics. also the turbulence surrounding the brexit story. if you exclude that, look at the incredible tight range the european stocks have been in pretty much all week. really suppressed volatility. that is certainly a theme. you see it in other asset classes as well. i highlight it when it comes to the equity point of view. we still have to go through the auction. ftse 100 outperforming. the mining stocks have done well. they beat huge underperformers of late. we have also seen the pound under pressure. it was under pressure earlier on in the session after the bank of england comments. the cac 40 lagging a little bit.
11:31 am
airbus of factor. lvmh a factor. i want to take you to the grr function on the bloomberg. i have set this for five days. i want to give you an idea of the sector rotation story. favoring thet is stretched valuations save defensive bond like proxy stocks. you can see it there. there is real estate. interesting in a week when we focus on wework. real estate up. where we did see the -- that has helped stocks -- food and beverage in there as well. another defensive bond proxy kind of sector. you can take away some sector themes for the week. that is ongoing valuations disparity between the mining stocks and the super defensive
11:32 am
stocks. the bottom end of the market, back to trade. that is the story, basic resources. i mentioned that as well. oil and gas coming off the board. banks under pressure. auto parts right down there. every guest we talked to at the moment, you ask them what is the main risk, trade, trade, trade. that is reflected in the auto sector. that is a look at the european markets and the european close. vonnie: here in the u.s., just small gains for the major indices. the dow and the s&p are positive, but just fractionally. helping that gain is wells fargo, which finally has a new ceo, charles scharf. micron is little bit of a drag, not just on the s&p but the chip stocks more generally and other indices. 8.5% after missing estimates. citigroup does they expectations
11:33 am
were massively high before this. let's give micron a break. needham saying it will be longer and more expensive to monetize the streaming portion. disney painting too rosy a picture of that for now. down $.63. about 8% lower. a rough start for the cycle maker, and obviously it does other things as well. my lawn up .4%. it was down 3% after the fcc came out and said it was filing a complaint against my lawn -- against mylon. are paying a settlement to the fec for that infraction and now the stock is higher. guy: you mentioned wells fargo. let's talk in more detail about
11:34 am
that. it has taken a long time, but charles scharf will be the new ceo, coming from the bank of new york mellon. he formerly worked at visa. he was the ceo there. he worked with jamie dimon at jp morgan as well. he will be taking over on october 21, which is relatively quick. that has caught a lot of people by surprise. isning us on the phone banking analyst ken leon. we have been waiting for a long time. is it a surprise they got one of the candidates many people hope they would but were beginning to doubt? ken: we have removed uncertainty. there was a lot of risk you cannot place a strong ceo with a strong background. we think charles scharf fits the bill. clearly, there is lots more to be done. i do not think you will see a new imprint of his strategy
11:35 am
until early next year. see him as ao not disruptive change agent, but someone who will evolve as he learns more about wells fargo. a positive move today. whether it changes the fundamental outlook in a big way, perhaps not. guy: some have suggested he has bounced around too much, that he is not spent time in some of the jobs he has had. is that a concern for you? ken: clearly he has had experience both in the investment banking at citigroup and then jp morgan. visa and then bank of new york mellon. a short tenure. there is some question. the opportunity to be the ceo of a major u.s. bank like wells fargo is a great opportunity for him. incrementally to make change. the imprint will be much more
11:36 am
intimate 2020 and beyond. that is what we will see in the next three to six months. vonnie: might he surprise us all after all? this is the first time he has his hands on a company ready for potential change. he did learn at the feet of the masters, at jamie dimon's feet. surprise?oom for ken: the question will be as we watch whether he is satisfied with the senior leadership in place or we begin to see announcements of charles scharf bringing in new talent. that is something we will watch. that is important in terms of getting agreement, in terms of strategy, and then in terms of financial performance. guy: wells -- vonnie: wells fargo more broadly, what does it
11:37 am
need to do? what should a good ceo do for the bank? be traveling a lot internally to see the thousands of employees and second-tier and middle management. that will consume him. it will be interesting to see him in congress. he is not had the experience of testifying in front of maxine waters under the house banking committee or the senate banking committee. newill probably be a experience for him. guy: i want to break into the conversation. we got up it of breaking news. -- we got a bit of breaking news. the white house is weighing limits on u.s. portfolio flows into china. let that sink in for a moment. the president is said to support a review of investment limits on china. evolution of what we
11:38 am
have been watching so carefully, a story focused on trade but now potentially has the potential to feed into the world of finance much more directly. we will see what the impact of this will be. i want to get a quick look at what the markets are doing in terms of their reaction to this. clearly, china has tried to integrate itself much more into the global economy and much more into the global financial sector of the world. we are seeing the s&p falling reasonably sharply on this news. lower over the last couple of minutes, we are now trading at 2967 as the markets digest this. as we've been discussing throughout this program, every single guest that comes on, we ask them how important is the impeachment story, and all they come back with is just watch the trade narrative. it is the most important thing for the financial markets. here is a direct blow to that. down .4%.
11:39 am
vonnie: it is an immediate reaction. according to people familiar with the matter, this could have huge repercussions for billions of dollars in investment pegged to major indices. among some of the factors the trump administration is considering, delisting chinese companies in the u.s. entirely and limiting americans exposure to the chinese markets through government pension funds. you are talking about major chinese docs from alibaba to tencent and much more. guy: alibaba is down sharply. down 5.5%. falling reasonably sharply. the s&p is only down .4%, but alibaba is now down 6%. , the most obvious example of a stock this could be affecting his falling in reaction to what we are now reporting. we will wait and see how the chinese respond to this.
11:40 am
this is a significant blow. there has been this idea, a containment strategy that could be put toward china. at the moment, it is focusing on trade. if you start to cut it off from the financial system it has been so eager to be a part of, that is another layer that could be wrapped around china. , providing acks limitation to the availability of finance, that is a huge issue. china relies on banks like hsbc because they have access to the dollar funding markets. it is so important to them that if this were not to be possible, that would be a huge blow to the way china is going to be developing the economy. alibaba down sharply on the back of this. vonnie: we remember marco rubio was raising questions about all of the companies being added to the indices out of china. it shows you how many hundreds
11:41 am
of companies from china have been added to those msci indices. funds, funds, government endowments, they all have major positions in some of these indices and by default have positions in these chinese companies. if the trump administration work crackdown on investments, that would have major repercussions. you can only imagine the rebalancing that would have to go on. according to people familiar with internal deliberations and obviously we will get wind of something before it happens. it is also not for sure that getting wind of something is not enough in itself to cause an equal but opposite reaction from the other side. potentially, this is theater. guy: absolutely. china front and center. tell me what i need to know about this story. how far does it go? >> these are discussions that are ongoing within the white house. nothing is imminent on this. you can look at this as part of
11:42 am
the broader u.s. conflict or the perceived conflict with china and a way to restrict or provide safeguards for american investors. capital that china needs to fund its growth. you can look at this as another path through which the administration is trying to make -- china'ss growth expansion is restrained to some extent to the greek -- to the degree u.s. law and regulations will allow. vonnie: would this be enough to scare china into giving some assurances on ip theft or policing some of the conditions the u.s. puts on if trade were to resume in its full capacity? >> these discussions are going on separately from the trait discussions.
11:43 am
certainly, it adds to the tensions in the relationship. china is trying to open itself to investment, taking slow steps in that direction. the u.s., if it were to come in with restrictions on that, on those incoming investments, that is going to make it more difficult for chinese companies to expand. it would definitely impact the climate around the talks. guy: china holds a lot of treasuries. this is a risky game, isn't it? >> it is if you think they would be willing to use those as a weapon of the trade war. a lot of people discount that, but they do have a couple trillion dollars of u.s. treasuries they could decide to sell and that could cause pain. that is a scenario people do not put a lot of stock in, but it is up there. vonnie: looking in another turning of the screw moment. i know you say this is a separate path to the trade talks. this is essentially u.s.-china
11:44 am
relations. anything that can put pressure on china should lead to the u.s. advantage, potentially. what happens next? when does the trump administration to side it will go ahead with this? is there something that would be a catalyst? brendan: there does not seem to be a timetable for these particular discussions on the capital restrictions we are reporting on. the trade talks are going ahead. the next meeting is around october 10 and 11th in washington. there is been some discussion about some sort of mini deal that will keep talks going. this development will get back to beijing and will not be looked at very favorably. reason chinaother would be reluctant to do deal with the u.s. guy: alibaba is down about 4%. how did it affect companies like
11:45 am
alibaba? brendan: capital flows two ways. alibaba is listed on the u.s. market. guy: looking to have a listing in china as well. brendan: if you are to gain out the scenarios, some sort of restriction on chinese companies may be something more hawkish members of the trump administration would want to do. it is one of those scenarios that the u.s. government regulates their stock exchanges and in a worst-case scenario, that might be something people would conceive of. vonnie: how would the mechanism be for this to actually happen? with the trump administration have to make the announcement of formal exchanges, the exchanges with an have to recalibrate their indices. it strikes me there could be a whole lot of market dislocation. reporting,om our
11:46 am
that is what we understand as the big issues. trump administration officials are trying to work through. and do itthey do this on domestic law, international norms, and so on, without creating a ripple effect to wear countries all over the world start doing this to each other. there's a lot of complicated discussions going on about the way forward on this. it is a story we will continue to follow. guy: can i draw a connection between the president talking about micron early on this week. we had micron numbers last night. the ip story he focused on within that speech and what is potentially happening here. there does seem to be a little bit of overlap in terms of the venn diagram. brendan: it is an interesting development we are seeing throughout the trump in general. donald trump very much wants the u.s. companies to be the strong ones, not the chinese.
11:47 am
companies the chinese government are championing. you are seeing a battle play out in public. moment.hold for a i want to bring in my bloomberg colleague shery ahn, cohost of "bloomberg daybreak: asia." this is a big announcement. trump officials disgusting ways to limit investors portfolio flows into china. we will get back to shery ahn in a moment. brendan, let me ask you. what could the chinese authorities do without jeopardizing a financial relationship with the rest of the world? do not to get into hypotheticals, but china's government exerts a lot of influence over american companies anyway. those american companies could become the short of retaliatory restrictionsy u.s.
11:48 am
on investment flows to china. there are multitudes of ways. it will be interesting to see how beijing reacts to this latest news. guy: u.s. banks have been trying to push into china aggressively. one of the ideas has been there should be a level playing field, or at least u.s. financials should be granted more access. that? i put that next to if i am jamie dimon right now, i'm trying to figure out where the growth comes from. clearly the u.s. markets are a part of that. china has to be a huge part of that. these guys have to be investing a huge amount of money. navarro,if i am peter u.s. banks investing in chinese assets are in an indirect way funding the chinese government, according to the hawks in the administration. that would be the trump
11:49 am
administration argument. that is where we think some of the impetus is coming from inside the white house. vonnie: i want to turn to shery , my coanchorre now on other programs. you're the coanchor of "daybreak: asia peter: i want to ask -- daybreak: asia." i want to ask how the chinese will respond to this. pleased.l not be shery: definitely not. china has taken a long time to try to open up its financial markets. not necessarily because they are trying to liberalize and a show of good faith, but because they need those capital flows. we are talking about big hits on their economy given the ongoing trade tensions with the u.s.. growth slowed down, industrial profits flatlining, they are falling and continue to fall.
11:50 am
they have been making big moves to open up the markets for these investments. we have seen authorities scrapping the investments in bonds and stock markets, not necessarily because they are confident they are liberalizing as a maturing economy, but because they need this capital as they get close to between deficits in their fiscal and current account. andave seen other moves full foreign ownership of onshore security firms and live insurers as well. other moves to growth in the local economy. tax cuts, special infrastructure bonds for local governments. if you are talking about limiting these capital inflows into china, that would be huge. we will have to see how this turns out. i have not seen any clear mechanism how this will happen.
11:51 am
have you heard anybody talk about this as a possibility. when you talk about this in asia, has anybody mentioned this as a potential tactic of the white house? shery: everything has been considered in this trade battle that has been raging for the past 18 months. come up as considerations, but i have heard of it more from the u.s. side of things. we have heard from marco rubio trying to limit pension funds in the u.s. from investing in these obscure firms in china, the stocks and bonds. we have heard of the possibility of this happening and what this would mean at a time when these global benchmarks like msci have been quadrupling chinese equities, not to mention chinese
11:52 am
bonds being included in a global benchmark. we have to note that interestingly last night, we had russell coming out and skipping their addition of chinese bonds into their global index. seenafter we had already the moves by bloomberg barclays to have chinese bonds on their global indices as well. limitingell yesterday and not adding those chinese bonds. most analysts have said this is just a delay. it will eventually happen. go backbrendan, if we to you in london, we are seeing the most reaction in things like alibaba. these are massive companies and massive employers in china. if the money is taken out of these companies as a result of this, and it is all speculative because nothing has happened, would we see layoffs?
11:53 am
would that be the obvious next thing to happen? brendan: in a prolonged slump, that ultimately would happen. in the near-term, we will wait and see what the administration does. these are ideas being thrown around, being pushed by the hawks inside the administration. it does seem to be gathering momentum as our story says. you look at one of the comments ,n the story from steve bannon he considers china to be a frankenstein to use his word, created by american capital to some extent. that is the mindset we are looking at from some of the officials inside the white house. i will have to see how it plays out. guy: you think there is any possibility -- the fact that the story comes out in a week where we had a massive focus on impeachment.
11:54 am
how long has the gestation been for this idea? brendan: it seems to have been going on for several weeks if not a couple of months behind the scenes. the fact that it is coming out now i do not think is tied to impeachment, but the president definitely wants to go into his 2020 reelection campaign as looking tough on china. elizabeth warren, a potential contender to run against him is considered to be very tough on china as well, more so than joe biden. you can see getting tough on china, whether it is through tariffs or capital controls being something trump could ride into 2020. vonnie: how long does it typically take for china to come back with a response? board rooms across china are getting fevered. this is not a great day to be happening, friday evening in china. people have gone home and gone to bed for the most part. there will need to be a
11:55 am
corporate response as well as a governmental response, no? shery: usually what happens with china, and we have continued to see this pattern of behavior with the government, is that any announcement or any leaks out of washington, china has taken a very measured town. they do not confirm or deny. they just announced their expectation or hopes of where this would go. they could hear something from the foreign ministry, which is usually the spokesperson. there is a daily briefing. we could hear from that, but that will be over when people are back in business. corporations, we are not quite careful not to go against the government as well. vonnie: i want to ask you as bel what the reaction would from the markets. obviously where looking at that right now. we will take a quick look into
11:56 am
markets. tencent down 1.25%. seeing a big reaction in the offshore remember he is well. trading at 7.14 and change. we do have to leave it there for a moment. thanks to brendan murray in london and bloomberg daybreak asia host here with me new york, shery ahn. coming up, "balance of power" with david westin. he will be speaking with the american banker ceo rob nichols with the situation at wells fargo. and we have more from brendan murray and his team. checking the markets, a little higher for the major averages, with the exception of the nasdaq down .1%. this is bloomberg. ♪
11:57 am
11:58 am
11:59 am
david: from bloomberg world headquarters in new york, i'm david westin. welcome to "balance of power," where the world of politics meets the world of business.
12:00 pm
we begin the hour today with markets moving on that scoop from bloomberg that the trump administration is considering imposing capital restrictions on china. we turned to kailey leinz to tell us what the markets are doing. kailey: you saw a sharp leg lower when bloomberg broke the news. we have recovered somewhat. the dow jones has turned positive, up about .2%. the s&p and nasdaq still lower. nasdaq tech stocks getting hit harder. faang stocks are down nearly .5%. where you are seeing -- chinese companies listed in the u.s.. part of that report was the trump administration was considering delisting companies administration was considering delisting companies such as those from the u.s. stock exchanges. we should be able to flip up the board and see a number of those, alibaba sinking off the lo.


info Stream Only

Uploaded by TV Archive on