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tv   Bloomberg Daybreak Europe  Bloomberg  November 17, 2016 1:00am-2:31am EST

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unleashes itsj first unlimited bond buying a operation as if fixed to take control of the world the second biggest debt market. bank of japan prime minister to become the first foreign leader to meet with president-elect trump. obama and merkel make a joint plea for a socially responsible economy and free trade as the u.s. president's farewell tour takes him to berlin.
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a very warm welcome to bloomberg daybreak, our flagship morning show. edwards along with yousef gamal el-din. of october, assets under management, 327 billion swiss francs. this is switzerland's third largest wealth manager. strategy at this company of course has been to make acquisitions and almost them all thelmost a double acquisitions. it has been chasing the growth that has been achieved by ubs. it sees its larger crosstown rivals. it is expanding its emerging markets client base, cutting costs, and all of that with attempt to fend off the various pressures including strength of
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the swiss francs. one number coming through from juliette, 327 billion swiss franc. its first consolidated statement since its merger with its belgian rival, third quarter coming in with a miss. you are looking at the performer 14.5 billion euros, and the estimate was for 14.6 billion euros. it rose 4.3% to 513 million euros and analysts were expecting 520 million euros. the company noting the trading environment in the u.s. remains challenging with ongoing price deflation and competitive pressures in the market. at the u.s. was always going to be a key part of the statement. the stock is up 6% of our this year. ceoill be speaking to the in the morning.
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that is at 7:40 a.m. monday some -- london time. anna: we have seen these attempts to control the curve coming through from the boj, but back in the timber, we got a change in policy from the boj. we can focus in on this chart. bojreasons why using the to hold the surge of the yield we have seen since donald trump entry -- yousef: it ties into this global vortex. they were pulled into this as well. you can see that pop after the u.s. election and of course the boj compelled to step in, especially once that two-year paper start getting really close to the five-year paper, has to step in there and rain things in. anna: a little more detail, not just the 10 target which we knew before. let us have a look at the risk radar and show what this has done for the japanese currency. boj policy seeing cap in gains
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or capping earlier strength. we have got the rather beautifully titled "generic future," which is the cover price. in shanghai, the price of copper decreasing from its two-year high to 2.2% earlier on in the session. we also have other commodities. yousef: considerable downside pressure in lincoln aluminum. brent at $46.55. we are watching what is happening with opec. they are meeting in qatar, trying to get momentum ahead of the november opec meeting. they are tried to put pressure on the price. the 10 year yield at 2.2% at the moment. let us cross over to the bloomberg first word news. haidi lun has the details. member of donald trump teams as the incoming
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administration is considering how to fix roads and bridges in a way hillary clinton had promoted in her campaign and the republicans had derided. haidi: they talk to and infrastructure bank to pay for the work, controlled by washington and funded by $275 billion tax increase on business. regulatory changes, looking at the creation of if theructure bank and structure investments. there is a lot of things to do. of the economic priorities are clearly taxes, regulatory, trade and infrastructure. haidi: president barack obama and german chancellor angela merkel have made a joint call for a socially responsible country and pushing vatican -- pushing back against trade. essay, "simply put, we are stronger when we work together. we are standing at a crossroads. the future is already here and a
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return to before globalization will not happen." the 7.1 percent rise underscores the nation's resilience to global risk as investments surge and consumers spend more. see the country's gdp thant to expand more 6%. that puts it among the fastest growing in the world. prince,llionaire, the are fort companies sale. the reverse of his long-standing policy that some shareholdings are "forever." hasinvestment from owned the city shares since 1991 and includes the plunge during the financial crises and the rises since then. it owns about 5% of twitter, valued at around $1 billion. >> what does that mean?
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the span,invested in wetwitter, in four seasons, are invested in tens of companies so really it is our divestingit requires from any company, who will do it for sure? there is no company forever. oil ministers from iran and iraq will not be there. the cartel is -- oppose thebaghdad biggest hurdle to a deal. 18 hours of talks in vienna last weekend also failed to bridge that divide. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. to give out more stories on the bloomberg at top . this is bloomberg. yousef. yousef: let us cross over now and get a closer feel and look
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at what is happening in the markets in asia. juliette saly is standing by. yousef, we are seeing that the regional index higher that there has been weakness coming through in the chinese market, the shanghai composite. off by 0.2%. this market rallied. of have seen a little bit depreciation coming through from coal players today. we have seen that weakness flow-through into hong kong although casino stocks are rallying strongly on the hang seng. a bit of selling coming through from those banking players that have been rallying quite hard over the last couple of sessions. elsewhere, that positive momentum from other asian markets are listing the overall regional index, worth having a look at the philippines today because it is one of the best performers in terms of what we are seeing in asia and that is after it came through with third-quarter gdp that absolutely smashed expectations, 7.1% year on year.
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australia's employment numbers coming through, closing higher by 2/10 of 1% and unemployment remaining at five point 6% there. on the close, pretty flat on the nikkei, but the member it had that solid run-up during yesterday's trade. anna and yousef. anna: thank you very much. in just a moment, we'll get more on the boj unleashing its first operations to buy an unlimited amount of bonds at a fixed rate. the first will become foreign leader to meet face-to-face with u.s. president elect donald trump when he pays a visit to trump tower in new york today. more on his important meeting, we are joined now and tokyo by isabel reynolds. very good to have you on the program. what are the issues of concern for japan and asia going into this meeting? trade is going to be talked about, no doubt. isabel: right, donald trump has
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caused confusion in asia and japan. the main reason perhaps is his comments on the tpp, transpacific trade partners in -- partnership which he said he wants to drop. actions abe has spent a lot of one and political capital passing this. the second thing is that donald trump has threatened to remove american troops from japan and south korea all must they pay more money and japan is already in a position of paying 75% of the upkeep of u.s. troops here is not pleased about that idea either. to the issues going into this meeting, but it is not clear how going to getally to the nitty-gritty of problems in this first meeting. yousef: the track record has not necessarily been harmonious between abe and trump. how is abe going to go about tackling these issues in his first meeting with trump? abe as already
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shown he is going to do an about-face. he has sent a congratulatory message in which he praised talk to the heavens with about his extraordinary talents and how japan wanted to work hand-in-hand with him and to the future, and so i think it is very much going to be an attempt to build a personal chemistry with trump rather than get into the nitty-gritty as i said with these problems which might prove difficult later on. he certainly does not want to get into any kind of fight with all top at this -- with donald trump at this stage. anna: isabel reynolds joining us there from tokyo. the bank of japan has announced operations to purchase an unlimited amount of bonds at a fixed rate. it comes after the 10 year jgb yields turned positive for the first time since the doj announced pegging the rates at zero. it has been caught in the global route sparked by bets that
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donald trump's stimulus policies will drive up inflation. joining us now in london, erik britton. great to have you on the program. lots of the world to address with you, and the united states, and britain, we'll come to this. the bond rout is something not specific to japan, not driven by japan, but we see the boj having to take action to limit bond yields as was their policy in september. eric: i can't help thinking of the phrase "fiddling while rome burns." they want to manipulate timing, movements in the yield curve which obviously is matters of bond traders and so on, but let us not forget that japan has been in this situation for 25 years and counting, a very low growth, a very close to zero yields, all the way down the yield curve. do we really think that shaving enths tens off the- t
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awful make a big difference to the story? what would make a difference? yousef: abenomics encapsulates a lot of the things you just mentioned. what is the future of that policy? you are not a big believer in it. you are saying it has failed. erik: it has failed. what was a test with? was tasked with making a decisive difference in japan's growth treasury and yield curve. and yieldtrajectory curve. it has not done that. the judgment on abenomics as it stands has to be it failed to deliver what it promised to deliver. yousef: what is the alternative model? what is going to be the catalyst? erik: let us analyze what the problem is. what is it that is tracking growth down and keeping yields low and inflation low or even negative? debt, in japan,
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europe, the u.s. debt in the round is a vast mountain in japan and that is pulling down on everything, and until that debt problem is dealt with somehow or other, we are going to be in the same yield environment. anna: perhaps you know on they -- perhaps shinzo abe would like to trade his way out of the debt. there's concern about what donald trump stands for trade policy. also what donald trump might mean for the yen because of course, the yen like many other currencies, has been caught up in this dollar strength. the japanese are not much pleased. erik: indeed. the two intertwined stories there. on the one hand, tbp and what that implies for trade. and what that implies for trade.
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it is probably dead. anna: is it too early to say? erik: i do not think it is too early to say, but does that matter? there are ways that amount is on the trade side clearly, but things that are as important as that which were not covered in the report which he talked about earlier was the geopolitical side. tpp is a way of, aimed at controlling the power of china which is what japan is very concerned about and for very good reasons. yousef: what is the future of the yen? where does it go from here? erik: the house you is that we are in what we describe as a "trump-light" scenario. maybe one or two changes on the trade side. if that is the case and how it plays, then the yen is probably roundabout, fair value now.
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if we get into the dark side, we wheret "donald dark," trade follows genetically as a share of gdp globally and not just in the u.s., a whole draft , then the yen will strengthen sharply. "trump-en under is dead.pp coming up on the program -- yousef: it is good to talk. a flurry of fed speak overnight. we look ahead to the big post trump victory testimony. anna: the management. is mario greco's leadership -- we speak with the man himself at 6:30 u.k. time. yousef: big expectations. philip hammond gears up for next week's autumn statement, but are his hands tied by talks over brexit?
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we will have all of that and much, much more. a stay tuned for it. this is bloomberg.
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yousef: welcome back. you are looking at a live shot. this is victoria harbour, gorgeous sunny day at the moment. currently 2:20 in afternoon. it is 6:20 in the morning in london. the hang seng just a little bit lower there. that us now get the bloomberg visits fash -- business flash with juliette saly. juliette: the netherlands has a folder shares for 1.50 billion euros, after an 18% rise in the stock prices during the year since the bank prices returned to the market. prime minister -- government which faces an election has plans to sell the risk overtime. u.s. authorities are preparing to announce as soon as today
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that jpmorgan will pay about $200 million to settle allegations it hired children of chinese decision-makers to when business, according to people familiar with the matter. the agreement would and a nearly three-year investigation into whether the hires violated u.s. antibribery laws. the spokesperson for jpmorgan, the justice department, and the fcc declined to comment. shinto has fired two of its top executives after payment paid to a giant iron ore project in guinea. legal executive deborah all valentine -- does not prejudge any external investigation of the project, says rio. have not replied to our requests for comment. that is your bloomberg business flash. anna, yousef. yousef: thanks, juliette saly.
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breaking lines coming and on zurich insurance. targeting dividend payout ratio of 75%. very top -- this is very topical. we are going to be speaking to marry a record, the ceo at -- mario greco, the ceo. today was all about how shareholders were going to be rewarded as a result of that. yousef: they are setting new financial targets and net savings of $1.5 billion until 2019. cash remittances in excess of -- billion dollars in the next three years. we will continue to carve out the details as the story unfolds in the program. let us go back to where the action is. anna: the fed. a lot of talk about janet yellen. testimony today and is likely to be quizzed on the fiscal policies of donald trump and how it could affect rate increases.
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there was plenty of fed speak overnight. nonvoting minneapolis fed president says big moves and financial markets since the election merit watching. it is too soon to reevaluate the outlook for the u.s. economy. the central bank should not overreact to market moves, says one representative. he had said this or had this to say on the current policy outlook. >> in our case, the economy that still theeks ago is economy today. the markets have reacted the economy did not change genetically in two weeks. we have to take into account what potential changes would happen in policy that would affect our behavior. in two dramatically weeks. we have to take into account what potential changes would
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happen in policy that would affect our policy. appear she will before an economic committee at 3:00 p.m. london time. it looks like that will be -- will bring about interesting elements. glut ofat will be a 12 5 p.m. u.k. time. still with us, erik britton from financial consulting. i have a chart, eric. bcv3122. in many quarters to the contrary, we saw a trump victory and we saw expectations of a fed hike going higher. the summer now? -- is it december now? erik: i would say it is justified. the underlying strength of the u.s. economy is sufficient to justify that and for their lives during the course of the next year whether or not the new loosensration
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fiscal policy as expected. they should. the impact would be stronger growth and higher rates. yousef: a lot of focus on what is going to happen we saw some of the treasury yields spike as well over the last week or two. we have a tips option coming up. i mean, that would be a complete no-brainer, right? if there is any time to buy tips, it would be now. erik: 100%. i think if you are -- if you have got protection in dollar assets of any sort, i think the dollar will do well. tips is a natural home. anna: do you think the dollar continues to benefit under donald trump? one of the reasons to buy the dollar is retired creation of foreign policy fascism one of then -- reasons to buy the dollar is repatriation. erik: are we in a trump-might
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light world or a donald dark world? that is a big upside for the dollar relative to that. yousef: a lot of concern for major decision-makers managing serious money that there will be political pressure on the fed and a change in the composition of the fed. out one or twole or three in 2017? erik: there is always political pressure on the fed. we have a different administration and different objectives no doubt, but every administration has some concerns about the economy and want to maximize it and feels directly or indirectly able to apply pressure to the fed to try to support those goals. is this one any different? only if they change. yousef: you are staying with us.
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erik britton, and still to come, we speak to switzerland's biggest insurer and find out how their new ceo looks to turn things around. this is bloomberg. ♪
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anna: welcome back. "bloomberg daybreak: europe." it is 6:30 here in london. are trading on dollar-yen, 3:30 in the afternoon if you are in tokyo. a bit of movement in the dollar. the boj announcing its first operation to purchase unlimited bond and trying to control that yield curve. yousef: a new edition of daybrk is now available on your bloomberg and your mobile. let's take a look and see it are some of the top stories making this additioedition?
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the company says the decision does not prejudge any external investigation of the project. anna: the next story is president barack obama's visit to germany. he and chancellor angela merkel had made a joint call for a socially responsible economy and free trade, pushing back against donald trump agenda. yousef: daybreak focuses on saudi billionaire prince a need -- the prince. that reverses his long-standing policy that some shareholdings are "forever." anna: 6:31 in london. cole smead joins us now. -- manager said he should -- cehic joins us now.
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today, kuroda announced the boj's first operation to purchase unlimited amount of bonds at fixed rates. that is the zero line right there. you have the 10 year in purple and the five-year in blue and the two-year in white. isn though and this interesting, no one offered to sell their securities at the auction, the announcement looks like it was enough to move the market, as you can see with the jgb yields coming down and doing a similar thing to the 10 year treasury yield this morning, down two basis points. we are at 2.2 percent or there about on the bloomberg dollar index, slipping from a nine-month high. we are looking ahead to janet yellen. according to said funds futures, that fed rate hike in december is a near certainty, so what we
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are seeing here is a little bit of caution slipping and ahead of that. in terms of the dollar, the dollar's climb against the yen, we have been talking about how that lost momentum, halting near 1.10. you are seeing yen weakness creeping in now. it looking at euro-dollar, earlier, it was strengthening for the first time in nine days against the dollar and that did not seem to last long. we are pretty much unchanged on that now. taking a look at what is happening in asian stocks and the equity markets, this is the msci asian-pacific index. a bit of a mixed picture across benchmarks. also a mixed picture in sectors. what i wanted to highlight are the two worst performers. you have financials off by 2/10 of a percent. that's related to the jgb yields coming down and energy starts off by 0.2 percent. oil is holding its losses around
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the skepticism of the doha talks and more supplied data out of the u.s.. yousef: zurich insurance group will cut costs. mario greco -- that news comes as the company holds an investor day today. mario greco joins us now for his first interview of the day. thank you very much for joining us on day break this morning. of us go straight into one the key lines coming out of your statement. 2015 to 2019.rom talk to me about what is driving that new plan? mario: the insurance industry has a cost issue, which is common industry. zurich has this issue itself, so we decided to attack it, attack it in the most responsible way by reducing over the next three our costsbillion of
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by the end of 2019. we will work on the i.t. expenses and contracts and procurement, internal organization, and we have plans to do it and we are fully confident we will achieve it. anna: those are some of the things you want to take out cost wise. years has been a busine that you have introduced a restructuring program already, rb organizing the business around geography and not product. how is that delivering for zurich? mario: the name of the game there is a civilization. we are multinational business has become very complicated over the last years and trying to make it simple again. at the end of today, we work for customers so we need to have a quick response to customers and this is what we are doing. initial responses are very positive. yousef: does the strategy update
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mean mna is back on the table? m&a.: we do not need to do the plan does not require any m&a action, but the -- we are strong company. e strong. we have been on the m&a market over the last month and have not found anything interesting. we will definitely keep the eye open, but we don't need to do anything. yousef: any particular side you're aiming for? mario: we are here in the market, ready to take advantage if there are convenient opportunities, but nothing that we need. this is a plan that just has been based on our internal strength. anna: given the cost pressures, does consolidation make sense for the sector? mario: insurance is an interesting industry were synergies and consolidation so far have not been visible.
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i think the challenge for the future for our selves and for the other big players in the industry is to see it and show that yes, consolidation can generate a positive benefit. yousef: where are the bright spots in this industry? you are talking about cost-cutting and price pressures, what keeps the positive? perhaps even geographies? consumers. it is a fantastic opportunity. the new technologies allow us to get in touch with the consumers. it is a wonderful world where we finally get traction in talking, and servicing, in believing in new goods and -- in delivering new goods and services to the consumers. we have to change how we do business. it is exciting times. anna: we see higher interest rates. for the moment, we will see where they go. slightly higher interest rates in the markets in terms of the yield. does that make life easier for people who need to make money
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out of their investments when we see upward pressure on yields? mario: well, yes. if that happens, we would be happy to see it. we are very cautious today on our asset choices. we see a lot of volatility and uncertainty and so, we do not take any special risk and do not take any bets on where the markets will go. if that happens, we will be most happy. yousef: the other major avenges the election of donald trump to the white house. you have seen some of the aggressive repricing across asset classes. what does the world look like hundred donald trump -- under donald trump? how do you are for that, what does it mean for europe? mario: truth is, we do not know. trump is definitely a big change, but it is a very new change. forave been in the u.s. more than 150 years. we have been under a number of american presidents and we look
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forward to the changes trump will bring, and we will face them and we will adapt. reality is, it is too early to say. anna: are we intoxicated with the idea of higher growth in the united states without focusing on the potential negatives? mario: right, i think we are exaggerating both today because we do not know that the what they are. of course, we are extremely happy to hear about infrastructure investments. this will represent for us opportunities as investors and as insurers. of infrastructure projects would excite you as investors and insurers? investors, we look for long-term investments in that we can fund. -- i meant found many it was difficult to find many of these investments in the world in the past few years. big country as
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the u.s. is willing to invest in infrastructure is definitely good news. we have long-term liabilities against which we have to put companiesassets, so are key to invest in long-term -- toa: you hope that spreads europe, that interception spend theme? mario: we have some of it and have committed to the infrastructure investments in europe and we are looking for to that and will be positive on that. yousef: briefly some thoughts. now that the u.s. election is out-of-the-way the way or semi-out of the way, looking ahead to a broad settled european elections, does the that way heavily on your shoulders that this wave of population could take over the rest of the -- populism could take over the continent? mario: there's a lot of political uncertainty. we will go into next year with a season of elections and that is something we will have to watch haveully because it can
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implications on the way europe is shaped and the way europe will behave, yes. anna: we have already seen a brexit vote. does that with stand the backs about? mario: that is very good question. --don is extremely prudent extremely fortunate in the world. we hope london stays with the role it has today and we do hope that -- will be achieved. greco, zurich insurance ceo. opec nations and russia are meeting in delhi today -- in doha today. iran and baghdad hurdles. biggest manus cranny joins us on the line, hopping across the deserts
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of the middle east in pursuit of oil barrels. is there any additional momentum that is coming out as they are gathering in delhomme? -- doha? manus: very good morning to you. [indiscernible] manus: the qatar energy minister, the lg during energy minister, they are the protagonists behind making the -- anna: i do apologize.
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i hope you can hear me. the line from the doha has been interrupted by gremlins. we cannot hear very well what you are saying. trying to track down the latest on those opec russia conversations. coming up, many budget, big excitations. u.k. chancellor philip hammond gives up next week autumn statement. our hidden -- are his hands tied over brexit? this is bloomberg. ♪
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yousef: you are looking at a live shot of new york. i love the big apple. it is 1:46 in the morning over there. looks pretty active. currently, futures set to open higher, a little over zero point percent. in the last trading session, banks were under pressure. pausing for thought, a moments for reflection. anna: let us get bloomberg
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business flash. here's juliette saly. juliette: anna, the netherlands -- 18% rise in the stock price during the year since the bank was returned to the markets in an initial public offering. the prime minister faces an election and about four months. of abno sell the rest amro overtime. u.s. authority preparing to announce as soon as today that jpmorgan will pay about $200 million to central allegations that it hires children of -- spokesman for jpmorgan, the justice department, and the sec declined to comment. itstinto has fired two of top executives. energy and mineral sponsor
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davies and valentine are leaving the matter. rio says the decision is not prejudge any external investigation of the -- preclude any external investigation of the matter. valentine is the director. they have not replied to a request for comment. the world's fastest accelerating car is set to accelerate even quicker. tesla will go from zero to 60 miles per hour in just 2.4 seconds thanks to a software enhancement that shaves off a 10th of a second, but there is a twist. when the changes are delivered while -- the owners have to figure out how to enable it. it is what is not in the industry, a easter egg that requires a specific series of gestures to unlock. that sounds too difficult for me. that is your bloomberg business flash. yousef: why is there always a story at the end i can identify
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with? yesterday was mario and today is the tesla story. 2.4 seconds! anna: mexico's central bank releases its rate decision today . it is expected to raise mexican peso has plunged in the wake of donald trump's election victory and concerns are growing that the drop will exacerbate above target inflation. yousef: for more, we are joined by justin kerrigan. yes he is, very much so. certainly as much as he has hisicly made comments about potential government's attitude towards mexico and the trade agreements and so forth and how that is impacting on the peso, which took a very, you know, negative reaction to his
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election. justin: clearly, if that continues to be the case, clearly, if he continues to push through some of these or starts to make these policies, push them through, he will face of course plenty of hurdles along the way, and then yes, he will be a major factor in policymaking and mexico. anna: and what does all ofhis mean for the future trajectory of the peso? win,ig reaction to trump's a lot still to be understood about exactly how much of the campaigning rhetoric talk will follow through on. justin: that is right, anna. there is a lot of water that has to pass under the bridge. there was a reaction to what at least his statements seemed to imply that with the u.s. would go about things. it remains to be seen whether much of that will ever get enacted. we have seen the peso in the
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past five days, for example, make a bit of a recovery. it is the second worst performing currency in emerging markets of this year, off by about 15%. you have to remember, it was already in a weaker spot going into the election, something like 6%. starting to make a little bit of recovery and that would suggest that people are looking out for a little bit more hawkishness from the central bank and other interest rate increase today, some voices saying the increase could be even larger than the 50 basis points, the consensus, and additional measures to keep the to some degree. and that would of course me instill some -- re-instill some confidence in the 20 markets. yousef: thank you. justin kerrigan. officials at the you can treasury say economic risks from brexit talks mean philip hammond
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will not be able to announce any major attacks or spending charges at the next weeks autumn statement. anna: the focus of the fiscal address to parliament is instead expected to target investment projects and setting a longer-term fiscal framework. still with us in britain in the studio, the visits in the united states and infrastructure spending. that is really welcomed by the insurance industry which once those projects, it looks as if in the u.k., we are talking about in the structure projects. something you think is a good path? erik: infrastructure is a good thing. at the u.s. needs more they and the u.k. needs more of it. borrowing costs are at an all-time low. it is not the panacea for growth that many people talk to enter first with as. spain, italy, ireland,
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portugal, and greece. he would not point to those as being stellar performers on the global economy. anna: things every covering that things are recovering. erik: but you would not characterize it as a set of countries as a leading the way. it is not a panacea. every house in japan has its own airport. does that help its growth prospects, not necessarily. yousef: there has been a theme that the longer this brexit mess drags on, the more difficult it will be for the u.k. to get a good deal. it's position will dramatically weaken the more they kick the can down the road. is that something you subscribe to? erik: i don't necessarily see the longer it goes on, the worst a deal. we are in a position where they want free access to the market without terrorists. tariffs.t
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we will wind up somewhere in the middle depending on the strength of our negotiating hand and the quality of our negotiators. anna: you know a thing or two about trying to forecast. i have got here a chart which compares the opr's march forecast. this is for the budget deficit in the united kingdom and how it is supposed to come down from negative to surplus in the years ahead. these are the march forecasts in blue, next to the latest forecasts which suggest we are going to see 100 billion pounds of a whole, shortfall over the next five years. is that what we are going to hear from the autumn statement next week when they give us there -- erik: growth is likely to be weaker thanks to the uncertainty in brexit and what that does for
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investment in the uk's investment that will be a drag on growth until we know with more clarity. on the other side, quite likely they will do some more investment or governments invest and or if the structure spending or something that would push up the spending, that the tax bases want to be weaker than we had otherwise thought. anna: howdy you forecast in this environment without clarity as to where the brexit conversation goes? this is a subject that the treasury committee -- the question to members of the bank of england, how on earth are you making your forecasts? how will the abr make it forecast? erik: that is uncertainty. we do not know what our trading relationships are going to be with europe, the rest of the world, and we will not know that for several years at least because of that uncertainty. one thing that we can be fairly clear about is that investors will invest less than they otherwise would have because of the uncertainty. yousef: what does mark carney in
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the boe do with all of this? they are not going to change policy anytime soon terms of raising rates? way out there. erik: we have a precedent here se marketjapan, who expectations are coming down and down. it is completely flat. a markets now expect to the bank of japan will never raise interest rates. after 50 years. the uk's getting not far off that outlook, too, and for the same reasons. it is all about debt. it does not change that underlying story. we are in a very low rate environment now and for a long time. anna: some things, tom has not changed in the view of eric written. -- erik britton. up next on the program, it is good to talk. there was a flurry of fed speak overnight.
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we look ahead to the big post trump's testimony. it will be the first time we have heard from the fed chair in the wake of trump's election victory. lots of details come from that no doubt. this is bloomberg. ♪
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yousef: japan's prime minister prepares to become the first global leader to meet the u.s. president-elect since his victory. -- unleashes its first bond buying operations [indiscernible] and united we stand. a jointd merkel make plea for a socially responsible economy and free trade. u.s. presidents tour takes them to berlin. president pasteur takes him
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to berlin. bloomberg daybreak. anna: we are getting some numbers on the carpet here in europe. european october car sales millionby 0.3% to 1.14 vehicles. volkswagen losing market share in europe for the 14th straight month since the machines -- a missions cheating scandal erupted area competitors trying to figure advantage of the woes at the german automaker. around a bit of context that number for the industry, industrywide european 7.03%.ations, burdened by one less selling day, that is one of the factors to bear in mind when looking at these numbers. europe's biggest carmaker as
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made strides in emerging from the crisis. volkswagen still facing criminal investigation and hundreds of investor lawsuits after admitting to rigging cars to cheat on a missions tests. --emissions tests. bit of taking on little sentiment we are getting from asia and that consolidation saved. positive msci was a one. mildl positive handover coming into europe. we caught up with the bojy that set up operations to purchase unlimited bonds trying to control that yield curve in japan. we know a little bit more about their tolerances and we said -- we've seen the dollar-yen stalling in its movement as a
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result of the policy. we are at -- it is moving again. that measure of it down 1%. the chinese, the shanghai prer price moves so interesting overnight. decreasing from a two-year high, falling as much as 2.2% early in the shanghai session. yousef: brent crude is $46. the build in u.s. inventories are not getting through. it does not speak very well in terms of the long term supply. ongoing talks end of the head of the november 20 meeting in vienna. year treasury .ields, two-putted -- 2.2% anna: a lot of focus because of the big bond really we have seen since trump's election victory. the yield gap, u.s. of a journey -- over germany is at its widest
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since 1989. when you are comparing and contrasting these numbers, 2.2% plays 20.3%. yousef: let's get you your bloomberg first word news. key member of donald trump's teen said the administration is considering how to fix roads and bridges in a way that hillary clinton plotted in the campaign. clinton-- hillary planned it in the campaign. >> the very big focus and regulatory changes. looking at infrastructure. there is a lot of things. economic priorities are clearly [no audio] regulatory trade and infrastructure. writing a joint article in
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the german weekly, the two leaders say, simply put, we are stronger when we work together. we are standing at the crossroads. the future is already here and a return to the world before globalization will not happen. yousef: the economy grew at its fastest pace in three years. the rise underscores the nation's resilience to global risks as investment surged and consumers spent more. economists surveyed think the country's gdp will expand, ranking it among the fastest growing economies in the world. a [indiscernible] reversing the long-standing policy that some shareholdings are forever. sharesve owned citi
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since 1991. owned 5% of twitter valued around $1 billion. are invested in twitter in many and companies. it is our interest to acquire [indiscernible] from any company. opec nations and russia are meeting in doha today. ministers will not be there from iraq and iran. the campaign is on a campaign to agree by the end of this month. to run in baghdad posed the biggest hurdles to that deal. opec has struggled to finalize an agreement reached in algiers in september and 18 hours of
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talks last weekend in vienna did not bring any further progress to that divide. anna: global news 24 hours a day powered by more than 26 journalists and analysts in more than 120 countries. this is bloomberg. let's check in on market action and asia. juliette: we have seen the shanghai composite turn positive on the close up five point one of 1% after declining earlier in trade for most of the trade. we have seen that pick up on the close by when one of 1%. the shanghai composite is in bull market territory. in hong kong in late trade, some coming through. down .4 of 1%. the banking plans have been rising over the st couple of sessions and have been sold out. tencent falling despite the fact revenue third-quarter was quite strong. you have seen a lot of buying casino stocks.
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third-quarter gdp struggling expected. the nikkei closed flat but the nikkei and the topics still holding on to those nine-month highs but not a lot of movement coming through in that equities market today. australia closed higher by .201%. we had employment data released their today saying the unemployment rate hold on to 5.6%. looking at the offshore the pbo, this is after seat weekend the yuan. -- weakened the yuan. anna: janet yellen gives a much-anticipated congressional testimony and is likely to be quizzed on how the fiscal policies of incoming president onald trump could affect the [inaudible]
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for rate increases. big moves in financial markets since the election merit toching but it is too soon evaluate the outcome. the secret -- the bank should not [indiscernible] yousef: he had this to say on the current policy outlook. >> the economy two weeks ago is still the economy today. the markets reacted differently but the fundamental real economy did not change that dramatically in two weeks. we have to take into account what potential changes would happen in policy that would affect our behavior. yousef: bloomberg will speak hkari atry -- neel kas noon. appear at 3 will p.m. london time.
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anna:the interview with james bullard will be five minutes past noon u.k. time. let's welcome our guest. he is in town and joins us here in london. great to see you this morning. we ran through a whole host of opinions from the fed and a lot to watch on the fed story at the moment. the truth is we do not really know very much about what president-elect trump will do in terms of fiscal policy. we know a bit about what he intends, what he actually manages to get support for on capitol hill is another question. guest: he has moved the bond market away from sentiment. the -- there is the borrowing of is noty u.s. households going on. people worried about disco policy, there has not been a major move in housing stocks which would be the primary way that households borrow money, create more money in the money
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supply and it goes to work in the economy. there were certain industries, financials and health care. what could go on in the next five years regarded as regards this of hillary or donald, it looks very good. forward tore looking a tips auction in the u.s. a no-brainer to buy into that. that is going to be a verdict as to whether the reflation train is on. cole: people are talking about inflation, the idea of real growth is missing. a potent cocktail would not only be inflation that is present which is now the conversation but real growth that kicks in as well. that cocktail could kill the bond market which in this initial move has been tumultuous. the spread between the europe -- german yield and the u.s. yield is wide. it is unlikely the largest content in the world will pay a higher rate and others will not have to follow suit just like the regulations on banks, etc. anna: that is why we see the boj active in the market today.
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because of the way that donald trump selection victory has made on markets not just in the u.s.. is one theme, you do not think that will be enough to materially move u.s. growth. is way biggeromy tied to consumers. taxave had 30% corporate rates, other places are at 15. has that stopped companies? not at all. this arbitrage that goes on is going to be the free market deciding what they want to do with their money and time. yousef: we're waiting for more details from -- on policy from donald trump and his incoming administration. how do investors position themselves to make sure they come out on the right side of this trade? cole: the two things i have been excited about this year prior to the election were tech, momentum
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growth, and the safety trade. why not lengthen your duration in bond surrogates and long-duration tech plays? they have woken up to a change in sentiment. just in the last week it has been a market change. companies are dumping nicely during -- since election and wound -- bond surrogates are getting pounded -- bond pound market market. investors might wake up to the -- in the next five years and the u.s. stock market, that could be to mulches because half of the revenue goes on from abroad. anna: you are a big fan of stockpicking. it is a tough time to be a picker. you think stockpicking is warranted because of the threats --the text that her and bond tech sector and bond property trades. multiple on17 times
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the s&p 500. it is not outlandish. it is more expensive than history. small caps are more expensive and they snapped a 10 plus percent in the week following the election. i highlight that because, do you want to pay 200 times earnings for the biggest market pet -- cap in the s&p 500 question mark you could put all the homebuilders inside the market cap. what if things go on that benefit certain industries because their economics are good, not because of political reasons and what if the index does not own enough? anna: which sectors are you buying? own a lot of discretionary, food trouble, a lotl -- travel channel, of these millennials have not bought houses. the financials are good, home and mortgage originations. it is not about rates. at the same time it comes down to who will be underwriting mortgages that unlocks the inflation, the growth, the
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incomes, etc. yousef: there is a scene among investors the last week that trump will tear up regulation, he will make it easier for banks to make more money. is that something you have penciled in as well? cole: overnight, no. this is not a change in u.s. politics that will be catastrophic. it will marginally go to businesses and say what you need to do to grow your business because the economics was the most important equation in the u.s. election. that is what people want so they do going to look for ways to it. fox broadcasting two days after the election filed a suit with the sec to go above a 40% restriction and owning their affiliates across the united states. why? because if google can have 65% market share, why can't a broadcasting station on more than 40% of the national market? it is the difference in what was a political regime prior versus what is the regime after. anna: thank you for coming on.
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yousef: we asked the bank of cyprus ceo why he is listing in london. we will get you the full story. this is bloomberg. ♪
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yousef: it is 7:19 a.m. in the morning. there are a bunch of clouds. it looks like it is going to rain. it looks like it is called. -- cold. cyprus isbank of applying for a standard listing on the london exchange. we are joined by the bank's ceo. great to have you on the program. thank you for joining us. changing your listing, removing
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yourself from the athens stock exchange coming instead to london. is it a vote of confidence? .uest: unquestionably we needed to dissociate with athens and we no longer have business interests there. it is important that cyprus which is in its seventh consecutive growth quarter, needs to be positioned as an investment opportunity separate to the historic association with greece. london is where the providers lease the sources and this is about definitely a vote of confidence. i think the conversation about brexit gets confused, we need to discuss london him of the city, what it is and what it does. we are very positive on the city. yousef: is it going to be a standard or premium listing and you need to improve your fundamentals ahead of that? is to bee objective is
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premium listed in time. to do thestep is shareholder actions to list onto the london stock exchange while we are and repair. we have fundamentals of sufficient to do the first move which is a first moved to london. the timing is uncertain as we fix more of the fundamentals. we would move toward a pre-existing and eventually hopefully seek index inclusion. are looking at this new opportunity to invest in this listing of your bank, they might look at the nonperforming exposures and compare that across the sector and then, do i want to get involved? what would you say to investors? guest: i would say you have to look at the track record of what we have been doing over the last thousand days. we have for her the liability side of the balance sheet so we started with emergency funding at our bank, of 11.4 billion which is 70% of gdp. the equivalent of having 700 building -- 700 billion.
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we paid that, there is only 800 million left. that side of the balance sheet is looking good. the loans to deposit ratio is 102% down from 150. that liability side is fixed. on the nonperforming site, it is the six performing quarter. we made serious progress. the size from the beginning was i watering lehigh and even with the repair, the size remains i watering lehigh -- eye-water ingly high. yousef: if you look at greece, cyprus, thereand is a close relationship. they know how strongly that connection is. is that you turning a page away from greece and the economic fallout they're saying, ok, this is all need to get from here, we will leave you to your own, we will see better fortunes elsewhere.
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guest: when the bank was resolved in march 2013 we shared our exposures in our branch network in greece. our purpose of being on the athens stock exchange basically went away. i do not believe there is a business future in the medium term in greece for us. we have limited exposure in greece now and it is a deliberate turn away from greece. the culture and linguistic connections remain there. they are very culturally compatible. the law in cyprus is much more in common with brick -- with britain. the business of preparing the economy has been more seriously dealt with by the government. cyprus is, in my view, a very different economy to greece and we need to disassociate with greece. anna: what is your outlook for risk with you -- reunification talks. does that make a difference to the business prospects? guest: if presents another 500,000 people for us to bank with.
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the economics are fundamentally different. the politics depending on the day you discuss look good or less good, there is definitely an opportunity for you the bank has a number of properties in the north which are on the balance sheet of zero. there is a possibility it will present some value. there are a lot of good things but we would approach it positively. yousef: what is the catalyst for increasing your earnings and revenue? guest: we have to keep that focus on nonperforming loans. we sold much -- most of really existential threats to the banks we had a lot of what i would describe as managerial tourism orbit -- adventures in two places we should not have been in. we sold our russian and ukrainian egg and shut the serbian exposures. yousef: would you consider expanding back into new markets? guest: the lessons i have learned in 10 years of bank
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restructuring is that you should do what you are good at. we had a 40% share in cyprus, we bank 83% of all cypriots. that is our core market, we have to make sure that works. we serve in a modest bank in the 1974 since 19 -- the emigrant trinity, there is an opportunity to serve small businesses and we will pursue those. that is a prong -- two prong strategy. do something in the u.k. for business. ona: let's get your thoughts what this means to the global economy. we have seen donald trump being elected. do you expect a role bank of banking regulation in the u.s. as a result? does that have implications that -- for the bank regulation generally? guest: it is hard to tell. there are more opinions in our -- then there are people what will happen with the trump presidency. there is a uestion mark over
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continued globalization and the continued march toward more capitalist liquidity. we will have to address it not just because of trump's presidency but because the world is beginning to become overregulated. yousef: the italy elections and across the continent, you see those moving in the same direction away from globalization and free trade and more toward intrinsic national policy? guest: there is no question that nationalism and the vote for change is gathering momentum across democracies. that present significant dangers for leaders. markets reactseen strongly to trump. putting competent people into important jobs is the key. anna: thank you for joining us. from the bank of cyprus. yousef: that is all we have for
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daybreak europe. bloomberg. ♪
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welcome to bloomberg markets. alongside matt miller. what are we watching? let's talk about curve control. its bondnleashing buying operation but is the central bank really in the driving seat or is it the markets that are setting the pace? the dollar index holds above 100 but is the trump rally running out of steam?


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