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tv   Bloomberg Daybreak Europe  Bloomberg  November 28, 2017 1:00am-2:30am EST

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fromtte: good morning bloomberg's european headquarters, i am and that edwards. manus: this is "bloomberg daybreak: europe." >> speaking with the status quo, jerome powell signals broad support for how the fed operates and guides the economy. >> the political crisis. the deputy prime minister faces a no-confidence vote -- vote today that could pull down the minority government for a -- further complicating the brexit negotiations. each will tell you how affects the fed in the next hour. and plans to cut additional
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jobs. ♪ anna: good morning everyone. this is "bloomberg daybreak: europe." let us get straight over to the market action in the asia-pacific. energy story.nd energy and mining stocks are feeling the brunt of the selling in the asian session. there are questions about the move over 4% or the 10 year chinese yields if that will influence the stock markets negatively there. second day we are seeing drops away from the highs. doubts lingering in the markets as to whether there were -- as
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to whether there is really a conviction. that looms large on the agenda for thursday. we are getting comments from the saudi oil minister saying there are no differences in opec. is there asndex well. pretty flat right now. we did see a little rally in the yen earlier. that perhapsjapan the north koreans are preparing a missile launch and that increased the appetites for the risk havens earlier. we have the jerome powell testimony. looking at the markets in the u.s. friday's terms of shopping, cyber monday. we talked about numbers like $5 billion. but the daily profit makes the point that the market is selling -- is lacking. s&pave put together the
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retail etf. the blue line is flat between friday and monday. what is that saying? is it all, already in the price. tocks need to outperform justify these lofty valuations. the equity market as you can see -- where do we go to next? is growth as good as it gets? 4%dman sachs figuring globally is as good as we get. we could be entering a trickier period in the market. whether alltion of of the stars online -- a line and whether the momentum matches the consumer side as well as the -- side. anna: i did not spend a penny.
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open declaration. not on cyber monday. we are going to be having some great conversations. we will talk about the u.k. economy and profitability. cablel be joined by vince at 7:00 u.k. tech. donald trump's nominee to head the federal reserve has said he does not plan to shake up the central bank. in a statement ahead of his confirmation hearing, jerome powell gave broad support for how the fed guides the economy. with thes him in line trajectory of the monetary policy set out for janet yellen. we will bring you all of the breaking news on that confirmation hearing. that will be at 3:00 p.m. u.k. 10. radio signalsived suggesting that north korea could be preparing for a missile launch. citing multiple government
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officials, the message is did not specify the type of possible missile. it also said any radio signals could be by winter training by north korea's military. japan's governor has said asian economies are more resilient against economic shock has contributed to global growth. he was speaking at an event to mark the 20th anniversary of the asian financial crisis. >> today, the capitalization of asian local bond markets is equivalent to 3.7 julianne dollars, more than 100 times bigger than before the crisis. we have certainly made progress. become mores have resilient to shocks and the financial sector has developed significantly. juliette: in ireland, the controversy engulfing the government which threatens
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brexit talks have escalated. minister, prime frances fitzgerald, faces a --n-confident non- nonconfidence vote that code pulled down -- that could pull down the minority government. a mexican official has thrown his hat into the ring to become a presidential candidate. this came just hours after he quit as financial minister. gonzales will step down as ceo -- in egypt, they will begin seeking proposals from banks to begin an international bond sale. minister spoke exclusively to bloomberg.
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we might add a new -- to meet our needs as well. juliette: global news 24 hours a day powered by our 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . another session in asia. have japan's nikkei index closing relatively flat but reversing some of the losses from earlier in the session. the hang seng is up by 0.6%. concerns that we could see more regulatory concerns in terms of inflows into that market. the kospi reverting after the selloff yesterday thanks to a rebound in consumer stocks and particularly samsung.
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let us have a look at some of the stocks we have been watching. japan's manufacturing crisis has worsened. a manufacturing company said it did falsify some information. down 5.5%. an insurance was one of the worst performers. -- that is the story you are seeing in the metal space. it is coming through saying chinese policy is affecting short-term demand. now, to our top story. has said that he expects the central bank to continue raising its benchmark interest rates.
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deliver before the banking committee. tosays that the goal is maintain strong jobs markets and gradual inflation. anna: he says we expect interest rates to rise somewhat further. let us bring in jodie snyder. good to have you with us on the program. i think the theme is going to be that he is not going to wrap -- rock the boat. he will offer a defense of the institution and will the out to keep things going the way they are. really supporting the job market a gradually rising upward trend in inflation. very much like his predecessor, janet yellen. he is expected to not offer much
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of a different strategy then stated in his remarks and those he has made as a governor. terms of the latest hurdles in the tax bill, this is like herding cats. one day they have the numbers and the next day they are off. there appears to be a number of stumbling blocks. what are the major changes to the bill? where are we? goodrding cats is a analogy. every time it seems they have someone in line, they have another person to worry about. what is interesting about this bill is that they can afford to lose only two republican votes. they are -- there are expected to be no democrats voting for the bill.
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the cannot lose too many votes and the latest is that we have ron johnson of wisconsin and bob corker of tennessee, both of whom are on the budget committee, saying they may not vote for it to come out of committee if changes are not made. they have different concerns. people likeoining senator langford saying he worries about its affect on the deficit. that it could add $1.4 trillion to the deficit over 10 years. while senator johnson is concerned that corporations passit much more than through businesses like partnerships and llcs. different concerns and that makes it tricky. how do you create a bill that deals with these concerns when you cannot afford to lose more than two votes. anna: thank you so much. derek halpenny, european head of
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global markets research from mufg joins us now. we will talk about the fed and the confirmation hearings of jerome powell. defending the status quo. not shaking things up. that seems to be the vibe from powell. even on things where we thought he would shake things up like regulation. did you expect no change? derek: broadly speaking we should expect no change. as we know the markets will read into any kind of slight alteration and there is always the risk that you might have something like that. it would not surprise me if there is some acknowledgment, for example, the inflation debate which has been intensifying in the fmoc as illustrated i the minutes released last week. there could be some
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acknowledgment that the fmoc is internally debasing more intensely. is down tonot it transitory factors or if it is more structural. the fmoc does seem to be shifting. he may be pushed on that in terms of what is happening. there may be some acknowledgment and the markets might read more into that if we do get some kind of hints on that. manus: you are a good guest. let us look at this chart. inflation protected wants. they are outperforming their peers. the bloomberg aggregate in the blue. and you have the out performers. the market -- they may not believe the number of hikes, but brought -- but bond triggers are beginning to protect themselves. derek: looking at the five-year, five-year, we are broadly stable. beginning to take a little higher. -- beginning to tick a little
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higher. what we are in at the moment i would say is near unprecedented. like your bloomberg reporter just mentioned this upward slope in underlying inflation. that is not what we are getting at the moment. in the last tightening cycle the between 2004 and 2007, that is what we had and the fed was hiking at each meeting. the core pce inflation has yeared over most of this and that is extremely unusual at this point in the cycle. it is justified to have this debate and be considering that there is something more structural. anna: you think jerome powell will stick with the dots then? to suggest that the markets are not on the same page as the fed.
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do you think he will stick with that? i think it is going to change. i think the dots from three will become to whether it is december or next year when jerome powell becomes chair. i think there is justification for doing that. if we look again at the underlying inflation picture, if you look at core cpi and shelter, we were at 0.5% two months ago. the lowest rate since 2003. in the pce inflation which is what the fed targets, it is a much smaller component. and a greater reflection. manus: if the inflation picture does not stack up, where do you see the growth? dudley is saying that we need tax reform but we do not need fiscal stimulus from an economic perspective. do you concur with that? that thewould concur
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tax cuts and the stimulus coming , for it to come eight or nine years into the current economic cycle is very unusual. the assumption that u.s. corporates are going to take this extra money and plow it into wages or business investments when there is deep skepticism over the valuations of u.s. equities and the maturity of the business cycle -- anna: are you going to say buybacks? derek: the s&p is at a record high. expectations are positive. and an element of that is the to 20ate tax cut from 35% percent. on the bond market, you see a flattening yield curve. is message from investors that the tax cut is coming but
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the conclusion is that we do not a ring to be much macro economic impact from that is right. going back to what corporate behavior will be in using the money. equity holders through dividend payments will be the main channel through which we get this into the real economy. manus: do you concur that the that was the view that we had yesterday -- that it will get flat? the yield message of curve is said, fmoc, slow down and i think they well. thes: derek halpenny is global head of -- the european head of global markets research at mf -- at mufg. i am on radio at 8:00. they are talking uber next and softbank. go radio. anna: every time you are on
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radio, you tell people to turn off the tv. how has the region's economy recovered? and the irish crisis is deepening. the deputy prime minister faces a no-confidence vote today. we discussed what that means where brexit negotiations. we discuss that next and we are live from dublin. this is bloomberg. ♪
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♪ it is singapore, it is 3:21 p.m. a great day. markets are skittish regarding north korea. could there be another missile attack? this is tilting investors'
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sentiment to the dying side. we are pretty much near record. let us get to juliette saly standing by in singapore. societe generale expects to book charges in the fourth quarter. the latest charges and a plan to cut additional jobs in france. 900 job cuts may take place. resulting in a charge of about 400 million euros. the positions of the bank has already said it would eliminate. -- softbank another and a group of investors are trying to buy a stake in uber at a sizable discount. includinglogy giant dragon near investment group and general atlantic are offering to pay more than $6 billion for a stake that would value the
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company at $48 billion. and over spokesman declined to comment. that is your bloomberg business flash. in a speech marking the 20th anniversary since the asian financial crisis, the bank of said- the bank of japan asia will continue to be the largest contributor to global growth. the economies have become more resilient to shocks in the financial sector has developed significantly. to the next 20d years, asia's economy will continue to be at the core of world economic growth and we will experience harder integration. along with such development, it moretural to seek developed and integrated regional financial markets. we can anticipate that 20 years from now asia's financial markets will have developed to
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as other efficient major financial centers in the world. halpenny, european head of global markets research mufg is still with us. he went on to talk about the balance sheet of japan. he said that the boj balance sheet is much larger than the .cb's and the fed's why is he making these comparative comments? beginning markets are to consider that and the governor in a speech in switzerland brought up this reference of what is called the reversal rate. the point at which the interest rate gets to a level below which it becomes counterproductive in protecting stimulus to the real economy. he mentioned that as a point at which we we -- at which we may
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have got to in japan. ofre is some consideration alterations of the real yield control. jgbgiven the limits of purchases, that they could move the target from 0% at the 10 year to something around the five-year. that would lead the yield curve to steepen which would help the banking sector which is weighed down by negative rates. some breaking news coming through from scotia bank. they are set to offer $2.2 for a stake in bba. -- in bbva chile. we are going to focus on the u.k. banking sector. derek, let us come back to you
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and speak to what is happening in japan. volatility awaiting. heading -- whether yen plus north korea equals 110. where are we on dollar-yen, we are at 111. how much stronger does it get? derek: knee-jerk if something were to kickoff. you would expect the yen to strengthen. but not significantly. i have tracked the 24 hour move in dollar yen after a missile event and it is not that consistent. three have episodes, seen the yen strength and. we are in a scenario where the fed has in raising rates for a
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prolonged period of time but you are still talking about a nominal yield pickup. manus: we will have to draw a line under the asian discussion. we are going to talk about the european banks and the stress test, next. this is bloomberg. ♪ retail.
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choose by the gig or unlimited. and ask how to get a $200 prepaid card when you buy any new samsung device with xfinity mobile. a new kind of network designed to save you money. click, call or visit today. ♪ anna: this is "bloomberg daybreak: europe." this is a shot of tokyo for you. we were just discussing the yen with derek halpenny from mufg. let us check out the latest in the market action overnight. political tension you are g oning about weighin asian markets on concerns that north korea a be preparing for the missile test. you can see this great function here showing you the equity markets across asia.
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the shanghai composite is down 0.4%. 0.8hang seng is down percent. the cost be shaking off the concern and is up 0.3%. unchanged on the new card -- unchanged on the nikkei. the losses in chinese equities have been weighing on metals. ther six days of gains on london metal exchange come longest run in quite some time, yesterday.el decline a second day of declines today across the metals. copper is holding the losses. even though we are seeing inventories shrink. the kleins in copper. down more than 1% in today's session. if we take a look at what is happening with dollar yen, geopolitical concerns. some strengthening in the yen but it has paired the gains because we saw some dollar strength after -- off the bank of a tweet from donald trump. cloudidating within that
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that you can see from these technicals. we have to mention bitcoin. we are waiting for it to hit 10k. $9,869.t this chart is showing volatility. with all of the moves in the past few days, bitcoins all agility has pushed to 100%. if you exchange that to euro-dollar volatility, which is lower than 7%, you get a sense of how volatile bitcoin is. manus: a couple of lines coming through from the societe generale ceo. a fourth quarter charge. which he hasticle given think there are no european acquisitions in the near term. and no domestic m&a before cross-border. that was from societe generale.
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taking 900 job cuts. yesterday, ubs was looking over the bond -- the bones of commerce thing. let us talk about the irish deputy prime minister who is facing a no-confidence vote. this could pull down the minority government. electionre a snap which could cause complications for theresa may's breakthrough in the brexit talks in the coming days. may's hopes hinge on northern ireland. let us get to dublin where we have our bureau chief. good to talk to you. the past 24 hours, it sounds like there is more news regarding france's for terrell. -- frances fitzgerald. yesterday, it
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looked like we were heading to a compromise that would avoid an election. around 7:00, the justice ministry released emails showing the justice minister probably knew more about the strategy than we originally thought. as a grenade in the efforts to avoid an election. pressureder intense and any talk about a compromise has gone away. that leads me to the next question about how today will unfold. will she fall on her own sword or will we get to this evening, no movement and have a vote? >> we know the prime minister will meet with the opposition again for a final time this morning to try to figure things out. we expect the meeting to happen in the morning. the prime minister is due in
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parliament around 2:00. and then we move onto the vote to if it happens around 8:00. of events. sequence it is probably 50-50 at this point. she is under intense pressure to resign. it seems inevitable but the noise we are hearing is that they still stand by her. andre in a game of chicken no one is sure how it will end. it could and very badly. manus: 12 hours to run and fitzgerald could step down which could help the prime minister. i watched him on friday night on his national broadcast. they made the point that he would still have a mandate for the irish people and the brexit negotiation even if he called the worst case scenario, an election. what he really have the mandate to carry forward ireland's view in the negotiations? is he will obvious
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effectively be a lame duck. the chances of him getting a concession are quite slim. though he should not change because he is in an elected position. it will have an impact. factor foruge frances fitzgerald. some are saying this is the most important time for ireland and surely one person should not hurt ireland's national interest regarding these talks. ont is a factor weighing frances fitzgerald. but she says she is not going anywhere at this point. anna: thank you for the update. our dublin bureau chief.
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and we have an update from the irish capital. let us bring back into the conversation derek halpenny. the significance of this to you it might haveause the ability to affect the brexit negotiation? derek: the implications of this. the key question is does leo still have the power of the veto. i would say, yes he does. he still has that authority. even as a caretaker. he may be a lame duck but when he demands what he wants, he still has that power and authority. , i amthink in that sense not sure a huge amount has changed. they are question marks are certainly if we are going into an election in december.
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but, he will no doubt be stressing the fact that he has that ability. and therefore will still be demanding more clarity on the border issue. manus: by the way, not to get bogged down in irish history, but, having come from northern ireland, one can understand the irish perspective that they wanted in writing. we have seen many promises and perhaps not much delivery. let us go to the optimistic side. if we got a deal on the 14th and 15th of december. and let us say the world looks better for the u.k. -- the risk from for equity markets is that there is a material, violet rotation out of u.k. stocks. sterling goes big. things move along. i am living in nirvana. anna: you are a believer. some sort of deal. manus: is that my market risk?
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stocks really do rotate? obviously, you have the opposite in terms of the big evaluation posts and that lifted equities. you would have to say at some marginal aspect, if there was a reversal the other way, but you would have to have a pretty big move. at 134 once again. derek: i think we could be higher by the end of the year if this moves the correct way. on the assumption that we are going to continue to make progress and get to rate hikes from the bank of england. that scenario is positive from a macro perspective. there may be some rotation out of certain stocks in the ftse but ultimately, if that is all positive in terms of the implications of transition and the removal of the cliff edge
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risk, the net positive is much greater than the negative for equities. manus: and as goes head of equities said the best case scenario is brexit is not an accident waiting to happen. it is not necessarily the worst case scenario. talking about variety of outcome. to the downside come if we do not get any kind of deal, what does the worst case look like from the fx perspective? derek: there may be a scenario where -- we are not there yet but let us keep going. q1, that is when they may start to implement policies that would show the outcome? markets1 or q2 -- the will get nervous. of may 19 ise
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becoming close from the market perspective. investors will try to cover exposure. the will put pressure on system. if that is not resolved, that is a terrible situation economically. i think you could start to see recessionary type economic conditions if the cliff edge risk of march 2019 is still lingering. manus: today, we get stress test very briefly. -- it ishe performance up 45%. not including a cliff edge from brexit. how do u.k. banks look to you? derek: looking at what the markets are expecting for today, there is a good chance that rbs will pass. in that sense, i
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think there has been some considerable improvement in that will open the prospect of rbs paying dividends and that helps the government. anna: which has been announced in the budget. derek: the bank of england will not be considering that. they will be looking at the details. there is evidence to suggest there is improvement on the potential pass. anna: thank you very much, derek halpenny. you will stay with us. will join us at 7:00 a.m. u.k. 10. at 8:30 a.m., the confederation of british industry's, carolyn, will join the libertine for an exclusive interview. manus: softbank and a group of purchase are trying to a stake in uber at a major discount. there is the punchline. they are offering to spend more
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than $6 billion for the stock atch would value the company $40 billion, 30% lower than its most recent evaluation. what a punch up if it is true? bloomberg's managing editor for technology in asia joins us now from asia. peter, your take on this? this has opportunism written all over this. it is an opportunity, isn't it? couple oftbank and a other investors are coming in and looking for quite a discount. were going tohey ask for a discount from the last fundraising that uber did run the $69 billion figure that we talked about. but the 30% discount is substantial. they are putting this offer on the table. the need existing investors to accept that your nation. they need another for them to get to 14% of the stock. they do not want a substantial
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piece of the company. they are trying to participate in the company's management going forward. that would trigger a few management changes around the board and what we need to see in the next 20 or so days is whether investors will accept this deep of a discount. anna: what are the prospects that existing shareholders will it --will agree to sell at this price? there are a number of issues including its operation here in london and even some scandals. peter: it has been a very difficult year in 2017 for uber. the cofounder and former ceo stepped down under pressure from investors. troubles in london in particular. they just disclosed there was a hack that exposed the personal data of about 57 million people
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including drivers and customers. the company has had its challenges and existing investors want to have the new capital coming in. many want to cash out. it could be much higher than what they originally put their money in. there is a prospect for them to accept this level despite the steep discount. it is unclear if they will get enough. certain people have decided they will not sell at this price while others need to decide over the next few weeks. manus: let us see if they get the deal of the century and take advantage of that opportunity. peter in tokyo, thank you. if you are a bloomberg customer, you can watch us on the tv function. you can also influence of the conversation. anna: coming up on the program, we will take a look at what the oil price is doing a head of this week's opec meeting. we are live in dubai for that update. and the u.k. banking sector --
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they will get their grades after being put through the toughest round of tests yet. we will have those details. this is bloomberg. ♪
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♪ the futures will go higher according to stanley morgan. another 6% is on the cards, potentially in the first half of 2018. juliette saly has your business flash. juliette: societe generale expects to book extensive charges in the fourth quarter.
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and a plan to cut additional jobs in france. as many as 900 job cuts made take place. resulting in a charge of about 100 million euros. 2500 50on top of the positions the bank has already said it will eliminate. it will take another expensive related to three tax changes. softbank and a group of investors is trying to purchase a stake in uber at a sizable discount. the technology giant and including general atlantic are offering to pay more than $6 billion for a stake that would value the ridesharing company at $6 billion. that is your bloomberg business flash. thank you. let us talk about the oil market. oil extended its decline from
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the highest level in more than two years ahead of opec's meeting with the allies. them by 2%. the meeting is this week to discuss an extension to output cuts. it is creating the risk of a slide in prices. 22.5%.up by just over nowef gamal el-din joins us from the 12th annual form. event find this commodity is a red carpet? what is the vibe there? strategicspite the location, the saudi minister with the past us energy minister from the united arab emirates. earlier, they said there were no differences within opec. they have been pushing for an extension. the variable that remains
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unanswered is how long the extension will be. the markets appeared to be positioning for a nine-month extension. there is ahs says lot of aggressive positioning around that scenario. given how good the overall , youmstances has been could see a a lot of uncertainty creep up and play to the downside of oil prices. manus: thank you very much. you have got a busy week coming up ahead. derek halpenny is the european head of global markets research at mufg and he is still with us. it is all baking the cake. goldman sachs has an almost passive understanding of the market. and that it looks like opec will agree. they say it is too soon to talk about the duration of the cuts.
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how do you look at all of this at the moment? terms of our oil analyst in dubai, the message we are giving clients is that the risk at this point is more skewed to the downside. consensus isng that we will get a nine-month extension. isre is talk that russia dillydallying and wondering why we have to give the commitment at the end of november when we are still through to the end of march. if there is any alteration, it will be more about the fact that thaton't have to give defensive, nine-month guarantee. in that sense, the risk is that we could get a correction lower. anna: one analyst is suggesting that the big problem is the exit strategy. that may go to your point. getting themselves out of what they are doing right now might prove difficult.
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partly out of their hands because we have seen the risk go up in the u.s. as prices have gone up. the inventory adjustment is going in the right direction. as has just been mentioned. we are nearly at the five-year average. they need to be looking forward to start considering how do we get out of this and what is the best way in which to do that. perhaps, something in the communication this we could be an indication of that. yesterday, we spent a lot of time talking about bitcoin. it was the lead story. the purpose -- the personification of the new pitch. it brings up 50% in the space of 24 hours, is that good? derek: no, it is perhaps something you should steer clear of. if you look at a chart of
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bitcoin, you have to say that there is a potential bubble there. how and when it corrects, i don't know. choosing your words buried carefully. i have a chart that puts this in context. bitcoin outshining gold. to allcompare bitcoin kinds of things including its own history and it still looks impressive. ps?you smell tuli about 17th century dutch problems and how this looks like one. derek: absolutely. it is still a very isolated and small part of the market that there are elements that suggest it is filtering through and becoming ingrained. these funds being set up to link to chipmakers that are very much exposed to the extensive work required for this mining in bitcoins.
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there are elements and opportunities being created to try to take advantage of this indirectly. the more of that that takes place, and of course we had the futures as well. the more of that takes place, the more the regulators will become concerned about the potential that it could become a broader financial market impact. manus: is there any way the bitcoin could be a systemic risk? any risks associated with that? derek: potentially. if we continue to build as we have in recent months, the regulators will become more concerned. even nonfinancial publications are running with that. derek halpenny, the european head of global markets research for mufg.
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under pressure, the bank of england publishes its toughest round of the stress test yet. a lot of exposure -- a lot of dividends and the u.k. consumer. we will talk about all of that when we come back. this is bloomberg. ♪
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manus: good morning from bloomberg's new european headquarters in the city of london. anna: this is "bloomberg daybreak: europe" and these are the top stories. manus: jerome powell signals support for how the fed operates, regulates and guides the economy. frances fitzgerald faces a vote created could pull down the minority government and complicate brexit negotiations. manus: vote created could pull down the minority u.k. banks are bracing for their grades in the toughest round of tests yet. we will tie you how they each fared. toa: society general expects
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[inaudible] and plans to cut additional jobs. manus: it is daybreak europe, you are welcome to the show. the bank of england is delivering their verdict, the toughest stress tests yet in terms of how they see the banks. down to capital ratios 10.3% in the stress tests. they are the seven key lenders in the u.k. soap barclays, hsbc, and nationwide along with rbs. will bank of england -- we will see if the bank of england will [inaudible] that is one of the first things in thes flagged
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preview. the countercyclical buffer will buffer again. they will review it again in the first half of 2018. it will be as reviewed again in the first half of 2018. investors may be underpricing the risks in global markets. this is a warning shot from the active england in terms of their perspective on global markets. lets you see if you have a the at some of the names, u.k. gdp could crash by 4.7% and world gdp to drop and unemployed 9.5 percent. these are the toughest stress tests yet but that -- they did the s cliff short b 2016 data.
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and they are talking a brexitxit, there is line coming through. the stress tests show banks can withstand a disorderly brexit. been tough, sharp declines in global and domestic growth, the pound losing its loss driven by surging interests. plenty of testing going on in the top line being the stress tests show the banks can withstand a disorderly brexit. a couple of concerns about individual names. manus: they talk about a messy divorce without trade deal or transition agreement coupled with stress, misconduct costs could push the banks beyond the limit of the test. it is important when you look at rbs. this is one of the alphabet and the -- alpha banks this year.
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beginning to sell portions of rbs. they have to get over this big hurdle of the retail mortgage-backed security litigation, one of the critical issues. it looks as if rbs is the dividend, that is why they so critically needed this pass grade in their stress test. anna: we are getting individual comments from some of the banks. standard chartered saying in a statement on the back of england stress test that the group has exceeded the race. we are getting some news coming in from shell. takingve an investor day place in london. there was a lot of focus on the script dividend and confirming they are scrapping it, confirming the by pat plan for 2017. taking shares in pseudo-the cash dividend. they said they would start the share buyback program to offset
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the effect of the dividend and their -- they are talking and considering withdrawing the script dividend in the past. we're getting some guidance from them. 25 toee cash outlook to 30 billion by 2020. isanic free cash outflow being raised. the statement coming through on the back of what has been a couple of months of rising oil prices. manus: we will break down the responses from the individual banks. will assess that on the opening sweeps for the banks. rbs will be in focus. u.s. equity markets are lower, equity markets a little bit lower. the discussion is about the constraints that may be placed by regulators in terms of the flow of money into hong kong come out futures down by two pips. to manylatory
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suspending the approval of funds moving across. a gradualist, for will be good news markets. london is down by two. i would be surprised to see this, paris likewise indicated up five takes at the moment. there is plenty for the market to digest. we're waiting to see how the u.k. banks price up in the opening sweeps. anna: more coming from lloyd's and barclays, the stress test commentary says they are not required to take any capital action. they see exceeding capital and leverage thresholds, lloyd's exceeds capital and leverage thresholds, the stink -- a statement coming through. barclays saying the minimum ratio exceeded the
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hurdle race -- rate. more details coming through from barclays. d from the bank of england that rbs and barclays detailn 2016 data, or coming through. let's talk about what has been happening in the router market story. we saw a drop earlier in the 1%.n session down by .25 of we see the energy related and commodity related stocks coming under pressure in the asian session. wti down by .7 of 1%, the second two-year we come off highs for the sector. we are looking ahead to the opec meeting on thursday. we have the dollar in there as well, flat on the dollar. a little bit of yen eyeing in the session. we would seeng north korea preparing a missile launch and that added to a little bit of safe has an --
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seeking of safe haven assets. trump tweeting that tax plans are progressing very nicely. we saw quite a bit of range in bund market, up five ticks in the european session. french bonds 158.83. u.s. treasury yields a little bit lower. you're seeing goldman sachs and barclays saying this is as good as it gets. we have a number of guests saying the flattening of the yield curve will continue. guest said the bond market is not related to the growth story of 2018, the momentum to continue higher. the equity market is continuing with that gross story in terms of momentum for the upside. morgan stanley another 6% higher on the u.s. equity markets. we will speak to this gentleman, vince cable joining us, the
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liberal democrat leader in a few minutes. let's get to juliette saly with the first word news. juliette: and the u.s. the senate bill is headed for a marathon debate this week with the aim to hold a floor vote as early as thursday. republican leaders will have to hammer -- hammer out a compromise. republican members of the senate budget committee say they may not agree to vote. delaying the progress and putting plans for a full senate vote this week in jeopardy. antonio meade has thrown his hat in the ring to become the presidential candidate and next year's election. that came hours after he quit as finance minister. the resignation and's months of speculation that he would step down to seek the nomination. down as ceo to
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become finance minister. reportedly received radio signals suggesting north korea may be preparing for a launch. citing multiple government officials, the messages did not specify the type of possible la. missile. it said any radio signals could be from winter training by north korea's military. the bank of japan's governor has economies economy -- are more resilient against economic shorts and that region is the largest contributor to global growth. at thewas speaking anniversary of the financial crisis. is 2.3 7pitalization billion u.s. dollars, or than 100 times bigger than before the crisis. we have made progress.
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the economy has become more resilient. financial sector has developed significantly. juliette: and ireland the controversy has escalated. the release of a cache of a males undermined the leader. theaced ovthey could pull down minority government triggering a snap election. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. more stories on the bloomberg at top . another session of losses in asia but things have turned around in the last hour and you stageeen large cap stocks a rebound up by .1 of 1%. the concerns about china weighing on the hang seng, off by .4 of 1%.
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japan closed flat and we are seeing a turnaround in the kospi and samsung rebounding after the sharp selloff during monday's session. in terms of stocks where watching corporate news around japan and softbank is offering sharesfor $40 billion, closing by .251%. and showing the manufacturing story widening. the latest company to say it has falsified data. nottwo biggest clients are affected. and bhpice fell .2% billiton, watch out for that falling 2% of metals weakness. saying the chinese policy is impacting short-term demand and pricing in the steel demand -- division. anna: breaking news coming through on the aviation sector.
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aiming eric schultz as a successor to john leahy. we were asking questions about how he was going to stay at the european aviation giant. airbus is [inaudible] of januarythe end 2018. he is joining from the rolls-royce civil engine unit. not an internal appointment is my understanding. manus: let's talk about the stress tests, we brought you the breaking news. the seven banks in the u.k. that have been tested, barclays and obvious fall short but do not have to raise capital. the bank of england raises the cyclical buffer to -- countercyclical buffer to 1% and will review in the first half of 2018. john glover joins us on the phone.
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thanks for joining us. the top line here, we're be fair to say we have done a bit better than last year, progress? >> it is better than last year because there was a straightforward failure on the part of rbs. and a couple of other banks. rbs had to raise money. the scenario is in better shape. tests impactl the on the lenders, there was a lot of focus on the ability of the lenders to pay out money in dividends and their ability to survive any kind of downturn and the consumer or the u.k. economy. -- what impact will these sets have? guest: yeah. i cannot think we can expect to see a bsp pay the dividend for the time being.
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-- rbs pay the dividend for the time being. it is not that interested i do not think in whether or not the banks pay dividends. aboutb is to worryit is whether the banks can keep lending in a downturn. it seems to be happy they can this time. dividends are for the regulator, for the supervisor. a bonus, if you want. an extra. manus: thank you very much. john glover with the latest analysis on the breaking news headlines in regard to the stress about tests and the u.k.n the u.k. welcome to the show. we have been breaking this news and terms of the nation. it would appear on first flush we are in a better shape.
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nobody failed, nobody needs to review. good news for u.k. plc? guest: i think so. it was not terribly clear how severe the brexit shot would have to be in order to feel the stress tests but it is good to know that our banks after almost a decade are still standing. important thing as far as rbs is concerned is how it will affect their share price. there is big sums factored into the budget for share sales. if the maintains his predecessors rules key cannot so much below the acquisition price. that is something to watch. rid of thee got rules given he talked about the sale of rbs and is planning to spend the money on something else? guest: i would be worried if he scrapped those principles. rid of the rules given he talked about the sale of rbswe are expecting andg the taxpayer will get their money back. it has taken this part of a decade. -- seems a reasonable
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a reasonable criteria to have. manus: they talk about a messy divorce, the context they have referred to. no transition agreement coupled with a severe global recession, that could push the banks beyond the limits of the stress tests. these are extreme scenarios, we know that and we appreciate that. as we move toward december 14 and 15, the irish question seems to be the thing where that is going to be the biggest stumbling block rather than money or european nationals' rights. how do you see the situation? vince: it is easy to understand where the irish come from. this is for them re-creating an irish border with the -- will be politically disastrous. they have more to lose than any
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other country in the european union given the way there economy is interwoven with u.k. i would think the chances of areing beyond this deadline high. the problems for the negotiations come next year rather than this cliff that we got to surmount. it is not yet clear whether we will have something that approximates to existing membership, the norwegian type agreement or whether it is a distant relationship like canada. that question about that relationship is up in the air. around that will be apparent when we get into serious negotiations. anna: i spoke to two lawmakers om differentr parties and there were talking about the possibility that any kind of transition deal might linker. there might be some change of heart amongst the population in terms of car -- how hard the brexit should be.
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we end up in a transition deal that drags out into the future and becomes, and set being a kind of norway. -- and up being a kind of norway. it could be it never happens, there are two ways. it is a mess next year and the government be it never tries to find a way out through a new vote or something like that. the other as you say is they do negotiate a trade agreement which is not greatly different from the status quo, there is a long transition and we have not really left accept the british have lost control over decision making and regulatory standards. hours we have spent
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talking to guests about the transition tries to. let's have a look at the size of the u.k. manufacturing industry. a great deal has been made of getting the style of canadian style agreement. -- we need something much more far-reaching than the canadian style agreement if and when we get an agreement. would you -- we need something h more far-reaching agree, it neee much more ambitious in the canadian agreement? vince: manufacturing is comparatively small. that is understanding the importance. that is where most of the r&d is , a country should exports and the disruption of supply chains if we do not get an agreement is particularly severe. in terms of your question, you're right. unless we had some kind of agreement covering services whether it is financial services , creative industries, digital, things of this kind, the blow to
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the economy would be severe. that is why i think the canadian type agreement is disastrous for the u.k. economy. people and theto u.k. finances and they talk about it is possible, they talk about a deal but is political will the stumbling block? vince: yes. clear ther made it --y is not going to get past get equivalence type arrangements. what i would like is to show that if brexit happens that they get a good deal but the prospects are not good. impactin terms of the papers, gina miller was here yesterday. being one of the protagonists and the legal case against the
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government. she said the british government needs to be more honest with the british public. in that merit statement. do you think the british government is being honest about thestate of affairs to we voters who went to the polls? vince: not at all. the contention is that there are large numbers of studies that look at the impact on sectors of the economy. it is not clear why they cannot be published except they could be potentially embarrassing. manus: do you suggest they do not exist? ofce: i have lots admiration for gina. the likelihood is they are awkward in terms of the information. they are -- [indiscernible] which would enjoy benefits of brexit if it happens. you were business
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secretary you are in the same position as grant clark taking about industrial strategy. on isth the government is different from the 1980's where industrial strategy was a dirty word. been reinvented sense. what is your reaction to what we have heard, are they on the right track? i think so. eventually they are rebranding what we did in the coalition like conservative colleagues were signed up to that stage. at one point.ty we work together very well. war i was somewhat critical yesterday is that the industrial cannot work unless is aave skills and that
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fundamental weakness in the economy. unfortunately, just when we need skills, more than ever before with the brexit exodus of europeans, the apprenticeship program is in a severe crisis. system is not working. small companies cannot get access to it. there has been a very sharp fall in the new apprenticeship stats, that is not good for sustained continuity and trend. manus: the grand challenges are part of the strategy to raise artificial intelligence, clean growth, new ways to move people and product. this is a fun activity conundrum. a productivity conundrum. if you had one grand policy you could implement to move the productivity down what with that be? vince: the one factor more than anything else which is driving this is business investment, fixed investment. we have been for over a decade,
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fixed investment is falling and this is compounded by the uncertainty around brexit. if you want to mitigate one simple solution is if the government could find a way of aspping brexit, we get on normal and participate in the growth which is happening in the world economy or focus this morning, britain is going to go through three or four years of stagnation, hiatus because of these negotiations. i cannot do any good and it is impossible to tackle the underlying problems. anna: global investors are looking and wondering how long theresa may will last. she was called a dead woman walking. g, maybe. how is your assessment of how long this government lasts and what does it fall on? >> she was a colleague of mine, she has her strengths and
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weaknesses. i said when she was appointed she was the best of a bad lot. that is probably still true. lotspect this survives a longer than people are giving them credit for. why would they want to have an election? manus: thank you very much. vince cable. some breaking news coming through. they are hustling on planes as we speak. opec will discuss the possibility of extending the cuts through to the end of 2018. to what extent is this indicating? this is the energy ministry of the uae, declining to say whether there is a consensus of the group's ministers ahead of the meeting. the oil market needs more time to recover. anna: not too much of movement
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as a result. the european open is next. interview exclusive at 9:00 a.m. this is bloomberg. ♪
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guy: welcome to bloomberg's new european headquarters. we have a lot of news to deal with. we will take you in a moment to the bank of england. this is the european market open. ♪ guy: rbs and barclays do not pass the health check. banks can withstand a disorderly brexit. mark carney is about to speak. we willat


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