tv Bloomberg Markets European Open Bloomberg January 5, 2018 2:30am-4:00am EST
leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. ♪ guy: welcome to bloomberg markets, the european open. i'm guy johnson in london. matt miller is in berlin and claims to have a suntan. i'll let you judge. we are 30 minutes from the start of cash trading. ♪ guy: new year, asian stocks head to their best since july. the dow breaks 25,000. could anything puncture the rally? what will the final payrolls number for 2017 tell us about
the u.s. economy and the fed path this year? and the former uber boss travis the private sale of a 29% stake in the business. will this be the start of a new era for the ride hailing company? matt: good morning, guy. great to see you back here on the european open. take a look at what we are inecting this morning futures. not a lot of movement there as far as directional change. maybe we see it continue to this rally we saw yesterday, although i can't believe we would see the same kind of scale as yesterday. the cac and dax yesterday and euro stoxx 50, up 1.5%. big gains in europe yesterday. we could see gains today. you would expect to see investors selling off debt in order to raise cash. you don't see that so much. this is the one-month chart. let me switch it to one-day
chart. bund truem into the today. yields are up a bit, so investors are selling off on this to a next and, but looking at a 44 on the bunds. not a huge for -- break from the range. thatstocks bid, the story has dominated the beginning of this year. around the world, let's show you what is happening. aussie market bid, germany very strongly bid. is this going to be the year the industrial capex style kicks in to gear. -- ballot 25, plenty going on. the emerging market currencies, yen is trading off, a risk on kind of day. let's show you the commodities space because this could set the tone for this year. down, bloomberg commodity
index down, crude down, brent down. a strong run beginning to fade a little bit this morning. let's get a first word news update with juliette saly. in the u.s., a bombshell book detailing dysfunction, backstabbing and chaos and donald trump simmons station has been published ahead of schedule. excerpts of the "fire and fury" triggered a rupture between the president and steve bannon. meanwhile, the white house has been defending trump's friend health fitness for office, an issue raised in the book. is disgraceful and laughable. if he was unfit, he probably wouldn't be sitting there and have defeated the most qualified group of candidates the republican party has ever seen. an incredibly strong and good leader. that is why we have had a successful 2017. north korea accepted a
proposal to hold talks with south korea aimed at reducing tensions ahead of the winter olympics. the meeting next tuesday will include north korea's offer to send a delegation to the games as well as overall inter-korean relations. the breakthrough came after south korea and the u.s. agreed to suspend plans for joint military drills during the games next month. suffered their biggest annual slide since the global recession, stunted by andain's buyer confidence skepticism over the emissions performance of diesel. preliminary figures from an industry body indicate 2017 sales file -- fell 5.6% to 2.50 4 million vehicles, the steepest drop since 2009. demand slumped 17%. global news 24 hours a day, powered by more than 2700 journalists and analysts in more .han 120 countries
this is bloomberg. guy: thanks very much. the worldwide surge in equities continues, the dow has cruised past 25,000. em currencies also hitting their highest points since 2011. the msci index is kind of weighted, maybe not in the most useful way at this point. the jp morgan index tells a slightly different story. the reason why you have the msci doing what it is doing is the yuan. the taiwan currency makes up half of the msci. is the rest of the space going to do better in 2018? mark cudmore joins us on set. by the fx joined strategist, as well. it has been a good year for em, but a tight year. certain currencies have done
well. does that carry on? mark: it does, it is a complete lovefest. the dollar is soggy and that is a perfect market -- environment. there are fundamental problems in high-yielding currencies, like turkey. runaway inflation, a current account deficit, but this is not the environment where you trade those things. this is an fx carry train and you don't want to fight it. mark cudmore live on set, what a sight. great to see you in london. about to ask a question the currency you have been writing about on the mliv brought -- blog, which is the lira. the longer-term outlook here, you expect the lira to underperform higher performing currencies globally? >> absolutely, mark made the point about fx carry. tended --s never intended to support the lira. it did in 2011, when you have --
borrowing, but you are not seeing that right now. certainly external balances are still very weak in turkey. the central bank is not operating a transparent policy, and we see the current account deficit widening to 6% next year and we don't expect the rush of portfolio flows into turkey this year as you saw in 2017. we think that will keep the lira on the back foot. guy: i have heard a number of people this year talking about 2018 year being the year the capex cycle kicks in. industrial goods will be the place to go hunting. currenciesthe case, do well. is that the right trade? kiran: yes, beyond that, global growth has improved and trade growth has improved, but driven by exports and consumption last year. this year, if you see the move
toward investment, typically investment tends to be more important intensive. it makes more demands on import volumes, that should boost global trade growth further and that is a positive backdrop for em currencies. matt: i just wonder what you -- morgannd mark stanley saying in the u.s. they want to get out of the high-yield trade because we are in the end of the cycle. they are not calling a recession this year or forecasting recession next year, but saying this is the time to get out of high-yield and riskier assets. what do you think about that? mark: we probably are coming into the end of the cycle. but how long will that and be? if they are talking about recession next year, that is a lot of games still to be made. we are coming toward the latter part of the cycle, but that latter part could last a long time still. it is way too early to be preempting that turn.
one of the things you learn in markets is that ultimately, investors are slow to leap on new themes and when they do, they grasp it with strong hands. at the moment, we are playing theme strongly of equities being good. i've talked to a lot of traders and no one is bearish. theyare all optimistic and have to chase this market. it got away and they are looking for the opportunity to get in. the positive environment for risk assets, high-yielding, em fx will continue at the moment. there will be time to trade the lower fundamentals at the end of the cycle, but it is too early. guy: what if we get our dollar call wrong this year? everyone down on the dollar. kiran: we have been calling the dollar down for two years. we still think the dollar is overvalued. therally, when you look at dollar and u.s. real rates, when
they rise substantially, it is a problem when global growth is slowing down. you saw that in 2013 with the taper tantrum, in 1994. when global growth is rising and global trade volumes are rising, it is less of a nation. it is true most of em's liabilities are in dollars, but if their revenue streams are increasing as global growth increases, you need to look more toward frenchy asian. weak versus strong balance countries. how far will the market be out of position if the dollar turns this year? it is all one way at the moment and that makes me a little nervous. kiran: here is what i think about the dollar. you went from shortened or tro -- new to -- short to neutral. that tail wind is not there for the dollar, but the dollar tends to do badly when the whole world is growing along with the u.s..
the u.s. ison where growing and the rest of the world's weak, it is good for the dollar. you were in the former now. you are getting growth in the u.s., which may taper off this year, you are seeing a recovery and the rest of the world and that tends to be bearish for the dollar. that will trump any positioning type of argument. for me, i am not an fx trader, never was. and ifthink about rates i was an international investor, i would want to go somewhere where the rates are high. the u.s. will continue to raise rates, and inflation even looks like a better bargain then japan and europe. why aren't those higher rates honey to the bear as far as the dollar's concerned? mark: they were honey to the 2016, the14 and dollar index rose about 25%
ahead of those rate hikes. preempted the rate move, and then the dollar rallied a long now,n the expectation and suddenly people are starting to think other countries might start their tightening cycle. europe and japan might remove some of their emergency policy. in the same way the dollar preempted the fed cycle, other currencies might preempt the tightening we might see in other countries. you've got to remember the world is still structurally overweight the dollar. the u.s. is slowly losing its dominance in the global economy. it is the most dominant, but its size is slowly eroding as ugly of a-- as asia takes more share. it is still an expensive currency. there still could be downturn for the dollar this year. guy: are we going to far too fast? this is the chart.
the momentum behind it has been very strong. are we getting to the point where we have come too far too fast? kiran: i go back to the chart were you compared the msci. this is focused on asia, and equity focused. it is an equity benchmark. jpm is a bond benchmark. early to mitch -- mid-stage of yieldsle, it was bond credit. later, it is equities and commodities. now, at least will continue to do well and commodities will continue to do well and that is skewed toward equities and could do well. that is why you are seeing korea and taiwan perform strongly. mark, thank you for joining us. mark cudmore, mliv strategist in the studio. in singapore.out
♪ matt: welcome back to the european market open. i am matt miller alongside guy johnson. you saw our new headquarters there in london. we need to get the bloomberg business flash with juliette saly. uber's former ceo plans to sell out 29% stake in the company. reaps kalanick stands to about $1.4 billion from the transaction with softbank and a consortium of investors. he has long boasted he has never sold shares in the company he cofounded. apple has said all mac computers by ios devices are affected chip flaws. the company added that recent
software updates mitigate one of the vulnerabilities known as meltdown. watch,so said the apple which runs a derivative of the iphone's operating system, is not affected. that is your bloomberg business flash. guy: thank you. my eco-screen up to look at the french data just hitting the tape. cpi coming through at 1.3%. number ofrsus the 1.2% previously. this is year on year. figure andliminary matches where we anticipated it would come in. 1.3%. just a little grease in the milk. let's talk about mifid ii. --ulatory in overhaul regulatory overhaul, biggest in a decade. implementation day, they were soft into it. regulators were pleased the changes came without any major issues. nejra cehic joint -- spoke with
yesterday about how mifid ii would be enforced across the european union. steven: it is important to far, the largest part of mifid ii will be .upervised at a nation level that is a task of the supervisors. obviously, the supervisory practice at national level is frequently discussed in the board. we are all national regulators around the table and if there is any concern about unlevel betweenfields or national markets of the eu, the issues come up at our table and we take it forward to see if measures are needed. of the fundexit and management industry and specifically delegation, that is a structure where eu funds delegate management to london,
esma has called that structure into question. our u.k. manages going to have to move to the u.k. -- e.u. en mass? it is important to emphasize what we have said regarding the fund industry is it is not calling into question in any way the delegation model, but what we have said is when you delegate, it needs to meet the regulatory requirements and also supervisory requirements are there to make sure the entity, which is located in the eu 27 in the future, and subsequently delegating act committee outside the eu 27, to london, is this is done on an appropriate basis. there is substance in the eat -- eu 27 where this is a supervisor
will entity and the entity is really the place where management decisions are taking place. matt: you can watch more of that interview on bloomberg markets. the program rules and returns from 8:00 p.m. london time on friday will be very popular as those stories -- methods stories were among the most read stories of the year last year. we are minutes away from the open of european trading. next, we take a look at some of the stocks you want to keep your ion at the open, including chipmakers as apple says mac's iphones and ipads are exposed to a chip flaw, meltdown. this is bloomberg. the open just eight minutes away. ♪
♪ we are minutes from the opening of european stocks trading. let's get some of the issues you will watch front-end center. first off, chips, on the big apple news. the company saying its chips are affected with a security issue on macs ipads and iphones. they are exposed to a flaw that causes so-called "melt down," which is something i seem to see in my iphone every time i am up for renewal. i think it is different.
a semiconductor has been upgraded underperformance. there are other reasons you could see chipmakers move this morning. keep an eye on the sector. eye on bt, it looks like amazon will look at the idea of bidding for streaming rights. this is streaming rights, the idea at the moment is the premier league will suffer its first noncompetitive bid for the rights, because what you have is sky and bt sport getting on the same page. thisan eye on those morning. it could be a story worth watching for both. another thing to mention is the european stocks looked to be coming out of the gate a little stronger this morning. the fair value catch relations the bloomberg seem to suggest the rallying continues. the nikkei was up by another one third of 1%. european stocks continue to push on this morning. it looks like we will be seeing
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trading is starting in europe. what are we expecting? the first trading week of the new year coming to a close. euro-dollar trading software. down by 0.1%. the nikkei had another solid session. up about 0.8%. the commodity story is fading around the whole commodity complex. as a result of wish, some of the stocks are coming off a little bit. we cleared 2500 on the dow jones industrial. what more could you want? well, a jacket for matt miller. let us talk about what
is going on with the fair value is. this is the picture we find ourselves with. asia did well. at the moment, we have a solid story being generated out of europe. let us get into the market open. keep an eye on the commodity stocks. they may fade a little bit. numbers coming through. 76.95 is where we are training -- 7695 is where we are trading on the ftse 100. let us see what the ibex does this morning, trading north of the 10,000 mark at the moment. we do have an issue of whether or not the euro will continue to strengthen. that may be a factor this year. whether that will take the shine off the story. the ibex is up 0.3%. the cac numbers are coming through. the ftse is the laggard. i am just wondering whether or not that is down to the fact
that we have the miners coming under some pressure. looking at the ibex. the commodity sector is where we are seeing weakness. energy stocks are trading lower. energy stocks as well. health care is beginning to fade. the jpention to that, conference kicks off monday. in san francisco. i expect in europe, we will see the details coming through on tuesday. that is the big day. financials look reasonably well bid. the shine is being taken off of the european get-go from the commodities. your mapm looking at .here with health care gains and losses. an interesting set. i have the stoxx 600. broken down into the biggest index points movers here. looking on the plus side, you
will see some of the consumer staple stocks. at the top. nestle is a gainer. you will see some of the others trading well. some defensive stocks may be trading higher. but, when i switch to the losses, you will see the definition of consumer staples trading down. also see some health care stocks. novartis for example. they are all on the upside. among the losers. on the other side of the nestle trade is unilever. is moving those stocks in opposite directions this morning. you will see material stocks and energy stocks on guy's map this morning. bp is off slightly. such a heavy stock, it weighs down the index.
rio tinto is off a bit. changedtch shell has just a little bit but even just 0.1% change take something off of the stocks. 337 gainers. only one of just 76 following this morning. falling this morning. asian stocks look to complete their best week and almost six months as investors around the world pile into equities at the start of 2018. the dow jones industrial sailing past 2500 for the first time. i have it under good authority that jon ferro is making h oodies for us to mark this milestone. it took just 23 trading days for 2400 toe to jump from
2500. with us is bob palmer from quilvest. is this a delayed santa claus rally? is there really more optimism for global growth? i spoke you just a couple of weeks ago in london. fornew there were reasons optimism, global optimism then. the fourth quarter of last year, we saw a decreasing cash position by investors and an increase in their global equity acquisition. at the end of last year and the start of this year, that equity allocation has increased further. and the justification for that is that we have had some very strong economic data. datald highlight the ism we had out from the u.s. earlier this week and the pmi data from the eurozone. and if you look, for example, at at aerman data, we are
record high. across the board, america coming europe, and asia data -- everything is looking very strong indeed. and the perception that central banks are behind the curve, rightly or run. and the expectations of the fed are in the process of changing. there is a consensus among investors that bond yields look unattractive and you are seeing a further push into asset allocation at the beginning of the year into equity markets. ignore is one cannot the expectation of high growth in the u.s. based on the tax reform bill. guy: let me pull up this chart. the gap between the u.s. and the rest of the world is expanding. a -- youfore, you left have to look at 2018 and say -- and i in the u.s. or not in the u.s.?
am i in the u.s. or not in the u.s.? the u.s. is where the growth is coming from. we are late cycle there. seeing late cycle euphoria. bob: you discussed earlier in the program what will happen to dollar euro. that is critical. ais year is going to be repeat of last year whereby currency movements are going to influence significantly what happens to equity markets. if we see, for example, dollar euro retrace into a range of 115-120, that is positive for the euro stocks. if you look at the composure of earnings, you have a different pattern in europe versus the u.s.
in europe, great percentage of earnings are driven by exports. dollar euro is more important the states.han for if you assume that dollar euro trades at this level or the dollar recover somewhat based on interest rate differentials, then you have to favor europe over the u.s. having said that, i don't think we are going to have a major setback in the u.s. yes, i would focus on the domestic sector tourists in the u.s. matt: to what extent, if you take out the fx trade just for argument sake, to what extent do european stocks deserve to be purchased more than u.s. stocks? u.s. stocks are trading at a higher valuation, much higher than the historical average. european stocks have barely touched that average. the reason i'm focusing on
foreign exchange influences because if i look at the growth differential between europe and the states, it will be that significant. america will grow between two point 5%-3% and europe will grow close to 2.5 percent. the growth differential is not that significant. earnings growth. it is fair to say that america's corporate earnings growth will hold to about 10%. i think in europe, we could easily get earnings growth close to 10%. more in the region of 8% more likely. i think where you will see significant differences is in europe, if we get a stronger euro, which i don't think we well, but that is not the consensus at the moment, that will hurt europe much more than the states. and the states' domestic demand remains strong, that is why i think the consumer discretionary sector looks interesting.
the fed will raise interest rates three times and i think the probability of four rate increases is rising. the financial sector will benefit from high rates and a high u.s. treasury yields. matt: beyond that, what do you expect from the ecb? a lot of people are talking about the fed raising four times next year whereas mario draghi -- you have to expect him to fall on the dovish side. mario draghi -- it would kill him to end qe and not extend it further, wouldn't it? bob: i think a lot happens raised on the data and we are in the process of seeing a significant upward revision to the outlook for the eurozone. to .5 percent growth in the eurozone, if we get -- and if we get 2.5% growth
we get thisone, if slow creep up in european inflation figures, and i think it is fair to assume that by the third quarter, eurozone inflation will be 1.7% or 1.8%, the ecb may move slowly, that one has to question whether they actually reverse potentially this extension of qe for the third quarter of the year. there is certainly the economic data, and its strength, it doesn't support any extension of qe the on third quarter. guy: what is the potential for growth in europe? bob: close to 2-5 percent. guy: potential growth. inflationary growth? where are we today? the u.k. economy -- it's potential growth looks slower now. able to run along
the motorway at 70 miles per hour without the car sharing. now, it is 50 miles per hour because productivity has not come up in the structural reform has not happened. at what point does the argument that the bank of england is making to the eurozone apply? the gap is not as big as we thought it was because the structural story in your business that great and potential growth is lower than it has been historically. bob: it has never been that high historically. the answer to your question is it depends on what happens with investment spending. investment spending in the eurozone, if you go back three or four years, is low. what i am arguing is that investment spending in the eurozone is increasing. is from corporate investment spending. it is a reflection of what we are seeing in the eurozone. guy: how inflationary could that
be? bob: the answer is that it will be slightly inflationary. the outlook for 2018 for the eurozone is plus or -2.5% growth up an inflation creep towards 1.7 percent by the third quarter. on that background, the ecb does in thed to ease further process of slow withdrawal from qe and starting to raise interest rates in 2019. guy: the eurozone is rocky at the moment. -- bob: thethe pmi pmi data that we spoke about earlier. guy: bob palmer will stay with us. up next, it is job stay in the u.s. that is up next. and this is bloomberg. ♪
you can see that we have some small pockets of red there. in the czech republic. in ireland. with the most part, europe is up across the board. not the strength you saw yesterday with 1.5% moves. look at germany. strong move on the dax. again of 0.75%. we continue to hit new records here as we do in the u.s. guy: the reason why germany is doing really well is the auto set your is doing really well. volkswagen is up really nicely. daimler is trading higher and bmw is also. the auto sector is up 4.5% so far this year in europe which is kind of interesting in terms of what we are seeing delivered.
germany's performance is coming strongly through. ofs data was generated out the u.s. earlier this week. speaking of that, we get the big number today. the u.s. jobs report for december. the expectation is the addition of 190,000 jobs. almost all sectors believe the central bank will have to raise above the equip you -- equilibrium level. if the fed can stop the equity rally? bob: coming back to the jobs data, we are probably looking at monthly figures averaging plus or minus 200,000. it may dip below 4%. inhink the thing to watch terms of that policy is what happens to wages growth.
and headline inflation numbers. headline inflation, we are already up to 2.2%. wage growth is up above 3%. i thought it was interesting looking at the common treat -- commentary behind the ism data. a number of employers said they were struggling to find skilled laborers. the implication is that they are going to have to offer more money on the table for wages in the coming months. i think wage growth probably rises to 3.5%. the headline inflation number, particularly what has happened with the commodity prices, headline inflation will probably move up above 2.5% year on year as we go into the early second dark -- as we go into the early part of the second quarter. i believe investors will start to focus on the probability of the fed raising rates four times. that has implications for the 10 year u.s. treasury yield and it
puts, not a reversal, but a cap on equities. matt: does the headline inflation number versus the core come it which is what the fed looks like -- versus the core, which is what the fed looks like, will that holdings back? we look at oil prices. we have a raft of commodities on this screen. at $68. trading if you see those kinds of gains, that is not what the fed is looking at since they see core but it is a tax on the u.s. consumer and slows down the economy a little bit. doesn't it? bob: higher energy prices obviously are a tax on the consumer. oils fair to assume that prices will probably stay at current levels for the foreseeable future. i find it difficult to believe that they will push significantly higher given the recent projections of the
increased shale production in the u.s. but coming back to your question about headline inflation versus core inflation, i think one can assume that the gap between those two inflation indices will stay wide. but looking at core inflation, don't be surprised if i am right about wage inflation, that we see core inflation creeping up in april or may of this year which is a fed target which will allow them to raise interest rates at least three times this year if not four times. what we have to focus on is the change in investor expectations. matt: bob, you're going to stay with us. he has a lot more to talk about with us this morning. st. louis fed president joins us for an exclusive interview midday u.k. time.
that is one you will not want to miss today. and later on, i believe we will also talk to an important member of the u.s. administration. we have a lot of important interviews coming up on bloomberg television. we will also bring you the stocks to watch including center ca whichncluding centri is going through an upgrade. stay with us, this is the bloomberg open. ♪
session. going onnd out what is in terms of the stocks on the move. unlikely and trends, amazon is aiming at talks to broadcast some of the premier soccer games. could have some competition on their hands. it is not affecting the sky shares which are of the quarter of a percent. are up a quarter of a percent. it cost $6.9 billion to bag these games. if amazon does not get its way, you may not just see men driving fast cars on amazon it also soccer. we are seeing credit suisse talking positively about this sector which has been eaten up
by legislative risk -- which has eaten up by the legislative risk. is up.v we thought it would get support from the chinese bid story. because ofed prices higher costs. but it didis only 5% push up some of the chinese beer stocks i-20 percent. -- by 20%. matt: i'm going to pick it up. the turkish president flies to paris today for an official visit and for meetings with the french president. let us get more with caroline. caroline, what do they hope to achieve at this meeting? they have slightly
different ambitions. for the turkish president, the goal is to end the diplomatic isolation of turkey at the moment. the relationship between turkey and the u.s. has been very donald trumpce recognized jerusalem as the capital of israel. and over last year, since the opponents inhis turkey, the relationship with the eu has been very difficult as well. and he has been accused of european leaders. for example, he is accused of dutchg -- he has accused and german officials of nazism. he goal is to end diplomatic isolation and i have discussions on the eu. those discussions have nearly stopped.
♪ we are 30 minutes into the trading day and here are your top headlines. new year. highs. asian stocks headed for their best week since july. europe gains again. and anything puncture this equity rally? jobs day in the usa. bet will the final numbers for 2017 and what will they tell us about the u.s. economy and the path for the fed this year. and travis cashes in. the former cooper boss -- the former uber boss is said to be planning 20% of his stake.
will it be the start of a new era for the ride hailing company? i am matt miller in berlin alongside guy johnson in bloomberg's new headquarters in london. guy: we are seeing the luxury german carmakers doing really well. a great start to the year for them. they are up another 0.9%. 0.5%are up about 5% -- year to date. the u.s. consumer is buying at the luxury end of the market. a great start for that. health care is trading reasonably strongly. if you take a look at the bottom end of the market come it is the bond proxies that are not having a great start to the year. you can really clearly see it. if you wind this back. it captures this week. the bond proxies have been off
the pace by a considerable margin. you wonder if that will be a theme that will run through the year. the real estate sector. the consumer staples sector. this is an area where the market has been less inclined to buy this year. let us get a bloomberg first word news. dysfunction, backstabbing and chaos in the donald trump administration. the book has been published four days ahead of schedule. it triggered a rupture between the president and steve bannon. the white house has been defending his mental fitness for office. an issue raised in the book. >> it is disgraceful and laughable. if you was unfit, he would not be sitting there having defeated the most qualified group of candidates the republican party has ever seen. this is an incredibly strong and
good leader. that is why we have had a successful 2017. sebastian: north korean has accepted a proposal to hold korea, reducing tensions ahead of the winter olympics next month. the meeting will be on tuesday. aftereakthrough came south korea and the was agreed to suspend military drills during the games next month. nigel farage is to meet european union chief brexit negotiator next month. he was one of the key architects for the u.k. tivoli the eu has asked his followers on twitter for questions to ask. the u.k. car sales suffered their biggest annual slide since the global recession. theering skepticism on emissions of diesel cars was a factor.
fell 5.6% from the year-earlier to 2.5 4 million vehicles. the steepest drop since 2009. the demand for diesel dropped with a swing back to petrol models. german chancellor angela merkel's plan to extend her governing alliance facing -- is facing increasing public skepticism. according to a poll, only 45% backs the coalition between her christian democratic block and the spd. however, 53% say they favor merkel serving another term. global news 24 hours a day powered by our 2700 journalists and analysts in more than 120 countries. this is bloomberg. let us talk right now at about uber.
to sellunder is said some shares and his company worth almost $2 billion. he plans to sell about 29% of his own stake. he holds about 10%. he has previously boasted he would never sell his stake. joining us now is giles turner, correspondent.ch let me ask you first of all, what prompted this? of a being pushed out position of power so he figures he may as well take some cash? les: it is a weird question. he still has a lot of money in shares in uber. i think what has changed is that he has realized that his time of controlling uber is coming to an end. with ave a new ceo stronger stamp on the company. and he has not had much of a chance to sell. may be beforew
they do an ipo. this may be the last major chance for people to offload some of their stock. the company is under fire. it is not what it once seemed to be two years ago. structurechanges the and his relationship with the company. is that what is going on here as well? must havehink he realized he is no longer the alpha male of the company. softbank is not the kind of investor that he has experienced before in silicon valley. the plaintiff also that softbank is such a huge player and has such control over itpanies it in vests in, -- invests in, he may think this is
the time to pull back, sort of like what steve jobs did. headlinen i saw the that he was going to sell 29% of his stake in open -- in uber, i thought -- he's going to be so rich. but how much does he have left here? how much is he worth on paper? s: he still has just over 7% it is a trick question. $48 billion. and softbank is putting more money in at a higher valuation. to aim to being higher. when it comes around, maybe it is $100 billion. that is a lot of money. eurotech -- it
was a big driver there. it is a more narrow market than you would have thought last year. a similar story in asia. if you wanted to outperform in 2017, you had to be a big player in tech. is that the same in 2018? issues we hadhe in 2017, the positive issues, are still very much intact in 2018. obviously, some areas of valuation are stretched and where revenue is questionable. one looks at basic tech, the infrastructure of the tech industry, i think the outlook is very robust and you have to hold those positions. guy: we will wrap it up there. giles, thank you for joining us on the uber story.
we are not done with bob just yet, he will join the bloomberg radio team over on daybreak. the conversation will continue at 9:00 a.m. london time. up next, we will look at what could be the big winners and --ers from the bond club from the bomb cyclone that has lasted on the east coast of the u.s. we will look at what is going on stateside. anna will be back with what is going on with that story. up next. this is bloomberg. ♪
♪ guy: 42 minutes into the equity market this morning. this going to get chillier weekend in the united kingdom but not as cold as it has been in the united states. 60ural gas prices surging times the going rate because of the howling blizzard moving through the united states. what stocks are being affected by this? anna: here are images of the snow in the united states. we are expecting this to be record-breaking on a number of levels. stinging snow. high winds. some of the features of this storm. what will this do to the u.s. shares? some u.s. companies have big exposure in the u.s.
they could be affected by this. a may not be affected right now but they could be in the future. a lot will depend on the duration of the disruption. aviation andd at equipment suppliers and reinsurers. lookout for any aviation companies. and equipment rental business, you may think there would be disruptions. but maybe the snow clearance equipment they could higher out. this company may tend to benefit. on the reinsurers side, a lot will depend on how much damage is done. we could also put in some of the retail stocks. this company operates a number of grocery chains in the u.s.
have highental hotels exposure in the u.s. as well. the key could be how long the disruption will last. thank you very much. let us focus in on hedge funds. a lot of news on the terminal. among the most read stories -- percentge fund lost 5.4 last year. its worst annual performance since 2000 three. some of the largest hedge funds continued their poor performance in 2017 because of a lack of volatility and lack of central bank intervention. on thee, we are joined bond seen. how big of a trend is this? was this the standout of last year? reporter: some of the largest light sky, they
have not done well because of their focus on developed markets. there is another story which is macro hedge funds betting on emerging markets. they have done amazing. returns are close to 30%. it really depends on where the macro hedge funds were focused. if they were focused on emerging markets, they have done very well. bluecrest stands out. these are sensational numbers. what is going on there? to ther: it boils down ability to take risk. they are able to take a higher risk and use a lot of leverage. that is the real reason behind their stunning performance the last two years. matt: what about the trend of
getting out of hedge funds? it seems to be something that a lot of -- that a lot of big endowments were doing last year. reporter: that turned around in 2017. if you see outflows and inflows from the industry. last year, the hedge fund industry attracted about $14 billion. that is a reversal of an outflow in 2016. already beeem to making a beeline for hedge funds, once again. taking a step back from all of this, a story we have been story.g is the fee what does that tell us about the model being applied? 0 is almostwo and 2 dead. have settledees
around 50% for performance and 1% management fee and it is going down. the message is clear. investors are willing to give you money. if you are a great performer, you can charge two and 20 or a little less. if you're not a great performer, they are negotiating very hard to drive down the fees. that trend is going to continue. as hedge funds face pressure from other types of products ore risk premier products alternative use products which are similar to hedge funds but they are at a significantly lower cost. matt: there is so much hedge fund news on the terminal over the last week and they are among the most read stories. not just about performance. and the michael coinstar he, the u.s. is trying to -- is charging
the superstar with fraud. includee allegations being paid back. is the u.s. push to get people for insider trading and get these hedge fund managers for wrongdoing, is that still bearing fruit for the department of justice? reporter: i don't cover legal toters so i am not too close those stories but we did report on michael: who was one of the biggest names in europe. he came here in the 1990's and made a name for himself. fortune for himself. that is an evolving story we are tracking right now. guy: thank you so much. thank you for joining us on the fund story. always a lot of interest.
we are 51 minutes into the session. european stocks are up across the board. we want to highlight this function on the bloomberg. the global trend is green. america, most of south most of europe, some of africa and russia is unchanged. you consume in on this to us -- this to see in on the actual numbers. everything is gaining. ireland isown and down but most everything house is on the rise after some big gains yesterday. it's in the u.s. new records in the u.s. and in europe. a 26 year high. equities are really on the rise. guy: let us talk about what is happening around the world. into the em hit a
record in 2017. billion reached $676 last year. propelled by lowering costs. trillion inan $1.5 bonds and loans set to mature, the risks associated with em debt are only increasing. the question is can the levels stabilized and can the levels of demand continue? let us go to brussels. let us talk about demand. what are we going to see in 2018? last year was spectacular. stampede into the bonds in indonesia were spectacular. is 2018 the year it starts to run out of steam?
2018 is off tod, a good start. we have stocks, currencies, and bonds at a higher level across energy markets. as you mentioned, we had a record bond issuance in emerging markets in 2017. a 40% growth on the previous year. and this last week, we have announcements across the board. mexico coming to the market as the first sovereign from emerging markets. that was wednesday. thursday, argentina. isday -- today, oman starting. it is a roadshow for investors. we are already seeing future demand for new issuers. mexico was five times subscribed and argentina, twice as much. from 450 investors, most of them from north america. .e are seeing huge demand
we are back to business. riskswhat are the biggest in 2018 to investors? reporter: risk remains the same. the market will be watching what the fed is going to do with rate hikes. it will be watching the ecb bond buying program. and obviously, there are risks in particular countries. they will have a heavy election and some inasia europe. and in latin america. that will create some volatility. but still, market conditions are very good and we are going to have another heavy year of issuance. guy: giving the positive background, how will the investors treat a positively structured debt? what is the big picture
surrounding those stories? markets areerging riskier markets. investors buy into their bonds, they have to be mindful of the situation. and this situation can turn sour as we saw last year around venezuela and the oil company. they missed interest payments. in africa, we saw missed andents from mozambique investors are still waiting to hear about the restructuring plans. but, as we have seen with our previous restructurings, , investorsukraine are back to buying their bonds. and as i mentioned earlier, there was a lot of demand for argentine bonds. when ukraine came back last year, it was also subscribed hugely. matt: ok, thank you so much.