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tv   Bloomberg Markets European Open  Bloomberg  July 23, 2018 2:30am-4:00am EDT

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>> good morning and welcome to bloomberg markets, the european open. we are live from our european headquarters in london. the cash trade is less than 30 minutes away. matt: threats to growth. the g20 warns on trade tensions but steve mnuchin reinsurers -- reassures his colleagues. that the u.s. does not want a trade war. the future of fiat. ceo.ompany has a new
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sergio marchionne has an irreversible condition. earnings.ive week for the big banks and global tech will be reporting. exclusiveing you an with the ceo of julius baer. we are less than a half-hour away from the european open. index futures are down across the board. we have some pretty deep drops. 50o stocks -- euro stoxx futures down. and dax futures down more than that in frankfurt. we could see a negative open this morning. we had a mixed trade in asia. mm.e a look at the dmg we see the equity indexes across asia. gaininghinese indexes
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actually with hong kong having little change. forex -- that is where the focus is. take a look at the yen. 110 point 92 against the dollar and that is on the big change or the perceived change in boj policy over the weekend. they did go into the markets to try to put a stop to that perception. and you see the brazilian radel moving as well. equity androm the forex columns, what you see when you go to rates and commodities -- japan again. the story here today. movedack ox means it has more than three standard deviations away from its 90 day square. the 30 year is up 8.5 basis points. that is where you want to keep your eyes today. commodities -- some movement in metals for example but you want to look at oil to see if there is any reaction from the ai
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iran story. ,uliette: and when us our race the world's top finance jeeps have warned that trade tensions threaten global growth. ministers and central bankers said in a statement published at the end of their two-day summit in the argentine capital that global growth remains robust and many emerging-market countries are better repaired to face crises. u.s. treasury secretary steve mnuchin moved to calm the concerns of his counterparts. >> this was a very productive set of meetings and again, communique's are important to look at the messages we are trying to send but do not over analyze one sentence and be concerned. we understand but the trade issues are and we are trying to productively deal with them. juliette: it has been a dramatic
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session for japan's that market which saw yields surge on media reports of possible changes to the nation's ultra-loose monetary policy. the yield on 10 year government notes saw as much as six basis points in early trade. the biggest increase in almost two years pulling the yen higher and weighing on stocks. the bank of japan offered to buy ofurities on a fixed rate 6.11% although there were no sellers at that level. uk's foreign secretary jeremy hunt is heading to berlin today to warn that the european union needs to do its heart to avoid the chaotic scenario of britain leaving without a deal. the key negotiator said the government must give up planning that talks with the eu may give up. donald trump lashed out on twitter to the president of iran
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. saying, never ever threaten the united states again or you will suffer consequences the likes of which no one has ever seen before. we are no longer a country that will stand for your demented words of violence and death. earlier, the iranian leader warned donald trump saying that america would be sorry if it reimposed sanctions. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. matt. very much. you asian stocks were mixed. the yen climbed and japanese government bonds slid on speculation that the bank of japan may move on the stimulus policy. mark, we have been showing the rates, -- inyen in
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yen and in rates. what happened to spark this, first off? >> it is rare that this is the most exciting thing of the day. i'm sorry, my microphone has fallen off. it is rare that jgb is the most exciting thing of the day but they were today because there was a speculation that started friday evening that the bank of japan will change policy next week. that they speculation might fine-tune their policy and change their yield curve control. there is even talk that they may tailor the etf buying. i find it unlikely they will alter policy next week. sign that they are making any success with inflation to justify a change in policy. theit is unlikely that
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speculation will go away until we have the results from the meeting next week. the yen and the jgb are most likely to continue to go back-and-forth. matt: what else can we expect in fx? i am thinking specifically about donald trump's comments regarding chinese markets. these tweetshink will have less impact because there are so many of them. a year ago, if he had tweeted on fx, it really would matter. nowadays, it still has a little bit of an impact but people will start saying -- what will be the real action behind this? in october, he might name some countries that are fx manipulators. therefor, if he again decides to weigh in on fx markets, the more sustained reaction might be to yen.uan or the
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i think it is less likely to have a long-lasting impact on the euro. the more we see these tweets, the less impact each individual tweet has. matt: the data shows that hedge funds are the most bullish they the dollar since 2017. you can see on this chart. has been weak. it rallied a little bit but now off a little more. even as hedge funds are building up long positions. badthey right to do considering donald trump's concerns about a strong dollar? mark: i don't think they are right to do that. -- even though it is unlikely to be followed up by an action, the market does not know that. dollar long has continued to build. the market has been going
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nowhere and yet people keep getting longer and longer. we have been roughly in this period for two months. it is either consolidation if you are bullish but i think the next largest move will be negative. down. i think from here on out, if donald trump continues to pursue an isolationist stance, the dollar will be on the margin. the u.s. policy has been priced into the curve. be a is more likely to shot from downsized moves. lower.t big move for be having been stuck in this range for the last two months, it is hard to know if we will break out on a limited basis. matt: mark cudmore out of singapore. you can follow live market insights from mark and the rest of the team on your bloomberg terminal. will bring you the
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best of our exclusive interview ceo, bernardaer hodler. very important as financials lineup to report earnings this week. this is bloomberg. ♪
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matt: welcome back to bloomberg
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markets. this is the european open. i am matt miller miller in london. just 17 minutes to go until they start of equities trading. the big story has to be earnings. net newaer boosted money in the first half in mind with the target. our own manus cranny joins us now live in zurich where he has had an exclusive sit down with the new ceo. six months into the job, how is he doing? manus: in his words, i feel very comfortable in this seat. it was a very different air from hodler when he walked into the room. growing net new money by 5%. buffer of we chatted about this. he said there is a good possibility that if there is no
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big acquisition on the table, that he would look at rewarding the shareholder whether that was a share buyback or a dividend. he is looking at opportunities in asia and latin america. they have a corridor. money -- we are at the halfway water market for 2018. standing at about 5%. declines are not shaking. they are not like horses in a thunderstorm. they are holding the risk line for the moment. the critical issue is how do you build your network? he is quite bullish in terms of ,ringing more bankers on board increasing the net new assets under management. the net new money. he was certainly in pretty good
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form. we chatted about markets and his outlook for julius baer. take a listen. bernard: we will be within the 4%-6% this year. that is my guidance. i said that in january. i said 2017 was an extraordinary year. markets went one way. i am very happy with the 5.1% and i feel comfortable that we will land between 4%-6%. manus: you have a different presence coming into this room and you did in the last six months. -- and you did six months ago. the markets have not been easy and volatility is back. it is good for julius baer. to be honest, i feel very comfortable in my seat. manus: good. year asia yielded perhaps the best inflows ever. how is asia holding up given the
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china market meltdown we saw on the equity side of the business? bernard: asia is holding up nicely. we have a quarter of our assets in asia. about 100 billion. we have seen a bit of the let -- deleveraging in asia, rosalie in the fixed income. clients in fixed income that have leveraged it with loans are more cautious. clients i have from the is more cautious because they are looking at the geopolitical concerns and trade tensions but overall things are holding up quite nicely. matt: -- manus: one target was to make make asia 30%s to of the target. are you sticking to that tell -- that target? bernard: currently it is about 25% and it depends on how nicely
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we grow in other areas but definitely come it is one of our most promising growth areas that we have and we continue to invest in asia. -- maybe youaction saw the transaction we did in march in thailand with the number one commercial bank there. we see opportunities in china, but there are other interesting markets as well. , wes: in terms of defection wrote a story where bankers were leaving the bahamas and panama. are there any pockets where it is getting harder to retain? is the competitor taking your bankers? the answer is no. we respect them but we have a lot of other competitors as well. it reallyentioned, has to do with our strategic repositioning. they do you remember that in
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january i talked about focusing on the key markets. the key markets in latin america are brazil and argentina. we make sure that we invested in these markets and do a little less in the other markets. manus: if you have to choose the geography that fits best with the next acquisition -- where are you drawn for the next serious growth spurt? to look at continue opportunities in the growth markets including asia and latin. i personally am quite sure that over the next 12-24 months, there will also be acquisition opportunities in europe and in switzerland. manus: acquisitions? bernard: the last two or three years, everyone was doing well and everyone was a buyer. get more the markets difficult and that is my expectation for the next two or three years, we will see more
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opportunities because the realize thatill it is quite tough out there. crannyhat is manus speaking exclusively to the new ceo at julius baer, bernard hodler. we are minutes away from the open of equity trading. up next, we take a look at the stocks you will want to watch at the opening including ryanair which posted a 20% drop in first-quarter profits. this is bloomberg. the open is just 10 minutes away. ♪
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matt: welcome back to bloomberg markets, just minutes away from the open of stocks trading. joining us now from our equities are our reporters. stay with us. we kick it off with you. tos has done a deal to purchase syntel. this is a long-running story. last year, they lost out on purchasing a dutch smart carmaker. since then, their business -- their online business in may -- this is just an extra leg up. they are pretty serious about
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doing this. atos.paying attention to ellen, let us talk about phillips. what are the earnings looking like? to have: it is reported a decline in china in terms of revenue growth. but, during the call this morning, the officer said it was improving in china. phillips still expects that it will be compensated by other products. level of growth came in at the below consensus. matt: a little below consensus. the stock over the last year up 14%. ryanair,ve on to you, what is the story with the profit drop? by 20% onprofits fell
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the back of an ongoing labor dispute. it has been dealing with an air traffic strike. potential flyers or would be customers are not booking flights. no one likes to book a flight that could be canceled and that had an impact on profits. going forward, ryanair also warning that higher fuel costs could hurt profits in the second order. we spoke to the cfo about the outlook for the business. let us take a quick look. >> last year we thought we would be marginally ahead. light of the strong whether we have had in the u k, the heatwave in northern europe. the world cup which is now over and the uncertainty around strike action. faire guiding our average
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below the 4%. overtly stronger numbers the first quarter of the year. that was the ryanair cfo. ryanair reporting a 20% decline in profits. matt: thank you, maria. firmly onping an eye fiat chrysler shares. mike manley has stepped in to replace sergio marchione and ilari has also stepped in. fcau in new york. rrari is race. an appropriate ticker. on thoseeep an eye shares. futures are down across the board this morning. it looks like we could see a
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rocky start for european stock index. here you see the stoxx 50 futures down. the open is next. this is bloomberg. ♪ two, down and back up.
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matt: less than a minute away from the start of equities trading. let's take a look at what we are seeing with the dollar really against any currency today. it's interesting to see what is going on with dollar weakness. just a little bit of weakness, but you see it against the euro and especially against the yen. japanese currency, japanese rates really a focus. the japanese index down 1.3%. the nikkei is down but we didn't see the topics nearly as bad and we didn't see gains in hong kong or china. all,s interesting, off at 7297 as the iranian u.s. spat
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gets more dramatic. you would expect it to pick up as production will be dropping in november. maybe that's priced in. take a look at features before we go to the open, down across the board for european stocks. we could see a rocky start to trading this morning, at least if youre long. take a look at the ftse out of 7677, 7672 and you can see it fall in the open. the germans are taking their time, as usual. we typically see the cac and the ibex open right after the ftse. we can see the british index loses ground, down .25%, and we're still awaiting the others to pop open. 20%, they are, cac down ibex down .3% as well. germansoing to take the
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-- take a moment for the germans. take a look at the imap and the industrial breakdown of trading across europe. this is the bloomberg europe 500 index broken up into groups. financials are down considerably, and that is going to the focus because of earnings this week. we also see material stocks gaining, i know of aluminum was up big. we didn't see oil moving up, but we do see materials gaining. we'll keep an eye on those things. take a look at the stoxx 600 movers. we'll see some of the individual names here. i'll pull it up on my screen there. novartis leading the way as far as point reduction. the size of that company helps. it's only off .7%, but when it comes down, it's really felt because of how big it is.
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we see hsbc down .5%. fiat chrysler very interesting, down 4%. the head of jeep, replacing the ceo of fiat chrysler is coming in. that has investors on edge. we did talk to the ceo of julius baer, their stock down. and ryanair is down. we were talking about concerns with ryanair. name, the dutch word for royal, down after their earnings missed the mark. take a look at the winners. novartis leads the way. we have autos gaining, as well. unicredit and barclays all up this morning. interesting to see the financials. we have some of us financials rising at the open. a little bitets
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lower in general after a mixed session in asia. let's get over to tim graph, head of macro strategies. thanks for joining us this morning on this monday morning. it seems like geopolitical headlines are really shaping the markets. the you see it that way? -- do you see it that way? tim: it does seem that way. volatility remains low. it's having an impact on equities markets. you're seeing that as a shift from last year. it didn't affect any market. equities may be responding but for the most part, currencies, the g3 currencies and rates aren't. it's hard to know if it's having an impact because some of those are the macro things you watch and are very well contained. matt: fascinating juxtaposition. last year, equities rally no
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matter what president trump said. but he did have the ability to affect individual asset classes. for example, his comments on the dollar would run that currency one direction or the other. last year, maybe concerns about iran boosted oil. today we don't see any movement in oil despite the mother of all wars of ronnie. do you think we see equity evaluations compressed because of these concerned? we don't see markets doing that. and ifat plays into it valuations are starting to become concerns. it's not too surprising in light of the risks getting accelerated and the market becoming sensitive to them, you are seeing equities flatline on a performance basis. so far this year, unless you were in u.s. equities or oil, cash helped you out the most.
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e.m. has underperformed. valuation had become a constraint and that's why you're seeing cash look more attractive. you still have a decent earning story. you can't flee from risk. matt: why is it european markets seem to underperform? historically, european valuations are lower. but as you mentioned, u.s. stocks are still holding their heads from the above water year to date and in europe, we see a loss for the ftse. the cac is up 1%. the dax and the ibex down 3% and change. why is the european story less attractive on the equity side? tim: the dominance of financials and banks still make a huge proportion of the market cap. and there are still problems with nonperforming loans and flatter curves. that will make it difficult for financials to perform. in a broader index based,
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european equities will suffer by extension. the second factor is the lack of tech. the u.s. is being driven the proportion of tech in equities, as were the asian equity markets last year. the lack of tech hinders performance. other than that, it's not that bad of a story when you look at consumer discretionary, energy companies. we're pretty constructive on a sector level. on an index space, they are restricted. matt: we have the cac screen that shows you earnings across indexes and across sectors. 5% as farech was up as earnings growth was concerned. u.s. tech earnings growth, 37% so far. absolutely. tim is going to stick with us. we have a lot more to talk about. he said of macro strategies. big rates and currencies story.
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we're going to also bring you the stocks on the move as this is the european open. so far this morning, including phillips, it's now accelerated losses down almost 3%. we'll talk more about it. this is bloomberg. ♪
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matt: welcome back to bloomberg
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markets. this is the european open. 10 minutes almost into the session of a weak equity trading monday. let's get to the top stocks story. we have callista losers. maria: stocks are on the move. i want to take off with ryanair, which reported numbers at 20% profit decline, ahead by a labor dispute. stock is down almost 5%. going forward, it's morning higher fuel costs could hurt profits. and it's a bellwether for the industry. i want to move on to fiat chrysler. over the weekend, we heard the ceo will have to leave his post due to health reasons. is going to be replaced -- he's going to be replaced. the market wants to get clarity after what his plan is. he's a big loss. somehow an icon in the auto
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industry. that's reflected in big losses today. i want to look at phelps, which put -- phillips, which put out numbers that met expectations. we spoke with the ceo and he made interesting comments on exit. -- on brexit. let's take a look. >> for industry to its stay competitive in the united kingdom, a customs union is really important. that was the message i gave. i continue to hope that this will all work out and therefore, the scenario planning, which would affect our factory in the united kingdom, would not be connected. maria: that's the philips ceo. matt, back to you. matt: thanks very much for that. in top news, iran's political litter has warned -- put a -- political leader has warned
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oilld trump not to warn its leaders. >> the americans say they won't allow iran to export even a drop of oil. do you think iran is that weak ? what are you thinking? we are people of resistance. the entire iranian nation will resist. president trump, do not play with the line's tail. you will regret it. it will bring it eternal regret. matt: president trump responded on twitter, writing and all caps, "never, ever threaten the u.s. again or you will suffer consequences. we are no longer a country that will stand up for your demented words of violence and death. be cautious! " annmarie hordern joins us on
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set. what does this progression mean -- you cover the oil market for us. you would expect it to drive prices higher, wouldn't you? annmarie: it's a war of words. one thing he did say, iran has always rejected the waterway. and mr. trump, don't mess with us. we did have the revolutionary guard a month ago threatening they would cut off the chokepoint. that's a serious threat, that's when you would see oil move. doesn't look like it. 30% of the world's seaborne crude gets shipped through the strait. it looks like the market is taking it as a tit-for-tat heated debate between the speech in tehran and now donald trump's twitter feed. matt: and he did suggest we could see the mother of all
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wars. on the other hand, he said a piece with -- peace with iran would be the mother of all peaces. i'm looking at this chart. it came down obviously, very strongly in 2012. it has since recovered. annmarie: the u.s. sanctions, the eu, and the yellow is the left off of the obama administration. matt: so if we see the sanctions reimposed, and we can safely assume we are going to, does this mean we lose these barrels of oil from the market? annmarie: they don't expect customers to get waivers and the u.s. department of state said they wanted zero waivers. they are putting pressure on japan. day,sts had 500 barrels a but with zero waivers, it could be much more. they produce 2.5 right now, so you could say a lot taken off the market. tim, put the macro have
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you are wearing already and tell me what you think of this war of words. donald trump did this with north korea, as well. you are not likely to see him in tehran for talks. tim: i wouldn't think so and fortunately, it's just a war of words for now. what it does is, and oil market under pressure, it keeps the floor under it. there are sanction related reasons. ante a little bit more against a backdrop were global growth and demand is robust. and the supply hits its taken, we were always of the believe they were temporary and it wouldn't last. and demand was still strong enough. this adds to a fairly constructive outlook for oil we have had. matt: i'm looking at a chart of oil. year,s wti over the last
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the 12 month chart. obviously, we are not in the hundreds but still, this is going to hurt earnings. yes, itng forward, definitely will. you are not seeing the trendline break down. these are mostly supply related pullbacks you see. the demand picture is a robust. it's not until you get a monetary policy environment or fiscal policy environment in the state, the boost in the state start to fade, that you might start to think of up proper commodity correction. annmarie: there's more shortfalls if you look at venezuela, libya. november will be interesting when the waivers hit iran. plus you have these question marks. matt: thanks very much. annmarie covers the oil sector for us. tim graf will stick with us. huge week.
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huge. huge week for earnings. we'll bring you a raft of guests and exclusive interviews with ceo's of anglo american. this is bloomberg. ♪
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matt: welcome back to bloomberg
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markets. this is the european open. i'm matt miller in for guy johnson. normally i'm in berlin and his office week so here i am in london. a warning in japan markets saw -- search. the central bank later offered to buy an unlimited amount of bonds at a fixed rate operation. the yen rose to a two-week high against the dollar and rates on jgb's rose, as well. we also have, and currency news, donald trump tweeting about chinese manipulation and complaining that the u.n. is falling like a stone. u.n.sponse, china says the exchange rate is determined by the market and also says threats and intimidation will never work on it. let's talk about the schoolyard ethics battle with my guest, tim graf. head of microstrategy.
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china says sticks and stones will break my bones, but words will never hurt me. still, donald trump will use that twitter pulpit. is he right to do so? tim: difficult to say. he also singled out the eu and the eurozone. it's pretty clear they have not been manipulating their currency. and china has been letting it fall. they haven't been taking active measures to weaken it. doy are letting the market what it wants to do, which is what people have wanted to see over the years, and the market is taking it weaker. they're certainly not discouraging it. does this market under shift? i don't know because it has to be followed up by for the rhetoric from trump. all of these tweets, as we alluded to, they're having less of an impact and they are
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focused on actions. matt: let's talk about what you expect across the board on currency. the euro, first of all. the last time it made any real news, the ecb all but promised to raise rates in september. obviously they are not manipulating the currency to the downside. what is the outlook for the euro? tim: the euro is in a challenging situation because trump can threaten to slap tariffs on exporters, which is your negative -- euro negative. the exports sector would be hit and growth would be hit. you're already seeing export growth rollover from the big three economies, france, germany, and italy. the eurozone is in a tough spot and the euro strength that can come from trump talking against the euro, on a second order basis, is going to be negative because it will slow growth. then you have the threat of tears from the u.s., which is a
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euro weakening device. even though the dollar is a consensus long, i'm skeptical that run is over against the euro. matt: it is absolutely consensus long. i had a chart earlier from hillary. i'll try to bring it up. it shows how hedge funds are positioned. there you see hedge funds are superlong the dollar right now, even though it looks like spot has rolled over. do you think it has? tim: i don't think so. we're do a pullback because -- due a pullback because there's a consensus. everyone started downbeat on the dollar and that proved incorrect. now you've had it move the other way, but this position has only just dealt and its extended, so you may see the pullbacks we've seen in the last trading sessions. the dynamics that have taken the dollar stronger have not played
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out when you look at rate differentials, relative performance of economies. it's going to be hard to break that trend. it will happen at some point, but not for several months. matt: let me ask you about the u.n. where we started the conversation. what do you expect there? it looks like china, they're certainly happy to have their currency weaken as trump puts tariffs on their goods, it keeps trade balance of. tim: absolutely. he threatened to slap tariffs on the entirety of chinese exports to the u.s. i wouldn't expect that dynamic to change. it may consolidate for political purposes. they may intervene to keep it stable, but the trend will remain the same if the tariff rhetoric ratchets higher. matt: thank you for joining us, tim graf, head of microstrategy.
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you will be joining us on bloomberg radio. definitely catch the rest of our conversation with tim. tune into bloomberg radio. you can do it online or on the terminal. just type radio . let's go to the stock of the hour. fiat chrysler clearly. the resignation of sergio being replaced by mike manley, concerns about sergio's health, it seems like fiat chrysler said the situation has gotten more dire and that was yesterday, lead to the jeep boss taking over. now sergio has been a whirlwind for this company, taking it from fix it again tony italian car slur, but that's of people used to say about fiats, to really a global carmaker.
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maker,uipment and truck spinoff of ferrari. do they need a partner? they are the sixth or seventh biggest automaker in the world. he bought chrysler in 2009. mike manley took over jeep, a chrysler brand at the time, and it's become one of the most important assets fit chrysler has, together with ram, which manley also runs. that's why he's the right choice for ceo. stock is down more than 3% today as the concern is, sergio has been at the helm for 14 years and when you've got someone new coming in as a surprise, you can understand investors are going to be jarred. as we head to break, let's give you a picture of the markets, just 26 minutes into the session. we have equity indexes down across the board. we come back, we discussed
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earnings, which are huge this week, including alphabet, formally known as google, and some of the world's biggest banks. this is bloomberg. ♪
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matt: welcome back to bloomberg markets. let's get your top headlines. steve mnuchin reassures his counterparts, the u.s. does not want a currency war. but china has back, saying threats and intimidation will never work on it anyway. the future of fiat, the carmaker has a new ceo. there's a irreversible health condition. we will have the latest live from the long. a mass -- from milan. a massive earnings as banks and global tech report. welcome to bloomberg markets, the european open. i'm matt miller in london. guy johnson is off. let's see how things are shaping
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up. these are the individual movers. some of the best-performing stocks, and you will see the size is smaller than the worst-performing stocks. done here at the bottom, american sports. and these are the big names on the upside but the names are on the downside. take a look on the mrr function on the stoxx 600. 2.8%, fiat chrysler down 3.25%. deutsche leptons a is down. ferrari race is down on concern about sergio marchionne leaving. he was the ceo of ferrari. phillips was down after earnings disappointed. ryanair down after earnings disappointed. really an earnings story in europe. it is a huge week globally for earnings. here's what you should be watching this week. we kick off today with alphabet,
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that's of course better known as google. and then tomorrow, it's the turn of switzerland's ubs. on wednesday, we have deutsche bank as well as facebook. you can see its global here. there's a massive juxtaposition in size. thursday, you've got nomura, you got shell, another big tech company reporting. then twitter coming out, as well as exxon mobil. just a couple of minutes, we're going to look to some of those earnings. let's get first word news with sebastian. sebastian: trade tensions threaten global growth. finance ministers and bankers said in a statement, global growth remains robust and many emerging market countries are better prepared for financial crises. but risks have increased.
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u.s. treasuries move to curb counterpoints. >> this was a very productive set of meetings and again, i think munich case are important to look at the messages we are trying to send but don't overanalyze one sentence and be concerned. we understand what the trade issues are and we are trying to productively deal with them sebastian: jeremy hunt is heading to berlin to one them. that comes a day after the chief brexit negotiator said the government must step up plans that the eu collapse. donald trump lashed out on twitter at the president of iran, saying to president rouhani, never threatened the united states or you will suffer consequences, the likes of which few have suffered before. we're no longer a country who
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will stand for threats. be cautious. rouhani warned the president not to threaten exports. iran towon't allow export even a drop of oil. do you think iran is that weak? what are you thinking? you cannot do such a thing. we will stand up to you. we are people of resistance. the entire iranian nation will resist. president trump, do not play with the lion's tale. you will regret it. sebastian: global news 24 hours a day on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. let's focus on the big week of earnings ahead of us from two of the biggest sectors on global stock markets, tech and banks. joining us now is alex webb, who
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ties, tech and jonathan great to have you here. tim graf just told us bank financials other the reasons european equity indexes are underperforming in the u.s. and the lack of big tech companies has been a problem for valuations versus u.s. valuations. let's talk about the elephant in the room, gdp are. global davis -- global data protection regulation. how is that going to affect tech companies? >> certainly for google, like it might be a positive gain in the immediate quarter we just had. they were prepared for it. they lined up huge amounts of new terms and conditions. because they are in so many parts of the value chain, it's easier for them to go to clients and say go with us because we are everywhere rather than
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risking going to minor players. you can leave you libel. matt: what about microsoft? cloud sales surged there. we saw sap do quite well. alex: you also see them in the chip space. intel is doing better because they make server chips. the interesting piece would be when we see, will make compare aws, compare that to google cloud to microsoft, to see how the landscape is changing, if at all, in terms of market changing. microsoft will do huge amounts to improve not just the cloud, but the way they onboard people to that cloud. that's why they acquire somebody like github. it will be interesting. matt: how does that stack up? who is the biggest cloud player, and what does the change look like? aalex: aws is the biggest.
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microsoft is making up ground. google is in third place. really,the landscape will it be impacted by it? their ability to offer additional services my also generate more revenue. huge, probably for big companies. maybe painful for smaller ones. jonathan, what are we expecting from europe's banks? jonathan: the sector has underperformed by 10%, so less expectations than previously. u.s. banks, $.15 gangs -- 50% gains -- 15% gains. hopefully limited negative surprises would be my first starting point. not a lot of room for negative
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downside surprises. i think trading, relatively better than consensus. capital builders were disappointing in q1, but it's still difficult because of the top line. there's not a great deal of momentum. down four or 5% and they are talking about acquisitions because it's getting tougher. matt: i wonder about deutsche bank. i'm looking at their stock 1029, althoughw it had gone down as far as it could. is this a separate story from the rest of europe's banks? is it such a different story as they get ready to announce, although you mentioned they preannounced? jonathan: it's the worst-case example. there's no revenue growth across the sector. the problem was it hadn't gotten long cost. we know the trading is still disappointing, but we're not
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going to worry about it. french banks underperformed hugely. bnp might be a bellwether. the dollar is going the right way for the banks this quarter. if we don't see an commensal positive surprises, the market is going to return to the fact the sector is value trapped. we are getting close to the point which people will give up on the sector in terms of growth, in terms of upside to valuation. matt: i'm going to chat with you before i fly to frankfurt for deutsche bank earnings. i'm sure there still will be interesting news out of that, even if they have preannounced, just to get a look at executive special interest in savings face-to-face. jonathan covers banks and financials for bloomberg intelligence. alex webb writes for bloomberg opinion. by the way, opi and go get you straight there. we will get you the stock movers, including ryanair, the
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earnings slide as it battles labor issues. an oil costs, feel costs. stock is down almost 6%. this is bloomberg. ♪
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matt: will come back to the european open. 42 minutes into trading, let's take a look at stock movers. aria: two days of declines
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after falling the most in a year on friday. saidis after a claim trust it will sell a 2% stake in the company. that i want to go into some rescue medications. it's up by almost 2%. on the stock is the highlight. just third jen today. and trade on the stocks to buy from neutral. lastly, i want to look at ryanair. at 20% decline and profits, you consider to the stock is down almost 6%. earlier we spoke to the cfo about the outlook for the business going forward.let's take a look. >> last year we were marginally ahead. in the last couple of weeks, particularly in light of the strong weather in the u.k., the heat wave in northern europe, the world cup, which is now over.
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and certainly around strike action, we are guiding our average fair, of only 1% in the second corner, below the 4% we previously guided. cfo, 20%at's ryanair profit decline, stock is down 6%. matt: thanks very much. let's check on markets here, 44 minutes into the session, down across the board in europe. everywhere you look, read on your screen as far as equity indexes. it's m&a monday and companies announced $2.1 trillion of m&a in the first half of 2018. that puts this year on track to be 2007's total record. but as the massive deals roll on, advisers are asking how much longer the delirium can continue? for more, here's our reporter dani burger. dani: the delirium can continue on because i love injecting
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skepticism into the idea into any conversation, but especially right now. we are looking at massive m&a value. the blue bar is the quarterly value. because it's so high, last quarter the most since 2007, also saying this is too much it can't continue. when we take into account the value of the overall market, it's not that impressive. the white line, i have the ratio of deals to the overall equity markets. look at what is happened this past year. this year looks no different than 2015. me it's notts tell delirium right now. this is more of a return to normal. this is a pickup in the paths from last year. matt: dani burger joining us. now ruth david from our deals team. what could either risk to the m&a boom continuing globally? what could stop this train?
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dani interesting because was talking about it not being that impressive. qualcomm, wasal, stopped by u.s. antitrust. that's the huge problem. our regulators going to clear some of these deals? there's talk about with trade war slimming, is china going to put in place new rules to prevent companies from doing m&a there? regulation, government. the other big thing is valuations. valuations are high. the deal a mass this morning, sentelle shares doubled in the past year. you wonder what companies and investors are thinking. is is the right time to buy? matt: a ton of cash. what is driving the split offs? ruth: investors are giving companies value for doing spinoffs. siemens, deutsche bank selling businesses have done well.
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but activist investors are in their rattling the cages. they are saying, how can you get the most value for us? -- spinningpending business is off. let's see how that plays off. matt: ruth, thank you very much. fiat chrysler has named a new ceo as a health crisis that left sergio marchionne unable to return to work. a 34-year-old rid takes the reins. marchionne was replaced after 14 years in the see sweet because of complications from surgery. his condition is irreversible. joining us now from milan to discuss, is bloomberg's senior reporter who has been following sergio around most of the time he's been running fiat chrysler.
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i want to bring everyone this photo we took with sergio, i believe at the geneva auto show recently. you and i have interviewed him together on a number of occasions. he referred to you as his affectionate stalker. how large of a figure was this man in the auto industry? was a deitye figure. sergio marchionne said things loud that some of his peers just said off the record. this was one of the big difference and this was one of the reasons we record him because he was always ready to give us some news. he also took some very courageous choices. in 2016, he decided to move away production from car production from the united states and just
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did suv. they thought he was crazy. obviously the fact that he was so outspoken created some problems. gm never loved the fact that he said they would have to combine, for example. and this didn't happen. matt: we also showed some pictures him with johnny elcon, the psion of the agnelli family, which has the biggest stake in fiat through xor. he made the elcon agnelli family a ton of money. if you take a look at the chart, you've got a yellow line when sergio took over, the stock was trading in the 20's. and now after lifting in new york, we're looking at a $255 stock. this is huge for fiat, very successful. what do we know about mike manley, who is going to be
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trying to fill these gigantic shoes? of value,, in terms sergio was a maestro. fiat was worth about $6 billion. now the three groups that used to be are worth $8 billion. i think those numbers speak for themselves. in terms of mike manley, mike manley is coming from the most lucrative and most important division of the group, jeep. jeep makes about 70% of the 45-50% of thet sales of the entire group. jeep isley is showing going to be essential to leading the future. it's going to be difficult to replace sergio mark carney. we also have mike manley,
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sharing with sergio a workaholic style. mike manley is good in public. very, interrelate his very respected. we should give mike the time to start his job. he starts essentially today. why we are speaking -- while we are speaking, investors are meeting. this was scheduled before. sergio, it'sry -- a much more important and crucial aspect for the future of the group. matt: i want to bring you a little soundbite of another italian ceo, with whom i spoke -- i guess sergio is canadian and manley is from britain, the fiat is a huge italian company. ducati is also one of my favorites, as you know. i had the chance to catch up
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with the ceo over the weekend and ask him about trade. listen to what he said. >> like 75% u.s. and 25% international. and so, we are less than 10% in our own country. of course we would be affected if this trade war starts introducing a problem of european programs imported to the u.s. but we are diversified. matt: i think the interesting point that he's making is, they sell only .1 of their product and italy. they are not really that affected. on the other hand, you've got a company like fiat chrysler that sells a ton of their product if europe puts on their tariffs, fiat chrysler was selling most
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of their products out of the u.s., ram trucks and jeeps coming into europe. but sergio has started to move production after he took over chrysler has in a? -- hasn't he? >> exactly. jeep is the more global unit of the group. they are now building suvs in china, india, brazil, and the u.s. produce local and in the markets. that's how you will be contacted by tariffs, or less affected you could be without local production. matt: on jeep, people said it's worth about $30 billion. does manley spin it off? how does he get that kind of monetization out of jeep as sergio did with the truck unit and with ferrari? >> the shoes of manley showing the jeep is not for sale.
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if anyone was interested in jeep, you can discuss. matt: all right, thanks for much. our reporter joining us from the lawn after years of covering sergio marchionne, he will be covering mike manley. time for battle of the charts. and reordered takes on maria tadeo. annmarie: i'm looking at foreign investment in iran, given the war of words between washington, d.c. and tehran. we had a huge inflow into the country. this is when iran made regulations more liberal in terms of companies being able to invest in the oil and gas industry, car manufacturing. you could see it's kept up the flows, but what will happen now as the november 4 deadline comes rapidly? we have the 90 days leading up to that in early august.
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this is not just about exports. total had to halt a project because global international companies cannot risk backlash in the united states or being cut off from the financial system and banks. matt: maria, what have you got? maria: i know hillary will be watching this. she likes fun in the morning. for that reason, i bring the tenured japanese government bond yield. a crazy morning in japan. speculation in the bank of japan might find in quantitative easing programs, sends bond yields soaring. they are six basis points to 0.09%. this made the yen go higher, stocks decline, and the bank of japan had to intervene, offering to buy at a fixed rate. a roller coaster morning in japan and all eyes will be on governor kuroda when the boj finally meets next week. matt: all right, quit of charts hillary clark, who takes the
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crown here? hillary: this is hard for me, the i must say i think annemarie wins today because of the impact it will have on the global market -- oil market. matt: definitely a financial chart because it picked up in the bush. we looked into this this morning. they listen to regulations in iran. yes, and that chart highlights what happens if the sanctions are reimposed. matt: thanks very much all of the for joining us. tadeo,e hordern, maria and hillary clark out of our control room controlling everything. you can see the charts and all others on gtv on your bloomberg. use them in your own work if you like. do cite us. it will be a huge week for earnings. we'll bring you a raft of guests, including ceo of ubs and
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exclusive interviews from the ceo's of anglo american and the cfo of ago santander. that's it for the european open. stay on bloomberg. surveillance is next. ♪ . .
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presidentthe u.s. counterparts,his warning consequences if tehran continues to threaten america. the central bank takes actions to raise yields. ca's new head. mike manley in charge as a health crisis prevents sergio marchionne from coming back to work.


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