tv Bloomberg Daybreak Americas Bloomberg September 3, 2018 7:00am-9:00am EDT
here are the top stories from the bloomberg and around the world. president trump says he will skip major summits in asia. what could it mean for relations as trade tensions continue? italy's finance minister defends salvini says the budget will touch 3%. bank pledgesral action to curb the highest inflation in 15 years. argentina says it has a plan to save the peso. we hear from the president this hour. u.s. markets closed today because of the labor day holiday. happy labor day if you're in the u.s. or canada. things humming along in europe.
with european equities, trading sideways on the first trading day in september after we saw weakness and emerging-market equities. -- in emerging-market equities. the pound has been moving, the sterling weakening after comments from the chief e.u. u brexit negotiator criticizing theresa may' is brexit plan. -- may's brexit plan. bank saying it will take steps to curb inflation. we are seeing a week earlier and the 10 year yield moving lower, down by six basis points, a little optimism following the change of the outlook from investors, not seeing it as bad as it could have been. time for your morning brief. hearings began for the confirmation of brett kavanaugh. bank of england mark carney testifies in front of lawmakers
on inflation. on wednesday, executives from facebook, and twitter testify on google meddling. on thursday, the terror public comment. ends. friday is job day in the u.s. let's get an update on what is making headlines outside the business world. keleigh: the british government says mark carney still expected to leave the central bank next year. one spokesman was asked if you would like to have him stay. he responded by saying prime minister may things he has done a good job. -- thinks he has done a good job. the central bank is vowing to use all of the tools at its disposal to fight for an inflation. it is promising to reshape its monetary policy at next week's meeting. consumer prices rose at an annual rate of 17.9% in august, the highest in 15 years. the weak lira is getting the
blame. in minnesota, the founder of jd.com has been released from jail after being arrested for sexual misconduct. richard luhansk been cleared of wrongdoing and has returned to china. police say the investigation is underway. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is "bloomberg." nejra: thank you. trump willent donald skip major asian summits in november, a move that could escalate trade tensions. joining us with the latest is enda curran in hong kong. great to have you with us. we are talking about president trump skipping the asean and apec summit. what could this mean for relations? i think the timing is
significant, the backdrop being the ongoing tensions between the u.s. and china. we have a signal that he will not attend the talks in singapore which are dedicated to trade. the u.s. has pulled out of the gpp and has raise concerns about the cost of maintaining the security alliance with japan and korea. questions of bad u.s. commitment to the asia region and it may give china an opportunity. and i was going to point back to win president barack obama missed one of these in 2013 when he was facing the prospect of a government shutdown and we saw how china managed to take opportunities out of that. how could china capitalize?
enda: you are right to make the point, the u.s. is sending the vice president and previous presidents have had their own issues. none the less, it does give because opportunity they are playing the role of a defender of the global order. they are preaching they are in favor of multilateral institutions and an approach to the world trade order. we have had keynote speeches from xi jinping along that fame. on the ground, -- along that vein. when you have the u.s. president missing from apec, a form dedicated to trade, it would to winina the chance over allies and preach their message at a time when the u.s. is pursuing a trade war and raising concerns around the
region. nejra: thank you so much to end a current in hong kong. joining us in london is lothar mentel, tattom investment ceo. this week's key because we could hear more about that tariffs on china. have you take any practical positions ahead of that? lothar: we have gone underway the u.s. we are nervous about whether donald trump can time this in a way it will work out for the u.s. or there may be collateral damage. we might just keep that open until the midterms because it seems he is perceived better fighting rather than settling down for some great deal. nejra: it is interesting you said you're under waiting u.s. equities. some would argue u.s. equities are the only game in town and
they have outpaced equities in other parts of the world. does that mean you are underweight regions in asia or europe? lothar: the u.s. has been the only game in town and i'm glad we were overweight most of the year. you can never time these quite white. we are -- quite right. we are underweight markets in asia. europe, we areht neutral weight in the u k nejra: how do see the way these tensions a bald affecting -- tensions evolve affecting the dollar? ithar: i am not sure whether is the safe haven argument for the dollar. the u.s. has been the strongest growing economy and investors -- interest rates are going up. we have seen the dollar come back slightly.
we might have reached the end. nejra: a quick chart that you can find in the library. calmest500 posting its august and 50 years. -- in 50 years. are we going to see volatility pick up? lothar: that is what we are expecting. up but thereoing are clouds there on the horizon and less he pins that one down is achina, that trade war big one and we have seen in the u k what it does to a valuations once there is uncertainty creeping in. is happening here, the stock markets are at a different valuation level to the u.s. nejra: thank you. up, italy's coalition
nejra: -- keleigh: this is bloomberg markets. i'm kailey leinz. let's get the business flash. there is a new ceo at the world's largest advertising company. wpp named mark read to succeed the longtime chief, martin sorrell, who resigned over allegations of misconduct. read has been helping to run the company as interim coach he operating officer. he takes over at a time when consumer giants are reducing ad spending and there is competition from digital rivals.
ford may cut thousands of jobs and car models in an attempt to revive its european business. ford may eliminate 24,000 jobs, 12% of its workforce. several models such as the mondale could be discontinued. ford is said to have lost $73 million in europe in the second quarter. aramco could use an option pioneered on wall street in the to carry out saudi arabia's biggest deal ever. it could employ a leveraged buyout using sabic's balance sheet to pay for the deal. that would keep aramco from having to borrow money and reveal its own details. that is your business flash. nejra: thanks. finance minister is trying to calm investor nerves as the 10 year yield traded close to a five-year high in the
wake of a downgrade by fitch. the leaders went back on and offensive and said they will follow through on campaign promises. joining us from rome is the bloomberg italy reporter. thanks for joining us. thingshearing different from the finance minister and salvini. who should investors listen to? that is hard to say. and investors have taken it well. the truth is somewhere in between. you have the finance minister who understands of the mechanisms of europe and the country's deficit and debt that then you have the politicians and they need to make sure voters are happy. european elections are coming. early elections are always a
possibility. they are saying different things and they want to make sure voters feel they are worried about them. there you have the issue. nejra: we also got that rating outlook change on friday. was that better than markets were expecting? it was what markets were expecting. it was good news, it was no cut. the ratings agencies are waiting to see what happens. we are waiting for the economic targets the government will give in september and the budget in october. at that point, politics and aality will have to find compromise and we will see what is going on. agencieshy the ratings were not too strict with italy. we will have to see what happens. nejra: thank you.
mentalith me is low tar -- lothar mentel. we're going to show you the spread. it suggests investors are starting to liken it to the debt crisis. is that overdone? lothar: we think it is. italy has got a legacy debt issue that dates back to the 1990's. have run a primary budget surplus for the last couple of years. they have had lower budget deficits than france, for example. te isll them profliga stretching it. it all feels political at the moment because they have a pretty big bargaining chip because of they are dealing with
the immigration pressures from northern africa and they can play that against the germans and say, you overstepped those limits in the early 2000's. let us do the same. nejra: if we do get the outcome theini was pointing to of budget deficit touching 3%, would that concern you as an investor? lothar: not particularly. they have been controlled in their budget approach, even the populists are not suggesting to go wild. the 3% would be beyond the target because they should be paying down so it should be below 2%. it is important to get the italian economy back to where they were last year, back into expansion and fiscal stimulus are not the worst to do that. nejra: does that mean you would btps?buyer of
lothar: not yet. not getting all that excited about another european debt crisis. nejra: how vulnerable are italian assets around yen contagion? investors see italy is the weakest link. lothar: that is the problem with everything being highly priced or investors being nervous after , anything that produces negative news gets slapped as we see in turkey, argentina, with any company that releases anything against expectations. nejra: looking at europe, we have got the pmi softer, are you concerned about growth? lothar: not particularly.
it hinges on china and how much of a demand drop off or return are we getting from china. europe is well-positioned with a weaker euro and that has not come through yet. at ami is staying stable healthy level is not a bad position. nejra: you said you were neutral on european equities. within that, do you have preferences? lothar: we are neutral on the u.k. and our preference would be on the domestic rather than international or other banks. i have gone on record that i do not like the european banks. nejra: you say you like domestic better. what about the fact we have seen the euro weakness -- that will benefit exporters? lothar: it will. have notean consumer borrowed.
joining us now is the bloomberg european reporter. great to have you with us in london. you are normally in brussels. we have seen the pound move. what did he say. he said he was opposed for the proposals after brexit. doesve known that the e.u. not like it but they have always tried to step back a bit. they do not wanted to stabilize at this time. interesting to read that he has said there is a lot the you does not like -- the e.u. does not like. can they get brexit over the line so that the u.k. leaves? can that wait until afterwards. nejra: the point you are wake --
you are making is that all they need to do is get the withdrawal agreement, not the trade agreement after, how likely is that alone? ian: there is one thing remaining and that was his point. he wants to focus on that rather than post-brexit. deal, you need a withdrawal agreement and the only thing remaining is the irish border. how would you keep the irish border free? it is difficult to do particularly when the e.u. have opposed views on how to do that. nejra: pound lower today on the comments. are we going to see any prospect of the pound strengthening before march? there is that prospect because at the end of the day, what we will get next year is an
exit but it might be an exit in name only. even if we get a no deal, it is too late to implement. there will have to be a transition. even if we were to end up with a no deal, it would mean that businesses would need to be given another year or two to prepare. on the basis of that, sterling is trading lower. nejra: how are you allocating across assets? lothar: you try to play it safe. the u.k. is internationally focused so there are enough businesses that you can play the more international background, revenues are from overseas. you are internationally invested. we do domestic plays on the basis it has gone low value. nejra: if we get what you expect , do you foresee rate hikes from the bank of england? lothar: that would not make
shot up iness we terms of activity levels and i cannot see that happening. nejra: what should be -- what should we be watching for now apart from the summit? ian: can they get convergence on the irish border. once you do that, the pressure is off. it might not be a deal people like but some kind of deal is likely and you can move on to union andeaving the taking the next year's to discuss what happens next. if they can get convergence on ireland, it is full steam ahead. that is a big if. i know you said there is a possibility of recovery. lothar: i would play it more calmly.
there is volatility ahead. nejra: it has been so low up until now. because it is starting to don him people there may be more upside than downside. -- two dawn on people there may be more upside than downside. nejra: thank you so much. lothar mentel stays with me. still ahead, turkey takes action. we see how the central bank is planning a policy response. this is "bloomberg." ♪ xfinity mobile is a new wireless network
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saving you hundreds of dollars a year. plus, get $300 back when you buy a new smartphone. xfinity mobile. it's simple. easy. awesome. click, call or visit a store today. nejra: live from new york, i am nejra cehic. let's take a look at what equities in other markets are doing right now. european equities trading pretty
much sideways. the ftse 100 up 9/10 of 1%. the dax lower. italian 10 year yields slightly lower. the dollar just holding on to gains. the stock market is closed for labor day. dollar-yen does not do much. we are taking about -- we are keeping an eye on the turkish lira. we were seeing oil weaker earlier. that turned around. brent crude on the front foot now. let's check in with the "first word news." for that, we go to new york with kailey leinz. kailey: president trump has a warning for canada on cut -- canada and congress on trade. he says if there is not a fair
deal after years of abuse, canada will be out of the north american free trade agreement. he says congress should not interfere or he will just terminate the current agreement. dusk or reuters journalists have been sentenced to seven years in -- on, accused of violating writer says there is compelling evidence the two were set up by police. benjamin that in yahoo! says they will not be any cease-fire deal with the gaza strip leaders until the remains of two israeli soldiers are returned. talks are underway. a cease-fire would lead to lifting the decades long israeli blockade of the territory. global news, 24 hours a day, on air and at tick toc on twitter, powered by over 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. nejra: thank you so much.
the turkish lira has paired the slide. speculation that policymakers will raise rates when they meet next week. still with me is lothar -- lothar mentel of tatton investment. expectationshigh for the market whereby if we get any sort of disappointment or it does not raise rates as much as the market expects, the lira plunges? lothar: i am not sure there is enough trust from the markets in the central banks anyway. yes they stabilized the lira somewhat but are they expecting some sizable -- it is a strong first up for the markets waiting for some real action to come through and if there is disappointment, then the lira would plunge again. nejra: the wording the central bank used is it would use all of
its tools necessary. you?does that mean to lothar: it means all tools meaty rateincluding rises. nejra: what would be a meaty rate rise -- meaty rate raised to you? lothar: not just .5% or something. then they would at the same time have to package it into more careful language, otherwise they go down the argentina route of upsetting the markets by trying to do the right thing. i think building trust is the most important thing for the central bank in turkey. nejra: argentina has done the thing that investors have been saying turkey should be doing. it has hiked rates, and at the peso keeps plunging to record after record low. what should argentina be doing from here? is it getting its fiscal house
in order? lothar: i think argentina is in a pretty bad place at the moment and i am not in a position to give them advice. i think they need to play it really quiet and calmly and they did not do as much and talk as much as they have because investors just don't trust argentina anymore. --ra: we are going to hear turkey playing a role in august ticket business -- abysmal performance. down with bloomberg tom mackenzie in an exclusive interview and outlined why he is positive on the in the long run -- in the long-term. orderpublic funds is in and have significant return people fear --en
there is none from poorly managed economies to well managed economies. -- they have a current account balance problem. important to manage the fiscal situation responsibly and it is important to keep reserves and you find that with a lot of emerging economies, they are in that position. i was in argentina three months ago and i met some senior authorities there and it is clear that argentina has some with butlenges to deal
to extend that to other emerging economies -- >> in terms of the contagion from turkey, you think that has been overplayed. >> i don't think it will be material contagion. in the short-term, there is always a very strong reaction. >> and the impact on european banks? >> banks are in a much different situation than they were. back then, you could look at the size of the turkish economy. i am very positive in the long term for turkey. the banks have reasonable exposure to turkey. >> in terms of italy, we see
concerns about their debt of course. there was reasonable appetite for yesterday's auction, but the yields have picked up slightly. are other markets underpricing coming out of italy? >> that is a tough question. i would be very cautious in any situation. i am not close enough to have -- we need to see how things evolve in the coming months. >> do you expect the ecb to step in at some point? >> the ecb has very clear objectives. necessary.what is i think the euro is very resilient. . was never worried
i was never concerned because histories are important. and i has a rich history think we will do whatever is necessary in the end to ensure that the euro continues. >> switching focus to the u.k. and the inevitable question on brexit. it seems like the deadline to coming to an agreement is being pushed back and that raises the potential of risks for a hard out. you must have thought through a game plan. what are the odds now of a messy breakup? >> i am not going to call the odds on that. everybody expects hawks but the reasonable outcome. nejra: that was part of our interview with the ceo of credit suisse. still with us is lothar mentel
is -- lothar mentel of tatton investment. great to have you here. we have a bloomberg opinion this beinging about a textbook e.m. crisis when talking about turkey and argentina. a textbook recipe for emerging-market prices requires a large dose of debt and associated credit bubble including misallocation of capital into an economic trophy projects. banking add a week sector, but deficits, current account gas, substantial short-term foreign-currency debt and inadequate forex reserves. are we facing a textbook e.m. crisis? >> that is the one view. if you look at it that way, it looks really bad. numbers arese big
about china. biga is contributing a chunk of those numbers, so i would say china, that the stress is building up really. you have stories like turkey and argentina, that overall, there is a growth differential between emerging markets and developed markets. vulnerable,kets are otherwise they would be developed markets and the story is that within the vulnerabilities, economies are trying to outgrow those owner abilities and achieve growth to become a developed market. , if you take inflation, the average emerging-market inflation is at , 2.8% compared to 18% in turkey.
debt, look at government you look at developed markets and you can take government debt to gdp is about 83%. france is about 95%. compare that to emerging markets. it is not that bad. india, probably 70%. stress, if you kind of slice in dice is not that much. there are areas of concern and areas of excellence. deserted waiting these -- you started weighting in march. -- lothar: you wish you could differentiate. that is a general problem worldwide, people by emerging markets. around the issue crisis in turkey and argentina. a lot of people are saying i'm not buying emerging markets
because there are these problems. nejra: was your underweight based on concerns that it used that -- that idiosyncratic problems could cause contagion? lothar: it was the stronger expectation -- the expectation of a stronger dollar starting to hurt markets and that has come through. in due course, we also more heavily underrated southeast asia which we can do on concerns that china is slowing a bit more --n had been is dissipated, had been anticipated. we're going to go back first. arebroader emerging markets probably still a bit more hampered by investors thinking i need to see some progress in turkey and argentina before i get back into the bucket. nejra:. trying to get back in yet.
briefly, we heard from the turkey central bank and we are waiting to hear from the president of argentina. can he say anything to support the peso? >> yes. this is a golden opportunity for him to get back the initiative by talking specifically about what the fiscal plan is. bullet and shows the political willingness to reduce the fiscal imbalance and cut expenses, i think the markets will listen to him. nejra: has turkey set itself up for a fall by raising investor expectations in the name i get disappointed? -- investor expectations and then they might get disappointed? >> yes. the lira is not doing as badly as one might have thought but the risk is there. nejra: great insight there. lothar mentel stays with us. coming up, the s&p has cut the
kailey: this is bloomberg markets. -- provideronline in the u.k. is going public. hoping -- iss hoping to raise about $388 million. last month, we learned funding circle is looking at a valuation of about $2 billion. manufacturing growth in the u.k. slowed last month to the weakest level in two years. optimism among companies fell to a 22 month low. brexit and the exchange rate were cited. dominated theans box office for the third straight weekend. the fell about the life thousand singapore ticket rich and famous took an estimated $22 million.
that is your bloomberg business flash. nejra: thank you so much. the s&p has slashed the debt rating of the french grocery chain further into junk territory, undermining the company's efforts to reassure investors about its financial conditions. we spoke to the deputy cfo earlier. >> the s&p statements in no way reflect our business. quite the contrary. the s&p statements commends us for our good operational performance, our strong momentum sales and our results in h one. their change in rating stems from a change in methodology. and now taken to the -- take into account the level of our share price and our parent company. i was quite pleased to read in we had strongthat
operational performance, particularly in french -- in france compared to our peers. >> this must put a lot of pressure on you because you are also battling the short seller muddy waters and complicated financing. do you have assets for them? >> i did not hear the end of the question. have aquestion is, you 1.5 billion euro asset sale plan. do you have buyers for those assets you are selling? >> we sure do -- sure we do. we already had some very nice indicator -- indicated offers and we are committed and very confident to deliver a one billion debt reduction this year , largely financed with this
asset -- and also by cash flow generation. that is why we were so confident in maintaining a one billion debt reduction from 3.7 billion to 2.7 billion by the end of the year. nejra: that was casino's former cfo speaking to francine lacqua. social media equity -- social media exec gives be grilled by congress on wednesday. we will have a preview next. this is bloomberg ♪ -- this is bloomberg. ♪ >
social media and russian election interference. google's ceo was also invited to testify but is sending a surrogate. joining us with the latest is alex webb, bloomberg opinion columnist covering tech. what can we expect from the hearing? alex: the first what is going to be in the senate -- there are going to be two hearings, the first one is going to be in the senate. the first one in the senate, they tend to have more time, meaning they are able to dig a little more deeply. the topic of the day is going to be the extent to which they implement it controls in response to election hacking, if you want to call it, from russia. we recently learned from iran and elsewhere as well. the second meeting will be focused on twitter in the house, perhaps a little more grandstanding as has been dictated in the past. members of the house or a little less informed than those of the
senate and are focused on the sent to which twitter controls or limits access to republican voices on twitter. have anyer likely to questions come up on what president was talking about last week in terms of some of these news sites being part of them? alex: absolutely. the issue is that for google and others, there have been greater controls put in to limit the spread of fake news fundamentally. unfortunately, fake news for some members of congress is subjective. from our position, we are clear as journalists, we have a good sense of what is and is not true. it is where news merges into opinion. there have been stricter controls placed on them by facebook and google that has not been to the pleasure of some members of the right of the political spectrum and their likely to raise those issues. nejra: how market moving could these issues be? alex: i think we will have a certain amount of recovery like
when mark zuckerberg win in front of the senate because he happened to put in a very good performance. ultimately though, facebook stock had been taking a pounding in the weeks leading up to the meeting. we have not seen that with google or twitter. i think realistically, the impact of the market will be limited. the main draw for these executives is to ensure there is no huge foul up, that they did not trip over themselves, offer something fore the headlines the next day. with zuckerberg, he have the ideal solution, the ideal outcome for facebook which was the questions by the lawmakers were not good. rather than him being the focus, they became the story. satisfied investors with the actions these companies have taken with regard to what these politicians are concerned about? what is goodue is
for investors is not necessarily good for the general public. -- the reasons businesses have scaled so successfully is because everything is automated. to the greatest extent possible, they are automated. there are no eyeballs checking what is true and what isn't. the onus is on the user base. introduce more eyeballs which facebook has been doing the past year, that reduces profitability and that what -- that is what hit facebook's earnings. nejra: alex webb of bloomberg opinion, thank you for joining us on set. next, vincent juvyns, jpmorgan executive global market strategist will be joining us and talking trade. this is bloomberg. ♪ xfinity mobile is a new wireless network
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nejra: here are the top stories we are covering from the bloomberg and around the world. president trump says he will in china.ajor especially as trade tensions continue. 3%teo says they will touch after changing the outlook to negative. continued turmoil for emerging markets. turkey central bank pledges action to curb the highest inflation in 15 years and argentina waits to hear the plan to save the peso. u.s. markets closed today because of the labor day holiday. happy labor day if you are watching over and the americas. things coming along in europe. equities not so much on a
headline level. the stoxx 600 not moving. cable below 129. 1.2871 is where we are trading. about theresa may the brexit plan, a selloff in cable. the lira also selling off. it has paired some of the law surge from earlier after saying the central bank will use all tools at its disposal for the highest inflation in 15 years. the lira still weaker. italy's 10 year yield moving down by four basis points. a bit of a disagreement into where the budget is going to go from here. a little bit of spread tightening on the bond to spread after it blew up to its widest in almost five years on friday. notes time for your morning brief. looking at the week ahead, on tuesday, hearings begin for the confirmation of supreme court nominee brett kavanaugh.
and a testify on august inflation. wednesday, executives from facebook, google, and twitter testify. on thursday, the terror of ends. comment period and friday, is a jobs day in the u.s. the british government says the bank of england governor mark carney is still expected to lead the central bank next year. asked,e spokesman was prime minster make things he has done a good job. carney is in talks about staying at the boe passed his planned departure date next june. in turkey, the central bank is bowing to use all the tools at its disposal to fight soaring inflation. to reshape its policy.
they proved an annual rate of 17% in august, the highest rate in 15 years. the week lira is getting the blame. in minnesota, the billionaire founder has been released from jail after allegedly called misconducts. the company says he has been cleared of wrongdoing and has been returned to china. we say the investigation is still underway. global news, 24 hours a day, on air and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz, this is bloomberg. nejra: thank you so much. trump snubs asia. the u.s. president will skip to major asian summits in november. it could escalate already tense trade tensions. joining us from washington is sarah mcgregor. thanks for joining us. why would trump not go to the summit? sarah: in terms of the aipac
sending vice is president mike pence. it is not unprecedented. what the disappointment is, any people thought trump would use those opportunities to try to smooth over some of the issues there are with china right now including trade. as you mentioned in a report earlier, $200 billion worth of tariffs on chinese goods. we may expect a decision as early as this week. that of course would greatly escalate the situation with china. anything intoread president trump sending mike the fact that the president is feeling pressure ahead of the midterms? right around the midterms that the summit will be taking place. i think there is some thought that the democrats could take the house from the republicans and perhaps donald trump is preparing for something -- for a situation that might not look
exact the same as right now where the republicans have control of the house in the senate. we don't have an official reason is it or know why this happening, but it is true that it is around the congressional midterms and there is just a lot of thought right now about how much does trump want to solve the situation with china if he has given up opportunities to direct late meet with the chinese president? nejra: could we see trade tensions ramp-up this week because we've already talked about the 200 billion extra tariffs on china, but also the nafta 2.0 talks have stalled. sarah: absolutely. is happening as congress is back in session. canada must be included in the agreement. on the trade front, we will see a potential decision on
the $200 billion of goods, whether they can move forward on that. we will also see canada's foreign minister in town on wednesday to try to reach an agreement to ensure they can keep it as a bilateral pact. nejra: sarah mcgregor, thank you so much for joining us. isning me now from brussels global strategist, vincent juvyns. are investors taking this seriously ahead of what could we the critical week? vincent: definitely. we have seen a sentiment in market over the last week. we have to navigate in the dark. to really make an assessment of what they can expect in the coming days and coming weeks. we see reasonable change of a
deal being found between china and the u.s. onceact that donald trump that is additional proof as they continue to put pressure on china from a trade perspective. the new measure announced of the last couple of weeks and the comments last week around europe where we found out that a solution had been found seems obviously to show the country. it's a tough environment. whatver, we start to see has an economic impact. we've seen that in the gdp take your in europe in the second quarter. we see that in the pmi's in china. we need to remain very vigilant. the impact for the global economy and the trade partners of the u.s. nejra: remaining vigilant is one thing, but is it time to actually put your money where your mouth is and take risk off
the table? sense theo, in a current trade policy of the u.s. is more the program of the rest of the world at the moment than the problem for the u.s. itself. as we've seen in the past, it's our currency but your problem. here it is your problem. if you look at u.s. risk that this is a key conviction that we had with jpmorgan asset management and it has proved to be quite rewarding. when you look at the earnings ,rowth in the u.s. for instance especially on the equity side it is definitely not the moment to take risk off the table but to of what islant taking place at the moment. obviously emerging markets and
europe have been hit more in this respect. we need to be more selective, but we do not believe it is time yet to take fully risk off the table. indeed, we are not engaging in the dark. there are quite a lot of binary outcomes. nejra: we will. stays with us to discuss these topics. italy's coalition government continue. they will even after cutting their rating. this is bloomberg. ♪
nejra: >> this is your bloomberg's business flash. a new ceo at the world's largest company. read has been helping run the country as interim officer. he takes over wpp had a time when ad spending is being reduced and there is more competition from digital rivals. ford reportedly may cut thousands of jobs and several car models in an attempt to revise european business. ford may eliminate 24,000 jobs, 12% of the workforce. several models such as the -- could be discontinued. ford is said to have lost $73 billion in europe in the second quarter. aramco could use an option market and thee
80's. they want to obtain more than $70 billion. they could employ a leveraged buyout using the balance sheet to help pay for the deal. that would keep aramco from having to borrow money ever feel financial details. that is your bloomberg business flash. nejra: thank you so much. italy's finance minister is trying to calm investor nerves over its budget as the 10 year yield spread over germany's highd close to a five-year on friday. the leaders of the coalition government back on the offensive insisting they will follow through on expensive campaign promises like the so-called citizens income and flat tax. joining us now is kevin costello . great to have you with us. quite conflicting things from the finance minister , but also from savini. mentioned the finance
manager was trying to calm things down, but matteo's albini set they sell beanie will try to the within the restraints but they are trying -- expecting a wider deficit next year and the interest of the italian people will come first. nejra: that is what we're hearing from the government. then we had the change in the outlook from fitch on friday. was that change in outlook as expected? it was. in fact, fitch left the credit rating as it was, two notches above noninvestment grade but fitch did change the outlook .rom stable to negative that did not do a lot for the trust in italy. so far today, the markets have been recovering. nejra: give us the key dates we are looking ahead to in terms of the budget.
kevin: the government must come up with new budget targets by september 27 and eight draft budget must be in brussels by the middle of october. there will be a lot of jockeying going on between now and then. we will also probably be expecting a lot more statements. many of them conflicting. perhapso we can expect more conflicting statements from here. we will certainly be interested. .hank you to kevin costelloe still with me is vincent juvyns. when you hear one thing from the finance minister and another thing from a tale -- matteo salvini. as an investor who you listen to? finance we hope the manager will know what is being proposed and that he will weigh and histhe decision
partner. it is important in the interest that italyian people remain. it is first in the interest of the people themselves. we see that the servicing has increased importantly over the last week. it is unlikely that the additional money spent will actually benefit italy. at the same time, you will see the service to debt will increase purdue much like we have seen during the eu debt crisis. theype and believe that will stick to the commitment to europe, but we cannot totally exclude some coalition dispute, which would eventually lead to the departure that -- the deadline is quite tight. 27 september and there will be
more clarity. if we do get what salvini points to which is a budget deficit that points to 3%, how far out at the btp bond spread blowout? i assume it would surpass 300 basis points. vincent: hard to put a level on it but this is not priced at the moment by financial markets. i guess most of the investors steer clear of italian btp market at the moment waiting more clarity and unity. no worst-case scenario is discount at this moment. the worst-case scenario is going to happen. the talks of the weekend did not reassure us much that italy was going to comply to the requirement. do not forget that the current is when thereement
budget will be submitted which could read -- which could lead -- later at the end of october reviewing the country's credit rating. fitch did not have like a assessment of the futures. how to italian political risks affect how you would allocate across europe generally? vincent: definitely that is something that makes it at the moment we would refrain to progress to -- to invest to aggressively. there are a few areas we have a good level of certainty. the u.s. remains a place we are confident that the market can
continue to move up. in europe, if we were to have an issue around italy, this would be very negative for the region. the institutional crisis first and on the financial market, europe is dependent of its anking sector which is as heavyweight in the market. this is definitely not be positive for europe. the overall fundamentals is a --stration in europe is we've seen data improving quite nicely over the last couple of weeks. the pmi in france and germany recently rebounding quite now slate. -- quite nicely. but it is overshadowed by the political situation in italy at the moment. nejra: that's that we did see the euro area pmi declining somewhat today but i take your point. still with me is vincent juvyns
nejra: live from london i'm nejra cehic. cost the uk'seady more than 2% of gdp according to analysis. despite this, theresa may has insisted she will not have into those calling for a second vote on exit your it -- vote on exit. seen -- how likely is it we will get some type of resolution on this? seems ase resolution far away as it ever has been. the deadline is approaching where some sort of agreement does need to be hatched. they've said they are 80% there. the new brexit lab confirming that. the 20% is proving difficult.
as we run the question of northern ireland and what the future framework is going to be. that is the thing the conservatives fighting about so much amongst themselves. what is the future trade a given -- trade agreement? there's been a lot of noise over the weekend. front page article in the paper today. there needs to be a different approach. happening,his is parliament isn't even back yet. the temperature is rising in this debate. a lot of arguments going in the coming weeks. vincent juvyns is still with me. is jp morgan base still that we will get a soft exit -- soft brexit? vincent: it remains our conviction. havee using europe to negotiations leading up to the
last day. it can be found in the mental of the night after 18 hours of negotiation. -- the risk for both economies are too high for not having a deal between our two economies. i see hope and have is a best case with my colleague that a soft brexit will be within the next year. nejra: what is all this about the possibility of a second referendum? david: the prime minister just cannot of the weekend ruling that out your it i think the question here, it depends on what the labour party has to say. they have been increasingly shifting their argument on this. we have not come out and said we will have a second vote at some of the recent comments have been furthered that maybe it could be something they would support if it were to lead to stabilizing
the government. the government is holding their line. europe may will come to a midnight agreement at the final minute here in the question is what deal could be passed by the british parliament? a people's vote or should parliament have a say? there doesn't seem to be any version of brexit that parliament can approve. if parliament can't prove it, we are back to no deal. nejra: what does this mean for cable going from here? of course we are weakening today. probably going to continue a couple of days. you will see a lot of uncertainty as long as we are kept in the dark regarding rex brexit thereing will not be much from current levels. pretty much like the other topic let we discussed earlier on, trade, italy, brexit are the
keys. we continue to wait on the markets. as long as no clarity will be provided by the authority, we need to accept this like we see today. ofra: vincent juvyns jpmorgan asset management stays with us. still ahead, more trouble in turkey. inflation hitting highest levels in 15 years, prompting the central bank to's ignore higher rate hikes. this is bloomberg. ♪
seen a huge amount of movement. you can see across the region's a little bit more movement. the ftse 100 on the front foot. some could be down to weaker cable. weakness on the dax. of these, this was one best-performing indices at the start of the year. it is slightly higher today. if we switch up the board and see what else is happening, we are keeping and i on the turkish lira here it is continuing to weaken. cable also weaker. brexitas theresa may's plan comes under some criticism. dollar-yen trade slightly higher. the bloomberg dollar index just about holding on to some gains from the past couple of days. italy's 10 year yield had dropped several basis points earlier. we are just down one basis point on that 10-year btp. brent crude on the front foot.
above $78 per barrel. 78.25 is where we are trading. here's kailey leinz. ley: president trump has a warning for canada and congress. he says that there is not a fair trade, canada will be out of the nafta. he says congress will not be out -- congress should not interfere or he will terminate the current treaty. two reuters journalists convicted to seven years in prison. they had been investigating military atrocities against myanmar's muslims. writers says there are compelling evidence the two were set up by police. israel's prime minister benjamin netanyahu says there will not the any cease-fire until the remains of two israeli soldiers are returned. talks are underway to end five
months of protests at the gaza border. a cease-fire would also lead to a lifting of a decades long blockade of the territory. global news, 24 hours a day, on air and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz, this is bloomberg. nejra: thanks so much. the turkish lira paring its slide after the central bank said it would take action to support price stability. --'s bring in bloomberg's and still with me from brussels is vincent juvyns. we got this statement from the central bank after the inflation date. we are seeing the turkish lira weaker. is the central bank setting the lira up for a fall if it doesn't deliver the hikes to as much of a degree as the market might expect? >> absolutely. traders in the turkish have swung between hope and despair all along. on one hand, you have this
inflation which is proving very aggressive. on the other, the central bank not deal with -- it is not backed by fiscal prudence. , thise making on the 13th is good news of the central bank reacting to the inflation print as being priced into their. the lira is not as weak as it could be so it is entirely possible that on the 13th, people could be disappointed. nejra: language the central bank used was that it would use all tools available. there are several rates the bank could raise but also the way they could self tighten. are there other tools they could use? >> they happen self tightening for -- it is more for probably consumption rather than market consumption. they need to go beyond those
tools because they don't have much credibility. they have not been able to tighten the lira. they have to go beyond these measures. openness and clarity in terms of which rate they are targeting for instance might even help. but the central bank is not the agency to stop and tighten the lira now. it's the government and fiscal responsibility that needs to kick in. nejra: we will get to argentina and a second. but i want to bring in vincent juvyns of jpmorgan. why are you still over weight em despite all the moves especially 40 msx? vincent: definitely. we should distinguish the situation in turkey, and argentina and some weaker countries shared when you look at the performance, it is true
they stalled off across the board. and turkeyntries, and argentina. it should remind us that at the moment emerging markets are tested or challenge by the dollar. but we aren't anywhere near a crisis like we had at the end of the 90's or even more recently in 2013. with the outside, we see a lot of countries that are quite resident. turkey and argentina were weaker before the u.s. dollar strengthened. ae issue that turkey faces is lack of central banking dependency which seems to start to regain at the moment because the type of talk here today where probably not possible a
week or month ago or just the mention of a rate hike would have in very difficult. overall, we should differentiate for turkey and argentina and the rest where we see economies are resilient. were countries have corrected their imbalances. nejra: so, you do maintain a select application to jim equities and debt. what part of emerging markets would you be selecting? asiant: definitely continues to stand out in this environment as a region that we do refer at the moment. definitely is a region, i would mention asia. we see em's that have sold off across the board. we are well aware that the dollar is going to continue to weigh on em financial assets but at the moment, we do see the
evaluation also. remain vigilant enough away with theaby bathwater. there are a lot of good stories in the emerging market that haven't changed and which we cannot compare to what we see in turkey or argentina today. nejra: we are still awaiting headlines from argentina. as we were talking earlier, argentina has done what a lot of people have been calling on turkey to do which is call -- which is raise rates. and yet, the peso continues to weaken. why? srinivasan: again, coming back to the issue of the school responsibility, the problem is not about monetary policy. the problem is about fiscal imbalance and the government finances. unless argentina signals a serious effort to increase seven or -- increase revenue and , the problemnses
will not go away. the wednesday, we saw passing of the book to imf saying they should fund quicker. the markets looked at it and says it is a sign of desperation. nejra: what can he say today? srinivasan: he has to set out a number of plans to reduce government expenses. this point, they have to raise taxes. for have to set a roadmap fiscal prudence. then, that will give credibility to central-bank action. all the benefits of these high rates will kick in. nejra: the indonesian rupiah continues to decline today. i know there's a current account deficit that is that because of a fiscal house? why is that not responding to actions that have been taken? srinivasan: it is different.
the rising rates and the current account deficit and so on. as he said, there are several layers in markets. the bottom being turkey and argentina. russia, south africa, and the commodity exporting countries. they are less vulnerable in relative terms but they have levels of vulnerability. nejra: to that point, if we continue to see a stronger dollar, how much of a risk with that be to your assessment on emerging markets? it is obviously going to remain a strong dollar which is always been negative. sympathy for what has just been mentioned differently. exactly the same view that we have at the moment. again we need to differentiate
which are today better positioned to support a stronger dollar and to move forward even with a stronger dollar. so, there is an indiscriminate set this moment on financial markets. you also see a bit more opportunity. we see a weaker pmi this morning, but the beginning of the year. india, indonesia, so many countries that are more resilient than markets inc. or discount at the moment in which definitely are attractive to steal and import folio owing forward. sentiment and a day ofe today it is a sentiment a lot of investors that the dollar may also provide some
>> the largest online provider in the u.k. is going public. an initial public office on the london stock exchange. the company is hoping to raise rates at $88 million. last month, bloomberg learned funding circle is aiming for evaluation of $2 billion. in the u.k.g growth unexpectedly slowed last month. exports contracted and optimism fell to a 22 month low. some firms cited uncertainty about brexit and the exchange rate. dominated --tions dominated theans
box office. the film took in an estimated $22 million. meanwhile, the latest mission impossible sequel let the box office. it had a strong debut in china. that is your bloomberg business flash. nejra: thanks so much. has slashed the rating further undermining efforts. bloomberg spoke to the company's deputy cfo earlier. >> the s&p statement in no way iteration of any our business. quite to the contrary. us for good operational performance paired are strong momentum of sales and whichod result in h one was 10%. the change in raging just dems from a change in methodology. they now taken account our parent company and our share
price. it in no way reflects any deterioration of our business. i was quite pleased to read that in the statement they even wrote they we have strong operational performance, particularly in france. but this much put a lot of pressure on you. you are also battling the short seller, muddy waters which has taken aim at your consecrated financing amid some of the price competition. do you have to sell assets? how much? and you have buyers? >> sorry, i didn't hear the end of the question? >> the question is, you have a 1.5 billion euro asset sale 10. do have buyers for those assets? >> sure. as we said, when we presented results we had some nice indicated offers. committed and confident
to deliver our one billion debt reduction this year which will of course be largely financed disposal.asset also by our cash flow generation. is why we were so confident in maintaining our one billion 3.7 two 2.7on from at the beginning of the year. we are confident in our ongoing plan. >> when do you think that you will be disposing of them? by the end of this year, or will it take you don't -- will it take longer or will it come sooner? >> what we said is we plan to do at least half of it by the end .f the year before the end of the year we will be of course be able to announce as soon as we have the definite offer. at this -- it is a very
confident view that we have based on the discussions we are having right now. >> just to make sure i understand -- are the assets real estate? >> some of it is real estate. we disclosed that of course. some of it is not real estate. the part that is real estate, what we see is that we are getting excellent prices. that is usually what we get when we sell real estate properties. 20 to 25 years of rent is the value of our real estate. it is going to be quite relative. french retailers have been and the price war and in some cases have even seen food deflation. you have any signs that it is getting a little bit easier for you guys come at that you are seeing in some cases food inflation? sorry come i didn't get the
end. food inflation in france? >> yesterday have you seen any signs of inflation taking hold? overall, our business in france is extremely strong at this stage. we see very good momentum. again, we disclosed our summer numbers which were very good. if your question is about how we see the competition and how we see our business going on, we think we have the right positioning and our numbers show it. the right positioning at the right mix and right combination of digital business. have the results of the revamping that we did on most of our stores recently. they are now like new cans in
the supermarket and that shows in the sales momentum. that is noticed by s&p which is growthhat of the average in france of retail. that was david lubec speaking earlier. moments ago the president of argentina was speaking. a couple of headlines from what he has been saying. argentina cannot spend more money than the nation has an the path for argentina was always going to be hard. that is what we are hearing so far. there in mind, a currency crisis argentina is driving further into a recession. as of friday we saw the peso down more than 50% this year. competing in a race to the bottom with the turkish lira as the worst performing currency in
emerging markets. remember the central bank has hiked rates to 60%. that did not stop peso plunge. analysts are saying the lack of , consistent strategy insult america's second-largest country is causing investors and the public to lose they -- lose faith in the government. so far to headlines coming out from argentina. does this so far suggests that we are going to see any meaningful move to cut spending? srinivasan: it started by making the right noises currently -- certainly. to replace words with action or is it going to be just words? we have to get more information on this and allow him to finish his speech before we can jump to any conclusions. investors will be looking for specific action on taxes and austerity.
come, ihe headlines think investors will be a bit skeptical about this. nejra: in terms of specific actions, we were hearing some tongs -- argentina was said be weighing reinstating taxes on crop exports. what have we been hearing and if that comes to pass how much would it contribute? srinivasan: this is going to be a long and hard battle for argentina to get out of the crisis. what investors want to look for is specific action. it could be the 10% tax on crop exports returning or something else. it could be specific action on cutting down expenditures. all of which will be difficult to sell to the public. i has built up over the years and it is time to deliver now and live up to the reputation. even if that is a different commitment in order to push the country to fiscal prudence, i
think investors must take that as a positive. nejra: more headlines coming through. that investors have started doubting argentina's ability, yes, that is fairly obvious given what we are seeing. these issuesing the best way possible but also saying argentina's situation has changed mostly on external factors. how much of argentina's problems are external and how much our homegrown? srinivasan: to put the blame on external factors would not be absolutely right. we have seen argentina pursuing a progrowth approach and prudence evenal as the central bank remains hawkish. that dichotomy, as we keep referring to, has contributed significantly to the crisis. i hope this is not passing the buck to say that, because of the
dollar we are suffering. no, the stronger dollar is common to all emerging markets. it is not affecting all markets equally. the external markets will affect you when the internal factors are weaker. nejra: still more headlines coming through, moments ago saying the peso weakness exaggerated by brazil and turkey. the contagiong to we sometimes speak appeared argentina reacted quickly to the weakening peso months ago. you were just saying that you can't blame all of argentina's problems on external factors. a lot of the problems are homegrown. is it the problem child of that south america or are there parallels to be drawn? srinivasan: argentina is pretty much the problem child. but growthn a mess, slowing and corruption and other things.
mexico has just had a close shave and now probably mexican assets are looking for more progress. cannot talk about external factors or even regional factors unless it exists -- it fixes its budget. the solution is also from there. ofra: could we see a repeat 2001? srinivasan: i don't think it will be so bad as 2001. they've just come back after 15 years of fighting with bond investors and a successful bond issue. reputation as being a reformer. probably argentina will start fixing its problems starting with this speech. nejra: and still yet more headlines coming through begin just a few moments ago. arek the argentines
traveling on monday. argentina mate reese a an agreement -- argentina may reach an agreement with the imf. we must make every effort to balance the budget and set the gold not to spend more than we have. he says argentina be exposed until they have a solid budget. thank you for joining me. roundup and analysis on argentina there as we get those headlines through. coming up, much more on argentina and emerging markets. the capricorn fund manager senior adviser and head of risk committee. thanks for joining me for this.
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>> it is 9:00 a.m. in new york, 3:00 p.m. in london, and 9:00 p.m. in hong kong. from new york, i'm caroline hyde. welcome to a special edition of "bloomberg markets." continued turmoil for emerging markets. turkey takes actions to curb inflation while argentina's president, plans to save the peso. here are the top stories. canada, and u.s., mexico get what they need from negotiations? sterling slumps as they battle over brexit heats up. mark carney is expected to step down in 2019.
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