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tv   Bloomberg Markets European Open  Bloomberg  October 17, 2018 2:30am-4:00am EDT

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to bloomberge markets, the european open. live from our european headquarters. boosting the nasdaq to a 3% gain. europe looking positive with a cash trade. >> the rally is on. european futures point to a stronger open. beat drug giant roche
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estimates. we will speak to the ceo. --e pompeo casts doubt donald trump casts out as mike pompeo lands in turkey. president trump: my biggest threat is the fed because the fed is raising rates too fast. i'm not happy with what he is doing because it is too fast. e.u. leaders meet with no brexit ram on the cards. we are live in brussels. >> let's take a look at futures after the big rally we saw. the dow jones industrial average and the nasdaq, up 2%. hours trading even higher. treasuries are not
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moving at all. this is interesting. we are going to get the minutes later. that could move this. traders will kind of sit on their hands in moments like this. they will turn off the algorithms because it is too difficult and complex. you are going to see the 10 year yield, maybe not change until 10-15 minutes after the minutes are released. we will take a look at that life later on. let's talk about equities. all three u.s. benchmarks gaining more than 2%. largely led by tech. we see a similar picture in asia. it is not about netflix. we have seen it in the semi conductor space. green across a lot of the reason. we are seeing dollar strength
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come through. dollar yen is flat. a number of these emerging-market currencies in asia decline against the dollar. euro rate declining. looking ahead to whether we will get a deal from brexit negotiations. look at what is happening in fixed income. the treasury rate been steady. a move, for basis points. what we are seeing in commodities, shanghai, some of those bid. >> thank you very much. moving to lower costs.
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aiming to save 200 million years by 2020. described that target as ambitious. the ceo of the company, joining us. profite a goal of 15% margins by 2020. do you feel confident about that? third quarter showing we are definitely moving in the right direction. we added two percentage report's -- points return on sales. we are 12.1 or 12.2. we took a big step. , we feel much more encouraged getting to these targets. the thirdly because quarter had a significant amount of head woods -- headwinds we overcame. great to speak you,
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thanks for joining us. talk to me more about your efforts to lower cost. how are you going to achieve that? thisen we embarked on a-20 strategy, we laid out bridge from the 2017 results with a number of elements in cost including optimization plans. we announced in october last year the first step as we call it of the organization. 110 million ural's would have delivered on that in full. means we are on track to deliver what we promised with the second step we just announced, $200 million runway savings for 2020. that is the second step we announced. as we have defined how it is
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going to go, we felt it was appropriate to announce it. be rolled outto over the next 18 months. it is implementing as we have been doing over the last year in of the promises we have made to get to 15-20. cost of raw materials of 108 million ural's review expect that to increase at a slower rate for the rest of the year. what of the biggest inputs? the commodities driving those increases that you clearly >> there are a number of categories in our procurement. resins.ones, those are the three big categories. it has kindat them,
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of reached its peak. we do not expected to come tumbling down. to flatten out and maybe a road. that is not the biggest worry. our price effort, we have been able to accept it. , not linked.lvents we still see them edging up slightly. our estimation was you are going a 300 million you're a impact on our portfolio in 2018. additional over what we had in 2017. we do believe we are going to be not only at the far end of the estimate, slightly over. we do see reaching kind of a cruising altitude. it is keeping us ahead of last
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year. it has been a jerk coney an effort to get the pricing up -- for coney an effort to get the conian effort to get the pricing up. nejra: can i ask you about acquisitions? paint some reason, the market, everyone is speculative and who is going to move in with whom. a lot of activity in 2007 team. we probably as an industry, everybody keeps actuating. it has been increasingly clear it was 15-by 20, a self-help plan. world leaderg a but having the entitlement performance that goes along with it. that is taking up the bandwidth of my organization. it is an either or. we would abandon that or go for a big acquisition, or vice
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versa. there are acquisitions, where ak nobel continues to be active. ineader in wood and metal spain. number one in decorative paint. we are very interested in them. at being alook focused company and bring it performance wise to where it should he, being one of the strong leaders. that is kind of secondary in our thoughts. >> i wonder about your pricing power. pricesily do you raise for example in the u.s. or europe? topicion starting to be a
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people are concerned about? up in any prices industry is difficult. i would say for mainstream products, we do have pricing power. is pretty well documented why we do this. this creates a different dialogue with our partners. it is never an easy way to do it. what we have done and our company, looking in the mix. we did lose volume in the third quarter. auxiliary products, on walls, the economy lines in places like china, resins -- sales we were doing. notvolumes where we were
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making any margins. we seem to be holding pretty 6%, 7%r own despite the increase we are doing. we seem to be holding our own and our categories. paint and clothing. i am going to be like a dog with a bone with the m&a issue. i want to know whether you have had any contact with your u.s. rival to combine the two companies. >> we love dogs. wrong with being a dog with a bone. we have contacts around. always investors, everybody comes with a great idea how to do it. we are not blind to that. right now, there is no active dialogue on that whatsoever. why we are focused on doing our own work. in thews what happens
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next month? for us, it would have to be a great opportunity to throw us off. 15 by 20. about ppg?k do you see any suitors? >> everybody talks to everybody. but not really. we can't stop anybody. we are on a track delivering. investors build confidence in our own plan, create quite a bit of value for the time being.
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>> very much focused. thank you for your time. talking us through. we are about 17 minutes to go until the start of trading. looking at equities exposed to saudi arabia. let's start with you. >> the company has weathered the storm. the revenue declined in the third quarter. seeing results come in at the lower end of the guidance. investors totally do not like that.
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not looking good here. at ast are you looking far as exposure to saudi arabia? >> decides the oil stocks, i am looking at defense and aerospace companies that could be exposed. airbus. they-year-old -- the euro typhoon fighter. bae mader, v.a. e -- about 17% of the group revenue. these stocks could have any as tensions in saudi arabia and the european union play out. are looking at roche. i love the headline. of drugsull guard
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holds up in the face of new foes. >> they want to know how the core of egg blockbuster cancer medicines are performing. for the first time in two decades. we saw sales beating estimates. this old guard of drugs did hold up and beat estimates. we see some benefit coming from new drugs. looking seta good of results. >> you can get all the latest stock stories, just type first go.
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let's get the latest on a huge earnings story. the ceo of roche. i thought it was interesting. naomi wrapped that up. the old guard doing well but you have new ones in the pipeline. strong quarter. sales up by 7%. over 90% due to these products. they will achieve sales after $2 billion. the most successful launch in the history. nejra: as we talked about, good
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medicinesop selling facing the competition -- you say it is about the new medicine. seemtock, investors do not convinced. what can you say to convince them? the stock has started to recover. i believe it is now about delivering quarter by quarter. it has to be continued, not just to compensate but overcompensate. whatsoever the befidence will come back and reflected in the share price. >> how are you prepared to -- i'm sure the new drugs are part u.s., strategy -- in the it is not going to be until the
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second half of 2009 team. you are seeing a 10% drop in those sales. quach's you have two offsetting trends. at the same time, more impact from the new medicines. there are a number of new medicines doing extremely well. already in the first nine months, over $2 billion sales, growing at 20%. growing very fast. medicines coming through the pipeline. yes, the impact will increase over the coming quarters. u.s.will also come to the market to read impact from the
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new medicines will increase as well. we expect they will grow through this time. you say it is not only about aqua verse. libre ask you about penn as well. what feedback have you had in terms of hemlibra? this is a breakthrough medicine. it makes life much easier. a is more convenient from delivery point of view. only one injection per month. difference. big on top of that, we have seen less leads. bleeds. we just got approval for
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factors not only for eight inhibitor patients but non-inhibitor patients. confident. the financial side of the business, i am wondering if the changes in the u.s. affect you at all, from the health care system under president trump -- president obama republicans seem to be whittling away at. of the day, it is about the value we provide for patients. convinced, if you come with medicinesgh medicines which really make a difference in patient lives, prolong lives, improve the quality of their
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lives, this kind of medicine -- we deliver as a company. i am very confident the u.s. remains an attractive market. >> would do you think of the u.s. policy that would force drugmakers to disclose the price of their products in tv ads? >> i think it is fine if there is transparency. we publish our prices anyway. from my perspective, there is no issue with that. a company very much are focused on specialized treatments. tb than other companies
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but personally i would have no problem with this. let's move down to china. sales are growing strong. what is your outlook for the market? companies take full ownership of joint ventures. how was it for doing business for a drugmaker? us, china is developing very well. there are two factors. one is the health care system is shifting from a more basic delivery to more sophisticated. are more expensive and sophisticated medicines are -- in the public segment. the cancer medicines are
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on the national list. this is one of fact. the medicines to the public to the public. the second important effect, china has improved its regulatory system. innovative medicines come to the market much earlier. for example, a medicine for lung cancer, it was a proved only eight months after approval in europe read given the historic timeline, this is a big step forward. that favors a company which bets on innovation. you have said before trade wars between the u.s. and china don't really pose much of a concern for roche. have you changed that view? what would it take to be impacted? >> my view has not changed. typically, when
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it comes to matters of death or life, importing and exporting a mutual, there is interest between the various ofntries, for the sake protecting patients, that typically does not make it into trade tension. i remain confident we should be less affected than other industries. i am just wondering about your stock performance. underperformed the benchmark in switzerland. it has been a rough five years total return, only bringing you 5%.bout what do you want to do to recoup some of -- regrow some of their investment? >> the big question in the
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investor community, is roche able to -- our portfolio is exposed. you only see over time the pipeline progress. importantly, the demand for the new product launches, providing enough growth to offset the entry of bio similars. personally, i am very confident. as i see the strong demand for our recently launched medicines. stronger than we thought internally. stronger than investors thought the demand would be at the beginning of the year. i see this continuing. very strong pipeline ramping up. 15 new molecular entities in
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late stage development. that is important for long-term growth prospects. thank you for joining us for a great conversation. the roche ceo. coming up, the market open. ♪ nejra: we are less than a minute
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away from the european open. the stoxx 600 gain yesterday was led by the rally in the u.s. session led by tech. the story has been the same in asia, the nikkei closing higher by 1.3%. tech stocks are leading, but it is not all about netflix. we have seen gains in semi-conductors. the euro trade is flat, a touch of dollar strength but fx is not the big story. big, up 3/10 of
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we had some signals we could see a drop in inventories. flats as well after a bit of a joke yesterday. it looks like we could see a firm open on the ftse. here comes the open. we will see if this feeds through to what we are seeing in europe. the future pointing to gains. inx trades higher. the ftse taking a while to get underway. it could exceed that as we head through the open. of the gate, we are seeing these gains in some european equities. just waiting for the cac 40 and dax to get going. matt will talk about that in just a second. are we going to see more gains for europe? although we saw gains of more than 2% across all three u.s. equity benchmarks, today to be a muted session.
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cac 40 up a quarter of a percentage point. to seet is interesting that energy is leading the one. -- way. we knew that tech would do well because of yesterday, but energy is doing quite well also. bit, we saw a bit of a dead bound. but we see it rising, materials up. only health care is down. you also see some read in industrials and consumer staples , more of a defensive industry group. it is noteason, maybe bad if you are along european stocks. what you see as far as individual names? nejra: let's take a look. if you look at the function, the
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best performer is pearson, up more than 6%. what we have heard is that it and its full-year adjusted is on track for profit growth with revenue in line. not only that, but we have been upgraded. a number of things feeding into positive sentiment. and we spoke to the ceo in the last hour, up 2.7% for akzo nobel. and if we look at what is happening to the downside in terms of some of the worst performance we are seeing. this equity down 2.5%. we are seeing interesting moves in a u.k. property and berkeley down 2% as well. -- barclays down 2%. matt: markets moving a little higher after the big rally we saw in the u.s. yesterday.
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earnings seem to be part of this as they should be. a lot of people have been saying , why aren't we looking at the fundamentals? i guess we started doing that. it brings us to today's mliv well earningsh is drive fresh record spike year-end? joining us now is the cio at saxo bank. do we hit record highs? likely considering we have this massive buyback program which is supporting overall market sentiment. i think earnings will be just fine in this quarter but a lot of investors are starting to look forward and say there were a lot of a one-off's that gave us the tailwind. but there's a fair chance. are 3.5% from we
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absolute top, it is possible. concerning yesterday, it was tech and bank earnings that added to the positivity. in terms of sectors, what would you say it will outperform? three to fourst weeks, momentum has been a strong driver. are lessguing they prone to be impacted by higher future fed trajectory rates. short-term, this is really where you will see the outperformance. value is coming back because of the underlying fundamentals you mentioned. matt: value is coming back. where do you see the most value in this market? in health care and in consumer staples. , the s&p 500 is the
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story of a lot of stories. technology is doing well, the burden of the outside. whereas consumers have been hit hard. most of these stocks are down to flat for the year. fundamentally, when people start to realize that, if we see a continued high interest rate, stocks will also be hit. a lot of their earnings life in the future, which means the tax on future growth also comes back to the momentum. fundamentally, they are about one standard deviation and that will carry for a lot of investors. when you say growth stocks could be hit, perhaps that is why you are not as positive on tech. but what about banks, because they have actually underperformed. but if there is is not value to be found there? there is definitely
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protection in terms of the dividend yield and performance. you have seen some banks be very disappointed about the stock reform -- performance. and the numbers we saw were quite impressive, myself coming from a market volatility sort of place at sachsen, i think they are doing great and there is fundamentals. but looking at the european banking sector, we see that they are being impacted by italy and the ongoing talks. we are going to talk a lot more about, of course, we will continue to discuss brexit. but we'll talk about banks as well later on. time. way, it is crunch i'm told it is crunch time for brexit. to join the conversation on today's question of the day at mliv .
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will the s&p 500 be driven to new record highs? we are already up, at least in the u.s., in terms of net income. fantastic, and of course, a lot of beats as usual because analysts always underestimate earnings going into the season. up next, we bring you the stocks on the move so far, including akzonobel. it's up after the company announced it is pushing ahead with its cost saving measures. this is bloomberg. ♪
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nejra: this is the european open , 10 minutes into the equity trading day. let's get to our top stock stories. >> let's talk about akzonobel up. this is its key profit margin indicator. from 10%,to 12.3% still short of its goal of 15%. the company is trying to lower costs as a deals with rising prices. 6%., asml up they beat estimates for sales and profits. they also announced five new orders and a third quarter for its newest machine. to the downside, danone.
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despite improving demand for dairy products, and really offset the infant formula sales in china, but the market is focusing on this 20% drop in infant formula sales in chinese markets. it really ends a stellar run for danone. matt: thank you very much. theresa may's brexit headache is far from over. sources have told bloomberg that the current guarantee to avoid a hard border does not have enough votes to be approved. a stark reminder of the constraints on the prime minister. she has to a key summit in brussels to break the deadlock. joining us now is bloomberg's maria tadeo. can they salvage a deal? that story we put out
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yesterday night is bad news for her, but i want to point out it is terrifying for the eu. a deal would get put to a vote and the u.s. -- u.k. getting thrown out is a worst-case scenario, because all bets would be off. before that stage, we have today. is that theresa may will get to have some kind of dinner with leaders and put forward her own proposal for the irish backstop. an incredibly technical issue that will require political will. the reality is that we have gotten no progress. what we hear is that we need to get a proposal today that takes things forward. may,it comes to theresa she is under immense pressure back home. she does have a bit of oxygen, and the only's people who can provide that will be european leaders. nejra: given the pressure she is
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people say her biggest challenge will be getting a deal through the u.k. parliament. how much are people talking about preparing for a november death -- deadline? >> we were told four months this is how brexit would play out. in october, we get the bones of a deal and leaders will sign off in november for a vote. the u.k. will leave in march. they have been crystal clear, there will be no extension to article 50. in terms of the sequence of events, things are changing quickly. hear is that we hear the same standby but no progress. is no progress, what is the point of a meet in in november.
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we might also hear european leaders calling a no deal summit in november. but theresa may does not need any more pressure. nejra: thank you so much. staying calm despite all the pressure there. still with us is cio at saxo bank. i've had a look through your fourth-quarter outlook. i don't see anything on brexit. is this because you don't see the u.k. as somewhere that is particularly investable? >> certainly investable, but it's not on our radar. this is a political issue. the good friday agreement stands in the way of creating the solution. -- illusion. the market has pretended this is an issue that will simply be resolved. it comes to the final hours of
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these negotiations, and i would be unsurprised if there was a delay. for us to talk about brexit would be a key one issue, because clearly, the u.k. does not know what to do. having said that, we are getting into an important part of the negotiation. if i would not be surprised the eu politician comes out with a stock the club sort of thing q1. -- in q1. matt: what do you think happens to sterling, the ftse? if we get a not know what deal not a deal. if they just negotiate into the 11th hour, drag it on. continue to move the goalposts. what does that do to the assets? >> clearly, it is the same deal as you know, but fundamentally, technically, sterling looks ok
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from a technical point of view. of the few economic regions that is still seeing expansion of the credit side of things. there is credit support and technical support. overall, if there is no deal, the lack of transparency and actually providing solutions will create more nervousness. i know you love this, but i think sterling will be exactly where it is in three months time. i don't think anyone will take a major decision on sterling before we get a resolution. interesting, it would be good to see if there is a lot more volatility aired i want to ask more about the ftse 100. battle of thein charts and i did not take it as a winner, but i bring it up now.
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strength indexve drops below 30, we know it is oversold, but it has gone above, which can be seen as a signal that now is the time to buy and get in. would you buy that on an index level or pick selective companies? steen: the ftse is happy in mining, which has been under pressure. so i would be buying. one of our themes is when will after the massive increase in fiscal and monetary easing. i think it is fundamentally a goodbye. and with sterling being unchanged. to answer your question, i don't think there would be a lot of volatility. theyone thinks we are in final hour, so i don't think anyone is sure. short, so the risk is on the up side rather than the downside. byra: so it is more of a than a commodity play?
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steen: yeah. i think it has become too much of a currency play every time sterling is down. nejra: understood. matt: thanks very much, stick with us. we have more to talk about. quick check of the markets. after 18 minutes of trading, we are still seeing gains across europe with the consonants doing a little better than london is. looking at a half percent gain in spain. this is bloomberg.
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matt: welcome back. -- 4:20 a.m. in tokyo. we are looking at a live shot of the palace, where i am sure nobody is smoking weed. but the candidate's hype is about to become reality in canada as the country legalizes recreational marijuana. juliette saly is covering the potential winners and losers. this is a big deal. not just for the counter culture
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kids, but for investors. >> it certainly is. there are more than 135 publicly traded pot companies in canada alone, but many believe that is only a matter of time until it gets whittled down through consolidation or failure. preferreds organic graham. this is their one year price momentum, up by over 300%. he says some of these will trade at a more realistic valuation than some of their bigger peers. let's have a look at the meteor rise of these companies. ray, a marketll value a $15 billion, up 800% year to date. 740% from its ipo. a lot of analysts calling for a buyout of this stock and a $200 price target. , traded on thele
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toronto stock exchange has seen stock rise 65% over the third quarter. but will these returns survive? one analyst says there could be only half a dozen major players left three years after the legalization. he says the rest will be bankrupt or out of business, just because of their business models won't work. as we look at options volume, they have surged recently as well. really ahead of this legalization, but it could be the days of these highly correlated moves trying to a close. their ceo told a toronto marijuana conference that disintegration is going to happen when people make promises and valuations they cannot meet. of you're seeing a lot outward momentum coming through in these options. according to an
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the international market will be worth around 50-100,000,000, down from the current $1 billion. ceo at 7 p.m.that here in london. nejra: thank you so much and great work. -- cio at us is ceo sex of bank. -- saxo bank. do you see any opportunity? >> sure. that thereeminds me is always a pot of money in the world that is exchanging ideas and concepts. less than a year ago, we were chasing cryptocurrencies. constantly, you can find pockets
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of stocks and ideas that trade up. clearly, this is one of them. matt: cryptocurrencies, arguably, nobody needs them the way you need a drink or a cigarette, or someday, marijuana, right? if you invested in alcohol or cigarettes at the beginning, you would have made a killing. and i don't mean any kind with that. what about weed? is there an argument to be made that if this becomes legalized and socially acceptable, then everybody will be doing it? case, i'm not arguing the and clearly you have some love for this product, but i'm arguing the valuation is out of sync. [laughter] upen: anything that goes this much is exponential, and when it is, that's a bubble.
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don't get me wrong, i'm not saying it is not a story. it is brave them to do it. down the line, it will have positive impact. but evaluation is totally out of control for the story. it is hard money chasing this idea, but i agree, this does not mean it is not a business that is ongoing and good for socioeconomic development. nejra: i will pick it from weed to tech -- pivot from weed to tech. would you buy? steen: it depends. the market is getting expensive. went to do that deal in time is the ultimate question. right now, no. deftly not touching technology. matt: we will keep you with us. and ie more to talk about
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believe we will have you judge our battle of the charts. hopefully you can stick around and do that. coming up, mike pompeo arrives in turkey as saudi tensions as get stock. ♪
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matt: 30 minutes into the trading day, let's get your top headlines. earnings rally on. europe opens higher following asia and the u.s.. asml and roche be to the estimates -- beat estimates. trump defends saudi arabia as mike pompeo lands in turkey. he also takes another jab at the fed. >> the threat is the fed, because they are raising rates. it is independent, so i don't speak to them, but i am not happy it is going to fast.
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heading into battle, eu leaders meet with noah brexit progress. what will they make of theresa may's backstop plan? good morning and welcome. i'm matt miller in berlin alongside may wretch a hitch in london -- nejra chehic in london. the benchmark gaining by 4/10 of a percent. it is tech stocks leading the gains. we saw that yesterday, we saw in the asian session overnight. this is the best performer, up 6.5% after beating analyst estimates, saying he wants to be watching those chip stocks. seeing one of the best performance up 4.8% earned positive news for pearson. we also had an upgrade from one of the houses on that stock,
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adding to positive sentiment. akzonobel higher. there was a miss on some of the numbers, we spoke to the ceo and he seemed pretty confident and talked about reaching targets. investors definitely seeing some positives. let's take a look at some of the losers, the worst performance. definitely underperforming here, down 13.7% heard some of negativity coming through in the housebuilder u.k. market space. barclays, down 2.5%. news int first word dubai. donald trump says it would be bad if saudi arabia's crown prince new about what happened hethe missing journalist but
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expressed skepticism over the growing criticism of the saudi rulers, comparing into allegations against supreme court bread cabinet. -- brett kavanaugh. this guy is a wrecking ball. this guy got murdered and a consulate, and it -- to expect me to ignore it, i feel used and abused. there's a difference between a country and an individual. he can never be a world leader on the world stage. >> mitch mcconnell says the fight over brett kavanaugh's supreme court appointment has given a bigger to republican voters. that comes as the battle for control or the senate enters the last three weeks. he told bloomberg that the timing could not have been better.
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a cliffhanger races we have like arizona and nevada, montana, missouri, indiana, tennessee. i think it has been like a shot of adrenaline, and hopefully, we can match the democrats in enthusiasm. china's holdings of u.s. treasuries fell for a third consecutive month. world's second-biggest economy and reduced its ownership of american debt by $5.9 billion to 1.5 6 trillion. the oneas they prevent from weakening amidst trade tensions. global news, 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra: thank you so much. donald trump has expressed skepticism over the
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disappearance of the saudi journalist. in an interview with the associated press, trump cautioned against rushing to and comparerulers the case to allegations against the brett kavanaugh. dubai is ourom golf economy and government reporter. catch us up first, good to see you again, by the way, on the latest in this investigation. far, mike pompeo is headed to turkey to meet with officials. that comes after searching the consulate. they said they managed to find evidence that the journalist was killed inside the consulate. after nearly two weeks since the alleged murder has taken place. the council generals have
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meanwhile left the country, headed back to saudi arabia ahead of a search of his house. saudis, they said they promised a transparent investigation. how are trump's comments playing out? is this the kind of thing his base understands he has to do? and how are they playing out in the middle east? so far, trump's comments are being ridiculed in the u.s. and met with disbelief from many lawmakers who do believe that saudi arabia had managed to manipulate president trump to not being hard on them. far is are hearing so the expression of many in congress, on both sides of the aisle.
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basically that democrats and republicans are both calling for accountability for whoever perpetrated this crime. act hasthe magnitsky been triggered and they have 120 days to come up with the conclusion of its investigation. that can lead to sanctions on people found responsible for this. what does all of this mean for saudis efforts to draw foreign investment? i'm guessing it's not looking like a pretty picture right now. >> it is a huge setback. two years of more of effort to try to move foreign investment seem to have hit a roadblock here. we have seen one business executive asked another to pull out of the conference that is going to be held next week.
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, we are actually hearing about deals being canceled. arabia, all of the work done in trying to modernize and bring foreign investment, it does not look good. saudi arabia has a big problem in trying to provide employment to a largely youthful population. the unemployment rate is around 12% and is rising. aside from all of this political , we are at real problems in the saudi economy that they need to tackle. this problem is actually whiter than it looks -- wider than it looks. matt: thank you very much. bloomberg's golf economy in the middle east reporter. disclaimer, several companies, including bloomberg, have pulled
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out of saudi arabia's future initiatives as media partners. as european earnings a season kicks off, investors are starting to look at the theme which drive markets. has published its finances, and says the world is a turning on four qualities. the cio and author of the report is still with us to discuss. where do you see the biggest change? is the quantity of money in the world that is a big concern. we can see that the exchange of credit in oil has collapsed, but we also see the qt in the u.s. and a tightening of monetary policy. inside the u.s., you have liquidity driving the equity overall, that combines
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energy prices, another spinoff. in some countries, they are up 1500%. of the top growth and s&p 500 comes from overseas. ultimately, and that is a we are pointing out, the u.s. economic reality has to meet the world reality and the rest of the world is still bigger. -- lookhen let's work at the rest of the world. come back to this is the stoxx 600, again, tech is outperforming like it was yesterday. goldman and did some research and said it is not about the tech sector anymore. everything is tech.
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looking at the rest of the world, what would you be looking at that is attractive? steen: it is consumer led appliances, consumer led apps, , those who have the opportunity to benefit. and don't forget, less than 50% of the people are online. still has, technology a huge advantage in terms of penetration of the market. it will be all of this technology that facilitates and creates services to deal with the democrat and health care issues. demographics, of where do you see the best opportunity regionally? we only have slight gains in the u.s..
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european markets have been decimated this year, but chinese markets and e.m. are even worse. where is the best opportunity present itself? steen: in terms of valuation, we think china is cheap. half of its pe is trading at 11-12, versus the u.s., trading at 21. it is three standard deviations cheaper. is ofe catalyst for that course that china is ramping up its effort. and to some extent, fiscal policy. and if we look at the numbers over the last six months, look at nonfinancial lending, it is up over 50%. nowcredit impulse, -10%, is up 3%. now, the transmission, unlike in 2008, it is much slower.
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. in 2008, you need one credit dollar per growth dollar, now it is the inverse. so the timing and when this comes to fruition is dependent on when china kicks in. and we think china was in a bigger hole in terms of growth. now, you're seeing a slow move towards that. but china needs to be part of your portfolio, and at a bare minimum, you have to reduce u.s. exposure. reduce u.s. exposure, by chinese tech. take a look at some of your mid-cap movers, we go to annamarie for that. >> let's start with pearson's. the world's largest education company. it reported a smaller than expected decline in u.s. college coursework.
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latest turnaround sign that things are working for the ceo, saying the company is on track to turn underlying growth. group, all of the homebuilders are down. this is as there could be a to pressure after the warning saying markets for new homes in london and higher-priced locations in southern england is more difficult than previously expected. resenius,ending us -- f the biggest lack of this morning. they manufacture shipping agreement in germany. they cost guidance, and that is what is weighing on the stock. matt, nejra. matt: getting absolutely killed. thanks very much for that. dealmaking is not quite dead on wall street. morgan stanley rallies and goldman sachs jumps the most in
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six weeks after both said their investment banking is this surged. that is in sharp contrast to the slump seen in their rivals. so what are the main takeaways and the dichotomy we have seen so far? joining us for now is bloomberg's finance editor in london. our guest is still on set, but keith, let me get to you and ask, what did we learn? there is still a fair bit of confidence in the investment tanking sector. when the cio was looking at stock prices, he was bewildered they had not done better until now. he pointed out in the loan market, something some have said they worry about, that they are not especially worried.
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when i look at the bloomberg screen this morning and see the news that mover is looking at $120 billion ipo. advising themnks are goldman sachs and morgan stanley. that says to me that investment banking is not dead. nejra: beyond that, talking about goldman, what did we learn from those results in terms of what it means for david solomon? was theavid solomon investment banker as opposed to trading, very much associated with lloyd blankfein. i looked at some of the conference transcripts, and one of the big executives there was saying that the bank identified 1000 companies they hope to gain shares with, aside coverage to 80%, and the bank seemed pleased. of whates you an idea
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they see coming out of corporate america. matt: let me jump to the political angle. it seems like the big banks are doing fairly well. corporate earnings are pretty good. how much does the administration , for example, the new tax legislation, have to do with this? the taxveryone thinks legislation boosted the bank numbers. it remains to be seen whether that is a sustainable job -- jump. the euphoria in the stock market has burned off. tryingore about people to discount the very optimistic things they see with employment and the lingering worries this could be as good as it gets for profitability and bad loans. nejra: that's one of the big
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questions, isn't it? whether this is as good as it gets or the start of a golden age. we didn't bring up the banks of briefly earlier. if you look at the banking sector, would you be interested in anywhere other than the u.s.? steen: no, no. these otherat areas, you have seen a drop in nonperforming loans. i think that is a major concern. actualrun into the details of what is a nonperforming loan, it is way different. asia, of course, with the shadow banking sector, absolutely. that even in the u.s. i am concerned. market volatility is not high enough to sustain that growth level. the m and a activity is driven by the exit liquidity.
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it is driven by the repatriation of capital and the tax rebate. i agree, to some extent. that said, where else to put your money? and banks are truly cheap right now. matt: how solid is the u.s. economy compared to what we have here? donaldthinking of trump's campaign promise that we would be set of winning. is that the case? is the u.s. economy as solid as a rock compared to the eu economic situation? what will stop the u.s. economy is really the strength of the u.s. dollar, driven by the federal reserve. i am pretty concerned, i think most of the drive has been industry repatriation. if we took all of the industry shore,, moved it on
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creating a massive amount of liquidity which could then be used to do buybacks and increase in activity and dividend yield payout. this has been a great year for free cash flow. it is not to be repeated in 2019. does that mean they fall apart? absolutely not. but it does mean that they will go into a prolonged progress, theything being equal, have spent a lot of future growth money through the tax cut and others. -- other things they have been doing. thanks for joining us. great to have you. i just put in a request to get you on with me in radio in a few minutes. if you have time, i would be honored if you would join me talking about banks. steen: i might say no. matt: exactly, that's why set on
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live television. steen states with us, judging battle of the charts. hopefully he does a better job than yesterday. nejra: it was you! you lost, you lost! matt: i am a sore loser. let me show you the stock of the hour. earnings have been a strong point in today's market, and we are not seeing the kind of rally we saw in the u.s.. even asia, it was half as strong as the u.s. yesterday. but stocks like this are pulling big. asml up almost 7%. check out my gd. square, whererst ecb absolute change, you can see how asml is doing versus its average competitor. it is doing well in that sense
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as well. at 24, the company has 20 buys and only three cells. -- sells. another great function, bloomberg terminal users can interact with the charts you see using gtd go. catch uprowse charts, on analysis, and save charts for future reference. charts, we have learned matt miller is a sore loser. is he going to be picked as the winner? that is coming up next. this is bloomberg. ♪
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nejra: this is the european open. into the minutes equity trading day and it is time for battle of the charts. yesterday, i take matt miller as a loser, said today, we have a new judge. anna will go head-to-head with sebastian salek. for me, this is the only track that matters when you look at the geopolitical tensions saudi is dealing with. this is saudi oil gdp versus oil dependent gdp. isyou can see, non-oil rising, but the country is still enslaved to the price of oil. why this matters is because it
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has been in focus since they are future initiative. it is coming to the forefront as a number of ceos continue to pull out. >> the people of canada will be far too high to think about anything else other than my chart. we has become legal and we have seen skyhigh prices for those pop stocks. -- pot stocks. 1100 at the peak. compared to bitcoin, last year's hype asset, and i have got before -- the fourth quarter of last year. gains,, massive comparative to bitcoin. when it does legal, will it go even higher? nejra: it is decision time. who wins? steen: two great charts. up,ink annamarie has to get
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she is given information most relevant to the market right now. nejra: thank you so much. thanks to everybody. and you can see all of the charts by running gtd dell. this is bloomberg. ♪
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francine: president trump says it would be bad if the kingdom's leaders knew about what happened to jamal khashoggi. popular in shares soared in extended trade as user numbers trade -- crushed even the most bullish forecast. theresa may heads to the summit to break the deadlock. donald tusk tells her to come up with something creative. ♪ hello everyone, this is bloomberg surveillance. these are your markets.


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