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tv   Bloomberg Markets European Open  Bloomberg  November 14, 2018 2:30am-4:00am EST

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>> real the from our european headquarters herein london. i am anna edwards alongside matt miller in berlin. matt: equity markets mixed in asia, oil falls for 13th consecutive session. the pound is getting little ground and the euro hovers near a 16 month low. the cash trade starts in 30 minutes' time. ♪ anna: it is a deal. theresa may reaches of brexit
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agree with brussels but can she secure enough votes to get it through parliament? free fall. wti extends its record string of declines. opec warns demand is falling faster than expected. raising the end of its forecast range amid gains. we spoke to the shipping giants ceo. good morning. good morning. where less than half an hour away from the start of european trading. take a look at where european futures are trading. we're looking at red arrows across the board, the ftse futures down .5 of 1% but dax and cac futures down .75 of 1%. 3.14, 3.15 changed, is where we are seeing treasuries and the three-day chart, we have come down we aretially, and now moving along. there is so much going on today that may be investors want to see what happens first before
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they make any real decisions with their money. sensethat seems to be the in the asian equity session. they are seesawing and that passion. with themixed b oil price. some of the optimism around trade subsided, the oil price taking the edge of performance and in the fx market, we do not see the pound. yesterday we would have seen the pound, some strong gains in sterling on the back of the agreement between brussels and theresa may. can she get the rest of the cabinet on board? she is the question and can get the house of commons on board? let's have a quick look at the other side of the gmm. italy is on our radar and so is the oil price. the selling going on in italian bonds and this is interesting, atps being celled as the government's -- sold as the government sticks to its budget. here we see a host of assets moving to the downside, oil
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prices continuing to move lower. let's get back to the brexit story might theresa may has clinched a brexit deal with the eu after months of deadlock. the pound rose on the rakes her but the u.k. prime minister has to convince a skeptical haven't had overcome the odds to get it through parliament. singapore isom mark cudmore. very good to have you with us. give us the bird's eye perspective on what is going on here with the pound and it rallied a little bit yesterday but back to levels we have seen earlier this week. suggesting that there is still a lot to do here if the pound is going to rally further. that is right. the reason has been a subdued reaction. its has been the base case, has always been assumed to that theresa may would reach some sort of five's agreement with the eu and the bigger issue is whether she can get it by parliament and that remains difficult. the big stumbling block for the last months is whether the eu and u.k. could agree on some
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kind of deal for the irish border. that would get the support of thatup and it is not clear the agreement would get the dup's support. that is the biggest stumbling block. even once we get through parliament, he does not fix all the fundamental problems of the u.k. economy and the pound. matt: what are the chances of this deal getting through? could you put a percentage on it? i am probably the wrong person taste in singapore, i spent many years living in london. the dup are not inclined to show support and there is enough people within the conservative party who are fighting against it. it looks difficult. i can put a percentage on it, -- cannot put a percentage on it but the real stumbling block is getting this through parliament. the agreement with the eu is not the big news.
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parliament is the big news and that is why we leave the focus on them. our: we are getting more of -- they contribution from our colleagues on that. there is the market reaction we have seen in the oil price, despite all that activity in the earlier part of this week in the middle east from the saudi's around talk of cutting production, that failed to put a floor under oil prices and still it dropped, what do we expect from oil prices from here? mark: price action is looking bearish. while there was capitulation, there was panic and no sign of a final capitulation. normally when you see a asset selloff so extremely, almost 30% for six or seven weeks, normally the end of the move happens when there is no more sellers left and that is where you see a rapid bounce in the last part of the move. it does not mean that is sustained, you see a bounce off and a final
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capitulation. we have seen no sign of that yet. you might consolidate for a few days and it is likely that it will plumb fresh lows in the weeks ahead. it shocked people that opec are suggesting that demand might not rises quickly as non-opec supply. that was alarming to the market and the news flow remains been negative -- remains negative. matt: what do you think about the contraction and the terminal economy, it could mean a weaker reading for the euro area and the euro is at a 16 month low. european growth is clearly doing very poorly and it makes a mockery of what italy's government is projecting for their own growth. this forecast was ever above 1.3%, it is now 1% and that is likely to be the downside. itsany is italy's to one of
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top to trading partners where it sends all exports. when the german economy is slowing down, that is negative economyian comedy -- directly. european rose's pork, italy's growth will be nowhere near that governments projection which means that budget will grow faster. there is a serious problem that is not being addressed and that will continue to weigh on the euro heavily in the months ahead. much for yourery time. mark cudmore, bloomberg mliv strategist. you can join the debate and the team. and if you want to talk to the markets live blog team. let's get a first word update. ey: prime minister theresa may has clinched a brexit deal with the eu. the pound rose on the
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breakthrough which includes plans for the whole of the u.k. to remain in the testament trade orbit indefinitely to prevent a border emerging and ireland. may faces the -- faces getting the deal through parliament. ministers meet at downing street later where they will have to decide whether to back it or resign. the white house says the u.s. and china have resumed contact at all levels and presidents trump and xi will talk trade when they meet in argentina. larry kudlow says it is better to talk than not to get he warned there is no certainty that china will agree to u.s. demands. the u.s. is said to have put plans to put new tariffs on car toprts on hold that as officials way revision to a report on the national security up locations of the measures. according to bloomberg sources, the administration is not yet ready to act on threatened
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tariffs up -- of up to twice percent on foreign cars. italy and the eu remain on collision course to the populist government in rome determine to defy brussels over spending plans. the coalition said it will stick to the budget despite the budget being rejected for breaking eu rules. brussels may trigger disciplinary action which could lead to fines worth billions of dollars. 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. this is bloomberg. anna and matt. matt: thank you for that. we will speak with the ceo of after the world's largest container shipping company raise the lower end of its profit forecast. we will see if trade is not affecting shipping. this is bloomberg. ♪
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anna: welcome back to the market open. we are 18 minutes until the start of cash equities trade. let's get an update on the brexit story. this is the party in northern ireland that props up theresa may's government amount theresa may has done a brexit deal with brussels, but can she get domestic support?
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no, not from the dup, the dup said we will not vote for the brexit humiliation. this follows on from donaldson saying another dup lawmaker saying that the proposed act up deal means trade barriers may be created in the u.k. let's get a bloomberg business flash. >> all-time remains comfortable [inaudible] from thebjections european commission. the french manufacturer expects the agreement to bring together the biggest european makers to close in the first half of 2019. they reported earnings up to 58% in the first half. hedge fund manager bridgewater associates added general electric to its investment in the third quarter. bridgewater went for u.s. steel corporation last year more than
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doubling its holdings. the shares of many american steel and aluminum makers have [inaudible] amid trade concerns. also staying with gold even as other investors sold off. snapchat's parent says the justice department and sec are looking into allegations that it misled investors ahead of its ipo last year. respondedaid it has to subpoenas and requests for information which allude to previous claims in a class action. investors allege that it did not reveal how much competition from instagram was hurting its growth in the second half of 2016. 24%its at rwe have fallen as germany's shift away from nuclear and coal fired plants take its toll on the utility's performance. standalone adjusted ebitda slumped 1.3 billion euros from 1.7 billion in the previous year. other exposure to a rapid coal phaseout in germany has been of
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concern to investors. the company says perforations for the integration of the new business and to the group by making good progress. general electric search the most in more than nine years after accelerated plans to parrot stake in oilfield services company baker hughes, selling more than 161 million shares through a secondary offering and a purchase. in a deal that could raise $4 billion. the decision marks a pivot away from oil businesses championed by the former ceo. struggling noble group expects existing stock will cease trading on friday. the marathon debts equity swap will see new shares being offered from the following day. reporting a third-quarter loss saying that its third coal business has struggled and it made bad bets on lng. that is your bloomberg business
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flash. matt and anna. matt: thanks very much, does lee humphrey there. revenue is improving across the business, prompting the world's largest container shipping company to raise the end of its forecast for profit. the copenhagen-based firm said or operating profit will reach somewhere between 3.6 and $4 billion compared to an earlier estimate of $3.5 billion to $4.2 billion. on the front -- phone from copenhagen is the ceo. thanks for joining us. how is it that you are able to raise your profit or cast and revenue is in -- profit forecast and revenue in a world increasingly beset by trade-ins -- trade restrictions? soren: rates have gone up more positiveo that is a
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driver, but we are seeing good margin progression in our other businesses particularly in logistics and our ports business. so right now, container market, the global trade is growing at a reasonable pace and container freight rates are going up. anna: good morning. in terms of volume and rates, is the storm?n before is this the race to get ahead of carriers and that is what is driving the positivity, what is your worst fear from here? from china to the u.s., there is some of that going on. imports to the u.s. are strong. most likelyustomers they are building up inventories in the u.s. ahead of the tariff increases that may hit in the new year and obviously, there will be a bill to be hate for
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that, so to speak, when that moment comes to an and with lower demand growth on the ocean in the first quarter next year. we are prepared for that. the overall picture for the slow butade is one of reasonable growth. at the same time, very moderate growth and capacity -- and capacity, a slight narrowing of the supply-demand balance leading to a slightly higher freight rate which is positive for the industry. about awant to ask you product you need to buy to ship all this stuff around the world, and that is fuel. where are you getting your fuel and are your needs for fuel increasing or decreasing? very gently -- very diligently with our fuel
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consumption, our fuel efficiency, and we are able to slowly but surely reduce the amount of fuel that we use per container, by deploying technology, by reading better at the way we drive the ships and so on. as we have widened growth, we are seeing a slowing crease in the demand for fuel. we have plenty of fuel capacity available from the global refineries, so it is not like we have to -- we are going to run out of fuel anytime soon. anna: can you update us on your investments, you are going to spin off your drilling businesses in 2019, has recent market volatility in october give you -- give a new part is forethought? update us on the time horizon. the company is ready to stand on its own feet. we have confirmed with management, the company has been funded, we are ready to draw down the debt and from the first
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of january, the company is a stand-alone business. we will list the company during i-19. we are not planning to raise any capital. demerge the company and listed in hand the shares to shareholders. we are not much relying on the market as such. just a reasonable, normal market, and this will happen in 2019. anna: thank you for your time that is an update from the ceo joining us from copenhagen. we are minutes away from the market open. next, we will take a look at the stocks you want to watch ahead of the opening including european automakers, that is the white house is holding off for now on imposing new tariffs on automobile imports. we will talk shortly about that, where we expect the automakers to open. focus on the oil companies.
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we will talk about that as well. this is bloomberg. ♪ omberg. ♪
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matt: welcome back to bloomberg markets, this is the european open. we are six minutes away from the start of trade. looking at your stocks to watch around the newsroom. we're looking at maersk and john team coveringur
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the auto sector including bmw and we're focusing on smith's. let's start about mac -- maersk. from the ceo.rd revenues looking good across the organization. he talked about how plans are going, one thing that was not mentioned was the integration of a [inaudible] it looks like they are ahead of plan in terms of incorporating that into the organization. matt: what about autos, we have a good scoop today that it looks unitede president of the states will not charge additional tariffs on auto imports. the white house is holding off the tariffs were now, we will see if this lasts. we saw asian carmakers rise overnight with toyota up 6%.
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we will see if we get a real love -- a relief rally for bmw. matt: very good. what is the story on smith? >> smith is based on -- in london. the main takeaway that they are separating their medical business's putting that off from the main group. they are concentrating under industrials. the technology while freeing the medical unit to deliver on its full potential, alongside this, they reiterated their full-year expectations. matt: thanks for a much. -- very much. you can get all the latest stocks the stories by typing first go on your bloomberg terminal and by the mobile app under the news heading. ofing up, we have the start trading across europe, four minutes to go until the open on a really important day for europe, for brexit, and for oil.
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this is bloomberg. ♪
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anna: less than a minutes to go to the start cash equity trading. the euro-dollar is fairly flat, oil prices and focus. we continue to see some weakness. even though these factors into the equity session. this is the picture over in asia, a fairly seesaw session, but china came up pretty badly. you can see it's weaker at the end of the session. the pound, a lot of focus on the yesterday, arse, big surge in the pound as a result of the deal. how will this go down in eu 27? how will this go down in the?
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she has to convince the before the house of commons. , this isthat in mind what we expect from the equity markets. we are expecting to go a little weaker at the start of the day. concern once again about trade tensions. just how negative is that for oil majors and where else does that take us? as we say, there are headlines as well. will we see oil majors bounce a little bit as a result of these headlines? president trump is not going to take action. generally, the director travel is a negative one. opening down by a tenths of 1%. the ibex down by a tenths of 1%. it looks pretty red from here. matt: that's right, a lot of red across the imap.
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floor,take a look at our you can see that almost all sectors are trading down. sliver next tole what we have labeled other, which i believe is information technology. sliver is real estate, that is the only gaining sector at all. energy is leading the way down as you might expect because of the oil price. crude dropping for a 13th consecutive session after a 7% drop yesterday. materials also down, financials down, and the i.t. labeled other also in the red. everything, with the exception of some consumer discretionary, some utilities and real estate really dropping this morning. what do you see as far as the individual names? anna: let's have a look at the function there. upside, we've got the
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tech group. on,ing about this earlier spitting up the medical business. they try to sell it back in september, that deal fell through. now we see them making headlines talking about splitting off. that was a fascinating conversation over at ap mueller. yes, there is, some inventory building people are trying to get ahead of any tariffs still to come. broadly speaking, they have a slow but reasonable growth rate in terms of the overall trade story. let's have a look at the downside briefly. we do have a bit of an oil flavor to what is going on. lundin petroleum in there as well. worth keeping an eye on. in terms of that car story, we seeing the car stocks a little higher, bmw a little higher.
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turning to the oil story, crude is showing little sign of recovering from its unprecedented decline. turning to the oil story, crude is showing little sign of recovering from its unprecedented decline. wti plunged more than 7%, its biggest drop in three years. that as opec warns demand is falling faster than expected, underlining why saudi arabia and other members are signaling output cuts. joining us now is opec president and uae energy minister. good to have a witness. do you think that opec needs to act and act soon? yeah, first of all, it's good to be with you. had the monetary committee meeting. we have said that we need to change in strategy.
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2019 is going to have its own challenges, and we are ready at our next meeting to change strategy and adapt to whatever is needed to maintain the balance on the supply and demand. we closely monitor the inventories and fundamentals. we are intending to keep the inventories at the level where riskare with avoiding the of the buildup. but at the same time, avoiding the risk of a major throw down from the inventories. people, consumers, as well as at the point of balance bring in investment. but at the same time, enabling the world economy to grow. ask, how much does
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the increase in production in the u.s. with their shale resources and the unexpectedly high amount of waivers given out for the iranian sanctions thatase other oil demand you were not expecting for other oil supply you were not expecting how much does that play into the equation? it does play a significant role in the equation. whenever we look at our balanceon, it is to whatever it comes from, from those producers outside the group. right, most of the exceeded one comes
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to the production from the united states and from other producers as well. that is why we need to always monitor those factors and adjust as needed to the markets balance. past tocuts in the , and if wets balance need to cut production to adjust to keep the market balanced, we will do that. but we will not overdo it, we are always going to keep that isance and our reference going to be the five-year average that we worked very hard with our non-opec members to achieve. it comes to the question are we going to act and act fast, i think, in early december, we have been meeting. thoseam expecting that
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groups of responsible producers will reach a consensus on the right measures to keep the market balanced. december is still a way off, but your best guess as to how much needs to be cut in september? mc,hen we met at the g.m. we asked to look at recommendations on the required adjustment. as you can see, october has been a very fluctuating month. we are moving now in november and seeing fluctuations. but there are things outside of our control, which are the speculations of market fundamentalists, they are still justify theot to drop we had yesterday, but at the same time, we are dealing with so many other factors.
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i think that when we talk about the level, we will need to monitor, after a mentioned, how non-opec.ming from will be studied by the technical group and they inl ring that to the meeting december. is that thatn adjustment and that group will reach a consensus on whatever is required to adjust the market. i cannot throw in a number prematurely, but whatever is thatred, i have confidence the groups that have worked very hard to achieve what they have achieved when not just let go of it in 2019. matt: assuming you make those
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cuts, and we have heard numbers, for example, the secretary general -- the secretary-general and others that the should be about one million barrels cut among opec and friends next month, where you think that the right supply energy equation would put the oil price? you for a right to price on brent crude next month? >> when it comes to what feels isht it is the results, it not a target for us. we are targeting a balance in and it is aies focus for us to look at. the average five years would be a good reference. lastannot fit it to the
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dollar, but we will try to keep it at the level we had in the past. i would say 3-4 months. the price of oil is a target, and we cannot target a price. we conserve and we hear the consumers, whether they are from the united states, whether they are from china, india. opec has transformed significantly, and hearing those voices in june when we merged and there was an acquirement -- that available production was not enough, we made sure to bring that production. and theber when we meet whatevernts to cartel,
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the required cut, we will cut in accordance to what we agree on. whatever price they end up with, the market will decide the price, but not us as a group. we are targeting what is good for consumers to keep the economy growing. and at the same time, enable us through investments and require investors to continue investing in this important commodity. the market will decide. anna: minister, thank you very much. the opec energy minister joining us there, a very timely interview, with oil prices continuing to fall. down by .4%. up next, we talk about brexit. the most recent headline over the last 10 minutes. benches,s on the back
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said she thinks this deal is as good as it gets. we talk about that next. this is bloomberg. ♪
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anna: welcome back to the european open. we are 14 minutes into the trading session. month after month of deadlock, theresa may has struck a brexit deal.
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agoshe has to convince her with it and overcome nearly impossible on. joining us now is a bloomberg u.k. policy reporter. great to get your perspective. i guess how ministers decided to vote might depend on how relevant they think the backstop is. it is still a backstop, it's not supposed to be needed, but i've seen lots of different perspectives. what is the news you are here? -- hearing? >> that's right, anna. the backstop suggests it might be invoked if nothing else is. that if theyem is get this deal a grade, something has to change for future agreements to come into play. think that if
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nothing changes, that backstop may have to be invoked. it may well have to choose. anna: one of the factions we need to watch for on this than. -- then. easy to seein, it's things that labor won't like, the brexiteers more like, and surely the dup says they don't want to vote for it. so what are the factions to watch for? >> you've got hurt loyalists, people who will vote for her plan. as you have just mentioned, and a super he, a lead -- anna subari has tweeted that this plan is the best we will get. suggesting she will vote for it and her colleagues will as well. last night and this morning, we have had brexiteers saying that this is absolutely unacceptable,
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and she needs labor on the side. labor really wants a general election. they have to weigh whether or not they can back this plan. they say they want the u.k. to stay in a customs union. actually, you know, this plan they have put forward looks quite similar to labor's plan, whether it is enough for them to back it. it remains to be seen. matt: it looks quite similar, jess, to the eu's plan. is this not what they wanted? >> what may has been trying to put forward this whole time is drawing a compromise that and that iseryone .otentially an apostle tax
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it is really going to be down to the details. we will see that document, potentially later today or in the week. it is going to be a case of people going through those details, see whether it fits in with the uk's relationship. years potentially becoming decades. thank you so much, a busy day for the u.k. politics day team here. we go to an indispensable market perspective. maria, great to have you with us. this shows overnight pound volatility spike in, but the increase we saw, it is up by more than 1% and we are back down. we have not moved very far this week overall. just outlining how difficult it will be to get the next bit of politics is done.
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what is the upside though? the upside potential for the pound if we do see this get through. maria: first of all, thanks for having me. view is that the pound is about 10% undervalued at the current level. having said that, it is very, very hard convince investors right now to go and buy sterling. i think your chart tells a perfect story, it is just so volatile. even if you happen to be on the not many are allowed to have risk limits that go into the street. positioninginvestor is probably close to the benchmark. so yes, sterling is undervalued, we all know it, but by the nature of the outcome, it's almost like you're reconcilable differences.ble
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u.k. equities are pretty much uninvestable. not because there are going to go down, they're actually ,ositive on earnings prospects energy staples doing better after a long time for structural weakness, you cannot just invest. given the spikes in volatility. anna: ok, matt. that therere saying are positive prospects for u.k. stocks and assets i wonder about the pound. is already priced in for a deal? none of what we are getting here is surprising. clearly, theresa may is up against big odds it through but it seems like the deal is going through exactly as expected. no.ja: yes and
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the market is probably expecting some sort of deal, but having said that, as i said, we're still pass the income. we still have strong volatility. it is still extremely hard to convince investors to act on this. anna: let me ask you about the bank of england. i think it was nomura calling this wage data blockbuster. setting the course for rate hikes. if we get some stability on brexit which is a big if, just how high that they have tied? if we did not have brexit, we would be hiking a lot more. but it is impossible to ignore brexit. is hard to expect anything more than one-year. matt: our guest is going to stick with us, the senior multi-asset charges at state street.
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we are plenty more to talk about. we have italy to talk about, the oil situation is amazing. and of course, german gdp is interesting, german gdp contracted more than expected in the quarter. german shows making a splash outside the country in the last years, i'm talking about television shows. how is the market for tv inside europe's biggest economy? pushwithout accelerating into local language content by netflix and slowing advertising broadcaster professionals have responded with a near 500 million euro -- bet on german programming. joining us on the phone from of the company. max, thanks for joining us. first off, let me get your expectation for the payoff on this investment you are making
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in programming. is revenue going to rise next year? max: links are having me, matt. -- thanks for having me, matt. this is about investing in the future. entertainment and broadcasting is at a pivotal moment of change. investing in the future to ensure we can grow for next year and the years to follow. we are putting the consumer view in the middle, focusing on content in sewers -- consumers love. that, we are thatng to be a company will be 50-50 percent digital in the future. we will grow from about 4 billion in revenue to 6 billion. to do that, we must make some investments, so you are right, we are taking up it investments on local content, digital and tech, starting next year at
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about 120 million euros. we have adjusted our dividend policy to return half of the money directly to shareholders and invested the other half for future growth. a couple questions here, max. one, r germans, who are tory asleep difficult consumers, willing to spend more on television and entertainment as they spend less in the cinema? interested inore german content? to your first question, germans are privileged to have access to a lot of content, including hours. -- ours. we are confident that will continue the, we see a stable television market. i think that is good. time, same point in
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germans, like everywhere else in the world, are taking on more streaming offers and working very hard to create a streaming platform that is already in place and will be upgraded. the best way to think about is the german hulu, one aggregate platform writing get all of the things i love use of content to sports. excited about that. good morning, max. he saw a drop your share price, a bad one day fall. can you say to your investors to make sure they come along with you? anna.ood question, the markets reacted because, of course, the combination. investments are needed in the future, adjusting dividend policy. that is a bit of a package.
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but it has got to be done to get us right for the future. topve spoken with a lot of investors and we have had a lot of feedback. people are largely saying we are doing the right thing. invest in the future of the business, which is what we are doing. they are looking for the probe points, can you do that? we believe yes. can you take your exciting portfolio e-commerce businesses, grow them at an accelerated rate , and then can you take your studio business, which is german we make for amazon and other things, and can you scale back and increase the level of synergy? we are focused on all of those three things. today's capital market day is all about putting proof. matt: thanks for your time, max.
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up next, investment grades adhere. -- bad yar. this is bloomberg. ♪
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matt: it is a deal. theresa may riches of brexit agreement, but ken sheikh -- but can she secure enough votes? sterling volatility spikes though the price doesn't move. wti extended declines. opec warned demand is falling faster than expect and maersk raises its forecast range. global trade growth will be slow, but reasonable. welcome to "bloomberg markets: the european open." i am matt miller in berlin alongside anna edwards at bloomberg's european headquarters in london. anna: we have a host of news flow to deal with on european equity markets.
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let's see how this played out for individual stocks. autos, oil,round italy, the list goes on. iliad is a telecoms operator in france with results out. is also up 60%, added to the msci index, driving them higher. a couple of german names here. metro go higher. smiths medical, split off from its company. the ipo to announce would not be possible. to the downside, we have wirecard moving lower. certain digital payment flavor. the regional index on the ipo. they talk about margins being ambitious, marching -- margin
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targets being ambitious. let's get a first word news update with desley humphrey. after more than a year of negotiations, prime minister theresa may has clinched a exit deal with the european union. rallied onround -- preventing a border emerging in ireland. she now faces getting the deal past in your own party with many on both sides of the debate reportedly unhappy ministers meet at downing street later today where they will have to decided to back it or resign. the white house says the u.s. and china have resumed contact at all levels and president trade in xi will talk argentina at the end of the month. larry kudlow it is better to talk the not to come yet he warned there is no certainty
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china will agree to u.s. demands. the u.s. is said to have put plans to impose new tariffs on heart -- car tariffs on hold as officials way revisions on report of the national security implications of the measures. according to sources, the administration is ready to act on the threat of tariffs of up to 25% on foreign cars. oil showed little signs of recovering from its marketdented decline, a hammered by swelling supplies and a darkening outlook. wti crude plunged 7.1% yesterday, the biggest in more than three years. that is after opec sees demand for crude falling even faster than expected next year. italy and the eu remain on a collision course with the populist government in rome determined to defy brussels over at spending plans. it will stick with its deficit targets, despite the budget being rejected.
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disciplinary action could lead to fines were the billions of euros. global news 24 hours a day, on-air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. with yourey humphrey news update. a collapse in investment grade credit has began. the comments come amid a tricky period for investment-grade debt , which is on track for its worst year since 2008. a senior for multi-asset strategist is still with us. which a sharp showing shows this -- chart showing this terrible year. the biggest lost since 2008. the you go along with the idea of a collapse in investment grade? is this the source of a crisis to come? mean, the chart looks
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striking. it has been a difficult year, but it has probably been difficult for a lot of assets this year. any acid except u.s. stocks and even those had her in this october. -- a karen this october. -- horrendous. october. for us, key factor is global growth. we heard from erskine today that -- maersk debate that global growth is slowing but reasonable. a very important factor for us is corporate profits in the u.s. are very robust. quarter ofher blowout earnings, surprise on the upside and not just on back of the tax reform. corporates areo
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in good health. equities, yes. matt: i am looking at distressed debt. anna is talking about investment-grade debt, but if i use a chart on the bloomberg, see over the past five years, we have come down on distressed bonds traded. there aren't that many out there and i wonder, do you think this chart is due to pick up? as investment-grade corporate debt has a tough year, are we going to see a pickup in the stress that -- distressed debt or what have we dropped so much? potentially and likely, we will see more distressed debt. it is probably a natural thing to see. one thing i would like to point
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out is the level of interest spreadave come up, the is out a little, but the level of interest rates the company has to pay is low by historical standards. extremely low, so to say companies are struggling to meet their financial obligation is probably a stretch, but things are getting a bit tougher but financial conditions are still fairly loose globally. said rates arest relatively low and that may be part of the region -- reason. that is a good appointment raises. let me -- point math raises. oil companies, if we see the oil price moving the way it has, that raises questions about the junk and in the united states. finda: absolutely, and i
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it quite ironic not longer than a month ago, we were talking about oil price going into the hundreds on strong demand and they were worried about sanctions on iran, problems with u.s. shale exporting. lower andices are 30% we are worried from their. the market needs to take a step we heard the opec president talking about the balance and longer-term averages. we had a big selloff in oil price. there are lots of reasons for us, financial speculation with correlation with falling markets. should oil price continue to go down? yes, oil companies could be at risk. at this level, probably should be fine for now but the risks are there. matt: but you're not generally
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concerned about the economy. even as we get a contraction of the forecast, a quarterly contraction out of germany, you possible real economic -- problems, the possibility of a recession coming quickly? germany is ank specific case. a large chunk of the german economy is somewhat related to the auto industry and that had emissionsproblems with coming online. there was a delay with registration and the auto sector had a knock on effect. germany is a specific case. in general, we are seeing global growth. the forecast has been for global growth -- has been downgraded to a marginal. we are paying attention to what is happening in china and we find china is one of the large
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economies that is very much engaged in the countercyclical policies, trying to boost economy and doing whatever it can to support it. what they have done in the financial crisis, they put 10% of the gdp into supporting the economy to convincing results. we are not forecasting 10% of gdp being spent right now, but are seeing appetite for chinese authorities to do what is needed to support the economy should that happen, that will cause global growth. anna: marija veitmane, senior multis asset strategist at state street. matt and i had to radio after tv. a quick word on the swedish parliament, voting against the new prime minister.
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it was always going to be a struggle. unlikelyn allies were to back him. all that blocked in this round. as theseeing reaction euro strengthens on the back of this versus the swedish krona, two months after the inconclusive election and a country still has no government. the winner has been the right-wing nationalists. we will see what the next stage of the process is in putting together a government in sweden. next, the stocks on the move climbing thissk, down .2%- they are after raising the lower end of the profit forecast. stocks, generally weaker. it is outperforming the broader equity market this morning. this is bloomberg. ♪
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matt: welcome back to "bloomberg markets: the european open." i'm matt miller in berlin alongside anna edwards harry european headquarters in london. you can see moller-maersk has bounced back up. bouncing between gains and losses, but not putting up the moves we saw a earlier after the company came out with the earnings and we spoke with the ceo from copenhagen.
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that's get stock movers. for that, annmarie hordern carried -- and reporting. -- annmarie hordern. mariano rajoy industry group, one of the biggest losers on the stoxx 600 alongside basic resources. we saw a collapse in brent yesterday, joining the wti entering a bear market. investors concerned about the deepening outlook for demand and we could see some more bearish news given the u.s. stockpiles data later today. down, trimming earnings forecasts for the year, blaming it on currency. maersk to the upside, a slight gain. you spoke to the ceo has -- who said slow but reasonable global trade growth. anna: anne-marie with the
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movers. pound has risen on the news the eu and u.k. have secured a brexit deal after months of deadlock. yesterday's move was quite stellar. we are flat to negative, below 1.30. theresa may now has to convince a cabinet it is not a sellout and get it through parliament. us further gives insight. good morning to you. what is the latest, then? whether this will get through cabinet? maria: good morning. it has taken two years, but we finally have a deal. it is a technical deal, but a breakthrough. the reaction in markets was immediate. the pound was surging yesterday and the question is the cabinet meeting set for 2:00 p.m. today. will they back theresa may or not? probablyoint, she will
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argue the deal, which is set to be 400 pages long so few people have seen it is the best the u.k. can get now. the deadline, march 2019 is coming fast but the question fundamentally is, will this get cleared by the cabinet and will it get cleared by the u.k. parliament? in the meantime, the european union, keeping a close eye on this. if it gets cleared in the cabinet today, we will see the optics of a corrected -- brexit deal in motion and that means a special summit late in november. matt: i'll pick it up from there. maria tadeo, on the ground that downing street. she will be covering every development. from copenhagen is john hardy, head of fx strategy at saxo bank. seen volatility spike.
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yesterday was a big day for the pound. today, there is really no movement to speak of. is everything priced in already? do you think the cable? john: we are all holding our breath right here. we don't know what is going to happen. it will be about the cabinet vote today. to me, it is a big event because , itcabinet is in favor would suggest it has a chance at passing a parliamentary vote. it would be key as soon as today if we get that signal from the cabinet. anna: what is the upside been -- iferling if we do get it gets through cabinet, if it gets through parliament, how high can you expect it to go? at that point, you need to factor in and giving lind rate hikes with more certainty, as well. john: there are a number of steps and the first is cabinet approval. we need to see more details on the deal. apparently 400 pages this deal
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runs to. we need to see with that looks like, what the noise is from those opposing what appeared to have been the deal heading into today. we are moving toward a parliamentary vote and if it gets approved, we are looking at potentially 6% to 8% upside in sterling versus the euro because the dollar has been doing its own thing lately. that is the order of magnitude. july -- junete in of 2016 were just above 80. that level looks to be a potential target over the coming weeks and months if we are clearly moving toward a brexit deal. matt: i have got the euro-sterling chart here. i am looking out over the last five years and you see the spike in 2016 that you refer to.
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we hit again in 2017 and we there for a back up while. not since the middle of the year. what do you think could take us the other direction? if the deal fails, how far down could we go in euro-sterling? john: i think we would see a very large knee-jerk reaction, but i think there is sufficient discounting. we have a bit of a backstop in the bank of england's most recent rhetoric that if there is a no deal brexit, they are willing to hike rates and i would suggest in defense of a currency. sawould go back to highs we since the brexit vote was ,nacted or came into place 92 93 area but i wouldn't see a massive new trend developing in that scenario. anna: john hardy, head of fx strategy at saxo bank in copenhagen, joining us with the latest on the fx market.
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next, we turn our attention to chinese business and tech related business. tencent's tumultuous time, having the worst year since 2004. nearly quarter of a trillion dollar lost in shareholder value and broken all kinds of records as the company reports earnings this morning. why tencent traders are preparing for its wildest day in three years. this is bloomberg. ♪
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matt: welcome back to the european open. we are 54 minutes into the trading day with a lot going on in europe, in great britain, in oil, but also tencent reports third-quarter earnings this morning in asia despite the loss of shareholder value since january highs of nearly a quarter of a trillion dollars. the outlook for some of the businesses is getting weaker. economic slowdown is putting a lid on advertiser spending, while gaming regulations have been strengthened. the options market is pricing in a 5.6% move or the stock either way following results. that would mark the biggest post results reaction for the stock, the largest component of the msci emerging markets index, since august 2015. joining us from taipei, bloomberg's opinion tech
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columnist tim. what are we likely to hear from tencent? thing we are likely to hear his them talking about the troubles in the gaming business. you have to get approval from the chinese government to publish games in china. so have to go through the application process. that has been on hold for quite immune -- few months. there was a small loophole known as the green channel where you could get something through for about a month and could test it. they stamped down that loophole and last week, lulu chen broke a scoop that said tencent has put a freeze on marketing any game titles. they won'tiven up, even bother spending as much money as they used to because they can't get much return on that. that is what we will hear about
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from tencent as they drop the numbers any moment now. a few hours from now, they will hold a conference call and a lot of people will be asking what they think they are going to do, what they are going to do with marketing budget and how they will get revenue from other areas like advertising. , that's anf wechat area where they can get more revenue. anna: thanks very much. i have a chart that illustrates the way tencent has done badly on the back of the chinese regulation around games, companies doing worse in the sector because of exposure in china. tim culpan with the latest on tencent. on the tencent earnings has been running for the past 45 minutes, waiting for those earnings to drop. matt: we will discuss them on our radio program. anna and i are headed into the booth. bloomberg surveillance is next
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with francine lacqua. this is bloomberg. ♪
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francine: done deal, theresa may strikes a brexit agreement with the eu, but the question is can she get it through? declines.s its testing tencent, traders get ready for volatility with $243 billion in market cap wiped out this year. we will discuss the results. welcome to "bloomberg surveillance." i'm francine lacqua in london.


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