tv Bloomberg Markets European Open Bloomberg July 3, 2019 2:30am-4:00am EDT
what will the imf chief bring to the role? treasury yields a slide to a low as bets on global using low. president trump's new nominee for the fed are likely to support rate cuts. pimco says the rally in risk and haven assets has the scenarios priced to perfection. so how much longer can they coexist? welcome to the program, this is the european market open. 29 minutes ago until the start of the equity trading day. let's check futures. . in terms of u.s. futures, they point to something a little weaker at the start of trading. ftse futures seem to be pointing a little higher than the rest. let's have a look at the gmm function to help us understand where we are in asia.
recommence -- weakness in asia and disappointing data in terms of the manufacturing sentiment numbers. pmi coming through. the carney is talking aboutrecn widespread a slowdown in the global economy in the policy response that might be needed to tackle that. all of that is at the center of things for investors and calling for markets to readjust. that as a result, we see markets selling off equity. let's have a look at the other side. you will see money coming out of equities and going into fixed income. context of treasuries, we see yields coming down even further. and as part of those concerns about global growth. and from a european perspective, overlaying that with news of christine lagarde. what does that mean for quantitative easing?
what does that mean for future dovish policy? see that the italian, german, and other european the bond markets catching a bid. let's leave the markets there for now. let's get a bloomberg first word news update. president trump has announced his latest nominations for the federal reserve board. christopher waller's director of research at the st. louis fed and was previously a professor of economics. annwhile, judy shelton is informal adviser to the president and her unorthodox views could attract opposition. struggling to recover after suffering its worst reaction to an opec meeting in more than four years. concerns are overshadowing the decision to extend output cuts for nine months.
energy minister tells us opec and allies will respond to any disruption. >> the market can change very quickly, as can situation and shall production. nobody would guarantee today that the supply could grow --ough would be maintained the supply growth rate would be maintained. tothe u.s. has beat england secure a place in the world cup final. withd-fought 2-1 victory england missing a penalty less than 10 minutes from full-time. the u.s. will play the winner of today's semifinal between the netherlands and sweden. global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. anna: thank you. set tone lagarde is succeed mario draghi as the president of the ecb.
shall be the first woman to take the job and the first politician, having being that having been france's finance minister before joining the imf. here is what her colleagues had to say about her. >> i have known lagarde for many years and am absolutely sure that she will be a very independent president. >> christine lagarde is someone who we know very well in ireland. she will continue the policies of mario draghi. >> we believe she has all the necessary skills to head the european central bank. i do believe that christine the broads experience. she knows how to address issues and will be very competitive -- committed. joining us is the group chief economist at unicredit to give us his thoughts. good to see you this morning.
we sit here with this news fairly recent. a surprise, because before monday, there have been very different names in the frame. how surprised were you? eric: i was very surprised. her name had been on the outskirts of discussions for a while because it was well known she wanted to come back and get a european job in the other, they are looking for a woman. we have had no female governor to the european central bank, so she was always there, but i was surprised. are you concerned about her appointment and her lack of monetary policy experience? brings with her and of outstanding experience in certain fields from a great communicator. -- fields, a great communicator. what do you make of that?
jay powell also did not have that. erik: he spent five years on the board before becoming chairman. in daily life, she is very intelligent, huge experience than a fantastic communicator who has run big communications. she knows how to deal with leaders. in normal times, she would be fine, i'm sure. but it is not quite normal times. an incredibly unusual set of monetary policy on the table right now. and she is not known to have ever engaged in a monetary policy discussion at the g7 level. for a smaller country to do programs with, but not these big ones. and if or when a crisis comes, without her rely on own educational framework or experience to sort the issues? right, pointing
out the jerome powell was on the fed before he became the chair. but both have a legal background, is the point out is making. -- i was making. but some are saying this be a healthy shift of power. maybe she would be more of a moderator, driving on philip laid and his experience. would that be a positive shift? erik: could be. and in normal times. but in a crisis, you need leadership. leaves,oit coeure depending who take that position there executive board will really only be one person with serious background, educational and experience come in monetary policy. and he has only been there for a few months. come intold very well a situation like when the ecb started when the chief economist
was immensely powerful. you have the duchess central had beeno was good but running a small central bank to copy bundesbank, to put it lightly. they became very powerful. time whenime into the his successor took over and the chief economist juergen stark was not as prominent. draghi became more prominent. so we could be back to a time where they become a very important person. anna: do you think she will do whatever it takes? erik: i certainly hope so, if needed. and she says she will. but this is the crisis you could think about. what happens if a major country one day needs it. how do they deal with the ones of the board who are opposed?
again, she has led the imf well. we will see over time how we feel about her program and other things. and she has experience, she speaks well. but as an economist, i think you would like somebody who had been trained in monetary policy. anna: thanks for your thoughts. nielsenlsen -- erik stays with us. money managers are caught between assets. and bloomberg is live on your mobile device or dab digital radio. we will be covering the appointment of christine lagarde. this is bloomberg. ♪
anna: welcome back to the european open. 17 minutes until the start of equity trading. futures are pointing tentatively higher. tentatively higher this morning. u.s. futures are flat to negative. we will be without the u.s. later on today and tomorrow for independence day. let's get a business flash for you. deutsche bank is sounding out potential buyers for a wide range of unwanted assets. this as it lays the groundwork
for its most dramatic overhaul in a recent history. it would be part of the german at lender's plan to cut unprofitable businesses. tesla jumped in late trading after setting a new record for quarterly and deliveries. the carmaker handed over 95,000 cars to customers. that exceeds the previous bets said in the last quarter of 2018. it alleviates the worst fears about demand for tesla's vehicles. that is your bloomberg business flash. anna: thanks so much. the u.s. and china may have reached a trade truce, but investors have plenty of others conflicts.- other pimco has word that markets are pricing the best and worst case scenarios. or as they put it, heaven and hell. for heaven, a combination of policy the gives the business help, atra juice, for long trade war and impotent , atral bankers -- for hell
long trade and impotent central bankers. andre joined by mark kudlow unicredit's group chief economist. good to see you, mark. let's come to you on this idea of assets at war. we talked about this for some time. there is very much this divided between which is right, equities and bonds. i think both assets can be right. it makes sense for bonds to price the recession earlier. today,this great comment a traitor we are talking to was saying the look to the bonds or the equities? he said he looked to fx. you never ask a single trader, but as a group, they tend to get the right thing. i think that is probably right. yen is at the low, dollar is turning over.
i think that is the right to dynamic. i think we are going into a risk-averse scenario and that the dollar will start trading lower. anna: i don't know if you would put golden that camp with the fx crew. let's bring this chart to your attention. this something you have been talking about for some time. the way stocks have been gaining human as we see manufacturing pmi falling. , it seemed an extent like stocks would follow pmi downward. mark: there are two great posts by my team rebutting me, saying pmi is little bit backwards. anna: he says they are never linked. mark: exactly. unfair toing that is publicly rebuttal on tv without a chance to respond, it is not a binary index. i don't actually thinks it makes
sense to do a correlation analysis on the linear input. so that is one thing. and the point has been made that labor markets are strong around the world but i would say they are a lagging indicator. we know that unemployment is one of the last to turn. pmi's still one of the best high frequency inputs. and we have not seen a collapsing global manufacturing. it is something we did not even see and 2008 -- in 2008. anna: that's the thing. that is one of the things that makes people say it does not matter, because it has been going on for so long. erik: it is because of trump, right? datadivide between hard and pmi is what we see with global clients all the time. if you asked how their books are and how is life, it is quite good. if you asked them about the
future, they get worried. you see it when you break the pmi down into the present situation and the forward-looking part. the forward-looking part in expectations are even weaker. in this works on growth. investment started to slow down so i am with you very much. i'm not the guy who wrote wrote your-- who analysis. anna: i don't know if you describe it as bearish, but mark carney is raising a cautionary hand. this is what he had to say about global growth. of tradetensification tensions have increased downside risk. to both u.k. and global growth. way we conduct policy today is we have to deal with the impact of the uncertainty around those events and how they influence the behavior of households and businesses in financial markets. anna: mark carney sounding a
little bit more dovish and then he has of late. talking about what these banks can do in times of crisis. --s raises question about questions about what banks can do to cushion themselves in crisis. mark and i were having an interesting conversation with traders, some are suggesting the central bank state can save us. erik: central banks do run out of ammunition. but it is an illusion to think they have no more power. there are political restraints on how much you can do, but that moves with the crisis. more importantly, how effective are the instruments? what you are seeing now in negative territory and the tltro's, even spain has negative lending growth. i think they have heard what howland draghi said, they are
sounding more dovish than the forecast. the reason is they are late cycle and uncertain about trade. anna: their view of the world being challenged in a number of ways. can the central bank save us, mark? mark: no, they cannot. and we saw this before in the last two cycles. the fed was positive -- powerless to cut the recession. liquidity is not the problem, the problem is a complete lack of growth. i think that central banks are kind of powerless, is the issue. i think that is what christine lagarde might be an interesting thing. she will be out of the box and is not a conventional economist. she knows the political open tos and might be
doing something extraordinary that might be quite useful. anna: being called upon to do extraordinary things. eric is worried about what economists will do if they are not needed. erik: [laughter] groupthanks to erik, chief and unicredit and mark cudmore, our managing life editor. -- live editor. reach out to us and the markets live team. are minutes away from the european market open this wednesday morning. up next, we'll take a look at stocks to watch. sales at the u.k. supermarket fell since it's failed deal to buy asda. this is bloomberg. ♪
anna: welcome back, 7:54 in london. let's get your stocks to watch from around the newsroom. covering sainsbury and dani burger is focusing on cybersecurity stocks. paul, let's go to you. >> sainsbury's first-quarter results really illustrate why the shares have performed so poorly, falling 25%. the retail sales figures are down 1.6%. ,ll of the main divisions
grocery, general merchandise, they are all weaker. key is going, the to be the capital market in september when they will need to set out a convincing strategy following the collapse of talks to buy asda. i could mention one positive, jd sports. they are saying their figures will be at least in line with estimates. those words at least will add something to the share price. mark: thanks -- anna: thanks, paul. dani burger, m&a in cybersecurity? dani: broadcom is looking to buy and expanded to software and cybersecurity. this shows how rife -- right the industry is for m&a. at others, all called higher by at least 3% today. mark: -- anna: thanks very much. bayer'sth mentioning,
we like drip coffee, layovers- -and waiting on hold. what we don't like is relying on fancy technology for help. snail mail! we were invited to a y2k party... uh, didn't that happen, like, 20 years ago? oh, look, karolyn, we've got a mathematician on our hands! check it out! now you can schedule a callback or reschedule an appointment, even on nights and weekends. today's xfinity service. simple. easy. awesome. i'd rather not. anna: they minutes ago go until
the start of cash equities trading. beenandover from asia has negative, down by .4%. a lot of week data coming through. pmi numbers certainly a feature. mark carney raising the flag. , we seeces go higher haven securing a bid whether it is bunds continue to hit record lows. thomas moment and fx markets. we see some money going into the yen.
you just saw the downward move we have seen in u.s. yields, 1.94% on the u.s. tenure right now. all of that adding up to a nervous session in the asian market, and a risk off session. --opean futures elsewhere in terms of individual names, plenty to go on with the weakness in the data. with the pmi manufacturing story, we build on that story to the european session. we will get three or four readings across europe. we will add to that narrative and on the weakness in the economy.
euro stocks fairly flat. spanish ibex not doing badly. a little weakness in the pound this morning, and the end is a touch stronger. in the equity markets from a perspective on equities, where we are heading and sentiment in the markets. financials seen mixed this morning. energy stocks seem in negative territory. industrials look mixed. things that mixed overall. 332 stocks on the upside domestic -- on the stoxx 600. let's look at the individual movers and what is moving these markets.
we are seeing movement, oil prices a touch stronger but not much. johnson talking about a tax on sugar and salt. sports is making gains, up by 1.4%. to the downside, we have a few ex-dividends coming through. and electronics business in the u.k. put out a statement, stock down by 3%. hayes down by 2.6%. it is not a day for many individual movers. we will start with the big picture and the ecb. christine lagarde is set to
succeed mario draghi. she will be the first person to take the job without being a career banker. joining us now from brussels is maria tadeo who is tracking the twists and turns, the horse trading between the european leaders as they struggle to andnate an ecb president european commission president. what type of central bank will christine lagarde b, what is the consensus? maria: in terms of christine lagarde, this is not a central banker, not an economist. something that has been her business, not your traditional european banker. is difficult to say before you start the job, but if you look at her track record, she has been supportive of mario
draghi and praised the action he took during the crisis. she could use fiscal room to create growth. in reference to germany with a huge surplus, she has always the key priority for the european union, they should do more to integrate economies. that we dois reading not get the clean break from mario draghi. it is more of a continuation. the: some people are making point it is not what she is that what she is not. she sets herself up to be different from him. let me ask you about the bigger picture. looking at the european commission, merkel locking horns with macron. who has come out as the winner? merkel, this is an
unprecedented situation for a german to get the top job, but she did pay a hefty price. she had to abstain in the vote. it couldoncerned unleash tensions with coalition partners. in germany it is a shaky picture for angela merkel. at emmanuelk macron, it is a different story, he did not like this idea. he managed to get a french woman at the european central bank. everyone speaks french, that is something he mentioned. at thea close ally european council. it is a good night for emmanuel macron. anna: thank you very much, maria tadeo in brussels. a shock to some economists and commentators. some of them blindsided by this
appointment. erik f. nielsen mark ivor phelps joins us. what significance does it have for you, christine lagarde appointed to run the ecb, a lawyer and politician rather than economist. mark: we are looking at a pragmatic approach. we have a lawyer running the european central bank, and a lawyer running the federal reserve. that is the career path of choice, you need to be a political animal rather than just an economist. i suspect the market is rightly anticipating that you will have a more pragmatic policy. a more open policy. .t is more accommodative it is not taking such a hard line. just a very, do whatever it takes approach, continuation of
mario draghi. anna: she would be someone who would follow in mario draghi's footsteps? mark: i think she will be very pragmatic. she is good at organizing people. them, butisten to europe does need economic activity to pick up, anna: what would you suggest in terms of twist and turns, where could the ecb go next? we will get pmi data breaking in the next hour. it adds to a backdrop of weaker data. the more selfish tilt we saw from mario draghi recently. if they become more dovish, which tools should they reach for? at what isu look affecting european growth, it is trade issues, trade is the biggest factor for growth opportunity. with these trade wars, particularly in germany, really
significant, difficult in terms of getting growth. it is hard for companies to make investments when they do not know what the trade backdrop is. there is a little bit with what the bank can do. rates are coming down more, more pragmatic. there has to be some demand. the idea that the economy has to move forward. there is a stable picture companies can invest into. anna: one thing i can easily imagine christine lagarde doing is carrying on what mario draghi did in terms of calling on fiscal government authorities to be more loose with fiscal policies. is that something she will push for? mark: i am not sure if it will be more vocal, but she understands the nature of the political dynamic of this.
she will work hard behind the scenes to look at some degree of physical movement. that means going to germany, and the germans have to say it looks like growth is bad enough to move on that one issue. that will be hard, but if the data gets worse, that is exactly what she will do. anna: that could be interesting for 2019-2020. thank you very much, mark ivor phelps stays with us. sectororts in the stateside, bloomberg reporting on a deal in that space, that puts the focus on stocks. this is bloomberg. ♪
cybersecurity firms. we talked about this before the open, and it moved cybersecurity firms in london. ripe thisow industry is for takeover. with britvic it looks like sin is in. boris johnson said he will review the syntax with things like salt and sugar, that includes soft drinks. these companies are rallying this morning. dekes -- nordex reported in the second quarter their orders had doubled. from one megawatt to two megawatts. pmi'swe have european
hitting the bloomberg this morning. the spanish services data is due to drop imminently. we are asking the question, why don't stocks care more about slumping pmi's? a nice chart here shows how they moved downwards in tandem. since then stocks have disconnected from the slumping pmi's. mark ivor phelps, cio concentrated global growth, alliancebernstein is still with us. why don't stocks care more about the gloomy picture from manufacturing? mark: if you overlay the u.s. 10 year you see the stocks are moving in line. that indicates the pmi's are clearly focused on the uncertainty for manufacturers about trade. you do not put in more inventory. anna: that versus hard data? mark: the market is looking
forward and saying, if we get eight -- get a deal, and with the cost coming down for future growth, then pmi's should pick up, and the market is looking at that. anna: what can central banks due to cushion us from the effects of this slump in the data? reviewing thein changes at the ecb to come, and nominations at the fed. we are talking about dovish names, people tempted to put more support in the global economy. can central banks save us from this slump? mark: i am not sure that is really their job. it has become their jobs since the financial crisis. anna: it extends the cycle. mark: to that point they have done quite well. the cycle is going to continue to be long. i think we are in the developed
slow growtheriod of with low interest rates, inflation staying low subject to trade wars. you is an environment where can make a reasonable return. from an equity standpoint, your discount rate comes down. investor, where else do you go? you are making no money in bonds. european bonds will go negative shortly. you are not making money there. you can hold cash, or you are thinking about where to go, and that tends to put people back to equities. there is a case to make that the background -- you come back to the idea of the fed put, and are they there? at the moment they seem to be. dovish people
coming in, they may not get approval from the senate. shelton may have a harder time getting approval. isthat regard, i think there a background within central banks that is accommodative. anna: with that in mind, and the headwinds that face various asset classes, are you bullish? mark: yes. in december we were extremely bullish on stocks, but fairly strongly this year. it is hard to say, could they get more expensive? if there is ok growth and not recession, very low interest rates, and in accommodative financial policy, i think stocks can go higher. i wouldn't say in the next three months, but they can go higher. anna: almost like goldilocks.
anna: welcome back to the european open. 21 minutes into the trading day. upopean markets catching from the second half of the u.s. session yesterday which was quite strong. today's u.s. session could be flat. oil is suffering after the meeting -- they have extended output by nine months. there is a need for deeper curbs. russia's energy minister told
bloomberg that opec plus will respond to any supply disruption. the market can change quickly , as can the situation in shale reduction. nobody would guarantee to you that supply growth rates that we saw in 2017 and 2018 would be maintained in future years. we also need to be able to judge the impact for these actions. deficitsw in 2018 appeared and we were forced to increase production to counter that deficit and avoid unnecessary market volatility. some companies believe we need to invest more time and money into developing our own oil sector to increase production and monetize the resources. this will be taken into account
when making decisions. we will be looking at all of the factors and all of the pros and cons. some russian companies opposed to this cut, and you said it was unanimous. what made the russian oil companies change their mind? was it president? we had long consultations with the company's, we have also discussed this with the ministers to arrive at a, decision to find common ground, and have reviewed a large number of scenarios, which include all options. after deliberations, we had the conclusion that the option you heard about today is the most optimal, and we proposed a nine-month extension, not a six-month extension.
we believe this allows us to achieve an optimal result by avoiding a low demand season at the beginning of the year. anna: that was russia's energy minister. still with us, mark ivor phelps, cio concentrated global growth, alliancebernstein. the fact we have seen this trump in oil prices in wake of this meeting, they extended reduction cuts, it does raise questions about what they can do or are prepared to do in the face of a gloomy demand picture. the only thing that a man -- the leading that matters in oil is supply-demand. today they tried to mitigate that by cutting production, and it worked to a degree, but until we see global growth pick up in the pmi's, it shows growth is not particular he strong, and you see structural moves, fuel-efficient cars having an
impact on demand, and a lot of supply from u.s. shale, it is hard to see we will not extend the trading range for a while. confirmation of , whichnish pmi unchanged was a little below the fork -- excuse me -- above the forecast. that is the european growth story. reason we are talking about the threats to demand for oil is because of trade tensions. for is a big unknown investors, economists, for anybody watching the status of the global economy. president trump could change his mind, there is a trump put available if he wants it. mark: clearly he is happy to use trade as a weapon, and he will do so. we have seen that already.
equally he understands there is a point of maximum pressure at which you need to do the deal and move back. pushing hard on global trade is not good for his electorate, and he is aware of that. if you go to the political cycle, he wants maximum improvement in the economy to come through before the election in november of next year. the third quarter this year, a prior -- a year prior to that, if you look at it from a cynical perspective, and improvement in the latter part of the third quarter to give him a 12 month the election, maybe that is part of the equation to think about. anna: thank you for joining us, mark ivor phelps, cio concentrated global growth, alliancebernstein. mark will join me on radio. we will carry on the conversation. european equity markets not bad, up by 0.3%. utilities are the biggest gaining sector. up next, imf managing director
anna: here are your headlines. christine lagarde is the surprise nominee for ecb president, a supporter of qe with no central background, what will she bring? president trump's latest fed nominees are both likely to support rate cuts. pimco says the rally in risk and haven assets have both the heaven and hell scenarios priced to perfection. how much longer can the two coexist? good morning, everybody. i'm anna edwards in london. have the swedish krona and a
decision from the central bank in sweden, leaving the key rate unchanged at minus 0.25. they also say the forecast for a repo rate is also unchanged. really, the focus is on the forecast and their plans for the rest of the year. some analysts were suggesting maybe they have missed the chance to further normalize policy and hike rates. they cannot continue with what they had planned previously. we will delve into the details to see if we get any guidance, but we can see a movement in the currency on the back. but no changes in the headline. this is the picture on the stoxx up, you see 429 stocks going on a day when we see a modest rally. but if we break this down, the
biggest gaining sector is utilities, which perhaps tells you what investors are buying into. maybe buying into a search for yield and weighing up the weaker yield a situation in bond markets, hence we see money coming into some of the higher yielding stocks. ve nokia is just under -- onovia up, fluff or entertainment up by 2.5%. we have got a few ex-dividends coming through. electric components and an electronics business in the u.k., that stock is down for -- down. word newsa first update. debra mao has that in hong kong. president trump has announced his latest nominations to the federal reserve board. christopher waller is director
of research and was previously a professor of economics at the university of notre dame. judy shelton is an informal adviser to the president. she spent decades outside of and heram economics unorthodox views could attract criticism. the trump administration has abandoned its battle to add a citizenship question to the 2020 census. trump last week said he would look to the latest census after the court put the plan on hold. the u.s. has beat england to secure a place in the world cup final on sunday. victory hard-fought 2-1 with england missing a penalty less than 10 minutes from full-time. the u.s. will now play the winner of today's semi final between the netherlands and sweden. to arade war could lead widespread slowdown that requires a major policy
response, according to governor mark carney. he says they face the additional threat of a no deal brexit but reiterated his deal but a smooth divorce could lead to higher interest rates. intensification of these global trade tensions have increased the downside risk to both u.k. and global growth. we conduct policy is that we have to deal with the impact of the uncertainty around aose events and have influence the behavior of households and businesses. is reportedlynk sending out potential buyers for a wide range of unwanted assets as they lay the groundwork for a dramatic overhaul. it would be part of the german lenders plan to cut its unprofitable businesses. global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. britt.resses like a
he utters a few words. she does not use his body language. -- he does not use his body which. he does not use -- body language. he is the quintessential italian. [speaking italian] >> unbalanced, it is a net positive. he strongly supports the decisions that have been made notably by the ecb. >> concentrating on the positive immediate view, an and urgent response which needs to bring together monetary oficy, fiscal space, and those reforms that will actually deliver value for people. >> in terms of monetary policy,
it is always better for all political leaders to let the central bank governors do the job they had to do and to preserve and secure the independence. the banks around the world are called different names, they have to operate on the basis of data. they have a mandate. thoughtse of the through the years on a range of subjects with christine lagarde who is set to succeed mario draghi as president of the ecb. she will be the first woman and politician to take the job, having been france's finance minister before becoming managing director of the imf. she has a legal background and previously backed draghi's qe strategy. she advised central banks to continue to adjust policies in response to a global economic rough patch. joining us from munich is the head of portfolio management of pimco germany. i'm interested to hear what you
make of this appointment. does it bother you? does it bother pimco that she does not come with a phd in economics or much in the way of formal economics training? andrew: good morning, and a good point. on that specific point, i think it will elevate the role of the chief economist within the executive board. but more generally, i think her bring more, she will of a fiscal perspective to monetary policy, relative to some of the other people who have been candidates for that role. in thel perspective sense of if you think of what the policy response will be, that maybe what we are seeing in the broader picture is a signal from the council that they think the priorities will lie with fiscal policy, rather than monetary policy. anna: that is interesting because mario draghi himself has
called on the fiscal access to provide more support. , -- mostntly at sintra recently at sintra, he said it was hard to work if they were headed in the opposite direction. that shethe danger talks to much about the fiscal side and blurs the line between monetary and fiscal? andrew: that possibly will happen, but those lines are blurring anyway. we have had some experience with japan as to what blurred lines look like. that really is an environment where you have a central bank which has reached the lower bound. what happens at that point? there are a lot of things the central bank can do. the efficacy of what those things are in the japanese experience tells us that maybe monetary policy is not so powerful down at this lower bound.
therefore, we would expect to see fiscal policy being the new monetary policy. the ecb will probably fit into that and support financing the government through asset purchase programs. anna: will christine lagarde the better able to push for fiscal her diplomatic skills and contacts within governments around the world? andrew: oh, yes. she is on that front very well-connected. looking at the ecb and the vice president and president in waiting, a formal finance minister herself. so the ties to politics remain and-- a deep -- remain deep well-connected. anna: you have any concerns about the ecb being less independent -- independent? and ecb that is less independent or not?
andrew: i don't have many concerns about that. the independence as well in freud -- enshrined. we have to look at what happens in practice. bepaper and practice will other things. i think it will essentially be along the lines of what is happening in japan. for all intents and purposes, japan is practicing modern monetary theory. they do not call it as such, but that is effectively what they are doing. this is probably where europe is headed. anna: how long do you think before christine lagarde says she will do whatever it takes. is that what the market is waiting to hear? well, there needs to be an event for such a response, and hopefully, we don't have another. we do have, i think, in light of
the decisions taken yesterday, you have a very close link to fiscal policy and you have somebody at the commission who, historically, has a very strong federalist. that is the signal from the council that it will be fiscal policy where the action will be. respond andtakes to the combination of the lineup we have, it looks pretty good. andrew, thank you very much. the headg words from of portfolio management at pimco germany. up next, the rally continues with the euro stocks set to enter a bull market. on one of the top analysts the gold market says the market has gone too far. we will speak with her next. this is bloomberg.
strategists a senior and has been named the top forecaster for precious metals in 2018. she joins us now. good to speak to you. what is your expectation for on gold? georgette: thank you for having me. in the near term, there could be some weakness on prices. the overall sentiment is extremely positive. you see it in the markets, people are very long on gold. this is against a background of expectations that the fed will be very dovish. also, the announcement of what trump is announcing of possible new members. as even moren seen dovish than the current members.
that was something pushing oil prices higher. and in the background, the dollar is struggling a bit. for me, these are the most important drivers for prices. on one hand, expectations about monetary policy, and on the other, what they are expected to do. the only thing about easing monetary policy is that we have a situation where the market has been to aggressively pricing in rate cuts. as we zoom out, the longer-term picture looks positive for gold, pricesthe near term, the are not. anna: if we don't get the fed being as dovish as the market has assumed, if we therefore don't see the dollar weakening much, then is there any upside left for gold?
currently, we think there is not much upside left. we don't think that will happen. we are still of the view that it will only be 25 basis points. towards the end of the first quarter, the market has priced in a much more rate cuts than we currently have. 75 basis points. especially gold markets have reacted extremely positively. move on the rates. out,f that were to not pay it will take some profit and we are back below 1400 or even lower. but that will not damage the long-term trend. anna: clearly, the gold markets are reacting to treasury yields of the opportunity cost of holding gold versus other
assets. so the flight to safer havens is what is helping gold. what about the fiscal side? what do we need to be aware of? georgette: you mention it very well about it being a so-called safe haven. gold has some characteristics, but i'm not of the view that it is at this level because it is a safe haven. i think it is more of a currency and rates dynamic. that is one of the things i probably differ them a few hours -- than a few others. whoalways have investors buy gold because they are not optimistic on the financial system. you will always have them. it -- isthing is, is that the market has opened up
for a much broader public. these investors are speculating with gold like they do with any other currency, so it is behaving more like a currency that has a safe haven. anna: thanks very much, ,eorgette boele from arn amro joining us from amsterdam. pimco has been warning that heaven and hell are priced into markets as investors and juggle and improving trade landscape with a weak outlook your some data points from earlier just this week to illustrate the picture. japan's manufacturing outlook fell to its lowest in three years. 0.1zone pmi came out at above its lowest level since 2013. the isn index in the u.s. dropped to 54.7, the weakest level since october. you are starting to get the picture. and the chinese pmi
manufacturing number went below 50 for the first time in months. and yet stocks are refusing to take heed of the data, with the s&p 500 climbing to record highs. so what explains the current divergence? dani burger has been breaking down the latest data. dani: looking at some of the services pmi, we actually saw he beat for spain and italy -- a beat for spain and italy. so we are about to get the numbers for france. estimates were at 53.1 for services. it looks like it is coming in at 52.9, so that is a miss from france. other european countries we've seen had beat on this metric. i have a chart of it is updating live.
-- the chart, it is updating live. you can see that blue line ever so slightly dropping. that is the composite pmi. that is a better than the preliminary, but still weak. especially that services pmi. let's go ahead and see what the bond market is doing. the blue is the german ten-year yield, flirting with all-time lows. you can see both of the french starting to rise just ever so slightly. but now we have this disappointing number coming back from france. so we are seeing yields continuing to drop. german ten-year yields flirting with all-time lows. we are going to get the services and composite pmi soon. we'll see if they follow france's footsteps or look more like spain and italy. thanks so much, dani
8:54 in london, a positive session for equity markets. building on gains, some of that speculation around m&a could be a -- could be helping. jumping on a report that broadcom is in broad talks to buy semantic -- symantec. still with us is our reporter in hong kong. good to have you with us to tell us the details. why is broadcom looking to do this deal? >> good morning. here is another big deal in the tnt space. it is a fantastic's -- a fantastic deal. it sounds like will be announced very soon, potentially this week. it is yet another big deal by broadcom. year, theyd, last abandoned a massive potential
deal with qualcomm on a national security risks by the trump administration. after that, they went on to buy other businesses, mostly to diversify their business portfolio. they bought technology last year for $18 billion. and this one would help the company diversify into software securities. some analysts and investors question whether this is the right strategy, shifting their model into software and doubling down into this area. yet, it could be one of the most ambitious moves by broadcom. so a very interesting deal to see here. anna: thank you very much, men well -- manuel. german composite numbers look in line, the services number better
francine: the time difference between the time difference between d.c. and frankfurt is six hours, but the real day of -- the real difference is in the data. the rate debate, trump adds to dots to the fed. bloomberg's headquarters has one hawk inbound. tesla shares surge after a record quarter of deliveries. has elon musk one back investor confidence -- won back investor confidence/ -- confidence? welcome to "bloomberg: surveillance." these are your