tv Bloomberg Markets European Open Bloomberg July 22, 2019 2:30am-4:00am EDT
>> good morning. welcome to bloomberg markets, the european open. i'm anna edwards in our european headquarters in the city of london. tech shares surge on china's new star board, but it is not enough to shake off negativity on the main stock indexes. european futures, points lower. oil gains as the u.k. looks to de-escalate tensions with iran
after the islamic republic seizes a tanker in the strait of hormuz. healthy growth -- phillips beats sales estimates for the second quarter as the ceo gives bloomberg his take on the trade war. >> these trade wars that are , as ave in the world strong believer in what globalization has brought to the world, i hope that we can see coming closer to each other. that will be good for the world economy. >> we had some outflows. if i had that back, we are actually within the target range . if i look at margins and revenues compared to the second half last year, they have substantially recovered.
>> a very more welcome to the european market open, everybody. european markets opening -- what? 28 minutes' time? there or thereabouts. futures suggesting we will be a little bit weaker at the start of the trading day. european markets expected to be a little bit weaker, apart from the 3100. i should point out, seen as a bit of an outlier, and that could very much the case in oil markets. futures dewpoint slightly higher. a little bit of a weaker start to the european trading day. let's talk about what is going on on the gm and. european equity markets set for a mixed to flat to negative open perhaps at the level. markets increasingly adjusting, an assumption that 25 basis points might be as
generous as the fed gets this month. we have the asian equity markets losing ground this morning, down around 1%. the hong kong market weaker. we will focus on the tensions there on the streets once again a little while. we also have the japanese yen losing ground. think we are having a little problem with our graphics this morning. apologies for that. we are get it all sorted. not seeing money piling into the japanese currency. quick word on oil, oil prices up , 1.6% higher on brent and around .9% on tensions in the persian gulf. but that's not the only part of the story. let's get to the markets now. a busy week ahead. our managing editor joins us now in singapore. very good to speak to you once more. you have been pretty bearish on equities recently. i know you have been assessing your bearishness, putting it
through a bull market lens and asking yourself if you could be wrong here. what did you work out in the bowl versus their case for u.s. equities? i was tryinghing to work out is what would drive equities higher in the short term. one of the longer-term readings that i am bearish is i have a negative perspective on the u.s.-china trade war and i do accept the point that if we have a grand bargain, the outlook will be pretty positive, but that's unlikely to happen in the next couple of weeks, so on friday, everything i could see a ahead of me was a negative catalyst. increasing our intentions, and that was even before the strait of hormuz seizure. season started off overly positive. much of the guidance has been lower and we are seeing estimates trend lower, so i have been trying to work out with my colleagues what it is i am missing. what would be the catalyst to buy stocks in the next to the
weeks? surprisethe fed will -- well, they will only surprise 50 basis points if there is a black swan negative tale event that would already be negative for equities. the ecb will cut rates but that will not do much to help the s&p, so i do not think that is much of a boost. overall, going through the popular scenarios to boost the positive is fully priced and yet, the risks are continuously underpriced. think the pressure for stocks the next two weeks is still lower, very much so. >> you mentioned what the fed could do. you mentioned also with the ecb could do. for some, that could be another area of surprise this week. draghinot think that will want to go out with a kind urrah this summary echo >> this a chance they might want
to surprise the market, but they also might want to keep some ammunition for the september meeting. i think that is a chance they do 10 basis points this week, but that will not massively boost sentiment this week. 10 basis points on deeply negative real yields already. we have a curve which is deeply negative. this will not be a game changer. it is not like shock and ought here. it's confirmation they're going to deliver the easing that we know is coming. i think that will provide a very short-term boost. will it provide much of a boost to u.s. stocks, maybe 12 hours, 24 hours, but not anything exciting. it does not override the mounting negatives and the risks. >> let me ask you our question of the day then. in europe, big events including the conservative leadership, we ministerthe new prime tomorrow in and that actually happens on wednesday, so will u.k. assets give the new leader a honeymoon period, or will the challenges of brexit way too heavily on sentiment?
>> we are kind of thinking we might see a relief rally tomorrow. not necessarily for any fundamental reason we can see obvious to boost u.k. assets, but they have been trading deeply negative for some time, and whoever the new prime minister is, it looks like that negative path will continue. it looks like brexit path will stay there and the fundamental negatives will not stay there. the deeply negative real yields, the leverage economy, the slow growth. it's not like there should be any particular positives this week, but this asset has been trading very negatively for some time, so there is a chance that tomorrow, investors find some reason for a bit of a relief rally that might cause a bounce for a day or two, but i think overall we will see u.k. assets on a negative slant for the next couple of months. >> thanks very much. life managing editor
joining us from singapore. you can join the debate on today's question of the day. will we see a relief bounce as mark suggests, or will the challenges of brexit way too heavily on sentiment? let's get the bloomberg first word news update now. >> u.k. chancellor philip ifmond says he will resign boris johnson becomes the next prime minister. he says he cannot accept that members of his government except a no deal brexit. >> very important the prime minister had those closely aligned with him in policy and i to theresa mayn before she tenders her own resignation. >> the results of the contest are due to be announced tomorrow. protests continue in hong kong as a peaceful mass rally turned
violent late sunday. police fired tear gas as demonstrators targeted china's main headquarters for the city. earlier, hundreds of thousands biggestas hong kong's political crisis in a generation shows no signs of abating. japanese shinzo abe has claimed victory in yesterday's upper his bloc ison, but short of the super majority needed. he is on track to be japan's longest serving prime minister. british airways suspended flights to kylie from -- to cairo for seven days. the carrier says it is constantly reviewing security arrangements and will never operate a flight unless it is safe. cairo is playing down any threats, saying there is no reason to halt flights. global news 24 hours a day on twitter,t tictoc on powered by more than 2700 journalists and analysts in more
anna: welcome back to the european market open. 10:42 in london, 842 and paris or berlin. let's not read too much into european suggestion of a sluggish start to the day. china's new stock venue designed for technology startups got off to a positive start today is all 25 stocks rose on their debut. theled after the nasdaq in u.s., the so-called star market is china's latest attempt to avoid moving the latest alibaba international exchanges. in the opening of the stan honda
-- the shanghai stock exchange live up to expectations? >> i was at the stock exchange earlier today and there was a whole frenzy of excitement, s from all 25e companies were there to ring the bell. investors did push up the stocks of all 25 companies higher, but that was really knows the prize given the limited supply and the massive demand. a a lot of investors are choosing to spit it out this time. they are concerned about the locking valuations and that after this initial excitement there will be a big fall when something's start to pare down, but there is little room for error here given that xi jinping had announced this initiative less than a year ago, and it has been touted by the top levels of the chinese government. there's a lot of impetus for this to succeed, especially in a trade war when china is being threatened from being cut off to the global supply chain.
>> what are the hoops that chinese companies need to jump through? >> this is arguably the boldest capital markets reform in china yet. it takes a more nasdaq style way of listing and there are the top three changes that are being limited. number one, it is taking a registration listing profits, which gets rid of a lot of the opaque regulations from before. it was a very cumbersome process to list on the other exchanges. second, it allows unprofitable companies to list. this is a big deal in that a lot of these innovations are .nprofitable companies this is a bid to get the next alibaba or tencent to list at home, not to go to new york or hong kong. it also gives the mystic investors a chance to experience the success of their homegrown technology giants. the issue has not been a lack of technology companies in china to
list. what has been missing before is to have a market with the regulatory structure that it will allow companies with a financiald different profile to list. >> thanks very much for the update. selina wang joining us there. let's get a bloomberg business flash. >> a bridgewater associates flagship has lost 4.9% in the first half of the year according to the financial times. it is one of the fund's worst performances in two decades. global stocks and bonds markets rebounded on hopes of looser monetary policy. shares of asahi falling the most in more than a year after the an 11maker unveiled billion dollar deal to buy a be and in that australian inbevions -- ab and
australian operations. signaledlators have they are on the verge of approving the merger of sprint foxt-mobile according to business. it says there could be a settlement announcement as soon as wednesday that will give us more details on the consensus agreed as part of the deal. his include asset sales to create a new wireless network. "avengers: end game" has toppled avatar as the highest grossing film of all time. mojo, it to box office only ranks 16th if we factor in inflation. the top spot in that ranking is still held by 1939's "gone with the wind." anna: thank you very much. extended gains as
tensions in the persian gulf remain elevated. the u.k. has demanded the immediate release of the tanker which was seized by iran in the strait of hormuz friday. later, british prime minister theresa may is leading a meeting to discuss shipping in the gulf. am joined by our reporter for middle east energy markets. great to have you on. what is the latest on the situation in the gulf now and how is that supporting prices. thise prices elevated 1.5% morning. >> good morning. is still ongoing. it has not been resolved yet. the tanker was taken on thursday -- on friday, excuse me, so we had already some impact on prices for or the close friday, but throughout the weekend here hashe gulf, the situation extracted. the two sides have traded arms. we saw some footage of the
vessel in port the iranian flag flying. ando not have a resolution that is contrary to into the tensions. u.k. officials did come out saying they hope to deescalate this. we are waiting to see what the next step is going to be. is this going to be a continued situation whereby iranians hold that it is tanker and whereby the british hold an iranian tanker in gibraltar, custody of that tanker by authorities suspended for another roughly 30 days last week? that potentially could continue for a little bit longer. >> the tanker that was seized off gibraltar, you know, thought to be taking iranian oil to syria. he iranians deny that, of course. try to iran doing to find markets for its oil? in the midst of sanctions from the u.s. and others, this is proving very difficult for them.
>> yeah, i mean we're watching the tankers move largely to the east. obviously, we have the one that went to gibraltar, going to syria, but we are seeing tankers enter in port in china. from our story colleagues in china that there is bonded storage. that means tanks that have not entered yet into the chinese system where iran is storing its crude oil that could be positioned to sell to other customers in asia should to be interruptions or should there be a move in the sanctions regime, or that could be sold into china. we are seeing these tankers going into china and, again, that is under the risk of u.s. chinese buyersld take that oil and should they have assets the u.s. could attempt to seize or take through sanctions, again, show those chinese take that iranian oil, but the iranians are not sitting
still. they are shipping that oil and trying to get into markets. anna: thank you very much. bloomberg's middle east reporter. we are minutes away from the market opening in europe. up next, we will look at the stocks to watch at the open as china helps drive demand for scanners and other hospital equivalent. we will talk blooming asian markets. will have the start of the european equity trading day, and of course, the market opened in eight minutes and 45 seconds' time. this is bloomberg.
anna: welcome back. six minutes to go until the start of equity trading. let's get around to the newsroom and get to our stocks to watch team. phillipsering siemens, , and julius baer. patrick, let's come to you first. sort of an inflow story or the pace of inflows that seems to be dominating, sinking here. what is the latest? >> good morning, yes. julius baer reporting first-half earnings today at a think it will be difficult even for the most optimistic of observers -- optimistic in of observers to say that they have been fantastic results.
relationship managers are the bankers responsible for bringing in even more new money. and to his tenure judge and a priority will be reigniting some of that growth for the next person in charge. anna: we have numbers out of phillips. talk of business in china. >> they reported orderly sales on a comparable basis. of around 6.1% compared with an average estimate of around 4.5 percent. those regions are key regions between china and europe. it comes as the company recently launched a wide range of new consumer health products and also upgraded its hospital business -- anna: ok, we will watch that one. siemens? >> the ceo taking aim at president trump, saying the man who owns the most important office in the world he says is turning into the face of racism
anna: a minute to go until the start of cash equity trading for this first day of the week. good morning, everybody. this is the european market open. we have been down essentially .5%. new stocks doing well in the star market it seems in china, at overall nervousness around host of factors and a sort of dawning realization that maybe the fed is only going to give 25 basis points. the pound certainly range found this morning, but definitely worth keeping an eye on. we are asking if the new prime minister is going to get any kind of honeymoon swoon for u.k. assets.
this is the yield on the u.s. 10-year. pointingres tentatively higher, but really there's not much in it. fairly flat for u.s. futures and european futures also pretty flat at the start of trade. perhaps we will see some divergence, between what is going on in london and what happens elsewhere on the continent. european equity markets getting started, getting under way for their first trading day of the week. we're expecting to see that divergence between the u.k. and the other big markets. part of that has to do with oil prices. oil prices on the rise up by more than 1%. theuse of tensions in strait of hormuz, because of the tensions between iran and the u.k.. that pushes up some of the oil majors and that might be what we see this morning. the opening fairly flat. the french market not far behind, for the same reason,
fairly flat. maybe the german markets might be where we see plans for oil. interesting to see the japanese currency on a sled today, down by .2%. the negativity in asia not spilling into comedy markets it would seem. things from a sector perspective and what kind of clues do we get? we are really very mixed. financials broadly read but then red.h care also broadly energy being a real standout mover to the upside. mover to a standout the upside, partly why we were expected to see the london market outperform, but it does not really. let's have a look at what is going on on the individual movers and we can see one of the biggest movers to the upside is phillips. leading mover, in fact, up by 2.2%.
we heard earlier from the ceo giving thoughts on global trade and our headlines and indeed the story out of china with demand for health equipment. phillips littering numbers that overall were better than estimated. update by one of the brokers. julius baer also on the rise. better than estimated numbers in terms of profit. net inflows, a topic of concern, topic of conversation. we will get more on that. let's move to the downside. not a great deal of news flow surrounding some of these companies, just looking through the list. that's what we've got. the european equity markets. down, 333,of stocks so fairly evenly split gainers
and losers. i should mention something going on in hong kong this hour. carrie lam, the ceo of hong kong, is speaking at this point saying that she strongly condemns the protesters that we have seen, the ongoing violence over recent weeks and another bout of violence last night. we had tens of thousands taking to the street and ongoing tensions. we will leave carrie lam to speak and bring you any comments she has that spark some interest and bring you back to the european market session. the european a great markets opening slightly weaker. traders dialed back expectations on the size of fed easing at the end of the month. joining us now, an investment committee member at quill vest. very good to speak to you this morning. let's start with this fed conversation. it does seem as if market expectations are settling on or around 25 basis points. conversations, you
would have thought any more than that would have been an unrealistic expectation. >> you put it rightly, in the sense that expectations are now settling, and that's after last week when we actually saw futures markets being quite volatile. particularly after mr. william'' common scum the head of the new york fed, that futures markets were starting to discount a 50 basis point cut -- particularly ,fter mr. williams' comments the head of the new york fed. the philly fed index jumped very significantly indeed. the new york fed, empire state manufacturing index has recovered. >> some of this data has not been that bad. >> what we saw very clearly was in april and may, that the u.s. economy certainly slowed down, but as we go into the third quarter, the evidence is that consumption is holding up well. the nonfarm payroll numbers obviously were strong. as i mentioned, these forward
indicators have shown an improvement. index,anta fed gdp now they have upgraded it to 1.6% for the second quarter from a recent low of 1.3%. the consensus actually is somewhat higher than that. the second quarter, possibly 1.8 percent. i think there is a strong case for a 25 basis point cut. i really struggle to see the case for a 50 basis point cut. anna: the comments by the fed's john williams, which were dialed back. the excuse from the fed was he was talking academically about how it pays to act quickly in times of economic distress. ant might seem sensible as academic narrative, but does it feel like economic distress right now? why did the market jump so willingly on the expectation? >> a think the market jumped for the simple reason it was not discounting a 50 basis points
cut. now, as you say, it has been dialed back. academically was absolutely correct, that if you do have periods of stress, you do need to act quickly, but that is an academic judgment. in terms of where we go from here, i think the market is focused on what is the possible -- probability over the rest of the year of 1, 2, or three fed cuts? be main case is we will get two lee, periphery yields trading at about 1.8%, the 10-year trading at just over 2%, i would argue that is discounted, so there is a risk that next week, the market says what happens now, and the economic data for the third quarter, as i would argue, is starting to improve. then you actually could have expectations the in rather dampened as to where the fed goes from here. >> where stocks go? i have a chart that shows the
doubt.day version of the a new age theory suggests semiconductor stocks are the modern-day version in the nasdaq, so you need the rally if you are going to see the nasdaq sustainably rally. where does this leave us in u.s. equities? the first point to make is you have a statement to the obvious. here to date, the s&p is up close to 20%. same for the nasdaq. the price to earnings ratio has s&p to over 17. low expectations are at the moment that we will see a rebound in 2020. for this year, the earnings outlook does not look very good. second quarter, quarter on
quarter, we could have a small decline in earnings. to answer your question, my view is we have had a strong advance in june and early july. i think probably we consolidate for a minor correction as we go into august and september. anna: thank you very much. up next, we bring you stocks on the move so far this morning including phillips, which is rising after second-quarter results beat estimates. more on the dutch health care and other things business. this is bloomberg. ♪
anna: welcome back to the european open. 10 minutes past 8:00 here in london. this is the picture across the equity markets. to whatly in contrast we had anticipated in the futures. first be minutes getting the best of the gains. let's get to the movers now. >> good morning. thisng the stock movers morning is royal phillips, up more than 3%. they had the top and the sales growth range, beating expectations. with heard from the ceo. there are still talking about how the trade war concerns are weighing them down and what they are thinking about for the second half of the year. julius baer also to the upside, up newly 1.5%. first half operating income beat
estimates. they did have a slowing of inflows. we are not seeing the pop as high as one would expect. >> thanks very much. oil has extended gains as tensions in the persian gulf remain elevated. the u.k. has demanded the immediate release of the tanker which was seized by iran and the strait of hormuz on friday. later this morning, british prime minister theresa may is leading an emergency meeting to discuss the security of shipping in the gulf. let's talk about where oil prices are heading and other things that could have an impact on -- i think we will head to emerging markets. , theabout oil markets geopolitics between the u.k. and
iran. is it just iran pushing this up, up by one .4%, or do you see underlying positive factors elsewhere. tug of wary is a between different factors. on the supply-side side, obviously, the sanctions on iran are starting to really bite. as far as we can tell, exports of oil from iran are now down to less than 500,000 barrels a day. quite significant disruption to , andn exports of oil obviously, venezuelan exports and production is under severe pressure as well. those are the three if you like surprised -- supply pressure points. on the other side, russian oil production despite the opec plus agreement, is still running at a high level in with not forget projections for american oil to betion are going exceeding 12 million barrels a
day in the second half of the year, so the supply side -- yes, you've got this small squeeze. i think what is interesting is despite the geopolitical tensions which are very serious in the middle east, we actually have not had a bigger spike in the oil price. brent has gone up a little bit, but it -- isn't that surprising that we have not jumped as opposed to josh that we have not jumped to, say, $17 a barrel, as opposed to just inching up incrementally? >> let me talk about what goes on in emerging markets. i saw a couple of notes over the weekend that talk positively x int the msx -- about emf particular. is that something that you are very focused on? >> we have been long emerging-market foreign an exchange for some months now. that has performed very well and it's also quite interesting, you
see a number of emerging currencies, which have actually strengthened despite a number of negative factors. for example, the turkish has appreciated. we are now near two-month highs despite the threat to the independence of the central bank. likewise, the mexican peso has been reasonably stable despite the resignation of the finance minister. domestic political situation in south africa is not simple, and despite that, the south african rand has actually strengthened. in a world where 13 trillion u.s. dollars of bonds are in negative territory, investors trading yield and if you can get 16% on turkish government bonds, you are getting not that high level on south africa or mexico, but you are still getting significant yield pickup and that is driving emerging currencies. anna: we talk in the break about
the phenomenon in china where demand for health care is growing with the increasing size of the middle-class population. to get the best way excited for this kind of long-term trends at the moment? >> it is actually relevant to what is happening to phillips today. i think there is a very powerful demographic argument that the health-care sector in a emerging markets, notably china, is a very attractive sector. the problem, however, is if you go into domestic companies, the valuations are very expensive. i think the way to play a that in emergingtrend markets is to invest in european and american companies, which benefit from the demand for health care in china and other emerging markets. phillips is a classic example of that. if you look at the valuation of the looks relative to the valuation of chinese health care companies, phillips is attractive. anna: excellent place to leave
want to see what happened in vietnam to happen again. we will review our manpower deployment and do our best to ensure -- juste ceo of hong kong has been speaking. that is the hong kong police commissioner. both have then addressing media after another 24 hours of protest activity on the streets .f hong kong once again, the protest activity coming through and some attacks on protesters by masked individuals. we will get an update on the latest in hong kong a little later on in the program. let's return to the corporate earnings season, though, in europe because phillips has reported second quarter profits that beat analyst estimates, after the dutch company introduced new products to rekindle growth at its consumer health division. earlier, we spoke to the ceo and began by asking him about performance in the company's home region. >> europe as a low single-digit market was in that market.
for ourso in europe health care innovations. nice order from university ourital in france taking informatics platform to a diagnostic decision-making. also the chain of diagnostic centers is upgrading and standardizing on phillips. i think customs really liked the fact that we have tied ourselves to their future and also that our innovations help them deliver on what is referred to as the quadruple aim of health care -- driving health outcomes, productivity and a better patient and staff experience. i expect this momentum to continue. we are well in our growth range. , wehe higher end of it expect a half year thanks to
this momentum. used mitigating actions twice now. i want to know where the biggest supply disruptions are for you and what mitigating actions we can expect from phillips. are you prepared to put more in to america given the political angst we have seen the past four or five days? where will the mitigating moves be made? a very strong footprint, actually, both in the united states, europe, and china and we are moving more toward a regional manufacturing hub strategy where we manufacture in it -- in each of these large continents. we are a net exporter from the united states, so i think we are contributing well to the economy. with the rearrangement of the supply chain, we are in fact more able to manufacture a broader product range in each of
these geographies, thereby also serving closer to the customer with a shorter supply chain, making us, in fact, more responsive than we may have been before. anna: other than the tariffs, which we have discussed, what is your biggest concern for the second half of the year? is it potentially the political environment in the u.s.? >> i would put at the top of my list still these trade wars that as aivisive in the world, strong believer in what globalization has brought to the world. i hope that we can see people coming closer to each other and that will be good for the world economy.
anna: the u.k. finance minister said he cannot accept boris johnson's demand that members accept a no deal brexit and said he will resign if boris johnson wins the special election. >> i therefore intend to resign to theresa may before she goes to the palace to tender her own resignation on wednesday. anna: results of the tory leadership contest are due to the announced tomorrow. of's start with our question the day. we've been asking this on the market's live blog about if there will be any kind of honeymoon for the new prime minister. sometimes we talk about how liken's -- markets certainty and at least if we find out a name, we got some certainty, but might that be enough to lift u.k. assets? >> the simple answer to your question is no. make it clear that johnson will become the new leader of the party and therefore the new prime minister, but there seems to be discussions going on already between the u.k., the irish, the french, and the
german governments. goo think that we will through a period of ongoing uncertainty as to how the brexit deal will pan out. there is quite a lot of the 31st ofhat come october, the u.k. will actually leave the eu but will become a provisional member as opposed to a full member. that, ton can prevent say we have actually left, but we will have a provisional status while a free trade -- and canada plus plus deal, as they call it -- is negotiated. lexus that the same as a transition deal, this provisional membership? >> politically, -- economically, yes. politically, it is quite astute party say the major threat is corbyn. true.s not
the major threat is the brexit party and for raj. if johnson can stand up and say we have left, although we will still be a provisional member, i think politically, that is quite a clever way to get around that problem. anna: that is the politics. let me ask you about the other side of the channel. this is what is going on in the eurozone. we started our conversation this morning talking about the u.s. some of the data have not been too bad and some of the data in the eurozone also ok despite what we heard from the ecb. you point to these areas that are not doing too badly at this point. >> i think the situation in europe is very similar to the states, which is that we are andng sort of late june july a pickup in economic activity, and i think -- you mentioned that the service sector pmi's -- they are very strong in germany. they rebounded in france, and actually, surprisingly also in italy. consumption has recovered quite strongly in germany and france.
anna: 30 minutes into the trading day, welcome back. here are your headlines. the islamic republic seizes a tanker in how most. -- hammus. it beats sales estimates for the second quarter. julius baer ceo declines negative rates after inflows slow for a third straight have. but it rises in the latter part of the year. good morning and welcome to the european market. 30 minutes into your trading day, this is the picture across
european equity markets. we talked about the impact. the biggest gain or, the paper company out of finland up. it had a negative session at the end of last week. that's worth keeping in mind. some others in the same sector moving on. this is phillips up 4% on the back of those numbers, in particular china. we heard from the ceo earlier on. we've also got companies that benefit from stronger oil pricing. this has got an upgrade. let's move to the downside, what's bringing up the rear for us. this is in a region base machinery business -- norwegian based machinery business. that didn't go down too well with investors. that's the extent of the story there.
elsewhere, a mixed bag of movers to the downside. 3%. down let's get a bloomberg first word news update with debra mao and hong kong. debra: serious consequences. that's what the u.k. warned iran will face over the seas of a british tanker in hormuz. london demanding removal of the vessel. prime minister theresa may will today lead a meeting of the emergency committee, cobra. u.k. chancellor philip hammond says he will resign if boris johnson becomes the next prime minister. he can't accept the demand members of the government except a no deal brexit. >> the prime minister has a chancellor closely aligned with them in terms of policy, and therefore i intend to resign to sheesa may if he tenders -- tenders her own resignation
wednesday. debra: they are due to be announced tomorrow. japanese prime minister shinzo abe claimed victory in the election, short of the super majority need of pushing revisions to the constitution. abe is on course to be japan's longest-serving prime minister. dominated the election. he pledged to crackdown on corruption. according to preliminary results, is servant of the people party won 42% of the vote. it's named after the television show that propelled him to fame. british airways suspended all flights to cairo for seven days as the government warns about threats to aviation in egypt. the carrier says it is reviewing security arrangements and will never operate a flight unless it is safe. cairo is playing down it is not
safe, saying there is no reason to hold flights. global news, 24 hours a day on air and at tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. anna? anna: thank you, debra mao and hong kong. julius baer reported the slowest inflows in seven years. it grew 3.2% in the first half, meaning the third-largest bank missed the growth of 4% to 6%. >> i'm actually very happy with the numbers we produced here. it's a substantial recovery from the second half of 2018. and with $391 million net profits, it's one of the best results in the history of julius baer. net inflows are robust from the core wealth management business, particularly for europe and the middle east. you're right. we had some outflows with cairo funds. if i had that back, we were in
the target range of 4% to 6%. if i look at the margins and revenues compared to the second half of last year, they have substantially recovered. and of course, we fully fitted from better markets. was very important going forward is the cost program i explain in february is nicely on contract. manus: do you think the new man coming in is going to have to do more aggressive cost cuts? >> look, the cost cuts, we did an aggressive cost cut at the beginning of this year. you will see the benefits in the second half of 2019 already, and certainly in 2020. so, i feel comfortable that with these cost measures, we will get back into the ratio. it's always dependent on the markets, but there's a good chance we get back. manus: where they reaching for risk in this world of negative
yield? or are they reaching for cash? >> the clients i talked to, they are still pretty cautious. so we see a lot of clients still heavily in liquidity, which i think is also positive. we don't see a real bubble that should burst tomorrow. clients stayknow, a bit on the sidelines still. still more activity on the sidelines, but at cash level. manus: as you exit the door, is the bank in better shape than when you came? >> i think it is in better shape. look, i'm very proud. if i look back, we created together the largest wealth manager, fewest wealth manager. and what i'm particularly proud of our three things. clear we gained a strategy direction in the last two years with regard to focus.
the market coverage, number one. second, we discussed it last time, focused more on fee-based income. and we started quite a boost in terms of technology and digital transformation. we're inthat, i think a very good situation going forward. manus: did you have full support of the board? did you think you were fully supported and given enough time? >> i was fully supported, manus. look, it's a long-term succession planning. i was very much involved. i think the board nominated a strong candidate to take over for me. i worked with philip, and i'm sure i will hand over julius baer in great shape and good hands. manus: was it disingenuous to say you were just a caretaker?
>> not a caretaker. i did more than just caretaking. i think we stabilize the firm. we calmed down the market. but i did more. the strategic direction that we started to really work on the poor markets quite heavily. not just caretaking. it is more. anna: that was the ceo of julius baer speaking to manus cranny. let's speak to manus cranny, who joins us from zurich. great to see you this morning. let's start with the numbers and the inflow and outflow story. he said he's happy with the numbers they produced. it's the pace of change that's gotten some scratching their heads in the markets. manus: yes. anna, good morning to you. in suspendedans isolation. it's about the flow of money. it's about the continuation of a
trend on what we've seen is the flow of money. is that post-clardy? is that looking at the funds that came in? if you look at the italian business, bernhardt was clear. we have a target of 46% growth in terms of net new money. if you take out the anomaly of what happened with the business in italy, we are still in that range. cost cuts are going to come to bear in the second half, which is the program he implemented. in terms of bringing the cost income ratio down. because that is the strategy for this ceo. he thinks they will make it back to the target of 6.8% cost to income ratio. anna: and he will be leaving that to someone else, while he? management will change, as he suggested. three ceo's in as many years. investors probably find that, overall,, unsettling don't
today? manus: i think that's a fair estimation. have a look at the names. clardy took the business. quick to defend his position. he steadied the ship, somewhat site. -- some would say. does he go through emerging markets? does he faced china and asia? the slowest growth in three decades. where next for julius baer in terms of dirtying -- studying those margins? --tudying those margins steadying those margins? i think that x-men into the seat has to convince -- of the next man into the seat has to convince the market they have a growth story to paddle. anna: indeed. whether it's a growth story or approaching maturity, he was quite defiant he hasn't been a
caretaker in this interview with you. manus: you always wonder when you try to get them to react here and he was very stoic about it. i was more than a caretaker. he wanted that to be said. i helped build this, stabilize it in my own right. enter that and, i think that's end, i thinko that that's what he wanted me to take. we calmed the market down. they added wealth management last year. he was deeply involved in the succession plan. this was a long-term trajectory. he was part of the plan. he's handing the baton on. by the way, if anyone was in any dark, if you were remotely worried, we've seen the story, no, we were not mortally wounded. anna: thanks very much. manus cranny on the ground,
we are 44 minutes into the trading day and things looking more positive across european equities. should point out the stoxx 600's flat to negative right now, but the major markets in positive territory. the ftse 100 up an eighth of a percent or so. the cac and the dax basically flat this morning. let's talk about m&a because it is monday. let's look at the deals driving markets in europe. liam fox has been pushing top pe firms in london to put their $1 trillion plus as capital to work in the u.k., and his strategy may be playing off -- paying off. one offered to take some of. syed, who with sarah has been tracking this story. looks like private equity firms aren't being deterred from investing in the u.k., liam fox trying to persuade some of the
groups. this is a business, isn't it? sarah: correct. they feel it's a certainty with consumers wanting to stick with beers.d keep drinking you're right. late last year, it was december when liam fox met with a dozen of the top private equity firms operating in london or based in london, trying to convince them to put this $1 trillion plus of dry powder that they have and invest it into the u.k. and i think what the private equity firms are most concerned about, though, is this idea of a no deal brexit and the uncertainty that might bring with it. anna: with that in mind, are we going to see a slowdown to the rate at which we're seeing the private equity deals if there's more uncertainty from the 31st of october or the run-up to it,
that date looming as the brexit date? sarah: i'm not so sure to be honest. i think june was the busiest month in the u.k. since 2007. i think sponsors who are sitting on a ton of capital are keen to invest it. i think what they look for other characteristics that they look for in the u.k. businesses. domiciled, the u.k. but if the majority or a significant amount of company's revenues are distributed across the globe, then people find it, there's a little more certainty. they can easily get these deals financed than if the company was generated most of its revenue from the u.k.. anna: although some of the companies is the enterprise. the pub operator is a u.k. story may be times of uncertainty, who knows where the u.k. turns to
for solace? let's talk about this broad trend, public to private. what is it about the pes find it so attractive? why are we seeing this trend? itah: i think we're seeing in germany, as well. as we go back to saying how much capital the private equities are sitting on, if you look at options in the private space, they become very expensive and competitive. lost stocks on the public -- whilst stocks on the public have come down, it has made it difficult to do deals in that space. going forward, we will see more public to private in europe. anna: thanks very much. sarah syed from the deals team. if you're a terminals subscriber, you can check out the latest m&a news. up next, we'll bring you some of the stocks on the move,
around 1/10 of a percent right now. here's a look at what you should be watching out for this week. tomorrow, we find out who will be the next u.k. prime minister. will it be boris johnson or jeremy hunt? will jeremy hunt be able to pull off a surprise victory? he's had momentum in the latter stages. it would take a lot of momentum, but we'll see. mid to late morning tomorrow is when we get the latest. we'll be live for that coverage. we get deutsche bank. investors will be watching for details on the executive's turnaround plan. and on thursday, we'll get decisions from the ecb and turkish central bank. focus will be on the governor and the central bank's independence. that's on the subject of turkey, not on the subject of the presidency of the ecb. and to close out the week, we get growth data from the note states, forecast to hit the
slowest pace since 2016. it will be a busy week, lots to look ahead for. bank reporting from european banks certainly in focus. let's talk about the equity markets right now. i mentioned futures in the united states look positive. we've been treading on european markets, down a 10th of a percent on the stoxx 600. this is a sector breakdown. oil and gas also getting. after -- gaining. it took time to establish the ftse 100 in oil and gas and basic resources. now we've achieved that on equities. stronger.00 is and we see basic resources outperforming. real estate the biggest loser. annmarie hordern has our movers. annmarie: this morning, and meyer berger is plunging, down nearly 17%, at with earnings
results and they had a loss this first have. last year, they were making profits. they are now reviewing some of their options. resources outic more than 3% this morning. they may be moving higher as india's top firm puts on hold the acquisition of essar steel india. for some in the market, that may mean they are holding on to billion dollars in cash they would be spending on the acquisition. i tv to the downside. so is mediaset. this is off to a new note from morgan stanley, talking about faster decline and linear tv watching, as well as slower rates in terms of ad tv sales. anna: thanks very much. a mixed bag. let's talk about politics in hong kong. carrie lam has decried a night of violence in the city as police crashed with protesters.
she says the government wants to find a root cause of the violence. clear theteargas to streets after demonstrators surrounded the building and defaced the emblem at the entrance. for more, let's go to our china government editor karen lee, who is with us. bring us up-to-date with the latest developments. lam andight, so carrie the commissioner have just spoken. we weren't sure what they were going to say. there was speculation they could acquiesce to protester demands, but she didn't. what you did was decry the violence. what we saw was something we haven't seen in this protest movement to date. we saw max to men, who were and i did masked man, who -- we saw masked man, who were unidentified, attacking people. police have faced criticism for what they said wasn't strong
enough presence. people said they tried to call for police backup. they weren't able to reach anybody. police under fire in a way they haven't been on and off through protest. and so is carrie lam. anna: and carrie lam says she wants to get to the root cause. the root cause is unhappiness with her leadership, the government in general? these weeks were sparked by people upset about extradition legislation she proposed that would ease extradition to the mainland. people worried this was an eradication of the fireball of the justice systems, the long arm of beijing. it's expanded into a wider movement that called for her resignation and of police violence. this is likely to feel the anger -- fuel that anger and resentment. anna: thanks for that update. that's it for the european open.
>> oil gains as the u.k. looks to disk tensions with iran after the islamic republic seizes a tanker. violent clashes calmed at the strongest warnings from the chinese government fanning fears of escalating violence. ceo declined the pain of negative rates. outflows. had some of 4% tothin the range 6%. if i look at margins and revenue compared to the second half of last year, we r