tv Bloomberg Markets European Open Bloomberg August 16, 2019 2:30am-4:00am EDT
phone as china prepares tariff countermeasures. investors bank in another quarter-point reduction. powell bow to the pressure? the u.s. says it is disappointed with the u.k. decision to release an iranian tanker. penalties could be imposed on any company that does business take a look at the 10 year yield, coming back. we dipped below 1.5% yesterday. this is a three-year chart. back to 1.5%. looking at decent gains across european futures. dax futures.t the gains of 0.6%.
across the board, really. ftse futures up a little more. wang.get over to selina >> chinese paramilitary police seen gathering near hong kong. some are interpreting it as a sign beijing is ready to use increased force. mirrors from the -- in comments yesterday. >> the hong kong situation is at a critical moment. we have full trust and if the situation deteriorates further, into
i say our government, the central government will not sit back and watch. is the special relationship in danger? the u.s. says it is disappointed with the u.k. after it allowed the gibraltar court to allow the release of the iranian tanker. the u.s. has threatened sanction against anyone who does business with the ship. it could put the uk's hopes of a trade deal at risk. letting them in would be a sign of weakness. will not bethe pair allowed in because of their support of a boycott for the country. twoh korea fired unidentified projectiles into
waters off the east coast. it comes after liberation day, a holiday marked by both korea's to celebrate freedom from le.anese colonial ru ambabwe has a plan to end standoff with its creditors. it will privatize everything from state telecom companies to timber plantations. they hope to access the finance it needs to revive the economy. global news, 24 hours a day. powered by more than 2700 journalists and analysts. >> thank you very much. in beijing. most asian stocks posted modest to stakes -- gains.
this comes after a tumultuous week of trade uncertainty and fears over global growth. week. been a historic the recession alarm bells ringing in bond markets, including the u.s., have pushed record $16le to a trillion. we asked guests in their views buying bonds. >> we don't have much in negative yields. you can make it work. boughtyear ago, we negative yielding euro debt. great investment. >> the situation, that is why we are serious. you can callng financial repression. >> it forces you further down the credit spectrum.
>> mostly capital appreciation, with a little bit of protection against credit spreads. haven't gotten any negative yielding bonds. >> it is a dangerous situation. in the medium-term, you do have to take risks. >> we kind of have to get used to it. with our bloomberg mliv strategist out of singapore. what is your take away? 30 year yields below 2%. we headed for a recession? about whether we are headed for one in the near term. i suspect if we can to this path, particularly with no end and therade war,
spinoff affects it is having around asia and the rest of the world, it is right likely a recession will hit somewhere in the next couple years. some of the things we are seeing this week are disturbing. it would appear more and more people just don't think of the central bank monetary policy is working any longer. we have gotten to the point where we already have the ecb and the bank of japan. negative policies for a long time. on a newas started policy which may end up with them going toward zero rates. and yet nothing much is happening and terms of restoring confidence in global growth. whys part of the reason bonds have performed so incredibly. people are giving up thinking central banks can save the
situation of the global economy. there are many countries around the situation is not able to help. it is no wonder so many managers are becoming panicky and buying whatever bond they can get their hands on. >> let's focus on japan. that is what your question of the day is. the impact of the yield curve control? what are you hearing? now, it is not working. to the curve to steepen a bit. it did not have much impact at all. during the day, we have seen japan has once again become the largest holder of treasuries around the world. becausert of that is
monetary policy has not been working. the curve is flat. on 30is hardly any return year bonds. it is forcing investors to go around the world. the obvious place for them to go as the u.s.. a flood of money has gone into the u.s.. the side effects have numerous read one could be through the currency market. not hedging are aggressively but if they do need to aggressively hedge, we will see some big dislocations in the currency markets. have moree u.s. control over what is going on? reserve officials said he did not think a rate cut is necessary.
>> it sends a dramatic signal to investors. in might get people panicky about what could the fed see that is so terrible, they need to do an immediate rate cut. fortunately, you have some ammunition. room to go further down when they need to. they must be looking at the situation around the world with global yield. italian yields going negative, there is a huge disconnect. disturbing signal. the fed saying, do we know the full story? is there something worse we haven't realized yet? i'm sure they would like to take more time before they pull the trigger on a big rate cut.
they will need more time to assess. it is going through their minds. bloomberg mliv strategist. you can join the debate on the question of the day. what is the impact of the yield curve? if it falters is the question. remember to reach out to us. up next, hong kong protest have entered their third month. we look into the economic impact of the unrest, next. and remember, bloomberg radio is -- if you are turning on the tv, tune in. this is bloomberg.
most and 11 years after a prominent financial examiner accused the company of accounting fraud. for releasing concerns about bernie made off. thege chief executive calls claims market manipulation. he bought about $2 million of rout. amid the a new owner further brooklyn nets. the alibaba vice-chairman is paying about 3.5 billion dollars for the basketball team and its arena. a 49% stakey bought to takeuntil 2021 control of the club. the purchase may be announced as soon as possible a. we have learned several private equity suitors are considering walking away, and the auction is corporateocused on
buyers. some firms have been frustrated by the reluctance to detailed information. deutsche bank has hit a record low. just two months after rebounding in optimism. shares fell to a new low. it is trading at 94%. it underscores the impact of a reversal in interest rate expectations, threatening to prolong the lost decade for european banks. >> thank you very much. kong againstong the controversial extradition law have entered their third month. the gdp figure is due. let's take a closer look at the political and social unrest. carrie lam's government unleashed a stimulus package.
forecast to 0.1% from a previous forecast of 2.3%. the prior tests -- protests and slowing economy taking tolls. the benchmark hang seng index at 1.1% book value. seems the situation is not scaring buyers on the mainland. they have purchased 5.1 billion u.s. dollars worth of hong kong stocks in the last 20 sessions. that's the longest run of inflows. joining us is jeff lack. the head of greater china economics. where are we seeing the biggest impact in terms of the economy? is it just that people can't get anywhere? is it a bigger problem than
that? >> good morning. the economy was already slowing. now is the seeing confidence shock we have had since june. , retailtical shutdowns closing down, that is relatively limited. that is not a major thing in at self. -- in itself. it is the confidence shock, people not knowing what to expect. when to invest. is the likelihood these protests are going to come to an end anytime soon. anotherne spider-man or climb a skyscraper and put up a banner.d are -- peace last 24-48 hours,
you may be able to receive some relief of tension. the underlying issues are though there. forecasting a quick and might be proven wrong. >> what would have to happen? remove.extradition law carrie lam is still the leader. if she steps down, with that comb protesters? at this stage, the protesters have a clear set of demands. none of them are being addressed. the bill is in suspension but it is not technically withdrawn. there is a sort of standoff. whether any movement on any one of those points would make a difference is hard to predict. the underlying issues are still there.
that is a long way from being addressed. >> thank you very much. jeff black, head of greater china economics. we are showing you a live shot of the shenzhen stadium. that is where we have seen police paramilitary gather. we are going to continue to monitor this feed and keep you posted. we are minutes away from the open. we are going to look at stocks to watch. after private equity interest cools and buying a unit. this is bloomberg.
underperform or outperform. a price target of eight euros. take -- keep an eye on the airline next week because they could be looking at walkouts. right where we are going to have the u.k. bank holiday. >> thank you very much for that. you have a story on munich-based infineon in. european chip stocks. a positive read. their figures beat estimates. profit level, indicating a recent slump in orders may be easing. of anticipation. stocks indicated higher. we will see if that is actually the case.
investors looking out for evidence this is the end of the cycle. the bottom of the cycle. back to you. >> great stuff. you have another german company. what is the story? telling bloomberg private equity suitors seem to be cooling off. they are apparently frustrated with the financial details. however they are also facing .ompetition from a cement giant. a building supplies company, standard industries. >> thank you very much. for joining us. you can get us -- the latest
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matt: we are a minute from the open of cash equities trading. let's look at the markets with annmarie hordern in london. annmarie: let's kick it off in asia. a mixed session but the msci asia is up .3%. euro-dollar, hovering around 1.11 this morning. oil, trading under $59 a barrel. the first time in three weeks we see a gain. we have an opec report not later and the u.s. can year yield paring down declines after it fell to below 1.5%. let's look at european futures this morning -- u.s. futures are up. ftse 100 futures are higher and
ax and cac, there is potential trading issue so we could have a delay to the open of the ftse in london but at the moment, we are seeing higher futures into the start of trading. we saw this yesterday but the market closed in negative territory. we do have the european markets opening up. ftse 100 is flat. this could be considered due to what is happening at the lse, investigating this trading situation. we will bring you that market once it opens and any details the lse is bringing. euro stoxx 50 opening up .1%. ibex up nearly 2% this morning and the british pound is higher up .2%. we are seeing a weaker swiss franc this morning against the u.s. dollar. the cac has opened up .3%.
we are seeing momentum to the upside this morning and on the sector picture, it is an absolute sea of green. we saw this a lot through the green. theaw futures higher, market open higher but we ended the day lower. a lot of it has to do with the united states. it has been a tumultuous week. this morning, i'm interested to see how the chipmakers do how well they did yesterday in the u.s. what the reader cross will be in europe. matt: obviously a lot of green, a lot of stocks gaining. individual movers, 360 up, 74 down. a little slow out of the gate this friday but some defensive stocks are still the big gainers. nestle is a big gainer today. roche holdings, anheuser-busch is a big gainer. although there are some movers -- we heard from albertina about infineon. could be gaining on other
results. we see some losers on results. look at the downside. but nivdisk, down 1% industries is down 7.1%. it missed on the second quarter and is taking a hit. fiat chrysler, also a big loser. european markets for the most part are opening higher. this comes as another tumultuous week of trade uncertainty draws to a close. could be something of a bounce. ofning us now, the cia of global equities at allianz global investors. do you think what we are seeing is a little bounce after so much concern over plummeting yields this week? >> in short, yes. change is not going to the trajectory of what markets will be doing and after a difficult week, you get a little bounce.
we are still in for a bout of volatility. it is that time of year but on top of that, you got the volatility caused by the trade uncertainty and uncertainty over what the central bank will be doing. we anticipate a lot of volatility. matt: when you look at the inversion of the yield curve, and historically it looks like a pretty good predictor of recessions, does it look like that will be true again this time or do you think things are different? both ways.an argue things are different in some ways because even the central bank suspension in bond markets, but at the same time, we've got the slowing down of pmi everywhere around the world. growth is surprising on the downside so there is increased recession risk. whether we get there is up for
grabs. matt: one thing we do see, we have been debating this a little bit today, it looks like recessions come after a few months after the inversion. maybe it is the steepening that is the problem. maybe that is a warning sign. do you think people should hold equities for a while longer? do you think there is room to run? lucy: i'm very biased. clearly i'm the cio thinking you should own equities over the long-term but when you look at the relative valuation of equities compared to other asset classes, even starting with the yield, but you are getting on equities globally which can grow. i am looking at where i can see yields anywhere in the world on other asset classes of that nature. not that many. so i think it is a starting point. corporatetill --
profits are still holding up. they are not growing, but at relatively healthy levels. you've got support from buying from corporate's, buying their own shares. what kind of shares do you want to holding case we do see a real economic downturn? hold equitieso but surely you don't want to hold growth socks -- stocks into a recession. byy: stocks are supported what bond yields are doing at the moment. supportways, that is a but looking at where growth is, a lot of that is already priced in. at this stage, where there is such uncertainty about the nature of scale of the downturn. we know there is a downturn but not how long it will be. in that situation, having some source of balance within the portfolio makes a lot of sense.
that is, assuming you will be in the equity market and looking at where you can find defensive assets that are not overpriced. me, ancare seems, to area where you can see that. looking in more cyclical areas, looking more you've got more diversification so you will not get the worst of the downside. you can get a little value support. that will give you more balancing your overall portfolio. matt: lucy, you stick with us on the friday morning -- this friday morning. lucy macdonald is the the cia of of global equities at allianz global investors. what a historic weekend has been for the markets and we will continue to try and figure out what is going on. right now, i want to point out we still don't see the ftse 100 index open, or the ftse 250. we are getting news from the london stock exchange that there are delays. we will bring you all of the
news on that as soon as we can. figure out what is going on there. if it is a late open, if it will take longer, we will get an update. we will bring you the stocks that are moving this morning. this is why we didn't see as many stoxx 600 movers out of the gate. amf is a mover, though. chipmakers, jumping on a read across from strong earnings at nvidia. infineon on is a gainer, as well. this is bloomberg. ♪
matt: welcome back to "bloomberg markets: the european open." 10 minutes into the trading day and we see the ftse still closed. it has not yet open for trading. we are told by the lse we will get an update soon on the trading issues, the delayed issues that are keeping us from seeing u.k. stocks trade. mib, otherc, ftse indexes are gaining the we don't see massive gains. 45 points up on the frankfurt in kic -- index. the most likely watched part of the treasury yield curve inverted this week but historically, there has always been a significant lag between inversion and recession, between six months and two years. what have we learned from the past six inversions? it is not until the curve
restatements -- resteepens until a recession kicks in. how long until that happens? what can policymakers do? blackrock told european toldrities that -- bloomberg that european authorities should consider cash handouts. what we are proposing is the next step has to be something else. something that goes in the direction of essentially what we call go and direct, which would be ways of putting money into pockets of consumers or corporates directly in order to spend. they are closest or at the point where more of the same simply will not work anymore. matt: lucy macdonald is the cio of of global equities at allianz global investors. it is not a new idea.
milton friedman first brought up helicopter money in the 1960's, but is it a possibility? lucy: yeah, it has been used in some form before. i think it is to me more an emergency measure. i'm not sure we are there yet. post financial crisis, when there is a big slump in consumer sentiment. we are not really there at the moment. consumers are still spending and growth is still just about positive. s tools to have in the pocket. whether it is one to use now is less clear. matt: what do you think in general about the european central bank -- let's just say, central-bank stimulus? it looks like it is really about the come from the ecb, cuts from the boj has been at it forever but it will increase bond purchases. does that make you bullish equities still? lucy: not super bullish.
we are expecting flatish markets. it has been bullish for the last 10 years, so it is not really expecting much out of equity markets, but what is holding equity markets is the level of bond yield interest rates. we wouldn't be at these levels unless those rates were there, if, as we anticipate that all central banks are going to remain accommodative for the medium-term, that will hold asset prices were they are. it's really because central banks are so concerned and looking back to the financial crisis, not wanting to go there again, that they air on the side of caution. we've seen the 180 degree turn in six months. matt: i guess my question is, do you think the central banks tools will be able to undo the damage done by the trump trade war?
lucy: well, it has worked this year, hasn't it? if you look at what happened at the beginning of the year when you had the fed turning 180 degrees and looking to cut interest rates. that was a bigger impact than the concern about trade. clearly, the trade is now having more of an impact on growth and on corporate profits, and there is less in the toolbox for the fed and they had. -- then they had. that will be the balance of the market. it certainly can have a big impact. matt: let me ask you the mliv question of the day, posted on the blog early this morning. boj'ss the impact of the -- if the boj's yield curve control falters? thisan really look at through the lens of any central-bank.
what if the fed policy falters? what do you expect? lucy: that is one of the biggest sources of volatility. of two are the uncertainty the trade and the uncertainty about central-bank policy. but also what do, they are targeting and that is an indicator. changing as they look at the target and the tools they bill using -- they'll be using. matt: lucy macdonald, the cio of global equities at allianz global investors stays with us. right now, our top stock stories with annmarie hordern. annmarie: chip stocks might be back in fashion. amf and infineon to the upside as nvidia reported profit that beat expectations. could be signaling the slump in orders may be easing. potentially more upside for the up nearly and bayer, 2.5% after the trump administration approves a phosphate project idaho.
matt: welcome back to the european open. we are about 20 minutes into the trading session this morning and looking at gains across the european equity indexes with the exception of the ftse. it says unchanged. it is not opened yet. the london stock exchange has issue and is an have promised an update but so far, no trades on the ftse 100 or its he to 50. u.k. stock -- ftse 250. let's look at the industry groups that are moving in the stoxx 600 of the stocks trading. i've got the grr screen and we can see that all groups are gaining today. this is a day of a rising tide lifting all those. auto parts, travel and leisure, and chemicals are doing the worst best, if you will.
on the upside, utilities, technology, and health care. interesting mix of growth and defensive groups. banks are the fourth biggest gainer today and industrial goods and services are bringing up the rear of the top five. lucy macdonald, the cio of global equities at allianz global investors is still with us. we want to get into the trades you like. your contrarian trades, though they are not trading currently -- currently, u.k. industrials. lucy: contrarian because it is an area you see absolute value. in a world where there isn't much of it. you are getting single-digit and yields to match. it is contrarian. it is high risk and not something i want to be putting too much money on at the moment but if you are a u.k. investor, within -- constrained within the
u.k., there is value to be had there. matt: an outside bed. -- bet. interesting you bring up that constraint. what is your outlook for the pound going into the october 31 brexit deadline? lucy: more of the same, until we get some more clarity about the and some idea of where we are going to end up. the pound seems to be a one-way bet, and flat when you look back at the contrarian iism. if you are a country trading within the u.k. and has a decent business outside europe, then you can be -- that could be a benefit. you got basically high risk value plays in the u.k., then, considering what the outcome of brexit could be and
really within the european auto sector considering the outcome of the trade war, right? lucy: yeah. we don't tend to do much in the auto sector at the best of times and that has generally been the right way to be. it has to be said, there does appear to be even more value than usual in that sector, but it is not a high return industry. cyclical and is structural challenges. the last couple of years, you've had issues with taxation with emissions. there is value there if you are brave and that is what you want to be doing but not something i'm comfortable with. matt: you don't tend to get involved in the auto sector -- the oil sector is also one that you don't tend -- you tend to avoid, but this is your under the radar trade. what you are watching, why? more out of intellectual
interest to see if it is in a structural decline. it is one area where, in the past has been used as some sort of barbell, some kind of yield itport and at the moment, seems to be structurally underperforming in all markets, up and down markets and whatever the commodity prices doing -- price is doing. it is a cyclical sector and the reason we don't see investment very much is the oil price is, in my experience, impossible to forecast so i tend to stay away from it. it isg at the way behaving, it makes me wonder if there is something removed from the sector for a more fundamental reason to do with environmental issues. matt: i want to finish on your conviction trade. that is health-care care stocks and you say "selectively." explain. lucy: there is value there, for
a start. marketssomething in the that is relatively scarce and particularly within the sectors that are non-cyclical and defensive. the reasons why the sector is cheaper is concern about health care reform in the u.s.. in our view overall, that might be overdone because we think the likelihood of medicare for all being introduced is very unlikely. but within that, there are pockets of risk to do with highly priced drugs so we want to be very careful where we are investing. the areas where you've got good structural growth whatever happens with trade and interest rates are things like health tech. companies that are benefiting from the move to deliver health services more productively. sequencing, which is on the rise. caremany areas of health
equipment and products which have structural growth to do with aging. areas, there is decent structural growth which is not that expensive at the moment. matt: thanks so much for your time on this friday morning. lucy macdonald is the the cio of global equities at allianz global investors. lucy will continue the conversation on bloomberg radio at 9:00 a.m. u.k. time. tune in on london dab in the city. plunging after holding back its financial results. the chemical maker is delaying the release for a month to coincide with a report on went wrong during construction of its near $13 billion lake charles project in louisiana. joining us from johannes berg is bloomberg's paul burkart. what went wrong with the construction? paul: well, it has been a compounding issue. a number of issues. there has been the weather and
theye last update, mentioned there was some management products locally with the project itself. we've seen the cost of the project climb 50% and this morning was a bit of a surprise with the delay of the results because i had confirmed, attending giving yesterday. -- even yesterday. it seems like a last-minute call but they want to wait until the autopsy is finished on what has happened on lake charles, and i guess make sure costs don't increase in -- even more. matt: you can see the surprise and markets. it is down 15% this morning. thank you for joining us on this developing story. .aul burke on sasol the u.s. says it is disappointed with u.k.'s decision to release an iranian tanker expected -- suspected of hauling oil to
we are 30 minutes into trading. here are your top headlines. call.ng president trump says he will speak with xi jinping on the phone very soon as china prepares countermeasures. confidence in a cut. investors bank on at least a quarter-point reduction. but will jay powell bowed to the pressure? and sanctions threat. the u.s. says it is disappointed with u.k.'s decision to release an iran tanker suspected of hauling oil to syria. sanctions can be imposed on any business that does business with
the boat. i'm matt here in berlin. we are 30 minutes into the trading day, and we are still waiting for the ftse to open up. right now, we are looking at a ftse that is unchanged as the lse says the open is delayed. up nowee 400 stocks and very few down. bayer, you see, a lot of defensive stocks on the upside. sap,ee some tech stocks, infineon is a gain or ted -- is a gainer today. on the downside, you see a couple of big movers. one is i am cd right now, -- imcd, trading right now in amsterdam. mcd down 16% after reporting
first half earnings. industries are down. there are some industry losers, but those are basically the only fallers right now. up. nordis is let's get the bloomberg first word news. for that we go to selina wang. barred entry to two muslim members of the u.s. congress after president trump said letting them into the country would be a sign of weakness. he added that they hate israel and all jewish people. israel says the representatives will not be allowed in because of their support for a boycott for the country. identified fired two -- unidentified projectiles into the waters off its east coast according to south korea's defense ministry. the launch comes a day after
liberation day, a day marked by both korea's to celebrate their independence from japan. they say they are monitoring for possible further launches. china's paramilitary police have been seen a gathering near the border of hong kong. dozens of armored personnel carriers and trucks were parked at a stadium near a bridge linking the city and the mainland. some are interpreting it as a single from beijing that it is ready to use increased force if necessary. bynears -- mirrors comments the ambassador yesterday. >> the hong kong situation is at a very critical moment, but we have confidence in the chief executive and her administration to handle the situation. if the situation deteriorates further into unrest, uncontrollable by the government, the central
government will not sit by and watch. has a plan towe end a 20 year standoff with its creditors. the finance minister has flagged rate cuts and bond sales. it will also privatize everything from estate telecom companies and plantations. have the financing it needs to revive the economy. global news 24 hours a day on air and tic-toc on twitter, and powered by more than 2700 journalists and analysts in 120 countries. this is bloomberg. matt? matt: thanks very much. selina wang in beijing with your first word news. china called looming u.s. tariffs a violation of accords reached by president donald trump and xi jinping. hasident xi jinping spoken against it. joining us from singapore to
talk more about this is derek wall bank. news of this call came as a bit of a surprise. what could they be discussing, and what are the outcomes we could expect? you are right, it did come as a bit of a surprise. we had been thinking there would not be too much in the way of u.s.-china talks going on at this moment, but trump out of the blue sky said there might be. what we are looking at is a september 1 deadline for terex -- tariffs on certain products, and another deadline because the white house delayed part of it to december 17. you are looking into whether those things stick or slide. you are also looking at the issue of whether china gives some accommodations to the u.s. we are talking specifically in terms of agricultural impacts. those have been a sensitive thing for president trump
gearing up for a campaign, where a lot of his base is in the farm country in the midwestern united states. those two things are really critical issues right at this moment. they are linked as well. the other thing i would throw in there is that president trump has been a saying the words hong kong a lot, and there is a lot of question on the chinese side whether the president is trying to link hong kong in here somewhere. that would be something i would be watching very closely as well. matt: the u.s. has also said it is disappointed with u.k.'s decision to release an iranian oil tanker. do the americans plan to stop that? i think there is a little bit of a legal race in gibraltar. the u.s. is trying to get some reconsideration before that giant ship actually leaves, whereas iran is trying to race
it out as quickly as possible. but one thing a lot of people don't know about u.s. sanctions, which is one of the things the u.s. is threatening, you don't necessarily just sanction a person or a country. you can actually sanction a ship. you can sanction the vessel itself, and make the vessel itself persona non grata. that exposes any port or person or company who does business with that specific ship to sanctions. what i would be looking for, if the u.s. is not specifically successful in here, is some move possibly in that direction. the other thing i am wondering about is whether this has some knock on effect with the relationship with the u.k. and government,n's because the trump administration has been crystal clear.
the trump administration very crystal clear that this is a nding event with the johnson administration. there is a lot of upset going on right now from the u.s. on the situation going on here with the ship in gibraltar. matt: thank you very much. derek wallbank talking about the important stories out of the u.s. and international politics. we are also showing you the bmap function you can use to track not just that ship, but a number of cargo and oil tankers. let's take a look at the stories trending on the bloomberg today with annmarie hordern. general electric is one of the most read stories. what is the accounting issue? annmarie: it is one of the most read stories on the bloomberg, and we see a lot of news in it across social media. a short seller is accusing the and theof miss account, share price fell 11% yesterday.
this is the same short seller who also was talking about fraud with bernie made off before that was actually -- bernie madof f, before that was exposed. they are coming out saying this is market manipulation. matt: and buying $2 million worth of shares, so putting their money where their mouth is. speaking of money, president trump wants to add another island to the u.s. it is a big one. annmarie: that's right. he seems to be putting on his old hat of real estate mogul. president trump wants to buy greenland. it has a lot of danish politicians scratching their head. some former politicians are calling it in same -- insane. the former prime minister says it must be an april fools' day joke, but it is totally out of season. what might be a bit awkward is that president trump and r
-- in roughly two weeks is going to denmark. the politicians do not like the onomous island, but it is still close to denmark. matt: i wonder if he knows that greenland is the one with ice on it. iceland is the one that is green. annmarie hordern, thanks very much. annmarie hordern with some of the trending stories. a reminder that there is still no trading on the ftse 200 and ftse 100 indexes. they are investigating a glitch. start trading has not begun. partition three is operating as normal, but we are still waiting for the stoxx to open on this friday. next, the new sick man of europe. germany's economy contracted in the second quarter and earnings season was bleak. could the famously austere country be forced to roll out a stimulus package? this is bloomberg. ♪
unrelated, we have been asking is germany the sick man of europe? the data certainly is not looking rosy. gdp contracted in the second quarter. that prompted chancellor angela merkel to hint that they could loosen their purse strings and turn to fiscal stimulus. things are not looking so good for germany, inc. either. the share of customers -- companies that beat estimates were barely above 40%, and the likes of daimler, bsf, and lufthansa led the ranks of profit warnings. is the worst yet to come? joining us is our government reporter and bloomberg's global business senior editor. you put out a story at the beginning of the week saying maybe there are cracks showing in this fiscal austerity front put up by the finance minister and the chancellor. what is the likelihood that we
could see more talk of spending? guest: i think the pressure is mounting. even the german industry lobbying group has called for a turnaround in the fiscal policy the balance is not as important as the constitutional rules. callingbig business is for it, economists are calling for more spending in infrastructure and also the social democrats were never so committed to the balanced-budget. they say the time is over to hold the hats. to be clear, it is not that germans do not like spending money, although germans do not like spending money. there is actually a law they cannot borrow because of the debt rig. explain that, and is it possible to take it out or get around it? birgit: in terms of growth,
there should not be any new data. at the moment, we see the first quarter entering into a recession. we are entering into a technical recession evening to consecutive quarters -- in two consecutive quarters means a recession. it is still not what investors are looking for, for the big stimulus package. for this to happen, there has to be a fundamental crisis, and there needs to be a clear crisis. this is a very strict rule, which is difficult to circumvent. the only way to do this is maybe to set up outside budgets, create new companies which are borrowing, and then take on new debt. matt: we have seen a lot more profit warnings than usual lately. typically, the majority of companies beat earnings estimates. we saw the majority miss
estimates or match them. what is the problem with germany inc.? guest: that was an impressive chart at 70% are underwater. the problem is twofold. sometimes very specific issues that a company has our homegrown problems, not bringing in the goods it wanted to. but the german economy is so tied into global markets, a big part of the issue is playing out in other markets yonder germany's reach. we saw it in the transport sector and with big industrial companies like siemens. we saw that in the chemical space. they also have the issue of climate change, the low levels of the rhine. they cannot transport goods. it is something the government will look at very closely because employment has been very good in germany. going into the latter part of the year, that might change. matt: the climate is also something that is very popular.
obviously the cause, but also the green party is very popular. this could be a way for the government to spend money. birgit: yes, and we see the correlation looking into big packages. they have called on the government to present new proposals on how to help the government. all the ministries have come up with very costly measures. if they ever wanted to come close to implement this, they have to increase investments. is going to be a cabinet in september, and on that date we will see where the government is going to go. matt: we will mark our calendars for that. it is not just spending for spending's sake, right? the infrastructure in this country is, at least compared to when i first moved here 25 years ago, it is really decrepit. there is a need for spending. .he bundes is practicing,
those seem to be on the ground more than in the air. we have the routine breakdowns of the planes. german infrastructure seems to go through these cycles. we go through the big post-reunification boom. there was huge demand for an upgrade in infrastructure, and we are now entering a bit of a lull, and that is a bit of an issue. we will probably see stimulus again when 5g comes around. we did see stimulus with the proposal to move toward renewable energy. but again, these are cycles we all going through. right now, we are in a bit of a down cycle, and that is having an effect on the company's. matt: there has not really been any complaining from the germany ag on berlin spending. i have spoken to a number of executives, including from volkswagen and commerce bank, and they say they are ok with infra structure as it is. anna: the complaint -- benedikt: the complaints go
toward the trade war and brexit. it is a global view the companies take at a moment. there has not been a lot of 10 rattling from the corporate side saying the government needs to help us. it is more, get your house in order in terms of the global picture because that is where the german companies are playing. matt: we do hear complaints outside of germany, they gain from mario draghi. -- begging from mario draghi. is there any chance that the rest of europe will get angela merkel to get on board? birgit: this has been going on for quite a while. the imf has been constantly calling for germany to do this. but germany is stuck on the fiscal discipline on the one hand, and on the other hand they are saying, we had so much tax spent all ofe have our surplus already in investments. they say the infrastructure, what you are pointing out, we
are spending a lot in infrastructure. the domestic amount is not the problem. we have problems spending all that money because we do not have the workers to build all that. matt: exactly. i will say from personal experience, driving along the autobahn, it is construction site after construction site, and we never see anyone working on those construction sites. they really need more people, i guess would be one more to put it. thank you. a reminder that there is still no trading on the ftse 100 and the ftse 250 due to a technical glitch. the stock exchange says it is investigating a trading services issue. partition three is still operating as normal, but 51 minutes into the session, there is still nothing going on in terms of german shares trading. you can see at the bottom of the screen, the lse is going to
to "bloombergback markets." this is the european open. we are almost an hour into the trading session, and still see no trading on the ftse. the lse will give an update at 9:15, british summertime, 10:15 here on the continent. we do see big gains across the rest of european equity indexes. the dax up almost 1%, the ftse up all a little more. let's get the top stock stories with annmarie hordern. selina: this morning,'s -- annmarie: this morning, some tech is soaring. they say that potentials could be goldman sachs and united overseas bank. the stock is up 7% on that report. ryanair to the downside, down nearly 2%. that comes after a double downgrade. on ite to keep an eye
ryanair because a head. this comes out the u.k. has a busy week. and imcd is plunging, down about 14.5%. the dutch chemical company says they were out with first quarter results and a warning about a volatile market. it is the worst drop since they ipo'd in 2014. matt: annmarie hordern with a couple of your big movers. i have a big mover to show you here. 6647chart, which is g#btv shows that inflows into money markets -- and this is in trillions of dollars, of course -- have risen to the highest level we have seen since back in 2009, right at the end of the financial crisis. investors are getting a whopping 2.3% from these money markets.
willesident trump says he speak with president she as china prepares a tariff countermeasure. yields hit 2016 lowe's. new zealand's benchmark also dropped a record. and the u.s. threatens sanctions on some jets. u.k. trade ties could be at risk after gibraltar allows the release of an iranian tanker. good morning, everyone. welcome