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tv   Bloomberg Daybreak Europe  Bloomberg  September 23, 2019 1:00am-2:30am EDT

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>> good morning from berlin. this is bloomberg daybreak: europe. i am matt miller. nejra: and this is nejra cehic. trading places. pessimism switches to optimism as the u.s. and china hold constructive talks. the market shifts focus to mario draghi and williams. weighing the risk. concerns over aramco's output and iran's foreign minister talks about the u.s. troop disappointment to saudi arabia. >> i am not confident that we can avoid a war. i am confident that we will not start when.
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whoever starts one will not finish it. wait, wed we work, we worry. pressure mounts on the ceo of in the u.k., the collapse of thomas cook leaves thousands stranded. matt: good morning. we have not escaped worries about trade concerns regarding a farm trip. we have been and reporting that the u.s. requested that but we are also told it does not mean anything is going on that is bad between the trade talks. it has nothing to do with the trade talks as we look ahead to the face-to-face meeting on
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october 10 after the working level talks last week. that is not stopped the asian stocks from falling. closed today.s asian stocks coming down. biggest losses in hong kong. mscia look at the asia-pacific and index -- that following this morning as well. and looking at u.s. futures, they are up. reading thes are signals differently or maybe something else is at work sending asia down but making traders optimistic for the opening of u.s. trade. is strengthening a little bit. coming down to 7.11. gaining strength in terms of dollars. nejra: mixed signals from market. the offshore yuan is
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strengthening though the onshore is weakening. friday, the 10 year treasury yields dropped six basis points. with japan closed, we have to look at the futures. the cash trade has not gotten going. the drop in the 10-year gilts outpacing the drop in the two-year yell. markets paring that back a little bit. the fed is going to have to could -- is going to have to capitulate at some point and brent is bouncing around for iranfor a ram -- and the fact that saudi aramco may not be able to restore production. and it is likely that iran was behind the saudi aramco attacks. to the roller coaster trade headlines.
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trade groups from china and the u.s. have held constructive talks upgrading to the chinese industry of commerce. markets were stu on friday tooped on friday when president trump says he was looking for a complete trade deal on friday. nejra: and at the request of the u.s., there was discussion or a cancellation of a trip to the heartland. joining us now is carl tenenbaum, the chief economist at northern trust. how are you reading these mixed signals? pessimism and then optimism. carl: the base level -- they are not escalating things. things are at an even keel. better they are talking then raising new tariffs. the issues are many and buried. the chinese are insisting on a
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comprehensive deal which is a sticking point. the sanctions against the telik made -- telecommunications maker is what is making china uncomfortable. some of the tariff issues may seem simple by comparison. matt: how long do you think it will take before we find a solution to this? both sides make the mistake of thinking they have time on their side. the chinese think if they wait out the americans until the new election that they will have someone friendlier to talk to is the democratic sentiment almost as strong as it is for republicans to push against china. and the outlook of the elections is very much uncertainty. for the u.s., they think that the chinese will crack with pain. but the president of china has
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called it a long march. nejra: the u.s. is waiting for pain,to crack because of but have they gone far enough with economic stimulus? made they have cut taxes, loans to small businesses. difficult toll be do given the concentration of manufacturing and the harm that the tariffs are having on manufacturing. do i also think the chinese not have the same resources to buffer an economy that is heavily dependent on trade. we have seen a lot of concerns in manufacturing in the u.s. as well. from fedex we saw a big warning. you saw it from another of other manufacturers like deere for example. does that carry over into the service industry? the consumers?
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does that we can the rest of the economy? ken the that we ca tha rest of the economy? only makesacturing up 11% of our gdp. the structure of the u.s. economy is better able to withstand the conflict with the chinese. in terms of protecting its economy from the trade war -- yes, we have had small stimulus measures but no broad sweeping measures yet. .nd then the yuan side it has been allowed to weaken so far. don't you think they have more tools such as rate cuts? fairness, the inventory is wide and they have not pulled out all of the stops in terms of allowing their currency to appreciate.
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they have another avenue. economy, beinghe so heavily dependent on trade and manufacturing relative to the stimulus. they were trying to cut down on the excessive use of credit. they are inviting the continuity. the further weakening of their currency could mean bad news for the chinese as well, right? it could lead to flight which is the risk they would like to avoid. if you look at the u.s., we have had problems there as well. the fed starts to or finishes its balance sheet expansion which starts to be reduced. repo nightmare we had last week. i wonder if you think that poses a serious threat to the u.s. economy or if you think the fed
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is on top of it? i think the fed is on top of it. you have to separate the short term from the long-term fundamentals. the estimates of required reserves and available reserves were out of sync. they are now more on top of it. longer-term, the economic fundamentals in the u.s. to look pretty good and that was reflected in last week's fed forecast leading to a very divided committee. nejra: it sounds from what you has said that you are worried about china's ability to offset the trade war and less worried about the u.s. how does that translate to your global view on growth? carl: many countries are caught in the middle of this. those dependent on imports and exports from the two combatants. in peripheralies asia come a hong kong and singapore that are suffering and in europe, germany is at the
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epicenter of the global supply chains. it is doing its best to stay out of recession. thelonger it this goes on less likely certain regions will be able to avoid a recession. matt: we will stay on top of this and keep you with us. carl tannenbaum from northern trust or let us get to the bloomberg first word news and for that we go to annabelle droulers in hong kong. good morning. hasbelle: thomas cook closed leaving tens of thousands of tourists stranded. additionalo raise funding under a mountain of debt. many vacations have been canceled. are bringing thousands of workers home. are awaiting a ruling from the uk's efrin koran whether the prime minister acted lawfully when he suspended parliament. it is a decision that will
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likely shape the future of brexit. thisudges hope to provide statement by lunchtime. tosident trump appearing acknowledge he discussed former vice president joe biden in a phone call with the ukraine president. it is now under investigation. the president says it was a discussion about corruption. police and protesters clashed again in hong kong on sunday. violence erupted in several parts of the city. next week is the 70th anniversary of the founding of the people's republic of china. guestglobal news 24 hours a dayn air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. thank you.
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annabelle droulers in hong kong. n is refusing to roll out war in the middle east after the u.s. sent troops to saudi arabia. he was the reporter that not optimistic about avoiding a conflict. >> i am not confident we can avoid a war but i am confident that we will not be the one that starts it. gains amidstumed the tensions. remain over how fast saudi arabia will be able to restore lost output from the attacks. let us bring in bloomberg's yousef gamal el-din. he visited the sites of the attack. what are your takeaways? >> the production damage is extensive. at the same time and by the same
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token, the ongoing repairs are flat out the beehive of activity. it clearly shows saudi aramco is putting all resources into play to get back production to where they want it to be. produced 1.2that million barrels up to 1.4 million barrels a day is operating at 40% capacity. back up too get it speed by the end of the month. the other field will take more time. the other key takeaway was security which was very tight around the facility. arguably raising questions about how these drones could have made it into what should have been one of the best defended parts of saudi arabia. nejra: great to have you with us. we have had comments from both the iranian and saudi arabia and foreign ministers this week and boris johnson just weighed in as well. what it we learned?
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-- what have we learned? >> there has been a flurry of diplomatic activity. the saudi foreign minister making it clear that investigations are ongoing. and based on the results of the probe, they would take appropriate action. , we the iranian perspective heard earlier from an iranian official saying that if something starts, it will not be from us in terms of a wider conflagration. and boris johnson saying iran was likely behind the saudi aramco attacks. saying they used a cruise missile to attack the plants. they're looking to reduce tensions in the region but at the same time, he is saying the u.k. is open to a military deployment to the gulf. we are getting into the united nations general assembly and the rhetoric could get ratcheted up further. nejra: yousef gamal el-din in
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dubai. we are asking the question on mliv --is this worth the risk? you can reach out. coming up, the biggest names in business and government will gather this week for the annual bloomberg global is this in new york. we will hear from moody and christine lagarde. and when you're traveling to work, tune into bloomberg radio in the london area. this is bloomberg. ♪
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a nejra: this is bloomberg daybreak europe. i am nejra cehic in london. matt miller in berlin. let us check on the markets in asia. for that we go to singapore and juliette saly. >> japan is out of action. the msi -- the msci asian index is down about one third of a
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percent. in india in response to reports of a tax cuts. market is also looking pretty good though there is weakness in hong kong and china today. the offshore yuan has fallen as well. there has been news of the cancellation of the chinese authority visit to america and that it was more about timing rather than a breakdown in the talks. there is still a weakness on the msci 300. i also want to show you what is happening in south korea. this is always a bellwether to the overall trade discussion. with the first 20 days of september, exports fell again. down 22% in those first 20 days since augustt fall 1009. 30% ands to china down
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flagging ship sails down as well about 40%. alluding to the fact that we are likely to see another month of exports falling from south korea. it is not just the u.s.-china trade dispute but south korea's own dispute happening with japan as well. giving more alarm to the economy which is facing its slowest pace of growth since the global financial crisis. nejra: juliette saly in singapore. thank you. over to annabelle droulers in hong kong for the bloomberg business flash. annabelle: deutsche bank is close to a deal with bmp to transfer its prime brokerage business to the french lender. the transaction may be announced today though the facts of the deal are not clear. a hedge fund, cash and securities. they declined to comment. down as after a much-anticipated ipo.
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softbank also behind the move. a board meeting could come as early as this week. representatives of both companies declining to comment. is working onco an ipo including barclays, bmp and deutsche bank. as manyventually take as 15 in total. officials from the banks will fly to saudi arabia for talks. and that is your bloomberg business flash. matt: annabelle droulers with your bloomberg business flash. the federal reserve and other central bank officials divided over the outlook for the , public comments are being scrutinized. investors are looking for a signals on the fed's effort to pull back money market rates and any hence on the path for policy said boston fed president
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on friday that the u.s. monetary policy is already accommodated and further stimulus is not needed. kicking off a business week, john williams is a key figure in trying to address those repo rate issues as well as james bullard. carl tenenbaum from northern trust is still with us. fed fund futures and euro-dollar, you will see there has been a pullback on rates cuts for the rest of the year. is this something likely to stay in terms of the market and fed converging? carl: inevitably, i think they will converge and perhaps the market got ahead of itself that the trade war would have more damage earlier on the u.s. economy. are stillin the u.s. active and employment is still strong. as a result, there is no clear and present danger immediately.
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that is why officials are saying they be we have taken out enough insurance. matt: which way will they converge -- towards the fed? is that the feeling fed has done enough and unless something happens either in the negotiations are fundamentally two americans did to six, it will be hard to get a consensus behind another cut this year. i think the posture of the fed is appropriate. they have added stimulus to the system. they are ready to move if conditions worsen. aile some say if there is recession it is better to move aggressively in front of it while others say it would be unnecessary. they could be adding fuel to markets that are already overheated. largely driven by 10 year yields falling faster then tune -- two-year yields.
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some are interpreting this as the market is backing off while others interpret it as the fed will have to capitulate -- carl: i have to confess. i have gotten vertigo. level andn to a low then almost instantly went up 40 basis points. the key ingredient to the long-term training -- trading is you have foreign investors coming in trying to get away from lower investment rates elsewhere. they just want a positive yield and a strong currency. matt: doesn't the fed have to come back in to the treasury market with some force such as mortgage bonds and how they mature? it will have to start buying again. sums.retty large when you expect that to happen?
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carl: a great points. i think the fed will have to evaluate the size of its balance sheet and have an announcement at its next meeting in october. it is losing money and principal from mortgage securities but they also need a solution to this overnight trading problem which has really vexed target participants. they need to supply enough reserves so dealers are not caught short. nejra: when you point to a strong u.s. economy, which indicators are you looking at the most? manufacturing? the housing market? thirds aare two consuming economy. and employment. thirdf those through the quarter were very strong and the momentum we have going on for the holiday season seems likely to be sustained. next year we should be right around trend.
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it is probably no change. matt: what do you think the that benefit the most from this economic strength? which industries do you see performing solidly through the end of the year? carl: the consumption sector is the one that will benefit. i would be very excited about some of the categories that are going to be featured in holiday spending. consumer durables. those sorts of categories. the ones i would be careful thet would be manufacturing. global manufacturing is having a rough go of it. toy will have to find a way remain profitable with global boarders getting higher. matt: thank you for that. you're going to stick with us. more from carl tannenbaum from northern trust. coming up on bloomberg, we are live at the labor party conference in brighton.
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stay tuned for more with john mcdonald. also hear more from the shadow brexit secretary. don't miss that. when you are traveling to work, tune in to bloomberg radio. this is bloomberg. ♪
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nejra: this is bloomberg a brick europe. i am nejra cehic in london. i am matt miller miller in berlin. boris johnson has three crucial u.n.s for his first general assembly as prime minister. crisis in the middle east. climate change. and selling a post-brexit britain to the rest of the world. but the big challenge maybe on the homefront. , labour to the bbc party leader jeremy corbyn pledged he would put a credible brexit deal to a referendum but he dodged the question of which
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way he would campaign. that we get an agreement fulfills the five points system, i have said all along it would be a credible offer to put before the british people. matt: joining us now from the labour party conference is anna edwards, my cohost on the european market open. it seems he is trying to unite the labour party. : not an easy task. we are here in brighton. i was reminded how close the eu is. as the salty air blue win this morning. and divisions over the brexit looms large over this party meeting. chairman a carbon speaking about his vision for brexit. but do not expect a clear line from him. this is the path as he sees it -- general election, labour
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party to brussels to negotiate a credible deal based on their five tests and then they will decide at a later date to push for that deal. and then there is also the program remain supporters. many have discounted that party at the center in recent years though they have been gaining ground in recent polls. wantpeople here agree they to stop a no deal brexit at the october though that is in the hands of the supreme court. nejra: great to see you. other than the labour party's brexit position, what else is of interest? a: hoping to get more detail on the renationalization plans. we heard over the weekend from rebecca bailey.
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she is ready to go in terms of green nationalizing rail and water companies. this has been a key flagship policy though details remain sketchy. they talked about compensating investors with bonds issued by the treasury that we don't know the formula and how much money asestors will get back assets are re-nationalized by the u.k. government. the policy aimed at the it seems like abolishing private schools -- they adopted that policy yesterday. a left leaning policy. and something that will not play well in some of those labor, or traditional labour heartland's particularly areas that voted for the brexit vote leave. plenty more when we speak to john mcdonnell later on.
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plenty to speak to him about the bonus culture. that will be talked about. including the right to buy in the private sector. all of these eye-catching, labour party left leaning policies. nejra: we hope you get to enjoy some of that brighton see air. -- sea air. the marketsin on around the world. here in london is annmarie hordern. indian stocks surging for a second day despite the fact that the rest of asia is looking muted, even weaker. why are they bucking the trend? bucking theave been trend. after the finance minister on friday announced the slash in corporate tax rates, that is
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probably the reason why such a stellar rally has been seen. sentiment was down in the dumps for the last two months after the gdp growth has dropped to an almost six-year low. there were a lot of sharp positions in the system. we have seen a massive rally on friday and today as well. gains have been quite stellar. you have the banking stocks. ks havelly private bacniks risen. them, there is a lot of saving. of this, manyt brokerages have created the easiest targets. like morganuses stanley and goldman sachs and ubs have up the target -- upped
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the target. there will be a lot of savings at the corporate level. what willon is corporate india do? investors higher dividends? corporate india is a reason why our markets have been scaling higher for the second straight day. matt: thank you for that. arearie hordern, you looking at the wider equity markets where equities are slipping in asia. marie: they have a case of the mondays. hong kong equities are down 0.8%. asia-pacific excluding japanese equities is also lower today. exchange -- a bit of a
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mixed picture. the new zealand dollar is higher alongside the yuan. sovereign bonds mostly to the upside with yields coming down. crude --ities, brent, brent crude and wti both up. look if the equity market. the stoxx 600 oil and gas markets have had their best rally in more than a week. up nearly 7% on the week. after the devastating attack against aramco facilities. this morning come oil is back in focus. these are the stocks to look at. this as markets are still on edge with the geopolitical risk and questions lingering about how quickly the kingdom can restore that lost output. thank you so much. let us get the bloomberg first word news from annabelle
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droulers in hong kong. annabelle: hello. foras cook has filed administration leaving tens of thousands of tourists stranded. the 178-year-old travel company failed to raise additional mound ofnd is under a debt. many vacations have been canceled and they are now working to bring home holiday makers. forcing a large repatriation. president trump says he has no primeo meet the iranian minister leaving the door open of activity.bility iran has denied responsibility for the strike though it has refused to rule out the possibility of conflict. not am confident we will start a war but i think whoever
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starts when will not be the one that finishes it. china'se: trade and cancellation to an american firm was done at the request of the u.s. whatnot forced by a deterioration in trade talks. high-level talks in washington is -- are scheduled the second week of october. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. annabelle droulers in hong kong, thank you so much. it has been almost three months since the political rupture between switzerland and the eu forest a breakdown. the expiration of the swiss equities is forcing a retaliation. markets are about to move into an unprecedented contingency
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plan. that are concerns switzerland could lose some of its appeal. joining us is thomas zeeb from six group ag. when do you expect an agreement with the eu on this issue? sayas: it is impossible to at this stage. parliamentary elections in switzerland later this year and a new parliament in the eu has to get its feet under the table. at the moment, it is impossible to say. matt: but you do expect an couldent or could you -- you put a likelihood on that in percentage terms, maybe? thomas: we are hoping for an agreement. i cannot put a percentage or a number on it for the simple reason that it is very much a political issue and not an easy one. because the various elements of a framework agreement with
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switzerland are fairly complicated. and the issue has been going on for many years between switzerland and the eu and the negotiations at the moment are stalled. and until new people come in to boththe negotiations on sides, i think it is impossible to say when a breakthrough is to be expected. we hope for one. i don't think it is a good idea to limit capital flows in europe in the way the current legislation is set up. nejra: are you confident it will manage the market successfully? thomas: absolutely. it has been seamless. it was really only a handful of alreadythat were not connected to this with exchange in any event. we connected those clients. the just overrom 70% market share closer to 100% in the meantime. but effectively, that has been the most liquid market in the
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market with the best spreads for a number of years. for most market participants, it has not been an issue at all. matt: what kind of growth can you look forward to in the swiss stock exchange? thomas: we are seeing significant growth in volume wase the equivalence implemented. apart from that, we are doing well on the ipo front. having two of the larger ipos in europe with stadler and yukon. we are confident with how the swiss market is moving forward are comfortable with the liquidity on the market itself. successou hinted at the of the current ipo season. what about going forward -- will the momentum continue? many thingse are so
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that affect whether an ipo makes sense. at this stage, there are early expressions of interest but whether they will come in the next three months, six months, or 12 depends not so much specifically on what is happening in the discussion with the eu and so on but what is happening in the wider market and whether it is an appropriate time to do an ipo. matt: you're talking about the thriving in a hyper connected world. what do you get from that? what does that change for you? us, one of our big initiatives is moving forward on the digitalization front. heart of that is that we will see where we believe that we will see a significant change in the way capital markets are going to work over the next call it 10-15 years. it will take some time to implement. i think the move to start digitalized thing assets is
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inevitable and we are responding to that. what that means, however, is we have to have very close relationships, even closer than now with a service provider and our clients and other stakeholders to effectively create the market. as we head towards brexit, what advice do you have for those negotiations or any thoughts on how that might pan out? focus has to be, in all of the negotiations, not so much on the relationship with the eu. the eu has its own priorities. it is about europe. and the competition for europe as an attractive place for both investors as well as issuers. it is against what is going on in america and in asia. the common interest has to be -- how do we get to a european solution that creates a single
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capital market with plenty of liquidity across the markets and free capital flows. and in all of the discussions that the u.k. is having with the eu, that still has to be the ultimate goal. matt: thomas, thank you so much for joining us. thomas zeeb, head of securities and exchanges at six group. here to look now at what you should be watching today. take a look at the week ahead. the labour party conference continues in brighton. we will be on the lookout for any shifts in their policies on brexit and any further details on their economic program. the main event of the un's general assembly kicks off tomorrow. world leaders are gathering in new york to discuss climate change to geopolitics. in new york,g bloomberg hosts a global business forum on wednesday. leaders will discuss key global challenges. speakers include incoming ecb
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chief, christine lagarde, mark carney and prime minister's modi and --. a new economic program for italy by friday. fixing the ailing economy and lowering the unemployment rate. when you are traveling to work, tune into the bloomberg radio or on the digital radio in the london area. matt and i will be joining you there later. this is bloomberg. ♪
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daybreaks is bloomberg europe. i am matt miller in berlin. nejra: and i am narrative edge in london. tension returns to global markets this week. slots and profile poor performances, how will these companies fared. dani burger has the details. is set to price
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monday, today come in hong kong seeking to raise as much as $4.8 billion. 2019econd biggest ipo of but even so, this is roughly r targeted.he brewe china shanghai makes its public debut. it raised about $410 million when it priced last week. this will really test investor sentiment since it is the first listing in hong kong since july. and a german software company is set to be one of the biggest in europe this year and expected to raise between 1.4 billion euros and 2.3 billion euros listing this week. peloton ise -- and
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expected to price on wednesday. already there is skepticism on wall street. on this. are mixed speaking of skepticism, we have to talk about wework. listing plans have been derailed. we have a lot of doubts about valuations and governance. it looks like it will be postponed until at least october. for all of these new listings, it is a difficult environment especially given that some of s are of more mature companies. the offerings have at least $1 billion in 2019 -- they have all underperformed. ipos. this group in total have fallen 3.4% since they offered on average but some of the smaller debuts jumped by an average of
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19%. there is still some hope for some of the smaller companies. matt: dani burger looking at the mega ipo's some of which may underperform. one of which is certainly one that everyone wants to talk about witches wework -- which is wework. some of the biggest names in finance are trying to come up with new tools. proposals include entries from ray dalio and stanley fischer. one thing in common -- they all powerful central bankers taking a more junior role and collaborating with governments. that type of stimulus used to be taboo but right now at is a big threat. and an emerging consensus is that helicopter money will be needed and central banks can't
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deliver it alone. carl tannenbaum from northern trust is still with us. prior to northern trust, he led the federal reserve's risk section. what do you think of the idea that the fed may have to work with a certain amount of money that is ok'd by congress to stimulate the economy further? as long as the helicopter is hovering over my home, i am in favor of that strategy. are closeuthorities to being out of dry power or out of dry power. forms ofnative monetary policy are not nearly as effective and the fiscal policy has an opportunity to get into all of the cracks and address specific opportunities in the economy. it is likely that if we do have
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a slippage, it will have to be the fiscal side and not the monetary that takes elite. wasa: when monetary theory talked about in the last few months, many came out against it but now we have fiscal monetary cooperation and a lot of people including stanley fischer and ray dalio writing about how this could work. how is it different? carl: it is all in the packaging. governments go more deeply into debt and now is not a bad time to do that with about 17% of debt around the world with negative interest rates. the central bank through the quantitative easing program can take off some of the edge. where experts differ is how long a central bank should hold onto the new assets? should this be a temporary support in hopes that the economict can generate
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support? or should it be more of a permanent arrangement? matt: the lines already blurring with quantitative easing. here todo we get from the magic money tree? is modern monetary theory linked to become a reality? carl: it is already a reality in japan. it would probably be more of a reality in europe if the constraints from the northern countries on the ecb were not so strong. there is a separation that needs to be reinforced. bankl needs to lean against some of the excesses. if you compromise the ability to do so, i think in the long run you get worse results. if you're something staring in your face in the short-term, it
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is hard to be doctrinaire about long-term objectives. nejra: what will or will not work for japan? decades of underperformance. we don't have that yet and it united kingdom, the european union, or the u.s. but if we get the other leg down we will have another recession someday. i think something like mmt has to be on the table. tannenbaum, great to have you with us. coming up, the biggest names in business and government will have broad and wide-ranging discussions as they gather in new york. we will hear from top bank executives, policymakers including mark carney, christine lagarde and more. what a lineup. all of that and more coming up on bloomberg. terminal users can interact with the charts that we use by typing in tv .
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analysesatch up on key and see charts for future reference. indon't mind if you use them your work. and traveling to work, tune into bloomberg radio. live on your mobile device in the london area. this is bloomberg. ♪ here, it all starts with a simple...
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nejra: good morning from bloomberg's european headquarters in the city of london. this is bloomberg's daybreak europe. these are today's top stories. trading places. china holdd constructive talks. markets can shift focus to mario draghi and john williams later today as they speak. weighing the risks. concernsumes gains on over aramco's output. iran's foreign minister sounds a tough tone after u.s. troops
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deployed to saudi arabia. >> i'm not confident we can avoid war. we are confident we will not start one. i'm confident whoever starts one will not be the one who finishes it. pressure mounts on wework's ceo as the group's board could be considering a coup against him over the collapse of thomas cook leaves thousands of travelers stranded. deutsche bank will begin -- sorry, i am just seeing these read headlines here. deutsche bank will begin to transfer its prime finance and electronic equities unit two bnp paribas. this is a prime brokerage
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transfer have all been waiting for. deutsche bank and bnp are signing a binding agreement, or have signed a binding agreement for a platform transfer. no terms have been released. deutsche bank is going to operate the platform until the clients are migrated to bnp. deutsche bank completing its deal to transfer its prime brokerage asset to the french bank as part of the largest restructuring in the lender's recent history. you can see deutsche bank shares trading now for seven euros and change. they will not open for trading for another hour here in germany. nejra: that will be one to watch, as well as thomas cook. watching very much when the markets open at 8:00 a.m. if we look at how futures are trading, we did see gains on friday in europe. in the u.s., weakness.
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ftse futures on the front foot, but only ever so slightly. a bit of red on dexia cac 40 futures, which is interesting. we have seen some weakness in the asian trade. u.s. futures really heading slightly higher. messages.ting mixed we have heard the talks were constructive. visit by the chinese is not going to happen, and it is the u.s. that asked for that. nothing bad we should read into that, because it has nothing to do with the trade talks. we look ahead to the face-to-face meetings in the second week of october. october 10 is the date being floated. treasuries, the cash trade has been closed with japan, opening up right now. how are the bond markets looking? matt: let's have a look at the bond markets, have a look at the bond futures and see where they are trading. they could help indicate what we are going to see in the cash trade. german bund futures a little bit
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higher. you could see buying in the cash market, pushing down the yield even further than it already is. italian futures also rising. that spread may stay the same. both yields are falling. in terms of the u.s., 10 year bond futures, investors selling the futures there in the cash trade yielding 1.7 3% right now. let's check on the markets in asia. for that we go to juliette saly in singapore. juliette: quite a bit of weakness coming through in china. the csi 300 down 1.7%. caution in the lead up to next week. the 70th anniversary of china. you are seeing indian stocks continue to add to those gains we saw friday. looking like indian stocks could start to test those record highs we saw earlier in the year. the korean market is flat. the nikkei was closed today for
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a public holiday in japan. a little bit of upside coming through from australian stocks. hong kong, weaker as well by 0.8%. in hong kong and china weighing on the msci asia x japan index. i want to show you the move in currencies after we heard that news china has canceled that trip to american farms. you have seen the yen slip a little against the dollar, suggesting people don't really need to be in safe havens. the offshore currency is rising today against the dollar. the offshore yuan. the unsure yuan is tracking a little bit lower. a bit of trading in the end today. the korean won, falling quite substantially against the dollar. the dollar is up by 0.5%. the won the worst-performing asian currency after we saw exports for the first 20 days of september fall by 22% year on
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year. the biggest fall since august 2009. that looks like it is setting south korea up for a 10th straight monthly decline of exports. just really adding to ongoing concerns about the chip industry, but also exports at on the whole, affected not only by the u.s. and china, but also their own trade dispute with japan. much. thank you so a roller coaster of trade headlines continues. trade groups from china and the u.s. health constructive talks according to china's ministry of commerce. it comes after u.s. president donald trump said he is looking for a complete trade deal, not a partial one. not byentiment was also china's cancellation of a visit to farms in the american heartland. we have learned that was done at the request of the u.s. and apparently not due to a deterioration in talks, what we are being told. we have also been told chinese
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vice premier plans to visit washington the second week of october for higher level talks. joining us now is catherine doyle. in -- or, thece current situation, is that price in? >> it is creating a lot of volatility. i'm not sure it is the trend, which is being driven by other factors, but certainly yes, where i think it would really have a sizable effect on markets would be if there was some sort of resolution of this trade talk and you would see strong upward momentum or if they stall, that could precipitate economies into a recession, which would be the risk at this point. you agree with our
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previous guest who said china's economy is more at risk than the u.s.? >> china is the big delta in the global economy. there is hard data that shows that is growing. there are clear signs the banking sector is coming under pressure. bank thatad bash out failed in the recent past. another bank being taken over. there is a rise in nonperforming loans. there are signs the economy is really under strain. what is even more worrying is that the sort of firepower that china has two reflate its economy is much less effective than it was in the past just because the sheer size of that economy is so much larger. , to scale any stimulus to the actual size of the economy, it's going to take a
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much bigger effort to really kickstart the economy. yes, we would say -- china is amongst one of the largest risks we would highlight at this juncture. aboutif you are concerned the chinese economy and you don't think the tools are necessarily strong enough to reflate the economy, what do you think about global growth? we are pretty cautious on the prospect of global growth. we think the sort of long-term structural trends are not positive. in particular, the fact we have a highly financial as the economy. there is a lot of indebtedness globally. the is all reflected in leading indicators, which are turning down. if you look at the ism new orders index, that is below 50,
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which is typically the sort of armature between expansion and contraction. generally, somewhat worrying. you have some action by central banks, but in our view, that is not really going to have a sizable impact. in any case, there is always a lag between any cuts in their effect on gdp. usually it is a two-year lag. nejra: what is it that makes you positive on emerging market debt? catherine: there are select opportunities. you have still got interesting yields in some countries. capability have the to do bottom-up due diligence. there are some drivers that will catalyze the asset class. it is also to some extent a bottom up country specific story.
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we can be very very selective there. aboutwhat do you think developed market stocks the echo we had such an incredible run. up almost 20% on the s&p 500. we are up more than that on the cac. the ftse is up despite brexit uncertainty. is it time to take profits off the table? >> we don't have a huge position. it is that historic lows for our strategy. generally, valuations are very inflated. that is across the globe. that does not mean you cannot find individual opportunities. we are really looking for certain characteristics we find attractive. good, healthy cash flow generation. strong balance sheets. good pricing power. industries that have consolidated, where the power
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lies in the hands of a few companies. those companies should be able to weather any sort of global economic slowdown pretty well. fused.more defensively we have some cyclical exposure as well. you need to participate while the rally continues. it is a delicate balancing act. i want to circle back to what you were saying about emerging-market debts. can you give us an example of where you are finding the opportunity? prior to trump's election we bought mexico currency debt and held that position for quite some time. it has done well for us. debt. hold some brazilian we also had some in peru. it has been quite diversified. stays catherine doyle
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with us. let's get the bloomberg first word news. trump says he has no intention of meeting iranian president rouhani at this week's u.n. general assembly, but left the door open that he might. the u.s. is sending troops to saudi arabia in response to the attacks on oil fields. iran has denied responsibility. >> we are confident we will not start a war, but i'm confident that whoever starts one will not be the one who finishes it. rise as doubtse remained over how quickly saudi arabia can restore output. the wall street journal is repairs may take many months. it says officials are in emergency talks and costs could stretch to hundreds of millions
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of dollars. in the u.k., we are awaiting a ruling from the supreme court over whether the prime minister acted lawfully when he suspended parliament. it will likely shape the future of brexit. expected until afternoon at the earliest. president trump appearing to acknowledge joe biden in a phone call with ukraine's president. that call is the subject of rational investigation. the president says the discussion was about corruption. trump repeatedly asked the new president to investigate the son of the democratic presidential hopeful. global news, 24 hours a day on air and @tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. bloomberg. much. thank you so thomas cook has filed for administration after talks
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failed. the u.k. government is hiring plans to bring home tens of thousands of stranded holidaymakers. joining us now is bloomberg's equity reporter joe easton. what has led to this downfall? >> thomas cook has been behind the curve really on the online offering for a long time. the consumer patterns have changed in recent years. people are customizing their holidays, they are not going into the packages as much. they have had this huge debt load. the structural changes to the industry have been combined with the debt and the added problems of exit. those effects have all come in at the same time. now we have seen these struggles where they have tried to get their extra funding and it has not worked, unfortunately. we have seen the news today. matt: are there other companies
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that need to be concerned? >> yes. we will be looking at airlines today. there will be a negative sentiment reading. some of the rivals have put a statement out today and they have said they will take a financial impact from this. they have not said how much, but they put that statement out saying they will be affected financially. fallw shares in hong kong about 5% after the company took a stake a few months ago. there is a huge number of other companies. some banks are heavily exposed to not just this company, but other companies that are in difficulties. they will be looking at this thinking, what did we say about our exposure to u.k. domestic companies? matt: thanks very much. emeaaston, bloomberg's
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equity reporter. coming up, the biggest names in business and government are together this week for the annual bloomberg global business forum in new york. we hear from top bank executives, world leaders, policymakers, including jamie dimon, narendra modi, and christine lagarde. ♪
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matt: in berlin, 7:20 in london. we are just about 30 minutes away from the start of live cash trading across europe and the u.k.. this is bloomberg daybreak. i'm matt miller. with the fed and other central bank officials divided, public comments are being
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closely scrutinized. investors are looking for signals on the fx call of money market rates. that is after eric rosengren said u.s. monetary policy is already accommodative and further stimulus is not needed. there's a host of speakers we will be monitoring today. catherine doyle is still with us. i was showing a chart that said that showed futures earlier. a pullback in terms of expectations around rate cuts, pricing one by the end of the year. , we love it when viewers interact, he said it has distorted the fed fund future signal so much that it is not a useful number and will not be until markets calm down. saysou in the camp that the u.s. economy is in an ok place right now so no rate cuts are needed? >> we think to some extent this discussion about one rate cut,
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two rate cuts is by the by. it's not going to make that much difference to the prospects for the u.s. or indeed the global economy. -- we say to sort of one rate cut this year is likely. problems arehe deeper than that. they are structural. they have been creeping problems that are going to come to ahead if we see some sort of catalyst that propels the economy into some kind of correction. it is more than just the rate cuts. matt: what kind of catalyst would that be? we already have the trade war. there are manufacturers saying they have to shut things down. the manufacturing sector is not that huge in the u.s.. consumers continue to spend. what would concern you?
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what are the headwinds? catherine: the nature of these catalysts is it is quite difficult to know in advance what they are going to be. the trade talks is one. the trade talks are really off the table. that could be a shock to the markets. it could be a geopolitical event, actually. something in left field that can cause markets to become twitchy. .t remains to be seen certainly looking at the data, economies, if you delve into the data, they are more fragile. some of the leading indicators, there are other worrying signs about imbalances that have been building up gradually over time. have dollar liquidity, something we look at quite a bit, which peaked at the beginning of 2018. the has been sort of steadily
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bubbling away in the background. nejra: does all this make you like the long end of the treasury curve fiasco -- treasury curve? catherine: we have had some exposure to the long end. we have done quite well out of it. clearly, if you were to see more experimental forms of stimulus, here i am thinking fiscal money,s or helicopter that could have an inflationary impact. it may take some time for that to come through. --is something that nejra: you expect it? catherine: it is hard to predict the timing. you have to be positioned ahead of the event. we have actually got some gold in the portfolio as a hedge
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against monetary debasement and the attraction of a real asset. also, if you were to see inflation, we would potentially increase that position. just want to quickly look at the fed balance sheet here. coming down, obviously, but there is a little tiny ski jump at the end. the fed is going to have to start going back into the bond market big-time. continuepect that to to put pressure on yields? it could. it is interesting, with the recent activity in the repo market and the functionality there, there has been a lot of talk about the fed expanding its balance sheets. that is been a recognition that is something it does need to do. we could see that.
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thanks so much for joining us today. catherine doyle at newton investment management. we want to get to a breaking story right now. deutsche bank has completed a deal with bnp paribas to transfer prime brokerage business to the french bank. through the walk us details that we know so far? >> what is important to know is the cornerstone of the ceo's strategy, they are shuttering equities trading and the brokerage unit is a key part of that. they announced they were trying to get this to bnp back in july. it has now been closed area that is a big achievement for the ceo to do that. is that overow time this will see about 1000 people move from deutsche bank to bnp. a sizable thing, really. nejra: thank you so much for
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that swift update. coming up on bloomberg, we are live at the labour party conference in brighton. don't miss our conversation with john mcdonnell. that is it for daybreak europe. ♪
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anna: good morning. welcome to bloomberg markets, "the european open." i'm anna edwards live from the labour party conference alongside matt miller in berlin. political risk is overrated. stocks slip as the u.s. and china hold constructive talks ahead of the u.n. general assembly meeting. are the markets still mispricing the risks? cash trade is less than 30 minutes away.


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