tv Bloomberg Markets European Open Bloomberg November 1, 2021 4:00am-4:31am EDT
plus, g20 leaders signoff on a disappointing climate deal, leaving hopes of a breakthrough took up 26 negotiators. we are live in glasgow. and as we checked in on the futures, we're seeing some upside priced in the cash trading that will get underway, gains in terms of futures, .3% in the markets now open. we will check in as we digest, of course, look ahead to major central bank action from the rba on tuesday, from the federal reserve, and from the bank of england, all this after some disappoint data out of china in terms of manufacturing, which contracted for the second straight month. optimism, though, in japan, on the politics there, kushida achieving the majority, upside of over 2%. in terms of the ftse 100 gains, .5%. the big corporate story is going to be barclays and that change at the top of that major bank
here in the u.k., gains of .5%. the cac 40 getting .2%, spain and the ibex is up by 30 points for .3%. let's check in on other assets. talking about iron ore, two year yields on the treasury because we want to bring your attention to that. an investor start to price in earlier rate hikes from some of these central banks, notably the fed. we're going to hear from jay powell around a tapering timeline. the nikkei is getting more than 2.6% again on the back of that success for the prime minister could shooter -- kushida. iron ore is down more than 4%. the fragility of the china economy and the u.s. two-year just below .5% we have seen a rise in these yields at the shorter end of this curve. let's get back to the breaking news story, jes staley stepping
down as barclays ceo. he will be replaced by can a christian. joining is now is bloomberg intelligence senior banks analyst. jonathan, just give us some insight as you look across this company as to the importance of this move, the surprise factor in it, and what we can expect than from barclays going forward under new leadership. >> morning. well, clearly a surprise. we did know about the investigation, etc., but nobody expected it to end quite as abruptly as this. i suppose very safe, 20 plus years at j.p. morgan risk, also strategically, we wouldn't expect anything to change from this. so, i guess over the past few years, jes staley has been fairly minimalized in terms of investors, didn't. clearly had the investors and
tempt to get the focus on the investment banking, which hindsight would show as a mistake. so reputational not great, more to the board., but does anything really changed from this? i expect not near-term. we're going to have a news flow overhang, but because of the great replacement, we don't see anything changing. this isn't life-changing event. emily: we'r --tom: we're seeing change down three provide percent. -- 3.5%. >> what i could say is, do i think anything material change? no. your think the return strategy, the fixed income, the cost is up and will change? almost certainly. it's going to hold the line jes staley holds pretty well. it's done pretty well for the shares the last couple of years. tom: we appreciate your time,
jonathan ties at bloomberg intelligence. joining us now is joseph dickerson, managing director, someone who focuses on this bank and the broader space. thank you for bringing us your views this morning. what is your key takeaway? what is your reaction to this news, joseph? joseph: good morning, tom. similar to my friend there from bloomberg, i agree that the new person is a safe of hands and it's an abrupt sense of timing. frankly, the departure of the ceo is something i would have expected to come at the full year, but not for these reasons. more because it's natural turnover. jes has been there since 2015. they were going to look for a replacement.
and organizations, various media organizations such as yourself, having quite focused on running profiles of the ceo,, the now new ceo finally enough. so i agree, i don't think there's going to be anything revolutionary. this is not like the retail banker coming in. remember, this is something who probably protected barclays from getting exposed. tom: also as you referenced, global chief risk officer prior to that role, as well. what can we read into the biography about what changes they're looking to make it barclays? joseph: clearly, he's going to be focused on risk-adjusted returns, the integration of risk through the whole bank. i suspect you'll see that go deeper, perhaps into the retail
and consumer side, although there's historic li bin risk issue there -- historically been risk issue there. into the capital markets business in a risk efficient way, and have this bank not had this managed in a risk effective manner, it wouldn't have been able to use the benefits from market business to build up large provisions on the consumer but in the first half of last year, much like the money banks. i really think it's more of the same, taking the risk approach to other parts of the bank. tom: would he be looking to buy at this point, joseph, with a share price of around 3%? joseph: yes, we're buyers of the shares. it's a very attractive risk reward profile. in the announcement, ceo doesn't
change much in terms of fundamentals in the near-term in my opinion. tom: briefly, before we let you go, what is the legacy jes staley leaves behind? joseph: well, unfortunately today, it's not very good news for mr. staley and the way he's leaving. but i would say, many investors, when he came in, would have probably encouraged him to, for lack of a better word, get rid of the investment bank, deemphasize it, and keep the african business they invested out of. and i would argue his strategy on focusing on the capital markets business has paid off. the u.k. and the u.s. in terms of capital markets, that business has indeed, in a crisis last year, proved its diversification benefit. tom: joseph dickerson, weaver --
we appreciate your insight this morning. the opportunities, the challenges for the new leadership, and the legacy left by jes staley. ok, it is day one of the cup 20 six u.n. climate summit in cost -- cop 26 u.n. climate summit in glasgow. if elbow short of what some nations were pushing for -- it fell well short of what some nations were pushing for. francine lacqua is there for us this week. of course, there's all one up to get that francine will be speaking to. the run-up to this event has been 20 two the digital organization and the storm, the impacts on traffic -- travel. what is the mood on the ground?
francine: yep, for the moment, i guess nervousness because leaders are arriving in one or two hours. security is very tight. if it -- if his like you're going through airport terminals because you have to get checked in. you also have covid passes and covid tests you have to show every 10 minutes. the mood is of disappointment. it was short of details. the g20 makes up 80% of global emissions. we were hoping to have more details on what they were planning to do. we did have something on methane, but it stops the global pledge of cutting it down 30% between 20 talk and 20 -- 2020 and 2030. we did have something on coal, yet again disappointing because of the financing, but nothing
about the master calls for china. they didn't say they would stop using calls. there were some fossil fuels that polluted the atmosphere. there are two schools of thought. either we didn't achieve anything on g20 level, why 200 nations here, were a lot of them are suffering from climate change but they're not the world's biggest emitters? the others are saying because the g20 is a little bit of a fiasco, they will want to push it through. we were talking about cop 26. and unless you have more commitment from countries and also corporates, he will be in -- difficult to achieve those climate targets. tom: we heard about china and russia not turning up at this event. the delegates are going to be on the ground. what are you looking for the next few days?
give us a sense of how things are moving forward or not. francine: so, the head of cop 26, tom, it was clear every major country had to put up a plan and say these are my pledges to cut emissions by 2050. we don't have a lot of them. we don't from india, but we expect the prime minister to give a speech. the other one quite significant is result. -- is brazil. we don't have anyone announcing anything today. we know that there's a pretty big delegation. we heard from the minister saying they will set of pledges. this is a pretty stark turnaround from brazil last couple of weeks. so what we're expecting is a more ambitious net zero target and pledging to end deforestation. this is a turnaround from an administration that has been
♪ tom: look back to the open. we are 15 minutes into the european trading day, and you're seeing some pretty strong reaction across the european stoxx 600, gains of .7% building on that record close that we saw on wall street on friday. in looking past, it seems for now, these inflation concerns and the central-bank action that is lined up for the rest of the weight. barclays is the corporate story we are focused on on the back of the news the ceo jes staley has stepped down as a result of the investigation by regulators here in the u.k. into his ties to jeffrey epstein. the new ceo is now seco -- ck venkat a christian, who be made ceo along with regulatory approval, the stock currently pairing heavy losses down 2%. it was earlier down more than 3%.
paring some of their earlier pressure on barclays, across the story for you. with inflation still a top concern, a slew of central-bank decisions will reveal how the issue is being viewed by policymakers. joining us now is the cio at four. good morning -- flow bank. good morning. thank you for joining us. you still think investors in markets, despite one of the best octobers we've had in months, could continue to climb? what gives you the confidence? what is underpinning that determination and get past some of these concerns? >> absolutely. i think one of the first things is just the strength of the earnings that we've continued to see. we've seen businesses adapt. we know supply chain constraints are going to continue. the at the same time, from an act of -- but at the same time, from an anecdotal perspective, it should improve in 2022.
we still have fiscal policy that's supportive, monetary policy that's supportive. people are moving past covid vaccination is accelerating. the potential medication or treatments are coming on board. and i really think the third quarter saw a delay to a lot of these supportive factors, the reopening in general with the delta variant and the supply chain challenges. and that's just going to mean growth is getting pushed back in this quarter and into 2022. tom: both delayed but not derailed is the line from your notes. where is the risk most astute for these markets among the central banks we'll be getting action from and communication from this week? esty: well, at this point, obviously it's going to be about the fed. we see that markets are really pricing in a pretty aggressive hiking path, with a full hike next september, and a full hike next december.
and that with tapering ending in june, july, so you barely have any transition before the hikes. the fed has insisted that one, they want to break between the end of tapering and hikes. two, they still think inflation is transitory and we can come back to what the definition of transitory should be. but i do think we're back when to get two full hikes next year. and unless you get much more hawkish than expected tone from the fed, which i guess would be the bigger risk, you're probably setting yourself up -- oregon, it probably -- or again, it could probably be a couple quarters. tom: just to be clear, you're seeing the divergence between the bond markets and equity markets, bond markets suggesting there's concern about growth. are the bond markets then getting it wrong? esty: you know, usually the bond market gets it right and the equity market catches up a little bit later. but what we're seeing here, and we're seeing more on the u.k.
market side, is almost a central-bank mistake. sure and is rising, which means we'll get a lot -- short and is rising, which means we'll get a lot of rate hikes. if not the best scenario. i do think again, the shore and is going to move up as much as people think -- short end is going to move up as much as people think. we should have some positive news on both of those sites. . the other thing to keep in mind, we've seen a bit of an under shoot during the summer, a bit of a reaction again, maybe 170 a bit high due to challenges ahead. and we seem to be coming back to arrange that i think makes a lot more sense for the current environment. tom: ok, we appreciate your time this morning, cio at flow bank. let's cross over to glasgow, live pictures of the u.k. prime minister boris johnson there,
standing of course on the stage. and he's going to be awaiting those leaders. about 100 leaders are going to be waiting for cop 26, signed after hours of difficult of negotiation in rome. but his communique has left many disappointed. as francine was saying, a lot of work needs to be done around pledges from these leaders to try and meet this goal around the climate crisis and climate change, 1.5 degrees warming and keeping it below that level. a lot of work to be done. prime minister boris johnson said the clock is ticking and he is really illustrating the amount of work that is needed that needs to be done over the next few weeks in glasgow. we'll keep across all those events as cop 26 that's underway. coming up, ryanair returns to profit as demand is surging. the ceo announces his plans to bloomberg for the year ahead as well as the possibility the carrier will exit the london
staley is down, earlier down more than 3%, so pairing from heavier losses. let's focus on airlines now, ryanair returns to profit in the second quarter as demand for air travel surges. my colleague, manus cranny, spoke to the ceo. >> as trading in our stock in london shriveled, it does make sense that we have a regulatory obligation to ensure we have european majority owned and controlled. we've taken away the votes from non-european shareholders so we're 100% european controlled. as of the first quarter, we were just over a third eu owned. and we needed to move that gradually up towards 50%. i think the two main instruments in that that would be more forced sales of non-eu ordinary stock and delisting from the london stock exchange. we did this first in 1987. i would be sad to leave the london listing, but it is an
inevitability in the next six months where, because of the rig otori strictures in which airlines operate, we must be e.u. owned and controlled and delistingare reasonably small initiative in that strategy. manus: ok, michael, need to just close off with a couple really quickly. we talk sometimes about needing cash flows between the balance sheet. but you need any cash to be bright and ready to get your hands on a deal if it comes along? you need to raise any more cash? michael: i don't think so. we closed that cash with $4.2 billion in cash. we repaid the loan five months early. the u.k. government loans, one of the first airlines to repay five months early. it will leave us more of $3.5 billion in cash. we were in active negotiations going up to three or four months ago. and then out of nowhere, -- they
were going to raise prices. so those discussions fell over. i would hope to see them restart at some point in time. i'm not sure boeing are going about the recovery the right way, putting up prices inc. post-covid is not going to sell a lot of aircraft. that's why a lot of boeing customers have announced airbus orders. i think boeing needs to get their act together. tom: that was michael o'leary speaking to is earlier. barclays down one pointer percent, paring losses when it -- 1.9%, paring losses when it fell 3.5%, as jes staley stepped down, replaced. we have a note out saying they are disappointed by this move as jes staley has done "an excellent job," bloomberg intelligence saying the strategy of the bank is likely to remain unchanged around the change of leadership. plenty more coming up. we are back in glasgow for