Skip to main content

tv   Bloomberg Daybreak Europe  Bloomberg  November 23, 2016 1:00am-2:31am EST

1:00 am
>> reshaping the fed. sources say donald trump is ready to fill two vacancies on the central bank or of governors. making a statement, use -- u.k. chancellor philip hammond with the much-anticipated many budget. what room does he have for giveaways? a ceo, later from this hour.
1:01 am
a warm welcome, this is bloomberg a break. i'm anna edwards. talking about record highs on u.s. markets, we talked about that a lot yesterday. you have a great chart that illustrates it. yousef: this chart shows the state of play in europe. this is europe stock volatility that has declined while the political risk has soared. this is the political risk index. 20% since earlier this month. the stocks are underpricing the clinical risk. let's talk about whether we are underpricing are
1:02 am
overpricing, we're seeing equity markets moving higher. asian stocks are extending the global rally. it does have a slight aboard drive but it's a little more stable than we have seen it. yesterday to below 124. a lot of comments coming through from very parts of the eurozone. yousef: also questions about the second and third largest producers in opec. down .5%. what is going to happen with iraq and iran ahead of the november 30 meeting? not a great likelihood of them resolving that so that's why prices are lower on that. i report is up 6.5%.
1:03 am
6.5%.n ore is up there is strength in china's infrastructure investment that is likely to persist. china infrastructure investment. there you have it. that's the one that is driving the story. let's see what's happening with first world news with heidi. >> opec talks indiana yesterday didn't result with iraq and iran joining any production cuts. ministers will meet next wednesday. they say continuing questions around production don't make a deal impossible next week but it open the possibility that the group will fail to implement the cuts first outlined in late september. the u.k. chancellor presents his statement to parliament later. they will pledge 1.4 billion and announce a relaxation
1:04 am
of the rules governing affordable housing funds. other measures will include an increase in the minimum wage. hammen has little room for big fiscal giveaways. we will bring you all the breaking news from that speech at 3:30 u.k. time. billionaire brothers charles and formeroch and other bernie madoff customers will keep as much as $2 billion from those transactions after a u.s. bankruptcy judge ruled the cash is out of reach of a recovering trust for victims. the brothers argued the prophet was beyond u.s. jurisdiction because it had been transferred using offshore funds to foreign
1:05 am
banks in the years before his 2008 arrest. the first issuance may be delayed due to market volatility after the election of donald trump. ministerry's finance spoke exclusively to manus cranny. >> there has been volatility because ofken place the philosophy of how the economy would run. there has been some volatility in the markets. facebook is so keen to reenter china that's created a tool to censor information in the country, according to the new york times. it's not certain that the social
1:06 am
network could return to the licensingen restrictions and other regulations that favor locally owned companies. facebook said it was interested in china but has not made any decision on's approach to the country and declined to comment on the new york times or. -- on the new york times report. you can find more stories on the bloomberg. this is bloomberg. yousef: we saw some of the .arkets extending record highs let's see what's happening with the markets in asia. julia has all the details. we tend to follow the latest, so we are higher as well today in asia as well. equities down .2%. the shanghai composite has been faring better earlier in the session. astray a closed higher, the standout in the region as we
1:07 am
continue to see these material players rally. a very resource laden australian market. new zealand had a positive session as well. japan closed for a public holiday. southeast asia is seeing mixed movement with the negative activity in malaysia as we continue to see the ring get we can against the dollar. does looking at some of the stocks we've been watching today , a jeweler in hong kong reported a 22% drop in first half drop it but that is a lot better than how it did at this time last year. crown resort still in focus in sydney, three of those australian employees formally arrested now in china. has won a contract with the national world bank network being built there. at theeen looking offshore renminbi.
1:08 am
it pushed through against the dollar for the first time ever. continuing to weaken against the u.s. dollar. let's talk about u.s. politics. donald trump's fight with the fed took another term. transition team sources suggest the president-elect will move within his first three month in office to fill two vacancies on the fred board of governors -- on the fed board of governors. this comes as the billionaire has signaled that he now has no intention of investigating and prosecuting his opponent, use of clinton, over her a private email server while secretary of state. he said it would be very divisive for the country. let's talk about what we know and don't know about his economic policy.
1:09 am
our guest joins us on set here in london. all trying to work out just how much donald trump is going to stick to some of the things he promised during the campaign versus changing tack. this is massive for investors. what have you learned so far? incredibly more reasonable. i'm very encouraged by this. becomee that he will more and more market friendly. and the movement of we've seen in equities reflects that. what about government bond yields? they've been hovering at 2.31%. the inflation trade is really on. what is your view on that? >> the momentum carries us forward. we've seen a reasonable performance yesterday, for example.
1:10 am
i think it is coming through. it was coming through with or without trump. anna: i want to show you this chart. this was pointed out this morning, 2016, ending the drought of synchronized record highs. about how the major for indices had reached these record highs at the same time, like nothing we've seen since the 1990's. it used to be common for these indices to move in tandem, and then something changed. it didn't happen for 15 years or so. 2016,t the end of suddenly something grips the market enough for it all to move in sync. i remember it well as i started in 1987.
1:11 am
alan greenspan was changing the way the fed works and then greenspan coming in, and this is depression -- the suppression of volatility. driven yields so much that markets got dislocated. we're going back to a pro cyclical market. is what are up and this should be happening in this environment. the environment now, this is been coming through way before trump's omentum for this. yousef: oppenheimer funds warns there could be a japan sought -- style stagnation. bond markets getting way ahead of themselves. are you saying all of this seems logical? >> we think you get to next year, you need a big rise in the
1:12 am
dollar. in december and probably to next year. yousef: isn't that a bit conservative? especially if the fiscal stimulus comes through. >> let's see who gets on the board. who joins the presidential seat. we could see them get more aggressive on interest rates. they may not need to do more than two. >> let's pick up on that. this is the one your implied policy rate change. still shy of pricing in two h ikes within a year. despite all the talk of what donald trump's economic policies might mean, it seems that traders are reluctant to price even 50sis points, not
1:13 am
basis points within the year being priced in, despite all the talk. moved so far, so fast, you need to posit reset and clear out some of the stale positions. it could go further. yousef: how much further does the dollar have to go from here? it's very sensitive to any trade deficit indicators. quite keen on the strong dollar. at repatriation of this 1.4 5 trillion dollars that is overseas in bringing that back, and may not be a bad place for him to be.
1:14 am
he will doseem like it before the february budget that we get. anna: thank you very much. highlights for your day ahead, a big morning for pmi. getay london time we mortgage applications out of the u.s.. and then u.s. initial jobless claims. yousef: egypt eyeing up a multibillion dollar bond cellnet year. we are live with the full story in cairo. of interview with the ceo italy's biggest insurer. kam chancellor philip hammond -- how much has brexit cramped his room for maneuvering? we will get to it all for you. stay tuned. this is bloomberg. ♪
1:15 am
1:16 am
1:17 am
1:18 am
anna: welcome back. , butang seng index flat asian markets excluding japan trading higher this morning, up 5.6 percent. japan is closed. shares fell in taiwan after the board said the airline is shut down after two disastrous rashes in as many years. thanks that lend money to the --rier are said to reduce reject closure and will fight the plan. the taiwan cooperative bank is reported to be pulling other banks to discuss counterproposals. >> in the first three quarters
1:19 am
of the year, the company lost almost 70 million u.s. dollars in the future does not look any better. the board has made the painful decision to dissolve the airline. the times of will cancel almost 900 flights today, disrupting travel for 100,000 people, after of pilots strike over pay was dismissed frankfurt labor court. premium services are among those wiped out. sued on behalfng of shareholders and claims board members stand to improperly profit. the complaint says they suffer conflicts of interest and have withheld information from investors in a bid to pursue the deal. a spokeswoman said the firm believes the claims are without merit. digital advertising provider is barredbart news from using its tools for
1:20 am
violating hate speech rules. the company said it scrutinize the company after donald trump his chiefe bannon as of staff. ceo said in as gmail statement that the company has always and continues to condemn racism and bigotry in any form. that's your bloomberg business flash. let's cross over to the story unfolding in egypt. the countries trying to reduce its borrowing costs after abandoning currency controls earlier this month. it the egyptian pound has lost 47%, the world's worst performing currency. manus cranny joins us now from cairo where he's been speaking exclusively with the country's finance minister. bond is set to cap the
1:21 am
market. do we know any further details beyond that? manus: they have tempted our appetite. standard and poor has raised the credit limit on egypt from negative to stable. this is a finance minister who's looking for a bit of fair went .o get in there >> we were planning to do it by the end of new member but there has been volatility since the election that has taken place, maybe because of the change in philosophy and the plan of the president elect. we are still trying to do it, maybe next week. december,ond week of
1:22 am
markets will either be quiet of this. how do i participate in the future of egypt? market --on is the the money in the market right now. how much more will we see for next year? >> it depends on the development of one thing like how much investment will come into the , but we will come to the markets. 5 billion, 10 billion? we can't have a number like that between now and 2017. removal of fuel
1:23 am
subsidies and raising interest rates, that's a lot to handle for one country in one market. what's the latest progress report from the ground in egypt? look at the equity market, one that best best-performing equity markets in the world. currency is one of the cheapest in the world. there's no doubt about it, the market is testing the level at the finance ministers they don't talk about currency. has beatens report what they thought they could do within 20 days. resultseedback and the are very encouraging in terms of returning the foreign currency theet and having it in market that was very harming to the economy. so the results so far are very positive.
1:24 am
he's a finance minister that turned up on time with a huge entourage. they haven't got the $2.5 , is my from the chinese interpretation thus far. they are working on it. it's an ambitious program. is whatyour money out global national investors want to know. $900 million has been bought. i'm told a lot of that is new money. manus cranny, thank you very much. take care of your portfolio. we mention the function as we went into that conversation, monitoring what currencies have
1:25 am
returned. this is total returns of the egyptian pound -- egyptian pound. aret, is this something you looking at? not an egyptian -- i'm not an expert on egyptian payment, i'm afraid. they've been a lot called more than hard currency emerging markets since the trump election. from the sovereign perspective, i'm afraid i don't have a lot to say about egypt. yousef: you could make the argument that with rising political risk in the u.s. and europe, there will be more appetite for some countries where political risk is fairly normal. how do they figure into the broader portfolio?
1:26 am
egyptitics are stable in for a change, i think that is great. you have to look at the global investor and think about emerging markets. egypt has been one of these countries that has been reengineering itself. a shift in ratings agencies is really important for them. there's so much else going on that right now, avoiding too much on emerging markets is probably the right paying. just today i don't have a lot of exposure in emerging markets. but it will be coming back through, certainly. up next, planning for the future. -- italy's your
1:27 am
biggest insurer as it releases its strategy update. we will be down there and front of westminster later on. this is bloomberg. ♪
1:28 am
1:29 am
anna: welcome back. remember there is no equity trading in japan today, a public holiday. japan. you are in all bring you up to speed on where you are. at the start of trade but not very much. oil with in their, some weakness coming through.
1:30 am
we need to take about what is happening in italy. a strategy update today. the company plans to reduce headcount and exit from less profitable markets to increase efficiency. the ceo spoke to our francine lacqua. >> it's mostly because of the interest rates. 15 years ago, i've been turning around the life insurance company in japan. the same low interest scenario. it's difficult to understand how and when you get out of this kind of scenario. so our assumption is we have to live with it and this is why we , to adapt the company, to live in this new low rate environment.
1:31 am
a cautious assumption is that is going to last. markets seem to believe donald trump will reflate the and the bonds have already started changing a little bit. yetaybe, we don't know because we don't know exactly because his economic program was not that clear. so we still have to understand what's going to happen. stateseless, the united is one thing, europe is another thing. ofis not the president europe, he's the president of the united states. obviously the growth is quite slow in europe. which also has an impact especially on the property and casualty business. this is why the competition is
1:32 am
strong and the growth of the premium is very small. >> do expect the more fiscal spending in europe as well? speaking, i don't really know. >> if you look at the situation in italy, are you discounted in terms of your share price because you are seen as an italian company and there is a referendum coming up? >> yes we are, definitely. connected toce is the insurance industry index, which is discounted. italian index, which is also discounted. one for the sector and the second for the country. , the expectedtaly result of the referendum from december 4, nobody knows what
1:33 am
will be the result. that, quite optimistic. you have to be optimistic and cautious at the same time, so i am boat. we don't know what's going to happen. my view is that anywhere in italy, the reforms have to continue. i think that politics is something that can accelerate or slow down the reform, but at the end, reforms will be cheap as they have to. >> why is there a discount for the industry? >> it's mostly because of the low interest rate which definitely has an impact on the earnings of the companies. and then the regulations, to
1:34 am
comply with this regulation creates lots of new constraints. i think the regulation should be a little bit more flexible. ago we had issues in the banking industry, there was not enough regulation. we need regulation and we need good regulation. it should not prevent the to be a bit more entrepreneur. and we to do business need to be entrepreneurs. sometimes because of the regulation, we cannot be entrepreneurs anymore and i think maybe it to change a little bit. >> do you think it will change? what would be the catalyst?
1:35 am
lobbying? what needs to happen? some variation in the u.s. could be a catalyst. constant constructive dialogue with regulators. they listen to us and we listen to them. sometimes we like them to listen a bit more to us, but anyway, a constructive ilog. constructive dialogue. designsthe company that semiconductors, you're looking at fourth-quarter revenue coming in at 1.60 8 billion euros. the estimate was for 1.60 9 billion euros. adjustedh-quarter eps coming in at .21. a very narrow miss on the eps
1:36 am
front. bloomberg intelligence had pointed out that the volatility along with the china exposure would affect sales. the auto sales had been accelerating in the last four quarters but the industrial multi-market segments growth has been slowing. you look at peers like texas instruments, and analyst surveyed by bloomberg, 20 have a buy. the company saying it had a successful fiscal year and a proposed,14% being $.22 a share. let's take a look at some of the top stories making it into today's edition. yousef: the cover story is oil, matter to -- the crucial
1:37 am
refers to ministers that will meet next wednesday. pmiext, we look ahead to readings for france, germany, and the eurozone. it's possible the data could capture and influence from donald trump's presidential election victory. the chancellor will pledge 1.4 billion pounds to ill 40,000 new homes and announced a relaxation of the rules governing affordable housing funds. there is little room for big fiscal giveaways. anna: more details on this story that we will be covering all day . our guest joins us now on set. thanks for joining us today.
1:38 am
if you have one big ask as the , what would you want to see? something round infrastructure and how it is paid for, perhaps. brexit,u go back three it was pretty good. suffering some severe structural imbalances. a big infrastructure deficit. the big challenge in the u.k. to finance infrastructure at a general taxation. fence andwith the education. we feel that philip hammond should learn from other countries.
1:39 am
authority finances infrastructure. this mechanism has been in place for quite some time in the u.k.. can you just flip a button and change overnight? >> legal changes have to be made. uk's can do it if you are the owner of the land. but about 9 billion pounds a year goes to profit for landowners. yousef: the numbers you are suggesting are impressive and they go further than anything that's being proposed, from the initial indicators that we have. if you could annually raise 9 billion each year but up to 180 billion, the u.k. is expected to
1:40 am
invest about 1.7 percent in gdp per annum. 3.5% for animal is recommended. anna: we know what the big business lobby is expecting. all the spending decisions we have alluded to, those are the constraints. thans have been better many expected. i have a chart that talks about the brexit deficit forecast. it certainly the expectation that is out there. >> hammon with his comments are
1:41 am
absolutely correct. gdp now.ose to 90% investors start worrying about it as well. financing everything he wants to do is going to be tough. the indications we've had -- anna: if you bar is to invest in infrastructure, will the markets treat that differently? >> it's there on the government's balance sheet. hook forstill on the it. thomas's idea is a very interesting one. i would love to see it happen. the transfer of wealth would go on. yousef: that's the nail on the head right there.
1:42 am
what is your base case for this? >> with the yield shifting up in the u.s., it will be hard for the u.k. to resist that move. we've clearly got inflation coming through from lower cable rates. inflation is coming through anyway. i think we see higher yields, but today we make it a pause in that as people realize he just doesn't have the flexibility to push forward. one comment said the statement is obvious. you sound almost set up to be disappointed, given your grand plan that you have in mind.
1:43 am
is this just all tinkering are windowdressing? >> it's just scratching the surface. ,he longer this goes on productivity is such a big issue. were not going to see the growth we need to pay down the debt and drive up real incomes of people. yousef: what about other components? looking at the minimum wage being raised. what are the takeaways from that? >> we been squeezing these just to make money. about putting things in place. all that is exactly what he needs to do. the market has to believe that it. we need to see some kind of action.
1:44 am
they said is not about picking the winners. six or seven new reports will be written. continuationt of but we haven't seen any meat on the bone yet. anna: thank you for joining us this morning. i will be in westminster monitoring the developments around 12:30 p.m. u.k. time. later i will speak with the u.k. business editor. coming up on the show, a monster move. we speak about the global recruiters u.s. strategy.
1:45 am
and we talk about donald trump's plan for the fed, and ahead of the u.k., we consider with the chancellor might do to shore up the british economy for the post >> it world. stay tuned. this is bloomberg. ♪
1:46 am
1:47 am
1:48 am
it's 6:48 here in london. you're looking at a live shot of new york at night. 19,000 fores reached the first time, extending the record levels. also an interesting call on the u.s. dollar. completely different directions as to what happen with the donald trump entry. let's get more respective on the bloomberg business flash with jill you. julia.
1:49 am
next the board said the airline has been shut down after two disastrous crashes in as many years. banks that lend money to the and willeject closer fight the plan. the time one cooperative bank is said to be calling other creditor banks today to discuss counterproposals. quakes in the first records of the year come the company lost almost 70 million u.s. dollars. future does not look any better. the board has made the painful decision to dissolve the airline. lufthansa will cancel almost 900 flights today, disrupting travel for 100,000 people after a bid to block a pilot strike over pay was dismissed by a frankfurt labor court. monsanto is being sued on behalf of shareholders over claims its
1:50 am
chief executive and board members stand to improperly profit from a planned acquisition. the complaint said they suffer conflicts of interest and retail information in a bid to pursue the deal. a spokeswoman said the firm -- the claims are without merit. breitbart news has been barred from using its tools for violating hates -- hate speech rules. steve bannon was named chief white house strategist. decided policy had been breached. the statement said the company has always and continues to condemn bigotry and racism in any form. anna: global recruiter rants that is betting on the huge or
1:51 am
success american companies. in august the group acquired monster. were joined by the ceo. great to see on the program. we often speak to you on the phone, so it's very nice to see you in person here in london. what are your expectations around the united states? the u.s. job market in our sector is by far the biggest job market in our -- in the world. , so ae a 4% market share lot of room to grow yousef:. what does the victory of donald trump due to your position there? does it play into your strengths? >> he's definitely thinking of improving the u.s. economy. so in that sense, it might be good news. we just react on what we see. anna: you had exposure in the
1:52 am
u.s.. when you hear what you've heard so far from doll trunk, does it make you want to invest more are pulled back for a bet -- for a bit, or you don't know enough to make a decision? >> we don't do upfront investments. as a traveler, i think the infrastructure needs to be improved in the u.s. bringing jobs back to the u.s., we will see. having said that, funny enough, it's already quite difficult to find people in the u.s.. in certain regions it's quite tough to find people. i don't hear him talk about that, but that could be an issue, i think. yousef: how concerned are you about continuing the spread around the rest of the world, especially europe? >> what we saw with brexit was a huge reaction on share price.
1:53 am
we saw the u.k. economy already slowing down of it in 2015 and after brexit, that trend just continued. on the one hand, it's good for our business. if clients just want to take it slow. anna: what is the latest on the brexit front, for a company such t1 as you suggest, you're all for moving staff away from london. >> i said if staff moves away from london, we are going to be there. that's not a problem for us. so far we see a little bit of shift away from permanent placements and a little more to tim, which is logical. yousef: what about the financial companies?
1:54 am
are you seeing more interests in moving businesses away from london? toward much more a move digitization, and all the layoffs we see now is nothing to do with the economy, but with the shifting business processes. we've heard that from those who are going into some countries without any kind of infrastructure and offering a very digital product. structural changes more of a driver for you than anything around short-term growth prospects. >> our clients are increasingly -- everybody is looking for the same people. i.t. skills and technology skills. and they should come from outside of europe. we can navigate with our clients on how to get them. you taking a
1:55 am
breather now or if the right opportunity comes along, would you be up for it? majorwon't do anything for the rest of the year because we need to integrate these acquisitions. we are quite busy. which parts of the globe do we expect growth to come from and where are the geographical drivers? >> we're not planning on going to any other countries. markets, we will play a more important role going into different sectors. yousef:? what about growth in japan? this is the second biggest world market, and we have a subpar position.
1:56 am
we want to be a top three layer. we are always on the lookout in japan. we've doubled our presence in tokyo. anna: we were talking briefly about brexit. economy excited about business going there? >> i think they are ready. anna: thank you very much. yousef: we will leave it there. thanks for joining us. transition team sources say donald trump is ready to field two vacancies on the central bank was board of governors. will his previously hostile stance toward organization influence his choices? we will try to get you those answers. this is bloomberg.
1:57 am
1:58 am
1:59 am
2:00 am
♪ anchor: sources say donald trump is ready to fill two seats on the board of governors. set to pledge is 1.4 billion pounds to infrastructure project. , what room forecast does he have? cutting costs. the ceo of italy's biggest insurance tells us about his plans to increase productivity. the new disposals will probably exceed one billion euros.
2:01 am
♪ anchor: welcome to bloomberg at daybreak in london. alongside anna edwards. anna: numbers coming out. , 23.4%.el business reduction of the dividends could be interesting to some. revenue at 7.8 billion pounds. estimate of 8 billion pounds. it'll shy of the estimates -- a little shy of the estimates. overall profit at 308 billion pounds. beating estimates on the operating profit even if the revenue number looks in line or a light. this is a company that aims to label hotels by 2019.
2:02 am
they don't necessarily need to on those. a change going on there for the business. a great story a couple of days ago about how sterling slights -- slides in that brits are looking at package holidays. yousef: how the stock has performed, 39.27% lower. how investors have felt so far. let's check in now with the futures to see what we are lining up for. at the start of the european equity trading day. up by .3%. we have been talking about the record highs. kets heart -- stock mar and the political risks we need to keep in mind. the asian stock market in today's session extending oval
2:03 am
gains -- global gains. yousef: the s&p 500 extending those gains. 1.2409.terling, what difference is that infrastructure investment going to make in the u.k. economy. anna: 47.90 is where we are in a barrel of wti the questions around iran and iraq great rotation out of bond market and into stock. this is what we see on the u.s. 10 year unchanged. seems so peaceful given
2:04 am
the volatility in the last two trading sessions. let's now continue with the bloomberg first word news. opec talks did not dissolve whether iraq or iran will join cuts. the ministers will meet next wednesday according to two delegates. continuing questions around the production don't make a deal impossible. it leaves open the possibility the group will fail. anna: his awesome statements for parliament later. buildllion pounds to help new homes and announce a relaxation of the rules on the affordable housing fund. increasing the minimum wage, but with public finances forecast to deteriorate sharply as brexit stole -- iits
2:05 am
secretaryew with the at 3:30 p.m. moist to keep as much as to billion for a security transaction. after a bankruptcy judge ruled the cash is out of reach. other defendants argued the beyond u.s. a -- jurisdiction because it has been transferred to foreign banks. egypt will seek to raise as much as $6 billion in international on sales through 2017. after the election of donald trump according to the finance minister. guest: there has been
2:06 am
.olatilities of the election maybe a change in philosophy on how the economy is run and the presidency elect. we'll be waiting until the markets settle. facebook, the company is so keen to reenter china it has created a tool to censor information in the country. china blocked facebook in 2009. it is not certain the social network can return to the nation given licensing restrictions and other regulations that favor locally owned companies. kasich was interested in china but has not made any approach to the country and -- facebook was interested in china but has not made advances. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries.
2:07 am
yousef: let's check in in asia. juliette: we have seen the despite being in positive territory for most of the day. we didn't by 2/10 of 1% -- .2%. malaysia we are seeing it fall against the dollar but it has announced it is giving its target rate on hold at 3%. good in lateking trade. australia really led the region up by 1.3%. a continuing story on that rally. certainly good news coming through from australia and will be higher by .2% japan closed for a public holiday. checking in on malaysian ring, rates on hold at 3%.
2:08 am
fallen 13% against the greenback since the election of donald trump. a lot of currencies under pressure. we've also been watching the -- that is the first time it is the first time it has pushed through that level today. this is after the pbs see -- pboc, raising for the first time in 13 sessions. the chinese ribbon the -- anna: donald trump's fight with the fed. sources suggest the president-elect will move within his first three months of office to fill vacancies. comes as the billionaire
2:09 am
has signaled he now has no intention of investigating or prosecuting his election opponent, hillary clinton, over her use of a private e-mail server while secretary of state. trump said it would be " very divisive for the country" what we learned where president-elect trump will take the country? jpmorgan acid midget joins us now. great to have you with us is asset management joins us now. great to you have you with us as always. guest: post trump we have seen market pricing fiscal stimulus, lower taxes, more infrastructure spending. if that does not come through that is going to be a big shock
2:10 am
for the market given the higher inflation currently being priced in the bond market. the huge impact of that has had on the intercept. hugeave seen a outperformance of the financial. we think bond yields will rise and trade will continue. if you did not see a physical stimulus delivered you can see a reversal of some of that. yousef: we have put together this chart. you are looking right here at the blue line which is your 10 year yield, and the s&p 500 earnings yield. you can see how it crosses and takes over. bottom, that is the spread. it slips around. here?s the goal from this makes the treasury yield more attractive, doesn't it?
2:11 am
we think they canmatt: rise to 2.5, 2.6. that's, obviously, is a bit further from here but not too much. in terms of the dividend yield, we don't see there being that much events. you expect the u.s. equities to remain on a similar placed with a are the moment. you can see u.s. equity pushed slightly higher. go by those sectors which benefit to higher bond yields as opposed to those that are hit. anna: sticking with the treasury story, i guess you answer no to this question. are treasuri oversold? the momentum indicators signaling the u.s. bonds have never fallen this far. you think they have further to go, 2.3%. you think it goes higher from here? yousef=
2:12 am
-- there is still potentialmatt: of further increase to come -- matt: there is still potential of a further increase to come. 2, 3, 4 hikes in 2017? matt: we think there will be one in december and two yes year -- next year. very low probability of the fed delivering it plots for next year. it 50% probability. if they do go ahead, we expect some of that scenario to see the dollar on the upside. it would be relatively limited. markets across the world, emerging markets, japanese, which would benefit from a
2:13 am
stronger dollar and weaker yen. anna: do they have any bearing on the way he forges the u.s. economy? was trump's victory a surprise? ma the markettt: is baking in the fact you are going to get a rate rise and december -- in december. apart from that, i doubt there will be that much in the minutes that's really influence the market today. yousef: what about political risk? we are looking at the italian referendum and we are seeing repricing happening. are you concerned at all? matt: all the political risks of coming, italy's the greatest. ultimately what everyone is worrying is that one country will end up leaving the euro.
2:14 am
there are a lot of things that needs to go wrong before you have a referendum about leadership of the euro. were there to be a referendum at any point over the next two years, italy is the country which is most at risk. it is still has a majority of people in favor of the euro. that majority is much slimmer than it is in european countries. where people pro-euro, others are 70-75%. anna: what is jpmorgan view on they want== -- trump's policy to go? wants a bilateral basis. he is leaving saying that he is open-minded on the paris climate deal. going against quite a few things he said in the campaign. matt: we can only hope that the
2:15 am
campaign rhetoric is just that. does, a huge risk for the global economy. a trade war between the world's two largest economies. his economic advisers will tell ver marketsnot a havey been very focused on the good news potential good of loweri taxes and more infrastructure spendingdea. , and not focusing on the risk of potential trade wars. that most likely those measures will not actually be delivered on. anna: thank you so much. what's more to come on the program. up next, the first post-brexit statement. what to expect from philip hammond next. this is bloomberg.
2:16 am
2:17 am
2:18 am
2:19 am
♪ yousef: looking at a live shot of berlin. a sunny day there. 6.35, interesting market moves in the bond market. german yield opening at a record low of -.741%. the bond story still in full swing. more with juliet. -- juliette. juliette: plane to cut costs to increase efficiency and mitigate risk. italy's biggest insurer hopes to generate over a billion euros and lower operating costs by 200 million euros by 2019. the ceo spoke to bloomberg. announce ton't
2:20 am
investors. we havesaid is that ourced since march headcount by 1500 people. thanks to these local transformation programs we are going to increase productivity by 60%. obviously repaid attention to competition costs and headcount. felltte: trans asia shares after the airline is to shut down. after two discussed her us -- disastrous crashes in the past year. banks that let money will fight the plan. -- lent money will fight the plan. they will meet today to discuss counterproposals.
2:21 am
>> in the first three quarters of this year the company lost almost 70 million u.s. dollars. the future does not look better. the board has made the painful decision to dissolve the airline. lufthansa will cancel almost 900 fights today. disrupting travel for almost 100,000 people. a strike over pay was dismissed. monsanto is being sued on behalf of shareholders over its chief executive or numbers stand to profit from bayer. they suffer a conflict of interest. a monsanto spokeswoman says they believe the claims are without merit. digital advertising provider at breitbartbanned news from using its tools for violating hate speech rules. it scrutinized breitbart after
2:22 am
donald trump named its former executive as chief white house strategist. the publication had breached policy against content inciting violence. in an e-mailed statement, the company " at as always and continues to condemn racism and bigotry in any form" that is your bloomberg business flash. anna: philip hammond will get his first chance to change policy in the wake of the brexit boat. expected to include 1.4 billion pounds to build new homes and an increase in the minimum wage. he is likely to focus on fiscal discipline and increase productivity being the best way to increase living standards. that showshart here this constraints.
2:23 am
the one you need to focus on and the u.k. is in blue. japan is not the points today. 89% are in-depth to gdp right now. the closer it gets to 90 more investors might start to worry. guest: i don't think investors will be worrying. the bigger issue is that it does significantly constrain what hammon can do. it is a little like christmas after you have decided to take a pay cut. yes, there will be a few minor headlines, but i don't think there will be a significant stimulus. next is going to be significantly weaker than this year. we expect growth to come in .round 1% yousef: there is nothingyousef: major we can look forward to, but on all the smaller things across the board, which one could be able to the catalyst --
2:24 am
a little bit of a catalyst? matt: the minimum wage increase is helpful for people, clearly. that could help to offset for some people at least. the increase in inflation next year. u.k. inflation up 3%. minimum wage goes up by 4%, that's will be offset for a large chunk., the real wage growth they have been enjoying is probably going to disappear. conception being hit by it turning flat. , his is astructure broader investment scene? or at least fiscal triggers to try to get more private money into infrastructure? is that something jpmorgan would get excited about? the u.s., yes, elsewhere,
2:25 am
not really. it and the u.k. and europe, is likely to be inequitable. in the u.s. it is much more meaningful to u.s. growth. in the u.k. and europe, all you're going to get is if the growth outlook deteriorates, they just don't cut. if you think that to the previous government, they would have ramped up the cuts and increased austerity. this government will just allow the deterioration without ramping up austerity. yousef: the proposed amount, not enough in your opinion. what kind of spending do they need to to get to to make a dent in the u.k. economic? merrier. more the if they put through a package heading towards 1% of gdp, start to be meaningful.
2:26 am
the numbers being leaked suggests it is not really going to move the dial. anna: you don't expect the bank of england to move on the interest rate policy. not overly concerned about gdp levels. global moves away from bond market and higher yields, where does that leave guilds? matt: if we look out on a 10 year review, if you buy into them today are you likely to be in inflation over the next 10 years? we are not sure you do. they don't look particularly attractive. in the short term, there is clearly risk. i would be cautious on the u.k. government bonds. anna: global marketing management at jpmorgan. monitoring the developments as the speech kicks off around 12:30.
2:27 am
i will be speaking with the business secretary. you don't want to miss that. live all day to do that. european futures suggest we will be starter -- stronger at the start. this is bloomberg. wow, x1 has netflix?
2:28 am
2:29 am
hey, drop a beat. ♪ show me orange is the new black ♪ ♪ wait, no, bloodline ♪ how about bojack, luke cage ♪ oh, dj tanner maybe show me lilyhammer ♪ ♪ stranger things, marseille, the fall ♪ ♪ in the same place as my basketball? ♪ ♪ narcos, fearless, cooked ♪ the crown, marco polo, lost and found ♪ ♪ grace and frankie, hemlock grove, season one of...! ♪ show me house of cards. finally, you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. ways wins. especially in my business. with slow internet from the phone company, you can't keep up. you're stuck, watching spinning wheels and progress bars until someone else scoops your story. switch to comcast business. with high-speed internet up to 10 gigabits per second.
2:30 am
you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. guy: welcome to bloomberg markets, the european open. we have your first trade of the day. matt miller is off today. let's talk about what is happening in the u.k. with brexit yet to have any real impact on the data, why should hammond deliver more stimulus? trump in transition. the president-elect temps


info Stream Only

Uploaded by TV Archive on