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tv   Bloomberg Markets European Open  Bloomberg  December 19, 2016 2:30am-4:01am EST

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jonathan: welcome, your first rate of the equity session coming up shortly. i'm guy johnson alongside matt miller in berlin. what we watching? is trump out of his debt? the u.s. china relationship enters deepwater over a need to drown. how frosty could this relationship between beijing and washington get? are we heading for a new cold war? will gladly deliver? growth of oil and plans to start
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seminary projects next year for bp. we look at the outlook on opec, trump, and the market. and go big or go home. barclays is preparing to sell 7000 clients to either trade more or find another firm. will slimming down its customer list boost returns? less than 29 minutes now until the european open. it's going to be an exciting day to watch. thing,n stocks, for one you have gains across the board in futures with the exception of tax futures. is cac 5000 something you are watching? i'm not so sure about that. but really interesting is going to be watching the u.s. open. each day, we get close to this watching? big, around 20,000 number on the dow jones industrial average. 19,950ek we were at and change. but we are looking at positive
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futures today, so you could see us get to that number. guy: i'm waiting for my jacket. let's look at the gmm. you are seeing a little bit of weakness in the u.s. dollar, but it's just a little bit. the bloomberg dollar index is trading down .2%, yen firmer. you are seeing some of the commodity currencies up, the norwegian krone trading higher as well, new zealand trading up, denmark trading up. a little bit of weakness creeping into the u.s. dollar. i think that's the story we will focus on this morning as we watch and see how this andtionship between china the u.s. is going to change and evolve. it does seem as if donald trump is very keen, very keen, to incite some sort of -- well, let's pick a fight. let's catch up on what we need to know with juliette saly. juliette: guy, thank you.
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john mccain and three other u.s. senators have called for a congressional inquiry into allegations of russian interference in the presidential election. however an advisor to the president-elect said there is no consensus among the intelligence agencies over moscow's role. thatn also told cnn president barack obama has no strategy for dealing with russia cyber attacks. scotland will hold a new independence referendum unless it can stay in the european union single market. that is the warning from scotland's first minister, adding to the pressure on theresa may as the u.k. prime minister "draw something" land's for leaving the eu. a new sturgeon will help arrangement to enable the country to remain inside the single market after brexit, even as the london government falls the rest of britain now. china's overheated property market continued to cool in november. , new home prices excluding government prices, gained from
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the previous month and 55 of the 70 cities tracked by the government. that is compared with 62 in october. this as authorities renewed homebuying curves to reflate a housing bubble. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. bloomberg this is bloomberg. guy: president-elect donald trump has lashed out at america's biggest trading partner after he claims china's stolen underwater u.s. navy drum. trump took to twitter, of course he did, in a quote that said "unprecedented act," before suggesting china should keep it. china has said it sees to the drawn to protect shipping safety in the region. meanwhile, the state run english language edition warned today that trump's inexperience and diplomacy might lead to contemplation between the nations. the dollar losing ground, the yen strengthened, along with treasuries. soy have come a long way,
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maybe it's the market to look for an excuse. we will wait and see, but the dollar index is still trading 102.6. let's talk to the founder and cio of lassitude investment management. good morning. enough a lot of good news surrounding donald trump, but there are risks, and one of them is that he seems to want to pick a fight with china. >> i agree. morning,ocation this it doesn't really help relationships. but at the moment i think it is just fostering -- this could be taken less seriously by the market. u.s., doou are in the you care that the global trade will slow down? it's a very insular economy. >> if you are an economist you probably do, but if you voted donald trump into power you probably don't. for the majority of people, they are much more keen to see making america great again, returning manufacturing to the shores of america. i generally believe that, while
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from a longer-term perspective, it would be weaker global trade to kay's, in the short america will be much stronger for the reassuring. freddie, it seems like we are all taking the trump policy prescription that we like seriously. for example, infrastructure spending and reducing taxes and regulation. but those policy prescriptions we don't like, we don't take seriously, like huge terrace, building a wall, picking a fight with china. he has been doing that for a year now. do you think the market might be too optimistic here? >> yes, i do. i agree with that entirely. trumpe points that donald has made is yet to be proven. he's not even in power yet. we have been talking about the dollar this morning already, and i think markets have already
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come a very long way and discounted the positive futures that may or may not come. i think that is fairly reasonable to expect, because the policies he will put in place in the shorter term will be a more positive. the shorter-term infrastructure bills and tax rates. but in the longer term the market is a discounting mechanism, and it needs to take into account the negatives as well. matt: what do you think, freddie, the market can do with the things that have already happened, in real terms? you have seen a steepening of the yield curve, for example, a strengthening of the dollar. is that good for some companies, that for others? can you already pick winners and losers? >> clearly, we have seen a reflationary market. one has only wanted cyclical stocks, and most defensive stocks and consumer staples, people are calling bond properties.
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i am a big believer that the yield curve moves in the key driver and the key beneficiaries have been the u.s. banking stocks, which have done phenomenally well. you have seen increases in the commodities space, increases in mining stocks, oil stocks. but my personal view is that it seems a slightly out of whack with the way the u.s. dollar has been trading, into their is a -- and there is a big move back down in the u.s. dollar or there will be commodity weakness. guy: let's pin you down. as the curve steepening, 131 at the moment. does that go wider? >> it can. i think it has probably moved as short as it could but i think the yield curve can carry on moving as the fed puts rate rises in next year. guy: a quick 1 -- this is the dollar.
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this is the speculative physician. both arising pretty aggressively. where is the point at which the dollar becomes a problem? >> a problem in the sense that he goes too fast? a tightening of financial conditions. >> exactly, which was installed -- i think we're nearly there, personally, and i think we will see a relief rally in emerging market currencies. guy: we have to talk about where we should put our money as we work our way through the program. stay with us. coming up, we will speak to bp's ceo. his view on opec's granted compromise. president trump and the outlook for oil. that's coming up next. investors -- yeah, we will talk about that potential acquisition. barclays is preparing to do
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more trading or find another bank. that is what we will focus on. this is bloomberg. this is the open. minutes away. ♪
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guy: welcome back. let's get the bloomberg business flash juliette saly. juliette: nintendo has taken a tumble again as the debut of
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super mario run earned low reviews. the title is currently only available for apple devices. it is had nearly 50,000 reviews in the american app store, gaining an average rating of just 2.5 stars out of five but. nintendo has been criticized for the cost of the game, which is free to download and play for the first three levels, but costs $10 for the full version. european union competition investigators exceeded their powers of a probe that ended in a record 13 billion euro tax bill for apple. that's according to ireland as a challenge is the decision. in august, the eu order the eountry to collect -- th government in dublin has insisted the company got knows we had deal, and the eu misunderstands the proper application of irish tax law. willof monte dei paschi begin taking orders for shares today. the struggling lender will sell stock to institutional investors thursday, while the officer
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retail investors will end on wednesday. that is as the world's oldest bank aims to complete raising 5 billion euros by the end of the year to avoid a rescue by the italian government. and that is your bloomberg business flash. manus: thanks very much. is the oil turnaround upon us after opec and 11 other nations agreed to cut oil production for the first time in a concert in 15 years? we are trying to gain some optimism about the industry, although many hurdles remain. bp ceo bob dudley was in abu dhabi to sign a $2.2 billion deal and talks with tracy alloway, who weighed in on everything from opec to donald trump. remain very,ng to very disciplined about the capital we spend and the targets we select, but it is time for bp to start growing. he works through so many difficulties that i think the company is now well positioned
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to growth. tracy: we recently saw a very historic deal by opec for the production cut. we also sell potentially even more historic deals by non-opec producers to join in with some of those production cuts. have you feel about opec in the future of oil at the moment? >> i think it is very significant, what happened on november 30. you have non-opec countries seriously talking about reducing their output. some people have said that opec is not a real organization anymore, doesn't actually bring things together, and i think opec is an important organization. the disagreement is significant. you can already see it in the middle east. i know because we work in russia that there is a schedule of reducing output, so i think it's very serious. i think oil prices between $55 and $60 seems realistic for 2017, and growth continues in
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china and north america. tracy: donald trump has nominated rex tillerson as a potential secretary of state. do you think he's the right man for the job? >> he's an excellent person who knows the world, knows leadership around the world, knows how to get things done. he's a very serious person. job,nk he will do a great not just because i am in the oil and gas industry. this is a man who really knows the world and knows how to manage global organizations. wecy: on a more broad basis, know donald trump is potentially more friendly to the oil and gas industry.and his predecessors what does that mean . for you and other oil companies? >> well, surprises are happening all over the world. the world was surprised by the u.k., even the referendum in columbia, which is now going in the other direction. the election for the u.s. was a surprise. i think we are in for moore surprises in 2017. we are a very long-term
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industry. we have to think seven, ten, twenty, years outfifty. bp finally has its financial framework back and we will adapt to whatever the circumstances are. freddie is still with us from latitude investment. freddie, what do you think about the oil price? $55 to $60 is where bob dudley feels comfortable. can we hold there as new shale producers come in in the u.s.? they are going to have an easier time of it anyway because of donald trump. and opec members don't typically stick to production quotas, do they? >> know, they haven't in the past, and i can't see, especially given the troubles at home, why anything will be different this time. with the increasing ability for shale to bring their assets back on more quickly, i think that $50, $55 might be the top of
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quite a volatile channel as opposed to a steady level where we hit some kind of marginal cost of production. -- is $55 enough to make you dip your toe, or is it something to stay away from? >> for me, it is not enough. i think we need to do a lot more on the supply-sider the industry, which is almost impossible, given the increasing amount that wants to come through. along with the increasing prevalence of shale. i think it's a difficult market to trade, given the valuations. oil majors are trading as opposed to the surgeon recovery. matt: ready, how does the climb in oil price affect your investment decisions? surely some industries -- shipping, for example -- must be concerned about paying the higher price for fuel, airlines are going to have to pony up as well at the same time they have
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in europe, real problems with labor. how does this change the decisions you make at your office? >> for us, it has been more about what to avoid, given the volatility, and the way we believe that will persist for some time. it is hard to call the binary offense of opec. it is hard to understand how much shale will come on the short to medium term. it has been things to avoid, and airlines, transport stocks, those are areas we have been avoiding. we aren't buying into the rally in commodity producers across the board, but oil majors in particular -- we still have a lot of industrial companies that are expensive, price tags if they have much less than we believe they will. it is more about what to avoid, and looking at the recovery and taking that oil price jump as a positive reflationary cyclical move, we have owned a lot of the u.s. banks and consumers stocks and other commodities. guy: what's wrong with this
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chart? >> the change in the relationship six weeks ago. you have always seen dollars and commodities trading inversely, and it's a very logical relationship. for some reason, we all know why, the dollar has had the spike, but at the same time commodities and oil have fallen through with it. one of those two relationships will give up. guy: which one? >> i don't know. it's about not taking too strong of a dollar view, not buying stocks that only benefit from dollar. it's about trying to avoid by buying domestic. guy: stay with us. freddie lait will be with us for the next 20 minutes. we will way for the european equity market open. up next, the moves in airbus, and others. this is bloomberg. the open is nine minutes away. ♪
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matt: we are just six and a half minutes away from the european market open. let's get your stocks to watch. saying itsker is sales will come in slightly weaker than expected for 2016, because of a weaker spanish market for its fresh dairy
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products. this is the third year of shrinkage for fresh dairy. and also revamp of its activity a yogurt.across europe those two things will cost it sales, and as a weaknessou can see the in the shares that haven't grown much of the year. guy: yeah. i never knew you knew so much about yogurt. airbus, should quickly mention that. ongoing issues with the 380 program, looks like iran will back out to buy the four engine superjumbo, maybe oil prices also getting into the mix. the superjumbo is slightly out of vogue, despite their size. looks pretty. the other stucco want to keep focusing on, the stocks that
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could break later on this week, we are waiting to see what sanofi do with it. i've priced this in u.s. dollars. andre thinking around 2.75, you can do this on the bloomberg, change the desired currency, currently trading at 2.12. result, we are going to see exactly whether or not this stock is going to spike even further higher, or whether it will be unwound. difficulty still to be done. they didn't get this deal done, will sanofi? the market open is coming up in four minutes. i suspect we will be watching carefully the foreign exchange market this week, as we continue to see the dollar volatility coming for. the ftse 100, 7000. 5000 on the cac. dax north of 11,000. lots going on.
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the market open in four minutes. this is bloomberg. this is the open . ♪
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guy: good morning. welcome to bloomberg markets, the european open. i'm in the city of london. matt miller is in berlin. we are minutes away from the start of the european trading. matt has what you need to know. very much.s trump rattles the relationship yet again. the u.s. china ties enter deep waters over a navy drone. how frosty could the relationship between beijing and washington get? patbossley deliver? the bp will start seven to eight project next year. we get the outlooks on opec, trump, and the markets in 2017.
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go big or go home. to glee's tell 7000 clients trade more or find another firm. slimming down its customer list boost returns. alreadyt, we are waiting on the ftse, and you are waiting for 20,000. the european open is not really going to be brutally exciting. there is the ftse, trading 7000. it is going nowhere in a hurry. i know matt is slightly excited by that. he is very excited about that and 20,000 on the dow, the icing on the cake. the european markets going nowhere in a hurry. we will break down the stock stories for you in a moment. let us give details with manus cranny. >> some of those numbers are incredibly important, how you finish the 20,000 numbers you mentioned.
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we'll see how bp opens later on today. financials, waiting for the rotation to go through. one thing that: did catch my i is politics -- my eye is the author of 2016, the office be bump for the dollar and some of these markets potentially. . top life go -- live they are bursting out of their recent high. europe had a good 2016. it grew by 1.7%. that is better than the market had anticipated. you will get the numbers later today. when it carries through into the markets, it is safety first and that is what is coming through. go into your ethics column and go see the yen fx column -- into your fx column. the positioning is quite extreme. that is what came through in the conversation in daybreak today. the positioning and the dollar,
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the positioning in the bond market. the dollar moving in a slightly opposite direction, crossing to the very last corridor on the far left of your screen under commodities. we have brent crude up 0.3%. the short positions have dropped by nigh on 30%. the stocks to watch, nejra cehic is with us. nejra: talking about that positioning, we have seen those that loans increasing in wti as well and oil extending its gains today. i want to draw your attention to bp because it cemented its 77 year relationship with abu dhabi by swapping $2.2 billion of its one ofres for a stake in the emirates largest onshore oil concessions. the ceo being positive as well of growth going forward. start going up 0.5% at the
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moment here at the open -- stocks going up 0.5% at the moment here on the open. beitalian -- actelion will acquired by sanofi, talks suggest. a little bit every positioning after the huge gains on friday. danone saying sales growth lower. it shrinks for a third year. hurt by weak demand in spain and a revamp of the activita yogurt brand. we are keeping a close eye on monte dei paschi raising its 5 billion euros by the end of the year. guy: thank you very much indeed. cyclical companies amongst the biggest gainers in 2016, but is
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it too late to get in on the rally? a couple of chartier. -- a couple of charts here. this is the cyclical story as we start to price in the possibility of growth. what is interesting is you saw this starting before the trump presidency was confirmed. what was interesting is the bond market selloff started as well and whether or not actually this is something that has legs regardless of what donald trump does, we will wait and watch. people have rolled out of their bond proxies. it was an incredible copy trade. tried figure that out and to make that trade work. the trump aspect, does trump put it on turbocharge? >> it has already been turbocharged. good names falling 20% in six weeks. i personally think that rotation will carry on.
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the more cyclical, the more value will be bought over the next few years as we returned to modicum of growth. in the shorter term, you have had a hell of a move in those bond properties down and i think, still, even at 3% 10 year yields in the u.s., which we are not at yet, most people think we can get to, businesses still fall apart. guy: if you told me those numbers right now and said that is the kind of kick or you will get, a lot of people would still take that. >> that is still achievable. these are very reasonably priced. freddie, i took a look at our rg, the relative rotation graph on the bloomberg, which shows basically exactly what you are saying, the big losers are the defensive consumer staples, utilities, health care, telecoms , and right now, you see energy,
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for example, climbing. no surprise there. financials almost off the chart, leading. it do you have faith that banks, u.s. stocks, the s&p 500, do you have faith the banks will keep up this kind of strength going into trump 2017? freddie: keep up that strength, it would be a remarkable feat in terms of momentum and share price performance in the short-term, but if you look at banks, a cap u.s. tangible book value, goldman's is on 1.3, but i don't think those are stretched valuations for businesses with far better capital bases to survive the cyclical downturns and making more than the cost of capital as their interest rate and facing an incredibly steep yield curve. you could be trading 1.5 times to two times on a lower cost of equity. i believe in the short term. theread a heckuva run and
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should be a positive some breath. i see a lot of upside. you mentioned book value, which makes me think of monte dei paschi and unicredit, where you are talking about one 100th of 1% value. is it just sort of a punt, and absolute binary bent one way or the other when it comes to italian banks? freddie: it might even be worse than that. it is not a very reasonable trade because you don't know what that book value represents. the assets in the italian bank in particular and across europe are very unknowable and with bank entities such as they are 6 forfinition, paying 0.0 monte dei paschi is quite meaningless. so i think you should stay clear of the european banking system for quite a few more years. meanse will see what that
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in that selection that are worth taking a look that in a few moments time. i want to wrap up the conversation in europe for what is happening in the rotation of the stock stories happening. europe traded a discount for the u.s., something that is just the reality, nevertheless, the spread earlier on, a couple of months ago got to 2009 levels. we have closed that up a little bit. 'hat is he's about top -- p s at the top and a spread at the bottom. i already have to question it. freddie: i don't think it necessarily comes through a very positive rotation, because that cap could be explained by the dollar as well. and you know, if 50% say overseas,arnings or that could move the relative valuation by 3%, which is all it would take to get that tell that middle line on your -- back to that middle line on your chart.
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i think it can happen without a strong rally in europe. freddie is going to stay with us. freddie lait. berkeley to boost returns. the lender prepares to drop up to 7000 clients unless they do more business with the bank. more details of that exciting story. click recovery after slashing spending and cutting thousands of jobs. bp ceo bob dudley says it's time for the oil major to start growing again. we'll discuss that and hear more this hour.dley closing the case. a french court will issue its verdict in imf chief christine lagarde's decades-old negligence case today. we are in paris, live with the latest. this is bloomberg. ♪
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guy: welcome back. you're watching the european open. to be brutally honest, european equities are going nowhere in a hurry. down 0.2%. nevertheless, not a huge amount of selling going on. stance what is happening with the calendar as much as anything else. keep an eye on what is happening in the foreign equities market. the dollar story continues to be interesting. the mrr, if you will, matt miller.
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matt: i got a look at the mrr right now. this is a one-day trade of the stoxx 600 and you can see the big winners up here. they got an upgrade. media set coming out and saying it is not in talks with vivendi. the losers, as you would expect. you can see actelion down here. interestingan loser. we have been talking about that. if sanity is offering 270 -- sanofi is offering 275, that is because the guys don't believe the deal will get done. ne saying itsno sales are going to be week. these are some of the biggest gainers of the year today. georgia getting cut to sell. coming another cell not
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out. previously to this coming out, deutsche had three buys, 17 cells. those metrics -- 17 sell. going bigger going home. please prepared to sell another 7000 clients. whittling down customer lists to the ones that produce profits.nt stephan morse, good morning. this is an extension of something that has been going on for a while. that is what barclays will be saying about this. how big a difference are we talking about? what is changing? has managed to get rid of 17,000 clients in their market division already, which is a huge number and they have brought in a new computer system which they hope will help them identify a further 7000 that will go as well and leave them with 8000. 32,000.m about
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you can see they are zeroing in on the clients. othermanagers, presumably banks and counterparties. matt: is this a trend we are going to see? a couple of other banks have done this already. are we going to see more big names like uglies telling some clients to go away -- like barclays telling some clients to go away? stephen: i think we will. some of the other banks we have seen our hsbc and group who already do this kind of te iering. we will see other european banks under pressure to improve their profitability. deutsche bank already doing this. sedits weeks, -- credit uisse. where are the 7000 clients all
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ordered by barclays, where do they go to get their financial services? we might see them going to a new group of people coming into service them. what are the chances being a decent client or two? you start to get toward the back end of the list and you have done 17,000 already and you are going to do another 7000. the probability of there being decent clients in that 7000 grows. freddie: they have to hope they don't necessarily -- stephen: they hope they don't offload the next facebook or google. they are looking for potential for future growth but there is always that risk where you offend the young ceo who has been using you for a few years and you have to go somewhere else and might not come back when they are going to be one of these top 8000 clients. themesting that they tier according to different standards. they have focused five.
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in barclays, they rank them in diamond, platinum, gold, and silver, tapering to the top. they have a top 50 clients they lavish attention on him, give them the best trade ideas, access to the ceo. they are trying to say, you need to give us more money so we can actually become profitable again or afraid, you are going to have to go. matt: you need to trade with that money. please don't give it to us because we are not making anything on it. freddie, is this part of the new low interest rate landscape that banks are going to have to figure out what to do if they cannot hold deposits and or money on that? freddie: i think so. you have seen it across the board with a number of banks around the world trying to do something similar. it is interesting to hear the 17,000 member which has already come through which i did not know about. it is essential. banks are focusing more and more on returns in equity versus cost
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of equity. their i.t. cost have beens have been -- costs blooming. they need to take account of that. guy: this is part of refining a business model. the european banks, do they have a business model that is now sustainable to get them to the next few years? that is a question the market continuously asks. we can talk about the yield curve and regulation, but all of that comes down to "do i have a business model that can make money, deliver returns my investors are demanding?" i wonder whether we have got to the point where we can successfully answer that question? stephen: i think absent a large macro factor like the yield curve in the european union which we are unlikely to crs steep as the u.s., you have to focus on what they are actually doing at home in the bread and butter of the business. it is relatively weak. they are trying to fix things like the yield on their customers through measures like this. it is going to take on time. while you look through the
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earnings over the last few years, the adjusted numbers are very different. still a lot of write-downs, right off in the -- right off in offs in the- write- assets. on and on, on a cash basis, they are not producing the returns they need. stephan morse, thank you for your time today. the chief investment officer and founder of latitude investment, next. brexitd will publish its demand, but will the u.k. government pay attention? we discussed the brexit pathway next. this is bloomberg. ♪
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matt: welcome back to the european market open. we are seeing losses across the board on the major european averages. the ftse, the cac, and the dax all down right now. 0.2european stoxx 50 off percent. let us check out what is going on around the world. bloomberg first word news brought to us by sebastian salek. >> john mccain and three other u.s. senators call into an inquiry. an adviser to president elect donald trump said there is no consensus among the intelligence
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agencies over moscow's role. mccain also told cnn that president barack obama has no strategy for dealing with russian cyber attacks. . bp has cemented its relationship with abu dhabi race whopping its own shares for a stake in one of the emirates largest onshore concessions. he sees signs of growth next year following more than two years of an oil slump that hammered its earnings. opec and other 11 nations agreed to cut oil production for the first time in 15 years. remain disciplined about the projects we select, but it is, you know, time for bp to start growing. we have worked through so many difficulties in the u.s. that i think the company is well positioned for growth to the end of the decade. chinese overheated property market continues to cool in november. prices excluding subsidize housing from the previous month
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and 55 of the 70 cities tracked by the government compared with 62 in october as authorities toled out new yield bankers deflate a housing bubble. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. guy: scotland demands first minister nicholas sergio to push theresa may's hands. government opts not to remain in the single market, our position in scotland should be supported to do so and the paper will publish, we will publish will outline how that will be achieved. a mixed response to her commentary on what is happening here. freddie lait still with us. there is a lot of noise surrounding this story. i guess the best barometer for figuring out how the market views the world right now is
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what is happening on the euro sterling. cable has gone 150, 120. is that an overreaction? freddie: it feels it to me. have been using currencies to implement their view of future economic news, and obviously, brexit puts uncertainty on the u.k., but a 30% move down in the currency seems overdone to me. matt: what do you think about the moves we have seen in the yen while we're on currencies? of for acked after all couple days and seeing it at 117. it has gotten stronger over the last two days. we are touching to hear from the boj. has been it has really been the dollar side of that trade moving it down. i think it has gone too far. i think the move in the curve in the u.s. has been very positive
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for the dollar, but the dollar and other financial markets should be a discounting mechanism and the dollar has been rallying for years. we have been pricing and the fact that the fed would be first on rates for many years now. it is coming to fruition. i think there will be eight cents of selling on the news. guy: are currencies still -- a sense of selling on the news. guy: are currency still th desirable? pounde: we still have the charter. it will be positive in a sense. we are living in a low-inflation world. that has always been the biggest threat for a low currency, partly because you lose face because you are seen as a weaker nation. it was always a worry of inflation. most economies and central banks quite like a little bit of generated inflation. if he gets to the increasing price of imports, that -- you price ofe increasing
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imports, that could be a positive. guy: thank you for joining us. have a great christmas. we will see you in the new year. dudley sees inob 2017. this is bloomberg. ♪ generosity is its own form of power.
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you can handle being a mom for half an hour. i'm in all the way. is that understood? i don't know what she's up to, but it's not good. can't the world be my noodles and butter? get your mind out of the gutter. mornings are for coffee and contemplation. that was a really profound observation. you got a mean case of the detox blues.
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don't start a war you know you're going to lose. finally you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. guy: 8:30 in london. 9:30 in berlin and frankfurt. we are not going anywhere with great hurry. interesting stock stories. ftse 100 down below 7000. the dax north of 11,000. the cap would desperately like to get to 5000, but down by 0.4%. here is never cherished -- nejra. it is going to acquire bsn medical for two .7 4 billion euros. this is the swedish maker of velvet tissues, expanding into orthopedics ahead of a planned
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split from for free products. it is expected to generate 30 million euros within three years with this purchase and it is going to be funded through that. we're -- through debt. thing that -- danone sales growth slightly below its target for 2016. revenue increased slightly below its three to 5% goal with fresh dairy business shrinking for a third year, hurt by week demand in spain and slower than expected rebound of the activity a business. deutsche bank, stock trading lower as it was downgraded as rising "too far too fast. it is overvalued after rising since the u.s. election, up more than barclays. the more the deutsche stock future the less any
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capital increase becomes. matt. matt: thank you very much for that. after years of spending reductions, project delays, job cuts, or the oil majors starting to see green shoots of growth in the industry? conditions may be beginning to turn around after nations decided to cut oil production together. we caught up with bob dudley, who laid out a cautious but determined path ahead. >> i think we are going to remain very disciplined about the b spend, the projects we select, but it is time for bp to start growing. we have worked through so many difficulties in the u.s. that i think the company is well positioned for growth. in tracy us bring alloway in abu dhabi who brought us that interview. so, tracy, first of all, what is his view on the market here? wti, $55 fore for
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brent? that must look good to him. tracy: sure. when i caught up with bob, he sounded very optimistic, which surprised me. he's talking about, now is the time for bp to grow. they are looking at a potential seven and eight major investments which is quite different to the rollbacks in expenditure we have seen over the past couple of years or so, thanks to low oil prices. bob was outlining opec as an essential game changer for the oil industry, something that would probably keep oil prices in the 50 to 60 barrel range -- $50 to $60 per barrel range, i should say. it has been its own financial discipline in the project keeping costs very low in the face of lower oil prices. dudley saying that now his company can maintain dividends with oil at $50 to $55 a barrel,
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down from an earlier estimate of $60 a barrel. definitely optimistic. dudleyacy, i'm sure bob will fly to the middle east to talk to you, but he was probably there to do something else. right you are absolutely about that, guy. he was in abu dhabi to sign an noc,oric deal with ad the local petroleum company. in -- 9.5% stake it was too expensive with low oil prices at the time and with some of the problems bp was facing at that time. it took two years to get to this weekend where bp said it would exchange two point two $2 billion worth of its shares in exchange for a 10% stake. take a listen to what mr. dudley
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had to say. bob: it will mean another 160,000 barrels a day in addition to the ones we produce in abu dhabi, so continuing a very long-term relationship. that is important for us. the economics are good for us, for shareholders. strategic brings in a owner of the company, which i'm also pleased. tracy: that was bob dudley here in on the dobby, talking to us about a very, very big deal -- in abu dhabi, talking to us about a very big deal. matt: tracy alloway from that very good deal out of abu dhabi. joining us now, amrita sen. what you think about the deal bob dudley cut in abu dhabi? they have been working on it for a long time. amrita: there has been some disagreement in 2014. they managed to put that aside. it is absolutely a stored.
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i think a lot of oil majors, not just bp, they are looking ahead and seeing the project buying is really thin and we need to get some projects up and running because i think there is a potential upside, even beyond the 50 to $60 that he talks about and most people talk about. that could happen by the end of the decade. cost ofap production, right up the heart of the asian market, could swing very easy. it makes a lot of sense. matt: what you think about? thei was wondering if market should be more skeptical, i mean because, we get this opec agreement, this historic, you know, first 150 years they have agreed with non-opec oil producers, but never really stick to these things. why trust opec and rationale? you know when you guys
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say they never stick to this historically, it is about 66% to 70%. is it that bad? -- you have to be careful what you say about compliance. they always did to what they say. skeptical. do i expect iraq to comply, absolutely not. a need to put everything in context of what would have happened if the deal had not happened. everybody would be pumping at maps and if anything, saudi arabia would probably have put more barrels into the market, maximizing whatever they have. i think one million barrels cut is very likely, because natural declines in countries like venezuela, even if they wanted to cheat, they could not. guy: wife the market so skeptical -- why is the markets are skeptical?
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we are looking at a story were the market does not believe and you are saying it should believe. there is a whole array of factors into play here. nobody really believes that saudi has got its eye on the aramco ipo months to make sure it -- and wants to make sure it is around for that. if the market does not believe in this price now, what is it going to take to convince the market to believe? amrita: i think the most critical thing will be q1 next year. the market has to start seeing first, now the nominations are out and they are making cuts, they need to see it come down when they load an entry drawdowns. when they see those inventory drawdown, it will drawdown quite sharply. i don't blame the market for being skeptical. like i said, i think people are overdoing it a little bit. let us break it down. it is probably not going to be as bad. guy: price in dollars, dollar going up, how long as that
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relationship last for? ourselvesan we find in a situation where oil goes up and the dollar goes up? amrita: i think oil, if opec and a little bit of the non-opec cut -- it is important. they were going to raise production now and may even cap production. thes a big change in supply-side picture. suddenly, oil has found its own rebounding. it could cast the upside a little bit, but will probably not change the rebalancing. oil will rally. all to remember, the reason for the dollar going up is because trump is going to do a lot more fiscal stimulus. that tends to be more positive for commodities. again, u.s. shale production rising, good for diesel demand. generally, fiscal stimulus may not be that bad for oil anyway even if the dollar goes up. guy: we are going to do that in a few minutes time. amrita sen is going to stay with us. up next, opec celebrates, but it
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is not alone. u.s. rates go back online. oil outlook in america. that story next. this is bloomberg. ♪
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matt: welcome back to the european market open. i'm matt miller in berlin. guy johnson is in london. let us go to sebastian salek we're bloomberg business flash.
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-- for your bloomberg business flash. calledw computer system flightdeck ranks users by what they generate for the capital. it allows barclays to prioritize its most lucrative. the latest move in an industrywide trend of whittling down to the customers who produce the most profit. sebastian: apple wants to repay a record 13 billion euros in taxes to ireland. that is after the irish government said european union competition investigated exceeded their powers in the probe. they ordered the country to collect. the government in dublin has insisted the company got no sweetheart deal and the e.u. misunderstands the proper application of irish tax law. bank of monte dei paschi getting shares today. they sell stock to institutional investors thursday.
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that is as the world's oldest bank raises 5 billion euros to thed a rescue by government. the star wars -- one," a prequel to the collected $155 million from the u.s. and canada. last year's "star wars: the force awakens," with $248 million. guy: put the hat on. matt: no, no, no, no. i cannot wear the hat inside. i think it is bad luck. guy: it is not bad luck. it is really not. [laughter] guy: there we go. matt: i'm getting a lot of flack. it's more like a bavarian
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hunting hat. guy: really? matt: a lot of people don't approve. guy: this is what matt does to abuse us during the break. [laughter] matt: i was just thinking about "wrote one," guy. one," guy. i'm ashamed to admit i remember seeing the original in the theater, a testament to how old i am. guy: i was six years old. you can do the maths on that one. i have to wait and watch it on dvd when my children, if they get scared, can hide behind the sofa. that a sock about things we should be talking about before people get across. let us talk about it in more detail. we touched on the kind of issues surrounding whether or not opec will deliver the cut. a lot of people in the u.s. watching this very carefully and the data continues to point to the idea that more and more rates in the u.s. are being put to work.
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you can see on the recount every friday, and what is interesting is in terms of the barrels coming out as well. this is a u.s. oil output chart. these are the rates coming through, and this is the output story, barrels per day in the millions. as you can see, that number has been climbing fairly swiftly. that is the bank account there and it is in and a portrait of. we are going -- an upward trajectory. this is one of the big stories we will be focusing on. i will show you what the brent inlooks like for a moment. let us get back to amrita sen. for every barrel opec takes out that the u.s. -- are they going to put one back in again? amrita: i don't think this is going to be one-for-one. this is very important. all of our clients over the last few weeks, everybody has said, the opec deal does not matter because it is not a question of
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when -- sorry, not question of if, but a question of when. there will be no impact on the market. the recount chart as you have shown as well, first thing, it is a slow process. production just started to take up. it is starting to climb from there. like backowth is not in the 2014 days when everything was reducing at 1.4. yes, we get growth. we have 350,000 growth for next year. not as much as 800 -- all that opec is cutting. if it flattens, -- guy: let us show the chart. this is where saudi tries to be a central banker. mario draghi tried to control the bond curve. this is saudi trying to control be brett curve. this is the brand curve six months ago, going forward. as you can see, fairly steep. they flattened it out massively. as yousef said, the objective is
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to basically prevent them selling forward. amrita: exactly. this is the thing the market is missing. look at algeria and vienna. don't mention the price ever in their community. we are targeting excess inventories. they want to get that down and flatten the curve. they are getting more for that barrel essentially compared to otherwise giving $10 a barrel to the shale companies. matt: i wonder what you would think about rex tillerson as secretary of state. i mean, there is a lot of interesting aspects of the trump effects on and those oil. is this the biggest, most important one? amrita: it depends. the domestic picture is quite important in terms of his energy secretary, the things he promised during the elections with regards to reducing regulations. that is probably more important
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to the u.s. politics. of course, if rex tillerson does become secretary of state, it will be important given his relationship with russia, in terms of generally, he has very good relations with a lot of potential problem countries or problem areas, so it could mean, again, it depends on a lot of other factors as well. slightly better relations between u.s. and russia. having said that, i think the big question mark of energy under trump remains, does he backtrack a little bit on the oil? .anctions can start the republicans are working on sanctions. that is the one to keep an eye out for. matt: you mentioned iraq almost certainly will not stick to its production promise -- promised production levels. what about iran? do they stick to those levels? are they as important to the deal? because they are back to the
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global oil market now with production. lessa: it is slightly fiscal risk because their production, the chart you guys have as well, the flatline at three .7 million barrels for the last six or seven months. they really don't have much more without new investment coming in to rate production. they are allowed to raise production by 90,000 barrels per day and have a couple of new deals coming up. that might help them. they also know that without foreign investment, that is not going to change. this is where trump gets interesting. do companies actually continue going back in there at the moment? there are a lot of memorandums, not real commitment. does trump create uncertainty with regard to where potential u.s. sanctions can go and thereby limit the upside in production? that is the key one for 2017. guy: amrita sen, chief oil
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analyst at energy aspects. up next, i left chief christine lagarde -- imf chief christine lagarde will learn he r fakes today. we are in paris next with that story. this is bloomberg. ♪
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matt: welcome back to the european market open.
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the verdict in imf chief christine lagarde decades-old negligence case will be decided today. she denies any wrongdoing. connan joinsoline us now outside the court of justice in paris. caroline, how likely is it that christine lagarde is found guilty? it is notso, impossible, but it does seem unlikely. last week, we had the french prosecutor who called for the charges against christine lagarde to be dismissed. he said the charges were quite weak, and that she was accused of things that did not relate to criminal law, but to political choices. the sitting judges of this court are not obliged to follow the prosecutors emendation. it happened in the past with the same a prosecutor jean-claude
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marin had called for the charges of corruption against jeff she chirac to becque dismissed. expected at 3:00 p.m. french time. guy: what have we learned over the last few days? caroline: christine lagarde has faced very aggressive questioning over the past week. she was present at the court every single day. one weakness on wednesday was especially harsh against her. be the chiefed to of the french investment agency. madeys christine lagarde him sick when in 2008, she decided not to overturn the arbitration. he said that even if the chances of success of overturning this arbitration were one and 1000, she should have tried, however, christine lagarde says she
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received the warnings of this french investment agency, and she decided to act in the public interest. and decided not to overturn the arbitration so she faced very aggressive lessening here. /questioning here. she said on her last day, she did a final emotional plea saying she carefully was waiting the -- pros and can't weighing eighing the w pros and cons in this case. guy: that pretty much wraps things up for us. is going toe" continue. it forward to that show greatly. matt, the production team have a new name for you. what do you think it is? matt: i am frightened to death. guy: it could be the new you.
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is it as good as it looks? am -- am i going to get a star wars name? i do like the movie. guy: "surveillance" next. ♪
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mark: barclays prepares to tell 7000 clients to trade more or find another bank. will this strategy help boost returns? china's lenders pledge to rein in risk next year. we will break down china's outlook for 2017. ll dudley deliver? the bp boss plans to start seven to eight projects next year. we will get the outlook on


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