tv Bloomberg Surveillance Bloomberg March 29, 2018 4:00am-7:00am EDT
francine: renault and nissan are said to be in talks for a merger. tech giant loses $53 billion of market cap amid reports that president trump is obsessed with regulating it. and, one year until britain is scheduled to leave the e.u. while u.k. prime minister theresa may will gauge the mood of the nation, what she might not like. ♪ francine: good morning and welcome to "bloomberg surveillance." these are your markets.
you can see the stoxx 600 gaining 1.4%. we are seeing a little bit of a pop. we are pretty much unchanged and looking at treasuries studying. the dollar nudging lower, the pound following. the pound is on the back of that one year anniversary to the brexit date. we should look at it the other way, one year since we trigger article 50. coming up, we have a great lineup of exclusive interviews. from the middle east, we will be hearing from the chief executive of tadawul. plus, the israeli central bank governor spoke to us about trade. later, it is the brexit show and we will be joined by former conservative party leader iain duncan smith. now let's get straight to the bloomberg first word news. here's taylor riggs. the leaders of north and south korea have agreed to meet face-to-face. today's announcement comes after
officials held talks under the have a -- heavily militarized border. this could set the stage for a andlar meaning between kim donald trump. the asahi newspaper has reported that the summit between kim and shinzo abe may take place as soon as june. in the u.k., detectives investigating the poisoning of a former russian spy and his daughter believe they first came into contact with the nerve agent at their home. the specialists have identified the highest concentration of the substance on the front door. that comes as friends who are in a coma in the hospital said they should be allowed to die. u.s. president donald trump has said he will replace veterans affairs secretary david shulkin with rear admiral ronnie jackson. the ousting comes amid a wave of resignations and dismissals in the senior ranks.
it follows the departures of economic advisor gary cohn, national security adviser h.r. mcmaster, and secretary of state rex tillerson. futures trading giant has reached an agreement to buy -- the deal values it at 3.9 billion pounds. it runs markets for trading currencies and complements the chicago-based companies operations. cme offers derivatives on many of the same things. as you were mentioning, the bank of israel governor has warned at the possibility of a trade war between the u.s. and china is worrisome for global economies. he made the comments during an exclusive interview with bloomberg. >> potentially, development in reducing the free trade and sort of making higher buyers for
trade. i think this should worry us. back fromat if we go free trade, this is bad news for the global economy and certainly bad news for non-open economies. least: in venezuela, at 68 people have died after a fire at a jail in the northern city of valencia. gunfire was reported as the fire began. the fire erupted during the unrest. the facility had a capacity of about 60 detainees. prison overcrowding is not uncommon in the country's detention facilities. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries.
i'm taylor riggs. this is bloomberg. francine? francine: thank you so much. it is the end of the quarter and volatility is back. the vix is set for its biggest quarterly surge since 2011. u.s. investors have a new punching bag in the tech space, amazon. facebook gave of its top loser spot to the e-commerce giant after a report that president trump is obsessed with regulating the company. amazon fell as much as 7.4% during the session. the fxe, let's bring in strategist at ing, and also joining us is dani burger. good morning to you both. amazon, was the fall solely due to what we think is a report about the president really wanting to regulate amazon? dani: it has been a strange week for stocks. there was a bit of a buildup to this selloff. it was a little bit weak, not quite as weak as facebook.
once we got this report about the president, it did fall 4.4%. we did last year have trump actually tweeting about amazon and shares only fell about 1.5%. this market environment this week, not as much liquidity. a lot of markets heading into a holiday shortened week. we have some portfolio rebalancing. this might be a case of a few players pushing around the stock, exerting more influence than they might have had. maybe it is portfolio rebalancing as well. investors saying, i'm going to the table.rofits off still, we are seeing companies express more weakness. why would the president regulate amazon? i guess the difference would be if he regulates it because he sees something ugly like facebook, then maybe that is why investor angst is at the forefront. dani: there is a political angle
to this. when you think about his, jeff bezos' ownership of the "washington post," there is an element of that that trump has tweeted about before. we've heard about trump decrying different companies before. i think initially taking profit off the table when we have these reports, it might be premature. that is what some analysts have said. we definitely need to wait and see whether there will be regulation time to amazon. francine: there's nothing about a data breach, correct? there's nothing like anything we've talked about in facebook. dani: this is about taxes. he's talking about taxing the company, not a data breach. francine: is there a kind of correlation between what we are seeing in equities, tech stocks, and currencies? we saw it yesterday in the u.s. will it impact dollar at any point? >> i think the contagion effects
from the tech stock move is limited. it draws parallels with the vix, .here it was a technical factor we are in this sort of tricky environment where one-day stocks are selling off because of trade wars, and one day because of technical factors. dani mentioned, extrapolating too much is difficult. francine: do we look into next week? do we wait for another 10 days from now to see what the markets do? quarter won't have this rebalancing affect anymore. it will be interesting to see how things can be true. one thing i'm looking at our momentum stocks, stocks that have been the biggest gainer. this is a popular trade. previously, we haven't seen momentum fall. i brought this chart with me. you can see it in the white.
as the s&p fell, momentum did well. buts still up for the year, this thursday and wednesday and tuesday, we've seen it fall quite a bit, biggest fall since november. this is a case of really popular stocks getting sort of crowded. means the end of the momentum trade, but it shows how much damage can be done when there is a strategy that is very popular. francine: in terms of charts, the bloomberg your momentum portfolio, and the s&p 500 in blue. when you look at -- is there anything like that -- if you look at currencies, we saw in 2017 and the beginning of 2018, they took the brunt of it. viraj: parallels there. the currencies that performed well this quarter, the momentum in the euro, pound, yen, you've seen that unwinding this week.
this is a bit of a restocking. those themes still remain in play. we are still bearish on the dollar. francine: what is your favorite pairing? please don't talk about pound, because we have a whole block on pound. viraj: selling dollar-yen on the rallies. this sort of uncertainty is likely to assist for multi-quarters. that is your best bet. francine: how much is it impacting equities? are there industries that are havens because of their supply chain? dani: there's a morgan stanley basket that you can pull up on the terminal that shows companies most exposed to china, boeing, apple. when wek it on the chin got these tariff talks. we have seen a bit of that ebb. initially, we did have a forceful selloff. retail investors finally capitulated based on some different surveys we've seen.
it does seem the focus has moved away from that and onto tech. tariff talk, clearly worries the markets, but i think we're going to need to get more forceful talk from the u.s. president, maybe some more retaliation from china, for stocks to react to tariffs. francine: thank you for joining us. dani burger, voronezh fidel. ftse russell has chosen to include the kingdom in its emerging markets category. we hear the reaction from the head of the saudi stock exchange. we are live in riyadh. this is bloomberg. ♪
the chairman of both companies is thought to be driving negotiations. let's get the latest with our global business editor in berlin. let's talk about carlos. do we think that he's actually spearheading this, since he was the instigator of the alliance in the first place? >> good morning. that seems to have carlos ghosn's fingerprints all over it. renault-nissan alliance in the first place. he did drop a hint last month when he said he wanted to solidify this alliance, and he wanted to cement the alliance. ago,ported about an hour these companies do want to come together under one umbrella. is, what willon the government say? what will the japanese government say? so far it has been a casually orchestrated alliance and nobody
had any particular dominance. the french government own a stake in renault. will they want to see that relinquished? that is one question people will be asking. there's a lot of hurdles before this comes through. so far, no comment from the companies. francine: what will the french government have to say, and what will the japanese government have to say? francine: the french government -- >> the french government owns 15% of renault and they have special voting rights. the japanese government looks at this alliance closely even though they have no direct involvement. they will want to see, if this does happen, where will the future seat of this company be, france, japan, somewhere different? some companies like fiat are based in the netherlands to give them that more neutral dutch, so
that is one point we have to look at. emmanuel macron, the french president, was the economy minister when the french government raised its stake in renault. he knows this alliance fairly well. he knows the players. he will be looking at this closely. the french government, traditionally robust in its approach to the corporate landscape. whether they really want to pull out or relinquish their role has a big question mark. francine: what does it say about carmakers more broadly? do they need to get bigger to compete on a larger scale? absolutely. what we are now is probably one of the biggest upheavals we've seen in decades. maybe even since the car was invented. we are moving away from this concept that a car is bought and owned by an individual and as a
combustion engine. people are sharing cars. the engine might not be a combustion engine. it might be a battery-powered engine. a lot of things are changing and carlos ghosn has been at the forefront of that. the nissan leaf was doing fairly well. renault has made a hard push into ev engines. are we best positioned to play a role in this? we have volkswagen pushing aggressively into this market. we have new alliances forming. in that dynamic, we are seeing these carmakers looking, do we have our ducks in a row? there are alliances that failed. carlos ghosn is sort of the master of holding these things together, spinning multiple plates. he's probably thinking, let's consolidate it now, and that way we are best positioned to capture these changes in the industry. francine: inc. you so much.
let's talk about emerging markets. saudi arabia is a new, as the ftse russell has no included the kingdom. the move could lead to $5 billion of passive inflows and pave the way for inclusion by the msci in june. the chief executive of the saudi tadawul has welcomed the decision. he spoke to bloomberg's betty liu and yvonne man. recognition by a the international investment community for the reforms that the saudi stock exchange has toen in the past 18 months address the requirements of opening up the saudi stock exchange and pursue a more attractiveness platform for international investors. >> are you confident that the
msci will deliver a similar outcome in june? it seems like the momentum is behind you. what are you doing to make that a reality? >> as we did with ftse, we worked closely with ftse and msci as well as international investors, to achieve the requirements. about they optimistic positive reaction of the international investors. we have been very closely in contact with msci and international investors to doubts the saudi market has had in the past. we believe we are in a good and strong state as we speak today, and we are hoping for another milestone to achieve next june. >> many investors before this decision were having qualms
about the saudi market and stocks after the crackdown on corruption last year. there are still some concerns regarding something similar could happen again. when you talk about geopolitical tensions, sharp oil moves, that is fair game in the saudi market. what would you tell them when it comes to these concerns? numbers isat the the right way to address such concerns. over the last years, the saudi market has been very stable. events aroundcent -- anticorruption crackdown look at the number just a week after that announcement. we have achieved a record number
by foreign investors ownership in the saudi markets. it is increasing every day, by having more investors as well as more cash inflows to the saudi market. today's decision is just a reflection of the international investor's confidence and appetite to invest in the saudi market. that certainly seems like lays some good groundwork for an ipo by saudi aramco. lots of speculation that that is going to land in your market. how are you preparing the $2undwork for that potential trillion ipo? exchange,other tadawul has taken all the required measures to address the requirements of such a unique ipo, with such size. aramco is a saudi corporate and will be very glad to host one of
the largest corporates in the world, being a saudi corporate. we have taken all necessary measures to address this. we aspire to have a very successful launch of aramco and tadawul in future. that was the chief executive of the saudi stock exchange. let's get more on this now from riyadh with the anchor of bloomberg markets middle east, yousef gamal el-din. tell us a little bit about what the decision means for saudi arabia and for investors. yousef: i spent a lot of years in the kingdom, and until recently, the idea was taboo. this is in line with this new saudi arabia that is trying to put its flag on the map for
foreign capital. stone more of a stepping to the msci decision in june. that is expected to bring in $15 billion of inflows and ultimately open the door to some more active capital to come in and be allocated to the kingdom. some estimates go as high as $100 billion over the next few years in terms of the amount of money that could come in, but it could also go the other way. in the past, we've seen some of these stories, buy the rumor, sell the news. now, a little bit weaker as we speak. the only variable that remains unanswered is the valuation of saudi aramco and how that will change the waiting. the guys at ftse russell think the waiting will shift from 2.7% to 4.6% assuming $100 billion valuation. francine: thank you so much, yousef gamal el-din in riyadh.
you can catch that show at 4:00 a.m. it has just been rebranded. we also send manus cranny there. wake up early, watch bloomberg, send us questions. let's keep the conversation on emerging markets. still with us, viraj patel. we were hearing from the chief executive of the tadawul, from yousef. emerging markets are on a tear thanks to artificial intelligence. it goes back to chipmakers. does it all change, and does the technology rout have an impact on emerging-market currencies? viraj: i don't think anything fundamentally has changed when it comes to emerging-market currencies. there are headwinds, trade wars, geopolitical risks. what we define as -- it is nervous goldilocks. a bit of caution, but still business as usual.
we've seen two stories this week, the china inclusion into the bond index, and saudi arabia in the index. all that suggests business as usual. still chasing those good local growth stories. francine: they haven't moved on the back too much of trade and tariffs. do you expect that to turn? viraj: what we're looking for is escalation. one, the u.s. either broadens its tariffs to other countries and sectors, or the u.s. retaliates to anything china puts in place. those are the escalations. trade war's don't necessarily ore stock market's down cause a sustained selloff in markets. what acts as a backstop is a potential repricing on monetary policy. we got independent monetary policy. compared to history, we didn't have that. that acts as a backstop. you need trade policy, plus other factors.
we don't think that is going to happen. francine: thank you, viraj patel. coming up next, brexit countdown. today marks one year until the u.k. is scheduled to leave the e.u. we will talk about the road ahead. we have some of your currency calls. barrage hotel with probably -- virage patel with probably the boldest call. we're also joined by iain duncan smith. we want to ask whether he supports the prime minister if he manages to get a customs deal. it is our brexit show, next. we moved it to thursday for your enjoyment. this is bloomberg. ♪ retail.
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the you and we have all the bases covered. nejra cehic is in westminster. the latest ons the implications for business and finance. we also joined by viraj patel on the fx moves. we are also getting some breaking news, gdp in the u.k. this is the third reading. let's see if it has any impact on pound. it is pretty much in line with what was expected. gdp 0.4%. year on year 1.4%. unrevised from previous estimates. nejra, it has been -- it has not definitely been the economic catastrophe that some were predicting. does it indicate the people that were for brexit? nejra: well, francine, it certainly hasn't been a
catastrophe, but there has been an impact. initially, the u.k. economy shrugged off brexit and some criticized the boe for being gloomy. since then, the pickup on inflation did have an impact on consumers with the pound falling and businesses being reluctant to invest or raise wages. more recently, inflation has come down a little bit. wages have been slowly rising. now you've got the bank of england signaling and markets pricing in a faster pace of rate hikes potentially. still an open question as to what impact that could have on the economy. the predictions are predicated on a smooth brexit and it could be anything but. francine: what have we learned, david? is touring the country to see how people feel about it. david: we did our own tour.
we sent reporters to all areas of the country to test the water, how do people feel? i think one of the main things is that opinion hasn't shifted that much. we've learned about what the possibilities are, what the dangers are, what the truth was around the referendum. people haven't shifted their view. what people agree on is they want more clarity. there are still unanswered questions. the country remains divided on this issue. the idea that we could run another vote, we would probably get the same thing. could go one way or the other. the big questions still remain. what sort of trading relationship are we going to have? how are we going to solve the irish border question? to be fair, we have made progress. if you think about where we could have been, we talked a lot about how precarious the government is looking.
we are at the point now where we are -- we nearly have a fully agreed exit agreement. we have a transition agreement agreed. there is some certainty for businesses. there has been progress, but huge questions still remaining. francine: you sent reporters to figure out what they care about, whether they would vote differently. brexit orcare about do they just think about their jobs, family, houses? is the economic impact that people feel at home? you mentioned the gdp numbers. economy has gone from either the top of the chart to write at the bottom in terms of the biggest developed economies. people certainly felt it over the last year in terms of the inflation numbers, the depreciation of sterling.
people care about that in terms of the take-home pay. there's a question that came up time and again. they feel like a decision has been made in terms of a democratic vote and they want to see that put into action. you had one of the boldest calls on pound. 1.50 versus the dollar by the end of the year. this is a chart that brings it back to 1993. you stick with that call? viraj: pretty much. 1.45 by summer. all the cards seem to be falling into place. you look at sterling's march report card, reassessment on brexit, reassessment on u.k. economic data, so those are pointing toward a gentle appreciation in the pound. the theory for sterling and brexit, it trades inversely with uncertainty. if you think it is going to
increase, the pound will move lower. if you think it is going to stay here, the pound stays here. if you think it is narrow, higher. we sit in that latter camp. lower economic uncertainty. should see some of the cyclical animal spirits coming back online, and i think that channels being missed priced in the sterling market. it potentially shows signs of life in the u.k. economy. francine: what is priced in for the customs union? nothing on the table? viraj: we are assuming that there's transition. 2020, 2021.to if that were to unravel, then certainly one could see the pound moving lower. doesn't seem to be the case when it comes to what politicians are telling us. we've got that certainty for the
next couple years. francine: we are going to a quiet period. what comes after easter? ?hat are you looking for david: there have been negotiations in the background all this week on the northern ireland question. the next european council meeting in june, by that point we are told they hope to have some workable proposal for the irish border. we still have the internal issues of westminster. there is this question of the customs union. will that come to a vote? can the government carry that or defeat that motion, or does mrs. may have to change her strategy? broadly, the talks are going to start in earnest on this future trade deal. this is where the gaps still remain between what the you receives as cherry picking and
what the u.k. says is a special trading relationship that it to gather. i would look forward to that council meeting in june, and further into the autumn, where we hopefully get to a point where the agreement is signed and has to be pushed through the european and u.k. parliaments. francine: we also have to of art -- alert our viewers and listeners that liam fox is answering questions in the parliament. , where is labor in all this? that is an interesting question as well. it sort of feeds into this possibility of whether we could get a second referendum. there's a great story on the bloomberg about the many different ways this could take in terms of the future of brexit. we have heard from labour before that they wouldn't rule out a second referendum, but there
seems to be many steps before we could get to that point. businesses, as you know, were already preparing for this. the biggest banks haven't been waiting to find out the outcome of the transition deal. they've already been planning and acting on them. the u.k.'s biggest banking regulator said that on day one of brexit, we could see 10,000 british jobs move out of london. i also spoke to gary baker earlier today at westminster. he was talking about some of the concerns that the fund management industry has, and no surprise that fund managers in the u.k. are far more concerned than in the rest of the world. francine? francine: david, when you look at the future of theresa may, is she in a safer place? the seesaw world of british politics swings again.
we talked about how precarious her position has been. a pretty good couple of weeks. she managed to get this huge diplomatic response to this alleged russian involvement in this nerve agent attack. she seems pretty statesmanlike. jeremy corbyn looking shaky, not only on the russia question, but anti-semitism in labour. a demonstration outside parliament against his leadership. he's looking vulnerable. mrs. may looking secure. this stuff changes so quickly. certainly, her government looking more secure now. francine: if there is a leadership challenge, what happens to pound, and if there jeremyow do you model corbyn for prime minister? viraj: i think it is back to that uncertainty. anything that takes this and delays brexit negotiations or increases uncertainty, the pound
trades inversely to that. i think what you would see is some of this cyclical phenomenon. it is not our best case that we get an election coming through, which is why we can afford to be bullish on the pound, but that is the theory. francine: thank you all for getting us started on this thursday brexit show. joining us, viraj patel. thank you also to our london bureau chief, and our reporter on the ground, nejra cehic. ministerthe u.k. prime tours the country to gauge public mood around brexit. we will be joined by former party leader iain duncan smith. ♪
welcome back. i'm francine lacqua in london. let's get to the bloomberg brexit flash. taylor: u.k. financial regulators reassure banks and insurers, telling them they can rely on a transition period to ease the road to brexit. the statements from the bank of england yesterday are the latest optimistic signals to the industry on the outcome of talks. they've put pressure on the e.u. to strike a similar tone, but the bloc has taken a more cautious line. a bundesbank executive board member has given his advice to businesses planning for brexit, st, butr the be prepare for the worst. >> every transition is subject to agreeing on these issues, and that will likely happen in october of this year. so we have some time to answer all this.
i personally would hope that we would have some sort of a transition period until the end of 2020, and have enough time to see negotiations progress. taylor: the u.k. plans to hire 1000 new customs and immigration staff to ensure the security of the border after brexit. the workers will be funded from 395 millions pounds pledged to the home office. it marks a reversal of a previous plan to cut the border force. that is the brexit flash. francine? francine: thank you so much. theresa may embarks on a trip to gaugee u.k. today the public mood before the country is scheduled to leave the you -- e.u. the visits include a textile factory in scotland, newcastle, lunch with farmers near belfast, wales, and tea with polish citizens in london.
the prime minister may not like what she hears. a bloomberg investigation found that divisions have only hardened since the 2016 referendum. can theresa may get the public on board? joining us is iain duncan smith, conservative mp and former party leader. last time mr. iain duncan smith was on the show, he batted away allegations, saying the media love a conspiracy. people do exactly what they want. they talk to each other and it goes on all the time. welcome back to the program. thank you for joining us. do you think there's any way that brexit backers could live with theresa may having an agreement on the customs union? mr. smith: she's been adamant about that. francine: what if she doesn't? what if she finds an arrangement where the e.u. are a little softer on the u.k.? mr. smith: i don't think it is
going to happen. theresa may, partly and publicly, is clear, we are leaving the customs union and the single market. the arrangements we are looking for are about the u.k. outside the customs union. that makes it clearer. we don't want to spend our time discussing whether we should be in or out. having clarity is critical to get these things done. the clarity that she's given is, we are leaving the customs union and the single market. we want an arrangement based around that formula. they are not expecting that we will come back. francine: the markets are less certain. seek the brexit hardliners to oust the prime minister? mr. smith: the party would split dramatically. that is my estimation. it was always clear at the time of the referendum. it will be interesting if the people that watch this program remind themselves what the government at the time said --
if you vote to leave, you must leave the customs union and the single market. it seems there would be no point in voting to leave if you didn't do those things. you might as well be in. you get things done to you rather than having any say. that is why it needs to have a clear idea about a trade arrangement. that is the whole point about the next six or seven months. francine: if the party splits, what would that look like. mr. smith: i don't believe that is going to happen. francine: in case there's a -- mr. smith: we can go on discussing the customs union, but stop doing that. we are not going to be in the customs union. the government is clear about that. the chancellor, the prime minister, the party. those discussions are discussions for no purpose. what kind of arrangement will the u.k. have with the you when we leave? that is the key element.
francine: do you think we will have enough details on what the trade agreement will be by the time we leave? mr. smith: we have to. we have to vote on it. it won't be a fully detailed ready agreement, but what it will be is a very clear terms about what that will be. that has to be voted on in parliament. it has to be voted on in the european union. it has to be a document that has legal status. we can't vote on it before we leave. after that, we are free to sign. moment onwards, details may need to be decided, but the relationship needs to be fully defined. francine: have can you define it without the details? mr. smith: in the sense of what it is. i'm talking about the functional details. the details will have to be thrashed out between now and the
end of the year. we need to vote on that before march. francine: business has always wanted clarity. mr. smith: the bundesbank was saying they want to know by october, november. i've talked to people in the priced inhey already what is going to happen. they are not moving that many people at all. if they move any. francine: what is the number you are getting? mr. smith: a few hundred here or there. we were told back at the time of 100,000, there were people. it is not the case. the city is still the number one global center. new york is number two. frankfurt has fallen back to number 23. paris is around number 20. seriously big financial center. employs nearly one million
people. the movement of a few thousand is not a big deal. this is really for the retail business, not for the wholesale market. it is the retail business and passporting affects the europeans. what barney reynolds has written is we should have enhanced equivalence. francine: the u.k. doesn't want that. they want mutual recognition. tom: mr. smith: equivalence is the area we should be aiming for. barney reynolds works in the city. he's written a very good pamphlet. whatells out how you get is called enhanced equivalence, which is where the city needs to be and where the european union should be. they need that to deal with these cities. francine: the problem is that if the e.u. can take it away at any moment, then that does not suit the u.k. it has to be -- mr. smith: my point is that if
you have an arrangement like that, it benefits the european union. most of the trade is in words to london. of the passports are into the city of london. they are not out of the city of london. we tend to see this as if it is london begging for some special position. london is a global trading center. business is done outside the european union. even leading german politicians have said they need london to thrive after brexit. francine: the french don't think that. they want our jobs. mr. smith: the french play silly games. nobody in the european union is siding with them on this. if london was to disappear, it wouldn't be going to paris. it would be going somewhere else. it is a global trading center. everybody in the city knows that and everybody of any common sense in europe knows that. how do you make this matchup in
a very simple way that allows us to have enhanced equivalence? go on to the website. look up barney reynolds' paper. francine: we have a viewer question. the person says, i wonder if iain duncan smith thinks the u.k. will manage to deal with e.u. countries separately until march 2019? mr. smith: not quite sure what he means. francine: basically, whether you can have individual trade deals set down without the details, like trade deals before march 2019? mr. smith: we won't have individual trade deals because they operate as a bloc, but what is quite clear is there is no agreement with the e.u. commission. there are lots of different views. most of them are stacking up. places like denmark and holland and eastern europe, italy made
it clear they want a free trade arrangement with the u.k. and they want the commission to focus on that, not on trying to find some way to make it difficult. i'm also certain germany wants that as well. to damage theot political structure. i think there is exceptionalism about the u.k. we were never comfortable with a deeper and closer centralization. francine: the u.k. drove a lot of the market reforms that the germans want. they saw david cameron and a lot your leaders as allies in this. pro-market, liberal. mr. smith: there's a lot that is going to affect the city which we didn't want. mifid ii, for example, and the solvency directive, r i think near disasters. being outside of those will be good for the city of london. we need to have them flexible here.
we need to encourage the best talent and make sure that this remains, as i believe it will do, the preeminent global trading system in the city. francine: do you think the u.k. and theresa may would get a better deal if she speaks to angela merkel directly? mr. smith: angela merkel has not been engaged very much in these discussions because germany has not heidi government for months. i don't say there's going to be a magic wand waved by angela notel, but i do think having germany party to these talks in a strong way has been one of the reasons why they haven't progressed at the speed they should have done. i don't say that she's going to come in and say, we want the u.k. to have a complete free trade deal, but they are going to recognize the balance, and the next few months -- i'm not saying it isn't going to be difficult, but i believe it is in the best interest of the european union and the u.k. francine: what speed the you
think the negotiations will take? do you expect them to accelerate? is it september, october, december of what the relationship will look like? mr. smith: the target is october. it might drift a bit more. but they have to complete this by the end of the year. the time is then for us to decide if we agree with this or not and for the european union to do the same. i have every expectation they will come back with that laid out. francine: will the e.u. push it back? we are up against the wall of the article 50 process, and therefore we are out. long, itt it drift too leaves the uncertainty around. people want to know, what is that relationship going to be?
i said, what do you want out of a trade arrangement. he said, nothing? we've already figured out what we want to do. everything else is a bonus to us. might have been nice. we not going to get that. we already priced that in. worstne: planning for the and hoping for the best. iain duncan smith, thank you so much for joining us. "bloomberg surveillance" continues in the next hour. tom keene joins me out of new york. we will be talking m&a. we will be talking to the director general and amazon. does the president really want to regulate it? this is bloomberg. ♪
obsessed with regulating it. renault shares jump as it is said to be in merger talks with nissan. me has a $3.9 billion deal for nex. deutsche bank is said to be conducting a review of its trading businesses. shares recover some ground. good morning. this is "bloomberg surveillance ." i'm francine lacqua in london. tom keene in new york. it is pretty much the brexit negotiations for bloomberg surveillance. if you look at the german unemployment figures, a record low. tom: it is unreal, how those numbers mirror what we see in the united states. you think everything in the world was great. when you look at these unemployment numbers. but it is a busy thursday with a lot of challenges out there. francine: if you look at the german jobless rate, it does really mean the economy is
powering ahead. it is very different from the u.s. because of inflation, because of the ecb. when it comes to a surplus, it is a different story. let's get to the bloomberg first word news. taylor: the leaders of north and south korea have agreed to meet face-to-face on april 27. today's announcement comes after officials held talks on their militarized border. the summit could set the stage for a similar meeting between kim and u.s. president donald trump. -- asahi north weber newspaper has reported that a meeting between kim and shinzo abe may take place as soon as early june. in the u k, detectives investigating the poisoning of a former russian spy and his daughter believe they first came into contact with the nerve agent have their home. specialists have identified the highest concentration of the substance on the front door.
that comes as friends of them, who are in a, in the u.s. president donald trump says he will replace the veterans affairs secretary david shall good with ronnie jackson. comesn's ousting following this month's dismissal of gary cohn. h.r. mcmaster and rex tillerson. the bank of israel's governor has warned of the possibility of a full-blown trade war between the u.s. and china is worrisome. during ants were made exclusive interview with bloomberg. the potential development in reducing the free of higherthe making
barriers to trade, i think this should worry everybody. and i think if we sort of go back from free trade, it is bad for the global economy and it is that news for small, open economies. global news, 24 hours a day. powered by our more than 2700 journalists and analysts, in more than 120 countries. this is bloomberg. tom: equities, bonds, currencies -- interesting oddities. trading globally on the markets into a three-day and four-day holiday. futures up eight. 1.24. euro- we will show this chart on surveillance. the next screen, if you would. the 30 year bond, did get to to dollar $.99 for a cup
of coffee. turkish lira. the court can't get a bid. bitcoin is fading away. francine: u.s. futures are edging higher. treasuries are climbing. the pound is falling, the one year anniversary of the triggering of article 50. tom: i was going to do the 210 spread. for all of europe, this is remarkable. german unification with the 12%, notent rate of the 20% that you read about. but this vector is unique to the
world. -- trumpver reason thinks they are evil because of the surplus but this is an amazing social experiment. francine: at this is my chart. match across our terminals perfectly. we do have to deal with unconventional conditions going forward. if you look at my chart in the path of average unemployment, it is now much higher at 3.4%. is full employment represented by the output gap which you see. we will push this out to social media for our radio listeners. let's get back to the markets. after theding steady tech lead selloff.
we are joined by the unicredit cohead of strategy. it is a funny week because we have easter. so does this have to do with anxiousness in the market or because it is easter? definitely an element of liquidity we are seeing ahead of the long weekend and holy days. but at the same time, the bulk of it has to do with the fact that we have two things that are moving alongside. one is -- peaking from high levels. and this seems to be weighing in -- we price in the risk of reflected.
francine: it seems that m&a is acting at overall support of the market. about nissan.s it seems that things are picking up. it is typical of what you see when the business cycle progresses. we have an extremely mature recordthird longest on that in the eurozone, we are somewhere past the middle of the cycle. and typically this leads to some pickup in m&a. tom: here is the arch question into a three and four day weekend which is, where are we? are you alert for instability or is it smooth as we go? that is a million dollar question. i think it is not as smooth as we thought initially it would
be. definitely the central scenario remains that yes, we are seeing peaking in leading indicators but at the same time, coming up high levels so it is neutralizing the upside risk but it doesn't mean that downside risks have increased. and this could eventually increase to outside trade , we are, in which case talking about a significant risk of disruption of global trade and global growth. so i think the scenario remains for at least a few quarters. it will come along nicely. -- but thecertainly uncertainty -- francine: -- tom: the distribution of risk, i like that. can central bankers going to the
feeling like they are on the right plan or are we setting ourselves up for april or may where we see central bank adjustment? i don't know about that. i don't know how confident they feel. recently, the rhetoric we feel from central banks seems to imply that they have increased confidence. but then again, my issue is that always central banks will, in a the latest developments because they are reading over what has happened over the past two or three quarters. and what has been having -- been happening is a strong growth. but this is where sentiment kicks in and sentiment can be affected by all of the discussion on trade conflict.
i think the field conflict when they look at the broad-based -- i think they should leave a margin of risk assigned becomes what we are seeing on trade policies. it is definitely worth playing -- worth paying close attention to. it has the ability to affect policy. tom: i agree. i think april and may will be more disruptive than people think. we do continue with vasileios , from unicredit. one of our most popular guests joining us in the next hour, mr. dean curnutt. he was on fire the last time he was with us. this is bloomberg. ♪
taylor: this is "bloomberg surveillance." in talksnd nissan are to merge. the deal would end the current alliance between the companies and marry them as one corporation. the chairman is driving the negotiations and would run the corporation. the japanese carmaker has a 15% stake in its counterpart. cme group has reached an the ndx group. this runs markets for trading currencies and treasuries.
offers derivatives on many of the same things. deutsche bank is conducting a fresh review of the trading businesses. helping to restore profitability. according to people familiar with the matters, they are very big businesses. yesterday, he sought to squash rumors that he may be out bid in a memo that the bank is seeking to replace him. that is the bloomberg business flash. tom: we take some time here in both of our hours, and jonathan ferro and i will do this on the radio as well, to talk about deutsche bank. it gives us time to sit back and think about it. bring up the chart of the recent performance. this is half of the john cryan tenure.
he was getting things done with a move up and then it all falls apart. someone who was on the deutsche bank watch for the bloomberg has done a great job, stephen ayers. what is the major focus of the management of deutsche bank? stephen: the management wants to stay in place. an wants to keep his job. it seems those talks have been picking up. people have turned down the job offer but yesterday, john cryer spoke out yesterday and said, i want to stay on. what are the people of germany thinking? what do the retail politicians of germany think?
do they care about john cryan's future? do they care about their bank? i don't think they care about john cryan's future but they do care about which a they are focusing more on the german domestic market of the retail bank and they gave john cryan .enefit of the doubt they want a strong bank in germany. they do want to see that happening in germany and they're watching very closely what is happening at the top. francine: what happens to the investment bank? it is the largest bank by revenue which gives shareholders anxiousness. do today ton cryan increase profitability at that unit? mean, if you recall, 2015, sayingob in
he wanted to scale back risk and the investment banking and he has been doing that but he has been doing it too much. the bank lost market share, all through last year. and u.s. rivals have gotten so many peoplei think in deutsche bank realize it has become impossible for the bank they have in that and been going through unit by unit to see which one is actually still a one that wants to compete more and will invest and which one is it and which one do we need to cut? piecene: you rotate great , which i urge everybody to read. how much more competitive will it be in germany? lookwe see foreign banks for the middle step? thewas really excited about figures.
steven: the german economy is powering ahead. that is true. are trying to get a piece of that pie. so it is deutsche bank. i think it is a pretty big market. john cryan true what wants to see happening, the smaller banks consolidate, then it may actually be more space. sachs recently announced they want to push deeper into corporate germany. facing moretainly competition there and the struggles they are facing are not helping them. thank you so much, that was steven arons. , the chief equity strategist and also japan. this is bloomberg. ♪
international investment community for the reforms that the saudi stock exchange has taken. months, to 18 address the requirements of the opening of the saudi stock exchange and to pursue a more attractiveness platform for international investors. you confident that the ms b.i. will deliver a similar outcome in june? it seems like the outcome -- it seems like the momentum is behind you now. ftse, as we did with the we worked closely with the ftse and international investors to achieve those requirements. we are optimistic about the positive reaction of the international investors. and we have been closely in contact with international
investors to address any gaps the saudi market has had. believe we are in a very good and strong space as we speak today. and we are hoping for another milestone to achieve next june. >> many investors before this decision were having homes about the saudi market overall, in stocks, after the crackdown on corruption last year. there are still concerned something similar could happen again. we talk about geopolitical tensions and sharp oil moves. that is fair game in the saudi market. what would you tell them at the moment when it comes to these concerns? the numbers is the right way to address such concern. over the last year, the saudi
market has been very stable. during tough times. i think the most recent events around the anticorruption the numbers,k at one week out from the announcements. we have achieved record numbers by foreign investors, ownership in the saudi markets. and it is increasing every day. that is the chief executive of saudi arabia's stock exchange. how big of a deal is this? are investors a little bit concerned? i think we are having a couple of technology issues. we do have issues with satellites. emerginglook at markets, what is the story
there? does it go back to tariffs and trades or structural reform? it is fair to say structural reforms have been put into place and there are a number of places that are cracking ahead with significant changes over the next few years. in terms of monetary policy and transparency. and what is happening along the slope of structural reforms. i do think it boils down to growth. but there is the potential to disrupt that. up, we speaking with wilbur ross on trade. this is bloomberg. ♪
south korea will meet face-to-face on april 27, it will be the first summit in 11 years. leaders of the nations, still technically at war, have only met twice since the peninsula was divided in 1948 and could set the stage for a similar meeting between kim jong-un and donald trump. detectives in the u.k. investigating the poisoning of a former russians fight at his daughter believe it first came into contact with the nerve agent at their home. the metropolitan police say specialists have identified the highest concentration of the highly toxic substance on their front door. friend say they should be a lucky guy. donald trump will replace david kin amid a wave of resignations and dismissal in
the trump team senior ranks and follows the departure of gary cohn, h.r. mcmaster, and secretary of state rex tillerson. the bank of israel governor has warned the possibility of a full-blown trade war between the u.s. and china is worrisome for global economies. the comments were made during an interview with bloomberg. potential the development in producing the making higher barriers to trade is something should -- that should worry everybody. trade,o back from free this is bad news for the global economy and bad news for small open economies. venezuela, 60 people dead after a fire during a ride at a
jail in the northern city of valencia with gunfire reported as the riot began. the reasons were unclear and the fire arrested during the unrest. the facility had a capacity of 60 detainees although prison overcrowding is not uncommon in the countries attention facility. -- detention facility. global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. .rancine: thank you so much the japanese prime minister is finalizing details for a summit with donald trump next month. on the agenda are north korea and trade issues. the u.s. ambassador to china told bloomberg that retaliation on tariffs is not the answer. >> it does not make sense. hopefully, the chinese will realize that we need to work together on these issues and
retaliation is not the answer. instead, collaboration and cooperation to address the issues that have been around for a long time. francine: still with us is the unicredit cohead of strategy research. sett of people coming on were saying japanese equities, japanese equities was where they wanted to be. is that still the case? where does the and go from here -- the end go from here? >> do not position into equities that have been under bought over the past 10 years. main pointack to a about u.s. assets, the dollar more broadly. the issue that we have a massive concentration of wealth towards u.s. assets. the net international investment position in the u.s. is massive, approximately the stock -45% of
gdp, which means you would think that the whole world has been destroyed and it is just the u.s. has survived, not the case. after growth outlook has broadened, there is flatlining of sentiment indicator and there are risks. the rest of the world is growing nicely, based on the central scenario and the distribution of the risk has changed. the long equities that have not been the darlings of investors for a number of years right now. as far as japan, i think japan has made moves into the right direction. we see that any number of indicators, the underlying growth in inflation that is picking up nicely, below target but picking up, which means a keeps incentives. yes, i would suspect we will see a pickup in inflows with japanese equities. will they go higher? yes. francine: are you worried about
abenomics? and we do notatch understand what the endgame of this would be, economically. >> >> that is right. what isthe question, the endgame for the u.s. economy? that --for right now is my main point right now is that the risk from your, as far as u.s. assets, will rise. this will generate flows away from the u.s. when you distribute this, emerging markets will be a place to, but you would like to be long in markets where there would be some liquidity and where there are prospects for growth picking up, including the eurozone and japan. i do not want to overemphasize japan over other regions that a preference with japanese equities over the u.s.
out, let'snical fake look at one. that is short yen. yen weakness over the last number of days. , is chart is so important will put it on twitter for bloomberg radio worldwide. above one of my long-term moving averages. it is just great, the trade gets covered but we do not go weak yen. there has to be a massive one-way bet on strong yen. what is your point estimate for strong yen out one year? >> we are looking for a convergence 100 and lower than that in 2019. -- and dollar-yen, it is one of the fascinating exchange rates because so many parameters in it. they all point in the same direction as far as i am concerned.
you have the dollar aspect and i am on the bearish dollar camp. specific the yen factors, and to the fair value models, talking about long-term fair value models that take into account not just rate differentials but trade inflation trends, icy dollar-yen significantly overvalued. compared to where it was a year ago. at the same time, you are having these possibilities of the flaring up in risk appetite. central banks are withdrawing policies and markets will be looking at where there is less pricing for tightening of monetary policy over the next 1-2 years. the yenwhere i think will benefit you -- benefit. tom: this is way advanced bloomberg functionality, the . rket bit -- bet on yen
priced,a massive short strong yen call do where one year out, people agree where we are going. is it too much of a one-way trade? risk -- strong yen a risk? much of time we get too a crowded trade, we subject ourselves to squeezes with the other side, even fundamentally the cases for that not to happen. it is a risk. the issue is that we are talking about a u.s. recovery, it tells you from a statistical point of view, the provability of a slowdown or a recession will impact risk appetite. one year out has risen substantially. this is what the market is sensing, there is the
statistical probability that the u.s. will fall into a slowdown one year from here. -- have betrayed conflict the trade conflict and wrong u.s. policies. the market is taking the view that the clear beneficiary will be the yen. i agree with this but take on board the fact that, when you have so much crowded positioning in the short-term, you make it squeezes that will affect your positions. francine: you talk about wrong u.s. policies, the deficit or nottary policy? >> i would talk too much about monetary policy being in the wrong phase. we have had a pickup in inflation and the fed's tightening, broadly doing the right thing. it is -- i am talking mostly about fiscal policies. keynesian in the sense that
i believe you need to use fiscal meany but that doesn't this is the right medicine all the time. when you use expansionary fiscal policy when you are in full employment, you run the risk of overheating the economy, of not boosting sustainably the potential growth because the policy is not doing that much. at the same time, putting inflationary pressure in the pipeline. it is not timely and wrong. although in absolute terms, we have seen expansion in the deficit, similar to what we will see in 2018 and 2019, if we adjust for the active gap, adjust for the business cycle, it is the most expansionary fiscal policy the u.s. is pursuing for the past 30 or 40 years. that will be bad for the u.s. tom: much more to talk about.
of the consideration of british industry has calls on the government to make our green decisions if companies turn to their plan b and leave the country. her --ehic was big to will speak to her and she joins us. we do not have the details of what the deal will be ahead of the transition and we also do not know that all the doom and gloom forecasts that experts were saying before the brexit referendum vote has not happened. >> that is right. she did call the transition deal the you and u.k. agreed on as common sense. there is a lot of uncertainty ahead. economy,omes to the they weathered brexit that we have seen consumers hit since then. growth has come down and inflation has been rising. the rise has softened lately but
well above the boe target. a hit on consumers and uncertainty for businesses ahead. the biggest banks have not been waiting around to see what might happen before inflating their contingency plans. when it comes to what happens over the next nine months, so much for theresa may to focus on and today she is going on a tour of the four corners of the u.k., scotland, england, wales, northern ireland. -- win the country is more divided than ever. francine: what does that mean for the possibility of a second vote? and what is labor doing? the labour party leader has had a tough week, jeremy corbyn. >> absolutely. labour has been distracted by the scandal and controversy around potential anti-semitism
in the party. something keeping them occupied, particularly german corbyn over the past few days. -- jeremy corbyn over the past few days. in terms of the second referendum, it is a possibility even though more of an outlier's an area with increasing calls oncehat, particularly from the next person in the labor party. i will ask carolyn fairburn later. labor may heard that try to tweak some of the brexit legislation so that there will not be a no deal scenario at the end of all this. tom: i can go back to henry the sixth or maybe charles the first with the show at the royal academy. let's go to william gladstone who had to see the troops. how will the prime minister be greeted if she does her walkabout across the united kingdom? >> that is a good question.
we have done -- bloomberg has done investigations into how divided the country is at the moment. it is a difficult question as to how she will be greeted in different parts of the country. we do know that scotland and wales are not particularly happy with where we stand at the moment in terms of -- she might face tougher questions in scotland and wales. also, northern ireland, one of the intractable issues with no solution is what will happen over the irish border, whether there will be a solution before britain exits or they will try to find something. she will face concerns over that in northern ireland. perhaps your easiest audience will be in england, but even then in london, she is meeting with polish residents who live in the u.k. a big issue is what will happen
to the eu citizens after breakfast -- exit and they may have difficult questions for her. brexit and they may have difficult questions for her. let's get back to unicredit. guilt, still playing out in the currency? >> it is a tale of different things. brexit. sterling reacted enormously at the beginning. it is pricing a right now some of the brexit risk premium. our view is that cable will draw higher but largely a dollar story. to 150?: punchy.oks a little
i would not rule it out in 2019. against the euro, a different story. because i largely think there is a big misperception about the data in the u.k. -- date and u.k. -- data and u.k., people say it has been much better than people forecast prior to the brexit referendum. the reality is that the growth forecasts for global growth were much lower back in 2016 and 2015 for the next two or three years. u.k. data, shows the u.k. benefiting from global growth upswing and brexit has not happened yet, borders are still open and there is still the customs union and single market. the alpha, the u.k. specific factor, is negative. you see the u.k. gdp growth at
the lower end of the g7 economies where it stood at the top four years ago, five years ago. productivity grew -- growth has lagged. this is not happening in the u.k. the idiosyncratic factor remains negative. tom: this is a good jump off point to an interesting chart in the bloomberg, trade weighted sterling. 1992-1993,ortant, the search facet nature that's sarcastic nature of the sterling weaknesses. it is an amazing triumph of sterling stability to see where we are. which way does this break as brexit occurs? do you assume weaker sterling? all relies on the nature of the brexit we will have.
the central scenario is we will have eventually a relatively soft brexit, which means sterling will go on a trade weighted basis. on the upside. i do not want to overemphasize the potential because i am very mindful that a lot of the trade weighted index has to do with euro. i am bullish, constructive on the euro, largely because i see flows coming from the rest of the world, including the u.k. back to the eurozone. ,s long as we get a soft brexit we may see upside in trade weighted sterling but i would not bet it would be very strong. francine: we have a couple of days off because of easter, looking at speeches, i spoke to someone who is pro-brexit leader of the conservative party and said we may not get a lot of details. before the 11th hour. what does it mean for an
investor? you do not know whether the parliament will vote for it. >> in terms of currencies, eurosterling trace in the 87, 90 range with upside bias. in table, you still have some volatility reduced by the headline risks. at the same time, you will have the weak dollar factor, which means cable will push either. i do not think we will get concrete details until the 11th hour, which means the market is still going to keep on pricing some possibility of a cliff edge. every time the user government dials down -- u.k. government dials down it stands versus the european union, sterling rallies . largely because of the fact that the market makes it further to price out the possibility of a cliff edge. every time that happens, i would buy sterling. francine: let's go to tokyo
where we are joined by goldman sachs japan vice chair of equity strategists. when you look at the currency trade war,trump's australia and defense currencies will be the collateral damage? the currency that here in japan has taken some of the brunt of the friction we observed around the world. i think you have to keep in mind that there are fundamental factors that have been driving the end of board. the fact that japan's credit account has been booming. the portfolio balance has been very politic -- positive with all of the investments the japanese investors have made abroad. look at all of the tourism that has been exploding in this country, inbound tourism.
those three legs of japan's current account has made it explode. well about 4% of gdp, historical highs. nobody talks about that. look at the other side of the u.s. dollar exchange rate, the u.s. with its huge corporate income tax cuts, what does that due to the fiscal balance and the current account balance there? not as shocking to see the yen appreciating as much as it has, yes, trade friction is part of it but a backstory vis-à-vis the fundamental external balance equation. what is the chance that japan enters into a bilateral trade deal with the u.s.? the desirems to be out of the u.s. government right now. remember, several months ago, when vice president mike pence came to japan, he met with the vice prime minister at the time,
that was the gist or the subject of the discussion back then. the plan was to launch the discussions from that point with the longer-term aim of achieving some kind of bilateral free trade agreement. hasou look at korea, korea a deal with the united states, something japan is looking to. it was originally in a discussion with the united thatmtppvolved, with -- tpp, the next discussion is bilateral. japan would perform a multilateral arrangement but given the desires of the u.s. government right now, the discussion may continue on a bilateral front instead. tom: you have such an wonderful pan asian view. i want to quiz you on how the members of tpp, including the dominant members, how they are
taking the trump trade policy. we have spoken in recent days to mr. navarro, wilbur ross is coming up later today for us, and theoss-navarro trade policy the president is comfortable with, how is it playing in japan and other tpp partners? well, i think it is pretty clear in many of the public statements coming out of the japanese government that they are disappointed, frankly, with the decision by the u.s. demonstration to pull out of the tpp negotiations after months and months of painstaking negotiations along the way. with that decision, leaving japan in the lurch with the remaining partners, japan's hope thatthey still
they can forge ahead with tpp without the united states and at some point the u.s. will come around and join. right now, without that it has been frustrating. you have the steel and aluminum of that, japan was not exempted and they are not thrilled about the discussions going on as well. i think the japan front has been disappointed so far and what they are hearing coming out of washington on the trade front, especially bilateral with the united states. tom: as you touch upon, it is the idea that the debate is fermenting in washington. does japan as the dominant partners of the pacific rim, do they just wait out this president? is the idea the ancient stereotype of asian patients. you just wait this guy out? is that the attitude?
that is not an official attitude. the idea is to continue to stress and emphasize the desire to engage, not only economically, but geopolitically. i see on the headlines right now that there are potential meetings taking place, bilateral between the united states and japan and the south korean president may meet with kim jong-un. there is a lot of fluidity in the geopolitical arena. it is hard to separate out and say, that is their attitude on trade and therefore we cannot engage him at all and we need to stay quite. impossible for any strategic alliance partner of the united states and asia to sit back and wait. side to from the japan continue to engage with washington and this demonstration will continue in my view. francine: our international --
our international investors breathed enough on the scandal? i heard half of the japanese people think prime minister abe should quit over the scandal. going? where is -- it is he has not been directly implicated so far and what would it mean for stock markets? >> we have seen what it meant for the stock market because in tandem with the hit that the cabinet approval rating has hit in recent weeks, the stock market has declined pretty much in tandem with that. yen is appreciating so not only the political uncertainty that is caused a market back but exacerbated the town. bowls, -- poll say there is disappointment and upset people. politicsd of the day, and japan are difficult to predict. as long as the sport rate is above the 30% mark, you range it pulls from 30% to 40%, if it
stays in the territory through september, when the next presidential elections are due, and if he can squeak by with the reelection, he is prime minister until 2021. too early to call right now what will happen in september. they're working hard to make sure this issue dies down. it did last summer. that is when it first directed into the market -- you rubbed it into the market. market.ed into the most foreign investors do not understand what is going on and why it is a scandal as he did not receive any money. it is consultative but everybody sees the support rate and watches the stock market and think something is brewing that does not smell good. it has been a risk for the market and will linger for the next several weeks. tom: thank you for being with us. of goldman sachs.
appreciate your efforts. a data check, a really interesting surge of features, up 12 with the euro 123.10, crude oil $64.53 per barrel. stay with us. this is bloomberg. ♪ ♪ new curve flattening and a new volatility. can chairman powell raise rates four times into a new lower terminal. 10 year yield, instability. owning equities, we consider the courage needed with kathleen fisher.
all the presidents men, all of them exit, is attorney general sessions the last man standing? .his is bloomberg surveillance live from our world headquarters in new york, i am tom keene and francine lacqua is in london. left because of, optimistic, -- let's be positive and optimistic , the chart on unemployment a success/ . francine: it goes back to germany. the composition of the german economy, their focus so much on exports, if the you that's if the eu were not accept from the tariffs donald trump wanted to impose, germany would take the most -- biggest hit. tom: an extraordinary story. the first word news with taylor riggs. >> the leaders of north and
south korea have agreed to meet face-to-face on april 27, the meeting between kim jong-un and moon jae-in will be the first in 11 years. leaders of the do nations, still technically at war, have only met twice since the peninsula was divided in 1948. it could set the stage for a similar meeting between kim jong-un and donald trump. u.k.tives in the investigated the poisoning of a former russian spy and his daughter believe that first came into contact with the nerve agent at their home. the metropolitan police said specialist them identify the highest concentration of the highly toxic substance on their front door. at comes as the friends of them said they should be allowed to die as they are in a coma in the hospital. donald trump has said he will replace veterans affairs secretary with a rare admiral. -- rear admiral.
this is among a wave of resignations and dismissals on the trump team senior ranks following the departures this month of economic advisor gary cohn, national security advisor h.r. mcmaster, and secretary of state rex tillerson. the bank of israel's governor has warned that the possibility of a full-blown trade war between the u.s. and china is worrisome. for global economies. she may be common -- comments during an exclusive interview with bloomberg. >> i think the potential development in reducing the free making higher barriers to trade, something that should worry everybody. and i think that, if we go back from free trade, it is bad news for the global economy, and bad news for small, open economies to -- open economies.
>> global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: equities, bonds, currencies, commodities. level -- features of 11 -- futures up 11. the curve is flattening. the next screen. stronger dollar. handle ford, a 2.99 a couple coffee. turkish lira was 4.01. bitcoin cannot find a bid. i am dying for bitcoin. francine: i am dying for a cup of coffee. european stocks on the upside. a little bit. a mixed session in asia and equity markets seem to be
limping to the end of a tumultuous quarter. treasuries edging up and dollar drifting lower. em climbing and crude stabilizing. tom: this chart matters to equity participants, bond markets, maybe to chairman powell. the presidential election. joy, no. massive curve flattening and we breakdown under this -- thanks to someone who nailed the call. new curveote of the flattening. when dean responses curnutt comes. he looks at the dynamics of volatility. the new volatility. we know it is correlated with ratings. we love it. translated, is there a new
volatility for market pros? i think so, back to the end of last year, we could barely get a 25 basis point deal moved in the s&p and now we are --veling in a 2% intraday tom: is it a precursor for instability or is it normal new volatility? >> they could be. -- it could be. tom: give me an answer. >> we will know based on the price action, when markets are in transition, we had six realized volatility for quarter for in 2017 and 20 now. you are imposing a shock to have people take risks. you have tripled the daily realize volatility. that is disruptive as market participants try to right size their portfolios exposures to a new normal of -- new normal. tom: we do regret is before a long weekend -- we do greek
letters before a long weekend. gamook, beta, delta, vega, a?, are we all gamm acceleration and convexity? >> let's take 2017 as one of the uniquely emotional market. no gamma. vix at -- average 11 for the year and the high was 16. volatility was way too expensive last year, relative to the lack of movement. you had sellers of volatility banking with premium and you have a 20 vix, which is more worth it because markets -- the movements are justifying the level of volatility. tom: memorize gamma and its function, by a phrase gamma is
gucci. francine: that is pretty good, my education was lacking but i did study greek. will we see more volatility after the easter holiday? >> it remains to be seen, you have tengion on the bedside. -- tengion on the fed aside. with the market risk meltdown that changed quickly and that change was rates were rising and people were concerned about inflation and the fed response. that eased off and we got better inflation with powell good in his first go-round with the press conference. we have new instability. we have tariffs. a factor driven rotation where people are very worried about the risk-taking in the bank stocks -- fang stocks over the last couple of years. underlying this is a very powerful, late stage fiscal
response, a tax cut, big budget deal, and you may have increasingly robust corporate profits. this could blow over and people realize there is no alternative to being in equities. the rightsizing of portfolio exposure amidst a quickly changing environment is tricky. francine: you are competent global growth is ok, u.s. growth is fine, we will not suddenly see a turn lower and 12-18 months? >> that is a little bit longer, i would say 6-12 months we should be confident in that. all signs point to a u.s. economy that is doing quite well. and a fed that does not have a tremendous need to have to push forward in terms of accelerating rate hikes. remember, the markets in the economies -- and the economy are two different things and what is good for the economy may not line up his equity with market and market right now are in the
dean curnutt is with us. vix and here it is when it was easy. every fundamental portfolio manager is a genius for x number of years and things changed. we are at a new higher level. anybody could see that. your world, fundamental guys laugh at, it becomes really important. this is the tactical reality of fundamental managers. is that where we are, active management long on the buy side really cares about your greek world? >> that chart is striking. and how to find the changes were on a daily basis. suddenly, normally -- not only does it go up but the range, the rate of change volatility increased. tom: this is a gorgeous chart.
i will put it out on twitter for radio london and everybody else. how to fundamental -- do fundamental pros use your work? cfa institute, the exams are coming it is over there, away from us. everybody uses it, right? >> a survey recently asked portfolio managers what their hedges look like. most everyone is getting them from diversification. diversification is a risk mitigate or. -- mitigate or. not only does volatility rise for correlations rise as well. diversification is challenging and hedging comes in and the best hedges over the last 10 years post crisis has been to own treasury. that is in flux. people are concerned that the almost free lunch of owning duration, which rallies when stocks goes down, that has
stopped working and the correlation between stocks and bonds -- tom: are the parity guys at risk? >> a lot of that is overblown to some extent. not all of these strategies are painted the same way but yes, it you can idea risk your equity portfolio into bonds safely and of a comes a rising bond yields are a part of the erosion of equity prices, that story changes quite dramatically. this is where macro risk advisors come in, we advise how to use derivatives to hedge. there is missed selling of derivatives and options strategies, you have to focus on, number one, what are you trying to a college from a risk management standpoint. you can structure the option trades in a number of ways, based on how you specifically are trying to mitigate risk. francine: where does the yield curve go from here? let me bring up my chart, similar to the one tom had.
note the lose predictor is flatter yield curve does have with respect to recessions. predict ability and less good at predicting equity prices. there is a looser translation and sometimes the lags can be quite long. if you look at the flatter yield curve and overlay interest-rate volatility, there is a vix equivalent called the move index , the flatter curve is correlated quite well with lower interest rate volatility. now, this is for tenuous, but the flatter curve is associated with a fed hiking path that is gentle enough and they are doing it because they can. because risk assets are well behaved. that can go too far. we will see.
at least for now we think that the communication from the fed continues to be controlled. it is on a little bit on autopilot. friends two inflation that the market care about, non--- the cpi, those were both market friendly, benign enough for the market to take a little bit of a breather from the late january concerns they had around rising wages. francine: thank you very much. dean curnutt of macro risk advisors. theresa may is on your of u.k. to gauge the mood of the country. businesses for regarding brexit is. best brexit. -- brexit. carolyn fairbairn has called on the government to make a complete decision before britain leaves. nejra cehic is interviewing the
head of the cbi. >> thank you. theresa may is around the country and i am at westminster with the director general of the cbi, carolyn fairbairn. great to see you and good morning. a year away from the u.k. being scheduled to leave the eu, our business is feeling more optimistic given we do have a transition deal or is there to much uncertainty? >> a bit of both. the transition deal was a very welcomed step forward for businesses. the ability to have breathing space 21 months is very good and we think it will help businesses take their fingers off he contended to planning and keep jobs and investment in the country. but there is huge uncertainty. when i talked to firms across the country, they are asking three questions, what will happen to customers, orders, holdups.
what will happen to regulation, how line will they be with european union? and on people, we do not know the future immigration model. the next six months will have big decisions that will matter for the next 30 years for firms. >> firms are starting to think the finger a contingency plan and ebay giving on said yesterday that the transition is business as usual for. extentndustries, what are firms still and limiting these contingency plans? >> if you are in a highly regulated sector like banking or pharmaceuticals, you cannot rely on anything that has uncertainty and we have not gotten equal certainty. many of the organizations are having to go ahead with contingency planning. other sectors like manufacturing who can take a longer-term view and rely a little bit more on what looks like a very strong promise, they have been able to make some changes. different by sector but we think
it will help a few sectors. >> there is still uncertainty about what a trade deal may look like between the u.k. anti-e.u. more uncertainty now -- and the eu and out more calls for a second referendum, for businesses in the u.k. come is the review that the second referendum would be good if the outcome was different? or bad because more uncertainty? >> the businesses i speak to our former practical than that. they want to get on with knowing club will happen, we have gotten these very tough choices to make. customs is a big one, what would the solution be on northern ireland. any more uncertainty will not be helpful. the big message to the government as let's get on and make the hard choices. and take on the decisions that matter. >> you keep pointing out how important customs are two businesses. the irish border, this remains
an intractable issue and it is difficult to see how it will be resolved, whether it will be fud how optimisticged. is there a resolution and are they planning for a scenario where it is not? >> this is very urgent. it is one of the first issues that has to be resolved before we can move on. or businesses, it matters as there are 200 roads across the border, agriculture businesses are shipping their products across the border all the time. thousands of trucks per week. we must get it resolved. the problem is, although technology might over time solve the issue of how you have no border in ireland, we do not see how that will be solved in the time frames were talking about. businesses big message to government, we are here to help and we will try to resolve the issues with you but let's get them sorted out as quickly as possible because it is jobs and prosperity at risk.
>> when you spoke at bloomberg recently, you highlighted three areas that needed to be worked on, regulation, data, and people. data in light of the cambridge analytica scandal. our business is in the u.k. the deal and data, the wide range of industries, are they making any changes or contingency plans given the scandal and the uncertainty of where they will stand once the u.k. exits? >> a massive issue, not just the issue with cambridge analytica but in general, data is the lifeblood of our economy, not just tech firms, retailers and manufacturers use data day-to-day. huge audience of data flow to and from the european union. we have not gotten an agreement of what the data flow will look like after we meet the european union -- leave the european union. so fundamentally important. there will be issues raised by cambridge analytica.
but this issue existed before and we will need to resolve it over the next six months. >> there has been research done by the government into how concerned employers are post-brexit, in terms of immigration and where we will stand with that. one of the issues you highlighted -- how are firms dealing with this and the uncertainty around that? >> the issue firms mentioned to me first. we have talent shortages in the u.k. greater than at any time since 1974. we are growing and we need new skills. the fact that there is no certainty around the future of immigration model is hurting business. --have uncertainty in the eu attention needs to turn to the longer-term model. we need to have preferential service in the european union because so many of our businesses are interconnected. when you are a service economy like we are, trade is all about people.
the quicker, the better for that solution. >> is there any concern in the business community that we could have a no deal scenario? >> it is a possibility but it feels as though it has receded. one of the bigger worries we have now is no decision. the hard choices are put off and he can escape down the road and we can see the impact uncertainty is having on investment. companies are putting things off. we need decisions and we need them quickly. >> thank you so much, carolyn fairbairn, director general of the confederation of british industry joining me at westminster. tom: thank you. fascinating to me to know where we are. you remember the day in june of 2018, youhen in 2017, wonder, where we will be one year from now. i have no clue. francine: a lot of people do not have any clue and when you speak to chief executives, and carolyn
fairbairn laded out, 60% there. 60% of for will happen we know. the danger from if you plan for the worst as a team executive. -- as a chief executive. ,om: much more coming up today on washington, the debate of trade, a wonderful conversation with kathy of goldman sachs and we get further perspective from the secretary of commerce, i believe he still has his job this morning, wilbur ross will join us in the 8:00 hour. we are with dean curnutt. stay with us. this is bloomberg. ♪ retail.
under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store
taylor: the leaders of north and south korea have agreed to meet on april 27. the meeting between kim jong-un and moon jae-in will be the first summit in 11 years. leaders of the two nations which are at war have only met twice. it could set the stage for similar meeting between kim and donald trump. in the u.k., detectives investigating the poisoning of a former russian spy and his daughter. they first came into contact with inner agent at their home. -- the highest concentration of the toxic substance on their front door. that comes as friends said they should be allowed to die. u.s. president donald trump says he will replace david shulkin
with ronnie jackson. is -- shulkin's comes amid a wave of resignations. departure of gary cohn, h.r. mcmaster and secretary of state, rex tillerson. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. tom: a million years ago, a great songwriter and a song about a rose garden. lynn anderson made it and i know mis-hit. hit.de it an enormous it is pretty vacant, right? kevin: it is sad how quickly that revolving door and washington, d.c. is. the big takeaway is this is the
president that says he wants to shake things up. you have seen this on trade with the assent of peter navarro in the administration with the likes of steve bannon on the outs. tom: we are thrilled to have our chief washington correspondent here. just the issues is when does the republican party say enough? is he getting any messaging from republicans? get some stability? kevin: i would say that this week mitt romney who is running a senate reelection campaign went to the right of president trump on the issue of immigration. there is a fascinating tension of folks trying to figure out where exactly the base of the trump movement is and the trump coalition is, especially on something like trade and immigration. they are not in the middle anymore. tom: can be meant with only that
base just can they mend with only that base. kevin: no. he saw that with the special election. you are seeing just how motivated democrats are to get to the polls. it is a different kind of democrat. it is of interest democrats and that tension would have a lot of clinical and policy implicate -- a lot of political and policy implications. it is not going to be far left progressives and that. -- in that. onncine: i was reading up the implications of mr. mercer. republicans and to the people of the right, do they have anything like cambridge analytica to analyze the base to target messages? kevin: democrats and republicans are using social media companies. former top clinton campaign advisor saying that they believe
they did everything by the book. there a lot less pressure focusing on that given that she is not an office. on the flipside we should note mark zuckerberg is likely going to officially testify once lawmakers return from recess. this is a start of a broader conversation that folks in washington are going to be having. i talked with a lot of silicon valley lobbyist types inside the beltway and they are just beginning to realize the pressure they are going to be under your get ready, because it is just beginning. it is not going to be a flash in the pan. it is going to be years of this regulatory landscape. francine: what will happen to the white house chief of staff, john kelly? he has not been by the president tsai. kevin: we have met heard from him as much. we talked about the comings and goings. i can tell you that john kelly
has tried to continue to be a stabilizing force to president trump. whether or not the president is speaking to him, there have been reports. on the job very much come on the case trying to be that stabilizing force. tom: i have eight ways to go here. what is the goal of general kelly and others this weekend to assist the president to a calm lmer and more stable monday? kevin: i am not sure the president wants that. he thrives on this type of energy. it is something that will always -- guy he wasthe same when you first cover the campaign? kevin: no. foreign policy events always change.
also the type of folks he was contacting has evolved. tom: kevin cirilli, thank you's much. with us here -- thank you so much. kathleen fisher of alliancebernstein, they are private wealth management. are you acquiring equities this morning? are you under the table all-cash? can there be a courage to own equities? kathleen: we are very much owning equities. looks.always using these these tests this is going to be a small lift down the road. the economy is still strong. things are still good. we are looking at this potential train wreck of all the things that could happen. all of the distractions. we still have to remember that things are still good. we still have low rates, low inflation. the question about how bad thingsget, any of these
come to fruition is one we are not going to know for some time. it makes sense to stick with your allocation. kathy, i will note the game is public he but do you think the effect is into bad things happening or is it going to look up? kathleen: we argue both sides of it. things are good. markets and just as desperate just as they think they will -- just as we think they will. if we do not have problems and things calm down at all of the regulations do occur slowly for the internet stocks, you could have a very decent market. shortsighted to make a dramatic action. we are going to be very data dependent in the months to come. francine: what are you most worried about? is there any data point could
under won't the market? kathleen: we are all looking at inflation -- could underwhelm the market? kathleen: we are all looking at inflation. inflation often surprises us. that is something that would shake a lot of confidence in the market. there is no question there has been damage to sentiment by the array of things we are talking about. derivatives and the great letters. this is a bear market chart. the bear market is down near 21,800. we are elegantly on the 200 day moving average. i'm going to suggest to you that not too many people are looking at charts. they are worried about fundamentals. translate the have the courage test translate how you have the courage they've have just to be in the corrective market -- to be in the corrective market.
we look at charts of all sorts. we think it is a much better way looking buti am not the wonderful teams at our firm focus extremely on these things and are looking at it all the time. we do think we are at a point of correction in the market. still, relative to history we have to remember that fundamentals are quite good. tom: gamut is the last call of the bar at the trump hotel. you always learn something when you come on the show. huge institutional fundamental research into the use of all of this blabber we talk about everyday. turmoils. fisher on the you see in the market. kevin: over a long people of time, fundamentals rule the risks.
duringn't mean that material period, they can become dislocated. there have been periods where market sentiment erodes the risk premium across different asset classes. he goes way up and people are forced to deleverage. when we come back -- where we come back to is 2017 was so low volatility, 6.5% realized volatility. we haven't seen some thing so calm and so long. mark to still living and breathing and they invite trade that capitalize on low volatility and this is where we are seeing the turbulence is about trying to right size portfolios. one other thing i wanted to comment on is predicting the future. the fed has failed to call a -- theyn in any year have had no success. it is difficult to see the future. we've got a lot of moving parts.
this is where we come back to risk management. you've got use option strategies to hedge. tom: karen -- i love this, kevin cirilli, dean curnutt and kathleen fisher. we are thrilled that peter navarro and wilbur ross coming up later. another voice in the white house charm offensive. kevin hassett is in the house, 9:00. really looking forward to catching up with the arch optimist. please they with this. -- please stay with us. this is bloomberg. ♪
new automaker that traces a single stock. a deal with in the current alliance between the companies and marry them as one corporation. the chairman of both companies is thriving -- driving the negotiations and what run the combined entity. the japanese carmaker has a 50% stake in its french -- 15% stake in its french counterpart. -- the cash and stock deal of values $5.5 billion acquiring any extra -- comments the chicago-based companies operation as cme office derivatives on many of the same things. softbank is edging closer to a deal to buy a stake in swiss three that would just swiss is holdingwiss re-
talks to buy 25% stake. the acquisition would dispense the japanese mobilephone carrier . something declined to comment. a swiss re-developer was not available to comment. deutsche bank is conducting a review in its business and overall. john cryan is looking to restore profitability. -- to is examining cash determine if they can win back market share brexit. he saw to squash rumors he may be ousted in a bank memo. that is your bloomberg business flash. francine: for more on deutsche bank, we are joined by stephen. we have covered deutsche bank everyday for the last 10 days to see exactly what happens to john cryan, the ins and outs of why
shareholders are not exactly pleased with the stock. what can john cryan do to help with the investment bank? this is the unit is the largest revenue at deutsche. >> they have been trying to restructure this investment bank for years. what this new review is doing is look up where they can compete. in the years they were paying this conduct fines, cutting away staff, they were falling further and further away behind wall street. it is the same dilemma that barclays faces. can they grow those misses guest: those businesses where they can make a return -- those businesses where they can make a return? we had this strange memo from john cryan saying he is committed to serving the bank. is that a sign he may be on the way out? he wants to stay? .> you can read that into it
the person who should've said that moment is the chairman who is in charge of john cryan's fate. it is a bit strange it came from the ceo himself. he sent out memos to staff himself when they cut bonuses. it is clear there is a severe morale problem in the bank. tom: yeah. >> -- tom: the dynamics of it. i want to talk about the deutsche bank nexis between london and new york. if they have to make tough geographic decisions, do they stay in build new york as part of their global wall street? or do they hunkered down and bring everybody back? >> that is what john cryan is looking at now. he took charge of the u.s. unit.
it would be a good time to have in your business. businessave a new york . if they are too small and cannot compete, they are not good to make enough money to justify costs. we will see deutsche bank retrenching for the back into london and even more people in frank for. just in frankfurt. -- in frankfurt. tom: did they bring -- pull cash out of new york and bring it back to london? stephen: they haven't started a full retreat from the u.s. yet, you can argue the smaller and specific they get, the more clients they will lose. .hey are stuck in a hard place they were slow to make the necessary adjustments after the financial crisis. may be in an untenable position they cannot get out of. tom: stephen morris, thank you for the briefing.
intowill be eventful april. we are going to come back with kathleen fisher and dean curnutt. --s fisher demands i put up ms. fisher the man's i put up just demands i put up -- demands i put up an optimistic chart. there is beautiful kathy fisher. you click on dean curnutt's wisdom and there is a gorgeous gamma.f gamut -- stay with us. ♪
miracle rally of american capitalism. it is tough to bet against. kathleen: i was amongst clients who are buying stocks. we're not going to on the same companies three years now as we own today. that chart shows the winning nature of capitalism. more companies are figuring it out. as the economy changes and that is why you own stock. tom: the president's comments on amazon where he is really afraid as are a lot of people of creative destruction. that chart is the ultimate creed of destruction chart, isn't it? westinghouse is not a part of our discussion. kathleen: amazon is fascinating because when are they going to have an earnings going forward? the bill question is how will this translate to sustainable earnings growth?
that is what investors are looking for. francine: dean, what are you looking for? dean: i was going to point out that if you start at the 10-year yields at 1980, you would've seen this 35 year, link the bull market in bonds. one of the big questions for equity investors is, have we finally reached the point at which bond yields are starting to rise? can rising bond yields coexist as rising stock prices? the answer is yes, but to the extent that stock markets have been a function of discounting future cash flows at low rates, that does tend to introduce some friction into the equation. we are keeping an eye -- not just the path of bond yields but the speed at which they move. that is a part of the risk dynamic. francine: dean, you don't accept
the correlation between bonds and equities to go back to what we had pre-2008? dean: it could. it is in the process of normalizing. post the financial crisis, we had this risk on/risk off response, very negative correlation between stock and bond prices. if you go back to the 1980's, he saw a very positive correlation between stock and bond prices. -- you saw a very positive correlation between stock and bond prices. we see more of that, potentially happening but these things tend to take time. tom: caffe, what is your prediction on these of cash? -- kathy, what is your prediction on the use of cash? kathleen: it is very idiosyncratic. that is were active management comes in to play. onre is m&a activity going
and a lot of it is going to buy back. i want to say one thing. we all know pes are not going up. that is what is interesting about this market. the big recovery was boosted by pe rates going up. that is over. that is like earnings matter so much. tom: that is a good way to leave it. this has been wonderful. kathleen fisher, thank you so much. we are going to migrate and continued the session and get you ready for the weekend -- continue the discussion and get you ready for the weekend. the fx report, the yen stronger. ♪ retail.
under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store
the tech sector takes a beating this week but overall analysts still making the bull case. welcome to the jungle. amazon loses $53 billion in market value wednesday after report president trump is "upset with regulating the e-commerce giant." the white house says there is no truth to the story. shareholders get whiplash. tariff toetapping. everybody waits as the white house lifts tariffs on specific chinese goods. welcome to "bloomberg daybreak: americas." i am julia chatterley. with.ve me to deal let's take a look at what is going on in the markets. call it the wild market west yesterday welcome to the jungle today. you get my drift. are we there yet? we are almost there is where looking at the month-end
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