Skip to main content

tv   Bloomberg Markets European Open  Bloomberg  January 18, 2021 2:00am-4:00am EST

2:00 am
anna: good morning. welcome to "bloomberg markets: european open." matt: good morning. welcome to -- [laughter] anna: apologies. matt: we both welcome you. glad you are back, anna. it's a great day to have you back, kicking off this week. the markets say don't expect a weaker dollar. the greenback gains amid reports
2:01 am
that janet yellen is set to affirm a market determined dollar level. futures point lower. u.s. markets are closed for martin luther king jr. day. the cash trade is one hour away. here are your top headlines from the bloomberg terminal. six point 5% growth. china's gdp hits pre-pandemic levels, making it the only major economy to grow in 2020. president trump lands a final hit on beijing, halting the huawei supply chain. germany's cdu selects the merkel loyalist as the new leader of the party as the chancellery is set to be considering a nationwide curfew to curb the spread of the coronavirus, plus it's a busy morning for dealmakers as private equity firms and global infrastructure partners match the offer for french water company -- tie up talks with tariff war -- with
2:02 am
carrefour are tied up for now. we see red arrows. we don't see a lot of size here. although some decent direction. you do see the dax futures are down about .3%. in terms of what you see on u.s. futures, as the nation prepares for joe biden's inauguration, red arrows here as well. s&p and nasdaq futures both down .2%. dow jones future is off about .1%. anna? anna: apologies again after that inauspicious start. we are normally much better trained on this program. let's take a look at what's going on in the markets right now. asian equity markets under pressure, down by .4%. you will see a jump in the chinese market, but that's not the whole story. yes, the chinese market responding to the better data we
2:03 am
had out of china. the chinese growth data. we will get to that conversation shortly. there is still a right to summation tech businesses and we see that weighing down on the kospi, which is down by 2.3%. what action put the trump administration take against broader asia tax in the last few days even if the biden administration can -- that is something weighing on korean markets. interest and conversation around the dollar. really interesting around the dollar, what janet yellen will say about the dollar. there were reports that should be market determined. what does that mean versus previous policies of strong dollar? it is martin luther king day in the u.s. so no treasuries and stocks will be trading. we saw yields go over that 1.08% level. european equity futures, u.s. futures, they are lower. that is as investors are waiting for the inauguration speech of joe biden who was sent to the u.s. presidency on wednesday of
2:04 am
this week. let's get into our market conversation with mark cudmore. our managing editor in singapore. the inauguration could hang over markets to some extent on the fears of tension and violence. it could be something that the market watches or is distracted by to some degree, mark, but really, the market story should be overnight that the strong chinese growth data -- how is that being received? mark: that's absolutely right. distracted, i think that's right. the inauguration will be distracting us this week. it will dominate the new headlines. it's not clear that it's a market story. it's a tail risk it does become a market story. fear about severe social unrest. it does seem like that might be an anticlimax. it's very high for there to be real problems. security levels so high, that might not be a news driver.
2:05 am
we have now had so much expectation built into the biden plans, we have got a lot of details. it's hard for them to suddenly hit with a bang now. is the fact that we just priced in all of that news already. there is a chance of the impact on markets from a biden administration. the two things you are watching around the inauguration this week, you are right. we should be focusing on the china data, which was overall mixed. we still care about the yield moves and the dollar. matt: the importance of the dollar cannot be understated. what does the janet yellen story mean to you? we are expecting her to confirm that she will not be attempting to manipulate the currency, which i guess is good news. she is going to affirm a market determined u.s. dollar. would a u.s. treasury secretary
2:06 am
do anything else? mark: i think this is where my colleagues had a good take care. the idea that she has removed the tail risk to reiterate the strong dollar policy so there was a risk the u.s. might return to strong dollar policy and therefore, given the market is social, it will squeeze a lot of the complacent positions as a real shot to the market. what she said was more likely to the be -- to be the base case expectation. it's a reassurance for the market and that's generally good news. that said, we have not seen the market trade off that much. the expected reaction if you remove the tail risk of a much stronger dollar would be a weaker dollar and the dollar is slightly stronger this morning, but of course, it is a u.s. holiday. anna: i am certainly seeing some fx strategies coming up with that similar conclusion to your colleague, simon flint. it does seem to be something that has permeated into market and gain. very interesting to see very little reaction to that at this point. we will keep an eye on it. the question of the day,
2:07 am
speaking of things emanating, how will fresh fiscal stimulus affect emerging markets? we have seen movements in the dollar, and some suggested the stronger dollar that might undermine emerging markets. rather, that might change the narrative around emerging markets. how do you respond? mark: i think have stimulus feeds into emerging markets, it will be more of a question of how stimulus -- how quickly it fields into yield reaction. stimulus should be good for growth. it's whether the impact on growth is more relevant than the reciprocal move or whether yields react on the concern around the growing deficit. i think it's really -- it's the stimulus to emerging markets. there is the interim step of the growth-yields trade off. it does appear that they move --
2:08 am
it has been very steady or gradual. it does very long auctions and there's massive demand from around the world showing that the world wants to buy treasuries and yields and that provides a little bit of a market cap to a move higher. at the moment, we are seeing the good type of yield rise. brca 1 based on growth but they are not running away, not yet destroyed markets. that might change at some point. as long as the good yields rise, it means it's good for emerging markets. matt: thank you so much for joining us this morning. mark cudmore, bloomberg's mliv managing editor, mark cudmore. you can check out his blog. just check mliv on your bloomberg terminal. china's growth hit 6.5%, making it the only major economy to grow in pandemic struck 2020. we will discuss that, next. this is bloomberg. ♪
2:09 am
2:10 am
2:11 am
matt: welcome back to "bloomberg markets: european open." 50 minutes away from the start of cash equities trading this morning. let's get the first word news. for that, we go back to london and laura wright. laura: goldman sachs is raising its outlook for the u.s. economy due to president-elect joe biden's $1.9 trillion revival plan. the banks economists expect growth of 6.6% in 2021, 2/10 faster than previously thought. the median is just 4.1%. germany's cdu has elected the continuity candidate as its next leader. they closely resemble angela merkel in policy and style. his leadership of the ruling party does not guarantee he will be nominated to be the next
2:12 am
chancellor, but it puts him in position for the job and gives him a key role in shaping the policies of the next government. the critic has been arrested on his return to moscow following treatment in germany for poisoning. he was met by officers as he landed on sunday. according to the state run task news agency, he was detained for violating the terms of a suspended sentence. he took the flight knowing he could face a lengthy prison sentence. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. matt, anna. anna: laura wright in london. the headline out of china today comes in the form of a familiar number. 6.5%. that of gdp. it picks up where it left off before the pandemic, making china the only major nation that grew in 2020. this leaves the full-year number
2:13 am
at 2.3% for 2020. we are joined by the cio of embark group for his early-morning source. peter, very good morning to you. a lot of people looking at this number, the strength we have seen, the unexpected strength in the chinese growth number, 2.3% in 2020, accelerating the global rise of nomura and -- both suggesting china will become the biggest economy in the world by 2028. that is not very long to wait. something that seemed distant off in our careers now seems almost imminent. what is the significant of the strong growth for the u.s. and china? peter: it is skewed. i think your previous commentator -- it has not been led by consumption. it reinforces that. it has made a difference last year. there's been a lot of debt
2:14 am
increase. government spending has increased on the back of this as well which is probably a lighter touch for the year as a whole. the trick will be to convert consumption back into where it is again to try and be stronger this year, to try and rebalance. doing this like capex and exports, and trade balances widening again. those that are not so positive in terms of the international marketplace -- again, it has interesting companies. probably the other area of interesting innovation apart from the u.s. it's hard to play for in terms of the environment in china and indeed elsewhere in the asian region. like last year, i remain pro the idea that it is still where you want to plant your flag for a two a bet -- two-way bet. asia will benefit. the third part is the growing
2:15 am
part of interregional trade. i talked to japanese managers and they have been commenting about how the area as a whole is expanding rapidly. japan is concerned about chinese growth. 20 years ago, it was what is the u.s. consumer doing? this whole change in scope, to your point, by the time we get to the end of this decade, it will be a lot less what is the u.s. economy doing and much more a case of what is the global picture doing led by china? matt: how much do you see western investors increasing their asset allocation to a country that to some extent still remains a bit of a black box, peter? peter: or a black hole depending on your perspective. fairpoint. i think the chinese are careful to continue to court that dollar flow. they of course still need it. the growth picture -- autonomous
2:16 am
economy at this point. you can make that argument for a lot of emerging markets, to be candid. it's the answers to the question about do i invest because the currency is not convertible, the capital market controls could come in, all sorts of things. absolutely so. those are the major risks always to investing outside of really western europe and the u.s., to be absolutely candid, but it's where the opportunities lie. institutional cash flow will follow with growth. you cannot deny the fact that growth is going to be, you know, asia and the african continent in the next 10 years and the growth will be elsewhere. anna: peter, do you see anything coming out of that strong growth story that you depicts fraser that looks inflationary at this point? hitting 2008 lows because of demand for copper.
2:17 am
i was also looking at shipping rates. shanghai terrazzo dan, fort -- shanghai to roster dan, -- ro stterdam, four times as expensive. peter: trade in goods prices out of asia has not collapsed this time. the pandemic had an amazing response. we averted a recession in the traditional sense of a recession being less economic activity. it was met with a wall of money, quite frankly. we have not got the same thing. 120 cars in september of 2008 and none in october of 2008. we have seen a bridge in the gap of the lost revenues, so we are 95% economy.
2:18 am
the rest of the world, some places like china, and korea as well. a credit boom in asia in many cases at the moment. the recipes for inflationary pulses, $2000 checks. and i think there is -- there are inflationary consequences and the bond yield is already beginning to tell you that. matt: you mentioned aston martin. i think of the automotive industry as well as finance has, you know, two industry groups you could invest in in the west and still experience chinese benefits from. are those the main places investors who don't want to go that far use with their money can put it here or do you think there are other groups i missing out on? peter: no, the trade is always going to be bizarre. there always ways of accessing emerging markets.
2:19 am
most growth comes from emerging markets. it's in the emerging world where there growth continues to flourish. you can go to india where there is more natural oil. it's been an exciting market. it's been one of the places to invest. there's a myriad of ways to look at the emerging market growth story. you can go to china, singapore, plenty of ways of accessing -- so without necessarily being exposed to the country itself. if one is worried about the fiscal backdrop. i think china will still grow. it has a plan and whether we like that plan or not, it is one of the innovators. they remain -- the united states is a little bit bubbly. china and asia generally. anna: we will talk about those
2:20 am
bubbles. peter toogood, cio of embark group, stays with us on the program. on the european market open, the rich are getting richer. access to financial markets chases the unequal recovery in the united states. we will discuss that, next. this is bloomberg. ♪ so you're a small business, or a big one. you were thriving, but then... oh. ah. okay. plan, pivot. how do you bounce back? you don't, you bounce forward, with serious and reliable internet. powered by the largest gig speed network in america. but is it secure? sure it's secure. and even if the power goes down, your connection doesn't. so how do i do this? you don't do this. we do this, together. bounce forward, with comcast business.
2:21 am
2:22 am
anna: welcome back to the european market open. minutes away -- 40 minutes or so away from the start of equity trading. a downside -- martin luther king holiday. asian equity markets down around .3%. fear around tech regulation spreading around, in particular, evidenced in the korean market. americans have become by some measures richer during the pandemic. those most well-off have benefited.
2:23 am
their massive wealth that can relay she and is obscuring the toll felt by all the -- there massive wealth is obscuring the toll felt by others. i wanted to continue on this story, peter toogood, because ahead of our conversation, you sent us a chart. it does look high versus history. i wonder how you think -- how you rate efforts by fiscal authorities to tackle this because this is something many central bankers have said we can't do much about. this is something that fiscal actors have to deal with. peter: to a degree but the kiwi program has been utter nonsense -- qe program has been utter nonsense, trickle down policies have been utter nonsense. the idea that qe, buying bonds, and actually, to a degree, supporting the credit market,
2:24 am
which in the pandemic had to be done, just floating money in the hope that it trickles down has never been anything other than likely to cause asset price inflation. it's back to the message of the wealth effect, which they have continuously believed, completely denying the fact that wealth inequality continues to expand, and the average worker in the u.s. still has had -- since 1998. whole financialization, the sustainable vote for trump initially -- the anger this has generated, part of it is a consequence of the response since qe, since the gsc, and qe has reached its ultimate goal, nationalized the bond market, which is an interesting place to have arrived. that's how it works in japan. the average ceo has 10 times what the worker has.
2:25 am
in the u.s., where it's a hundred times, it's not a good place to expand. matt: the idea, peter, is that central bank had no other choice than quantitative easing, and now, the idea is basically central banks and governments have no other choice than modern monetary theory. but are you saying you are worried all of this unsustainable money printing policy just leads to, you know, a breakdown in civilization? when you look at washington, d.c., and it looks like it's heading that direction. peter: it generates productive should have been directed to -- it's not quite peoples qe, but it's close to that. he was talking about it and he was right. there's ways of directing this. let's go back to some of the poorer parts of the country in this country, in the united
2:26 am
states, proper policies to address that rather than, quite frankly, a simple us to buying bonds, and having it trickle down. has not done that in 10 years in the pandemic is a separate response. it was a necessary response to bridge the revenue gap that exists. corona war bonds in the next year or two and sending all the liability to the -- which i hope you do. what is that you are trying to do to influence growth to more deprived areas? there is not been any policies for decades. keep inflation low and print money. that's not going to answer the long-term question ultimately. it's not a constructive way to approach things. there's going to be more and more anger from the average individual who has been missing out. matt: peter, thanks very much. peter toogood, cio of embarq. appreciate your time kicking off
2:27 am
what could be -- embark group. appreciate your time kicking off what could be a difficult week. our next guest says the pandemic has spurred founders to take money off the table. this is bloomberg. ♪ ♪
2:28 am
2:29 am
2:30 am
matt: welcome back to "bloomberg market: the european open." 30 minutes from the start of cash trading across europe. we see red arrows, accelerating in some places. cac 40 futures down more than .5%. jpmorgan, citigroup, wells fargo, and other large u.s. banks fell in friday trading, resulting as all three showcased warnings about the economy and muted expectations ahead.
2:31 am
joining us to discuss is bloomberg's dani burger. does it look like this is going to be disappointing earnings season for u.s. lenders? dani: certainly the market reaction does trend toward that way, but if anything, it is another quarter of uncertainty and this isn't what investors were hoping for. they were hoping for a quarter were finally we get some clarity on the economy coming back and that helping banks. instead, yes, we have $5 billion worth of loan officers being released in banks that reported but it wasn't coming from their mainstream consumer businesses. instead, things like the sale of an educational business from wells fargo or in the case of jpmorgan, something due to their wholesale banking business and we heard comment after comment from executives saying yes, we might have had consumers staying strong in 2020 because of the initial stimulus, but we need to
2:32 am
build a longer bridge. we are not there yet, and for that reason, you have a lot of concern surrounding banks that perhaps the consumer is still in need of help and loan-loss reserves can't be helped -- released to help the bottom line. anna: what can we expect from the rest of the banks? we will see other u.s. banks reporting. dani: bank of america, goldman sachs, morgan stanley. they will all report and what we are likely to see is the consumer focused banks like bank of america struggle more, the commentary you need a bridge for the consumer section to do better and the really trading focused banks, morgan stanley are likely to do better. the trends we've seen through 2020, when you have the more volatile environment, lending to better trading results. part of the reason citi didn't
2:33 am
do well is their bond trading didn't perform to expectation. overall, we should see the dichotomy between consumer and trading businesses. anna: dani burger with the banking sector, a sector we focused on last week and this week. lots of other corporate news flow this morning. laura: car for has abandoned talks on a proposed $20 billion merger after opposition from the french government. the two will look at a looser alliance, working on fuel purchases, branding, and distributions. the deal would have been one of the largest ever takeovers of the french firm by a foreign company. suez has got a day -- bid, global partners are willing to offer 11.3 billion euros for the french company. it matches the. proposal made four months ago. veolia has no intention of
2:34 am
selling its 30% stake. job openings in london's finance industry almost have in 2020 -- halved. 60,000 new roles, a drop of 49% from the year before. according to morgan mckinley, that's the lowest since 2015. the slump comes amid the pandemic and brexit. that is your bloomberg business flash. matt: thanks very much. laura wright with your business flash. the pandemic has sped up many things. according to our next guest, this includes exits from small and medium-sized businesses. founders are teen to reduce the risk by taking on external capital at an earlier stage than they previously would have done. we are joined by claire madden, managing partner of connection capital. where do you see this most evident and what does it mean
2:35 am
for the rest of 2021? claire: i think for a lot of small and medium-sized business owners, the pandemic has brought into focus just how concentrated their wealth is in one asset and that is their own business, so what we've seen is many business owners wanting to take on the role of the private equity investor. historically, transactions may have been with debt but debts for these sorts of transactions are pretty hard to come by so private equity seems to provide the answer for these business owners. in addition, pandemic driven, we saw the government schemes that have been brought in to support
2:36 am
the economy need to be paid for in some way, so there's been a lot of talk about capital gains tax being increased. for business owners, they want a lot lock in and release some of that capital. anna: it seems as if there might be reasons private equity are thinking about getting other sources of capital involved in taking money out. in terms of small and medium-sized businesses raising money at this point, is one of the drivers the exit of a founding -- well, a founder of the business? what are the other drivers? our business is coming from a position of weakness and saying we need to raise money because we are going to run out of cash, or they see strategic opportunity? claire: it tends to be from businesses that have performed very well through the pandemic. this is really driven by that.
2:37 am
there is a different market that comes from companies that have been affected by what happened last year through this year and has may be taken on some external debt, which at some point needs to be refinanced or the balance sheet needs to be repaired in order to grow as the economy recovers, but in particular for the equity relief i'm talking about, it tends to be businesses that outperformed throughout the pandemic. matt: are these assets going cheap, claire? it struck me as i was talking to some bankers who wanted to pick up certain retail chains here in berlin that they could get better deals after these businesses had been closed for 6, 7, 8, 9 months. claire: the short answer is no.
2:38 am
i think what happening generally in the marketplace and across private equity as a whole is you've got two sets. the businesses that were either unaffected last year or performed well and then you've got other assets in distress. where prices have really fallen is in the latter case, but actually, prices have really held up in the former case and good assets pay decent prices. still not as expensive as the quoted market. but certainly we've not seen a drop off in pricing at the quality end of the market. anna: claire madden, managing partner of connection capital. thank you for bringing us the story round financing and private equity for small and medium-sized businesses. coming up, merkel's cdu chooses
2:39 am
its new leader. what is in store for germany's ruling party ahead of national elections? we will get that from berlin next. this is bloomberg. ♪
2:40 am
2:41 am
matt: welcome back to "bloomberg markets: the european open." just under 20 minutes from the cash equity trade and big news in germany over the weekend. the cdu, the bigger coalition partner that ruled this country, has opted for continuity by picking merkel loyalist armin laschet as its new leader as the party kicks off preparations for september's maximal a lot -- national elections, a massive turning point for the coun try because angela merkel will
2:42 am
be finished as chancellor after holding the post longer than,, well, anybody. what does this choice of leadership mean? it feels a little lukewarm, undramatic for the cdu to pick armin laschet. >> i think that is the point they were trying to make. in the first round of the vote, friedrich came out on top, but a lot of his voters went for armin laschet, opting for continuity over a more conservative option. the thing with armin laschet is he is the merkel loyalist, he supports are on a lot of polities, pushing for a very european, pro-european track, but it will be interesting to see how he plays with the biden administration considering he
2:43 am
is supportive of the integration of huawei into the five g network and nord stream 2. anna: what does this mean for other parties vying? we know who will lead the cdu but not necessarily that bloc puts forward as their chancellor candidate. >> when we look at the two big other parties, but -- this has thrown them through a loop. they've picked their candidate and they picked someone who could be there version of a merkel continuity candidate, olaf schulz, seen as being from the right of the spd, so he will appeal to cdu voters attention only that potentially. the green is trying to present themselves as more centrist as previous -- than previously perceived, but it shows the greater likelihood of a green-cdu coalition september
2:44 am
because it looks they are more likely to work with someone like laschet. matt: it will be interesting to see how matt: -- how laschet's numbers, if they improve at all or if the cdu goes with the csu leader. what about the coronavirus situation here? we are due to be done with our locked down by the end of january. you and i could finally get a beer in person, but it doesn't seem likely, does it? agatha: it really doesn't seem likely, especially because there have been leaked reports merkel is expecting this will be extended by another eight or 10 weeks. tomorrow, on tuesday, merkel is meeting with state leaders again to discuss not only lengthening measures, but strengthening them through curfews and after a complete shutdown, other things on the table, the cdu are not
2:45 am
happy with the idea of mandating office closures. the greens have been calling for closure where possible because in a recent study, it was shown significantly fewer people are working from home in this locked down then back in april and the greens think this need to be changed for protection laws to be strengthened. anna: one of a number of countries in europe trying to figure out how this should compare to march and april. bloomberg reporter abby cantrill. here with the top stories, laura wright. laura: china's economy expanded last year, the only major nation to avoid a contraction. in the fourth quarter, rates not seen since before the pandemic, expansion 2.3%. nomura predicts china could top the u.s. by 2028. goldman sachs raises its outlook for the u.s. economy due to
2:46 am
president-elect joe biden's $1.9 trillion revival plan. economists expect growth of 6.6% in 2021, .2% faster than previously thought. goldman's estimate is higher than bloomberg survey. the median is 4.1%. a critic has been arrested on his return to moscow following treatment in germany for poisoning. he was met by officers at passport control as he landed on sunday. according to the state-run news agency, he was detained for violating the terms of a suspended sentence. he took the flight, knowing he could face a lengthy prison sentence. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. anna: thanks very much. let's have a look at a couple of m&a stories this morning. 14 minutes until the start of
2:47 am
the trading session. the supermarket train carrefour has abandoned talks with couc he-tard. they will look at forming a looser alliance and suez has received an 11.3 billion euro approach, taking the fight to veolia. joining us, our european deals managing editor. seems a flurry of european news flow. why so much opposition? why so much political opposition to the deal? >> they weren't really ready for all the opposition from the government. the key point here is there are local elections ahead of the presidential vote next year and they don't want to be seen as threatening food security in the middle of a pandemic. matt: i don't know if you just
2:48 am
saw that video, but apparently, you can rollerskate through carrefour? >> if canadians took over, they might stop that. matt: i don't know, it may train you for hockey if you can skate through the store. what would the tie up look like, assuming this comes back together? >> right now, they are looking to have a looser cooperation agreement. joint purchasing agreements, sharing best practices about the retail industry but they are rather different businesses. couche-tard was hoping they could buy carrefour to diversify. couche-tard operate circle k convenience stores around the world, a lot have fuel stations attached and carrefour, which have fallen out of favor in some countries, would help them diversify as well as enter new
2:49 am
markets in the greater part of europe as well as latin america. anna: let's switch sectors away from retailers into utility. why so interested in suez? this story continues. ben: this has been a long saga in corporate terms the last year. they are the white night helping keep suez out of the hands of veolia. on its own part, it is a private equity firm that likes infrastructure so a water company like suez is perfect for them. they may not be a sexy business, but over the long-term, based -- they throw off steady returns. matt: thanks for joining us, ben scent, our european deals editor. thanks for talking about the tie up that took up so much attention last week and may occupy our time.
2:50 am
coming up, a look into your stocks to watch including bt, facing a lawsuit over claims of overcharging customers. this is bloomberg. ♪
2:51 am
2:52 am
matt: welcome back to "bloomberg markets: the european open." eight minutes to go until stocks start trading. stocks you want to watch with dani burger, there's a lot going on. let's kick it off with total. dani: a lot of deals especially, total expanding its renewables portfolio yet again, applying a 20% stake in india's larger noble company. along with the 20% stake, it is adding a 50% stake in a portfolio solar assets. the deal coming in at $2.5
2:53 am
billion. third deal in a week for total in the renewable energy space. anna: and let's ask about bt. some weekend news development for the telecoms business. viviana hurtado a lawsuit coming -- dani: a lawsuit saying they overcharged customers, finding they overcharged landline customers. a new group saying because of the overcharging, they still haven't back paid about eight years of overcharging, saying the affected customers were more likely to be elderly and vulnerable and the max amount we could see bt have to pay up is about 600 million pounds. matt: another deal proposal from akzonobel. dani: looking at a finished paint manufacturer and this deal is not anyone, but what is new is akzonobel is pumping up their price they are offering for the finished paint company.
2:54 am
31 and 25 euro pence per share, 13% higher than january. the market is going up. that is 12% higher than tikkurila's closing price friday so we are likely to see a boost in those prices, as well. anna: dani burger with stocks we are watching. some of the companies to keep in focus. the french m&a story, also crucial to keep an eye on leisure stocks as we should take our eye off the virus fighting measures being brought in by various european governments. sitting in the u.k., i can say the leisure stocks could be in focus given the latest developments friday, the ending of air corridors. that makes travel perhaps more difficult in the short-term and i know a focus of years, sounds like a space mission, but the merger to big -- of two big auto giants and we will see that listing this morning. matt: that's right, the merger of psa and fiat chrysler.
2:55 am
a couple of fascinating issues, it won't be traded in the u.s. today because it is mlk, martin luther king jr. day, so you could see some price discrepancies tomorrow that can be taken advantage of by u.s. investors. number two, this company, everybody is watching it closely because carlos tavares is the superstar in the automotive world and kind of taking the reins from sergio marchionne in a way as far as his aura, but now taking over sergio marchionne's former company in a sense. interesting to see what he does with this behemoth that has so many regionally dominant brand and also, i love the ticker, spla. it is very italian somehow. do you feel me on this? anna: i'm not sure i am.
2:56 am
you can explain it in the break. we will take a break as we start european equity trading. equity futures suggesting downside. we are without the u.s. today so keep that in mind through monday's session. the open is next. this is bloomberg. ♪
2:57 am
2:58 am
2:59 am
anna: welcome back to the european market open. a minute to go. 6.5% growth. china's gdp hits pre-pandemic levels. president trump lands a final hit on beijing halting the huawei supply chain. germany's cdu elects laschet. the chancellor is considering a nationwide curfew. a busy morning for dealmakers of
3:00 am
private equity firms. veolia and suez. and the deal between carrefour and costarred -- couche-tard fails. matt: i was referencing "a streetcar named desire." stella! futures are pointing lower this morning kicking off a week in which we are waiting a lot of news on the pandemic and the vaccine, the rollout in some places seems to have gone better -- or as well as you could expect, but we could see some speed bumps. and we are waiting to see what happens in the -- what happens in washington, d.c. the dax is down 0.6%.
3:01 am
we do see a risk off scenario playing out across market assets. the dollar continues to strengthen today. you could see that as well in terms of equities across the board in europe. we are expecting to see red arrows. a company begins trading today. it is not marlon brando in "a streetcar named desire." dani: i am a theater nerd so the marlon brando is what comes to mind. i have the italian ticker up. spla im. up here is where it is trading
3:02 am
at so far. to give you some details. the italian one is open but it is also trading in france as well. tomorrow, it will start trading in new york. matt, you said the ticker reminds you of stella. spla, that looks a lot like tesla's ticker. and stocks that have similar tickers do very well as a proxy of the trade. people hoping they will get it wrong. a pretty good start to the trading day. up 2.8% as we speak. if you held fiat chrysler shares comic it is a 1-1 share. one other thing to note up why we might see share prices rise in the next few weeks -- because we have a merged company,
3:03 am
analysts are pointing out that passive funds might have to purchase more of the company. that might also be giving the company a boost today. matt: i feel like they could not be more opposite. in terms of the big carmakers. tesla has one product it sells across all the growth regions and it is pretty dominant in its sector. meanwhile, psa has brands popular around the world and they are still the only company selling explain for leader naturally aspirated engines. these are the least green engines you could possibly buy and the least electric cars in the world. and tesla is the leader. i think tesla enables the
3:04 am
company to purchase those engines. what is that called? a jumble? dani: it is a bigger company now. more spending power and more power to amp up on their desire to get more of those electric vehicles, more environmentally friendly business going. matt: all right. it is interesting. it is also worth about 20 billion euros in market cap and tesla is worth $800 billion. european equity markets in general, stella aside opening lower. in germany, the cdu has opted for continuity by picking merkel loyalist, laschet as new leader.
3:05 am
that as the chancellor considers a nationwide curfew. we should -- we were supposed to be out of the lockdown in 10 days but there are talks to extend it a few more months and locking us in at night as well. joining us now is carsten brzeski. let me get your take first on laschet who did not have a stellar record. in terms of dealing what the pandemic. an interesting pick because he has done so poorly in those terms. carsten: it is but i don't think he was elected because of his track record during the pandemic. he was elected because he stands for continuity. staying in the political center of germany. this is why the two alternatives
3:06 am
would have shifted the party more to the political right. that was too much of an experiment for many delegates. they clearly chose continuity after angela merkel. anna: continuity in that sense but also in terms of the fiscal conversations happening in germany and the amount of money that is or is not going to be thrown at companies struggling or around europe in the sense of the amount of cash required. does it change anything fiscally in germany? carsten: it will depend on whether laschet becomes the candidate to lead the party into the elections or whether we could get the bavarian minister president leading the party into the elections. the party leader clearly trying to bring together the more
3:07 am
center oriented part of the party and the right part of the party. if you judge him on his personal record in his state, wes failur -- westphalia, i think it is the most indebted states in the country. in terms of pro-european, more european integration and continuing the fiscal stimulus we have seen since last year in germany, i think that is what laschet stands for. matt: the energy transition planned for 2038, when my daughter who was born two months ago is in college, they will be phased out of coal. how old will greta be?
3:08 am
34 by the time germany gets out of coal. the rich are minting money in the pandemic. the rich are getting richer and the poor are getting poorer story. the wealth and income inequality continue to grow. it strikes me that the same could be said on a company level. you have small and middle sized companies shutting down the selling out or going bankrupt as the big companies are continuing to see higher and higher stock prices and getting cheap loans and financing for nothing. what kind of affect will this have on the economy down the road especially as merkel molds a longer lockdown and curfews across germany? carsten: that is an interesting theme. it started prior to the crisis. structural change in germany. we are moving into an economy
3:09 am
which is clearly more focused on services which is dominated by the big players and the very small, complete -- extremely agile startups. germany is banking on the medium-sized enterprises. we could see a continuation of this big center moving on one side to the bigger, multinational and on the other side towards the smaller startups. it is a longer-term transition which will clearly cost a lot. this could be causing the lockdown and the curfews. maybe slowing down economic life. it will put pressure on the government. you need to make a distinction between the short-term term and the long term. short-term, merkel and the christian democrats don't have
3:10 am
any interest at all in seeing a real economic crisis unfolding before the elections of september. anna: the political risk in italy. are you concerned about the future of conte? carsten: i'm not really concerned about the future. the base game is that we will see a continuation of the current government with a reshuffle. italy will still get money out of the european recovery fund in the second half of this year which will boost the economy. no party is really interested in putting this at risk. also, if you look at the bond markets right now, most of the funding has already been done by the italian government. plus, we should not forget that the ecb is in the market and for
3:11 am
the rest of this year going into next year. it will be interesting to see on thursday whether christine lagarde will confirm that the ecb -- look hard does not repeat the mistake we had in march when she said it was not the ecb's task to keep spreads. anna: we will keep watching the lord of the spreads. carsten brzeski, ing-diba's chief economist. we will discuss china, next. this is bloomberg. ♪ so you're a small business, or a big one. you were thriving, but then... oh. ah. okay. plan, pivot. how do you bounce back? you don't, you bounce forward,
3:12 am
with serious and reliable internet. powered by the largest gig speed network in america. but is it secure? sure it's secure. and even if the power goes down, your connection doesn't. so how do i do this? you don't do this. we do this, together. - [announcer] imagine having fuller, thicker, bounce forward, with comcast business. more voluminous hair instantly. all it takes is just one session at hairclub. introducing xtrands. xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. they're personalized to match your own natural hair color and texture, so they'll blend right in for a natural, effortless look. call in the next five minutes and when you buy 500 strands, you get 500 strands free. call right now. (upbeat music)
3:13 am
3:14 am
>> overall, the quarter has shown that the economy has ended the year on a strong note. >> in terms of chinese data come in line with expectations. positive for the country and the region. >> we are watching out for whether the pboc is going to continue maintaining its very tight policy in the face of an economy which is potentially on the brink of deflation. matt: guests reacting to
3:15 am
familiar number -- 6.5%. chinese growth picked up where it left off before the pandemic making it the only major nation that group during 2020 as president trump dealt a last-minute attempted blow to beijing by revoking the licenses of several huawei suppliers to sell to the firm. even during that trade war, donald trump's trade war, china seems to have been doing ok economically. carsten brzeski is still with us. what is your take on the china growth story? they are certainly doing it. the details are more murky than they would be with a more transparent economy. but, is this something that investors in the west will have to take advantage of now? carsten: what we see in china
3:16 am
and even in greater asia is that there was no state -- no second lockdown or wave of iris. china is the only country and region that experienced recovery. this is extremely positive. and the economic power is moving away from the western hemisphere towards asia-pacific. in the short run, the only thing i am concerned about is that last week we saw the first locked down in china. we are heading into the chinese new year. the question is -- will china also get away from this second or third locked down virus wave or will be mutated virus and the situation we see in europe and maybe in the u.s. also play a role in china? and then, could we see an interruption of this ongoing recovery?
3:17 am
anna: say china manages to get through the uptick in the virus and deal with it as efficiently as they did the first time, what is it that threatens china? is it going to be green issues? unemployment driven by technology and ai? what threatens china now? carsten: in the longer-term, it would be more protectionism. under president trump, we saw four years of protectionism. and europe has changed its position vis-à-vis china a little bit. also, under joe biden we will see if this war on tech will continue. that is one issue that could interrupt the chinese growth story. also, china still needs to integrate the larger part of its population into the wealthier
3:18 am
more prosperous part of the society. for that, do they need growth? it is an extreme challenge. the final point -- when you look at leverage and indebtedness, and fiscal stimulus -- could we see some ceiling there in which the growth can no longer be debt-financed in china. matt: carsten, thank you for joining us. carsten brzeski is chief economist at ing germany. he will continue with anna and i on bloomberg radio. if you are in london, you can listen on dba radio. the european leveraged finance association has a new ceo and she is making sure the industry focuses in on eng. next up, we will speak with
3:19 am
sabrina fox.
3:20 am
3:21 am
anna: welcome back to the european market open. 21 minutes into the trading session. not down by much. martin luther king day in the u.s. means we will be without our u.s. friends later in the session. the new ceo of the european
3:22 am
leveraged finance association is putting eng at the center of her mission. sabrina fox. she wants to help debt issuers improve their eng disclosures. sabrina fox, very good to speak with you. are you trying to fix a mismatch? you have high-yield bar worst that want to borrow money that maybe they are not esg friendly enough. are you trying to join the dots? sabrina: i think that is right. the european leveraged finance association is recommending debt investors in the u k and on the continent have seen a huge acceleration of investing. as an organization, that is something we would need to focus on with our mission. focusing on transparency and
3:23 am
disclosure. we want to make it easier for investors to assess the esg potential. we have done a workshop to bring together companies and investors. there is a mismatch about what companies need to disclose and what investors want to see. we thought the best way to a dress that would be to get everyone around the virtual table and have discussions on a sector level basis about that. matt: it is definitely a virtual table these days, sabrina. i wonder how the pandemic has changed the conversation. it seems to me that esg investment in some areas has been accelerated because of the pandemic. sabrina: accelerated was the word i was going to use. when we kicked off this stage of the initiative when we started
3:24 am
the virtual workshop series, it was the last event that we had on the diary before the locked down we had to postpone it. i wondered sitting in my home office if we would eat reinvigorating that and it -- if we would be reinvigorating that and it happened quickly. the initiative was backed up and running and we had the purse said of companies join us in september. we covered four companies. as a result of that quick work by everyone in the organization, we are in the position to publish our first fact sheet for the market. tomorrow. i would say it absolutely accelerated the timeline. i would not have been able to tell you in march what was going to happen but it remained at the
3:25 am
top of our list of priorities for our members as well as investors. anna: another priority you are trying to tackle is covenants around debt. i was interested to see that 54% of respondents to one of your surveys find it difficult to determine if the covenants allow companies to take a certain action. they don't understand the existing covenants on debt and what they really mean. sabrina: there is a proliferation of very complex provisions which the consequences for monetary policy since the global economic policy has resulted in a growth in demand.
3:26 am
it comes at a price. the real a roche and of some investor protections. as they become more complicated, they become more of a concern to investors. the first thing we did was go to our investor group, our members, and the broader investor market. we wanted to know whether this was an issue for them and how we should go about trying to tackle it. when you think about transparency, 73% of the survey respondents told us that transparency about covenant calculations was an aspect of their overall and analysis of the esg of a company. now that we have taken the first step, our plan is to go out in the market and lobby for greater
3:27 am
transparency so companies can fill out that aspect of the profile. and improve their governance. -- covenants. matt: sabrina m.i.t. why so much for joining us on the program. sabrina fox, ceo of the european leveraged finance association. ♪
3:28 am
3:29 am
3:30 am
anna: welcome back to the european market open. 30 minutes into our session. losing a little ground. without the united states today. we see some weakness coming through on european equity markets. the sector break down -- a lot of damage being done by energy coming utilities, chemicals. some m&a in some of those sectors. some sectors moving higher. technology is also moving to the upside.
3:31 am
the u.k. will step up its mass coronavirus vaccination this week. vaccines will be offered to the over 70 and those being seen as clinically vulnerable. the government is aiming to offer the vaccine to all adults by september. this is dominating the conversation in the u.k. in the u.s., the conversation is dominated by the soon to be inauguration of joe biden. i'm pleased to say that we will speak now to the former prime minister, tony blair. a couple of topics to get your thoughts on. starting with the transatlantic conversation. it does not seem like prime minister johnson and joe biden got off to the greatest of starts. can they get off to a better start?
3:32 am
mr. blair: in the end, the american and british relationship is strong and they have the climate issue. the u.k. government is going to be in the lead because we have a big climate summit coming up this year. the new u.s. administration has put climate issues front and center. whatever the political differences have been in the past, i think this climate issue will have them working closely together. i also think they could work closely together on the pandemic. what has been in emerging is the weaknesses and the global health structure. that is another fruitful area of cooperation. i anticipate the relationship will be good and close and whatever differences there have
3:33 am
been in the past on various issues, i think will quickly fall away. anna: there is hope for the special relationship. what priority should there be for reaffirming that special relationship between johnson and biden? mr. blair: there are all sorts of issues. we have heard he discussed two of them. there are others. there is a much more difficult situation regarding the health situation in north africa. you have issues to do with the relationship with china. whatever part of the world you look in, where there are problems, it would be fruitful for the u.s. and the u.k. to cooperate. as well as nato. one of the things that the american administration will be
3:34 am
keen to show is that multilateralism is back in fashion and they will be working with european countries, the u.k., and other partners in order to show that american leadership is back at the multilateral level. matt: first of all, i appreciate you joining us this morning, tony blair. i want to ask you what you would do were you in joe biden's situation. we have an extremely divided society in america especially at a time when we are making this transition to power, president donald trump is the first living president in over 100 years who has refused to go to the inauguration of his successor. what would you do if you were in joe biden's place in order to try to bring the country back
3:35 am
together? mr. blair: the first he is clearly doing which is using language of reconciliation. it is in his nature. i have known him for a long time. he generally has a good heart and good values. he can see the division in america and it has -- and he has made it his job to try to bring the country together. the second thing is that this is not an american specific problem. you have to put an immediate focus on the pandemic. the best way to overcome some of the divisions in the society is to show that you are delivering to the people. first of all with the pandemic but also with the economic recovery that is going to be extraordinarily difficult and is a monumental challenge for governments after all of the economic destruction. it is going to be really
3:36 am
important to show that you are making progress. that is the best way of bringing people together. my view is that the biggest challenge that democracy faces today is efficacy. getting things done. in a world changing very fast showing that government has the ability to change itself and handle the changes going on in the world in a more effective way. i'm sure he will concentrate on these things and that is the best way to be an effective government but also bring people together. anna: back to the uk's experience of the coronavirus, what are the most pressing actions that need to be taken by the u.k. government? mr. blair: they are ramping up vaccinations and that is a positive thing happening in the last few weeks. as the supply comes through, we need to go faster and further.
3:37 am
the only thing the u.k. government has to get sure is that as soon as the supply is there, it is out the door and into people's arms. that is a matter of logistics. they are ramping up considerably at the moment. secondly, the one thing i would stress is that we are going to be living with this disease for a long time. there are going to be different you tatian's. -- mutations. and we will have to develop a variety of vaccines. we need the best data systems in the world to capture as much of the data as possible. this is a real time, real-world experiment. we need to know which vaccines work on which people. the danger is not focusing down
3:38 am
on that. matt: how do you see the path to lifting these restrictions? it strikes me that the best way for the economy would be to say --have you had the vaccine? we will find a way to denote that and then you can go to a restaurant or fly on a plane. that might not be the best for society. mr. blair: i'm sure we will get to some form of health status passport. in my view it is inevitable. you are not going to get an economy in the international sense unless you have that. the problem is that policymakers are facing a problem and it has come about because of the events of the last few weeks. the new strains. the problem is that most policymakers around the world
3:39 am
have seen three phases. locked down and get the disease under control. the second phase is that you have restrictions and you are waiting for the vaccines. the third phase is vaccinations. what has happened is the second phase has collapsed under the pressure of recent spikes in infections. what you are facing as a policy maker is mass locked down or mass vaccination. it is putting enormous pressure on supply chains around the world. they have not geared up to accelerate in the way that governments now want to. what you are finding is a desperate scramble for vaccines and for governments to realize
3:40 am
that until you get a substantial part of the population vaccinated, ending locked down could be perilous. the riddle of handling the pandemic is changing. but however that plays out, at a certain point, i have no doubt that you will need a verifiable health status of people so you can show that -- i got vaccinated or i have antibodies or i have a recent negative test. otherwise, i think it is going to be extremely difficult to handle this via a lockdown. anna: and we are left with an economic fallout. how long should we take to pay back the debt accrued? should it be paid back over decades? mr. blair: it is difficult to judge that at the moment. if i were the government, i
3:41 am
would keep maximum flexibility. some say we will bounce back very fast while others are skeptical. i think it is difficult to judge how you handle the interplay between fiscal and monetary policy until you see how things pan out. right now, the risk is heavy job losses, recession. at a certain point, you will hopefully get to the point where economic growth is powering ahead. and you will have to determine how to guard against the risks of inflation. but right now, i cannot see for example the u.k. taking measures that in anyway restrict the ability of the economy to bounce back. we will be bouncing back heavily dependent on how we handle the next stages of the pandemic. matt: when it does bounce back -- we have a widely read story
3:42 am
today that says rich people during this pandemic have gotten much richer. and there are so many of the less privileged that are out of a job and fighting to put food on their tables. do you think a wealth tax is a way to deal with this debt afterwards? mr. blair: i have come to the conclusion that every turn that the wealth tax does not work in the way in theory you might think. however, the point you are making and tackling it is essential. you have two things happening that will cause enormous political tension. those at most risk economically, those with lower pay, perilous jobs, including retail and brick-and-mortar, you have
3:43 am
that to deal with. you also have to deal with the massive gap between rich and poor countries in the acquisition of vaccines. what has become apparent -- what will become apparent in the next few weeks is that there is a whole section of the world that will have to wait their turn until the wealthier companies situate themselves with the vaccine and that will cause enormous tension and anger. that is why when of the things that has to happen is global coordination. the more we work at this together, the more possibility there is to deal with these issues in a measured way which also pay attention to issues of justice and fairness. as well as effectiveness. anna: thank you for joining us, former prime minister, tony blair. thank you for joining us.
3:44 am
43 minutes into the european equity trading session. european equity markets moving to the downside by about 0.1%. when we come back, we will talk about how d.c. is on high alert. thousands of national guardsmen are deployed to washington. this is bloomberg. ♪
3:45 am
3:46 am
3:47 am
anna: welcome back to the european market open. european equity markets in the red but only modestly. on to the u.s., wednesday will see the inauguration of joe biden and ahead of the big day, thousands of national guard troops have been deployed to washington, d.c. of course, thinking about the policy initiatives that president-elect biden will be turning his attention to, we know that climate is at the center of it. this will be interesting. lord turner, senior fellow at the institute for new economic thinking and former chairman of the uk's financial services authority is with us. lord turner, very good to speak
3:48 am
with you. on the issue of the green agenda , i know that you at the energy transition commission have been thinking a lot about this. how important is it that the u.s. signs back up to the paris agreement? lord turner: it is hugely important. the biden administration plans to be more ambitious and forceful on climate change than we might have thought a year ago. it is becoming one of their signature policies. you can see that in your range of appointments. and a -- you can see that in the range of appointments. a clear commitment to be a net zero economy by 2050. although joe biden will be constrained on what you can get through the senate in terms of legislation, there is a lot he can do by executive order. and simply by the tone or mood
3:49 am
music, that will have a big effect. a lot of american businesses have been hedging their bets. they have not wanted to make climate change commitments because they would get a nasty call from donald trump. the change will unleash a major change. this is a very positive movement and mood for climate change in this crucial year in the run-up to the conference in glasgow in november. matt: we have the paris agreement. what are the other actions president biden can take? lord turner: he can undo a set of things that donald trump has done. he allowed the oil and gas
3:50 am
industry to allow leakage. he can stop putting pressure on states to undo their targets. for example, donald trump was going to sue california. there will be a tax bill. they can increase the tax credits for renewable energy. there is a wide range of things including undoing what donald trump has done and enabling states to act and also what the department of energy does -- it will be an important driver and has been in the past of technological developments which has given us some of the technologies needed to deal with climate change. i think we will see the
3:51 am
department of energy swinging back to support the next generation of technology we need to go further on the carbonization. anna: -- on decarbonization. anna: sticking with that green agenda, london is in flux redefining itself in its relationship with europe. how much of an answer to that is the green agenda? lord turner: i think everyone in the city or most will see that there is an opportunity in developing green products. it is a complicated issue. what we are seeing across the world is an increasing number of asset owners, asset managers, pension funds, banks, and insurance companies saying we are going to make sure that our
3:52 am
activities are paris compatible. a lot are trying to work out -- what does that mean? how do you work out what you should lend or be willing to hold? if you have a steel company that says it is on a path for being green, how do you know if that is true? there is a lot of work to do to turn this green agenda in finance into concrete actions. we are working with the finance industry on how to do that and within that, i think you will see london and its leadership saying london should be at the forefront of that thinking and of the specific products, the green bonds and loans to avoid green wash. to make sure you have a set of criteria which is sufficiently
3:53 am
robust so people can be confident that when they invest in green bonds, in missions are being reduced -- emissions are being reduced. matt: lord adair turner, thank you for your time. chairman of the energy commissions. don't miss our special coverage of president-elect joe biden's inauguration on wednesday. it starts at 4:00 p.m. london time and 10:00 a.m. in washington, d.c. i'm sorry, that is 11:00 a.m. in washington. european stocks continue their retreat as investors await the inauguration. we will bring you the market action next. this is bloomberg. ♪
3:54 am
3:55 am
3:56 am
anna: welcome back to the european market open. 56 minutes into what could be a fairly quiet trading session. the u.s. markets are closed because of a martin luther king day. matt: take a look at some of the other asset classes. the dollar is the most interesting to follow for global investors. the greenback extending gains. the u.s. dollar index up to 11.29. italian yields are rising.
3:57 am
german yields are coming in with the 10 year as investors buy that debt. bitcoin falls $100. this is bloomberg. ♪
3:58 am
3:59 am
4:00 am
francine: hey new administration begins in america. joe biden becomes the president lends to ash wednesday -- president wednesday. china hits pre-pandemic levels but can it sustain them and the u.k. shuts its borders this week to anyone who hasn't tested negative. the company will step up its mass vaccination program. happy monday. this is "bloomberg: surveillance ." i'm francine lacqua in london.


info Stream Only

Uploaded by TV Archive on