Transcripts For BLOOMBERG Bloomberg Markets European Open 20240712

These are your top headlines from the bloomberg terminal. , nancyg the deadline pelosi sets a tuesday time limit for more progress on u. S. Fiscal stimulus if the president wants a deal before the election. Backing down, a bloomberg exclusive says the u. K. Good rewrite its lawbreaking brexit bill, a move that may revive talks with the eu. Sterling gains on that. Plus, restrictions tighten as virus cases surge around europe. Italy is the latest government to add lockdown measures, prioritizing its struggling economic situation. Under one hour away from the start of cash equity trade in europe. Lets take a look at the futures this morning. If you pull up the European Equity Index Futures you will see a pretty mixed trade. You have ftse futures trading a little lower, now bouncing off up about a quarter of 1 . Ftse futures are a little changed right now. Take a look at the u. S. Futures picture. You have more green arrows there. Dow jones and s p many contracts up 7 10 of 1 . Nasdaq 100 many futures up 9 10 of 1 . What have you got on the gmm screen . And lets put up the gmm see where we have been through the session. U. S. Futures pointing higher. The upside. Adly to interesting to see how positive things are in japan. Japans nikkei 225 raising its losses for u. K. 2020. We talked about the European Markets and where we see that taking place. Whether we were going to see the get back intoy positive territory. The dax is down by 2. 6 year to date. Thats the best performing in europe. Europe is by the u. S. Where the nasdaq is up 30 year to date, and now behind asia with japans market. You can see that red headline. Thats what weve got in terms of the big picture. We have a lot of talk about stimulus. Stimulus in the united states. We will talk about that with the markets live team in a moment. The pound has been on the move in the asian session. Credit downgrade when things kicked off in sydney. Moving a little to the upside. We talk about the possibility of watering down the mark entre version legislation. The new Zealand Dollar getting a boost from the fairly definitive victory. Gdp data from china in the mix. We get to that and a moment. But getting first word news update from laura wright. Laura there is optimism of progress in washington. How species House Speaker nancy pelosi says a deal remains possible, but a tuesday deadline is set for making way with the white house. Getident trump says he will the gop to get a good deal. Going beyond the dollar amount thats on the table. New zealands Prime Minister has won a landslide election victory. Voters were turned her labour party, a majority with her biggest share of the vote in more than 70 years. Since new zealand reported proportional representation in 1996. There is a Coalition Government that will increase the green party. Azerbaijanty between and armenia has collapsed hours after coming into effect. Its the second by russia that failed to stop the virus. A traded accusations of who had violated the agreements. It comes over a longrunning context in the region. Global news, 24 hours a day on air and at bloomberg quicktake, powered by more than what he 700 journalists and analysts in more than 120 countries. This is bloomberg. Laura wright in london with your first word news. Asian stocks rise along with u. S. Futures amid optimism about progress on stimulus talks in washington. U. K. Officials are paired just prepared to water down controversial legislation in a move that could revive failing talks with european union. Lets get into the markets with mark cudmore, bloombergs mliv managing editor out of singapore. I guess we will start with brexit. Angela merkel suggested the eu could budge on state aid rules. What do you suggest . I think its great pulled sides have a little bit of compromise coming. U. K. My water down the controversial legislation that has passed a month or so ago. The fact that both sides are showing some sort of compromise is giving investors a small bit of hope that we are going to ultimately end in a deal. The reason we are only seeing it relatively subdued is that a compromise will be reached. We knew that last weeks deadline would be fudged. We knew it would be under pressure and get a small relief rally when it was fudged. That is the way we have been expecting all year. To anotherh forward deadline and we will play this again in a months time. Anna something to look forward to. Good morning. Let me ask you the markets live question of the day. This is something that for a long time we were fixated by. Preelection stimulus affect assets . Nancy pelosi setting a tight deadline. The deadline is not far off. Just tuesday, tomorrow, is this still a preelection issue for markets . Do you think markets are almost happy to leave this until after the election . Have a think it would massive shortterm impact. I think precisely because for most investors this is a postelection issue. I dont think this new debt by makes any difference, aside from keep the hope and the story alive. We have known it has been hard to get a compromise because its not about the white house and the house democrats. Its because the Senate Republicans are not willing to go higher. I dont see how that will change going into the election as trump does much worse in the polls than he was a few weeks ago. Senate republicans might be aware there could be a new leadership in a months time. I think its very unlikely that this changes, but it does keep hope alive. It means when the deadline is passed we get a little disappointment and we have a negative backdrop so it will play into that. Is a very unlikely chance that we suddenly have stimulus and it would have a very powerful shortterm impact because its expected to be next year and not this year. Matt i guess we talked about brexit, the election, and that leaves covid. We talked about italy at the top, but ireland could move to a level five lockdown today, which is like con one in coronavirus one in death con coronavirus times. Do think investors will be worried these measures will be too rk only in . Draconion. Mark it will drift into other countries as well. Polarizingt is very what should be done. We think rising case numbers exhibit consumer behavior. If we have a restrictions, that only happens more. Economic recovery will be hit because companies will suffer and we know that most likely, asset prices have to fall until we change the liquidity equation with more stimulus paired stimulus. Anna the fatality rates we are watching. Mark cudmore, Bloomberg Markets live managing editor. You can join in the debate and getting get into the question of the day. Would preelection stimulus affect assets . Reach out to us on tv on your bloomberg. Up next, a continued recovery, chinese gdp growth accelerated in the Third Quarter. The nations economy has regained all ground it lost in the first half. The gdp number came in below estimates, but we got other numbers that beat estimates. This is bloomberg. Anna welcome back to the European Market open. 50 minutes until the start of equity trading. A mixed picture coming in for the futures market here in europe. We are expecting downside or in underperformance on the london market. We are seeing a push higher in the pound because of some of our colleagues reporting around the Withdrawal Agreement bill. Lets get to the big picture story, the growth story coming out of china. Chinas recovery continues. The headline gdp never came in short of expectations at 4. 9 . Growth accelerated in the Third Quarter while retail sales both beat forecasts. Our Bloomberg Markets coanchor Tom Mackenzie is with us from beijing. Great to see you. How much should we read into the gdp numbers and the fact that it missed estimates . Some people are saying it missed estimates, but that had to do with imports and things that could be interpreted as good signs. Tom the number we got for the Third Quarter was 4. 9 . The forecast was 5. 5 . Quite a ways off what the economists expected. The people we have been speaking to today, economists, and jpmorgan earlier this morning has said that you should look through that, effectively, because the important numbers are tracked from the overall gdp. Even though higher imports is positive for china. You are looking at growth of around 0. 7 . Its made up from the loss of momentum we saw as a result of the pandemic. It sounds pretty anemic, is well away from what officials hoped to achieve for 2020. They have been looking at 6 . The when you look at china when you put china along other economies, its not positive. There is one reason we are here in this massive Fulfillment Center run by the ecommerce giant jd. Com. We knew retail sales would be important. We saw growth at 3. 3 . Well above what we saw in august. It was the missing piece of the puzzle for many economists concerned for chinas economic momentum. There was chinas consumer . Now it seems they are feeling more confident and theres a suggestion that if you see retail sales at this pace or higher, then that momentum could continue. Industrial production was high at 7 . Fixed asset is relatively strong. The sustainability remains a that thethat now consumer is chipping in, some are suggesting the momentum should continue. How solid are things looking on the experts site export side of things . Tom exports have been a key component of the recovery because postpandemic when they were able to get the virus rapidly under control, they fired up factories again and make up for that demand, or at least meet the demand they saw from europe. Medical supplies and electronic equipment with the work from home work from home shift. Given the severity of the virus situation in europe and the u. S. With demands on chinese exports. Certainly that is a risk that is being flagged. Other risks of the perennial issues around debts. Officials have been talking about leverage in some parts of the economy. Areother component u. S. China tensions in the background. If you get a more severe pickup intentions that could prove to be a drag. We are not out of the woods, but the economic recovery has broadened in terms of the momentum. Well have to see what happens when the consumer kicks in. Matt thank you for joining us. Tom mackenzie, Bloomberg Markets anchor out of beijing talking to us about the big economic story to kick off this week. Lets turn back to europe. Millions are facing tighter resurgence as infections continue sweeping across the continents. Still, governments are clinging to the idea that fullscale lockdowns can be avoided. Most governments, that is. Italy and else minimal changes to its coronavirus policy. Last night the Prime Minister said, the country cannot afford a new setback. However, in ireland we could see travel restricted and nonessential stores shut down when the government votes today. We are joined by the chief european strategist at bearings. Gettingre the markets used to this thing being around longer than we previously anticipated . He spanish flu was two years do you think markets are pricing that in . Exactly whats happening right now. People are understanding and Market Participants are understanding that this virus will stay. Even a vaccine would not do anything. Social contact, restrictions would have to remain in place. Might not recovered to the same the same status that they were before. That set us up for the earnings season i had . I was reading some commentary from jeffrey saying the mother of all profit turnarounds is coming in the Third Quarter, that depends on visibility that individual businesses have to make it through the winter. Agnes that is a complex question. There are several parts that are moving at a different pace. You just talked about china and china is doing really well. Equipment fromhe germany and the luxury group from france and italy, you really have to rally into the detail about earnings. We know that the virus is here to stay. If we are locked in at home, to some degree, then tech is also having the time of its life and is not going anywhere, vaccine or no vaccine, tech will stay. New tech hasof accelerated three to four months, more than you had in the last 45 years. 45 years. One has to be discriminating about pockets of values that are there on the markets. So, some stocks are going to do well in a continued lockdown. I wonder about the bankruptcies we have been warned about, and so far have not seen. At least not the cascading bankruptcies that joe has talked about. Do you expect that to materialize in the Fourth Quarter . Europe, it has been in many years. Ny, the governments right now are carrying the economy. They are supporting companies with payouts, with guaranteed loans, supporting households. 8 of the population right now in europe has been on furlough. So about a third of where it was at the april pick, which means there is still room for households to go back on this, and governments do have the means to support them. Where the Fourth Quarter is going to go is probably not so bad, given that the economy has not recovered yet and is weakening at the end of september. Social distancing restrictions remain. I am more worried about 2021. It it depends on how long takes to find other treatments and whether social distancing restrictions are expected. Its not about economics, its about confidence and health progress, medical progress. Matt agnes, we will keep you a little longer. Agnes belaisch, chief european strategist at bearing. She stays with us to talk about whats expected in the u. K. Britain is prepared to water down its lawbreaking brexit legislation. That could boost billing investor confidence, but the trade deal could happen. Maybe more important, Angela Merkel pointed out the eu is willing to bend on state aid. That could be the compromise on which we want to focus. This is bloomberg. Anna welcome back to Bloomberg Markets european open. 40 minutes to go until the start of the equity trading day. Brexit could be the dividing line here. We might see u. K. Assets and stocks under persona underperform if we see pounds continuing. To wateris prepared down its lawbreaking brexit legislation. Sources say the bill to revise failing talks with the eu. Otherwise, Boris Johnson said his focuses on leaving without a trade deal. The chief european strategist at barings is still with us. What are you watching when it comes to how this develops and when it developed . What is the deadline for you, and what caught your attention . Is it the posturing from number 10, posturing from Angela Merkel or Emmanuel Macron . Agnes compromises the name of the game in politics. All parties are very good at playing this game. It went on for long months, a roller coaster ride. I think its around november 23 when the European Parliament meets last for this year and can ratify any new agreements that both parties will have done. Whats happening on three or maybe two and a half bones of contention that remain near the debate. When you mentioned before, which is how much the government tends to push the economy postbrexit and to enter competition for the eu. Wants toe hand, the eu be sure that the u. K. Sets its rule. And on the other side the eu wants to reassure that the u. K. Wont break the rules. These cannot be resolved by itself. Looking at the second issue, we had to resolve disputes about the issue. I think these two negotiating tactics have to be resolved together. It will have to be made on these two chapters, one after the other. If they can find a way to resolve this, then the eu will let go of its desire to have everything on how the state aid the u. K. Can give. There is this other bone of is the victorych tosence that could be given the u. K. , which is about fishing rights. I really hope the u. K. Does not lose their sense of humor for brexit. That its going to be the final tactical play where the eu understands very well that they will have the same access to the u. K. After brexit and it will give up some of its demands on the assets. All this is playing together. Go ahead. Channel isuch of a there between no deal and the deal that is possible here . Is it really a very small difference . Agnes its a very small difference. Its only going to be the starting line. The u. K. Will have to negotiate what happens with its service industry, which is in negotiations now. They will have to negotiate other trade agreements with other zones that they can trade with. The u. S. And china are doing a big one. I think what really matters is mr. Current u. K. Leader, johnson, comes out of this looking like a real leader and a choice were the leader. That is left up to brexit for the u. K. Its not a particular type of trade deal that they will have reached. , chiefgnes belaisch european strategist at barings. Really appreciate your time today. Nancy pelosi sets a tuesday deadline to agree on a stimulus plan before the election. President trump he wants a deal bigger than the 2. 2 trillion package. This is bloomberg. So youre a small business, or a big one. You were thriving, but then. Oh. Ah. Okay. Plan, pivot. How do you bounce back . You dont, you bounce forward, with serious and reliable internet. Powered by the largest gig Speed Network in america. But is it secure . Sure its secure. And even if the power goes down, your connection doesnt. So how do i do this . You dont do this. We do this, together. Bounce forward, with comcast business. Anna welcome back to the European Market open. 30 minutes to go to the start of equity trading. The brexit news having an impact on the ftse. Let us look ahead at some of the events we will be following this week. Later today, opec and its allies will gather to assess the state of the market. Theident Vladimir Putin and saudi crown prince, mohammad bin salman has spoken twice before the summit. Netflix will report earnings tomorrow. It could top its somewhat conservative guidance of two point 5 million extra subscribers. I cannot think of anyone that has had any time to watch netflix. Matt [laughter] also, tomorrow numbers from ubs. The last set of results under ermotti. Of sergio and on wednesday, tesla reports. Analysts will be watching for progress towards 500,000 cars sold. The target for the year and a key one for elon musk. A tuesdaysi has set deadline for more progress with the white house on a stimulus deal before the election. President trump says he is willing to offer more than the 1. 8 trillion amount the republicans have put forward. Im pretty sure he said he wants to do and even bigger stimulus then nancy pelosi. Our Senior Editor is standing by. How big does President Trump want to go . It is hard to say exactly where he wants to land except he seems pretty clear that he wants to literally do something. It was very clear that he wants to have something brought to his that he can sign saying help is on the way. And as you say, the office of nancy pelosi has said tuesday is the dropdead deadline to do something before the election. A simple function of the calendar. You have to have a will written that has to go through the house and senate and then to the president. It all takes time. There are some good signs here. Nancyoffice pelosis office and Steven Mnuchin and are not necessarily shooting arrows rhetorically at each other right now. They are saying here are some of our differences and here where we are a part. They are still not quite there. A very good sign that Nancy Pelosis office said they were going to start drafting a bill and they could put the agreement points in there. That helps because it offntially cuts 23 days the bill writing time. You have to get Something Like that through the senate and there are a lot of republican senators including rand paul who say this is not necessary. Donald trump says he can get the republicans to go along with what he wants but that is an untested situation this close to the election with the Supreme Court justice and Everything Else the republicans want to do and not to mention campaigning. Anna and even President Trump himself agrees that not all republicans agree with him. Will this make any difference . Millions of people have already voted. Than 28 Million People that have already registered ballots in the president ial election. Amountuite a staggering of people that have already voted here. And reasonably right now, we are seeing the democrats are thinking this early vote more than republicans. Republicans are planning to vote a lot more on election day according to surveys. They will make up much of that gap on election day. But polls show biden to be ahead on average nine points. And i took a look before coming on with you. It is interesting to note that if you compare polls 15 days out from what actually happened on election day, the medium differential between those is one percentage point. Only two of the last elections varye last 12 has had that by more than one percentage point. 2016 deviated. Some movement at the end, President Trumps campaign. Ismulus is what they believe a chance for move some of those votes. The other is the final debate at the end of the week that the white house is pointing very hard towards. Jump actually, let me just in here if i could. I was just thinking as you mentioned it is not clear that republican senators will do has said. The Republican Party has been pretty obd it to the president for the last four years. Does that tell you something about the expert tatians they have for the election . It would certainly be an interesting point. Ares tell us republicans broadly pretty happy with donald trump. Among self identified republicans. He does get nine or 10 or more saying he is doing a pretty good job. To the degree that people are willing to distance, that is notable. Get closer and closer to these election deadlines, the senate is such that the power of even one republican senator grows and grows. There was a chance to stop this. There has been some conversation among some republicans that they are starting to sound worried about increasing deficits. And democrats are saying that is a preparation for if and when joe biden takes over two throttle some of the Spending Plans he has. We are seeing some rhetorical pivot on two things like that. It is subtle. But you cano loud start seeing it if you look. Anna interesting to see them thinking that far ahead. With you for joining us the latest on the race towards the president ial election. Goldman sachs says companies with a higher presence of female executives have historically awarded their investors. Is a new basket of European Companies with the most women at all levels. Not just the board room. It is called women oomics. Joins us now. L great to have you with us to talk us through this piece of research you have done. You also include some positive messages about how far europe has traveled in the last 15 years perhaps compared to other places like the u. S. And asia. Sharon i completely agree. , i startedted off quite basically that europe would be quite a bit behind. Has increased quite a bit over the last 15 years. And in fact at every age group. From 30 years old up to 60 years old. A great portion of the labor workforce of over women are working is working in europe. As opposed to the u. S. And even on pay gaps, europe is doing a little bit better. Matt has the european economy performed better than the u. S. Economy in that case . Sharon it hasnt and i think a lot of that has to do with population decline. And that could be part of the reason you are seeing greater female participation in europe and in japan as well ridiculously in older age groups. You need all of the workers to work even more. U. S. , the working population has been increasing in recent years. Thatss what i am saying is per capita gdp growth has not been that different between europe and the u. S. Therefor we need all of the european skilled workers to work. And in europes younger age groups, there are more female graduates than men. Anna and regarding the paved most of the gap cannot be explained by observable factors. What does that mean . This is true across all countries in europe. It is lower than in the u. S. And a lot lower than in japan which is great but it is still there and in most european countries, it is doubledigits. Somewhere between 10 and 15 20 . They are all factors that you can look at to explain the pay gap. Maybe that women work in different sectors where the pay is lower. Women are taking on those roles. Mayher of the ruble factor be how long women have experienced. Have experience. Are those factors sufficient . We can explain about half of it. It. T a third or one half of but definitely not all of it. And education works in reverse. When you put together your , did you look at women in the csuite . And does that include or exclude Certain Industries . For example, if you look at all , ands, probably oil, gas mining are going to be underrepresented in your basket. Sharon we compare companies in a certain sector. Company, youmining are not compared to a retailer for example. And we do compare every level. We look at women in the workforce of your company generally. Women managers. And women on the board. Have companies that perform well at all of those levels. We have a lot of scandinavian and French Companies in their for example. Sharon, thank you so much for bringing us this research. From Goldman Sachs. To go until the start of equity trading in europe for the week. Up next, we will get your morning call and look at how fx investors are trading across the board with brexit. That is also having an impact on futures. This is bloomberg. Matt welcome back to the European Market open. 15 minutes away from cash equity trading. I am in berlin. Lets get the Bloomberg Business flash. Won approvala has for a listing in hong kong. Getting a green light for the Hong Kong Exchange to list as soon as today. A already has a nod for shanghai listing. Says it is being investigated for a potential breach of antimoneylaundering and counterterrorism financing melbournehe flagship casino. Officials are looking at how they handled high risk issues. For an alternative asset manager. Brookfield a 20 stake in equity. Confirmed they news rejecting a proposed 3 billion takeover from a massachusetts mutual life. That is your Bloomberg Business flash. Anna laura wright in london. From get your morning call Juliette Saly standing by in singapore. It is all about what happens if there is no deal on brexit. The pound has been whittled in the asian session. And now things get more complicated. What is the latest . Juliette they do. The pound has been rising in asian trading around a Bloomberg School that officials are close withviving talks officials. There has been some political posturing from Boris Johnson on friday regarding a weaker pound. The main issue will be the u. S. Election. Againsteeing hedging the pound. A lot of traders saying they will mute the brexit noise after four years of discussion until the contentious u. S. Election is over. Will be asaying there no deal brexit and you could see a 5 decline in pound across the board. We are also hearing from a strategist that things we are moving towards a cash point and november will be key for the pound. Take a tactical position regarding the pound. Have also heard from another analyst saying if you do not have a deal by the end of november, even more volatility ahead. They expect a lot of volatility across the board due to the u. S. Election and the pound will be hit hard. Anna you have to wonder which of these deadlines really matters as we head towards the 31st of december. Navy that is the only one that is marked firmly legally on the calendar. From European Market open. Up next, we will get your stocks , thetch including dannon french yogurt maker. A shakeup. We will get the latest as well as some of the other potential movers and there were quite a few to choose from this morning. This is bloomberg. Anna welcome back to the European Market open. Nine minutes until the start of the equity session. Laura chinas recovery from the pandemic is continuing. Faster than the expansion seeing in the Second Quarter meaning china has regained all of the ground it has lost in the first half of the year. Opec plus officials are set to meet today to discuss the state of the market. No supply decisions are expected saudidecember, russia and arabia are already stepping up diplomacy. Vladimir putin and crown prince mohammad bin salman have spoken twice in a week. Paris rather do in yesterday to pay tribute to a history teacher killed in the city on friday. There was a moment of silence held. The teacher was attacked after showing cartoons of the prophet mohammed in a classroom. Detained anhave 11th person. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Wright there in london. We are minutes away from the market open. Let us get your stocks to watch with dani burger. Let us kick it off with phillips. Dani phillips beating estimates. 769 million euros. The estimate was 630 million euros. A sizable increase in what was expected today what was expected there. Bemeans medical gear will boosted in terms of demand. They see that impact lingering. The ceo telling manus cranny and Annmarie Hordern that he expects modest growth in sales in 2020. Baer is about more inflows. This is the big deal for them. Clients aret getting more comfortable in this environment. It is hard to raise assets when you cannot meet with prospective investors facetoface. They did see more cost cuts which helped with profitability numbers. Inre was a significant cut an italian branch. Danone had a big headline this morning. I guess they are going to look at all of their units. Dani they are basically looking to see what has been underperforming and looking at getting rid of it. Justified ae ready few segments they are doing that to including in argentina. They will sell those assets. And the cfo is also leaving in a shakeup to management. The hope is that it will revive the french yogurt maker that phase is a lot of competition in the space. Going forward they will continue to we out some of the underperformers. Att dani burger looking some of the stocks you may want to watch this morning. I also am paying close attention to siemens after a story that the company is going to stop its strategy of breaking itself up and selling units off after joe kaser is gone. Watching another company as well after the economy minister said in the oped on saturday that the government does not want to stake rulingtake a out or rejecting a previous media speculation there. As also watch volkswagen another company says it is ready to purchase the rest of navistar. That is a deal that could move the stock today. Anna let us talk about one London Company in particular. The chief executive setting out a new plan for London Office space. He sees a future in london. We will watch that. We will bring you the market open, next. This is bloomberg. Anna a minute to go until the trading forh equity monday and this week. Welcome. Shifting the deadline. Nancy pelosi has set a tuesday deadline for more progress on u. S. Stimulus. Backing down. A bloomberg exclusive says the u. K. Could rewrite its lawbreaking brexit deal which may revive talks with the eu. And restrictions tighten as virus cases surge across europe. Italy adds lockdown measures, the latest european government to do so. Take a look at futures. A mixed picture from when we last looked an hour ago. It still looks the same. Ftse futures, little changed. Dax futures and other continental futures are gaining a little this morning. When the live trade kicks off, we will pull up the global macro movers screen on the bloomberg. The far left hand column will show you the equity indexes. The ftse is the first out of the gate. Only attle although fractional gain. 0. 5 . Ex gaining and the continental Index Futures contracts were planing higher this morning so you are bound to see gains there. And the back and the dax and the cac and the dax are up 3 and 4 respectively. Returned about a u. S. Stimulus deal and the uks position but even more importantly europes stance on brexit. Joining us now is April Larusse from Insight Investment management global. What do you think about the possibility of a solution for these problems . Brexit right now looks like one of the easier ones to solve. April well, i dont know if it is easy. Seems like they have wrestled with it for a long time. This is a negotiating stance taken by the u. K. Government to get a better deal. It will go to the wire. It looks like there is some realization from some u. K. Negotiators that they need to do something to get a deal. If you recall, when carney was running the bank of england, the bank of england did some forecasting which said if they do not have a deal or and australian deal which is a no deal, it was likely they would gdp. 5 off the u. K. We cannot afford to do that given how weak the economy is already. And inflation would be higher. Up 5 due towas food prices. I cannot imagine that would be a good scenario. We are expecting them to go back to the table and it will go down to the wire. Anna if we think about the possibility of a no deal and what markets might do in response you mentioned inflation expectations, the abouthas dropped, what the possibility of negative Interest Rates . Would the market move quickly to price that in on the possibility of a no deal . April they have intermittently priced that in already. Box but itly in the is the last tool in the box. They would like to do more on qe and forward guidance. We think sterling would weaken although clearly it has weakened a touch already. It is unknown how the gilt market what perform. Perform well. But people would worry it about would worry about increased issuance. The market is not an obvious place to express your views. Sterling and Corporate Bonds would likely underperform. If you are looking for an , gilt would likely perform well in the environment. Matt what does the moodys downgrade mean for markets . April not a lot. It was more pertinent when we saw italy downgrade. That was a lot more meaningful for markets when they are thinking about things that are different. When there are small moves, one think theo, i dont market is looking at the u. K. As having any real credit concerns at this stage. Anna when you look at german the marketyou think had been pricing in a better handling of the virus . I should also mention that i said a roni us live early on that the German Market was the best performer in europe. The point was that out of the majors, it has done relatively well. That someket assuming decent handling of the virus . Or is that not part of the story for you . April we are looking at europe and looking at the bund market on friday was very interesting. We saw it take a big leg lower. Goingg at 10 year bunds looking at we are the outperformance of the european bond market, we can understand that it has done so well with this quality view. What we are looking at now is to what degree does the virus numbers picking up in germany and the expectation of additional stimulus we think investors will look at some of these igloos in germany in particular and think profit taking is the good thing to do. The european bond market has been distorted by the huge amount of qe. When you see markets start to move a certain way, the fact that there is less liquidity the markets means are going to be very jumpy. The fact that the core markets have been doing well should not surprise anyone given the uncertainty of the market we are facing currently. Anna april, thank you for joining us, please stay with us. April larusse will stay with us a little bit longer on the program. Some breaking news the haveean equity markets been a focus of investors for many months and we see the shares opening to the downside, down 11. 3 following the news that pwc is still the auditor. Auditors seeking a new regarding the labor issues. Coming up on the program, caught in a stimulus trap. Keeping the path open for now. Will they ever be able to stop the money from flowing . This is bloomberg. Continued recovery is anticipated which will benefit the global recovery. I think that the main risk right now we see is one years macro years macro ratio is increasing. The risks remain heavily skewed to the downside. Sports,w a phrase from i think the hard knocks are still to come,. The vacation you could not take in may, youre not going to take in october. The system becomes unstable. This,you were to grasp after the great decline we saw in march and april, the recovery look Something Like this. Anna that is global central bankers speaking over the weekend in those clips. The majority of policymakers are under no illusion that the coronavirus is over issuing fresh restrictions. April larusse from Insight Investment, a specialist come is still with us. We talked to some that follow the credit markets and they suggest you do not need to worry too much about large caps and bankruptcies. Those with access to money markets will be able to get access to help them get through. It is the smaller caps is that where the crisis goes over the winter . April absolutely. The differences are interesting between the Global Crisis and the concerns we had been where companies could not access the markets. And this time where there has been a massive amount of issuance at incredibly cheap levels. And companies have been tendering and calling their bonds early to the extent that they can and issuing longer debt to lock into these low rates. Troubleness has had no getting access to liquidity. And even more so in europe. Lend to youo because they want to borrow from the ecb at a lower rate. Big businesses they do have concerns about their bottomline and their ability to generate cash but they have many levers they can pull to get liquidity. Much trickier for smaller businesses. But they doograms not have access to Capital Markets in the same way and that will be a concern going forward. There is the possibility that Central Banks in europe may cut but the jury is out on that one. Matt why is there so much investment demand . The thing i find interesting is there is so much money out there to buy this duff. Stuff. Debt when you instead can get into a stock market that is on fire . The s p 500 is up 8 year to date in a year where the economy is seeing its worst recession since may be the 1930s. April that is probably a good reason not to go chasing risk right now. There are some concerns that the market has responded to stimulus which is three times what we had during the Global Financial crisis. That does not make a lot of investors look at equity and think they went up a lot so i will buy because they will go up even more. We are just starting to see a weakening economy hit corporate bottom lines. Do i want to be buying into risk assets in terms of equity markets . They are more willing to buy into the bond markets. If they are buying Investment Grade or in government markets, they are thinking their capital is safe and i will get the principle back. Whereas in the equity market, there are concerns that valuations look a little bit too stretched. Say there is no inflation anywhere. How long will that statement the true . Forcesthe deflationary are huge in economies now. Longer term could see some inflation but in the shortterm, it is hard to imagine that you will get anything like the levels of inflation that most Central Banks would dearly love to see. Levels of unemployment are likely to remain higher. And so, the Deflationary Force is there. Sterling isning something that could cause inflation if it drops sharply although that would be viewed as an external factor and therefor not real inflation that anyone needs to worry about. Longterm inflationary risk premium is still priced t oo low and the market is not thinking about it. As markets as economies recover. Be still a long way off. April, thank you for joining us. Atil larusse is a specialist Insight Investment. Brexitg forecast with trade talks falling apart. What could no deal mean for britains ports . Mike sellers joins us from Portsmouth International port. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. We are 18 minutes into the session and looking at the stoxx 600, the broader european benchmark. Up 0. 8 . Industry groups rising one of them is the stoxx 600 banks index, up 1. 5 . S p futures are up almost 1 . Could be a higher u. S. Open this monday morning as well. Sticking with banks, the reporting season in europe is kicking off this week. Ubs reports tomorrow. Barclays is on friday. U. S. Bank results left investors disappointed. Joining us to discuss is bloombergs dani burger. What will we focus on for tomorrow . WeWealth Management had positive signs. Julius baer and morgan stanley. An interviewi gave over the weekend saying one of the things he is most proud of is being contrarian and not selling the Wealth Management division when there were certainly some pressures for him to do so. This will be important for him in one of the final Earnings Report of his time. Trading figures will be important. Ubs is concentrated in equities. That could be a headwind. M a another focus. 10 days ago, the chairman at ubs said they were not interested in a bright. They were a bride. They were not interested in m a targets and he would not comment on credit suisse. Anna dani burger with a look ahead on the banking sector. The u. K. Is prepared to water lawbreaking brexit deal to try to revive failing talks with the eu. Otherwise, Boris Johnson has said his focus is on leaving without a trade deal. What would that mean for britains trade and ports . Good to speak to you, mike sellers. Ive been looking at some of your background. Opened in 1976. Isleave without a deal, what your assessment on what that would do to your business . Mike you are right. 1976ort was established in with two ferry operators. One of which is brittany ferries. They are looking to get Fresh Produce across to the u. K. And they joined and started looking at that at the time that the u. K. Joined the ec. Been focused on eu trade. We have been preparing for whatever the outcome will be and we have been looking at a reasonable worstcase scenario of a no deal. That has been our focus and has been for the last several years. Matt brexit is a huge issue for you. That was expected at least after the vote. You had years to prepare for it. How has the coronavirus pandemic affected your business . Much more of a surprise. How dramatically has that affected turnover . Mike in terms of years to prepare, you are right. It has been a semifocus for us since the referendum. However, it was only until july this year that the government announced what we call the border operating model which is what the talks will need to work to in terms of when we leave the eu. So, despite the referendum being until6, it really was not july of this year that we had that clarity and now we are playing catchup for what will happen at the end of this year. Our european counterparts have been clear from day one that the and have been preparing. Coronavirus, we are the Third Largest International Passenger port. We get on average 2 million passengers that will go off to france and spain. To give you an example from march through to the end of august this year compared to the same time last year, our peak season for passengers, we were a million passengers less. It has had quite a Significant Impact particularly on our finances and income. Ourre a Municipal Court so profits go to a Central Council services. From is a big funding gap the lack of income from passengers. Ferries anding with cruise ships and the fruit and vegetable important that you do as a business i can see how that is an issue. We have heard talk in the u. K. Around free ports. Will you apply for that status . Mike we serve the Western Channel so we are not the short crossings you see fairly publicly around places like chunnel. D the there is capacity and brexit resilience and that has been recognized by the government. Critical for each roots have routes critical freight have been protected through the pandemic and that has included portsmouth. Even from january, the government has supported particular routes for the First Six Months to ensure things like medical supplies and Fresh Produce come in. Serve the eu particularly fresh bananas. And one of the risks of brexit is we are also a transshipment hub so the Fresh Produce would come into portsmouth in a container and be loaded into a trailer and exported to france. With the challenges around brexit and the potential no deal, shippers are looking at possibly diverting to european hubs. Hise free ports come in they would give protection for ports such as ports such as portsmouth to ensure that we remain a transshipment hub. We continue to work with the local Enterprise Hardware shipped to look at a regional mainport bid for the coastal ports including portsmouth and hampton. Matt very interesting stuff. Do,are a man with a lot to a lot going on in the port business. Mike sellers, thank you for your time. Theext, we will get back to brexit discussions with guntram wolff, director of the think bruegel. This is bloomberg. Anna welcome back to the European Market open. A half hour into your trading session. We seem to be lifted by some renewed optimism around stimulus in the u. S. Tuesday . E dashed on that is lifting the broad European Equity story. Let us get an update with laura wright. Optimism about progress on a rescue package in washington. Nancy pelosi says a preelection deal remains possible that she has set a tuesday deadline for making more headway with the white house. President trump is confident he can persuade the gop to go for a deal. Chinas equity economic recovery is continuing. Gdp grow 4. 9 . That is lower than forecast but faster than the expansion seen in the Second Quarter. Regained alla has of the ground it lost in the first half of the year. Industrial output and retail sales have improved. Turned her labour party a majority with a bigger share of the votes in more than 70 years. New zealand introduced proportional representation in 1996. Ardern is considering a Coalition Government. A ceasefire between azerbaijan and armenia has collapsed hours after coming into effect. The second time. Traded accusations yesterday regarding who had violated the agreement. There is a longrunning conflict in the region of nagornokarabakh. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna, matt . Matt laura wright in london with your first word news. With talks over the uks future relationship with the eu on life support, the chief negotiators including Michel Barnier and david frost will seek a way out of the latest bind. Michael will also meet with officials to discuss northern ireland. He is less hopeful than he has been in recent weeks that a deal will be reached. We hope that the eu will change his position. Saying that we cannot talk to them but it is only fair that we communicate one other thing which is that we are ready if required to leave on what has been called australian terms. This is your weekly brussels edition guide to politics and regulation. ,oining us is our reporter maria tadeo on the ground in the european capital. Maria it is monday morning and we will talk about brexit. We are joined by guntram wolff. This will make our monday morning better. Easier. Onlook at where it was left friday where the Prime Minister said it is clear that the eu has given up on us. And Emmanuel Macron says it is you that is leaving. Who will move first . Guntram thank you for your kind words. It is a great morning. Great to be on the show. I have to say that i am worried actually at this stage. I still think that the logic on both sides is to come to the ande with Michel Barnier david frost to sort their differences and find a way out of the impasse. Really talkson has to himself into the corner over the fishery issue. I think he is going a bit too far. Andu. K. Is leaving the eu it needs to have a way of saying brexit has consequences also for you guys. Very el that he is a he has strongly boxed himself into the corner. I also feel that many people thess europe, lets say netherlands and other countries are not very happy with the strong position france has taken including by watering down the European Councils statement. We want to continue the talks. Overall, i think what is needed now is, on both sides, a willingness to look into red lines and see where there could be some compromise. Up on a want to pick point you made on the french president. Aboutday, he repeated four times in a press conference that lasted 30 minutes that the u. K. Needs a deal much more than the eu does. Making aink he is political miscalculation . Werating on the basis that do not have to do much because they really need this more than we do. Guntram the french president is correct. Brexit has bigger consequences per capita or for the gdp in the u. K. Then it does in the eu as a whole but that does not mean that the eu is immune to a brexit without a deal. Eu will groups in the be affected by a hard brexit. The fishermendes in britannia, france, that will not be able to fish in british waters anymore. Small Business People in flanders, the netherlands, the north of europe is relatively exposed. I think really if the strategy is to put the access to fishery grounds above anything else, it could fail in the sense that you neither the access to the fishery grounds nor would acrosse proper access europe. The cross to the u. K. Is bigger then the eu but the cost in the eu but there are costs in the eu as well and unevenly distributed. I think it would be stupid to take that cost if there was no proper reason for it. I really think it would be a historic mistake if brexit failed over fishery rights. Stupid. Ld be just too maria and what about Boris Johnson what does he do next . Waset a deadline that he not going to be able to comply with, october 15. He has cornered himself putting himself in a tricky position. Given the Economic Uncertainty and the coronavirus, can he actually walk out without a deal . Guntram i also think the u. K. Prime minister has boxed himself into a corner. These are tactics to find a new way of discussing but it is also for him, the same applies. The economic consequences of a no deal brexit, especially in the short term, are significant. And it will be felt by the little guy. By the port authorities. By people in shipping. By the commerce people. The british Prime Minister also has a responsibility of finding a deal. Politically, i guess, i would there think that given are so many years of brexit, of the mass in the u. K. , politically, he may be able to swallow it. Even though people are suffering come he would put all the blame on macron. Macronwe will see if gets all the blame. You forwolff, thank talking with us. Anna maria tadeo and the , guntramof bruegel wolff discussing the latest on brexit. Other matters. Areill be talking talks set to resume and manchester will enter the highest level of englands restrictions. We will speak to jim oneill, previously from Goldman Sachs and now part of chatham house. We will see what he has to say. This is bloomberg. Anna welcome back to the European Market open. 42 minutes into the trading session seeing european stocks moving to the upside. Stronger than it was just an hour or so ago. They are still flirting with the thelevel dealing with possibility of watering down the agreement deal. Let us go to other matters u. K. Talks are set to resume on whether Greater Manchester would enter the highest level of covid restrictions. The Prime Minister threatened to force manchester into lockdown. Joining us now is jim oneill, the chair from chatham house. A big advocate. Great to speak to you. Give us your thoughts on where you think this is heading in the short term. It sounds to me as though there is a stronger chance of some kind of an agreement late today. Media, thereritish has been a round going with the minister responsible. The mood on talks that took place today must be a bit better. The government will be providing more money to manchester to help them cope with any potential loss of employment. Businesses are be enclosed down. Personally, i think manchester is right to push for it. This is causing problems for the government on top of all the others they have. Somehow, they have put themselves in a position where, as with other things, they appear to be going in the opposite direction. Politically, it has not good for the government. Matt it does not look good for them at all, jim. And of course, we should expect politicians to fulfill their Campaign Promises but right now, it looks like their hands are tied a bit when i look at debt to gdp and the downgrade from moodys, can england still afford to fulfill those promises made by Boris Johnson . Are miniscule the areers on the deal for this miniscule. The number of people that work in the hospitality sector, the is sector in particular tiny compared to the money being spent overall by the u. K. In the pandemic. I do not understand why they have managed to get themselves into this silly situation. The amounts they have to increase to do a deal are literally tiny compared to the moneys being spent in recent months. It would be a little speck on the table of the data. In this particular incident, we are talking about small amounts of money. Anna you had an alternative approach. You have talked about guaranteeing revenue for businesses. We previously the treasury has designed plans all about paying a percentage of salaries. O pivot tolate to a new way of doing things . Jim this mess with manchester has resurrected an idea that i discussed on your program in march which got a lot of attention. I dont think the whole loan scheme was sensible. They treated business and employees as separate areas ever since this has started and it is thanng the u. K. More money otherwise would of been the case. And it is causing so many different tensions that might not otherwise have been there. In reality, i think the deal reached today will be some version of what i have said. I think they will offer manchester a pot of money. Businesses may temporarily have to close. To prevent them from going bust. I dont know what it will be called but i suspect it will be part of the deal. On the more macro level, what do you expect to happen it looks like we have saddled consumers and a lot of businesses with debt at a time when they were not taking in any revenue. That seems like a recipe for disaster. They will never be able to dig themselves out of the hole. Is there some kind of Debt Forgiveness that will be necessary, even globally . Jim despite everything i have said and some of the many mishaps of u. K. Policy, slightly i actually think the World Economy is showing a decent recovery from this mess. A few hours ago, we had the latest chinese numbers which are really important in themselves because china is so big for the world. China is clearly experiencing a vshaped recovery. It went into this and out of this sooner than anyone else and it shows you in theory what could happen elsewhere. I think we are getting very close to news of a stage three vaccine result from one of the leading candidate. If they go the way the general talk has been and there will be two or three that will come in weeks later, i think by the first quarter, notwithstanding the longerterm challenge of debt, Economic Growth will accelerate dramatically everywhere because of the sectors that have not been able to participate at all could start to reopen with the use of a vexing. I think in the next six months, these debt issues are not something to worry about. Muchd 2021 and throughout of the first part of the decade, these are huge issues and someone is going to have to pay for them and we will have repeated concerns about the sustainability of longterm growth and its quality. And evenven quality some inflation. But i dont think these things are relevant for the next few months. Anna that is the global picture and the optimism that many cling to. Back to my doorstep and your talking aboutle the pandemic speeding up fall lines that were already emerging. Devolution . Nglish has a virus speeded us up in that direction . Jim i hope so. I went into government briefly. It has been four years since i left. I was there to push the Northern Powerhouse and devolution. Moste one of the ridiculously centralized countries in the year in europe. The way the government has handled this mess demonstrates the problem of too much centralization and we must accelerate the process of devolution across england as well as across u. K. Itself. Matt jim oneill from chatham house, the chair. Of course, he has done a lot of work in england as well as on wall street. Would preelection stimulus affect assets . We put that question to Kristine Aquino who leads our live markets in europe. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. We are 53 minutes into the session and looking at gains on the continent, slightly stronger than what we see in the city. Ftse is up 33 basis points. Dax is up up the 0. 5 . Joining us now is Kristine Aquino who leads the markets live team in europe. Gains thatfrom these investors are more sanguine about the covid lockdown issues . And also about the possibility of a solution for brexit . Kristine i think it is probably not so much a sanguine feeling but rather a bit of consolation. Giving back some of the declines that we saw last week. Thursday was really a sharp decline for european stocks and across the market landscape in europe was a big risk off move. It would be sensible for some assets to start the week off in a more upbeat tone to give back some of those declines. The virus story and the widening or the prospect of the widening lockdown in europe are still very much front and central. See ad not be surprised kneejerk reaction lower if we get more on that front. Especially if we get news that cities are doing more restrictions or those are ready with restrictions receiving even more stringent ones. Anna i know you have been talking a lot about the possibility of fiscal stimulus and what will happen in the u. S. On that front. Just recently, what is the latest on that moving markets . Kristine the best case is for after the election stimulus. Any kind of surprise would be positive. An october surprise for markets. Anna Kristine Aquino leads our markets live team in europe. Matt is having a coughing fit over there in berlin. Matt it was a sneeze. I was not coughing. Anna i did not mean to say the coughing word. That is it for matt miller and i. We had over to bloomberg radio. Please stay for surveillance. Chinas economic recovery from the depths of the covid crisis continues. Missing expectations but expansions can be seen in the Second Quarter. Addlatest government lockdown measures for its struggling economy. In shifting the deadline, nancy pelosi set a tuesday time limit, if the president wants a deal before the election. Good