Transcripts For BLOOMBERG Bloomberg Markets European Open 20

BLOOMBERG Bloomberg Markets European Open December 6, 2017

Lands to keep you cave rules aligned with the eu. In early is down trade. Is there more to come . We will talk about that with the mliv team. Wrangling over that u. S. To limit will continue today. The next big risk from the u. S. We are less than half an hour away from the start of european trading. Lets take a look at futures. They are deep in the red. You can see here the percent missed price for dax Index Futures is down more than 1 . Indications that we have a weak open in frankfurt not quite as half percent. You can see the middle range if 50. Look at the euro stoxx investors continue to buy treasuries in the u. S. Pushing the yield down, falling five or six basis points in the last couple of days. Were looking at 2. 33 . Now down seven basis points over the last three days. Guy 28 minutes to go until the start of european trading. Lets take a look at what asian trading delivered overnight. Japan down and korea continuing to be hit and hit hard, down 1. 42 . So my conductor stocks out of asia that continue to be in focus. The Mining Sector is something some of you want to Pay Attention to. The korean won traded down, this risk off sentiment driving people into the yen which is interesting. There is plenty more to talk about on the gmm this morning. Lets show you what is going on in the commodities space. We saw copper down yesterday. We have seen the price for some of the london miners already. If they further to come . Iron ore again trading to the downside in singapore. Aluminum and rubber, i could go across the board in the commodities these commodities space. We will have the take on what is going on here shortly. Keeping you fully informed as to what is going on in these markets. Lets get a lumbar first word news update. Heres juliette saly. Juliette u. S. President donald trump will declare jerusalem to be israels capital. He will direct the state department to start the American Embassy therefrom tel aviv. A historic shift a policy that could inflame key allies. And assigned the announcement could be symbolic. The white has warned that any actual move would take years and boundaries are still talk to these talks that have bedeviled u. S. President s ford decades. The u. K. Par minister was the assassination attempt. The plan to detonate an idea downing street and kill theresa may and the chaos. Andrew parker, director general of mi five has briefed cabinet ministers and the plot. Theresa may is facing a revolt from insider cabinet over a plan to keep regulations allied with the eu after brexit. Efforts to rescue negotiation from an embarrassing breakdown on monday prompted fresh divisions in the British Government yesterday. Backers challenged the Prime Minister days before a key deadline in talks, a slip that tends to undermine hopes of breaking the deadlock. The lebanese prime mr. Will attend a meeting friday in paris of countries that support lebanons efforts to cope with regional conflicts. The french president said he remain indecision to office after lebanons governing partners pledge to stay out of neighboring conflicts. Rex tillerson is also expected to attend the meeting which will include the five permanent members of the Security Council and germany and italy. The u. S. Will reportedly deployed be one beam b1b bombers as part of a joint exercise with south korea. A similar drill in september saw the aircraft flight the farthest north of the Demilitarized Zone of any american fighter or bomber in the 21st century. Nhat prompted pyongyang to war n that he has the right to shoot down planes and internationally or space. And completing the 2018 olympics. Their flag will not fly and awards will not count toward the medal total. Following a threeyear investigation into statesponsored doping leading up to the sochi games in 2014. The kremlin denied the allegations and threatened to boycott the event. Foruite has passed 12,000 the first time amid speculation that is a futures will lead to Digital Currencies being viewed as a legitimate asset class. It soared from less than 1000 at the start of the year as optimism climbs for the Block Chain Technology which is at the heart of bitcoin. Accompanied by a chorus of warnings that it is an acid bubble poised to burst. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. 23 minutes to go until the start of european cash trading. Asian down hard, europe looking like it will follow. Not quite as much but we are seeing some weakness in the futures. Copper a factor. The tech selloff a factor. The u. S. Tech story a factor. Lets talk to mark cudmore joining us from our and lift team out of singapore. Our mliv team out of singapore. Can i use the word capitulation yet . Mark we saw some highvolume selloffs across the assets that have been trading well all year. And then this week it turned a bit more negative. We have seen some signs of capitulation. Is this a one day or might this be a states that plays out over several days . One of the themes, this is the unwind of traits that have been. Orking well for a long time asian equities have been roaring all year. Commodities have done well for several months. Technology is outperforming. If there is deleveraging it cannot sustain. The u. S. Momentum portfolio chart up and we have seen a rampup in this. Theeptember accelerating to upside in october. November and december generating something of a selloff. Is this what you would expect after strong yield flows from momentum trades . Mark it is something we have been discussing over the last week or two. Going to the end of the year after a great year for equity markets we had extreme optimism for a few events whether it was the brexit negotiations or the tax deal or the opec deal. Whatever it is, people seem not to be worried about anything happening and it will be wonderful. We are in an environment where we are vulnerable to any kind of risk or disappointment. ,eople have made so much money they are inclined to move to the sidelines if there is any risk and they are not diving back in, not before the holidays or christmas and not with things like the debt ceiling coming up. When they found out this tax plan had been brushed through so quickly there is confusion about whether the amt close will help parts of the u. S. Sector or hinder them. So great, plan is not maybe this has gone to quickly. Lets move to the sidelines and wait till the new year. I do not think the amt has helped anyone. You could argue it helps government revenue that they want to scrap that so they will need to find somewhere else to go. , 41 ofplan in a survey americans said it would increase their taxes. At 150, 250valued and copper slow down that makes sense if china stops investing in roads and subways and the like create art all of these problems combined with the fact that the key debate on the debt caning whether to kick the great reasons to sell stocks . Mark you are dead right. But not trying to solve the debt ceiling problem, they are pushing it into a worse time of year to have that problem which is worrying. That helps the negative sentiment. There. S weighing and there are a lot of reasons why people want to the risk at this stage. After a good year, this is not a panic or turning bearish. I do not think this will be a better major correction. We will see more volatility until yearend. It will be two way volatility but no incentives for people to say this is a great time to take new risk. It is not like the pullback is large area not like people are going, this is a great opportunity to buy and ahead of all the risks. There are some reasons, china concerns, frustration over the tax plan, there are reasons to take money off the table. Matt let me bring you back to europe and the u. K. The pound, you predicted we were not ready for a downside. We did see that move to the downside and now you are saying we could see the pound strengthened again because the irish issue although it cannot be solved, they can be fudged to some extent . My big concern last week is everyone was complacent about brexit. You are aware of the irish situation, the red line from the dup and the Irish Government are polar opposites and id it not see how we would get an agreement. That was the basis for my argument that sterling was underpriced. We do not need to have an excess elon the irish border. But we need to see is the eu saying there has been sufficient progress so you can talk about trade and a transition deal. It had to involve the clear conclusion on the irish border but that is not the case. They might fudge this and make a clear commitment which is a different thing than a cleared deal. Kicks the can to six months down the road. It will rear its head again. Wants and the Irish Government wants is different. There is a real risk that this threatens the conservative government. I am not saying the problem is going away but my thinking has evolved when i was worried for the sterling outlook. It has fallen a bit but not too much. Much political will to say we will move on with talks. That is likely the base case for next week and that is why traders are staying with the pound and it might squeeze liquidity at the yearend. Surveywas reading the results, the market may be more positive on the pound to throughout next year. A lot of volatility. Any Central Bank Action we will see surprises on . Mark all the big events to watch, india, some people think they will cut. I do not see why. Growth is roaring and while it was slightly lower because of the demonetization and lower revenue, there is still rampant growth and it does not imply that policy is too restrictive. They can let the currency appreciate and do some tightening for them. I do not think they will cut tore and they do not need stimulate the economy further. On brazil everyone expects a cut. Rates were 2. 5 . They are expected to be at 7 today. The yields are still positive, brazil has inflation under control. Is unlikely to hike again. People will look for guidance as to when that hike will come. Cudmore. K you, mark survey,ant to take the you will find the survey on your bloomberg. Rrier on thisme one. It is crowd surveying. And helping part out the mliv guys as well. Matt i have more bloomberg functionality that can help clients stay smart. Take a look at tv. You have your interactive television, you can click on that to see a live stream of us and you can hear radio with that panel. If you click on event coverage, you will see bill ford speaking live. Fortune forum you could catch speakers including jack ma, tim cook, stuart gulliver. You see mark mobius. At the conference. The ease donation indonesian Prime Minister speaking there. You can listen to what some of the smartest investors in the world have to say about what is going on. Koppers meltdown. The worlds third most widely used metal suffered its worst day in almost three years. We will talk commodities next. This is bloomberg. Matt welcome back to the European Market open. Looking at pictures of our beautiful new headquarters in london. You can see 12 minutes to go until the start of european trading. We want to go out to get the Bloomberg Business flash. For that we go to juliette saly. Shares in Steinhoff International holdings have after the ceodon resigned with immediate effect after the global furniture retailer reported irregularities. The owner of the francebased store chain and pet Clothing Stores in africa has appointed a n agency to investigate. That values the Real Estate Company at 3. 4 billion pounds, the offer would create a Real Estate Investment trust with 21 billion pounds of assets. The company says they expect to sell 2 billion pounds of property if the deal goes ahead. Mark said it has made his biggest desk was asian acquisition yet. Buying aetrium innovations. It is acquiring aetrium from an group. Ent in a bid for growth beyond stagnating mainstream brands. That is your Bloomberg Business flash. Guy thank you. Copper had its worst day in on years yesterday. The prospect of so demand in china, the dollar picking up. Below. G k lets get some thoughts on this. This is china. It is all about china. Copper prices are extremely sensitive to any worries about chinese Economic Growth and we have had some stories in the last couple of days suggesting it might not be as strong as people expected. In particular, there was one forecast that the chinese copperction sector with grow it all. T giving peoples for thought people pause for thought. Matt what is the outlook . Is china going to pull back on investments in infrastructure, what dost a slowdown, you hear about the demand side here . Is strong. Nd side there is a feeling that the prices may have run ahead of themselves. The fundamental driver of the Copper Market will be on the supply side. Supplies are balanced in 2018 but from 2019 onwards, a lack of new supply means people see your deficits. On the medium to longterm, people have reason to be bullish. Some people are feeling that prices have gone ahead of the longterm bullish story and the makes it sensitive to any concerns about chinese gdp growth. Trimmed wedp growth could see further falls in the price of copper. Take fromsignal can i this story . I doubt copper has been always seen as a useful predictor. Blue line is the s p 500 and the white line is copper. What can i take away from this . Will a lot of people think it is a thermometer for the broader economic index. Constructional sector in china, it does go into new homes in china, it really does go into infrastructure spending. If you are believer a believer in the thesis it may give you thought for prospects. Guy we are minutes away from the market open. We will take a look at the stocks you need to be watching including steinhoff. The resignation of the ceo and an investigation into their books. That is another stock that can move in london. The market open next. This is bloomberg. Matt minutes away from the open up your paid in trading and equities. Lets get some of the stocks you should keep an i on. Steinhoff is one of them. This is a company that trades in frankfurt and operates a furniture business, Retail Business in france and operates a south African Clothing store. Owner thatea near kicked out billionaire owner that kick out the ceo because he does not trust him near the books. Drop, a 70 drop for thisstock is caused breakaway gap. The massive loss there. We want to mention nestle buying aetrium innovation. That is the shift with the new ceo Mike Schneider getting more into health care stocks. Andave to look at stocks futures on the way into the European Market open. We are down across the board, it could be a bloody open in four minutes. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. One minute to go until the start of cash trading here in europe. The background actors that could affect the market. London looks like it is going to outperform. The pound is near the bottom of the range against the dollar. The nikkei had a pretty soft day. Youve got to think about the legacy into the european space. Il, Pay Attention to that there was a story yesterday with a s p 500. Lets take a look at the numbers this morning. The mispriced numbers that we need to be looking at because we have been selling off a little bit. London looks like it is going to outperform, only down by. 4 . The dax looks like it is want to open down a full percentage point. Into hammerson, some of the stocks you need to be paying attention to. Lets get into the market open and show you some numbers the kicked out some numbers being kicked out. We will see what the Market Makers have to say. That. L come back to lets move on and talk about what is happening with the imap. A sea of red across the screen. Health care is one of the sectors standouts. We get a little bit of safety coming to the markets. Every sector, very few piece of the pie and they are very thin slivers. There is a bit in health care, a bit in industrials but the rest the imap is trading into negative territory. As we go along, those bits of green are just beginning to disappear. There is a little less in the i. T. Sector. Some pretty aggressive selling in the european space. Matt i am quite surprised that 10 socks on the leader side. I will preface that by saying, it is going to take a long time to open these stocks today, especially those who had the downloads. You had big down moves. The big names, novartis, hsbc is down. Nestle is down, even within acquisition. Investors are going to the above to smile. It is only a drop of 0. 4 but it is a very heavy stock. Also the miners down today. Glencore. Rio tinto is down. I suspect that if you scroll through the losing side, you are going to see almost all miners on the side. It you look at the winning side, you dont see anybody connected to commodities. You see a lot more of the defensive stocks. You are going to see some of those utilities and Consumer Staples stocks on the upside but really going to be very few winners, as far as todays trade is concerned. Guy matt, the dax is still waiting to open. Elsewhere, we are getting some numbers that are shown you the extent of the drop. The dax is likely to show the biggest drop this morning. Many sectors in negative territory. Many stocks trading to the downside. We are expecting the dax to open down a full percentage point. London looks like it is outperforming. We will talk a little bit about the pound later on. This comes after we saw a fairly decent selloff. We are talking 2 in some markets out in asia overnight. Copper a factor in all of this. Tech stocks have been hit hard. Sentiment now being transferred to europe. Lets talk about what we are seeing in terms of

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