Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20180111

BLOOMBERG Bloomberg Daybreak Europe January 11, 2018

Anna welcome to the program, everybody. This is bloomberg daybreak europe. Its 6 00 here in london, 7 00 in switzerland. Forgetting numbers for the Third Quarter, sell a constant currencies looks to be ahead of the estimates coming from this luxury player of watches and jewelry and other things. How are sales able to shake off the negative fx effects . Some analysts asking whether we will see around of buybacks of inventory from this particular business. Talking about whether there will be a further inventory by back around retailers, notably cartier. The export data looking a little bit letter of late. So breaking news coming through their. Manus fast retailing depends a great till on the weather. If you here in the u k or in uniclo. You know it as it comes in at 100 ¥13. 9 billion. ¥113. 9 billion. In terms of guidance, its critical important for them. This is in line with what they guided back in october. The bloomberg estimate comes in it 208. 7 billion. Eriod, and theld p internationalization of the company is critically important to its success for the chairman. There expected to add 160 outlets abroad. So comfortable beat on the operating profit, pretty much in line with the guidance. Global brands operating profit has risen by 2. 4 year on year. Anna so a good way to start the morning. Lets talk about whats going on in markets more broadly. The bond market battering that lasted a couple of days until we got the seeming denial from china or at least a bit of a little bit of pushback from china. Much to that rate questions about how much stocks are overvalued . Thats what were dealing with over in the asiapacific region right now. Very muchan currency unchanged. It was down by. 7 in yesterdays session in the peso in mexico also weaker and all of that because the canadians are raising questions about the u. S. And whether the Trump Administration will walk away from the nafta talks. The seems to be a clampdown in the offing, the government drawn up a bill to outlaw cryptocurrencies. Revivalalk about this or this wording of a rebuttal coming from the chinese. We riled the bond market with his story. 2009,ve to go back to talk about the veracity of the bond market. Be careful with every story that comes out in terms of the denial. The bond traders are questioning this runup because if you make it rich enough, they will come. The bond auction that we had yesterday evening, we saw a slight flirtation with the highest level since 2014. This is what weve got, demand for the option came through quite strong. It was 20 billion of notes, it through the strongest ratio since 2016. That is the red line. Funds who run mutual bought 17. 4 of this auction, the most since august 2016. The yield goes up and delivers for pension fronts who are morally and legally obliged to take the stock on to their books. They took the lead since march of last year and even bill gross is saying that the bear market he is talking about is a mild one. What is it with these guys . And thent up on fire say dont worry, its going to be a mild one. Doa and then you have to with it at 6 00 in the morning. Go to talk about commodities later on and how you want to play that. We will get thoughts on commodities on oil, gold, and stocks associated with the best way to play this market. Thats get the first word news update with Juliette Saly. Juliette this President Donald Trump has predicted that clashes korea and the u. S. He was speaking during white house News Conference with the norwegian prime minister. Were building up our military to a point that weve never been before. Weakened overuch riod of time, pe but not with me. I dont expect that were going to have because of strength, these through strength. Germany is maintaining its hardline stance on brexit, demanding that the u. K. Pay for its privilege after it leads the block. Britain cannot hope for a trade agreement that includes Financial Services unless it agrees to make substantial andributions to the budget adhere to european law. In the k, Job Vacancies in london science industry suffered what is being described as a seismic drop in december. A new survey found a number of positions fell 52 . Recruitment firm Morgan Mckinley says his findings underscore the brexit is from the city after a decline in job openings year on year. Canadian officials said theres an increasing likelihood that President Trump will give sixmonth notice to withdraw from nafta. A white house official insisted there has been no change in the president s position on the tray packed. A wtoate this week filed complaint over american duties, move described by u. S. Trade representative robert white house or as an illadvised attack. Lower afterrading south koreas Justice Ministry said it is preparing a bill that which i down Digital Currency exchanges. An earlier report cited the ministry expressing concern about serious risks associated with exchanges. Concerns a been raised by the asntrys officials demand demand for cryptocurrencies has driven up demand. Armed these have stolen jewels and other goods from a boutique in a paris hotel with media reports valuing the hall at almost 5. 5 million. Police arrested three suspects but at least to others got away with the loop. Several highend paris Jewelry Stores have been targets of dramatic robberies in recent years, including cartier, and harry winston. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. You can find more stories on the. Loomberg at top the equity momentum has come to a bit of a stall here in asia. In holding at its best we can about six week, the nikkei down for a second session. Look at hong kong, trying to rally for 13th straight session again today. It has been a fluctuating trade. The way down by those cryptocurrency reports and australias market eased from that decade high down by another. 5 today. Looking at stocks in detail, weve been talking about the point and what south korea has said. We seen qatar, one stock that was falling by 7 . Morgan stanley analyst have been very busy, theyve upgraded air overweighthares to and jb hifi industry, saying christmas sales were strong on the back of iphone x sales and flatpanel tvs. Saying they can compete with amazon down under, so couple of bright spots, but overall it has been a week session here in asia. Probably just taking the foot off the gas a little bit. Lets talk about china. Saying a bloomberg report may have quoted a wrong source. Senior beijing officials recommend is slowing or halting all purchases of u. S. Debt, they got a little jittery yesterday. Bill gross is among those who have called for an into the three decade bull market. That imar market talking about is a mild one, but it includes negative crisis for highyield bonds. Manus thats get to our strategists, mark joins us this morning. Gross wasesting, bill one of the two big names i used at 6 00 a. M. , and here we go. Drop. L be a mild mark, good morning. What do you make of it . Had this movie playing before and will probably have it played in again here it several times when still spiked toward highs, they will these regular names and quite often its these two names. I think theres a misconception that just because of a 30 year bull market, we suddenly need to go into proper bear market. Bill gross did clarify his comments and say hes talking about 15 or 20 basis points in that is pretty irrelevant. Overall this year we could see yield stick slightly higher but theyre unlikely to run away. The structural inflationary play should be a globally are still there. This is why the transitory inflation weve had for many years in the u. S. Is not going anywhere and we are unlikely to see 10 year yields run away. I dont think it will be in a proper bear market and i think that it would cut the , irification out of china think well see lower yields the rest of this month. Price yesterday even before the chinese clarification was very positive for treasury and negative for yield. Now that weve had this clarification come he can assume the market will start chasing treasuries higher and bring those yields lower for the rest of this month. Rest of the year it will probably be a volatile range but it will not be a fair market. Anna its been three decades in the making, hasnt in it, the bull market. So you will be right at some point, im sure. Its all a question of timing. What about the china clarification, as you call it . China pushing back a little bit this morning. What do you make of that . Are two things to take into account. China has not been the marginal driver of ponder treasury prices in the last year anyway. They have been allocating their resources based on how their managing domestic policy. We were seeing last year that as dollar see and why was rising, they were reducing their holdings. Since then weve seen dollar cny come lower. Its been fluctuating backandforth. As a clarify today, is just normal operations. Even if they do throw up a trial doloon suggesting that might a strategic reduction of the treasury holdings, i cannot over the ideas that many people have suggested this is a negotiating ploy with trade negotiations coming up this year. They are not going to be vastly reducing their treasury holdings. That would be a terrible thing for china and restart a and reduce their own reserve holdings as not a policy they are likely to follow openly. Essentially what the daily profits are saying. Saying were fundamentally estimating what is going on here, if anything at all. This is a broadside perhaps to the chinese. This is what they said in terms of if they really were going to reduce the treasury holdings. It would be deeply threatening to the goldilocks scenario we are currently enjoying. Would be like three bears threatening markets like Leonardo Dicaprio in the revenant. He gives you some sense of the unease that is out there. Thats where our guests have said so far this year, it is global trade. The market should be more focused on perhaps then the withdrawal of stimulus. Nafta risk is very valid and very real. The repercussions will be massive if that does break down. If the u. S. Does pull out and its the end of talks. Its true there are genuine risks out there. If thethem is obviously stimulus is removed to quickly. Its important to note that were still in the goldilocks scenario at the moment. We have relatively low inflation and yields. Good Global Growth and a new tax plan passed in the u. S. Itmay not boost growth but will certainly boost earnings. The earningspershare growth will be higher again in the pricetoearnings ratios will look more attractive. And no longer looking at stretched as they were. Overall environment is positive for equities globally. There are risks but it does not mean you should start trading those risks before they transpire. Deal and the art of the know larger, its hard to what to take at face value and what to dig underneath. Mark cudmore joining us therefrom singapore. Dont forget if you have to turn of bloomberg tv, Bloomberg Radio is right there in your car or on your device however your traveling to work. Pick it up on Digital Radio in the london area as well. Crude holds onto its gains, near a threeyear high. We will pick up on that on Bloomberg Television later. Surge,japanese stocks that story in technicolor, next. Anna and earnings from some britains biggest names today. This is bloomberg. Manus a live shot of Sydney Harbour there. What kind of day is it . A little bit overcast. The aussie dollar is pumping it out. November retail sales beating the analyst estimates, up. 4 . That certainly beat the estimate, given it it of a kicker to the aussie dollar. Heres what you should be watching for the day. Anna the German Economy ministers estimate at 9 00 a. M. U. K. Time. 3. 5 hours later, an account of the december policy meeting. President dudley delivers his keynote speech on the outlook for the rest of the year. Lets get the Bloomberg Business flash with Juliette Saly. Juliette ferrero nearing a deal to acquire nestles confectionery business for 2. 8 billion dollars, according to a person familiar with the matter. The business inclusive butterfinger and baby ruth rants and is suffering a decline in revenue. Selling 1. 5 billion euros more of its remaining stake as part of its ongoing plan to focus on drugs and life sciences. The German Company has been steadily paring its stake in the former division as it shifts away from Industrial Chemicals to focus on pharmaceuticals and cross chemicals. Its agreed to buy monsanto, a deal that will test buyers financial firepower. Rio tinto has dropped out of the bidding for a stake in one of the worlds top lithium producers as it pursues other ways to capitalize on the electric car boom. According to people familiar with the matter, rio decided not afterceed with an offer information in a data room. Ats worth about 5 billion current market prices. Representatives for rio tinto and the others declined to comment. The biggest ever makeover of the diet coke brand for cocacola. New versions include ginger lime and blood orange. Diet coke was launched in 1982 and while it remains the third biggest selling carbonated soft drink in the United States, sales volume fell more than 4 last year. The original diet coke not be changed. Thats your Bloomberg Business flash. Anna ending on the biggest story there. It wasnt the first time the central bank has done this, the announcement a guided speculation that officials are looking to relax the tenure bond till target this year. The back of this news we have seen the japanese yen strengthen and the topix klein almost 4 this month. Rick, good to see you this morning. Thanks for joining us. Would turn to the boj move, is this still tightening from the boj . Is this just a small technical tweak . Rick i think most people think it is probably the latter. The Market Reaction to it i think is interesting. Presage what is likely before us over the next couple of years. As the big Central Banks wind back there stimulus and start tapering. I think we can have a lot of comfort that Central Banks are going to be if it all possible, very moderate, gentle, and certainly careful, presuming they can precipitate a really big drop in bonds or big rally in the u. S. Dollar, thats the thing, from whatever they do. Manus good morning to you. If i look at the markets im going to show the veer what i got here, which is again rising and the yield rising the yen rising and the yield rising. Rising bond yields are not at catastrophe. Rising bond yields drives the banks. It may be just a precursor to a little bit of a fade in the qe move that might not necessarily equal disaster. Ric thats true. This is one of possibly the core questions that investors will have to answer in the next year or two. As you rightly say, usually the early stages of monetary tightening, which are associated with a bond yields inching up often, or great news for equities because essentially, not are still very low really pulling back the economy at all and economy is rising. The traditional goldilocks scenario. Is it different this time . Thats a question. The reason it maybe different is pushed policies have bond yields down to such low valuations mayty be to some extent the payment almost very low yields. That may be the case, although i dont see that as being a catastrophe. Be 10 worth of bay andon a relation, profits continue to grow at a good pace in the overall result for stock markets could be a bit of a pullback rather than a real catastrophe, as you say. Anna thats the global picture, nicely laid out. Terms of the japanese story, its fascinating, talking about whether theres still tightening going on from the boj. That pushed up the yen. It has not really hurt japanese exporters and the stock market in the way you would expect it to. Measures orader broader look at japanese stocks has not done all that badly despite all the move higher in the currency. Overall,s right, and japanese valuations are probably not too high, in my estimation. I think the Market Reaction we are seeing at the moment probably reflects that. Although even when we do get some official move to tighten policy, there may be a bit of an impact. Manus always good to get your input here on the market moves this morning. Cheap Market Strategist at cmc markets asiapacific stays with us chief Market Strategist. You can get all of our charts and functions at tv. It can even ask ask a question, nothing too hard this morning. It has been dubbed chinas despite the best efforts to curb the crypto market. s founderiew with neo coming up next. Well talk about china oh and whether the bitcoin miners are moving locations to take advantage of Cheaper Energy prices. And what is south korea up to in terms of regulation . This is bloomberg. Anna this is bloomberg daybreak europe. Its 6 30 here in london. 7 30 in many other parts of continental europe. London asive shot of its about to wake up this morning. Marketsheck in on the. Ent nedra change we are seeing weakness across a lot of the indices. Australia is down, some weakness in china and japan as well and in south korea. Msci cassation asiapacific down as well. One bear market not quite, Morgan Stanley setting itself up against bill gross. 2. 53 after the tenure auction went well yesterday, but also we had news from china saying the report that it could be halting or pulling back on this treasury purchases. The upper line is showing the 2014 highs in the tenure treasury yield. We are still a little bit of away from that at the moment. A bit of recovery in the dollar against the yen today. Its still near a six weeks low. This chart is shown some technicals where the dollaryen andw broke below the 100 200 day moving averages among some other technicals as well. A little bit of recovery in the dollar. Finally, i want to take a look at bitcoin because weve been seeing some moves here, a bit of a pull pick a bit of a pullback. Its dropped as m

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