Transcripts For BLOOMBERG Bloomberg Markets European Open 20

The former fed official draws criticism after suggesting the central bank hold back on stimulus that would help Donald Trumps trade policy and reelection. The president s deadline. Italys political leaders meet today seeking agreements on new government. Failure could mean a new elections as soon as november. Bp exits alaska. They sell their business in the state for 5. 6 billion saying it is no longer a competitive investment. Good morning. Matt good morning. We are looking at bund yields down to 70 basis points right now. Take a look at the threeday trade. Yields continue to follow how lower fall lower and lower. For the most part, futures are pointing to a negative open right now. We have futures down just marginally on dax futures and ftse futures. Futuresowing cac falling more significantly. Anna we look at europe versus the u. S. We will see how that levels itself out. I have a mixed picture coming through in the asian session. A bit weaker over in the chinese markets. The Investment Community really struggling for direction around the trade story, trying to guess what happens next on trade, where the white house and beijing take us next on this one. We see the dollar of a bit stronger. Some movement to the downside in other currencies. The New Zealander dollar, citing in that region the dovishness of the central bank has one of the reasons for the fall in the new zealand dollar. Lets move onto the other side of gmm. A mixed picture coming through in the equity markets. The big talk was all about the italian bond market yesterday. We will see whether we get any type of movement in the politics, what that does to the narrowing of spreads we saw in the italian market yesterday on btps. Lets look at commodities. This has been a story of the last 24 hours, crude prices on the rise as a result of expectations we are going to get sinking u. S. Inventories. How good are oil prices . An interesting chart i have got for you later on that particular subject. We will talk more about commodities and where we go next. The big story overnight, really in the latter part of yesterday and playing a reaction coming through overnight, bill dudley has suggested the fed should reject interestrate cuts that would help Donald Trumps trade policy and would help his 2020 reelection. In an oped for bloomberg opinion, the former new york fed president states policymakers should not bailout an administration that keeps making bad choices on trade policy. In response to the column, effect Spokesman Says Political Considerations a fed Spokesman Says Political Considerations play absolutely no role in fed policy. Lets bring in a markets perspective. Mark cudmore in singapore is with us. Really interesting comments coming through from bill dudley. I know you have been talking about this. Your initial thoughts when you saw this oped . Did you think this was some sort of big expose about the way the fed functions behind the scenes or would it have been naive to think they have no Political Considerations . What are your takeaways . He is the former new york fed president. He does not have a role in the fed right now. We have to bear in mind that his incentives are slightly different, his incentives for writing this piece. He would not have written this piece before. I dont think this reflects how the fed operates. I dont think the fed will operate like that. I think the statement from the fed was important to clarify the political that Political Considerations do not weigh into their decisions. It is furthering his agenda for perhaps his own political ambitions farther down the line. I dont think we should read too much into it. Unfortunately, they are going to see those headlights. Matt im shocked. Mark im afraid its true. We cannot dismiss it because of all the headlines. Matt i am absolutely shocked. I cannot believe you are saying this. I mean, he was the president of the new york fed for nine years. It was the vice chairman of the Federal Reserve until last year. Hero a piece suggesting the fed get involved in the 2020 election he wrote a piece suggesting the fed get involved in the 2020 election to defeat donald trump. He spent a weekend in deep discussions with leaders from Central Banks around the world. This has to show that central bankers are political animals. That, what issay his role now . He has no role at the fed now. His role now is at princeton. His role is to have an interesting opinion, a controversial, exciting opinion. His role now is more similar to my role than anything to do with the fed. He is there to say an interesting view. There would be no point in saying something that would not get readership. His incentive is to attract attention. Perhaps his ambitions are if trump loses the election next year, that he gets into the next administration as the next treasury secretary. Perhaps this is furthering his own gains. He has no role within the fed now. I think it should be dismissed but it will not. We see those headlines. Dudley is a big name in Monetary Policy. We forget that he has no role on the fed. I think it undermines fed policy a little bit. If they do not cut in september, people will go, there following dudleys advice. If they do cut, are they caving to trump . Fed policy has been undermined all year by the tweets coming out of the white house. Now, it is even further undermined. Something that it provides more volatility, and undermines the dollar live as well. Will billmuch dudleys oped for bloomberg impact on u. S. Rates . There is another way to look at this and the impact it will have on rate setting, i suppose. Does it act as some sort of trial balloon for the relationship between the Central Banks and government policy . This is not just a fed question. We perhaps see central banking officials at odds with political decisionmakers. Mark i really dont think it does. Dudley had nine years working at the fed where he did not express anything along these views. That might have been a trial balloon. He has waited until now when he is working as an opinionhe has other incentives, when he has moved beyond his career at the fed. He has had a great career at the fed. Matt but mark, he should have been were this kind of thinking truly offlimits in a completely independent and apoli tical Federal Reserve, he would have been so indoctrinated to that thinking that he would not be able to express this kind of view, certainly not after meeting with Jerome Powell and spending the weekend with all of the voting members of the Federal Reserve. I mean, it is just, i think, truly on believable unbelievable not that the fed is political, but that one of their former leaders out some self himself. Lf outs that the fed should use Monetary Policy to influence political elections is unbelievable. Is ani think dudley exceptionally capable person. In his time at the fed, he never went beyond outline. I think is possible it is possible that he has the ability to transition to a new role. He is in a new role with new ambitions. If you want to be treasury secretary under a dramatic democratic president , what better way to show where his loyalties lie . He is a very smart and capable guy. This piece is gathering attention. I think he has the capability of transitioning from been the fed governor to transitioning to a new career beyond a fed governor. It does have an impact on the markets. I say it should not, but it does. People dont see him as just an opinion writer. They see him as, what does he know thats going on in the fed . It does undermined Monetary Policy. It undermines the dollar. Its another negative for the markets but it does should not be given the week it has it hasven weight been given. Get a bloomberg first word news anna lets get a bloomberg first word news update. The u. K. Sees an opportunity to restart brexit talks with the eu after Prime Minister Boris Johnsons meetings last week with his german and french counterparts. A u. K. Official told us they appeared to relax their language on the need for the irish backstop. Dropping the provision is one of johnsons red lines for radio. Deutsche bank has confirmed it has tax returns sought by house democrats. They had a request for Financial Information on President Trump and his family. Exactly whose returns are they . That is still a mystery. The disclosure was made to unappeals court on the panel is considering trumps request to block access to the financial records. Results bolsonaro says president macron must apologize for socalled Brazils Bolsonaro says president Emmanuel Macron must apologize for socalled insults before accepting funds to fight the fires in the amazon. A Spokesman Says any funds will be welcomed as long as they dont interfere with brazils sovereignty. Former malaysia Prime Minister in court on charges related to an investment fund. He is standing trial on 25 Money Laundering and corruption counts. The trial reached the end of the prosecution phase yesterday and may conclude by november. Najib has pleaded not guilty to all charges. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is blumberg. Anna, matt . Matt thanks very much. Annabelle droulers with your first word news out of hong kong. It is crunch time in italy. A Coalition Deal is nearing, with Giuseppe Conte seen staying on as Prime Minister but key Sticking Points remain. We will talk about what they are and what can be done about the next. Them next. Emic remember, Bloomberg Radio is live on your device. This is bloomberg. Back to bloomberg daybreak europe. We are 16 minutes away from the start of the european cash equity trading date. Now to italy, where the fivestar movement and democrats are meeting today to decide on a new coalition. The sides have agreed on Giuseppe Conte returning as Prime Minister but the key Sticking Point is fivestar inder luigi dimaios role the new government. Maria tadeo, good to have you on this story. How close are we to a deal . This seems to be a crucial date. It really is crunch time today for italian politics. It has been almost three weeks since the crisis started. The negotiations between the five star and p. D. Are still ongoing. In principle, there is still a deal which is not final yet. It would see a new majority led by Giuseppe Conte and would avoid an early election. The market likes this. They like the fact that you can have a government not go to a new election and perhaps be inclined not to be on a confrontational road with brussels. Perhaps we will see tensions deescalate with a new majority. The one Sticking Point and this has become a big issue over the past 24 hours, is luigi dimaio, who is currently the deputy Prime Minister in this country. The p. D. Says he really needs to go, otherwise there is no deal. He cannot stay in that job. Ni . T what about salvi a couple of weeks ago, he seemed like a huge winner after the elections. His party had garnered so many boats. It looks votes. It looks like he was going to topple the government to become the new leader. Whats his deal now . The question now is when did this whole thing go wrong for him . He was polling 40 . He was assured there would be a quick election. That may not be the case. He could see himself going home emptyhanded. That tweet from President Trump yesterday where he said he likes Giuseppe Conte and he hopes he can stay in office, so everything that could have gone has gone salvini wrong, especially if this deal is confirmed today and we see a government that could stay all the way up to 2023. Anna maria, thank you. Maria tadeo live in rome. Lets take a look at the futures. ,. S. Futures pointing higher but the european picture looks more mixed. In fact. , fairly flat on ftse futures. We have a little bit of movement on the other markets but essentially pretty flat. U. S. Futures suggests some of said some upside. Lets get the Bloomberg Business flash. Heres Annabelle Droulers in hong kong. Thanks. A former uber engineer is being charged with stealing driverless vehicle technology. Counts andcted on 33 faces a maximum of 10 years in prison if convicted. s lawyers say he did not steal anything. The indictment adds a new waymosin the saga of case against uber. Oflip morris on the back their biggest deal. Close morris and altria to a merger. They hope to complete the deal in less than six months. Phillip morris owns about 50 of the combined company. Home exercise start up peloton is going to go public. It will likely be the years biggest ipo. The Company Seeking a valuation of at least 8 billion. It is likely to help make 2019 a bumper year for public offerings. It is already set to be the best since 2014. That is your Bloomberg Business flash. Matt Annabelle Droulers bringing you your business flash. I want to quickly bring you break some news on toyota. Toyota and suzuki going to enter into a capital alliance, enter into a Capital Partnership according to nhk. Not as big a deal for toyota, which is the second biggest carmaker in the world, as it is for suzuki, which probably makes so few cars in your market that i am guaranteeing you can only name two models maximum. Toyota and suzuki together will enter into a capital alliance, according to nhk. Anna dont test me on those models. Lets talk about whats coming up. We have earnings from the biggest banks in china this week. They control more than 14 billion in assets. We get a slew of Economic Data out of europe, including secondquarter gdp for france and august inflation for germany on thursday. Matt . Today, the u. S. Releases ecodata. The second reading of secondquarter gdp estimated to be revised down slightly to 2 . On friday, the south Korean Central Bank sets rates. On sunday, the next round of billioniffs on 300 dollars of chinese goods will kick off sunday, september 1. We are minutes away from the open. We will take a look at your stocks to watch, including bp. The oil major is getting out of deala and a 5. 6 billion in a 5. 6 billion deal. This is bloomberg. Anna seven minutes to go until the start of the equity trading day this wednesday morning in europe. Lets get our stocks to watch from around the newsroom. We gathered dani burger, paul jarvis covering thomas cook, and Annmarie Hordern focused on bp. Lets go first to bp. A very sizable asset sale for bp. Icallyy are bas exiting alaska completely and selling their assets for 5. 6 billion. That means alaska and the u. S. s most liquid oilfield there, as well as all of the pipelines. Bp has been there six decades so its quite a big move. Shares are looking to be higher at the open. Matt paul, lets come to you on travel and Airline Operator thomas cook. Fores, the rescue deal thomas cook has finally come to pass this morning. It is a 900 Million Pound deal involving both chinas fosun and the companys lenders. This will help secure thomas cooks longerterm future and get it through the low season over the winter. What does it mean for existing shareholders . It will be massive dilution of their equity position. They will be left with very little. Two participants will end up owning almost all of the business. It will be a rough time for thomas cook shares this morning. They have already fallen more than 90 in the last year. Anna lets talk about the Engineering Software business. This is a case of transatlantic influence, i suppose. Exactly. There u. S. Cut therefore you u. S. Peer cut their fullyear forecast. Autodesk and market trading tumbled 12 in postmarket trading tumbled 12 . Matt thanks very much. Appreciate your time. You can get your latest stock news from our Equities Team by typing first go on the bloomberg and via the mobile app. Toyota and suzuki entering into a capital alliance. Toyota will inquire about a 5 stake in suzuki for ¥120 billion, a little over 1 billion. The market on the others of this break. Other side of this break. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. Anna a minute to go until the top of cash equities trading. Lets have a look at the markets. The asia Pacific Story is fairly flat. Up. 10 . Investors trying to establish and make their best bet where they think the trade story is going to go next. This is the s p 500. Showing a more positive story than european features. Oil prices. A hike on the expectation well get inventory information that will support higher