Transcripts For BLOOMBERG Bloomberg Markets European Open 20

Stocks drop and bonds advanced. Setting up the potential for further problems. I think there is a good chance that we will see some progress on trade discussions. I am encouraged. Anna a luxury takeover. After theack in talks annuities owner boosted its offer for the u. S. Jeweler. Good morning. Matt lets take a look at futures quickly. They are down acrosstheboard. More severely in europe. The s p, dow, and nasdaq futures are all down. Maybe there is a little bit more optimism. What you see . Anna maybe there is a little bit more optimism. This really does highlights the move to the downside we are seeing and stocks. These are session lows. It lifted the hong kong market. We saw the senate vote to approve that hong kong bill. Wait to see what President Trumps approach will be on that. Lets focus in on the markets. There he good to have you with us. I guess we have to ask ourselves how far stocks can fall if we dont get a phase one trade deal in 2019. There have been reports this morning that perhaps any kind of signing might be pushed into 2020. There has been a lot of biggest debate about what was the expectation in the markets. Is really expecting a phase one deal to be signed this year. Especially after a recent meeting got canceled. We think the market expectation out there is there will be a delay in the tariffs. But we will not get a signing and the deal. There will be no major deal. I think you can see that as part of the expectation. This was supposedly saying that the deal not might might not be signed until next year. Than 1 of its record high. Trade is driving markets all major ebb is not a and flow. Likely, even if a signing date, markets will really care. So with liquidity on your side, to you by that . I think we are in a moment where tactically, they will be rewarded. Global growth still looks pretty negative. Do think that point you have made about liquidity and momentum means they will still be traded. We could get a black swan. Break trade talks will down entirely. This is not about a delay. Not about a hiccup in negotiations. That will be very bad news. We are going to go in rocky fashion. You suggest a trade narrative is the ebb and flow of the market. Maybe there was just a reassuring message. But nothing big was changing. It is a great question. I think the answer to it has changed throughout the year. We are sixmonth months on from those may talks breaking down. Clearly trade has not been driving markets this year. Most important at the moment is liquidity. Last month was the biggest ramp. P that we have seen we know what happened after december last year. Liquidity is probably the biggest driver right now. Colleague has written a piece about while we talk about trade, there may be a big macro picture. Subdued growth is a positive environment for u. S. Equities historically. Seen we seem to have change bottoming out in the data. We did not get a german recession. We are starting to see data points that were incredibly weak. Is this looming possible emergingmarket debt crisis that you are talking about. What do you think are the big headwinds . Unfortunately we are going to be discussing the u. S. China relationship here. The ultimate path of that will remain important. That will be a significant boost to the markets. The Global Growth outlook is still pretty poor. 2019 was a year of bond markets. The support from yield is not going to be there next year. We are seeing central bank starting to question their policy. Question the idea of these very low rates. This might become more of an issue in 2020. Matt thank you very much for joining us. We both thank you. We both appreciate your time. Lets start in the u. S. Damaging testimony for President Trump and the impeachment inquiry. Aty giuliani was working trumps direction and demanding a quid pro quo from ukraine. Up a white house meeting for the leader. Israel is nearing its third election and a year. They were unable to form a government. Now something that has never happened in israels history, parliament tries to get to line up a new governing coalition. If it cannot break the deadlock, israel will go back to the polls. There were differences over climate change. They were mostly united. Supplied fiat has with a lawsuit implicating its further chief executive and corruption. It has always landed some high executives in jail. The accusations. This is bloomberg. Anna thank you very much. Of great, a host interviews from the Bloomberg New Economy Forum in beijing. Former white house chief executive advisor gary cohn. All of them joining us from beijing. Allmber, Bloomberg Radio is over the forum in beijing as well. This is bloomberg. Common,ould pursue cooperative, sustainable security and reject zero some games and cold war mentalities. The cooperation is the answer. The world will change forever. I worry that some of this will be reversible. As trade and tariff negotiations go forward, will we see supply chains and customers move . We have not seen that. We continue to serve our customers in china. View from the the top. Ceos and government officials. Lets get to another one of our exclusive interviews. One of the big issues when you think about Economic Growth in the medium and long term is the u. S. And china finding a way to coexist more productively. I have been fortunate enough to speak with policymakers on both sides. Im encouraged. We can expect the progress to be in stages. I think it is important. I think here in china the chinese realize it is important for them. The u. S. Realizes it is important. It is important for everybody. Could a phase one deal lead to a phase two . I think that we have to hope that over time, in a world where both of these economies are super important to Global Growth, that we can find a way to make progress on all of these issues. Certainly a step in the positive direction. I am a glass halffull guy. I will assume that china is interested in the u. S. Is interested. Talk to me about hong kong. You were just there. Celebratingeen around the world the one 50th anniversary of Goldman Sachs. I spent some time in hong kong. It is very complex. We are watching it closely. I was glad to spend some time with my team. The routine that people experience in a city like that, when it is disrupted, it gets tense. It is quiet. There were not many people on the streets. You can see the impact on the economy. We are hoping for a resolution because that is good for everyone. What are your plans in hong kong . I dont see any change. Hong kong has always been very important as a Financial Center across the Asian Pacific region. I think china recognizes the importance of that. It will be important to find a resolution in the near future. Can it lose its status as a Financial Hub . I dont see evidence of that. The situation needs to be resolved. This is a challenging time. That was the ceo of Goldman Sachs speaking to Francine Lacqua. It is interesting to see his comments around hong kong. We also heard from bill winters. He said the hong kong situation is manageable. Nobody works in the Banking Center will want to see any disruption in hong kong. We keep that in mind. But it will be fascinating to see how this is resolved. Absolutely. There was a column on the possibility of using china with other tools. The issue that the senate is pushing now supporting hong kong protesters that donald trump is said to be ready to sign could be a really big issue. This is where you get are opinion columns. It is very interesting and certainly concerning. We are minutes away from the open. Lets take a look at your stocks to watch. Them. S one of the german steelmaker said it would ask shareholders to approve a suspension of its dividends for two years. This is bloomberg. Plus, much more from the Bloomberg New Economy Forum in beijing. Stay tuned for that. Only cooperation is the answer. By working together, sorting out differences. Looking at the common ground. All of this is important. Anna that was the president of the Asian Infrastructure Investment Bank on the potential for a phase one trade deal. He was speaking on the sidelines of the new Economy Forum. Plenty more to come from there. Lets go around the newsroom. It looks like it will open a bit softer. This is after they are sweetening their bid. The two are said to be entered to talks. In october, it was about 120 a share. Their shareholders will be asked at the annual meeting in january to suspend their dividends. They are already in the process of disposing their elevator unit. Either by a sale or an ipo. These are down today. Anna we dont so frequently get guidance to the upside and the Banking Sector in europe. Of their Capital Markets said everything is on track. This will be the sixth Consecutive Year that they see doubledigit returns. On schedule to cut their costs to income ratio by 55 . Definitely some positive numbers coming out here. Anna you can get all the latest stock stories by the mobile app. Keep an eye on fiat. There is legal action being taken. The it is saying that gms lawsuit is unfounded. On tobacco companies. They seem to be increasing their guidance. Five minutes to go to the market open. We expect to be weak at the start of trade. This is bloomberg. Anna a minute to go before the start of cash equity trading. Lets use this minute to see where we are. It is trade once again. We are off of those lows in the asian section. We had some more positive comments coming through. We had a pullback from those session lows. We are expecting some weakness. Markets getting open for thursdays trading day. Lets see if that extreme level is being led by the at inflow of the trade narrative. Is it all about trade or is it about liquidity . This is the extent of the weakness. On a day like today where you have the trade story dominating, you expect to see much of the stocks working in one direction. All of the sectors have been in negative territory. It is certainly worth bearing in mind. This is similar to where we have been. Lets get to the individual movers. Stocks going down. Only 45 to the upside. Lets have a look at what is going on. British American Tobacco moves up. We have seen this positively moving up. I think there was an update for the market. Had an upgrade from one of the broken ones. That is in focus. Lets move to the downside. That is the biggest fallers. Down by some 8 . It is a big story before the break. Blowing putting some of the blame. They missed on some of their numbers. That stock is down by 3. 4 . Fell European Markets lower. The move is likely to set up a citation. The trade war has change the world forever. China is not the producer of goods any longer. That change is happening. Supply from a of single source, for anyone in the world, it has reduced. Joining us now is the cio of connor broadly wealth management. A widely shared opinion that this changes the paradigm in global trade. We will not ever go back. Does it change the way you view your investment imperatives . Up to a point. Accepted thatly there is no recessing to where we were a few years ago. It is an interesting phenomenon. His views are not mainstream. He has changed the agenda. You see that throughout the world. I dont think there is any reset. I think we could go years or decades in terms of the economic rivalry inside the u. S. And china. It was a collaborative relationship before. Now is aare right wider trade resolution. There seems to be a limited truce. In terms of supply chains, you can identify certain winning country strategies. You will see outsourcing from china. One winning country is vietnam. It is caught in the net in the same way. The only problem is there is very little spare capacity. Do you see any other emerging relationships . One strategy urged by economists for europe is to do you see anyr emerging build a stronger relationship with china. To take advantage of the u. S. Protectionism and build an exclusive relationship with asia. Do you see that as a strategy that will pan out . It is interesting how it fractures the postwar consensus in this way. We will have to see. Europe has some pretty big trade issues. These are the big economic blocks. It is interesting to where we will interact with that triumvirate. Anna good morning to you. I want to bring this chart into the conversation. Where do trade talks had next . Colleaguewith a earlier on whether it is the ebb and flow that moves markets. Or if it is the liquidity of central banks. It does raise questions as to how much we fundamentally care where the trade conversation goes. It has been intriguing. I do think it is a very important question to ask. We are attributing a lot of what is going on in the world to the trade narrative. There is probably a lot more going on under the surface. One big factor is liquidity. Raising rates and lowering rates. How that percolates around the world. What is going on in china. How much of the china slowdown is due to trade . How much of it is due to what we have been familiar with to a long time. Which is now fading. And how the authorities will try to reconcile that with lower rates of longterm growth. Had a couple of guests thinking about that. Int about what we are seeing hong kong at the moment and how that plays in . We have seen the level of violence and level of destruction to daily life. This may be a question for the future. But is that something that we need to question . It is fair. We will feel a Great Sadness about that. How will china relate to hong kong . I find it difficult to be optimistic to that. I think china will exact a toll on hong kong. Matt we will talk a lot more with you about a number of things. I think gold is an interesting thing to touch on. Up next, we will bring you the stocks on the move. The Italian American carmaker is down this morning after gm surprised with a lawsuit. Plus we will have more from the Bloomberg New Economy Forum in beijing. Stay tuned for some big interviews out of the chinese capital. This is bloomberg. Anna welcome back. 13 minutes into your trading day. A negative session for european trading markets. Preoccupied with the latest noises around trade. Some cautious optimism being expressed. Not enough to override with we get a phase one trade deal. A lot of these european moves are coming off of u. S. Headlines. Regulators are hitting the brakes on a drastic move that would force them to lower the nicotine level in cigarettes. That plan now hitting the brakes. Good for the tobacco companies. Down nearly 8 . It will be significantly worse. They are set to suspend their dividend payment. They were talking about the fact that their businesses are not doing up to satisfaction. They are going to push ahead this elevatorof unit. This comes out of gm surprising with a with a fiat racketeering lawsuit. That fiatnote chrysler has denied these allegations. Thank you very much for that. A look at some of your big movers out of london. Lets get to ubs. Boss says his company is very wellpositioned despite a number of looming risks, among them the situation in hong kong and the ongoing u. S. China trade war. Toward our Center Position as the leading wealth manager in the world. The leading asset gather in the world. This is a secular trend. It plays very well to who we are. We are extremely wellpositioned to capture growth. You have all the chess pieces on the right position on the board. Are you the right scale . Do you think ubs is the right scale . We are the largest wealth manager in the world. The size ofause of the clients assets. But also the fact that we are a leader in the u. S. We are one of the leaders in asia and europe and switzerland. We are wellpositioned to capture this growth. It will eventually be an issue for many players. Tell me that you are not going to do a deal. I have come to you a few times this year. The rumors in the market are that you are looking at this or that asset manager. Will you need to do a deal to rearrange the scales . We dont need to do a deal. That is exactly like saying youre never going to do a deal. Nobody can, in any industry, say that you are rooting out doing a deal. We are not forced to do deals. We have a good strategy. It has been quite successful for the past few years. We are wellpositioned to capture organic opportunities. If we have an opportunity to evaluate nonorganic options, we well. But it is not something we are forced to do. There is a report that you want to stay until 2021. That 2021 wille be a time for you to think about moving on and handing it over . To come to zurich every quarter. It is a question for the market. You set the benchmark. For the reinvention. When do you think is the right time for you to think about it . I have set it in the past. Enough has been said about succession. We have set everything that needs to be said. That was manus cranny at the new Economy Forum in beijing. To focus in on the european as well. Facingne lagarde is because to refocus her lobbying for looser fiscal policy. Rather than seeking national stimulus. We are going to see her second to official speech as president of we did not get much out of the first one. What kind of message do you expect to hear from her and more broadly, her era at the ecb . Continue to we will hear the message that when reaching the limits of monetary andcy in terms of stimulus further calls for fiscal stimulus. Is a trickyis debate wherever it takes place. Independence of centralbank policy. Of course we have that meeting on monday between jay powell and donald trump. That is showing you that interplay. Is that much more complicated because of the nature of the european union. I think we will hear that call once again for fiscal stimulus. It will remain a big global theme in the next year or two. Where is it going to come from . Will it happen . We know that monetary stimulus is becoming less active, particularly in europe, where they have this big problem. The negative rates that we have already had incrementally taking the rates further. It might cause as many problems as it solves. Anna that is interesting. Where does that lead Monetary Pol