Transcripts For BLOOMBERG Bloomberg Markets European Open 20

Shinzo abe announces a package with 240 billion. Will europe follow suit . Anna another luxury buyout . Kering has talks on a deal with montclair. In search of consensus, oil eases ahead of todays opec meeting after the biggest surge in over two months. We await the pricing of saudi aramcos ipo. Matt i am looking first and foremost at the pound as i pull up my worksheet this morning, i. Oticed another spike today this is the threeday chart. It looks like markets are getting more confident in conservative victory in the upcoming election, just a little over one week from now. Take a look at the futures in europe. We have trade optimism that started this time yesterday after a Bloomberg School saying the u. S. And china are closer to a phase one deal than the rhetoric would lead you to believe. The japanese stimulus witching , daxes up both in europe futures up 0. 2 , but the futures up 0. 2 as well, and in the u. S. U. S. Futures, green arrows. Dow jones, s p 500 many contracts in the green. We will see if those futures for the ftse 100, whether they tell us given the strength we have seen and the british pound. P by 0. 25 ofity markets in asia, a lot belief in a phase one trade deal. Saying, ignore the rhetoric and the tone set by President Trump. What matters are the conversations behind the scenes. Not seeing a big boost in ofanese assets as a result the stimulus package or fiscal push, but that certainly will be mentioned. Out. Ndian asset stands in general, indian assets in focus, a surprise hold from the r. B. I. No economist predicted the r. B. I. Would stand pat, but they did. Economykness in their not causing the r. B. I. To cut rates. Oil prices not featured this morning, but they are up as a result of u. S. Inventories dropping today. Onsee a pullback and focus oil prices later in the program. Lets get into the markets with Garfield Reynolds who joins us from sydney. Good to speak to you. I want to ask you, we have seen the markets move on the ad and flow of trade news. Flow on trade news. The japanese stimulus package does not look what is the significance of this . Rfield part of the reason the moves are tepid is because there were various figures bandied about before hand, some which were larger than but they ended up coming up with. You could also say abes government when it comes to fiscal stimulus in reform, that is playing a role. Looking more broadly this is part of something of a gradual creep towards the realization that Central Banks cannot solve all of the worlds problems. You need to get fiscal support. The surprise decision by the r. B. I. That they decided to hold , they included in that decision , in their commentary, some obvious expectations that the government will step in with fiscal stimulus. Christineinto what lagarde at the ecb has been calling for, which is that we have done what we can at the ecb and it is up to governments to take over with fiscal stimulus. That is a theme for the entire globe. Stocks are a little cautious areuse policymakers cautious about the idea of spending large. Matt to be fair, mario draghi has been saying that for like eight years before Christine Lagarde started saying it, and repetitively. I wonder if you think if we will see more Central Banks on hold, more Central Banks i do not want to say throwing in the towel saying we cannot do much more with Monetary Policy so we will not keep cutting regardless. Garfield that is part of what is taking place. There were similar comments here, and of course the most important reason for that is mr. Powell, he has made it clear he is not cutting. That takes away a lot of the impetus for Central Banks around the world to cut. Some felt over pressured to resort to easing because the fed moved so rapidly to reverse much of the rate hikes in 2018 with 75 basis points this year. Now that the fed is sitting on its hands, they have the time and space to take a look at what stimulus they put into the economy has done, especially in a situation where a lot of them are obviously running short on ammunition. Anna we have seen a couple of Central Banks, they are talking more positively about the global environment. The bank of canada and the rba to some degree. Day, how farof the will commodities the verge from stocks . As we saw stocks rally in expectation of a phase one deal, commodities have not cap pace. Kept pace. Garfield part of the story is with the trade deal, everyone is aware the chinese economy will continue to slow, and china is a massive source of demand for all sorts of commodities. If you have a week china, commodities will rally strongly. It has been obvious Even Crude Oil has been reluctant to get involved in some of the trade spike up for other risk assets. There is an underlying concern about how readily demand can rebound. That is part of what is driving it. I expect commodities to continue becauseehind stocks realworld Financial Assets can centraln by a lot of Bank Monetary easing that is flowing through the economy. As long as we have this back and forth on trade, it becomes harder for businesses to make concrete decisions or Big Decisions about to spend money, and that is what needs to flow into commodities. Where i am sitting in australia, the concern the last few days is precisely the way australias showdity price indexes what australia is likely to earn from its exports, those have been coming down strongly. That will feed through to doubt on the rba optimism that the economy can regain momentum. That is also why bond yields are staying down. I am a lot less optimistic on stocks at the moment. Matt we will check out the mliv blog for more of the teams thoughts. To get the word from Garfield Reynolds and his team. You can join the debate on the question of the day, how far will commodities divert from stocks. Garfield thoughts to on your bloomberg terminal. Up next, crude eases ahead of the opec meeting. On the carrotlans and stick, and Bloomberg Radio is live on your mobile device or dab Digital Radio in the london area. Tune in. This is bloomberg. Anna welcome back to Bloomberg Markets european open. Futures suggesting we will see movements to the upside for European Equity markets, and the pound is up 0. 25 , not weighing on futures yet. The scatter first word news update. Japans government is pulling out all the stops on fiscal stimulus, announcing measures to support growth as the economy contends with an export slump and the fallout from a sales tax hike. The total package amounts to around 240 billion and is expected to boost real growth by 1. 4 percentage points. U. S. President ial hopeful Elizabeth Warren is drafting a bill to reverse megamergers. They would restrict deals going forward. Speaking to bloomberg, she says President Trump does not have a plan when it comes to trade. Occur in to see trade a way that is helpful to the American Workers and the american consumer. I want to see what donald trump is doing, he is destroying markets and value of around the world. An unexpected hold in india, the r. B. I. Keeping it benchmark rates unchanged. It reaches its mediumterm target. None of the economists targeted predicted that moved, they were expecting a cut. They are signaling hikes are off the table. Probe on amazon is expanding to its cloud business. The federal trade commission is announcing Software Companies about the cloud unit. The ftc and amazon are declining to comment. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Anna thank you very much. Oil is easing ahead of the opec meeting this week in the end up. Crudes biggest surge in two months on signs of a u. S. China trade deal. Joining us now to talk about the saudi budget, the aramco ipo, is alia moubayed, managing director, jefferies international. Good to speak to you this morning. Lets talk about where the stories meet. The saudi arabia and government is mindful of the need to support the aramco ipo, and that is in their minds as they attend this opec meeting. Cut . Hey incentivized to that is the expectation in the market. Shortterm to make the ipo as successful as possible ahead of the pricing. Market toure the oil meet this objective of growth in the kingdom and fiscal stability. These have been the kind of tradeoffs that policymakers in saudi arabia have been facing. Means yourther overall growth in gdp is likely to go down. Obviously require a bigger stimulus for the economy. Tension playthis out this year, and i think it will continue with the kingdom for 2020. This is what the oil minister has in mind. And thei aramco ipo extension between growth maturing the budget. Anna they will be focused on making sure they comply . Alia yes, because they have been upset with opec members, including iraq. Likely they would compliance to ensure that the happen asally planned. The threat of raising production may not be a serious threat. It is like shooting yourself in the foot. You bring oil prices down, and 75, but we needs do not know the parameters of the 2020 budget. Matt it seems a brilliant strategy. If they cant convince everybody they are willing to do it, then the next time they will be taken seriously. I wonder about the ipo, it looks successful if you think it will go out at the top of the range and it is already 2. 5 times oversubscribed, the biggest in the world. They will be trading in riyadh, and the investors are mostly locals who have a a lot of acentive and are being lent lot of money to buy the shares. Do they need a bigger foreign Investor Base . Alia obviously there is a need to have a bigger foreign Investor Base because saudi arabia and the region have seen a major reduction in close fl ows, and creating flows over the past five years. Ony have been reliant issuance and capital markets, and the objective is to try to use the ipo as a catalyst for by loweringk market foreign investors. Difficult,ving to be and i think the other objective of the ipo is to raise enough money to invest in some of the projects that have been the highlight of the crown prince strategy since the launch of 2030. The 25 billion expected from the on the scale of the financing needs of the kingdom. Even that money will not be cover for the fiscal deficit of saudi arabia, which is estimated every year around 50 billion. Anna thank you very much for joining us, alia moubayed, managing director, jefferies international. We are minutes away from the open. Up next, the stocks to watch including montclair after bloomberg reported that kering is exploring a buyout of the luxury ski wear manufacturer. We will see how far that moves the luxury sector. This is bloomberg. Matt six minutes to go until the open. Your stocks to watch, dani burger is looking at ericsson. Our Equities Team is covering kering and montclair. And we are focusing on fiat. You are not going to talk about awe wage increases for u workers, but the fine for undervaluing their purchase of chrysler . Start from a statement aftereived from fiat authorities claimed they underestimated the value of chrysler. Upt means it could cost fiat to 1. 5 billion, but fiat told us they disagree with the report and are confident they will make the case, and they said they see no cash outflow or impact on earnings because they have [indiscernible]. Anna thank you. On the lecture a space and further m a talks taking place between kering and montclair which makes ski wear. Montclair has estimated the value at 10 billion euros after its shares rallied. Stocks are looking like they will open higher. Maybe some activity in the broader luxury space as m a activity does heat up. Dani, quickly give us ericsson. Are about to settle a longstanding u. S. Investigation into possible corruption for about 1 billion. Anna thank you so much. See a littleing to bounce at that start of the trading day. This is bloomberg. When you move homes, you move more than just yourself. Thats why xfinity has made taking your internet and tv with you a breeze. Really . Yup. You can transfer your Service Online in about a minute. You can do that . Yeah. And with twohour Service Appointment windows, its all on your schedule. Awesome. So while moving may still come with its share of headaches. No kidding. Were doing all we can to make moving simple, easy, awesome. Go to xfinity. Com moving to get started. Anna a minute to go until the start of equity trading. Welcome back to Bloomberg Markets european open. S p futures looking positive. Possibility of a phase one deal, setting aside rhetoric from President Trump and focusing on behind the scenes progress. , movingulus from japan japanese assets. The pound also moving to the upside, up 0. 3 . It is all about the polls, the count down to a week from now. We caught a glimpse of the oil price, on the move in the last few sessions and could have an impact on the ftse 100. P atre expecting to see a po the start of trade just as we expect on the dax and the cac. A little belief in the possibility of a trade deal at the start of this european trading day. Not a great deal of corporate reports, some m a, the luxury space is very topical. The pound is moving to the upside. The dollar more flat, the euro flat. Despite the move in the british pound, we see a fairly flat ftse. 0. 1 . S down by the French Market up by 0. 8 . We do see the london market and elsewhere. We will see if that holds. Lets move on to the sector picture. We might have luxury goods to focus on today. Lvmh and tiffany is the talk of the luxury space, and now moncler. E will continue to watch that health care moving to the upside along with financials. A broadbased move upward. Broadly, we seem to be a touch higher on the european market. Matt if i look at winners versus looters, first off, 329 stocks up, 200 down. We do see health care as some of the biggest gainers to the stoxx 600. Er as a big gainer. Sante fe one of the top winners. 0. 5 . Only about keep an eye on that as moncler rising. Biggest is one of the additions. The top three with nestle. Hsbc is taking the most points away from the index, down 0. 5 . More defensive stocks, British American tobacco is down. Down, and Oil Companies glencoref as well as and angloamerican. See inr, they could italy for allegedly undervaluing chrysler as a purchase. European markets are up as optimism persists over a trade deal. We get stimulus news out of japan. Joining us on the set is john roe, head of multi asset funds, Legal General Investment Management. What is your take . I want to ask you about the most recent twists and turns of the trade war, if we can still call it that. Do you expect a phase one deal done this year . John there is a strong consensus that is overdone, and we saw in may there was a lot of talk behind the scenes progress, had almosttrump unilateral decisionmaking to make. There is not much evidence, it is a narrative being creative that we call trumpilocks, he claims he will have a trade war and tricks the fed it to henging policy, then once changes policy, he does not have a trade war. It is a nice narrative that it suggests a lot of planning, and he is more in the moment decisionmaking. On the u. S. Economy has not been that big, a few tenths of a percent, and not a strong need for him. The chinese weakness is domestic rather than driven by the trade war. Have not fallen is a share of the global average. We think people are over conditioning on this variable. Anna trumpilocks, i have not heard that before. Point there are companies that put investment on hold or are reporting margins, we are hearing talk about that, margin pressure. Maybe that is not coming through. I am wondering if we have seen a trade war. Margins, they are under pressure. You give companies an excuse for it. This has not been going on long, the most recent tariffs got delayed, and everyone is confident the december once will not go ahead either. There is a lot priced in an people talking that narrative. There is great uncertainty in the decisionmaking of President Trump. When you dig into peoples reasons, they say things like , ive wouldnsiders not put much conviction in them. It has not been doing much damage to the u. S. Economy, and yet we see big banks come out and say they expect a recession in the u. S. Next year, and the fed reacts with four rate cuts, a full percentage point. The you think they are off base . John yes, we saieh one in four chance, slightly higher than recent years, but we are late cycles so you will see the probability rise. Jobs was a small miss, but from that Perspective Companies are under pressure and we see a margin squeeze. To have that as a base case is hard for us to understand. Anna d you see the fed is more 2020 . To cut than hike in generally ares into the idea that there is only one way rates can go in the cycle, which is down. That is a strong market consensus. U. S. Ok off our long yesterday, and that is a worry. The under price would be inflation, not rate hikes, but then the talk of a steeper curve. That is not our base case, but it is important to look for the underpriced in the market, rates lower or stable is the market consensus. Anna thank you john roe, head of multi asset funds, Legal General Investment Management. He stays with us. Up next, stocks on the move, including moncler. We are expecting a bounce after kering is exploring a buyout. We are waiting for that and we will get to that story shortly. 0. 9 . Up by this is bloomberg. Anna welcome back to Bloomberg Markets european open. 10 minutes into the european trading day. The pound is stronger by 0. 3 . Japans Bloomberg School<\/a> saying the u. S. And china are closer to a phase one deal than the rhetoric would lead you to believe. The japanese stimulus witching , daxes up both in europe futures up 0. 2 , but the futures up 0. 2 as well, and in the u. S. U. S. Futures, green arrows. Dow jones, s p 500 many contracts in the green. We will see if those futures for the ftse 100, whether they tell us given the strength we have seen and the british pound. P by 0. 25 ofity markets in asia, a lot belief in a phase one trade deal. Saying, ignore the rhetoric and the tone set by President Trump<\/a>. What matters are the conversations behind the scenes. Not seeing a big boost in ofanese assets as a result the stimulus package or fiscal push, but that certainly will be mentioned. Out. Ndian asset stands in general, indian assets in focus, a surprise hold from the r. B. I. No economist predicted the r. B. I. Would stand pat, but they did. Economykness in their not causing the r. B. I. To cut rates. Oil prices not featured this morning, but they are up as a result of u. S. Inventories dropping today. Onsee a pullback and focus oil prices later in the program. Lets get into the markets with Garfield Reynolds<\/a> who joins us from sydney. Good to speak to you. I want to ask you, we have seen the markets move on the ad and flow of trade news. Flow on trade news. The japanese stimulus package does not look what is the significance of this . Rfield part of the reason the moves are tepid is because there were various figures bandied about before hand, some which were larger than but they ended up coming up with. You could also say abes government when it comes to fiscal stimulus in reform, that is playing a role. Looking more broadly this is part of something of a gradual creep towards the realization that Central Banks<\/a> cannot solve all of the worlds problems. You need to get fiscal support. The surprise decision by the r. B. I. That they decided to hold , they included in that decision , in their commentary, some obvious expectations that the government will step in with fiscal stimulus. Christineinto what lagarde at the ecb has been calling for, which is that we have done what we can at the ecb and it is up to governments to take over with fiscal stimulus. That is a theme for the entire globe. Stocks are a little cautious areuse policymakers cautious about the idea of spending large. Matt to be fair, mario draghi has been saying that for like eight years before Christine Lagarde<\/a> started saying it, and repetitively. I wonder if you think if we will see more Central Banks<\/a> on hold, more Central Banks<\/a> i do not want to say throwing in the towel saying we cannot do much more with Monetary Policy<\/a> so we will not keep cutting regardless. Garfield that is part of what is taking place. There were similar comments here, and of course the most important reason for that is mr. Powell, he has made it clear he is not cutting. That takes away a lot of the impetus for Central Banks<\/a> around the world to cut. Some felt over pressured to resort to easing because the fed moved so rapidly to reverse much of the rate hikes in 2018 with 75 basis points this year. Now that the fed is sitting on its hands, they have the time and space to take a look at what stimulus they put into the economy has done, especially in a situation where a lot of them are obviously running short on ammunition. Anna we have seen a couple of Central Banks<\/a>, they are talking more positively about the global environment. The bank of canada and the rba to some degree. Day, how farof the will commodities the verge from stocks . As we saw stocks rally in expectation of a phase one deal, commodities have not cap pace. Kept pace. Garfield part of the story is with the trade deal, everyone is aware the chinese economy will continue to slow, and china is a massive source of demand for all sorts of commodities. If you have a week china, commodities will rally strongly. It has been obvious Even Crude Oil<\/a> has been reluctant to get involved in some of the trade spike up for other risk assets. There is an underlying concern about how readily demand can rebound. That is part of what is driving it. I expect commodities to continue becauseehind stocks realworld Financial Assets<\/a> can centraln by a lot of Bank Monetary<\/a> easing that is flowing through the economy. As long as we have this back and forth on trade, it becomes harder for businesses to make concrete decisions or Big Decisions<\/a> about to spend money, and that is what needs to flow into commodities. Where i am sitting in australia, the concern the last few days is precisely the way australias showdity price indexes what australia is likely to earn from its exports, those have been coming down strongly. That will feed through to doubt on the rba optimism that the economy can regain momentum. That is also why bond yields are staying down. I am a lot less optimistic on stocks at the moment. Matt we will check out the mliv blog for more of the teams thoughts. To get the word from Garfield Reynolds<\/a> and his team. You can join the debate on the question of the day, how far will commodities divert from stocks. Garfield thoughts to on your bloomberg terminal. Up next, crude eases ahead of the opec meeting. On the carrotlans and stick, and Bloomberg Radio<\/a> is live on your mobile device or dab Digital Radio<\/a> in the london area. Tune in. This is bloomberg. Anna welcome back to Bloomberg Markets<\/a> european open. Futures suggesting we will see movements to the upside for European Equity<\/a> markets, and the pound is up 0. 25 , not weighing on futures yet. The scatter first word news update. Japans government is pulling out all the stops on fiscal stimulus, announcing measures to support growth as the economy contends with an export slump and the fallout from a sales tax hike. The total package amounts to around 240 billion and is expected to boost real growth by 1. 4 percentage points. U. S. President ial hopeful Elizabeth Warren<\/a> is drafting a bill to reverse megamergers. They would restrict deals going forward. Speaking to bloomberg, she says President Trump<\/a> does not have a plan when it comes to trade. Occur in to see trade a way that is helpful to the American Workers<\/a> and the american consumer. I want to see what donald trump is doing, he is destroying markets and value of around the world. An unexpected hold in india, the r. B. I. Keeping it benchmark rates unchanged. It reaches its mediumterm target. None of the economists targeted predicted that moved, they were expecting a cut. They are signaling hikes are off the table. Probe on amazon is expanding to its cloud business. The federal trade commission is announcing Software Companies<\/a> about the cloud unit. The ftc and amazon are declining to comment. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Anna thank you very much. Oil is easing ahead of the opec meeting this week in the end up. Crudes biggest surge in two months on signs of a u. S. China trade deal. Joining us now to talk about the saudi budget, the aramco ipo, is alia moubayed, managing director, jefferies international. Good to speak to you this morning. Lets talk about where the stories meet. The saudi arabia and government is mindful of the need to support the aramco ipo, and that is in their minds as they attend this opec meeting. Cut . Hey incentivized to that is the expectation in the market. Shortterm to make the ipo as successful as possible ahead of the pricing. Market toure the oil meet this objective of growth in the kingdom and fiscal stability. These have been the kind of tradeoffs that policymakers in saudi arabia have been facing. Means yourther overall growth in gdp is likely to go down. Obviously require a bigger stimulus for the economy. Tension playthis out this year, and i think it will continue with the kingdom for 2020. This is what the oil minister has in mind. And thei aramco ipo extension between growth maturing the budget. Anna they will be focused on making sure they comply . Alia yes, because they have been upset with opec members, including iraq. Likely they would compliance to ensure that the happen asally planned. The threat of raising production may not be a serious threat. It is like shooting yourself in the foot. You bring oil prices down, and 75, but we needs do not know the parameters of the 2020 budget. Matt it seems a brilliant strategy. If they cant convince everybody they are willing to do it, then the next time they will be taken seriously. I wonder about the ipo, it looks successful if you think it will go out at the top of the range and it is already 2. 5 times oversubscribed, the biggest in the world. They will be trading in riyadh, and the investors are mostly locals who have a a lot of acentive and are being lent lot of money to buy the shares. Do they need a bigger foreign Investor Base<\/a> . Alia obviously there is a need to have a bigger foreign Investor Base<\/a> because saudi arabia and the region have seen a major reduction in close fl ows, and creating flows over the past five years. Ony have been reliant issuance and capital markets, and the objective is to try to use the ipo as a catalyst for by loweringk market foreign investors. Difficult,ving to be and i think the other objective of the ipo is to raise enough money to invest in some of the projects that have been the highlight of the crown prince strategy since the launch of 2030. The 25 billion expected from the on the scale of the financing needs of the kingdom. Even that money will not be cover for the fiscal deficit of saudi arabia, which is estimated every year around 50 billion. Anna thank you very much for joining us, alia moubayed, managing director, jefferies international. We are minutes away from the open. Up next, the stocks to watch including montclair after bloomberg reported that kering is exploring a buyout of the luxury ski wear manufacturer. We will see how far that moves the luxury sector. This is bloomberg. Matt six minutes to go until the open. Your stocks to watch, dani burger is looking at ericsson. Our Equities Team<\/a> is covering kering and montclair. And we are focusing on fiat. You are not going to talk about awe wage increases for u workers, but the fine for undervaluing their purchase of chrysler . Start from a statement aftereived from fiat authorities claimed they underestimated the value of chrysler. Upt means it could cost fiat to 1. 5 billion, but fiat told us they disagree with the report and are confident they will make the case, and they said they see no cash outflow or impact on earnings because they have [indiscernible]. Anna thank you. On the lecture a space and further m a talks taking place between kering and montclair which makes ski wear. Montclair has estimated the value at 10 billion euros after its shares rallied. Stocks are looking like they will open higher. Maybe some activity in the broader luxury space as m a activity does heat up. Dani, quickly give us ericsson. Are about to settle a longstanding u. S. Investigation into possible corruption for about 1 billion. Anna thank you so much. See a littleing to bounce at that start of the trading day. This is bloomberg. When you move homes, you move more than just yourself. Thats why xfinity has made taking your internet and tv with you a breeze. Really . Yup. You can transfer your Service Online<\/a> in about a minute. You can do that . Yeah. And with twohour Service Appointment<\/a> windows, its all on your schedule. Awesome. So while moving may still come with its share of headaches. No kidding. Were doing all we can to make moving simple, easy, awesome. Go to xfinity. Com moving to get started. Anna a minute to go until the start of equity trading. Welcome back to Bloomberg Markets<\/a> european open. S p futures looking positive. Possibility of a phase one deal, setting aside rhetoric from President Trump<\/a> and focusing on behind the scenes progress. , movingulus from japan japanese assets. The pound also moving to the upside, up 0. 3 . It is all about the polls, the count down to a week from now. We caught a glimpse of the oil price, on the move in the last few sessions and could have an impact on the ftse 100. P atre expecting to see a po the start of trade just as we expect on the dax and the cac. A little belief in the possibility of a trade deal at the start of this european trading day. Not a great deal of corporate reports, some m a, the luxury space is very topical. The pound is moving to the upside. The dollar more flat, the euro flat. Despite the move in the british pound, we see a fairly flat ftse. 0. 1 . S down by the French Market<\/a> up by 0. 8 . We do see the london market and elsewhere. We will see if that holds. Lets move on to the sector picture. We might have luxury goods to focus on today. Lvmh and tiffany is the talk of the luxury space, and now moncler. E will continue to watch that health care moving to the upside along with financials. A broadbased move upward. Broadly, we seem to be a touch higher on the european market. Matt if i look at winners versus looters, first off, 329 stocks up, 200 down. We do see health care as some of the biggest gainers to the stoxx 600. Er as a big gainer. Sante fe one of the top winners. 0. 5 . Only about keep an eye on that as moncler rising. Biggest is one of the additions. The top three with nestle. Hsbc is taking the most points away from the index, down 0. 5 . More defensive stocks, British American<\/a> tobacco is down. Down, and Oil Companies<\/a> glencoref as well as and angloamerican. See inr, they could italy for allegedly undervaluing chrysler as a purchase. European markets are up as optimism persists over a trade deal. We get stimulus news out of japan. Joining us on the set is john roe, head of multi asset funds, Legal General<\/a> Investment Management<\/a>. What is your take . I want to ask you about the most recent twists and turns of the trade war, if we can still call it that. Do you expect a phase one deal done this year . John there is a strong consensus that is overdone, and we saw in may there was a lot of talk behind the scenes progress, had almosttrump unilateral decisionmaking to make. There is not much evidence, it is a narrative being creative that we call trumpilocks, he claims he will have a trade war and tricks the fed it to henging policy, then once changes policy, he does not have a trade war. It is a nice narrative that it suggests a lot of planning, and he is more in the moment decisionmaking. On the u. S. Economy has not been that big, a few tenths of a percent, and not a strong need for him. The chinese weakness is domestic rather than driven by the trade war. Have not fallen is a share of the global average. We think people are over conditioning on this variable. Anna trumpilocks, i have not heard that before. Point there are companies that put investment on hold or are reporting margins, we are hearing talk about that, margin pressure. Maybe that is not coming through. I am wondering if we have seen a trade war. Margins, they are under pressure. You give companies an excuse for it. This has not been going on long, the most recent tariffs got delayed, and everyone is confident the december once will not go ahead either. There is a lot priced in an people talking that narrative. There is great uncertainty in the decisionmaking of President Trump<\/a>. When you dig into peoples reasons, they say things like , ive wouldnsiders not put much conviction in them. It has not been doing much damage to the u. S. Economy, and yet we see big banks come out and say they expect a recession in the u. S. Next year, and the fed reacts with four rate cuts, a full percentage point. The you think they are off base . John yes, we saieh one in four chance, slightly higher than recent years, but we are late cycles so you will see the probability rise. Jobs was a small miss, but from that Perspective Companies<\/a> are under pressure and we see a margin squeeze. To have that as a base case is hard for us to understand. Anna d you see the fed is more 2020 . To cut than hike in generally ares into the idea that there is only one way rates can go in the cycle, which is down. That is a strong market consensus. U. S. Ok off our long yesterday, and that is a worry. The under price would be inflation, not rate hikes, but then the talk of a steeper curve. That is not our base case, but it is important to look for the underpriced in the market, rates lower or stable is the market consensus. Anna thank you john roe, head of multi asset funds, Legal General<\/a> Investment Management<\/a>. He stays with us. Up next, stocks on the move, including moncler. We are expecting a bounce after kering is exploring a buyout. We are waiting for that and we will get to that story shortly. 0. 9 . Up by this is bloomberg. Anna welcome back to Bloomberg Markets<\/a> european open. 10 minutes into the european trading day. The pound is stronger by 0. 3 . Japans Prime Minister<\/a> shinzo abe has announced stimulus measures to support growth and economy contending with an export slump. Natural disasters in the fallout from a recent sales tax increase. The biggest tanks celebrated the move. In an exclusive interview, we it was moreerg told than a Monetary Policy<\/a> alternative. [indiscernible] boj should consider the negative impact of policies. Insight into the of the japanese banking sector. Ets get analysis good morning. Lets start with size and scope. What is the intended impact of this package . I would put the desired impact as threefold. Number one, they will try to. Void an outright recession the economy will shrink this quarter because of sales tax hike imposed last month. Fixing its owns goal. You want to prevent a recession. Number two, they want to seed a feelgood factor in the runup to the olympics next summer. There is talk of the potential election, and the Prime Minister<\/a> abe would love to get another four years for his liberal Democratic Party<\/a> in the lower house. Potentially a political motive. Number three, a lot of stuff needs fixing. We had a big typhoon in october. Movie Spirited Away<\/a> will remember rivers are paved in cement, and levees were busted because of the typhoon. They have to do fixing up around the country. Why is the ceo so relieved about the move . Because it is taking pressure off the bank of japan. Monetary policy in japan has been going full tilt not just sense governor kuroda took office in 2013, but for 20 years. The japanese Institutional Investors<\/a> and Financial Community<\/a> more broadly is basically being pushed out of safe investments, pushed out of the Government Bond<\/a> market, and into riskier assets. We have a story today about japanese insurers who are taking increasing risk onto their books because of ultralow interest rates. Anything that relieves pressure on the bank of japan to ease policy further is going to be welcomed across the Financial Community<\/a> here in japan. Anna thank you very much. John roe, head of multi asset funds, Legal General<\/a> Investment Management<\/a> still with us. We are getting to the european angle of this at the moment. The size of this stimulus is fairly significant, and part of this has to do with making sure the economy is resilient to weather events such as typhoons. It is interesting how these narratives come together. , a smallmate change percentage might not agree with it, but it is happening, and it countries toor invest in infrastructure because they can save more in the future. It is convenient because generally the population will be on board than if it was just same,oads and more of the and also admitting there was an underinvestment previously. It does fit nicely, and something we are saying in new zealand, their finance minister talked about a new zealand for tomorrow. They are looking at an infrastructure package. They are trying to pass the baton into the fiscal side. It, and japan can do they have responded to the debt , a staggering to her 36 , if they can do it, cant anyone in the western world, in developed countries spend money . John the japanese numbers is always distorted by how much private wealth there is. There is massive debt on one side and asset based on the other. Others can do it. It makes sense on the fiscal side, but what is interesting is that japan is not getting much bang for its buck on fiscal spending. For the last hand the 15 years, the japanese government has moved from being a quarter of the economy to a third of all spending. We have not seen much recovery, somewhat above trend growth not inh of a multiplier infrastructure investment. There are no second round of benefits. From that perspective, the real question is will it be any more effective boosting the economy than the monetary side, which has been disappointing given the scale of qe. Anna what is your answer to that in a european context . The slovenian finance ministers speaking to bloomberg, saying the euro area should boost growth by a fiscal set because monetary stimulus is more or less exhausted in the euro areas. What are your expectations a fiscal package can make . One guest telling me the clock john dunker what is your expectation for europe . John hopes and expectations are low. The beneficiaries are the large current account. It germany needs to put money back into the broader region. Is also some of the money needs to go back to the heavily indebted areas. Against that backdrop, the problem in europe, it is not about tinkering around the edges in individual countries but if you want some form of fiscal then to redistribute profits and losses. Without that, you are looking at small changes. Matt you will stick with us longer, john roe, head of multi asset funds, Legal General<\/a> Investment Management<\/a>. Thes our guest cohost for hour. I want to get the top stock stories. Higher than indicated. 11 it opened to more than and will be its highest price on record, and its biggest jump in six years. That is after talks between kering and moncler. This luxury space has seen a lot of m a as of late. We are seeing other luxury good providers, burberry being one of them. It is a story of two different brands. Then we have retailers like declining 3 today, some of the founders have sold their shares. We are seeing shares trend down to the level. A sold more than a hundred 42 Million Pounds<\/a> worth. When people high up sell shares, it spooks investors. Seem to be asking for trouble with the name of that company. Up next, another u. K. Fund gets frozen. We will get a break down, and what it means for the investment community, and what it tells us about the retail story in the u. K. This is bloomberg. Matt welcome back to Bloomberg Markets<\/a> european open. We are 22 minutes into the session, and looking at a mixed picture. The dax falling a little as the. Ac rises more than 0. 3 the ftse is down is the pound gains strength. Brexit worries and the spiraling crisis in the Retail Property<\/a> markets have prompted investors to flee. Is a crisishind mng of liquidity, and for that we go to dani burger. We keep seeing this in u. K. Investments, investors hunting for yield and drawn to these illiquid assets. We see managers offering those assets in funds that promise easy entry and exit. When those turns sour, investors rush out. Managers might struggle for redemption. We saw this in 2018 with liquidity worries, and it has continued to struggle since. An internal review found this star manager without sufficient due diligence. Summer, it was brought to its knees with a heavy waiting in unquoted companies difficult to sell, and some which breach regulatory guidelines. H20 wasafter, and you, linked to a german entrepreneur who has a history of troubled investments. Investors yesterday g froze its Flagship Fund<\/a> struggling to sell, having a hard time meeting them. Issue has to do with 40 of the fund. U. K. Real estate is in a correction. Investors say they are clearly seeing this correction happen. When you see investors pull from real estate funds for 14 consecutive months, it is impossible to find buyers for real estate asset. That is a toxic formula with liquidity being one of the top issues for u. K. Investors. Anna thank you very much. Still with us is john roe, head of multi asset funds, Legal General<\/a> Investment Management<\/a>. Just a quick word you for your thoughts on the u. K. , a word on the structure of this market. We are talking different stories. There is a mismatch between investor ability to take money out of certain funds and the ability to sell the assets in those fun. Is that something we need to change or review or get used to . John i think the cases are different. It is clear with the property that is illiquid, it is not the first time in recent years. Has been vocal working with the Property Community<\/a> to make sure investors are treated necessary,t is rather than keeping them open too long. With others has been more difficult to understand because people have not understood the level of illiquidity they have had because it has not been disclosed or it has risen quickly. Everything has to be super liquid, but investors miss out on interesting affect classes. What is important is that people understand the risks around the availability of liquidity. The property side, that is better understood and less of a surprise. , itome of the other funds has been difficult to explain. Matt thank you so much for joining us, john roe, head of multi asset funds, Legal General<\/a> Investment Management<\/a>. He will continue the conversation with us on Bloomberg Radio<\/a> at 9 00 a. M. U. K. Time, 10 00 a. M. Here in germany. Tune in. You can tune in on london dab if you are in the city. If you are up early enough on the east coast, you can tune in on sirius xm 119. We are looking at mixed market after we had gains in futures. We see drops in the ftse and the dax. Could we be headed for a risk off session . 30 minutes into trading. This is bloomberg. Matt 30 minute the trading day. Another luxury buyout. Talks in a deal from montclair. The entire sector is gaining in the news. The italian ski where maker is up more than 12 . Japan takes the lead. Shinzo abe announces a stimulus package worth around 240 billion in a bid to boost growth. Will european nations follow suit . And in search of consensus. Oil leases ahead of todays opec meeting after the biggest surge in over two months. We also await the pricing for inmcos ipo, the biggest world history. Welcome to Bloomberg Markets<\/a>. This is the european open. I matt miller alongside anna edwards at our European Headquarters<\/a> in london. Anna 30 minutes into the trading day, lets pull up the stoxx 600 and see where we are. We are up 0. 1 in the stoxx 600. Pairing those early gains just a little bit. We do see some appetite for luxury goods. The result of the m a story around montcler. The buyout possible for them. Burberry group goes higher. Hugo boss goes higher. Hermes also higher as a result of that. Got news from Morgan Stanley<\/a> moving around some of the recommendations in that particular field. Lets move to the downside. If you exdividends making themselves felt. Royal mail featuring here. I geo group down by 3. 9 . Trading through the broker business. Ds smith talked about acceleration of volume growth into the second half of the year, but that does not seem to be enough to support the share price. Lets get the bloomberg first word news in london. Japans government is pulling out all the stops in fiscal stimulus. Announcing measures to support growth as the economy contends with an export slump. We have learned that the total package amounts to 240 billion. It is expected to boost real growth by 1. 4 . Hold in india. The r. B. I. Keeping its benchmark rates unchanged as headline inflation breaches its mediumterm target. The central banker retained its accommodative stance, signaling hikes are still off the table. Over in france, unions are striking. Labor groups representing everyone from transport workers going in an indefinite strike. It is to bring it threatens to bring the country to a standstill. The unions oppose president restructurens to the pension system. If history is a guide, pensions will not be as easy. The estimated value of the American Business<\/a> by over 5 billion euros. That is the claim from italian tax authorities. They are presenting the carmaker with a potentially hefty bill as it prepares to merge. 2014lays to the structuring after it purchased the final parts of chrysler. Global news on air and on twitter powered by more than 2700 journalists and analysts. This is bloomberg. Matt thanks very much. Your first word news. Oil is easing slightly ahead of the opec meeting in vienna. Biggestlows crudes surge in two months on signs of a potential u. S. China trade deal and possibly more importantly tightening american supplies. Joining us now from vienna is manus cranny and are middle east finance reporter joins us from dubai. Manus, lets come to you first. What is the biggest risk at opec over the next two days . What are you watching most closely . Rhetoric andng of nondelivery in terms of cuts. Cuts, butrrels of where do those cuts come from . Is that just saudi arabia codifying the reduction in their output or will there be new cuts to come . Compliance, cuts, and continuity. Would say it is the triple c when i talk about continuity, i talk about the continuity of the relationship between opec and opec plus members. Undoubtedly, this is about the long on rhetoric, short on delivery. We tracked three Foreign Ministers<\/a> around hotels, nobody was speaking. There is a new king. The king is dead, long live the king. There is one man riding the agenda writing the agenda. He is in charge, it is his message. Get in line. Anna where are we on the compliance story . You referenced it in passing. It is perennial. Quite material to where things had from here in the conversation around cuts into 2020. Absolutelys important. Ive been hearing compliance all year. This goes for nigeria, iraq, and russia, the opec plus member. Do your bit, do more. This carrot and the stick. Do what you said you would do in regards to compliance and we might even do more. That is the saudi message. The heavy lifter off the compliance. A bit of a row behind me. Comply or you will hear the voices from on high. We think of compliance comes to heal, about 300,000 barrels of oil per day, and that is no mean feat. Matt speaking of compliance matthew, what are we expecting on the ipo . Is there concern that this ipo is just sort of going around to the billionaires in the kingdom, forcing them to pay in for a share, then forcing banks to in order tomoney take this risk . Yes, we are expecting to see the details of the aramco pricing coming out later today. It seems to have been a bit delayed. We were thinking it would have come out a bit earlier this morning. At 12 30 dubai time. We are still waiting for that pricing. Books, the the order offering is around 2. 5 times covered already. A huge portion of that coming from the wealthy saudi families and businesses who are being offered huge loans by banks. Some of those individuals are rounded up and detained in the ritz a couple years ago accused of corruption. Clearly, the government has some leverage other those over those people to participate in the ipo. Out ande aramco come traded up in the first few days, then this leverage issue wont be an issue. If we see a wobble in the price and the price go down, the leverage is going to come a bit more for the investors and the banks. Anna where are we in the pricing of this . Of course, the range has come down since the initial conversations about what this business could be worth as a whole. Where are we in the price . Initially, the crown prince wanted to see aramco listed and valued at around 2 trillion. Thats not going to happen. The price range of when the ipo began puts the listing at the top end of 1. 7 trillion. That is where we expect things to come out. The price range for the shares was 3032 rials. The information we have from sources is that the vast majority of the bids have all come in at the top end of that range. There expecting to see final offer price come out there. That is going to mean that aramco is the biggest ipo ever, raising nearly 26 billion, valuing aramco at 1. 7 trillion. The largest listed company in the world will be based in riyadh. It will be aramco. It will be listed in riyadh. We are expecting that that is probably going to be happening next week with the shares trading possibly around the 11th of december. Anna matthew, thank you very much joining us from dubai. Manus cranny, of course, in vienna. With the buildup to the opec meeting. Up next, some of the stocks on the move. Afterure retailer surging raising its profit outlook. This is bloomberg. Matt welcome back to bloomberg this is the european open. Elizabeth warren has hit out at donald trump about his trade strategy. She called for a more coherent approach. Has this plan. T you have a plan . Is the Elizabeth Warren<\/a> plan . Part of it is to say we need an overall strategy. Trade is about tariffs, but it is not just about tariffs. Trade is about regulation is much as it is about anything else. What i want to see is i want to see a coherent plan for anybody who wants access to american markets. Armorsto ease up so our are not beings greased being squeezed like crazy. A third part of it that i think is important is we need to be working with our allies. We want to have a trade deal with china that is favorable to the u. S. , then lets not declare trade wars at the same time in canada, on our other asian allies, in our european allies, lets get everybody to Work Together<\/a> on this to try to get china to follow a reasonable set of rules on trade. But if china is hoping to wait out the Trump Administration<\/a> for a warren administration, you would not be willing to lift the tariffs on day one . We cant keep doing this as one offs. We need a coherent strategy. A strategy that works with our allies and a strategy that makes clear where our longterm interests lie in trade. Occur, but i trade want to see trade occur in a way that is helpful to the American Workers<\/a>, that is helpful to the american consumer. I dont want to see what donald is doing. He is destroying markets in value around the world. Would you tie chinese human rights abuses potentially to a trade deal . I think again working with our allies, we should be putting a lot of pressure on china, and part of that pressure should be diplomatic and part of it should be economic. We need to use all the tools in the toolbox. Anna that was democratic president ial candidate Elizabeth Warren<\/a>, of course. We should note michael bloomberg, the founder and majority owner of bloomberg lp, the Parent Company<\/a> of bloomberg news, is also a democratic president ial candidate. Lets get to our top stock movers. Dani burger has a breakdown. Dani ive got movers today. Numbers. First half the papering and Packaging Company<\/a> disappointing. Citigroup saying the numbers did not meet expectations, specifically pointing out volume growing. Rallying today. In 11 months. Ost the u. K. Furnishing company, they said they see a profit outlook higher than they originally estimated. It all depends on the outcome of the u. K. Election whether consumer demand sticks with it after that. Then there is ig group declining today. Seeing first half revenue fall. Shares now declining more than 3 . Matt all right, thanks very much. Another luxury megadeal could be in the pipeline. Guccis owner has held exploratory talks about a tie up with montclair and that has sent the italian skewer maker surging this morning. Up 10 . He shares ,o get more insights on luxury eric joins us. What do we see across the industry . Is this an industry that is ripe for consolidation . This is an industry that has been consolidating for years fueled by the rivalry between these two french families. The arnault family behind lvmh and their big rival which controls kering. They have been assembling these portfolios of brands. That is driving this consolidation. Anna good morning. We see other stocks moving in the back of this news flow, as we did when we talked about tiffany being bought by lvmh. Burberry moving higher. Hugo boss moving higher. Hermes, as well. One leads to speculation that others would be snapped up. We had the tiffany deal days ago. Now news of a another big one. Everybody is looking for what can be next. What is the future for these brands . Especially if we are looking at the possibility of a global recession here. Is that stopping the old coric from scoop ultra rich from scooping up moncler ski jackets and the like . These brands have been extraordinarily resilient to any kind of shocks to the system so far. You look at hong kong over recent months and the protests. Theys hit watch sales, but are still selling lots of ski jackets. It does seem like they are pretty recessionproof. Matt i hesitate to say ski jackets. And it isan apre. It is a pretty vague investment to take out in the big investment to take out on the slopes. They look pretty good at the bar afterward or the World Economic<\/a> forum in davos or those kinds of places. Anna are you suggesting they have all the right gear, matt . Eric, thank you very much. The latest on the mende story from the luxury sector m a story from the luxury sector. Looking at where we are in the markets in europe. 5 cks up by zero point two zero. 25 . 0. 25 percent. U. S. Futures suggest we will keep our head above water. In terms of the sectors, it is not exactly a risk in move to the upside when you see utilities as the biggest gaining sector. Retail also doing well. Leisure way down in part by sas. Up next, sterling is surging. Are investors counting their chickens before they hatch . We will discuss that. This is bloomberg. Matt we are seeing very Little Movement<\/a> in the dax right now. Unchanged. The ftse only down 0. 1 . We do see gains in paris. It could be kind of a risk in session. One thing we have been getting on for sure is the british pound. I brought in rate strategists to tell us why. Is this another rally in optimisms . I think this is the market growing very comfortable with the conservatives winning the election. It looks like they are going to be able to pass the withdrawal agreement. A lot of people, what this is where you his classic get the market anticipating an event, the event actually occurring and a lot of the good instancehis particular , a lot of return for the pound. Period still ends at the end of the year, even if they do pass a withdrawal agreement. The clock is ticking on longer term concerns are still there. That is really interesting. How quickly before market starts to reflect on what happens at the end of 2020 . Possibility we go out with . O deal investors and traders have new blank sheets in front of them. That is when we start to see a little bit of downside for the pound. I dont think the government is keen on getting an extension, so a lot of politics will start to weigh on it again. The boc has said there is evidence of a stabilizing global economy. The rba was cautiously optimistic. The r. B. I. Surprised economists leaving rates unchanged. Japan has come out with fiscal stimulus. Are we on the cusp of a change in terms of Central Bank Policy<\/a> and governments helping out . In terms of Central Bank Policy<\/a>, i think we are still stuck with overly accommodative policy and that they are trying to put a positive spin on it. The concerns are going forward. Stimulus, ifiscal think in japan, that is looking like it is going to happen. It looks like it is going to happen in the u. K. In continental europe, im not sure it is looking very likely in germany. Germany is going to go kicking and screaming into fiscal stimulus, probably where it is most required. It does not look likely at the moment. Matt we sit here in continental europe, but in our hearts, we are north american neighbors. Richard, thanks for joining us. Check out his work and the work of his team globally. Mliv go. Stay with bloomberg television. Up next, it is surveillance. This is bloomberg. In search of consensus. Biggest gains after the month. A deal. One week to go ahead of the u. K. Elections. Boosting education. Can he hold onto his lead in the polls . Good morning, everyone. 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