Transcripts For BLOOMBERG Bloomberg Markets European Open 20

BLOOMBERG Bloomberg Markets European Open July 13, 2024

Illian. Has joke at the end it reminded me of churchhill as well. Do you expect Boris Johnson to try to emulate his idol . Will he try to boil down the middle now that he has such a big church and keep all of these voters with the conservatives for longer . Christopher well, i thought that was a most interesting part of his speech. In my opinion, perhaps the most effective was his candid and disarming, even charming admission that a lot of the voters who put him back into power with a large majority have him on probation. A very nice parallel with his election as the mayor of london when a lot of traditional labour voters supported him and they have now supported a conservative party. That, i think is notice also in the rhetoric, one nation conservatives. He remindednation, himself that that is the formula. What does that remind you of . , not labour,labour but new labour. That was the slogan of tony blair. Clearly looking to put a very personal stamp, which arguably could be churchhill. I mentioned tony blair. There could be many other parallels as well. One other item i would highlight from his remarks was his mention of one United Kingdom leaving the European Union. Well, the election shows that is not quite true. The england voted overwhelmingly for the conservatives. One nation conservatives, that was their slogan. The nation in question is england and to some considerable extent also wails. England is the one nation. Scottish nation has the diametrically opposite view and election result. Francine given all the money the tories have pledged also during the campaign, how different is this tory party from the previous one . Or especially from the James Cameron one . This is very antiausterity party. Christopher yes, i think that the conservative party has realized that austerity is not going to be a vote winner. Their previous fiscal plans to arrive at a balanced budget by 2022 were formally abandoned in the camping. If memory serves, they now now have a target of a 3. 3 gdp deficit. Clearly in the atmosphere of confidence, i think that the u. K. Gilt market will absorb that issuance without excessive difficulty, and there will not be tax cuts, according to the conservative manifesto, with the exception of perhaps some cuts on National Insurance for lower paid employees. There will be debtfinanced spending increases. Matt christopher, thank you so much for joining us. Really appreciate your time on a busy day. Christopher granville, managing director of Global Political research at ts lombard. Some yelling in the background. I am not sure if that was stopped brexit steve. It is interesting you do not hear as much anymore as you previously did. Maybe that is another thing this conservative victory has brought us. Lets get to the market view now. Joining us from geneva is fiona frick, ceo of unigestion. What do you think about the Election Results . Does this reduce uncertainty to such an extent that investors are going to feel comfortable purchasing risk assets in the u. K. . Investors assets investors have felt quite comfortable already purchasing risky assets. The victory and the majority that Boris Johnson has now on top of the negotiation between china and the u. S. , which is getting in a better position, i think, yes, there is a bit of optimism that will be in the markets. The only problem is that there is also valuations which are quite high, and the fact that all the good news we are a bit worried about valuation. Now some of the uncertainty around the hard brexit is out, we see a plan. Obviously, we have to keep in mind that valuations are quite high. Matt what about the you know, yesterday we saw equity markets soaring already before in. Polls came a different uncertainty was stamped out with Donald Trumps tweets and the bloomberg scoop that the president has signed onto to a phase one deal with china. How big is that for ruling out uncertainty . Or do you still have serious concerns about the trade war . Fiona i think it is a first step. Some of the questions about the trade war have not been defined between what happens with technology, etc. Agricultural goods, intellectual property. There can be more risk next year and even with the u. S. Election coming. I think it is good news that we have found a first deal. Andstory does not end there 2020 could bring some surprises. Atncine we are just looking Prime Minister Boris Johnson arriving at downing street with the very christmas tree, going in with his partner. Fiona, when we look at the trade deal you were just discussing with matt miller, the fact that we seem to have more of an idea of what happens with brexit, is 2020 suddenly a little bit more predictable than we thought it would be two weeks ago . Fiona yes, it is, clearly. I think also the fact that Central Banks came today and said the situation in terms of rates will be stable, as it was set for the u. S. , europe, as it was said for switzerland. It gives visibility on Central Banks. The Central Bank Risk is low. The Political Risk as of now is low. I think next year, a lot will be about the fundamentals, the macro risk. We see the situation stabilizing in the u. S. And europe, which is also what has been said about central bank heads. For the next six months, we see positive growth. Less uncertainty on the political agenda. Valuations are high, so perhaps one bad surprise could have an effect which is more than expected in the markets. Fiona, because it is Prime Minister Boris Johnson and because there is a sense of continuity, do think there will be a Bank Governor appointed quickly . Would that appease currency traders a little bit . Fiona i think so. Also the fact that there is discussion about a fiscal plan. Obviously, that will appease the currency traders. I think that a lot will be next year about macroeconomic risk. Negotiatione brexit , although we know that is the plan now, could be perhaps more bumpy than what is said to be by mr. Johnson today. There could be some surprise there. How different the program will be from the u. K. To assemble europe matt we will keep you with us. We have more to talk about with you. Fiona frick is the ceo of unigestion on a very busy day talking markets with us after the British Election is decided in a big way in favor of the conservatives and on the day after donald trump has decided to sign on to a phase one trade agreement with china. Coming up, we get the business reaction to the u. K. Election result. We will speak with the director general of the british chambers of commerce, Adam Marshall, after 8 30 a. M. , an interview dont want to miss. This is bloomberg. Matt welcome back to Bloomberg Markets european open. A real risk on day. Gainse seen big 1 , 2 across asian equity indexes. Now we are looking at european futures up more than 1 on the continent. The gain on ftse futures may look small but when you look at the fact that the pound is up more than 2 against the dollar, it starts to look a lot bigger. Lets get the Bloomberg Business flash. The top u. S. Aviation regulator is criticizing boeings chief executive. Concerned the playmakers pressuring the agency maker 737 max airplane is pressuring the agency on the 737 max. It was grounded after two fatal crashes. Is nearing a deal to purchase control of we have learned delivery hero will purchase an 87 stake from is this thing investors for 13 of the company held by Senior Management will be converted into shares of delivery hero. The thomas cook brand is set for a 2020 relaunch. The chinese owner plans to use operatorearold tour for travel platforms targeting european customers. The company dramatically collapsed in september. The new platform will debut in the first half of next year. That is your Bloomberg Business flash. Matt, francine . Francine thank you so much. Lets bring you a bloomberg scoop. This is something that we have known overnight. U. S. President donald trump has signed off on a phase one trade deal with china. That has stopped the additional tariffs on about 160 billion of consumer goods from being imposed this sunday. That sent markets soaring. Joining us now from geneva is fiona frick, ceo of unigestion. It is a little bit similar to a status quo rather than a comprehensive deal that industries want. What does it mean for european stocks . They have been battered because they have been caught in the middle of this trade war. Fiona i think it is good news for european stocks and especially for manufacturing stocks and stocks in germany. Is that we see stabilization of the numbers in the macroeconomic environment. Hasink that the u. S. Performed quite strongly in this last year. Perhaps 2020 could be for europe. Fiona, you have i think 23, 20 4 billion in assets 24 billion in assets under management. How much of that is in cash . How much do you see investors able to put more money into equities at this point . Fiona i think it is interesting, because the rally that took place this year was a rally with very little money. If you look at flows, for example, morningstar come up flows this year were mainly in bonds and cash substitute products. The flows and equity started in august, september. The rally that started at the beginning of the year was done with the year was done with very little money of investors. Investors started pouring money into markets in september, october, now it is starting. There is a space for more money from investors. I think what investors have thed is that equities new bonds, especially with dividends. It is very difficult to avoid. [indiscernible] francine what industries will benefit from i am not exactly sure how you would describe it, traded truce or Something Like that. Its been 20 months of a to protect between the u. S. And china titfortat between the u. S. And china. Fiona the trade war is clearly not finished. A truce was declared yesterday but the trade war is not finished. Depending on what happens in the election next year, it could start again. Some of the important factors such as technology have not been solved yet. We would be careless if the market goes ahead of itself and tries to much optimism. At that point, and a risk will not be priced in. You could have more volatility. I think a lot of the news are in the market already. We have to be careful about the negative news that could be affected, that could have an impact on the market. Matt what are the biggest risks for your business . What keeps you up at night in terms of possible problems . Liquidity has been an issue for a lot of Fund Managers lately. Fiona i think the biggest risk will be the macroenvironment next year, because i think we see clarity from Central Banks. What they say for now is that they do not see any move for 2020. We see that obviously there is Good Progress in Political Risk. I think what will be very important next year is the macroeconomic and moment. Obviously, macroeconomic environment. Obviously, it will have on the consumer optimism, etc. The big risk next year will be, how does the macroenvironment evolve next year . We dont see risk of recession, risk of inflation either. It is quite a nice environment. We see mild growth. I see u. S. And europe growing at potential, not more than that. Next year, the news will be more on the macroeconomic side than on the central bank side. There will not be this tailwind that we profited this year from the move in Central Banks. Francine what is the biggest risk to that macro environment you are describing . Is it higher than expected wouldion taking hold that actually change policy expectations for Central Banks . Fiona for us, the biggest risk is not necessarily higher inflation risk. It is more, worse economical data and the fact that we are growing at potential. At one point, we could grow beyond potential. We think the risk of recession is still far. There is a risk of growth fading out. We are at the beginning of stabilization of growth number. A present growth on moment and we try to see how many numbers are progressing and how many numbers are getting worse. On the numbers we measured, run 50 of the numbers are Getting Better and 50 which are getting worse. I think this diffusion index we look at is quite important that we will look at this in the months to come. Loud. Lake geneva is i think i heard a steamship earlier, now there are sirens very early in the morning for that quiet little laketown. Let me finally ask you hear about one of the other big issues overnight. We have the trade news out of the u. S. We had obviously the huge British Election news. 25, the had the cac Climate Change movement that has been highlighted in the u. K. With extinction rebellion, has been highlighted with Greta Thunberg and don global wall street. What does that and on global wall street. What is that mean for you at unigestion . Fiona that means we have a park to play also. We are integrating esg to make sure we invest wisely and allocate capital in order to solve, contribute to solve some of the issues society is facing today in terms of climate. It becomes a priority. This year, we have reinforced how we integrate esg in regards to climate into investment andess by avoiding call calculating the Carbon Footprint of our portfolio and trying to make it better. I think it will be a responsibility for government. It will be a responsibility for corporate. It will be a responsibility for Asset Managers and it will be a responsibility for individuals. Will haveve our we to all play something in this project. Matt thanks so much for your time. ,iona frick, ceo of unigestion joining us at of geneva. We are minutes away from the open of cash trading across europe and in the u. K. Up next, as the sterling sores on johnsons decisive victory for the tories, where next for the pound . We will look at some of the analyst calls. This is bloomberg. Matt this is Bloomberg Markets european open. We are just about six minutes away from the start of cash trading and we are looking at some big gains in terms of futures. Very big here on the continent, up 1. 4 in paris. We are not looking at such strong gains in london, only 0. 25 but that is because the pound surged so much against the dollar after a dramatic election. Decisivenson won a majority for the conservatives and the jump in sterling was the biggest we have seen since 2017. Going forward, what will we see . Dani burger joins us with some of the pound calls of circumventing in the market. It has been a difficult environment to make any decisive calls about what the pound will do. We are starting to hear more from strategist. We heard from westpac and they said that during the asian trading, we might see the pound surged to 1. 36. If europe gets back on the map, they say those gains might retreat because in london there was an expectation of a conservative majority. 1. 37 ass we might go to brexit uncertainty glitz clear from the map. Macquarie and ubs less optimistic. They say there isnt less uncertainty out there and we might see gains capped. We have 11 months until the deadline for a u. K. U. K. Trade u. K. E. U. Trade accord and thats why we see some of those trades capped. Matt we will Pay Attention to the currency moves. Software, other companies after oracle missed estimates and watch anything trade related, including automakers, on the phase one deal with china. This is bloomberg. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone wifi up there . Uhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your local xfinity store today. Francine we are one minute from the open of cash equity trading. Markets rally. While stocks hit record highs, bond yields and the pound jump. It is risk on as brexit and trade worries fade. Bring on brexit. Boris johnson it returns to downing street after a decisive win in the u. K. Election. He says he can now deliver brexit and the pound sores. President trump signs off on a trade deal with china matt let us take a look at futures. We have big gains on the European Equity futures this morning. Not such huge gains on ftse futures. Considering the pound is out 2 against the dollar that is a pretty strong gains for the ftse. Just the markets are opening and we are likely to see a similar picture to what you just showed on the futures. The ftse is weaker at that is because of sterling. This is the highest level of sterling that has been flirting with since 2017. I have seen a ubs note that this is early christmas for the market. Risk is taken off the table. Not to mention the fed is going to pump 500 million of liquidity at yearend. We are seeing the market reflect that optimism. All of these are more than 1 gains. We also have more optimism where the markets are betting on a lot of bearishness. Moving into the cash markets, it is propping up some of these markets. The sector picture also should be an trysting. Even though it is a big macro day. A lot of green around here. You will notice immediately that the staples include health care. We are seeking green in tech but we had weak oracle numbers affecting some of the chip stocks. Yields are moving higher. We are likely to see a lot of u. K. Financials benefit from a decisive conservative majority. Matt, what about the individual moves . Matt tech stocks are big gainers. The stocks are gaining. 440 of the stoxx 600 stocks are up. 60 three are down. Another 100 are still in auction waiting to open up. One of the biggest gainers otherwise, thanks including santander,

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