Transcripts For BLOOMBERG Bloomberg Markets European Open 20

BLOOMBERG Bloomberg Markets European Open July 13, 2024

Boris johnson announces the first step to easing its lockdown. Donald trump combats an outbreak in the white house as he tries to return to work. Vice president mike pence spends the weekend in selfisolation. The European Commission threatens to sue germany. Therong rebuke over Constitutional Courts ruling on ecb bond purchasing. This is the picture weve got. Welcome to mondays program. Of futures, euro stoxx 50 futures up by 0. 4 . Ftse futures upice 0. 7 . Up by 0. 7 . We have seen the nikkei doing quite well. The hang seng doing quite well. Less well in the chinese market, but broadly speaking, positive. In response to a lot of talk about stimulus, we have had talk from the pboc and china, policy coming through in india. Lots to think about in asia. Also thinking about the european context. We will look to where all of that conversation goes. That expectation of fiscal policy doesnt seem to be underscoring the positive move in equities. Reopening gradually, very gradually. Economies with a positive effect. Lets get the first word news update. The European Commission is threatening to sue germany challenging the European Central bank policy authority. On eu law isd always spoken by the European Court of justice, adding eu law has premises primacy over national. Infringement proceedings against germany are possible. We speak to the lawmaker later this morning. Pence united states, mike is selfisolating after his press secretary tested positive for coronavirus. Everyhas tested negative day according to a spokesperson and he is not in quarantine. He plans to be back at the white house today. The worst may be yet to come for u. S. On employment. That is the warning from neel kashkari. He is also saying congress should step up providing more help. He made the comments on abcs this week after u. S. Payroll data showed a loss of more than 20 million jobs. First word news from bloomberg, let me also tell you what is going on in these markets. France, italy, and the u. K. Reporting since march, though south korea warns of a second wave of infections. Boris johnson said there would be no immediate end to the lockdown as he detailed the initial steps to kickstart the economy on sunday. Lets get to the markets now, how are markets responding to the latest news . Mark cudmore joins us from singapore. What do you think is underscoring the optimism in markets . Futures pointing higher. Is it the lockdown measures being tentatively listed lifted . Is it the expectation of more support to come . I think it is a combination. The fact we are using lockdown restrictions is providing a boost to sentiment. There is that backstop. The message that if it has not been sufficient stimulus so far, they are willing to do more. Central banks are willing to do whatever it takes. It may be does not prevent a second dip in equities, but it will prevent the doomsday scenarios people were considering. We finished positively last weekend that momentum is carried into this week. To startnervousness seeing whether these lockdowns work. We have the delay before we get the virus impact. In terms of the u. S. China tensions in the background, people are not sure where that is going to go. Matt miller is with us in berlin. Jump into the conversation, matt. On, i am here and focused mark, the conflict and now that has broken out between the eu and germany or the European Commission and germany, the European Court of justice and really the German High Court here. How do you see that playing out . See wolfganged to say it threatens the existence of the euro. Mark i have been quite surprised myself by how negative the commentary has been from within the eu institutions toward the vulnerability of the euro. I think that is one of the worst signs, they are saying the euro project that risk. I do not remember it getting so much criticism, the euro getting so much criticism during the euro zone debt crisis. One of the messages at the time was that they would do whatever was required. That was a consistent message. Even if they did not deliver, they were talking the talk. This time it is slightly worrying. The one thing that has confused me around this and maybe provided reassurance this is not going to trade to negatively is the commentary over the last few days has been very negative on the structural divide between germany and the ecb and how it might lead to the end of the euro, how one institution might sue the other. It has divided the Legal Precedents in europe. And yet over the last few days, the euro has not weakened any further. It has been relatively steady the last few days, which may suggest that people who are andish the euro already we need something substantial to hit the next trade lower. Despite the negative news, and it is negative, the euro is trading positively. Really interesting move in the euro. Let me ask you the question of the day. I know you and the markets live team have been thinking about how we will map unemployment not just in the u. S. , but elsewhere. How will that change markets . We saw positive response arguably in risk assets to the jobs report friday. Maybe not as bad as some anticipated, but expectations are all over the place. What do you think the market is going to make of this unemployment story . Depending on how temporary it is, i guess. Is consistency to the feedback we have been receiving. It is disappointing, some of the internal views, the impact of such unemployment will linger much longer than seems to be priced in markets. We are getting that divergence. The stimulus is supporting on employment, but there is there are businesses closing. These people will struggle to get jobs for a long period of time. This is not just a view of people who are more negative on the economy. We are seeing official forecasts suggest a year after the impact of the coronavirus hit initially , we are going to see unemployment levels below a level unprecedented until this crisis. The idea people are just going to go back to work once you reopen the economy is not true. What will be the impact of the fact that large swaths of the population will be unemployed, consumption will be down, and will it change politics massively . Will we be talking about a universal basic income . It is going to play into the political arena for the next several years, it is going to hurt consumption, it is going to change the form of consumption, and it is going to add to the debt burden. Governments are seeing this rampup. That is going to be one of the longterm consequences. They are probably going to have to keep growing them because they are going to have to provide social Services Support to a level they were not planning a few months ago. How do you see the negotiations going between there are a couple of conflict areas here. To have and china seem a fairly iffy relationship now, worse than before the coronavirus. The u. K. And the eu still need to negotiate brexit, which it seems other things take priority right now. How do you see these trade relationships working out . One forore important markets is definitely the u. S. China one. Perspectiveyones seems to be skewed by their underlying bias rather than any new information. It really could go either way. Warannot see the trade between the u. S. And china flareup properly again. It would be a hammer blow to markets. I have no idea whether it will or whether it will all go quite positive. There is a bit of bluster. It has been easier to predict the u. K. , very fraught and unlikely to end well for the u. K. It is going to be very negative for the u. K. , but i think the brexit damage the last for five years and the decline in relevance of the u. K. And the Global Economy and the Global Political circle just means increasingly at the margin i should say the marginal impact of what happens to the u. K. Has shown diminishing returns. It will be negative. It will be bad. It will play out over many months but it is not going to drag down global markets. Matt mark cudmore Bloomberg Markets live managing editor. You can join the conversation. If you have a view, share it with us. Type ib tv in order to be part of that conversation. Next, lockdown confusion. Boris johnson faces resistance to his back to work plan. The next phase next. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. We are just over 45 minutes to go until the start of cash trading across europe and the u. K. Futures are pointing higher. Lets get the Bloomberg Business flash. These are top corporate stories from the bloomberg terminal. Saudi aramco is in early talks about delaying payment for a controlling stake. Sources tell us it wants to stagger payments more and reduce the size of the initial installment of the kingdoms sovereign wealth fund. The oil giant is looking at, if it is possible, to reduce the price tag on the deal. Group is looking for financing after a 20 drop in fullyear profits. The owner of the worlds biggest Longhaul Airline raised 1. 2 billion in the First Quarter to provide a cushion for coronavirus. It plans to tap debt markets for liquidity. The california county blocking tesla from reopening its only u. S. Car plant. Elon musk is threatening to relocate to other states to keep manufacturing. He says the carmaker will sue and has filed a complaint with the district in san francisco. That is your Bloomberg Business flash. Anna Boris Johnson has announced the first step to lift lockdown. Homee who cannot work from will be told to go to work. Unions and the Opposition Labor Party have criticized the plane saying it raises more questions than answers. Let us speak to julie teigland. You were listening like many other people and trying to work out what it meant for you, for your family, your business. Like the path forward to the u. K. Is where are now . Are we still seeing is clearer now . Are we still seeing confusion . There are a lot of details that need to be worked out. It is difficult to design strategy for an entire company an entire country with various things that need to be considered. For example, regional approaches as to how the virus is developing and the sector approach from a business perspective. Certain sectors have been harder hit. Certain sectors have difficult issues resuming work certainly simply by nature of how that work is, social distancing within their production environments is very difficult. I think there is quite a bit of work to do over the next few weeks to make sure we rampup over those three phases and ensure we get our economy going again, but playing the health and safety of our workers first. How will you countries respond to another hotspots . Ew infection do you think plans are in place that make sense . Julie what we would be encouraging governments and finance to do is ensure they have incorporated this new reality into their strategy. Ensuring that we have accounted for effectively the new volatility. We expect hotspots to emerge, perhaps not a murder immediately, but the next six to 12 months. Vaccine, therea will be temporary shutdowns where the virus reproduction rate reaches certain levels. We are Encouraging Companies to make sure they can respond by having very localized strategies. It allows us per production site or Office Location to respond in a way that protects the health and safety of their workers. Thats going to require a number of things, including leveraging the benefit of technology to do that, whether that is with, for example on the government side, the tracing apps that are necessary or on the business usinghe technologies workplace assignments and the tracking of workplaces, better scheduling tools to make sure companies now where workers are and ensure they are keeping them in a healthy safe environment. When you speak to clients with Global Supply chains, do you find that they want to rebuild trust in those Global Supply chains, or do they want to create something more localized . Interestingt is an combination. Every company is doing a reassessment of where they are on their supply chain trying to assess what is the resilience of that supply chain Going Forward . Rethoughtng they have their price points, does that apply now in this new environment . They are rebalancing offshore, nearshore, and local operations, realigning logistics, and restructuring staffing and organizational models. You mentioned an interesting point. A lot of issues uncovered in the past two weeks and months, there have been dependency uncertainty areas in supply chain. Companies are calling for a rebalancing, making the supply chain more resilient by leveraging local providers. I think you are going to see a pivot to, well continuing to have a Global Supply chain, including more local and National Elements to make sure that supply chain is resilient, more than it was the past few months, frankly. What percentage of work is going to stay at home . How money people are going to be content working at home offices . What percent of the workforce are managers going to be content having there . That is an interesting question. I would have to get out my crystal ball. Our studies and expectations reflect that there will be a new normality. I do not think anybody is going to be happy with it completely. Longerterm up a to 30 of the workers would have ability to leverage more Remote Working in the future. Whether they are satisfied in the longer term remains to be seen. We see the possibility of leveraging technology to allow people that flexibility. We are estimating 30 for that. Matt thank you for joining us. Coming up, a showdown in europe. The deepest recession in a century. The European Commission president threatens to sue after the German Constitutional Court challenges the authority of its eu counterparts. This is bloomberg. Open this is the european just about 35 minutes away from the equity cash trade across europe. Ftse futures gaining 0. 75 . The European Commission has threatened to sue germany twice in one weekend for not abiding by you eu law. It follows the landmark ruling by the countrys Constitutional Court challenging the ecbs monetary authority. Commission president ursula von der leyen said the final word on eu law is always spoken in luxembourg, referring to the European Court of justice there. Nowhere else. The European Commission is tasked with the functioning of the euro system and the unions legal system. We are analyzing the ruling in detail and we believe that the next steps which may include the option of infringement proceedings. Joining us now is bloombergs Legal Affairs correspondent in berlin. There is a lot to sort out because it is the European Commission talking about the German Constitutional Court stepping on the toes of the ecj over an ecb ruling. But basically, ursula von der leyen is saying europe trumps germany. What are her options now . Has very fewshe options. She is the president of the European Union and she has to defend its integrity. She has to take action one way or the other. She has to talk to the germans. She does not have to file a suit immediately. She can initiate talks, try to stop the conflict somehow. If that does not work out, she probably has no option but going to court. What can germany do to avert this conflict . Is there interest in averting a conflict from the german political establishment . Karen of course. Germany has no interest in escalating this. That is the question, how do you do it . We are talking about a ruling that is out there from the top court, a very Political Court and a very independent court that has been critical about its own government a lot. If the German Government wants to help throughout this crisis, it cannot just overturn the ruling. Imagine howult to you negotiate Something Like this. It is really a quagmire. I have no idea how to solve it. Thats going to be the difficult side. There has to be a solution somehow. Bloombergs Legal Affairs correspondent for germany. Thank you for the analysis. We have european futures pointing to the upside. We will see what we get. Some of that positivity at the start of trading. Season. Dire earnings it has not done anything to stop stoxx from posting gains. We will break down why and look at the rest of the year. These days staying connected is more important than ever. So were working 24 7 to maintain a reliable network, to meet your growing internet needs. Were helping customers who are experiencing Financial Difficulties stay connected. Were increasing internet speeds for low income families in our internet essentials program. And delivering selfinstall kits to your door. Nos comprometemos a mantenerte conectado. Were committed to keeping you connected. For more information on how you can stay connected, visit xfinity. Com prepare. Anna welcome back to the European Market open. Talk about the earnings season. The First Quarter results in europe have managed to disappoint already low expectations. The majority of companies have reported numbers for this quarter and the ongoing theme, the worst is yet to come. Second quarter, Bloomberg Intelligence expects ets to fall despite the share prices have been supportive across the continent. Lets break down what to expect

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