Transcripts For BLOOMBERG Bloomberg Markets European Open 20

BLOOMBERG Bloomberg Markets European Open July 12, 2024

English premier league along with a spat with the u. K. , all reports prius president xi jinping could close the u. S. Consulate in showing do. Tension and political Mitch Mcconnell good unveil a gop plan opening up discussions with immigrants. Cost cuts assifies it sees a considerable slump in economic output. Confirms its diagnostics unit. Units from unilever coming from across the wire. What are you seeing . Anna we got the numbers from unilever. Lets get to the story in london. Unilever with underlying sales, down. 3 , but better than the market anticipated. The estimate was for a drop. 3. 89 . That is a good number for the underlying sales story. They were telling us about what they plan for their tea business. They talked about moving it on in some way. Now with a that will hold they will hold on to some of it. They are retaining the tea businesses in india and indonesia and interest in the ready to drink tea joint ventures they have, but they are telling us the operations they will separate out according accounting for 2 billion euros in 2019. They are still planning to get rid of a substantial part of the tea business, but they are hanging onto a couple sections. We will be speaking to the ceo later on in the program. We will bring that to you after 7 30 a. M. U. K. Time. Matt looks like markets have found their direction. An hour away, we see futures up across the board, not huge gains but looking at dax futures up more than half a percent as our euro stocks. U. S. Futures showing green as well. It looks like it could be a risk on day for european and u. S. Stocks, possibly driven by good news on earnings. Absolutely. We will keep the earnings story, a mixed bag of results from european corporates. Looking here, you see things are finding their feet and that is the same in the asian session. We are up broadly. We have some movers to the downside in china and south korea. Japan is closed. Making modest gains. In terms of the overall story, we are being pushed and pulled by basic pieces at the moment. Geopolitical tension is one of those. We will keep an eye on whether we will see pressure or instruction to close a consulate in china. Supports around fiscal of when they are going to come. Lets step away from the markets and get a bloomberg first word news update. Laura wright. The u. S. Ordering the closure of the consulate in houston, it estimates tensions between washington and beijing already under heavy strain. The global Times Newspaper tweeting the chinese response will cause the u. S. Real pain. The south china warning post warns you china may close a u. S. Consulate. Global coronavirus cases. And accounts for nearly half of all confirmed infections and 40 fatalities. It is the biggest france has recorded its biggest daily increase in deaths. Italy is targeting 25 billion euros of extra spending to rescue the economy hit by the coronavirus pandemic. A senior official says the government has approved the plan which now goes to parliament. This extra money be used to help his misses and provide subsidies. Providebusinesses and subsidies. Global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Matt we have got some breaking news from repsol, more big oil stories and earnings stories. The loss in the Second Quarter little bit better than anticipated. They lost slightly less money than the street was looking for. They thought they would lose. Epsol 284 Million Euros the adjusted loss was 258 Million Euros. Losing still a quarter of a billion euros, but better than anticipated. Repsol booking a 1. 2 9 billion euros impairment on lower price estimates. We are looking at a big impairment on lower oil rice estimates. Maybe impairment was to be expected but this is a large number. The company says it will announce a new Strategic Plan in november. Getting these headlines a from repsol. Not sure if anyone watched the race sunday, but mark marquez had a horrible crash, broke a big bone in his arm and doesnt look likely to be World Champion again this year. That man has performed miracles in the past. Lets it to markets now, stocks putting higher, the dollar dipped to knew the weakest level near the weakest level since march. This amid new uncertainty and the timing of an american stimulus package. Flynn joins us now. Let me first ask you what you think about these u. S. China tensions that seem to be front and center for markets although not driving futures down. Simon you are right. Markets broadly dont think this is going to lead to a sustained deterioration in trade relations. We recognize these are quite worrying. It is worth noting things could sound worse overnight because mike pompeo is due to speak later on today. He is going to publicly have a fairly aggressive or surface speech towards beijing. China will have to give a strong rhetorical response. What does that mean for emergingmarket assets . What does it mean for chinese assets, the chinese currency . We saw the chinese currency move on the back of this that flirts with seven right now. But flirts with seven right now. A nervousare in for few days. We will see how the chinese respond. May be a bigger response then change it closing one consulate would be to force a significant reduction in staff at the hong kong embassy. The global times suggested that was a possibility. That would be inconvenient and be a further assertion that hong kong is part of china. People might think that would lead to a little bit further run along in terms of negative news. Then say we have to get through the pompeo speech. My nervously held assumption is there wont be any major deterioration at least until after labor day in the u. S. From the u. S. Perspective, it makes more sense to wait until they have the electorates full attention before they launch a more assertive china policy. Matt thanks very much for stopping in this morning. Simon flint at bloombergs emergingmarket strategists, what is important to give your eye on that universe. On thatyour eye universe. We will talk to the ceo of skanska. And we will be speaking with a host of ceos including on this ,rogram alone Bernard Charles alan joke and this is bloomberg. Welcome back to the European Market open. Startutes to go until the of equities trading. In europe we see a further footing, futures expected to be up there lets get a Bloomberg Business for you now. Business flash. Tesla has managed to stay profitable even in the midst of a global pandemic. The orderly Quarterly Earnings for the fourth in a row. It joins the s p 500 index. That is elon musk wanting to grow the company, announcing it will build a plant in texas. Softbank approached apple for bidding in a chip design firm arm, but the iphone maker is not planning to pursue an offer for a key part of the company. The licensing would fit poorly with apples hardware focused model. Microsoft is reporting slowing growth. It is failing to match lofty Investor Expectations for continued boom in demand. Revenue rose 47 , but it missed predictions for 49 gain. It was notably lower than the previous quarter. Thank you very much. Laura wright with your business flash. Swedish construction giant skanska reported operating profit of 845 million krona in the Second Quarter, beating the estimates for 787 million krona. We did see revenue coming in light. Lets talk about that to the ceo, joining us, anders dani elson. Let me ask you about the quarter in terms of the coronavirus impact. Clearly businesses across the globe were hit hard, but we have started to see a recovery in a lot of them. I wondered how yours looked. Seers yes, we definitely improvement in the last part of the quarter here, quarter two, but we have been impacted. By themuch impacted coronavirus, but we have seen impact in central europe, u. K. , definitely in the u. S. As well. Stillng to ease up, but we are not out of the woods when it comes to this pandemic. Morning. D i saw the operating profit number dropping 59 year on year in the Second Quarter. Given what you have said about things slowly recovering, do you have visibility on what operating profit does . Anders we dont give a forecast on the rest of the year, but i can say that the underlying profitability in construction actually improved because we have some positive oneoff effect in the last year and Second Quarter. This year we have been impacted from the pandemic. That we are remains determined to continue to improve the profitability and instruction stream and construction stream and remain in Residential Development and to grow our commercial development as the market allows us to do that. Matt i wonder about your order book. We have seen a huge increase clearly in employees working from home. It makes me think maybe commercial development is not going to be as big in the second half. However our analysts at Bloomberg Intelligence says your order backlog has returned to a near record high. Can you give us any color about your expectations in that sense for the second half . Anders that is right, we have a strong order backlog. We did see a slower secondquarter, especially if oo,y take out highspeed t which helped a lot. That was a great order we got during Second Quarter. Besides that, it was quite slow. Also slow in the u. S. But nordic is ok with order intake. I am confident i am not concerned over the order backlog. I am following the market carefully. Betill believe we will impacted during the rest of the year by the pandemic. Anna that is from the construction site of things. How is it going with disposing of the commercial development you are finishing . Has that market been hit considerably . Anders going from a record high First Quarter, we had the record high gain. The Second Quarter was quite slow. We did not see a lot of transaction in the markets either. Tell a bit difficult to where the market is going right now. We just have to continue to work harder with leasing activities to make sure that we test out new products. We did have a couple of weeks warsawecord lease in when it comes to square meters. That was of course encouraging. I do believe we have a good position when it comes to our , also in rate is high line with our completion rate. We have a good position there and we have a good Balance Sheet, cash flows. We are in a good position to take the opportunity when they show up in the market Going Forward. Matt can i ask a question considering the political intensity that we have seen before between the u. S. And china, the u. K. And china, the e. U. And china have issues as well. What kind of investment to you have in terms of chinese money in western projects . How active are they . Have you seen that reduced . Anders we have not been so impacted by that. When it comes to our own product development, commercial development, there is a lot of european investors, a lot of american investors. We have plenty of investors interested in our projects. We have not suffered from that. That goes from talking about the trade, the trade war if you will between those companies, that has not affected us either. One example is pretty much all the public projects in the u. S. , we buy american. That is conditioning in those contracts. All competitors have the same condition. Dont really impact us. Thank you so much for your time. Anders danielson, ceo of skanska. Talking about the construction in scandinavia and far beyond. Settling into the earnings chasm, a investorsre ignoring the risk from investors ignoring the risk from weaker earnings . This is bloomberg. Welcome back to bloomberg markets. Less than 40g at minutes away from the start of european trading, 40 minutes from basically midnight in portland, oregon. These are pictures from the demonstrations in portland. People are protesting the use of federal agents against the will of local officials, among other things. Protests have been going on for weeks in oregon. This is one of the reasons why President Trump ordered federal agents into the area. The mayor ted wheeler is expected to speak to crowds soon. We will keep you informed on this story throughout the night and morning. Anna u. S. Stocks posted a fourth day of gains as investors continue to be optimistic over a new spending bill and the potential for a coronavirus vaccine. The s p hit a five month high. Our next guest says they are ignoring the earnings chasm opening beneath them. We are joined by paul jackson, from Invesco Asset management. Good to have you with us. You say equities are running with their eyes wide shut, ignoring the earnings chasm opening beneath them. Do you think policy support is not going to support earnings in the market is misunderstanding . Paul we are in the middle of what will probably be the deepest recession since the second world war. We know that profits, corporate earnings, they are cyclical, they suffer in times of recession. We can see that with the u. S. Second quarter earnings which from what we have seen so far were down 20 year on year. Things like in the economy lag in the economy so it takes a while for the effect to come through. Central bankers have thrown money at the problem which is causing a liquidity to wash through all asset groups. Other things we have seen, i spoke with the vice , asident of the bundesbank she is also the chair of the two big to fail reforms analysis too big to fail reforms analysis, looking at what they have done in jurisdictions the last 10 years. I thought about although this recession is going to be deep and worse than the great financial crisis, we are not looking at the kind of financial crisis we had the then. Do you think the markets are relieved the banks are in much better shape . That is probably some of it. Typically a recession when there is financial crisis is worse. We are not getting the staffing points we had to the great financial crisis which came from the financial sector. The problem is really elsewhere. Common not call it a garden recession because there are some strange things going on here when you look for example at the earnings performance in the Second Quarter of the more defensive sectors. It is not what you might expect, and the financials are doing quite well. It is a bit of a strange recession but nonetheless, it is pretty deep. Governments have put a lot of support in, which is helping companies for the moment. Anna thank you very much. Paul best paul jackson from invesco management. This is bloomberg. 49. 50 i found you good job. Now im gonna stay here and you go hide. Watch your favorites from anywhere in the house with the Xfinity Stream app. Free with your xfinity service. Now any room can be a tv room. Stream live tv, on demand shows and movies even your dvr recordings. Download the Xfinity Stream app today to stream the entertainment you love. Xfinity. The future of awesome. But what if you could stdo better than that . K. Like adapt. Discover. Deliver. In new ways. To new customers. What if you could come back stronger . Faster. Better. At comcast business, we want to help you not just bounce back. But bounce forward. Thats why were helping you stay ahead and adapt with a network you can count on, 24 7 support and Flexible Solutions that work wherever you are. Call or go online today. A breakdown in relationships with china whereas this is a surprising move, it certainly fits within the fabric of a structural deterioration of relationship. We have moved from strategic cooperation with china to a time of significant should to take competition significant strategic competition. It looks as if china is in the process of moving its most important external relationship if it has not lost it already. We will have to see what happens after the president ial elections in november. The Trump Administration has been stronger with china than any other previous administration, and that is in some cases important to be demonstrated. If pompeo thinks this is going to change chinas behavior, he is mistaken. Statements like his and others weekend weaken reforms in china. We expect the decoupling to accelerate regardless of which already takes control of the white house. The number one we were should have is making sure our own houses in order. We have been naive in terms of how we have predicted ourselves. Protected ourselves. Matt some of our guests reacting to the u. S. Decision to close the chinese consulate in houston. China vowed retaliation after kickedsulate staff was out. The editor of chinese owned news outlet the global times said china could consider cutting staff at the u. S. Consulate in hong kong. Paul jackson is still with us. This is clearly our most read story. I think the number one thing markets, if they have a list of what to watch, this is right there at the top. What do you think about the u. S. Chinese tensions and are you expecting them to escalate . Will they somehow get better . I would expect them to escalate in the short term because this is a good the current president thinks this is a good editorial gambit. He is putting hitting the chinese bogeyman hard. That could improve if we have a change of administration in november. Although i think everybody is biden willggest joe not be soft on china. I think there would be less aggression. Is interesting. If you are looking to protect yourself on the turmoil, do you like gold and the way it has increased . And paul i think gold has done what you expect. Gold goes up when real yields go down, when the dollar weakens. Since the financial crisis, gold tends to go when inflight Inflation Expectations go as well. What i noticed literally from the day of the election in 2016, the u. S. Election was gold went to a significant premium. It would suggest there is premium inike a 200 gold since the elections and i suspect it is a geopolitical premium. I think gold does play that kind of safe haven in terms of stress. Matt what are your favorite assets . What gets you most excited in investment terms when you are looking through a portfolio and you need to make rebalancing changes . Paul given where many asset groups are, it is hard to get excited. Across the fixe

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