Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20161206

BLOOMBERG Bloomberg Daybreak Europe December 6, 2016

President said the Incoming Trump and asked ration cost decision could help support economic rates. Welcome to bloomberg daybreak. Our flagship morning show. I am anna edwards. The call after the storm. Some of what is happening in the asian equity sessions and other Asset Classes as we consider whether the market is making of the latest coming out of italy. Forgh of relief, promising italian voters. That was the conclusion over the weekend. It has come down the little bit. Running into that italian vote. It did not take long for markets to readjust this time around. Lets show you where we are on the asian equities session. Italy reliefe rally as the president of italy seeks to minimize political fallout. Approval could happen this week. S p futures are muted. The dow returning to record levels. U. S. Data is in focus. That is the focus as we go through december. We got that you news yesterday. We see the euro is weak or by about. 1 of 1 . Near its strongest level since the middle of december. We have the price and therefore you. Another down another 1 . Snapping that four climb that we have recently seen. Rba. Ange in rates from the lets get the bloomberg first word news with angie lau. Angie lets get you a little bit more on that and Australias Central Bank has kept Interest Rates unchanged as the global commodity upswing eases. The reserve bank of australias governor traders has written up policy moves while the [indiscernible] the Prime Minister of france is confirming he will run in next years president ial election. As part minister to prepare for the social for the primary. Announcing his candidacy he warned that his country is divided, it risks letting Marine Le Pen into office. Ministerprime [indiscernible] overheard a parts to brexit. Willsa may has said she trigger exit talks by the end of march. As many as 40 tories could vote with the opposition party. Putting forth a motion that she planet she plans to publish a brexit plan. The Supreme Court hearing into whether the government needs to parliament before triggering article 50 enters its second day. Yesterday, police riot vans werent attendance. As a small crowd gathered at the court. The governor of the bank of england has launched a defense of globalization, speaking in liverpool. Mark carney sent out a manifesto for central bankers and government growth and make the World Economy more equal. Decade realpast earnings have grown at the slowest rate since the mid19th century. This weaker Income Growth that focused attention on its distribution. Any qualities that might have been tolerated during generalized prosperity are now felt more keenly. Angie al gore has met donald trump to discuss an issue close to his heart, global warming. The president elect has rejected the existence of climate change. Gore said their truck talks were a sincere search for common ground. Mr. Gore the bulk of the time was with the president elect. I found it an extremely interesting conversation. And to be continued. I will leave it at that. Thank you. Angie singapore and australia are introducing collateral rules for overthecounter derivatives. Will be required to have systems ready to exchange collateral known as variation margin which covers daily market swings. The guidelines which will prove apply to very admit variation margins are part of an initiative to make transactions in the market safer. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg. I am angie lau. This is bloomberg. Anna thank you. Lets check in on the live Market Action in the asian session. It seems asian markets are joining in that relief rally today. Haidi we are setting up for quite a nice open. We do have asian investors getting involved on the back of lead, a strong shrugging off the uncertainty that is posed by the italian referendum. This is what we are saying seeing. Are closinge stocks up by half a percent. We have the stronger dollar session and that boosts some of the exporters. Were not seeing the strongest buying calling coming from stpi. Ost be ko we are hearing about the impeachment mode and potentially addressing the nation tomorrow. Driving the rally. Also around the region, up by half percent and the rbs holding that cash rate steady. Predicted by every economist we spoke to at bloomberg. Shanghai just up. 1 of 1 . Not a lot of take up when it comes to that. Northboundes to that quota there. Hong kong is headed for the biggest gain in about three weeks, up by. 8 of 1 . Energy names doing really well. Lets take a quick look at the movers. Japan saying the lower house has passed legislation when it comes to potentially legalizing casinos. They make some of the equipment for these and japan cash machine. They did selloff with the understanding that legislation needs to go to the upper house of parliament. It is a long road ahead when it comes to the casino legislation being cemented when it comes to japan. Some of these names are coming up in the south korean inquiry, doing very nicely. , the heads samsung of the companies under questioning in south korea. Anna thank you. Lets get the latest in italy. Italy on hold. The italian Prime Minister was asked to wait to resign until next years budget had been approved. This is italy seeks to minimize the political instability triggered by renzis stinging defeat. Lets get to Francine Lacqua. When will renzi step down . We hear talk of linking this to the budget. This is a very live budget conversation. Is italys interesting is the president of what chooses next. We understand that the president of italy had over an hour of around 6 30 p. M. Or 7 p. M. And it was clear by the statement, this is the president s palace. The president is externally concerned about civility. He had forced or asked gently mr. Renzi to stay on until the budget lies past. It just puts to bed the budget for 2017. There will still be these two houses to a Lower Parliament and the budget law has gone through to the lower house and it needs approval to the senate. We understand that this could be approved as soon as friday. It could take as much as a week. Until next tuesday. We understand that is when the Prime Minister will step down. The other thing to bear in mind is this gives a little bit more president to go and talk to the various actors so he does form a technocratic government. When you speak to insiders there was a sense that frenzy is almost too emotional, that he resigned straightaway saying i do not want any part of this because it was such a blow, the referendum did not go my way. It seems the president gave him a cooler head. Succeedo is likely to renzi . Who will succeed him . Francine we have 45 names that as renzithe same party including the finance minister. This is significant because we understand the president is looking at the transport minister, the head of the senate which he may think will ensure stability especially for the banks. We have about 45 names of people that would be trusted by the market. Ofbably by speaking to a lot inking ceos. The current finance minister has been in charge for two years and he is top of the list. He was the one pushing and helping to reform a lot of these banks. The populist party is the one that is campaigning for the no referendum. It is looking very unlikely that or todent would ask take part in a new coalition. This may change but it does seem that the president wants to keep things stable. We would be looking at the market stress to take over from renzi when he steps down officially. Anna there is still the fact that the market perhaps saw this coming. That explains why we did not see equity markets falling off a cliff yesterday. Amazing that we have this on sunday and the dow overturneds a record high in trading yesterday. Francine what is clear is we got burned by briggs it. If you look at the italian index the day after brexit. Byy are saying we got burned trump. This time we were not going to get burned. It does seem that the positions were for a no vote. We had a blackout for two weeks. The latest poll in november before that blackout gave the no a victory. Us by 60 . S the tory it did give it a 53 no and that latest poll. It does seem that the markets were somewhat prepared. There are concerns about the banks. We understand the government is looking at various options. Nothing is confirmed. Some of the press are talking about a nationalization plan. I do not know how that would fit. Everything is in flux but this is something that we need to keep an eye on. On thursday we have the European Central bank, there was a lot of chatter yesterday amongst the investors we were talking to hear that the ecb may have intervened in terms of buying bond yields yesterday which is why you did not see that spread between the german and italian yields rise by so much. Anna thank you. Francine lacqua on the rooftops of room this morning. Great to see you. We find her self dealing with a bigany have cast is political set piece event. Have this so those with the bloomberg terminal can get a look. Aroundain we saw this the italy vote over the weekend. Do you sit down and mark all these events in there, this is where the there are spikes of volatility. Is creating aket narrative where people will trade around, we will see and it willlatility normalize back down to where it should be. That is what we should be looking at. The fact that the underlying name, that Central Banks are ultraloose my Monetary Policy is expansionary and it is a primary driver for asset prices. All the other noise around it whether it is trump, brexit, the italian referendum is just that, it is noise. Investors need to be able to what issee through happening, not excepting the topline narrative that is being sort of fed to them and go forward with understanding that as long as Central Banks keep their current stance, as in prices will continue to thrive and do well. If the threat of the Worlds Largest Economic Union in the u. K. And eu breakup, does not spark a massive route into safe haven assets for an extended time, a full equity Market Correction of 20 percent. Anything that happens subsequently after that is not going to trigger a massive move. This italian referendum probably would never spark what type of move the brexit could have. Said are youat you over italy already . We had these questions are on the Banking Sector, could that come back to herd the broader eurozone picture . Swap. Ave done this equity that is one of the three parts of their capital rating plan. They are searching for these linchpin investors. Keeping an i on the italian situation. We do believe the backstop of the ecb is Strong Enough to move bankingwith any italian salvation. We are not enormously concerned that this is going to trigger a contagion through financial markets. Something significantly worrying. That is the key to what investors should be looking at. What are Central Banks doing more than anything else . Anna to put in context what we have seen, this is the fourth largest swing. Do see the euro going from , now . Re we are now peter the Trump Administration will allow or put pressure on janet yellen to allow the u. S. Economy to run a it hot and not tightening significantly quickly. The pace of normalization will be significantly lower. We have seen it recently, the pace of the dollar is down as well as rotation from bonds to equities. Even that upswing in global yields has also slowed. Theo not believe unstoppable Dollar Strength is forecastable. Signaleyee if th will that on ending qe is on the table or is now the time to signal where there is some the slowdown of ecig purchasing. That will allow the eurodollar to recover a lot of its lost ground. Anna the Bond Buying Program will be expanded. They were talking about extending qe. Peter tapering is in the process. Been sos policy had large and so dominant for such a long time, even a slight indication that asset purchases may end in september or sipped december. It changed the gradient of how we look at financial markets. Anna thank you. Here are some highlights of the trading day ahead. We get final readings of the eurozone and thirdquarter gdp. Angela merkel gives the keynote ruling party convention. We will be live with updates. In the u. S. , we have trade deficit numbers at 1 30 p. M. U. K. Time. Angela merkel says that germanys election will be the [indiscernible] we ask if this will be the year that more Political Risk comes to europe. Can the left take on Marine Le Pen . Announcing he will run for the presidency. And rent his future. Italy seeks to limit instability from the prime and referendum. We are live in rome. This is bloomberg. Anna welcome back. This is daybreak in room. 7 23 a. M. The dollar, wet are calmer than we were this time yesterday. 107. 47. Lets look at the european stocks. Joining us now. Station f. R of talk aboute to startups in france. Do you feel that it is popular right now . Guest i think france has been a for attractive place startups for well. You have a number of startups in the u. K. And elsewhere that are looking to other locations and france has risen to the top. Anna this is an old station being turned into a habit for startups. Is this going to put france on the global tech startup map in a bigger way . Guest yes. I think this will make a huge impact with regards to the french ecosystem. Madell make it has france visible. There have been a lot of smaller actors that have been doing very well for a while now for a number of years but this has one giant project with them in the same location and attracted a lot of attention from around the world. Anna it is still under construction. Lets talk about the politics and how this plays in. Many Tech Companies say we might not have much access to talent. Andlook at Marine Le Pen the rise of [indiscernible] and you wonder where that goes. Thet everyone has this in back of their mind. With a start up ecosystem we remain positive and we things just keep on working on what we are currently doing. France has made tremendous progress with attracting international talent. They have been working on bringing international entrepreneurs. Anna if youre looking to , what does the Tech Industry want . Guest it is much more about talent and not just entrepreneurs. From within the company so we can keep a lot of the jobs in france. Anna great to hear your story and good luck. Thank you for bringing it to us. Off ection of station businesseso persuade to take a look at the realm it. Angela merkel says that germanys election will be the hottest in years. We ask if i17 will be the year of Political Risk in europe. This is bloomberg. Anna welcome back. The euro against the dollar. One of 7. 50. Lots more coming up from francine. Live on the ground in rome. A new edition of daybreak available on your mobile phone. Lets take a look at the top stories making it into todays edition. Mexicos first competitive Deepwater Oil option. Exxon oil and chevron all on block. Bring 40 billion in investment, helping the country to recover Oil Production lost amidst the collapse of crude prices. Once january the 20th his passed, it could be interesting. The other story. A potential challenge to Johnson Johnsons move to acquire this with swiss biotech firm. The number is based on johnson , the opportunity top is more than 27 billion. Todays final euro gdp data for the quarter. The big picture is the expected between 0. 3 want soak up slack in the economy fast enough for the ecb to scale back qe. Lots more conversation about what the ecb does on thursday and into next year a little later on. Commodities have made a comeback this year after sinking to a quartercentury low in january. Yousef joinskets us with the chart of the morning. We are set for the first game since 2010. Lets pull out the bloomberg Commodity Index. This covers 22 commodities. Everything from oil to coffee. This is the index. You can pull it up on your bloomberg. A beautiful chart that shows you the difficulties the bloombergs Commodity Index has. 2013 and 2014. Threeyear returns of 30 . Put out a note here predicting strength will continue in 2017. As Global Economic growth picks up, that will eat into the oversupply. Investigators are bearish on performance ing commodities was a fluke. They also see a decline in soybeans given the fed is about to height rate by craig. We spoke to one of bloombergs top forecasters on bloomberg markets, he said a lot of the gains we have seen in commodities have not just been on infrastructure hopes were chinese investment, it has also been a hedge against inflation. That is another key component driving this speculative enthusiasm. A lot of reality checks kick back in. Anna thank you. Now back in dubai, great to see you. Says germanys election next year will be the hottest in years with her party facing challenges from far left and the right. She made the comments to a german tv station ahead of her convention, which gets underway in essence today. Matt miller is there in essence for us. Rick to see you on the program. What will the focus of the platform be ahead of the election . The subject of migration will come up. Matt absolutely correct. That is going to be it. The refugees are the focus inside and outside, all across the germany. The party would like to focus on other things, namely the subject of europe and holding it together. Those two are so strongly interlinked right now that they cannot avoid trying tossing up their rhetoric. Because they are getting so many attacks from the right and they dont want to lose any ground to not only the right wing party, but also the right wing of their berea

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