Transcripts For BLOOMBERG Bloomberg Surveillance 20161128 :

This is bloomberg urveillance. I am francine look. Happy monday. We have a great show lined up. Party and hadhe off the challenge from the National Front . We get the latest from paris. Plus, Aberdeen Asset management reports net outflows. We interview the ceo Martin Gilbert. Into trump trades falters. Some of the trades that have performed best sentencing election. Taking the pulse. Here is nara. Nehra. Nehra ministers are flying in for talks to saudi arabia for the first time. Delegates due to meet and be in on wednesday. Finalize the terms of the first production decrease and eight years. President elect donald trump has claimed without evidence the u. S. Evidence had fudge want voting. He said he won the popular vote if millions who voted illegally removed. Ry are a push for recounts and three battleground states. Cap said that was also budget went and called his critics cry babies the death of longtime leader fidel castro. Cuban flag is flying at half mast. Funeral will take place on saturday followed by a burial in a san diego cemetery. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. This is bloomberg. Francine . Francine these are your markets. Europe, unchanged. On the lower side. Down to 0. 9 percent. Dollar dropping. I want to show you the price of oil. Overall, it is because we have opec meeting on wednesday. This is the picture for yen. 111. 97. And the candidate for the president ial elections in france. Runoff creating about 60 some percent of votes andpledges to taxes and propagate labor reform. Now from paris. Where does this leave next years president ial election . Is it too soon to know . If we believe the european we have to be careful. This victory downgrades the chances of becoming the next president because some of those. Ay have been tempted by votes some of her views on france leaving the eu or leaving the eurozone might be better now she is with the program of one who is considered a conservative right wing program, maybe less extreme views on some of the social issues or the issues with the european union. The victory as the republican nominee, the odds have been checked by bookmakers. According to them, the odds are fivetwo against the National France and in a related poll we had yesterday, the results of the primary actually shows that thate roughly on might fillon and 32 for Marine Le Pen. For the candidates from the centers such as for example emanuel who was on tv last night. He said the viewer a french life is from the 1960 and his vision of the economy is from the 1980s. The era of course, of margaret archer. Much. Ne take you so in paris. Nell on todays show, managing member. Innow you are quite bullish southern europe. What is your take on france. I know you have investments there. This political turmoil change everything . Thank you for having me. I think it is bullish for france. Or once we have a common sense candidate. He has a wide mandate. As you saw, he won with 67 of the vote but more importantly 400 million plus people showed up at the primaries to vote for him. The French Economy is gradually recovering. It has been a bit of a laggard in the past couple years. I think this would be the ideal boost to bring back investment, most notably to the victor. Francine i know it is extremely difficult to say because we dont really believe the polls at this point but when chance to get in . Are you present . 5050 . Chance. Tty high again, the turnout yesterday was very high. I think there is perhaps some form of willingness from the for a to sort of go nononsense candidate. Weve had 30 years of strange economic policies and france. The 35hour week which went pretty much against everything that was done in the rest of the world. Time in age go down when it went up in most other countries. It has been going against the tide, if you will, so perhaps now at a time when everyone sees surgingrving everywhere else, perhaps the french will take the other side. Francine the problem is will you actually cut your stakes in france . Yes. I think a Marine Le Pen win would be disastrous not just for france but for the world. Francine does a Marine Le Pen mean win when mean if the eurozone were to break up, realistically, would have to break up with the hard currency countries at leaving. Not the week currency countries at leaving. We saw that with grace. They went to the brink. They looked at it, studied it, valued at, and decided they could not. That was a marxist leninist government at the time led by people that were pretty extreme. Francine thank you so much. Managing member. Women be back in a couple minutes to get one grace as well. Stay with surveillance. More coming up including aberdeens outflows. Rhyming the economic and political news for a further drop in funds under management. We interviewed the ceo Martin Gilbert. Plus, can the challenge for Marine Le Pen be staved off. And, trump trades falter. The dollars drop and bonds gain. Take a pause. We will bring you all the news you need to know. This is bloomberg. Francine Aberdeen Asset management shares are a little bit lower. Lets get the chart up so we can doing. T it is reported earnings gaining 1. 6 . Outflows of 7. 2 billion pounds in the fiscal Fourth Quarter. Ceo Martin Gilbert said the political news flow had weighed on sentiment. Live from his offices in london. Welcome Aberdeen Asset Martin Gilbert. Always a pleasure because you insight into the market. Martin it is looking better in the fourth order. We saw inflows into our emerging market products. While president elect trump might be good news for the u. S. Market, it certainly has not been good for emerging markets. People thinking he might be a protectionist president. So, it could be a buying opportunity. Buy ane is it a opportunity for you, martin . Martin i hope so. I tend to think if he lowers taxes people will feel good, and inevitably that will benefit emerging markets. Francine right. Over time are you going to see huge outflows in emerging markets of the fed hikes and december . That is pretty much priced in 100 percent. Reinflatingind of of america. Marketspens to emerging in the next six month mark martin i dont think we would expect to see massive outflows from the funds. We would expect to see inflows as people wait and see. Some of our clients who work positive on emerging markets have gone back to neutral, a lot of the private banks. That is where i think we will see the change. Francine martin, how important is it to stick to your dividend in these times . Martin i think were obviously very pleased to pay unchanged dividend but i think the industry and by that i may the Asset Management industry has a lot of headwinds. Capital, feery ome pressure, the rise of the rites of passage. All of this points to a more difficult time for the industry. I will not give any prediction that we will pay an unchanged dividend next year but we will see how things go. You never know, emerging markets may recover usually. Francine you never know but they could recover on the back of what, exactly . Martin i think they have had five horrible years. I think there is a lot of catching up to do. They are growing well. I mean, india is still doing very well. China is growing reasonably. But of course there are the as e. On countries. Of course there are the asean countries. They are doing pretty well in terms. Francine you said you would like a similar deal to janice henderson. Are you looking to merge . Martin if we could find Something Like that. I actually said i thought it was a very clever deal at henderson because we all want more access to the u. S. Market and the u. S. Firm manages such as janets are keen to go more global. I think it is a trend we will really we have nothing planned, sadly, in the near future. Francine are you looking . And actually, martin, british were ideal deal . Would you be a acquiring someone or would it be a merger . Martin acquisitions are always easier to integrate dan mergers. But at this then merges. At this stage, we have to look at what is good for the business and there is great opportunity. Ive always said to you, in america it has got more than one half of the worlds wealth. It is an area where we want to involved. Francine you would look for an opportunity that gives you exposure to the United States, is that right . Martin yes. I think so. Especially distribution in the u. S. We have always been keen to sell. Seller is the wrong word, but for more of our capabilities to be bought by u. S. Investors. So something that gives is that is really where we are. But really the rest of the Asset Management industry is looking as well so we are not unique here. Hendersons been a sold to it. Francine martin, jubilee is it president elect donald trump will deregulate Asset Management in the u. S. , therefore making it even more attractive . Departmenthink these of labor roles are certainly causing a lot of consternation with the u. S. As a managers and i must admit i am not fully ok with the actual detail of the regulation but i would think that for us as ana independent asset manager, any real change is going to be beneficial. I think he will probably deregulate the banks more. Just make the usa more businessfriendly area for especially the european banks to work. But let us wait and see. Francine i ask every time, margin, and i have to apologize but you know youre one of the very few european businessmen who knows donald trump because you dealt with him in scotland when he was opening some golf courses. Is there anything out of character in the last few weeks. I imagine you follow the tweety said or is an online with what you are expecting from him . Martin i am thinking very much in line with what we would expect. We have to remember with any politician, what they say in an election or campaign or whatever is not what they will do after the event and i fully expect donald trump to fall into that category and i think the world thinks actually he could be quite a good president. He may surprise on the upside. That seems to be the general view. Francine do think he will surprise on the upside . What will he do . All the fiscal spending within hoping for for quite some time . Push thee able to dollar through . Martin he is in an unprecedented position of strength. I think people say the strongest president since 1922 in terms of capability of pushing legislation through. Firm view is and my hope is that he does borrow more and borrow more longterm debt, issue longterm bonds and invest in infrastructure. I think that is the only way we are going to get these economies going again. Hurtful would that be for the european economy . I am thinking deregulation and banking stocks. I know aberdeen holds a lot of these european banking stocks, especially the u. K. Once. To they automatically suffer if he deregulates wall street . Martin i think it depends. You have to look at that bankbybank. Clearly, lloyds is very much a Domestic Bank now so it will be unaffected by brexit or president elect drop. O trump it is dependent on the u. S. Which seems to be doing well. Obviously if youre looking at or the credits leases, i think a liberalization or toning down of the u. S. Regulatory environment will be beneficial to them. But at the end of the day, the wall Street Investment banks have really come through since 2008 very strongly. Youcine martin, where do expect the most volatility . Currency . Bonds . Actually equities . Martin i think probably bonds and currency will be the two. Olatile areas presumably equities will be. Whatever is unexpected rarely happens. Thinking, be my definitely currencies and bonds. Francine all right, Martin Gilbert. Great as always. Ceo there. Bringing the Corporate News to watch out for this morning. This is bloomberg. Music dont francine this is bloomberg surveillance. , i am Francine Lacqua right here in london. At lufthansa pilots went out on strikes tuesday and wednesday. The company says it is working on special flight plans for those days. About air has been fined 1. 2 million for paying undue profits to its ownerfamily. Sent to the prosecutor for further consideration. Korean air was not immediately available for comment. U. K. Servicein the sector are increasingly pessimistic about the future a pricesosts slow and rise. Survey say they were less confident about the business situation in the Third Quarter compared with the second quarter. Businesshe bloomberg flash. Francine . Atncine when you look brexit, what have we learned . I know you are bearish right after we spoke after brexit. Are you even more bearish now . Yes, i am still bearish. Typical of macro adjustment next. You have the Economy Investment is coming to a halt. I would be worried about real estate in the u. K. , since weve had such a huge bubble for such a long time. Going forward at some point it will hit the consumer and that is when you will really see the impact on the economy so yes i am the economy so yes i am still any negative unfortunately. Francine causing you dont own anything . I dont own anything in the u. K. Francine so we will focus on what you do have. Coming up with plenty coming your way including the president ial primary. His seed the man . We speak to the Economic Advisor. His is bloomberg. Bloombergthis is surveillance, i am Francine Lacqua london. Were at the bloomberg for your asset check. Nehra is the trump factor losing a little bit ofs way . Trades have performed best in the three weeks since the election results. Taking a breather today. The bloomberg dollar index is here. The technical rsi index underneath. The biggest drop since september 21. On its 2nd avenue decline. The relative strength index is not only it may be overbought, of course that is when he goes over 70, it has now dropped back through 70 suggesting it could be a cell signal. If we look at the dollar again, it is heading for its biggest decline in two months. This is the 10year treasury yield coming down today as well. One trade that has performed well since the election of donald trump and which continues to perform well as the metal trade. Metal mania if you want to call it. A strong rally today. Zinc headed for its strongest close in nine years. For its strongest close since 2013. The speed has left the 14day relative strength in index. Yes, i am loving that technical indicator at the moment. Zinc, lead, and copper all above 80. Perhaps overbought. Commodity market of oil very much in focus today with the opec meeting happening in just two days. It is extending its decline. A euro. W 46 developments over the weekend, saudi arabia for the first time on sunday suggesting opec does not necessarily need to curb output. And out of a meeting with nonmembers including russian. A lot going on at the moment. Opec holding an internal meeting today in guyana to resolve its differences and Oil Ministers from algeria and venezuela heading to moscow. With all of that, oil price extending declined to today. Impact elsewhere, multiasset view looking at gmm. You can see here what is happening in equity markets in europe. The ftse down a must 2 . Your stock down almost 1 . 1 . Deck down almost same for the ftse 100. With a weaker dollar, the euro up again. 6 10 of a percent. Youre seeing yield come down in europe. Tracking this treasury yields. Tenure german deals down three bases points. I talked about what is happening with the metal. If i sure you the imap on the stock, you can see what is happening. The stoxx 600 hit a onemonth high on monday. Coming up that now. Energy stocks lagging. Down 1. 7 on the weaker energy price. Francine . Francine thinks under pressure today because we are about six days away from that allimportant referendum. Expected to possibly take Political Risk back at across the in europe. This is it today. Down 4 . A little bit different because they are going through capital plan was approved last thursday and today down 12 . Closed lower. 2. 6 percent. To our guest. I want to show you the bank because i dont know if we are jumping at shadows. Political risk around the corner. Everybody concerned, investors assume the worst and hope for the best. It would be a case of the referendum come december 1. The conclusion because weve seen bad political results or outcomes for markets this year with brexit and trump. They are assuming the italians, the french will also surprise on the downside. Theyve jumped to the conclusion renzi will lose his referendum next weekend and it is too close to call. Good chance the yes winds. Lets say it is no. What exactly is the issue . A movement which is an extreme. They would want italy to leave the euro. As an investor you are bullish. The two cannot really match. Know, they cant. I just him believe he will come to power any time soon. I think there will be a change in the electoral law. Modifications. Go to elections. I am not sure. There will be a coalition. Referendum i see is a risk on the upside. The downside is already more than a standby markets. I think markets are looking at this if you look at the spread between bcp and dont it is blown out and that it suggest to media the market is taking significant chance that the no be no with wins with a resounding majority. I dont see that happening. That is not a scenario. I think the yes wins. That would not surprise anyone. I dont think anyone owns any italian assets as far as i can see. Chunk of our portfolio, 50 of our portfolio. Iancine sovereign bonds . Know you mentioned the germanitalian. That i have the italy and france in your 10year. Itself has widened against germany so it is completely blown out. Right now. About 10 spain is 1. 6. It gives you a sense of the damage weve gone through. I do not think bonds are particularly attractive in europe, sovereign bonds. The ecb has been buying with its program and as a result it has recompressed bond yields across the board. I see a lot more value and the markets. Banks, it is a complete disaster so i would go out and buy a number of the mystic francine but how do you grow . The problem with the banks is it is very difficult for ba