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tv   Bloomberg Markets European Open  Bloomberg  March 7, 2018 2:30am-4:00am EST

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welcome to bloomberg markets: the european open. alongside matt miller in berlin. cash trade is less than 30 minutes away. ♪ anna: gary cohn resigns. president trump's top economic -- economic adviser quits the white house. the yen and treasuries gain. clamping down on china. washington will impose
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restrictions on chinese imports. how will beijing respond? testing the saudi crown prince. he gets the red carpet treatment as he visits london. will he prove a reliable new partner for brexit england? we are less than a half hour away from european trading. take a look at futures. we gave up all of our gains in yesterday's session, much of our gains in yesterday's session. we have futures down across the board. futures are often 0.6%. dax futures are also off. take a look at treasuries in the resignation.cohn's you can see that the yield dropped into the end of the session yesterday and this morning as investors bought bonds, seeking the sake haven of
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government debt, also buying the yen. you see a lot of risk off trade going into effect. what do you see on the g mn? anna: the risk off trade, and departure seems to be the main theme. we will talk about what extent this prices into the market. add to the gary cohn story, the broad tariffs for the white house, and what they achieved to do with the chinese imports story, and investment story. we have that news circulating as well as gary cohn. when you look at yesterday's beginning of the u.s. session, there was more optimism around the geopolitics story and the north korea developments. that has been pushed to the side. you can see the trade tariff story having an effect on foreign markets. the canadian dollar is weaker.
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the australian dollar is a touch weaker. the environment is capturing the usual suspects. the yen is on the rise. on the commodities story, we see the risk off trades. we see money coming out of those commodities that are geared to the global growth story, fear perhaps. how high we see the nationalists drive, and their descendents in the white house now that gary cohn has departed. let's get an update from juliette saly. eu of tariffs on steel and aluminum by the trump administration. that comes as the block is expected to target 2.8 billion euros of u.s. goods, everything from t-shirts to motorcycles if washington goes ahead with the plan to impose steep levees. -- levies.
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>> we are assessing what are the options of our action. we will react in a firm and proportionate way within wto rules. the eu will need to react to that kind of one-sided tariffs imposed by the u.s.. juliette: the trump administration is considering clamping down on chinese investments in america and imposing tariffs on a broad range of imports. according to people familiar with the matter, and announcement following an investigation by the trade representative office into china's practices is expected in the coming weeks. the presidents announcement last week on tariffs has ratcheted up the global tensions and led to the resignation of his chief economic advisor, gary cohn. the u.s. justice department has on a crackdown
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on immigration. the lawsuit targets three state laws that interfere with federal immigration enforcement, and violate the constitution. attorney general jeff sessions is scheduled to visit sacramento today, and homeland security officials will take punitive action against the largest u.s. state over its refusal to ramp up deportation. reported in the u.s., gary cohn is resigning as president trump's economic advisor. one person with knowledge of the chaotic west wing decision making process, said cohn and wilbur ross, who recommended tariffs privately argued over the issue. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. thank you very joining us
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from hong kong on gary cohn's resignation is our editor jodi schneider. give us the story here. resignationry cohn is going to complicate the business agenda, the economic agenda for the white house. he was viewed as a steady hand in an unpredictable administration. he helped president trump get to wastax cut legislation that passed late last year. he is respected by wall street and by the business community. he had become in recent days an ally of lawmakers on capitol hill, including the house speaker paul ryan. people who opposed the tariffs, he was trying to engineer a meeting in the white house of business executives who would be affected by the tariffs. losing him is going to complicate that relationship
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between the white house and capitol hill, which is very much the representatives from the president's party are worried about a trade war. we had information from people familiar, that the u.s. is considering, the trump administration is considering other tariffs against china, punishment effectively for what the ministration views as china not following the rules with intellectual property. this could effect -- this could affect clothing, electronics, shoes, a range of things, which could up the ante and provoke further retaliaon this is, again, all of this coming about when this position will be unfilled. there are several others in the administration as well that are not thrilled right now. there is all of that going on at
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the same time at the white house. anna: jodi schneider with the context around gary cohn leaving the white house. the way markets have been reacting to this story, let's go to singapore and mark cudmore. mark, good to have you with us. on one level, you can try to put context around this is a departure of one person, on another level, you can look at this and see it more indicative of the way trade policy will go from here from the white house. that is why this is more worrying. mark: i think so. there is still more pain to come. we expect this to play out over a couple of days, but the fact .s, this is bad for trade it is bad for global growth. it is bad for the u.s. administration, and makes them harder to push through their business agenda. it is bad for the financial industry. this is their main ally.
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while in a few weeks time we may say this was a storm in a teacup, and a trade war never materialized, or there were a few tariffs that are irrelevant, that is a narrative for a few weeks time. it is not a narrative for this week. with the removal of gary cohn, the handbrake has been removed from this process. we are going to trade this story of as splitting trade tensions. that is bad for equities. it is one of the worst thing for equities we could have. the screeni've got up in my bloomberg. if you put the drop down box in a deficit, you can see what kind of deficit the u.s. has with mexico300 $27 billion, over $100 billion, germany $67 billion. why do you think, what are some of the reasons for these kinds ?f protectionist measures
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wilbur ross is not a stupid person, and he seems to be pushing for it. isk: i think a lot of it driven by politics. it works for trump's base. especially if they target china. the main impact will be to raise prices in the u.s. it is different the other way. china tends to import intermediate goods from the u.s., therefore they can have the upper hand in this trade war. they can impose tariffs that will not of affect their economy. at the moment, this may be bluster. it may be part of the negotiations for nafta. trump baby do nothing -- trump may do nothing. while there is uncertainty about what will be imposed, that is a negative risk. no traitor or investor was to up their risk levels when we do not know what the outcome is. we may know in a few weeks that nothing will happen or minimum measures, but not today, and
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that is why there is bad news in the short term. anna: this move away from risk, whatever drives it, whatever the politics, see the yen strength. many people are asking, what does this do for the boj? will they now plan to normalize any policy? mark: it is definitely theysizing that boj and cannot relax policy. the market does not care about that at the moment. now that we are having this risk aversion from this trade turmoil, that is helping that story that if dollar-yen is coming lower, we are seeing yen strength. that is putting pressure on the boj. they have been kuroda did say they might in 2019.when to exit it is not a topic of conversation for this year. this will weigh on japanese stocks as well. korea and india were
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the bellwethers for asia. they played the tech story, the asia story, but this year it is the pound stocks, and the yen is hurting them. matt: mark cudmore, thank you. you can follow market insights on the bloomberg. up next, beijing backlash. president trump has said to be considering a clampdown on chinese investments as well as imports over alleged intellectual property theft. this is bloomberg. ♪
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♪ you're watching the "bloomberg markets: european open." let's get a business flash from juliette saly. steel shares have plunged in tokyo after the
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president confirmed his resignation. that is after an independent investigation of the fake data scandal found more misconduct. he will quit on april 1. his successor will be named in the coming days. kobe steel executives vice president and the head of its aluminum unit will also step down. says he iso's ceo not worried about teacher oil demand. he thinks the world will meet oil and gas as far as he can see. >> i am not losing any sleep over peak oil demand. oil and gas will continue to be a major oil source for the world. oil will be required for the foreseeable future. juliette: that is your bloomberg business flash. thank you very much.
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the trump administration may restrict chinese investment in america, and impose tariffs on a broad range of imports. according to people familiar with the matter, and announcement halloween an investigation by the u.s. trade representative's office, is expected in the coming weeks to back those decisions up. our bloomberg's -- correspondent is in beijing. what has the response been in china to the terror -- to the tariff threat and investment concerns, and intellectual property theft allegations? : so far, you have not had the response from beijing that you heard from the european commission. put have been at pains to forward a conservative response to what we have been seeing out of washington. we spoke to the chairman of the major conglomerate, they bought a u.s. drug company last year. we asked if they were changing strategy, and they said no.
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they expect higher hurdles with the trade tensions. there is a sense that beijing is happy to let the europeans and canadians duke it out with washington while they sit back. and iis also a concern, heard this from people close to policymakers about this potential tariffs hitting things like electronics. and also a change to protocol where they make it more difficult to invest and by assets in the u.s. buy assets innd the u.s.. for the moment they appear willing to allow the europeans and canadians. -- we havee not hurt not heard much from the chinese administration on this. &a you say, indications for m$
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investment. where could the chinese push back? tom: i should stress the tone could shift. we will hear from the foreign minister tomorrow. maybe he will start to take a punchier line on this. they talked about restricting sort him and soybean imports sorg he u.s. to react -- hum and soybean imports from the u.s. unofficial take measures. they could put pressure on u.s. companies operating on the ground in china. orther it is automakers companies like apple, around issues like licensing, just making life more difficult for those are measures they could impose. they do have the right to protect their industry there, but for the moment they are trying to dial back these
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tensions. we will hear from the foreign minister tomorrow. tom, thank you very much. we are minutes away from the open. up next, we will look at the stocks to watch this morning, as equity trading gets underway. ,ay attention to rolls-royce with earnings ahead of expectations. more,l discuss that and stocks to watch. this is bloomberg. the open is 10 minutes away. ♪
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♪ anna: this is "bloomberg markets: european open." from the start of european equity trading. it's have a look at the stocks we are watching. sam, good morning. before we dive into stocks specifics, let's look at sectors that could be hit by this general move away from risk assets. causing a huge risk off move in markets. banks, it could be almost across the board. no one really likes a trade war. it is a risk off sentiment today. , i spoke withy the ceo of roles race the
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carmaker. today we are getting numbers from rolls-royce, the engine maker, and they are beating expectations. has been goinge through restructuring the last few years. a key number for them today is the cash flow. it has been a big part of the investment story. out, they sayents this is no longer a company that is afraid of its own shadow. they have had profit warning after profit warning, and now they seem more comfortable in the new direction, and so it is welcome by markets today. let's talk about the gaming industry. what have we heard from them this morning? they had a really good fourth quarter. some friendly results, especially in soccer over here. they beat their own guidance on adjusted earnings. it is looking good. usually investors respond
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positively. although they were light on a lot of numbers. it may be a sweetener rather than something that is all-out positive. we are seeing the stock down a little bit this morning because earnings and revenue were a little lighter than expectations, especially in the fourth quarter. we will see where that goes. matt: thank you very much. stocks to watch, could be a lot of action at the open. we are getting the latest from our stocks team. on theut first go bloomberg. you get all of the relevant information you need for the equities open each morning. you can subscribe to that on a mobile app. that will remind you. coming up, it is the market open. we have four and a half minutes
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until the start of trade. futures are pointing down across the board. they are not huge. we will give you that and more next. this is bloomberg. ♪ mom, dad, can we talk?
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sure. what's up, son? i can't be your it guy anymore. what? you guys have xfinity. you can do this. what's a good wifi password, mom? you still have to visit us. i will. no. make that the password: "you_stillóhave_toóvisit_us." that's a good one. seems a bit long, but okay... set a memorable wifi password with xfinity my account. one more way comcast is working to fit into your life, not the other way around. retail. under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store
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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. anna: they're less than one minute away from the start of european equity trading. let's take a look at where we are set to open. this is a glance at a number of markets. really the story is around gary cohn. his departure from the white house, does that put more anti-trade invoices into the contingency. we are expecting to see those markets ahead a little bit lower.
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a little bit of a yen strength in there as well. featuresnce at those before we start trading here in europe. we are expecting to see a movie down in the european markets. hearing from our stocks team, we're looking at trades.k-averse the u.k. market is not as negative as they might have expected from the futures and some of that moves in asia and compared it to the u.s. futures. the ibex is down by .3%. let's take a look at the individual industries.
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very different from yesterday. it was green across the screen yesterday. take a look at a whole host of individual companies to see if they can keep their head above water. keep an eye on rolls-royce, we might be seeing a little bit of movement there. rbs could also be in play. also people look at some of the advertising plays. wpp could be under pressure as a result. some let's take a look at of the big companies are moving the indexes in one direction or another. 600 moves appear. only 71 are gaining. as far as the big names weighing on the index, you can see that
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moves't have really sized here with the exception of glencore and rio tinto. the top 10 are all down less than 1%. hsbc is one of the losers today. you also see some of the oil companies there. bp is down. some of the big chemical makers. these are the biggest companies on the stoxx 600. -- when theyn move , theyt even small moves do tend to weigh on the index. take a look at the winners here as far as the big companies that are helping to hold the stoxx 600 back from bigger losses. you see some bigger size moves here. smurfit kappa up more than 1%
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here. otherwise, you have some very big games here that tend to move the index around. you can see that a move in allianz kinship and index very easily. let's talk with the head of technical analysis. he had that the team covering the equity and commodity market. let me get your reaction to the seeminglyat is can surrounding gary cohn's resignation. it we have seen this before in situations where he did not actually leave and the markets were still royal. he is gone and we don't see that much of a drop really considering the concerns we have had in the past at lower levels. david: i think that is correct. beginning of the week we clearly weakened sharply and equity markets, then we held what was
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significant across the equity space and the europe. we now have this new dynamic with the trade war and gary cohn resenting -- resigning. i think it is interesting that we have seen a whole dynamic over the last few months sort of speak equity markets a little bit. spook equity markets a little bit. by no means have we reached the tipping point. that happen,es because a look at this negative news flow. we see equity markets selling off as a result of gary cohn and the news that we are bringing this morning around the u.s. maybe imposing further terrorists because of intellectual property -- tarrifs because of intellectual property. market investors have just been rewarded. what breaks that?
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david: i'm going to speak as a technical analyst. what this brings to the table is it reveals what are the key support levels. despite all of the news and rumors and was going on, it is about what are the key support that defines the range. this brings to the front again how important it is to bring a technical overplayed. no major support levels have been broken. we are getting close to them each time. the bounces from them each time are getting less. i think the data this friday will be huge, especially the wage data. out, we take those levels then the trend changes. house is a little bit more neutral, but not to the point where it was broken down.
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i think if you are a trend --lower, have you tie and the technical analysis you do with the important fundamental analysis? you mentioned the economic numbers that you are watching you givemuch weight do that kind of fundamental news versus the support levels, how important are those? for us, we're definitely a technical team that believes in fundamentals. we trade from a technical standpoint. when we come to our conclusions, and we do bring some macro into the analysis, it has to fit with the fundamental backdrop. i think the price does lead. notwithstanding that, it has to fit. no major trend is going to work unless the market supports it. definedlearly
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everything a, what are the key support levels and trains and resistance levels, and then it is what is the fundamental driver acting on the market? normally old have been the most crucial thing that we have seen. -- normal yields have been the most crucial thing that we have seen. it is the data now that ties into whether we are going to bring that 3% or 5% level. tooksurprise number nominal yields higher. -- economic data on friday comes in and it is highlighter,-- yields could be other major levels. china into february, 3.134 5 trillion u.s. dollars.
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perhaps a little lower, but still over that crucial $3 trillion mark. the investment back into the u.s. story that we were talking about with tom mackenzie. is it going to be more difficult for the chinese to spend some of this fx. for oneave that part second and return to the conversation we were having. she was talking about how gross headwinds are going to become tradewinds -- tell wins -- tailwinds. have you see those kinds of comments given what you have set about where you see interest rates going in the u.s.? all abouthink it is the direction of travel and the trend that we are starting. could levels of a think are starting negative for the equity market and they don't think that until figure 5% in nominal
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yields in the u.s. are trading well below those levels. are we beginning a trend that is taking us down the path? hikes, at about the the moment you can still argue that we are trading into a sideways trend. 3.5%arts us on the path to . that is kind of how we are trying to mix it in together. it does not mean it is a problem now. that -- the path is started to that point. matt: david, you are going to stick with us. we have a lot more to talk about with us. we have an interesting move in rolls-royce. that engine airplane maker be estimates.
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-- beat estimates. thisun up almost 10% in morning's trade. watch this stock. this is bloomberg. ♪
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anna: this is global markets 24 hours a day, powered by more than 2700 journalists and
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anaylsts in more than 120 countries. -- this is "bloomberg markets: european open." let's get details. >> best gainers so far this session is rolls-royce. beat estimates and the company to dig in more. it gave a 9% increase to its dividend. that was above estimates. it also specified it's 2020 ebay -- ebit. manus and i spoke to the d eutsche post ceo. finally, i am looking at the with these -- publicis2.8%.
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take a look at wpp as well. matt: i will pick up there. let's focus on a busy week for the world's central banks. the governing the council may discuss moves to pave the way for the end of the quantitative eating -- easing program. friday we will hear from the bank of japan as a strengthening yen restricts a strengthening banks ability to scale back purchases. anything on the fundamental side from mario and the ecb that you think the market has got wrong or is missed prizing here? vid: i don't think so.
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i think right now the euro moves is seeing most of its trends so far. i think probably what the market is missed pricing in genuine -- general is a global yield moves. the u.s. has been the headline in this. i think at the moment, it is more of that global yield move anticipating more of the ecb. i think what is surprising with europe as a whole is given how strong the europe -- data has been, they have been quite sluggish. about that talk rising yield trend and how it relates to europe. charts yields.
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between the red and yellow lines, there is some degree of decoupling going on. in the most recent. -- period the point being made is the re-coupling. how much do you see that flowing transatlantic? david: we see the all over. canada,yields in australia, sweden, the u.k. we are seeing the global markets catch up with the u.s. we think that is stalling as europe's art to play catch-up. 10we take a look at a global year benchmark, we think that is an upward trend. is the global yield move that is starting to do that. what is fascinating is some of
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the breakdown in some really big correlations that we have seen in a u.s. and germany, but in terms of the u.s. dollar. yields have really outpaced the dollar. at what point does that get disconnected? the euro dollar chart of the last 12 months is really striking. as you mentioned, a lot of this has to be dollar weakness, but we also see real euro strength as part of this and we hear about the economy underpinning that. where do you expect this level to go? david: i think the euro-dollar trend and euro trend is still up i think it is losing momentum. if we look at the year in trade terms, it has been trying to stall a little bit. momentum.rly losing with that reinforces to us is that 125 and 126 is still likely to be a formidable barrier.
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i think that is a combination of rising euro and weakening dollar as well. i suspect that will be looking at is more of a shift to a 126 117.5 the range to 118 or down the range. anna: thank you very much. of next on the worst month for quantum 17 years. who is losing the money? this is bloomberg. ♪
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matt: this is "bloomberg markets: european open." old $350 billion pocket of quantitative money management is struggling amid choppy markets this year. last month, trend following trade advisors log their worst returns in set -- 17 years. danielle want to start with you. -- danny i want to start with you.
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this recent downturn is the worst in 17 years comes on the back of the best quarter in 2017 for the strategy. put very simply, these will vary, but they try to capture the trend and markets. think about this sort of trend we have seen over the past decade. we have this incredible nine-year bull market where, especially the last year, you rarely had a selloff of more than 1%. a lot of these programs have really trained themselves to know that markets will continue to go upward. any sort of downturn will quickly spike upward. essentially, these programs are not going to get short of a 3%, 4%, or 5% drop down -- draw down. think about what that means in february. come february, the market starts to fall and they remain a long.
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they even buy into the downturn. that led a lot of these strategies to do very poorly. the average was about a 6.4% loss in february. anna: what do we know about looking into the rest of 2018? big if as we are entering this new regime. it certainly seems that way. the issue going forward for a lot of these strategies, managers will say these are all backward looking models. volatility picks at if there is more choppy trading. our models will adjust. however, there is a pocket you have to remember that accrued a lot of assets. a lot of these managers who have done very well by essentially taking a very correlated position to long equities, now have so many assets that it could be harder to be more nimble.
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if you have a lot of money behind your program, that is a lot of trading cost to try to act quickly. in it your thoughts in terms of volatility and whether it is back because that seems to be well rides on for these markets. david: i think we have had a superb nine years, certainly the last two years in terms of low volatility environment. clearly the beginning of this year has put that to the task, and are we changing the regime? looking at data for this year, you see moves later than 1% and we have seen in the entire 2017 period. i think that is one of the biggest impacts on performance. the question is is that a permanent change in the structure? that is what we are trying to determine in markets now. creditre changing the you have to look at the high-yield and that
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relationship is strong. it just means we are going to have to change the strategy. i'm curious to know what your technical analysis have been telling you with the vix so low for so long. it did not seem normal from a layman's perspective. how to look from a technical analysis perspective? david: i think it is all being a part of the environment that we have been in for the past few years. for me, in terms of the vix, we overlay it with credit spreads. i think they have been tied together. we have had this huge tightening over the past five years in credit spreads. question for not just a volatility, but for the markets in general, i think was been triggering the prices in the past few months is a rising yield, we are moving away from
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that easy money. we are starting to normalize the market. if we are generally doing that, we are returning to the previous normal times and will likely see a rise in normal times. .nna: thank you very much let's take a look at world markets. this is the picture across the globe. a negative session over any asian equity markets. the u.s. is doing quite nicely on the lower geopolitical risks around the korean peninsula before we heard about gary comes departure. the has led markets lower over in the asian equity session and into europe. here in europe, we are weaker. out also thatt u.s. futures are weaker. we are not as weak as we were. all of the free majors are pointing down by more than 1%,
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it has pulled back a little bit from that. we found out what is on the agenda and what is at stake. this is bloomberg. ♪
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reporter: we are 30 minutes into your trading day. gary cohn resigns, quitting the white house as the u.s. administration is ahead with the trade tariffs. clamping down on china. play in onwill chinese investment. as punishment for allegedly intellectual-property theft. i will beijing respond? and testing the saudi crown prince. he gets the red carpet treatment as he visits london. will he prove a reliable partner
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for brexit britain? good morning and welcome to bloomberg markets: the european open, and imf miller come alongside anna edwards. anna: let's look at how things are shaping up. we have risk off in connection with a couple of the headlines you went through. the gary cohn story and the chinese tariff story. targeting the chinese in washington. should there be further tariffs on chinese imports because of intellectual-property? so, how is all about playing out? generally, the risk off move, weighing on the sectors. basic resources move lower. travel and leisure moving lower, oil and gas lower. we are seeing those sectors a little bit weaker. abroad move higher in real estate.
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which is interesting. the sector as a whole is doing quite nicely into day's session. industrial goods and services, watch out for that one. rolls-royce, the big gainer. the media sector, on the down side. yes, another day reporting around the likes of p&g, how much they will be spending on advertising, taking a chunk out of those advertisers. sebastian: gary chn is resigning as the top economic advisor. the administration prepares to impose deep tariffs. cohn and wilbur ross recommended the tariffs to the president. stocks stumbled and treasuries climb on this news. the trump administration is considering claiming down on chinese investments in america and imposing tariffs on a broad range of imports.
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an announcement following the investigation by the u.s. trade representative's office is expected in the coming weeks. the president announced tariffs and that has ratcheted up global trade tensions, leading to the resignation of gary cohn. governor lael brainard has signaled optimism about the american economy's outlook. they suggested the tightening policy might need to accelerate. >> in many respects, the macro environment today is the mirror image of the environment a couple of years ago. in the earlier period, strong headwinds weighed down the path. today, with headwinds shifting to tailwinds, the reverse could be true. reporter: and the crown prince of saudi arabia's lighting facerm program will
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its first test. towill meet with premise theresa may and the clean as he faces the foreign policy es, proving he can be a reliable partner as britain seeks to forge new relationships after quitting the european union. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. this is bloomberg. : -- matt: i will take it from here. street, and weng are getting some of the latest there. anne marie, what have you got? marie: the crown prince has landed. he is greeted by boris johnson this morning and he is here to drum up support in terms of business and trade deals, likely to sign some 14 trade deals. ft reporting $100 billion.
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a lot of this has to do with his vision, his 2030 vision, making sure that investment is coming into the country, especially after that purge and the political unrest we saw in the country. he will be meeting with theresa may later this afternoon. he will be seeing the queen. this is his first international trip and his first official visit to the u.k. and after this, he is heading to the united states. anna: this is one leg on this journey. are we expecting any news on something, aside from trade deals? is he here to talk about aramco? not thate: it's likely we will get any big news on the aramco deal and ipo. as you know, london and new york, theresa may and donald trump, they are both fighting for this ipo to come to their prospective cities. london has even said they will
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change the regulatory hurdles to make it easier for aramco to come to london and choose london over wall street, which has a strict regulations. we likely will not hear anything. but this is what the investment community wants to know. it is the crown jewel of the 2030 plan. it's the crown jewel of the nation. and people want to know where they are listing and when they are listing. we heard from the ceo of aramco at the big oil conference, not giving timings. they did say it would be mid-2018 to the end of 2018. now they are starting to not give timing. people wanting to know when this will happen and where this will happen, but likely this trip will not be about aramco. it will be mostly about trade deals, especially trade deals baa. we are waiting for a follow-up in terms of defense materials from saudi arabia. a big trade deal, but unfortunately for the oil watchers, nothing it on aramco. annemarie, you,
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reporting from outside 10 downing street. now, let's talk more on commodities will study ceo of saudi aramco says he is not worried about the future of oil demands, speaking at the conference. nassar says he thinks the world will need oil and gas as far ahead as he can see. >> i am not losing any sleep over big oil demand or resources. oil and gas will continue to play a major role in a world where fall energy sources will be required for the foreseeable future. matt: meanwhile, the ceo of conoco phillips says opec should extend the output curve beyond 2018 and he spoke exclusively to bloomberg's alix steel. >> we have to remain disciplined. we have to keep trying to take the volatility out of the equation. >> extending that agreement longer. >> it does. a they want to try to put
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muzzle on th, that is the role they can play. anna: still with us in london, david sneddon. let's get your thoughts on the commodities universe. we cannot talk about it in isolation, though. we spoke about the surprising decoupling of the dollar. how does the dollar influence your thinking around commodities? david: i think the weaker dollar is beneficial across the commodities space. it helps the commodities rally as a broader asset class. it is not always the case and there are individual circumstances, but generally a weaker dollar is still supportive and we as the house, see the dollar continuing to weaken. the bigger house will move sideways, but the immediate pressure is down. we have clearly got the dollar-yen weakening. the dollar-yen has a very big falls. that is driven by the yen as
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much as anything else. the dollar canada is actually trying to strengthen. but overall, that does help the commodities. oil has clearly been up, but that is what we have been stressing, like before when it was on bloomberg television, the to $71 is a huge resistance. if you years ago we had the big collapse in oil, that is where we have gone to and i think the bigger trend is more difficult here. oil is probably still sideways and gets capped at 71%. the big thing is the positioning, even though it is very long, it has come off a little bit. it is still very long. matt: isn't the shale play a big concern. the iaea came out last week and said they expect u.s. shale to dominate as far as the growth we see with oil production over the next year. david: that is something in
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terms of the moment, it is a clear function of the market, in terms of the trend of the market. impacting atlly the moment. the begin flexion point on that -- if that to $71 breaks, you are removing a significant area of resistance. then, the whole dynamic in terms of shale starts to come to the forefront. $71 will remain a significant barrier and we will see oil come back down. anna: and there are extreme highs in brent. david: they are incredibly long. anna: david sneddon, joining us on daybreak. -- sorry, on european market open. he will be joining the bloomberg radio daybreak europe team. he will carry on the conversation with bloomberg. up next, we bring you some of the stock movers this morning, including paddy power slumping today.
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analysts cutting estimates on this expense. this is bloomberg. ♪
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anna: good morning, this is bloomberg markets: the european open and we are 43 minutes into the trading day in europe. here are the mid-cap movers with nejra cehic. start with paddy
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power, down 4.7%. analysts have been cutting the 2018 estimates for the company because of increased brand investments and adverse fx movements. a downward movement off the back of that. page group then, this is a recruitment company, dropping october of 20 15. it remains cautious in several markets, including in the u.k. finally, i am looking at maisons due monde, down 7.5% now. it has had a record drop, dropping as much as 13% earlier. this is after disappointing 2018 guidance. thank you for that. automotive supplier shiffler owns continental. it has announced a dividend per share for the full year, that was 3.8% above analyst estimates. more on that now. with us from munich is the ceo
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of schaeffler. i have got to ask you first, as some but he so closely connected to the automotive industry, although clearly other industries could be affected by a trade war, what do you make of the rhetoric out of washington. good morning to london and thanks for the question. that is an obvious point to ask. we are a global supplier. we have six plants in the united states. we deliver to our customers from the united states and we are purchasing most of our steel and iran material in the united states. so, the risk of a potential tariff is a problem we can bear. that is for sure from us. problemd not be a big directly. however, we are concerned this next step triggers a trade war. and it increases the protectionist risk.
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and as we are part of the global supply chain, it is important from our point of view that this risk is properly handled. and that we avoid any type of tariff for the benefit of our customers, but also for the benefit of the global consumers. matt: so, i mean, what do you do in this situation? do you have lobbyists working in washington to try and calm things down? brussels as well. the eu wants to retaliate as well, we see. have: well, look, we don't people in washington for this, but we have enough people to talk to. we are part of a german industry that is a global industry. we talked to our customers. we spoke with our suppliers. we talked publicly as we do today and we want to make sure that the business leaders speak
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with one voice. protectionism is the wrong direction once again, to the benefit of the customers, we should avoid these types of trade wars and the tariffs that are under the discussion at the moment. we watch the situation carefully and we are prepared if that comes, but i think once again, it should be avoided. matt: what are your biggest run materials costing that you look at, klaus? you are one of the biggest rolling bearing players in the world, if not the biggest. and i assume steel costs are a huge piece of that. yes, we purchase more than one billion tons of steel each year. to put that in perspective, that is two times the eiffel tower. steel is critical for us, it is not the only raw material, but it is one of the major ones we work with. everything we do is made of steel and it is high precision
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and therefore, is not only the best deal, but there are types of speciality steel that we need. we are watching the very carefully and so far, we have benefited from low material prices. there is a certain uncertainty going forward that prices will increase. so far we have not seen that and there is ample capacity around the globe for steel. but this new situation could once again,is and we want to make sure we can benefit from good steel prices in the future. klaus, i was at the geneva motor show yesterday and most of , manyo's i spoke with companies, including ford, were optimistic about the european auto market. but if you spoke with analysts
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it looks very peaky, even ready to roll over and decline in europe. what is your view on the european auto market? klaus: look, we are a global supplier. we supply most of the big carmakers around the globe. we think globally, the market will grow. maybe around 2% on a positive note. our plan is to once again outgrow the market by about 4%. for us, it is very important that we see the innovation, which comes out of europe. there is a lot to do, space.larly in the for that, we are well-positioned. matt: if it had not been for the trade war rhetoric, the show would have focused almost completely on electric mobility. specificallyffler
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benefit from the electrification trend? klaus: look, one of our key focus areas in our mobility for tomorrow are c02 levels. the hybridization that comes after the diesel discussion is more important. it is a big opportunity for us. invested a lot into the area. we have just separated all of the activities into separate business divisions. we are about to establish centers here and we see this as a significant opportunity going forward, with our high precision mechanical, technology in particular, but also with the components we arepeten building as we speak. matt: klaus, great to have you, especially during this uncertain time.
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klaus rosenfeld, ceo of schaeffler. they bring together the businesses of ifa and eng. remember, if you are a bloomberg customer, you can watch the show using tv . you can also follow our charts and functions, as well as message us directly. so take part in interviews like the one we just did with klaus by clinking the blue link. uscourse, you can manage directly. this is bloomberg. ♪
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francine: watching bloomberg markets: european open. we are looking at rolls-royce today because of the outstanding performance. rolls-royce is deepening the restructuring following an earnings surge. 14.6% just ined
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today's session. pledging something restructuring efforts, the ceo, warren east, he introduced initial cost cutting measures, which allowed the giant to snap years of earnings declines. optimistic.s are tried to develop a significantly simplified staff structure. this could be want to watch in the future, really trying to turn around his business. and picking of business is worth noting, you had a fascinating conversation with schaeffler around. you have been immersed in the automotive industry. matt: yes, i was talking to some of the most important ceos in the industry, including sergio
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marchionne. i asked him about president trump's proposed tariffs. and a little bit of optimism. >> they do not necessarily provide the right level of protectionism. he has raised this issue. you can make whatever you want of the way in which it was raised, but there is a concern there. retaliating with a tit-for-tat strategy will not resolve the issue. anna: it is interesting that he takes such a measured view. he's optimistic that cooler heads, that common sense would prevail. i would love to go back and ask him today what he thinks after gary cohn's resignation, not that it would necessarily be
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that much different, but great to get sergio's take, the ceo of rory. -- ceo of ferrari. up next, surveillance. this is bloomberg. .
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francine: calling it quits. president trump's top economic advisor exits as the white house rolls out its tariff plan. rutgers on chinese investment in the u.s. global stocks decline with u.s. futures edging lower and the yen and treasuries gain as markets grapple with the fallout. and preparing for the protests. the reform program of mohammed bin salman will face the first test abroad as he visits london. we will speak with the u.k.'s


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