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tv   Bloomberg Markets European Open  Bloomberg  September 7, 2020 2:00am-4:00am EDT

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they'll blend right in for a natural, effortless look. call in the next five minutes and when you buy 500 strands, you get 500 strands free. call right now. (upbeat music) anna: good morning. welcome to bloomberg markets. i'm anna edwards, live in london, alongside matt miller in berlin. matt: today, the markets say it is not over yet. nasdaq futures point to more losses in u.s. tech stocks, but europe looks set for gains, with ftse futures outperforming.
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the cash trade here in europe is less than an hour away. let's get your top headlines. softbank plummets on reports it made big bets on derivatives linked to u.s. tech. a selloff looks set to continue, although u.s. stocks are shut today for the labor day holiday. johnson plays hardball. u.k. officials say britain is not scared of walking away from brexit negotiations empty-handed. talks restart on that note in london this week. and cracks in the pipeline. germany's board member -- former minister links nord stream 2 to the poisoning of alexey navalny. we are less than an hour away from the start of european trading. there will be no u.s. equities trade today. you can see european futures are gaining. we are getting more german data out now, economic data. up 1.2%.strial output
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the estimate was for a gain of 4.5 percent, so a mess in terms of industrial production -- so a miss in terms of industrial production. year-over-year, there was a drop. the actual drop was 10%. the estimate had been for a drop of 7.4%. german industrial production not doing as well, or indeed, doing far worse than the market or analysts had anticipated. anna? anna: let's look at how we are looking on futures. as you suggested, we may not be done in terms of where we head for this session. european equity market futures look higher, but the nasdaq points to the downside. .et's go through to the gmm the mc si pacific down.
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we are seeing some markets moving higher, some moving lower. some interesting movements about tech stocks. we continue to see a third day of selling. softbank paying its price for some of the headline grabbing action it has been doing in options markets. that is the story out of japan. we also should keep in mind what is going on in fx markets. you can see the pound down 0.4%. in the headlines, the latest on brexit, we have had really interesting positioning coming through on the u.k. side over the weekend, and now we have moved through to another week of negotiations. will the pound continue to slide from here? keep an eye on oil prices, also seeing weakness in wti, down 1.6% on the gmm. there is sluggishness in the demand picture on that part of the backstory. let's get a first word news update for you. here is laura wright.
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laura: india has overtaken brazil as the company with the second-most cases of coronavirus. the nation has confirmed more than 4.2 million infections. it is also the third worst country in terms of deaths. more than 71,000 people have died of covid-19 in india. the u.k. is stepping up preparations in case no trade deal is reached with the eu. today, boris johnson will say he is willing to walk away rather than compromise what he sees as the core principles of brexit. at the same time, his government is drafting a new law to dilute the force of the deal signed with the eu. if outstanding issues on northern ireland cannot be resolved. protests have stepped up in hong kong. activists blocked a street with barricades. the aim was to protest the legislative council election, which was scheduled to take place on sunday. it has been pushed back a year due to the pandemic. the demonstrations and a period of relative calm since the
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implementation of a national security law. novak djokovic has been kicked out of the u.s. open extra ordinary fashion. he angrilyg a game, slapped the ball behind him, hitting a linesman in the throat. that ends a 29 winning streak. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. anna, matt? anna: thanks very much. laura wright in london. what a way to go out for tennis. let's talk about breaking news here in london, coming out of the u.k. corporate. primark trading in the fourth quarter exceeding forecasts. trading in q4 with both food operations and primark exceeding market operations.
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an upbeat statement coming through from primark and ab foods. we will watch that at the open. matt: absolutely. futures are diverging in europe and the u.s., although of course the u.s. markets will not be open for cash trading today. the selloff in american tech stocks in terms of futures looks to continue, even as other markets are rising. you can see here, nasdaq futures are down. euro stoxx futures are up. if you were looking, you would see that dow and s&p futures are trading higher. let's get into markets with laura cooper, our mliv macro strategist. does it look like -- it is really just the tech stocks for now? we are starting to see more and more. it already happened at the end of last week, a divergence of cash equities rising partially.
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if they were not tech stocks, the nasdaq was falling. reporter: that is the focus this week. this test of the retail rally. whether we will see it prevail in tech, or if we will see pressure spillover to broader risk aversion. the fact that today is a u.s. holiday will not read too much into it, but that set futures on the back foot and is not a good sign for what lies ahead. crucially, it is about whether we see the spillover throughout the week and whether this options friendly driving a rally in tech has further room to unwind. anna: good morning to you, laura. interesting to see this options driven tech rally. it really raises questions about the role of retail investors, along with all the reporting around what they have been doing. positionshich other
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are vulnerable if retail investors are coming under pressure in the tech space? i know that mark cudmore has been writing about gold and bitcoin. we will watch those if we see retail getting into difficulty. reporter: absolutely. i think the fact that tesla was not included in the s&p 500 on friday, the fact that tumbled in post market trading, that encapsulates the fact that retail traders who had been betting on these tech stocks continuing to have this strong performance, that could potentially be challenged. whether we see that spilling into popular trades like bitcoin remains to be seen. i think that is really the key test this week, whether we see this resilience among these have thatevail and activity come back and spur renewed risk sentiment, or whether we see this case of a rush for the exit as they look to take profits on the
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exceptional gains they have seen so far this year. you havewas bitcoin, got to consider how many people own the big tech stocks, people who own tesla, etc. also own bitcoin. if they start taking losses somewhere, they may be need to make it up somewhere else. if they have margin calls, it is time to sell some digital currency. that is just a theory of mine. i wonder what you think about the possibility of europe catching up? if it is the tech stocks that are the big problem, and we have said forever that europe underperforms the u.s. because we don't have any big tech stocks, does that mean that europe can be a safe haven if people are selling off u.s. tech stocks? reporter: i think that certainly could come into play. when we look at the action we saw late last week among u.s. tech underperformance, we did see cyclical stocks outperform.
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there was a day win stocks edged higher. -- there was a day when bank stocks edged higher. it is predicated on the economic recovery continuing to outperform with the u.s. on the back foot. given the fact that we are seeing this resurgence in virus cases in europe, that could feed into less of a risk bid. but certainly, that remains to be seen. crucially this week, it is all about the ecb and whether they strike a cautious tone around currency strength, around this stalling recovery, and whether more stimulus is in the pipeline, because that could be a catalyst to spur this renewed appetite in europe and the fact that there is stimulus to be had, whereas in the u.s. we are seeing a lapse on that front, that it is yet to feed into risk appetite and through to equities. anna: laura, thank you.
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europe and asia is all you've got today because the u.s. is closed. laura cooper joining us there. nasdaq futures are down 1.2%, but as we say, u.s. markets are closed today. we will see where we are this time tomorrow on those nasdaq futures. next, softbank's foray into public trading leads into problems. the japanese investment company gets smashed by the selloff in tech. we will get more details on what has been happening at softbank and how that is impacting the share price. this is bloomberg. ♪
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anna: good morning. 13 minutes past 7:00.
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, the nasdaq futures the u.s. is closed today, but nasdaq futures are firmly in the red. softbank is reportedly sitting on fo $4 million worth of gains, but that was clobbered last week in trading. it sent trade shares tumbling this morning. here with the details of that story and the wider moves in tech is dani burger. dani: that's right. what is being called the nasdaq whale has been unmasked. spends that softbank billions of dollars betting on u.s. equity derivatives. more specifically, call options tied to u.s. stocks, so bullish derivatives it would go higher from here. you can see what that report has done to softbank, declining more than 7% in the japanese trading session. its biggest decline in about four months. the reason that decline is happening, because although the strategy is tied to tech shares and may have gotten them $4 billion in trading gains, those
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have yet to be realized. they need to unwind their position quickly or else they risk seeing the gains being eaten away, as we see nasdaq futures continuing to tumble this morning and get hit hard last week. let's be clear, this strategy is a risky want. that is what strategists are telling us. you can see how risky it is and how much it may have impacted the market by looking at my next chart, which is showing us call options tied to u.s. stocks. volume has exploded since march.we . -- we have been talking about this frequently. but this volume according to goldman sachs cannot just be retail. over the past few weeks, 335 billion dollars worth of options traded hands on average. that is three times the average from 2017 to 2019. that has really taken off in the past month. bloomberg reported that softbank had a strategy tied to public markets. now that we know the detail of
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that strategy, that is its equity derivatives, it may have created a feedback loop. that is u according to nomura. they need to snap more of the underlying stocks. now traders are concerned those profits are about to be lost and are starting to foul off soft pictures. matt: thanks very much for joining us in this highly red story -- highly read story. we are bringing in our guest. i want to ask you about softbank specifically, but we had a great story on the terminal saying there is a reddit group of retail investors who are saying -- who are touting this strategy, saying if you go out and buy a ton of call options in a stock you are long, it could help spur movement. this has been around for a while, but it looks like if it
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is the case, it is working so far. michael: yeah. elementsre have been of the tech rally for a while now that have looked a little bubble like. i guess examples like that yeah, there are anecdotes around a bubble. so far, though, what we would say around tech is we know the fundamentals that have been improving rapidly and are pretty solid. it is a question of how much of a price rise it justifies. as you said, the level of contagion to the broader market. as we know, equity markets are run far ahead of the economy. one of the questions we will have this week is has that been justified, or is it just about
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profits in tech? correctionhnical more than evidence of a broader concern. anna: good morning to you. if you look at where we are on tech stocks, using the nasdaq, despite this selloff, two days of selloff, will we get another tomorrow? what is theat, broad strategy with tech from here? are you staying clear of tech fearing that the selloff continues, or do you want to use this opportunity to load up for another rally? think the price has gone up, as you say, extremely rapidly. but there are also fundamental reasons that support at least part of the rise, but maybe not all of it.
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i certainly don't think we should be starting to stay clear of tech as a whole right now, and it is not just tech. it is u.s. equities more generally because, as you pointed out in the top of the program, u.s. equity outperformance has been driven largely by tech. so no, we are not quite ready to give up on that because i think fundamentally nothing is really changed. been a pretty remarkable rally in prices. matt: we were talking to laura cooper about this before, but in the meantime, bloomberg news put out a column by michael mostly can and jan-patrick barnert about the facts that this tech bubble fear that has driven the u.s. market down so abruptly in the last few trading
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sessions shows that europe might be a safer place winner people -- where people rely on earnings. does that affect your thinking as well, when you see how hard hit the u.s. can be by tech bubble concerns, that maybe you are better off in old-school european stocks? look, certainly if the volatility in tech continues, that will definitely be a factor. that was a big part of europe's underperformance while tech was going so well. i think the other question for europe, and obviously we will get part of that answered this week, how will the ecb cope with the fed's new ability to be super dovish and what that has meant for the euro and what that means for eurozone inflation. the words from the ecb will
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matter as well. we will get to that conversation shortly. michael metcalfe from state street staying with us longer on the european market open. we want to talk about many angles of the european story. one of those is brexit. coming up, playing hardball. boris johnson says he is willing to walk away from post-brexit trade talks without a deal. we will discuss what that gamble means for the u.k. this is bloomberg. ♪
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welcome back to the european market open. 23 minutes past 7:00. 40 minutes to go to the start of the cash equity trading session. nasdaq futures, although the u.s. will be closed today for a
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public holiday. the u.k. is stepping up preparations for brexit trade talks to fail. boris johnson is set to tell the european union he is willing to walk away rather than compromise on core principles when the two sides meet in london this week. the british prime minister is urging the bloc to rethink its positions, and it says there is an agreement to be had ahead of an october 15 deadline. michael metcalfe, global head of macro strategy at state street, is still with us. it seems that at this stage in any negotiation, there are a few positions on either side. in terms of what the market is assuming, let's deal with what the markets think is going to happen here, what do you see in the risk premiums around no deal? do you think the market is taking this as a serious possibility? is interesting because we have been writing for a few weeks now that it did not look to us like there was much of a premium. you could see that either
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through the options at the end of the year, or indeed the 15th of october, which is the new date. thingso the other curious is we have been tracking media sentiment in relation to the pound and exit specifically -- and brexit specifically. brexit was not getting mentioned. the market isthat not ignoring it, but they were not paying the attention they had done to brexit in the past. given this time it is really different and we would have to get the deal done or not by the end of the year. that was surprising to us. matt: what do you think about the pound? where do you see the pound at the end of the year if we have no deal? michael: goodness, yeah. to give you an idea against the dollar, we think the dollar is
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currently fairly valued. we think there is no premium in there at all. no discount, really, for a hard brexit. if you throw it back to 2016 to look at how undervalued the pound has been at various times throughout this process when brexit has been a factor, it has been anywhere from 10% to 15% undervalued. you could expect quite significant moves, if that is the reality of the situation. much michael, thanks very for joining us this morning. really appreciate your insight. michael metcalfe, global head of macro strategy at state street. next, the big bounceback. italy's finance minister tells bloomberg the the economy will rebound faster than anticipated. we will hear from our exclusive interview next. this is bloomberg. ♪
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welcome back to the european market open. 30 minutes until the start of cash equity trading for today. futures point to the upside by around 0.5% for european stocks. let's take a look at what you will be watching out for as the week unfolds. the next round of brexit talks begin tomorrow with face-to-face discussions between the u.k. and the eu. though stocks will take place in london. tomorrow, we will get second-quarter gdp figures for the euro area. we will be looking out for whether the recovery is stalling. matt? matt: on thursday, we have the
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ecb rate decision. signs of another stalling recovery emerging. we will be looking for a new forecast for growth and inflation, which may offer clues to the next steps the central bank tax. a press briefing by christine lagarde will follow, and she will definitely get a lot of questions about the stronger euro. traders that were hoping the tech selloff was a two day event may be in for a bit of a shock, although i guess the blow is cushioned, dani burger, by this labor day holiday. let's look at your morning calls this morning. dani: we may not have a down day of trading in the u.s. today because it is a holiday, but that might just delay another least according to an investment house that uses technical analysis. they say that when they see selloffs, they come in threes, saying it will take at least three days for the market to
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wash out. we have only had two down days in the s&p 500. that means we are headed for another day of losses. and given the fact that the u.s. holiday might make things worse because we have this buildup of anticipation. gear yourself up for further pain in tomorrow's u.s. session. dani, we are tracking reaction in markets from the jobs report on friday. sometimes the good news is a better job's than some anticipated. the unemployment rate is to be welcomed. but investors who were waiting for bad jobs data to stimulate fiscal support, maybe they need to rethink. what are you hearing on that front? dani: there is a note out exactly on this. she says that because the unemployment number is below 10%, this is going to make
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senate republicans comfortable enough to not pass another round of stimulus. thatcombined with the fact house speaker nancy pelosi and treasury secretary steven mnuchin have agreed not to have a government shutdown, so there is no must pass legislation on the table, i.e. more stimulus. chances ofe put the another round to 20% to 30%. previously, it was as high as 65% to 75%.% -- matt: downside risks also mounting for the pound. you have something on this? dani: part of the reason the pound has been under pressure this morning, brexit negotiations. s hatof the economic --
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their first test is going to come at the 290 day moving average. after that, expect another test at 248. he sees continued points where we get some resistance to the pound, but he says don't be surprised if we enter a downtrend for sterling. anna: interesting stuff. thanks very much. commenting as we speak in france. thanks very much, dani burger. let's get a bloomberg business flash. for that, we go to laura right. tokyo softbank tumbled in . the japanese conglomerate is reported to be sitting on $4 billion of trading gains tied to u.s. stocks which were covered in last week's trading.
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that they arerry embarking in unfamiliar territory, and could cause losses. suez has talked about a takeover. they say they risk running into antitrust obstacles. they offered to buy a 29% stake in suez, the first step towards a full takeover to create a giant with more than $40 million in euros. rose from a year earlier, the third high less month on record. fell, leavingedly a trade surplus of $59 billion. that is your bloomberg business flash. matt: thanks very much. laura right in london if your business flash. italy's economy will rebound faster than expected in the third quarter. that is according to the finance
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minister. he sees output expanding by more than 9.5% in the government's latest financial plan. but a return to pre-virus levels is not expected until 2022. he spoke exclusively to bloomberg at the ambrose study form. >> the measures we have taken so in have been decisive containing the economic impact of the crisis and preserving our productive capacity and jobs. planecovery and resilience is oriented to the future, with the transformation of the economy on innovation and social allegiance. we will focus the plan on investments and investments
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aimed at enhancing our growth potential. so we will invest in innovation and growth, cloud, , europeanting, projects of common instance like macroeconomics. privatesupport the sector to invest more in thevation and to support process of reduction of emissions. we will boost our infrastructure equipment. andaterial like broadbent we will invest in education research. is a big concern for investors. you mentioned in your speech a new mechanism to reduce the debt
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gdp ratio in a solid and stable what. howyou give us details and that could lead to a reduction? >> we present at the end of september our fiscal report, a longer-term projection well we will reveal a reduction of our gdp ratio. that would be significant and sustainable. we have the opportunity to do that via medium-term fiscal measures, and also the impact on growth and growth potential for productive investment that we would deploy with our next generation plants. >> your government has mentioned an 8% estimate in gdp contraction this year.
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now, what would you think the true number will be? between 8% and 10%? >> the 8% contraction forecast was the forecast in mid april. as we said, it will be revised. it is contrary to other predicted aat have very significant decrease of gdp , thanks to the positive rebound. that it will be amited and we are expecting reduction of gdp for 2020. >> and for next year, the gdp? >> next year, we will have a positive increase. we have not yet defined our forecasts. you will see soon. by 2022, we will be able
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to arrive to our precrisis gdp levels. public finance has taken a hit. italy's publicis finances stable, only because of the current central bank? >> monetary policy of the ecb is extremely positive, but it has to be taken into account also the sound fundamentals of the italian economy that make our debt fully sustainable. i have to say also that we are seeing even in this difficult moment of the crisis for many a very positive trend of fiscal revenue. theou know, we had significant downturn. that worked the revision of our deficit for 2019, and one of the
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factors that are making us improve our forecast for gdp. tax revenues are positive. we have a number of elements which allow us to defined a trajectory that we will further increase. financeat was italy's minister exclusively to bloomberg. up next, is there more pain to come? the nasdaq falls to a four-month low. we will discuss the headwinds with mark cudmore. this is bloomberg. ♪
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matt: welcome back to bloomberg
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markets. this is the european open. 17 minutes away from the start of trading. softbank tumbled in tokyo this morning after reports it got caught out with some options trades related to u.s. tech stocks, and the pain may be said to continue as futures in the tech heavy nasdaq are vastly underperforming contracts for other u.s. indexes, even as cash markets will be closed in america today for labor day. meanwhile, hedge funds have slashed their bullish bets on the nasdaq to the lowest levels since may. let's get into the markets with e.rke mark cudmor let me get your take on not really the softbank story so much, but the retail investment play that we saw on bloomberg news this morning. apparently, there is a reddit group. this is a great strategy. if you are long stock, you go
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heavy in the options, in the calls, and you get some momentum. it is almost like a pump and dump sort of thing. mark: these things are the same story. the retail element is the much larger one. were talking about coming up with this idea earlier in the year, and softbank seems to have gone with the trade. one person has taken a very large stake, and they are a big flagship name. but essentially they are dwarfed by the retail sector, unless softbank is trading to the horizon, which is unlikely. the pain in the retail sector will be much larger. softbank is hurting today. not only do we have the pain at the end of last week after and but-climactic reaction, tesla did not get accepted into the s&p 500 after closing friday. that means there will be a lot more pain for the nasdaq and the
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tech sector when they reopen on tuesday. that is why they are having nervousness across other assets. there is that contagion effect. you say, is this a pump and dump idea. it is not fraudulent. it is a risky strategy. it seems like a no-brainer. people ask you to buy the underlying cash stock. that drives it higher. you go in a virtual spiral.but obviously , this cannot go on forever. there has to be a trigger and it comes back down. market excited, but it does not have the legal element of pump end up. anna: we are getting an idea of where investors are exposed these days. ofre is also the involvement retail investors around the nasdaq. but if retail investors got themselves in trouble on thursday and friday, or wednesday when the markets reopen, if they are in trouble, where else will that show up? where else will they be forced
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to sell because they have to cover margin calls? where will the pain show up in other markets? mark: great question. it is more relevant than ever before because this is the first year i remember where retail rules the market. retail has been winning the last six months over institutional investors, and they have become a dominant part of markets. there tech sectors is a big one, but they also have bitcoin. that is why bitcoin is off almost 20% from a week ago. we are seeing gold off this morning. that ties to the theme that they have been short on the dollar. that has been a broad theme that institutional investors are in as well. as we get this risk aversion, we will get haven bids to the dollar, but that is exacerbated by the fact that the market is short the dollar as well. that becomes a negative spiral
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in the opposite direction. if we start getting the dollar bid, not only does that squeeze people the wrong way around this, but that works effectively as a tightening of financial conditions, which makes the environment less conductive and requires more selling off. tech stocks is again the most important, but any momentum trade out there, they are all ones where we will see that show up. matt: first of all, i want to make it clear, i did not mean to imply anything illegal was going on and i used the term pump and dump. i met literally like to stem cell. -- boost and sell. you mentioned the s&p 500, the decision to not include tesla. plit yoursli infinitive. is this a decision they will regret? mark: it is certainly an
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interesting one. it is not an area i am particularly informed on, but in the wake of the decision to not incorporate tesla into the index, i hav assumed it would happen like many of the retail body instead. but i have been told there are many cases in the past where the s&p 500 has delayed the inclusion of some names, which have checked all the boxes theoretically, but there remains uncertainty about the sustainability, whether that was a one-off. there are some questions about how sustainable some of the profits are. for those who are more informed, maybe the risk was more obvious than it seems to be for someone like me, who assumed that once they ticked the boxes, the s&p will let them in. will they regret it? i don't know enough to say on that one. anna: i am sure you are not alone in those assumptions. mark cudmore, managing editor
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for markets live here at bloomberg. let's get a first word news update with laura wright. laura: india has overtaken brazil as the country with the second-most cases of coronavirus. the nation has confirmed more than 4.2 million infections. it is also the third worst country in terms of death. more than 71 thousand people have died from covid-19 in india. the u.k. is stepping up preparations in case no trade deal is reached with the eu. today, boris johnson will say he is willing to walk away rather than compromise on what he sees as the core principles of brexit. at the same time, the government is drafting a new law to dilute the divorce deal if the issue with northern ireland cannot be resolved. novak djokovic has been kicked out of the u.s. open after losing a game and angrily smacking a ball behind him, hitting unofficial in the throat and prompting the chief umpire to suspend the match. it is a stunning end to his 29 match winning streak and 18th
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grand slam title. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. matt, anna? matt: thanks very much. laura wright in london. next, we will get all the stock stories we can that may move this morning. including suez, after it rejects an offer to buy a stake in the company to build a titan of waste. this is bloomberg. ♪
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anna: welcome back to the european market open. seven minutes until the start of cash equity trading, the first session of the week. european futures look -- they are anticipating movement to the upside.
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let's get the stocks to watch. here is dani burger. dani: suez is one of the stocks to watch. you will recall, veolia has been trying to create a french environmental services giant by buying it out, but the suez ceo has rebuffed the offer, saying it faces possible antitrust scrutiny, but more importantly saying the offer undervalues the company, specifically calling it opportunistic because the company shares have been hit by the pandemic and that has masked the success of its turnaround plan. veolia is still trying to buy a steak for the company, and one of the ways it will do it is buy ng, which the ceo of suez says we have scenarios in the work to avoid this. another stock to a watch is ab foods. after the fourth quarter, sales of its food business and primark have beaten expectations. the news coming from primark is the basket size is still very
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large. even though there may have been pent up demand from the pandemic, it looks like that is still carrying over and will likely make investors very encouraged at this point. finally, the last stock i have for you is airbus. there is a report saying the aircrafts and their global fleet are at 60% to 65% back in service. that is a huge improvement from april, where just when he 5% of their fleet -- 25% of their fleet was in service. have not reached expected volume, but some encouraging news for airbus. matt: thanks very much. dani burger with some of the stocks you may want to watch at this open. just five minutes away from the start of cash trading in europe. futures are pointing higher. it is labor day in the u.s. it is not a lot like labor day
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here in germany, maybe a little bit like what it is in britain. but in any case, the main similarity is there is no cash trading. we will see how that affects the trade here in europe. this is bloomberg. ♪ look here, it's your very own all-in-one
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minute to go until the start of cash equity trading. risky business. softbank plummets on reports it made big bets on links to u.s. tech. johnson playing hardball. britain is not scared of walking away from brexit negotiations and he handed. talks restart this week. cracks in the pipeline. germany's foreign minister becomes the first from merkel's
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linket to discuss -- to the pipe to the poisoning of an official. the green a look at arrows. stronger on the dax than they are on the ftse. up 0.8%. european markets now open live. take a look at the global macro movers. , you will seelumn the equity indexes. they will populate when they open up. they turned green or red if they move in a more severe way then 0.1%. 0.5% -- 0.4%. these are typically the first european indexes to open. 40 up 0.3%.
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gains in france, spain, and in the u.k. when you see a bigger you just move, the dax takes even longer to open up. you may have to wait a little longer to see german stocks trade. british stocks and continental stocks trading higher for the most part. global stockse as mostly stabilize after the junest two-day slide since . nasdaq futures are continuing to fall in the u.s. looks like we are seeing a little bit of a rebound especially as the u.s. equity market is not going to trade. joining us now is stephen king from hsbc. i'm noticing that we are getting mixed signals. say maybe the
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recovery is better than expected and then we are seeing signs that the recovery is slowing down if you look at german industrial production for example. the drop was bigger than expected year-over-year and the as bigver month was not as expected. how do you see this recovery in europe? stephen: very patchy. if obvious problem is that britain's lockdown ends which in itself is encouraging. but areas like restaurants and hotels and all sorts of retail areas will be quite depressed. the result is the initial rebound which was quite encouraging. this unwinds to extrapolate that. one example is the german
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industrial production numbers. a modest rebound in the latest months, there is no sign that it is returning to levels pre-covid . we're talking about levels of activity depressed from where they were earlier in the year. even with the jobs report coming through on friday, it is a mixed story. some people are going back to work while others are unemployed. it is a mixed picture depending on where you are in the economy activityottom line is is depressed. europe,en you look at and the pace of the rebound back towards where we were but nowhere near it, what is the propensity to consume for european consumers right now?
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trueen: it is certainly that consumers are behaving differently than they have in the past. and the geographical issue -- people that were previously commuting to work are no longer doing so. cafés are doing well but those in central london or central berlin are not doing as well because of the reduced commute. that is one big sector coming through. lockn china, even when you -- even when you end lockdowns, consumers are not going back to consuming the way they had been. suggests there has been a considerable change in behavior
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altered fundamentally where we were from the beginning of 2020. matt: you mentioned china. i wonder your take on their story of export growth -- it continues to what does that chinese it can -- economy look like? was apparently on top of covid-19. suggests thedata was of infections significantly lower than other countries which allowed chinese domestic consumption to unlock pretty quickly. ultimately is restrained
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by what is happening elsewhere in the world. more than 20% of its gdp is exported. the rest of the world is still the chances of china regaining its earlier poor is economically are still really constrained about what is happening elsewhere in the world. you have to give china high marks in terms of its domestic recovery. it is -- there is not much they can do in terms of what is happening elsewhere in the world. marks theink this beginning of a sustained exports surge into the remaining months of the year and into 2021 and beyond. anna: you mentioned the export market for chinese goods. one is the u.s. data that., the jobs
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does thatfriday, remove any impulse towards further fiscal stimulus? reassessad you to whether we will get further support from the u.s. government? stephen: a strange measurement issue. if you are furloughed, you cannot be unemployed in the u.s. the unemployment numbers are heavily impacted by the statistical treatment of people. you can see in certain industries this has been a positive story in recent months. most obviously in construction jobs. returning to what they would of been prior to covid-19.
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but retail and hospitality, the numbers there are still very depressed. reflected inlready terms of the monetary policy with the second quarter announcing its symmetrical inflation target with the hope of suggesting inflation might be allowed to run a little higher than 2%. there are many reasons to do that. monetary accommodation will remain longer it then what otherwise might be the case. there is still considerable concern about the longer-term issues of covid-19. that worth bearing in mind we are seeing possible permanent job losses in the u.s. that will be important in the coming months. that suggests some kind of
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fiscal response is still needed. stephen king, senior economic advisor at hsbc. coming up on the european market: open. boris johnson tells the eu that he is prepared for the brexit talks to fail. what will that mean for the economy? this is bloomberg. ♪
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matt: welcome back to bloomberg markets. this is the european open. looking at 1% gains across the major equity indexes both on the continent and in the u.k. suez has rebuffed a takeover approach from veolia. the deal undervalued the company and risk running into antitrust obstacles. the yulia offered to purchase a stake in suez, the first step in a full takeover. china's exports kept expanding
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in august. output rose, the third highest month on record. imports expected to fail -- to fall. italy's economy will rebound faster than expected in the third order according to the finance minister. he sees output expanding by more than the nine point -- 9.5% outlook. the is significantly up of 7.9% forecast. that is your bloomberg business flash. anna: thank you very much, laura wright in london. the brexit -- the british prime johnson, says he is prepared to walk away from trade talks with the eu rather than compromise on what he sees as the core principles. the pound has weakened against its g10 peers after reports that
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the u.k. is stepping up preparations for a no deal outcome. talks get underway tomorrow. a busy week on the brexit front. when you look at everything the u.k. economy has been through over recent months, all covid related and now we add this extra layer of uncertainty brexit, what is your assessment of what a no deal brexit would bring to the economy even the damage we are party scene? --we have already seen? i am a bit cynical about the whole process. you might think that covid-19 provides the perfect camouflage a no deale costs of brexit. .ovid-19 is so damaging
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beginning to see a sense that perhaps this is a kitchen sink issue. throw everything at it and if it goes wrong, it goes wrong. maybe that is too cynical. the u.k. government i think has also recognized that doing a deal with the eu is frankly tricky. lead todrawal could some questions about sovereignty with northern ireland. there are those still anxious withdrawal. the problem is if you think it , trust begins to
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break down. without trust, it is difficult to build and a lasting relationship. having said that, some in the conservative party might say the world is changing. we need to form new alliances. not with the eu but perhaps with canada, andstralia, new zealand. thing is that state aid is another big issue. will they have state aid also in northern ireland which is more complicated. and the oddity there is that for a party that was behind a single market under thatcher that believed in the market as opposed to state a, to suggest is whatte eight iaid
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england wants is unusual. matt: what indication do you take from asset prices? options -- ihat noticed that options in volatility and cable do not show much concern about brexit. the pound is where it was at the start of the year. i cannot see, other than the ftse's incredible underperformance year to date compared to other equity indexes globally, i can't see risk assets pricing in a lot of concern for a hard brexit. stephen: the ftse has underperformed partly because of its nature and the sectors that
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are heavily overweighted in the ftse compared to other markets. ,here the u.s. is tech heavy the ftse is tech light. this is about the weakness of the dollar. the dollar has been soft for much of the year. some people have talked about the cyclical differences. perhaps the u.s. may lose its role as a pivotal player in the and itsconomy geopolitical might is falling away. i suspect that it is the fact that europe including the u.k. significant had a improvement regarding covid-19 while the u.s. is still struggling.
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the u.s. has struggled during the course of this year. and to a certain degree, [indiscernible] epidemiologist. i wonder whether that is something [indiscernible] can i ask about the for oughscheme -- fourl scheme in the u.k.? minister isprime saying the spanish government is willing to extend its program. will the u.k. be some kind of outlier here? i think there is a good case for extension. the reason for having the scheme in the first place is to try to encourage companies to hang onto workers that otherwise would have lost their jobs. when you get some kind of
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sustained economic rebound come it will be easier for people to go back to the jobs they previously had. and that means getting some kind of control over covid-19. because that situation remains there is a strange idea of having a time limit on these schemes. ory you could in the extend it. in the u.k., there are about 4 billion or 5 billion people caught up in the scheme currently. some will unfortunately lose their jobs. you have a delayed reaction to covid-19 rather than something that gets rid of the problem altogether. would beal preference to extend the scheme if possible.
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u.k., aboutn the 350,000 businesses, mostly one-man or one-woman businesses fail. and if you are in the business of protecting every business and every job, you will reduce the impact of the market forces in determining where resources should be taken from. there are costs associated with it. matt: it is been a great pleasure having you with us this morning. thank you for giving us your time. up,ming up -- coming germany's support for nord stream 2 is under pressure ovalnie of the n
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affair. this is bloomberg. ♪
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matt: welcome back to the european open. we are 24 minutes into the session. we are looking at a solid green equitiesross european after a couple of days of a down
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trend. up ftse and the dax are both zero point -- are both up 1%. germany, the support for i findd stream 2 gas angela merkel is at risk. the foreign minister has linked the fate of the project to the alleged poisoning of the kremlin opposition leader navalny. pressure has been growing since the german military said navalny was poisoned. joining us now from frankfurt is our germany bureau chief. this is the first time we have had a cabinet member link these issues that she wants to keep separate. the pipeline is a commercial venture or an energy security issue whereas the poisoning allegedly is a political issue.
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can she keep those thing separate? >> that is the big question. we are ready had a second cabinet member voicing a similar view as the foreign minister on this linking the two cases, the nord stream 2 and the navalny case. the pressure on merkel internally is growing. we have also seen several senior policy -- politicians from her own party to link the issues together. --what isestion is her thinking on this? will she change her stance on this? she said 10 days ago that there the navalnyetween case and nord stream 2 but that was before the german military came out with the news that there has definitely been a of novell only
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with a nerve agent. like a longs since time for this story and in politics. talkwe come back, we will tech once again. this is bloomberg. ♪
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matt: welcome back to bloomberg markets. this is the european open. almost 30 minutes into the session and we are looking at 1% gains across european equity indexes. take a look at the stoxx 600. it is up a little more than 0.8% right now. if you want to see what is moving things, you can look at the group ranked return things in order to find out which industry groups are winning and which are losing. today, all winners after the two
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day drop that we had in terms of risk assets. we have a rising tide once again. this happened on monday morning -- this happened on friday morning also. auto parts a big leader today. automakers. as well as industrial goods and services and real estate and insurance. on the bottom, telecom. but still much rising. food and beverage. oil and gas. pretty much everything gaining this morning. softbank is reportedly sitting on $4 billion worth of trading gains but the gains are tied to u.s. stocks which were clobbered at the end of last week's trade. the report is that -- that report sent shares tumbling. dani: the nasdaq whale has been
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unmasked. softbank has spent billions of dollars betting on derivatives tied to equities, u.s. equity tech, bullish options. that would have done pretty well giving them a $4 billion profit has beenrophet unrealized showing how risky a bet it is considering what tech has done. -- has of that concern, because of that concern, softbank in the japanese session is more than 7%. the pain for a softbank could continue. let us be clear. it does look like it has had an impact on the market with call option volume in the u.s. this is a bullish option. it has taken off this year. at the beginning of august,
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bloomberg reports that softbank is using a strategy going into equitiesties, public specifically. according to goldman sachs, it daily volume averaged 335 billion, more than 30 times the average in 2019. tailrun-up might have a wagging the dog affect. believedrting to be that is part of the reason why we have seen this big rally in tech which took quite the big pause at the end of last week. anna: tech is the focus and it start up u.s. markets again tomorrow. the decision not to include tesla in the s&p on friday -- that hit some heart. dani: it was already one of the lastfrothy stocks
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week. the s&p 500 will not include tesla. a lot of the run-up in the shares last week had been over the idea that it would be included in the blue-chip equity gauge. the s&p global has a committee that decides what goes into the into the index. it is not automatic. some of the reasons why it was not included could have something to do with profitability measures. the pose market trading unchanged. once the stock opens up again tomorrow on cash market trading, we do not have the proper anymore that will be added to the index. it --t that there, ear, it will b
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be a had scratcher. because of pent-up demand. what will that do to house prices. rising 5.2% from a year earlier. august ismbers from seeing a rise of 1.6%. let us get a bloomberg first word news update. india has overtaken brazil as the country with the second most cases of coronavirus. it has more than 4.2 million and factions. it is the third worst country in terms of deaths. flaring up again on the streets of hong kong leading to hundreds of arrests. activists blocked a straight with barricades.
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process --for the the reason for the protest is the delay in elections. the demonstrations ended a period owed of relative calm. been kickedic has out of the u.s. open in extraordinary fashion. the tennis world number one angrily smacked a ball behind him hitting an official in the throat. the chief umpire suspended him from the match. it ended his winning streak. 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. anna: thank you very much. laura wright with an update. the u.k. is stepping up preparations for brexit trade talks to fail. boris johnson is set to tell the european union he is willing to walk away rather than compromise on core principles when the
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sides meet in london this week. the prime minister is urging the block to rethink its position. bloomberg on this, maria tadeo joins us from brussels. there is a ticking clock. what are you looking for in terms of the state of play as we head into this week? maria: there are a lot of optics to a deal like this. delegation says october 15 is the final deadline to get the deal done. european leaders are expected to of a potentialgn deal and then it will be ratified.
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that is the deadline set up by the u.k. european leaders say that is not the case. you are looking at a negotiation closer to christmas. we just heard from the leader of the negotiations on behalf of the eu -- the idea that the u.k. have to initiate legislation to water down the brexit deal. he says this is not a good idea to walk act on an agreement are ready agreed by both sides. repeating the idea that before we get a full comprehensive package, there needs to be a deal on the fisheries. eu iss one point that the not willing to compromise on. wrapping whatdeo we know so far about the negotiations out of brussels. coming up, we speak to the ceo of the russian direct investment fund, kirill dmitriev.
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that is up next on bloomberg. ♪
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anna: him welcome back to the european market open. 41 minutes into the session. today.. will be closed
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global trade is under the microscope. even after the coronavirus crisis, it still faces the threat of u.s.-china tensions and an uneven recovery. the wto is currently without a leader. what are the key challenges the wto faces? and recorder takes a look -- annmarie hordern takes a look. this year, the wto is 25 years old and is based in geneva. the most turbulent point in its history currently. it is at the center of controversy and political wrangling. the latest round of negotiations started in november 2001. it stalled in 2008. since then, a little progress. spanof the trade disputes decades.
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the u.s. has given the green light to cut $7.5 billion. the u.s. has been a -- recently come of u.s. has not been a fan of the wto. he was refused to consider any new candidates. as terms expired, it meant the main form of settling disputes lost its ability. good news for president trump. bad news for free trade. general decided to resign a year early. the organization was under fire needing a new later at the time the global economy is also feeling the heat. .he u.s. presidential election the stakes could not be higher. anna: looking at the challenges
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facing the wto. the u.s., india, and brazil account for more than half the world's coronavirus cases. 27 million cases. european hotspots are spiking up again. rate -- the race continues to find a safe vaccine. health officials have criticized the country for approving the shots before clinical testing at stage three had been completed. joining us now is the ceo of the russian direct investment fund. speak to you and thank you for coming to talk to us. is it premature for russia to have approved this vexing before
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stage three trials are substantially underway? kirill: not at all. we were criticized. you need to understand technology. thetechnology is based on human genome virus specter. military [indiscernible] mma. very different from [indiscernible] we know have trials of more than 40,000 people in russia and in saudi arabia and other markets. matt: you mentioned those other countries. how many other countries have
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expressed interest in buying and how many have signed binding agreements to purchase a sex scene -- this vaccine? than 20we have more countries that would like to pursue it. this approach has been cited a lot. there has been zero long-term effects including cancer and infertility. we are not the only ones doing this. it is also johnson & johnson. there is no question that this vector is the most researched technically -- technology. matt: any european countries
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that have reached out to get -- to get this vaccine? understand there will be some discussions among their producers today. [indiscernible] politics prevents some of the countries to work with russia -- most realize know if president putin has been offered the vaccine?
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i don't know about the president. the defense minister and our itustry minister and i took along with my 74-year-old parents. the platform is incredibly safe and one criticism is that some say there are only 76 people. but astrazeneca only had 10 people. if you used to shots, russia can give it to many more people than astrazeneca did. science areknow the very supportive. it is important that people check the long-term consequences of the other vaccines that are out there. matt: the russian direct
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investment fund is one of the world's leading sovereign funds. what is the effect of the allegations by germany that an opposition leader in russia, no with a nerveisoned agent that only the russian government has access to -- is this concerning to you? is it concerning for some of the partners with whom you work? kirill: we do not do politics. our vaccine is to save people. all i can say is what i read in the newspapers. i understand the family is willing to kwok gratefully with the investigation. russia is frequently politicized. -- you want person
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to be sure that you have access to a good vaccine. our efforts to save people are not politicized. this tension between russia and the west or europe in inticular, does it not get the way of cooperation around the vaccine? kirill: we do our best. we know we have the best vaccine out there. russia is in a leadership position. people understand they need a safe approach to save their people. we believe this should be separate from health care. we are not doing anything and politics. save asust trying to many russians and other people in other countries as we can and we want to share information that has frankly been hidden in
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the west. this has nothing to do with the case you are mentioning. today publishing an op-ed to raise those questions. people in the west need real access to the facts. matt: thank you very much for your time this morning. really interesting stuff you are working on. we love hearing about it. heroes demetria from the russian direct investment fund. gold failed to get a lift last week as the nasdaq headed south but it may be a different story this week with central bank action on the cards. this is bloomberg. ♪
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anna: welcome back to the european market open. 54 minutes into a positive session. the u.s. is closed today. joining us now is bloomberg markets live editor. you are written an interesting piece about shoe leather. homework help us. is the point of your p that you
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have to be an active investor if you want to look for gains rather than a passive one? >> that is exactly right. is hard to call. it is hard to see where the opportunities lie. i think to really understand whether a new product or a effective, it is hard to see in the data. it is easier when you speak to people. we are seeing companies that are if the marketnly identifies them as a good company. sorry. matt: to make it easier, especially for robin hood is there any kind of
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basket they can buy rather than having to go through all of the individual companies? >> that is the key. female board membership is something you can track but trackare other things to including how they treat their staff. those are the things that matter in the long run. just because robin hood investors and all investors view these things possibly but the real opportunity for all of them to shine is to look at the statements. i think there is an opportunity for all investors to beat these quantitative funds. thank you very
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much. that is it for the european market open. stay with bloomberg television. they will be taking you through all of the european market action. up next is "surveillance." u.s. markets are closed though the u.s. nasdaq futures continue to point to
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francine: the u.k. steps up preparations of brexit trade talks fail. -- toals plan to with water down the withdrawal agreement. the ecb unlikely to make moves but christine lagarde has set the stage. ittbank plummets on reports -- related to tech. u.s. stocks are shut for labor day. welcome to "bloomberg: surveillance." i'm francine lacqua in london.


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