tv Bloomberg Markets European Open Bloomberg April 20, 2017 2:30am-4:01am EDT
ontle sales beat estimates europe and asia. there was the slowest revenue growth in a decade. we will get an analysis. matt: a lot of big earnings out today and we will cover the mall especially the consumer space. less than a half-hour away from the start of european trading. take a look at where the futures market is. eurostoxxro stocks -- futures down. the ftse, it was up yesterday, the biggest gain since january. keep an eye on that after unicredit surge 6%. take a look at the bond trade. upsideentum was to the in yields as investors were selling off getting out of that safe haven trade that they wound
up. bundt down to 0.15 on the and we went above 0.20. we are me back down below that. a little bit of buying in bunds to make up what we saw yesterday. guy: let's highlight some of the things you have been talking about. today was the italy move. we have seen south korea raising, chinese markets also trading higher. the peso is getting back some of its recent gains. the indonesian current see is down. 128 .19. is trading the area of the market expected to find itself in. how sustainable is it around the 128 level? morgan stanley talking about the fact that the bank of england anld be faced -- forced into
earlier rate hike. we will see a shift in the way that the government approaches its balance sheet as a result of the general election. that could be something to pay attention to in terms of the rangers on sterling. here's the bloomberg first word news with juliette saly. japanese exports grew at the fastest rate in more than two years supporting a moderate economic recovery in the face of weak domestic demand. exports rose 12%, almost double excitations. imports jumped to 15.8%, the biggest gain in more than three years leading -- leaving a trade $4 billion..6 the u.s. secretary of state has criticized a 2015 nuclear deal with iran. rex tillerson said it delays the country's ambitious to gain weapons of mass destruction and did not take into account its terrorism andring destabilizing other countries. the announcement is the
strongest signal to date that president donald trump may walk away from the agreement. >> the trump administration has no intention of asking the buck to a future administration on iran. clear, iran'ss provocative actions for -- threatened the u.s., the region, and the world. the federal reserve says the u.s. economy continued to grow at a modest to moderate pace as its labor market helping brought wage gains. the economic report did note that consumer spending was mixed. vice-chairman stanley fischer has painted a picture of a centraling economy seen banks should manage a's bill of rights monitoring tight -- monetary tightening in the u.s.
this is the view of the former foreign exchange. he does not see any major changes to the foreign exchange regime before china's party congress later this year. market [indiscernible] --maintain the ability stability of exchange rate. if second scenario is economic recovery is becoming or solid -- more solid and the dollar index is not so strong as the market expected, probably the exchange rate could get [indiscernible] paul volcker has questioned the idea of a new version of glass-steagall. -- the law separated
commercial and investment banking and was repealed in 1999. president donald trump signaled willingness to revive it. is doing would depose that and thinking that the investment banking operation, trading operation is going to stay supervision regulation which is what i assume the thrust of this is. that does not fly. that is not where we were. that is what broke down. juliette: global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. guy: the latest polls of the votes implying a real chance that he will make it
into the runoff round. some analysts say the risk surrounding al melenchon -- a melenchon presidency is greater than le pen. i want to talk about what is hacked -- happening with the risk reversals. this is the skew on the options and it is significantly negative on the euro dollar. that is brexit, that is where we sit right now. price -- the euro-dollar risk reversals are at the worst place than they were surrounding the brexit vote. let's join mark cudmore joining us out of singapore. markets fractured in the melenchon rise? the options market seems to suggest there is some. mark: the risk of melenchon winning is underpriced in the markets. it happened so recently and -- in his good performance in the
debate, they have not fully hedged for this outcome. i do think most likely this complacency, investors will get away with this, there is a lot of hype about the election which is probably not justified. the chance of melenchon winning is greater than people realize. le pen is a red herring, she is unlikely to win in the second round and that is why investors have started to dismiss the french vote as not too much of a worry. investors were complacent ahead of brexit and were not expecting it. at the time there was not really a pricing for brexit outcome which is what you saw the massive move in sterling. we have a slightly greater thatng but i do not think is pricing a extremist candidate winning. be domestic policies will did to rental for french assets. matt: i have a chart up here and usd risks gvp
reversal. pre-brexit you can see the pound , investors got very scared and it looks like we have not reached nearly that level yet on the euro. what do you think it will take, do as far asrunoff this is concerned? mark: as you say that shows people are not getting too worried about this election. a melenchon-le pen outcome would be detrimental for markets and there would be a extreme reaction. event. a low probability it is underpriced, it is a 25% the aira finger in probability. investors may get away with
complacency but if we get melenchon-le pen the dollar will drop card on the open monday morning and assets across europe will spread toward global assets. do not expect that as the these case. guy: if melenchon makes it into the second round, how much is there a risk of melenchon winning and le pen winning. must people do not believe that le pen can win in the second round. is that the same for melenchon? >> that is a great question. the pen is likely to get to the second round but externally unlikely to win that second round. it does not seem like she has the potential expendable base to get that high to win the vote. melenchon is unlikely to make the second round but his largeibility is -- maybe enough to win the second round. polls show him beating le pen and fillon. macron andely that
melenchon get into the ground. melenchon unlikely to make the second round but could win if he makes it. the penn, unlikely to be president. matt: thanks very much. bloomberg mliv macro strategist, to melog proved priceless this morning, very useful. i recommend our clients and viewers who can follow it, mliv go. we will bring you a host of big names including dallas fed justin trudeau. coming up, we are live in zurich. we get the latest on consumer news. reportss the food giant earnings. unilever also reporting.
london. let's get out to hong kong for it bloomberg is this flash with juliette saly. juliette: thank you. is news host bill o'reilly leaving the network in the wake of a sexual-harassment scandal that caused dozens of advertisers to flee his top-rated show. try first century fox announced his exit and a one sentence statement saying after a thorough and careful review of the allegations the company and bill o'reilly have agreed that bill o'reilly will not be returning to the fox news channel. shares have dipped in extended trade as it failed to sustain investor this esm that it's turnaround efforts are working. that is as the online auction site reported growth that continued to lag behind e-commerce industry and did not narrow the gap with amazon. despite a raft of new initiatives sales rose by 3.7% in the first quarter. similar growth to the devious p eriod.
a few market is planning to triple the size of its technology hub in new york city to increase space. according to a person with knowledge, the firm is in discussions with brookfield property partners to lease an additional 300,000 square feet on the upper levels of five manhattan west near hudson yard. a spokesman for brooke -- for brookfield declined to comment. that is your bloomberg business flash. corporate stories we need to pay attention to in the consumer goods space. unilever has been of interest on the m&a front. said it sees the outlook on track. similar story in nestle. it saw growth in organic sales beat estimates and confirmed its full-year outlook. the numbers are right that if you look at the long-term story this is not a great set of
figures were nestle. better than estimates but could be better. well they get better? let's talk to john cox. good morning. what we need to know, what do we need to hear on the 2:00 call from management? much was the calendar toact in q1, it could be up 150 basis points. you get an underlying growth figure closer to 4% compared to 3% reported this morning which was better than a straight expected. in historical context it is the sales growth figure we have seen in nestle in decades. that will reverse in q2 and things will look a lot better going into the remainder of the year. they had no leap year, they had no easter, they had
higher input costs, considering those things, aren't you happy to see that they were able to hold up pricing power and put those costs through? guest: the pricing impact plus 1% versus 90 basis points expected by the market was better than expected. europey themselves that remains deflationary, it is improving. great read through for the consumer space. raising inflation is a good thing for consumer goods companies in an environment where prices are going up, everyone has to increase prices .nd that will be sticky in an environment where prices are falling, private label and stored rands are quick to cut prices on the way up, they tend to follow the brand as well. i am optimistic for the second half of the year in terms of the
pricing outlook. we are seeing some of those commodity stocks is again, we yields,ng with bond inflation expectations are falling again after rising in the last couple of months. i tend to think it will be a good second half for nestle in terms of pricing and generally for the consumer staples space. intowe are a little way the re-think of nestle. takes abig company, it while to get around and see what is going on. what is your sense of the key milestone achieved, what does he need to do in the near term? in as an has come outsider and he is looking around his executive boardroom, those guys and girls have been typically together for many years. he is talking to us publicly as investors saying it is going to be more of the same,
we need to get things right in terms of our food and beverage is this, we are not necessarily going to do a major portfolio overhaul. he is talking as much internally to his colleagues and the huge as much as to the investment community. he knows what he wants to do in terms of maybe getting rid of some of the slower growing businesses. what he wants to do in terms of m&a. will hear more as we go through the year. he is playing his cards close to his chest to start. the first thing he has done is bring back expectations for the year between 2% and 4% organic. the goal has been 5%. that takes some of the pressure off the company in some ways. that guidance will be increased as we go through the year. for under reputation promising but over delivering.
organization. it is going to take time. he has said we want to focus on the health and nutrition aspect of the company and i think he will do so. anr onam looking at my bloomberg. target shy ofrice 1871. how does this work? >> i think in terms of the value call among the three players, it is the value call, we hear from the -- we hear that and that -- that new financial targets will be unveiled as they have done the big acquisition which makes sense. it did not look cheap. the value play is clearly [indiscernible]
intle is the quality call the food space. i tend to think there is a rebooting of that portfolio focusing on costs and topline growth. if you want to sleep better at night, nestle is the core. in terms of unilever, the stock has done well on the back of that kraft heinz bid. you saw topline growth at 3% underlying, that is much better than expected by the street. they have their feet held closely to the fire given the investor attitude. we think it is fairly valued. matt: absolutely. thank you, john cox. untilt have seven minutes the market open. this is bloomberg. ♪
matt: where minutes away from the open. we're talking with john cox about a stock, unilever. they came out with sales that beat the street. fire him stood not drop as much as the street was looking for an pricing power was stronger than the street was looking for. unilever one of the many consumer goods companies reporting today, beating the street. watch the shares of the open area and also watch rio tinto, purporting lower-than-expected first quarter copper production and cutting its full-year output guidance by 25%. the copper rising -- price
anchor: welcome. let us hope about where these markets are going. mosts opening, but not the exciting open at a headline level. there are plenty of stock stories we will be focused on. plenty of names out there. i'm going nowhere in a hurry. the ftse down less than .1%. going nowhere in a hurry. matt, nothing in the headline level. stocks stories get interesting to read oil is pretty interesting as well. matt: yeah, it is. i'm looking at wti. this is the nymex trade. i brought up a five-day charge. oil has closed lower every single day of the last five
sessions, but of course, yesterday was the big drop. very interesting for u.s. production and gasoline stockpiles rise, giving oil a real reason to pause after a big long rally after they weeks previous. guy: equities are open. the main markets. you have a swiss market in red, the ftse will probably open up first. looks like it is softening up. down by around .1%. a sense of direction here is lacking. 7107. the final hours before the french election. people may be switching to the options market to position themselves better. ftse 100, 7106. cac dropping as well. maybe more, down by 2/10 of 1%. anna, what have you got? anna: it is a direction of sorts.
the asian session first. the asian handover, broadly positive, up .3% for the markets overall, but equity markets closing up in shanghai, so that a focus in on that. 84 trading days without a loss of more than 1% on the shanghai market through this is not the market that is exactly a stranger to government influence, shall we say, but even for that kind of market, that is an impressive feat, the longest stretch of such performance since 1992, which is a long time ago. up, and this is the stoxx 600 opening in the red, down by .2%. interestingaples, and the results we got this morning. we coming through in energy and materials. oilre seeing recovery in prices this morning. we saw a fall in the u.s. session yesterday, so that was tonificant to anyone exposed
those sectors through the fixed income markets in the u k, the gilts opening up. pimco not a fan of gilts. this is the yield you will get on the 10 year, coming to life this morning. the conservative party say about tax and spending plans? that will be an interesting thing on your thinking in the gilt market right now. on that austerity debate, just how much will they have to back away from that given the recent polling? or maybe they won't need to. let us have a look at what the pound is doing right now. the current debate going on on mliv in the currently market. we spoke to the daybreak program earlier on and he was saying in terms of what he's looking at right now, it is about the transition period, the amount of time theresa may and her government will have to do this transition, and that because of this emergency election or snap election, the fact that the next election has been pushed further long grass increases the transition period, so that
is for asset markets. we have seen support for the pound in this morning's market. guy and matt. guy: thank you very much indeed, anna. be aware of that. but ineurope, systems -- terms of where we are seeing the total,oints, to tell -- roche, softening up a little bit. it is oil and drugs softening up in terms of the move. where are we seeing the upside? we will wait for the 2:00 call. ct later on jewish nighters is trading higher, and unilever picking up on the back of its members. big movie and pandora. it is up 5.6%. unilever and the other stock moving as well. so some of the names that we have seen out with numbers this
, soing do seem to be rising it will be interesting to see who exactly comes through and ofivers some of the sort closing highlights. nestle, that could be quite important, matt. interesting stuff. a lot of interesting earnings out today, but we have a political issue we cannot ignore either. three days to go until france of those in the first round of the presidential election. every poll for the past month has shown emmanuel macron and marine le pen taking the two top spots. the rise in recent days of jean-luc melenchon has taken forecasters by surprise, and don't forget about francois fillon, neck-and-neck with the communist backed president. caroline connan is standing by. how are le pen and macron trying to secure their electorate in these last few days? caroline: first i want to tell
you what we had a few minutes ago. we are seeing the support for in thel macron rising latest polls and as you were mentioning, behind him is marine seann, followed by let's -- melenchon and fillon. marine le pen was in marseille. day after twoone men were arrested in marseille, suspected of planning a terrorists attack against the campaign, so she used this to for the farard-line right base, targeting security and immigration, saying her --als just wanted to tried tomacron position himself as a head,
which involves the military chief. he appeared side-by-side with one of the popular figures in the socialist government of francois hollande. guy: briefly if you will, give me the electoral mathematics, if both melenchon and le pen get through. i'm also interested in melenchon makes it through, how does that change for the other candidates? caroline: it is actually interesting because melenchon only started a week ago to be tested in this second round, so if he faces emmanuel macron, heat could potentially lose, however, he could win against the republican francois fillon and against marine le pen, who is seen as losing against any rival in this guy:. thank you very much indeed.
the u.k.t the head of investment office at ubs wealth management. you guys staffed up on sunday afternoon? guest: i think the interesting thing is people have to come into the office earlier than and i think there are reports that there are initial indications out of the belgian and swiss regions that right around the time new zealand comes into the assets markets, basically be prepared. after the s&p will be repaired. we had a guest on, jeff, talking about the asymmetric .isks here earlier this morning if that heightened by the fact that there are so many undecided polls, or dose they just stay home and not come to vote? guest: that was sort of the
swing factor, i guess, when it came to the u.s. election. overall turnout did not jump by as with the case of brexit, those who had not voted in the longest time finally decided they had a say, so i guess it is not exactly those who are undecided, but the turnout of those who never really participate and are still undecided are the swing factors. in scenario planning, it was basically for marine le pen residency versus the main stream presidency. with the rise of melenchon, adds a third dimension. it is becoming tricky. guy: how do i position for the french election?what do i say ? guest: it is getting to the point where you really have to take of you. if you do believe in nonmainstream results. that will allow you to see what happens after the first round. you have to take a more defensive posture on the euro,
european stocks, and look at what happened, start thinking about redenomination risks. with thebeen a future candidacies. did you want to take france out of the euro? that is the positioning under the condition that you believe there will be a nonmainstream result. that is very important. up or oney are cached the sidelines and don't want to take positions right now. guy: not taking positions despite treasuries. is it possible to be in europe and have a safe haven? switzerland excluded, is there a safe haven in europe in which you can hide out? if not, an am i taking the chips off and putting them in the united states? geoffrey: keep non-european exposure. that seems to be the preference
amongst our clients. you can take the view that if you have to be exposed in europe, stay away from france. stay in mid-caps in germany. the fact is, when you have a seismic event like this, everything becomes correlated, so you all have to take that all on the chin up front and then go from that. matt: it reminds me, when guy says to buy treasuries, i look at you, title head of u.k. investment. how come investors want is a haven in the u.k., they don't buy gilts as opposed to buns or treasuries -- bunds or treasuries? geoffrey: we find sometimes, let us say we speak to a u.k. based investor who is largely sterling denominated, and we present a sterling-based allocation, then they say "why are you presenting a sterling-based allocation?"
you cannot go into a client discussion assuming home vias. maybe this investor will say "i'm seeing a good u.s. story. i want exposure to the u.s." given how the pound has moved, people are more wary of the risks, so there is less dollar exposure, but overall, do not assume home bias is in place. we all have u.k. investors who want nothing in the u.k. we have seen across the board in our client base. guy: we need to talk about what is happening in the u k and figure out how we work that story. interesting theories surrounding what is happening with the election coming up and whether that will change the fiscal start to the u.k., whether that changes the bank of england's view. we will talk to geoffrey yu about that from ubs. where we are with the markets, i want to see what is happening with euro-dollar this morning. we have been through the kind of of level, just shy 107.50.
guy: welcome. nearly 15 minutes into equity market trading, castrating here in europe. let us look at worthy numbers a stack up. not a clear direction. really not a clear sense of direction, other than sideways. the stoxx 600 is absolutely flat. 1%es on the move, nestle up on the back of its numbers. a 2:00 call coming up. jon cox talking to us about that, what we need to hear on that. schnider, unilever, you know, so it is really a kind of earnings driven and upside move in the markets here. all of those stocks have some factor in the mix, these are the earnings. not a surprise to see some of the oil related stocks. a component. . systems is one of those this morning, down by 2%, but that is a factor in the market
there. market there. thursday. a modest to moderate pace in recent weeks. household purchases outside of automobiles were softer to paint the picture of an economy maintaining a steady expansion without the rapid pickup that would reflect a surge in confidence among consumers and businesses are you that comes as 10ure treasury yields -- year treasury yields have been marching lower. bloomberg spoke to blackrock ceo larry fink about where he sees yield heading. larry: i said in december, i said in january, i said a few weeks ago, i believe there is a 51% probability that 10 year treasury could go below 2%. why? i do believe there is still great uncertainty. ,att: still with us is geoff yu head of u.k. investment office
at ubs. take from the u.s. economy and this tepid pace of growth? geoffrey: right now, we are still posited in the u.s. economy, reflected in our asset allocation. in the recent weeks or so, there it tendsreason to -- towards overenthusiasm somewhat with respect to how much the fed would be willing to advance things and how financial conditions would adjust. we actually did have a duration position in our allocation right now, in the 10 year, so it is moving in the direction we anticipated. i do not think this should fromct from positive, fundamentals. going below 2% again and then we probably will have to revisit whether the fed actually has any capacity at all to move over the next two to three years or so. it would take a major revision in the forecast rises. i do not think that is enough
economic data to suggest the fed should embark on a total change in direction. guy: let us think in more clear terms. january 19 fed funds futures. where the dots are right now. the market's kind of pricing out these rate hikes quickly. geoffrey: firstly, there has been a revision on what can be achieved. that could change. [indiscernible] is adly, i do think there rather big geopolitical discount being factored in here over the last few weeks or so, i'll be the geopolitical front and the fact that, you know, investors, they have seen a good run in the u.s. holdings and u.s. economy. it does make sense to rotate
somewhat. it does feel like a tactical decision if data begins to pick up again and to be honest, 150,000 range in job growth and payrolls, -- what worries me is the u.s. savings rate. if that continues to rise, income growth is rising in the u.s. and american consumers are not spending, they are saving. that could repeat what happened in 2015. matt: are you optimistic that we will get some stimulus measures passed before the end of the year maybe? geoffrey: i think we have to define stimulus very carefully here so that there is time for stimulus, but there should be a monetary stimulus by keeping real rates low. deregulation, that direction is still clear. that could be a former stimulus -- form of stimulus as well. that will be a plus for the markets, because i think that is what is being pushed up by markets. accommodation of things can ouren and we will maintain
position in u.s. equities as a result. guy: stay with us, just for you. he is going to stick around. page, thee tv landing page on your bloomberg. hit tv , this is what you get. click on the interactive tv page. let us watch now, shall we? see what happens. you ask the guest a question so you can i the team directly and it will come through. bup here, features function, tv . theater the functions, show you the charts so you can access all of the charts we are using as well, and the functionality that is there. ask the guest a question. this is interactive television. right here on tv , interactive television. this is bloomberg. ♪
matt: welcome back to the european market open. 23 minutes into the session, we have got moderate gains here in equities. let us get the bloomberg business flash. for that, we go to hong kong and juliette saly. juliette. juliette: that, fox news host bill o'reilly is leaving the network in the wake of the sexual-harassment scandal that caused dozens of advertisers to flee his top-rated show. company 21st century fox announced his exit in a one sentence statement saying the "after a thorough and careful
review of the allegations, the company and bill o'reilly have agreed that bill o'reilly will not be returning to the fox news channel." unilever has reported quarterly sales growth that bea estimates. dovemaker of dust notet -- soap rose. a confirmed with outlook for the year in its first results. meanwhile, nestle has reported first-quarter revenue growth that exceeded analyst estimates as it raised prices on this cafe in europe and asia in sales accelerated. companyd biggest foos said sales rose 2.3% on an organic basis. mark schneider is trying to revive growth in his first year leaving nestle. that is your bloomberg business flash. guy. guy: thank you very much indeed. yu is still with us.
let us talk about oil in a moment, but do it tangentially. i want to get your take on u.s. equities. if you are going to buy a market right now, you would think this is the place to be, rather than something else, this is the place to put my money? geoffrey: actually, eurozone high-yield [indiscernible] we do see value as well, and by extension, we talk about oil here. we know where the concentration shale.it is exposed to we are positive on oil prices in the short/near-term. in terms of u.s. markets, there is the growth story, liquidity. client, that is where they feel most comfortable in the medium to longer term, where there is structural reflation. have happened whoever would have won the election. with tactical shifts, we favor
having global allocations as well, so our recent moves are overweights having in global equities positions. the core component of that with the u.s. equities as well. through that positioning, we are trying to get exposure. has politicalure discount. i would not say clients are underweight or anything. it does not matter where you're waiting preference is. they are heading into political risks. geoff, thankht, you very much u.k. investment officer at ubs of management. he will stay with us. you can still submit a question if you would like. for that, go to tv , click into one of the streams on the blue link and send a question to geoffrey yu. up next, campaign kickoff. theresa may begins to push to increase her parliamentary majority and strength in her brexit hand. we will discuss the you k's snap 's snap -- the u.k.
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guy: -- matt: bresky at risk. should the markets be alarmed by melenchon's late surge? positioning ahead of the election on sunday. opec's challenge. stockpiles are higher than when the cards started the oil cuts. will are part -- will output have to be lower for longer? sweet quarter for nestle. the world's biggest food company's sales beat estimates on europe and asia, though it was the slowest revenue growth in more than one decade. good morning, welcome to "bloomberg markets: european open." imf miller in berlin alongside guy johnson. ,- i am matt miller in berlin
alongside guy johnson in london. guy: you have to remember the shadows of the french election. people are taking their hand up, going to do nothing. wait, watch, see what happens, try to get a sense of what hyundai night is going to deliver -- sunday night is going to deliver and see how that will trade into monday morning. i think people are going to take a very cautious stance on what is happening here. political risks front and center absolutely right now. let us talk about the u.k. six weeks, general election, campaigning getting underway. for aoted overwhelmingly snap wrote on june 8. on june 8. may is expected to build a majority in parliament, result she believes could strengthen her hand in the upcoming brexit negotiations. gained yesterday,
trading around the 128 level. picked up pretty strongly. lines coming through about how this could affect monetary policy as well. the ftse is flat. the member, it is an inverse relationship. the pound is up, the ftse goes down, because of how the revenue streams work. geoffrey yu is still with us on set, joining us from berlin. at ing.loc does the election change anything in your mind as to the way the brexit negotiations are going to go? >> we might get a few more hints of where the strategy is for the manifesto. the transitional deal. that buys us more time as well. geoffrey: with the way to market is behaving, i do not think there is any other reason. we saw an
incredible strengthening of the pound when the snap election was announced. does it make sense to you to see sterling? it went up through 129 at one point. nejra: there is hope that it would take place, but i think it is the wrong hope. be campaigning against brexit. all of the others are in favor of brexit. matt: what do you think about the euro? we see a lot of strength there as well, and obviously, having something to do with the french elections, but also influenced by the brexit negotiations. carsten: if you look at the euro, you see the tail wind right now. the economy is doing much better than you expected. at the same time, we have the kind of uncertainties right now ahead of the french election, so we are looking into two weeks of uncertainties. he gets a point that matt was making at the get-go. how will angela merkel, how will the various leaders around europe look at the u.k. if
theresa may achieves a very strong mandate in parliament? she has a lot of political room to work with domestically. how will they figure out where the opportunities or threats lie? carsten: honestly, i think they will not look differently at the u.k. than they do currently, because for them, the european part is that the receiving end. it is up to the u.k. to come up with proposals. you taken reacts. at the same time, we know the clock is ticking for the u.k. i think mrs. merkel and the other european leaders can take a pretty relaxed stance here on what is happening in domestic politics in the u.k. guy: geoff, let us talk a little bit about what is happening kind of more internally. that is certainly the way the labour party would like to fight
this election, what is happening in the grammar schools, etc., very domestically. one of the things they also are very much against it what they perceive as austerity, and they think the u.k. should loosen its fiscal pursestrings. are we going to see that, and it could feedback into monetary policy? how is the relationship between the treasury and bank work in this scenario? geoffrey: the manifesto first and how much of that is going to focus on the domestic agenda given the prime minister's focus, especially trying to capture former labor, those who voted for brexit in a northern region. there might be a temptation, a shift to the left on the fiscal side or against traditional policy. however, we had similar fiscal expectations heading into chancellor hammond's budget. guy: it was an interesting case. geoffrey: i'm assuming he's days.
there'll probably a reshuffle -- probably be a reshuffle after. i think that would be the number one lesson for them, perhaps. there will be a mandate for that as well. ultimately, this will be a bit more about exit than anything else -- frexit than anything else. the premise are made that clear. jeremy corbyn only mentioned brexit indirectly. is that the right start to take and what is going to be a brexit general election? that will be risky. matt: carsten, we talk about the effect of -- we rarely talk about the effect of brexit, what we think it is going to be on the european economy. is that the right -- should we be omitting that conversation because it does not matter? or is there going to be in effect? -- an effect? carsten: it will have a trade impact on the european economies. if you look across europe, i think the impact -- it goes toween .1 percentage points
.4 percentage points of gdp. it there will be an impact, but it will not be significant. matt: relative to the u.k.? carsten: exactly. guy: let us wrap this conversation up. carsten bresky will stick around. geoffrey yu will be the parting. the tv function does work and we have got a few questions in, so let me put one to you before we go. is there an investment opportunity in emerging markets like nigeria? how do i play some of these? geoffrey: so, one thing to be cautious of is, you know, liquidity is actually a bit more restricted, so without going specifically into products, there are ways to do it. what we tend to see a high network clients is pursuing direct investments, so looking for opportunities with public listed companies in developed
markets doing cofinancing or just some seeking direct investments with local partners as well. that may be taking a long-term , that is maybe the third way for frontier markets. is today's frontier markets developing markets. guy: think you very much indeed. from ubsyu, joining us wealth management. remember, if you are a bloomberg customer, you have got your bloomberg open in front of you. tv , the function, this is the landing page. you click on the "watch now" on the interactive tv. it can do the radio, "listen now." have also refuge of options, who is on air, what is going on, what is coming up. great functionality and chart functionality on this page. we will carry on the conversation with carsten brzeski, talk about france, and where we should put ourselves in this debate.
we're looking at modest to moderate gains across european indexes with the exception of the cac, which is down a little bit, but only .03%. nejra cehic? nejra: consumer goods very much in focus this morning with two of the sector giants reporting today. nestle first quarter revenue growth beating estimates. also, an uptick in pricing. that may be a glimmer of hope for the sluggish food and beverage market. we have seen the shares react positively, up .9% at the moment. looking at unilever, quarterly sales growth beating estimates, and it confirmed its outlook for the year. this is the first set of results since unilever rebuffed that takeover approach. it is the first set of results since it announced that strategic review. we are seeing positivity and the share prices, up 1.1% or their thereabout for unilever. publicly's biggest
traded hedge fund, man group, up 2.8% right now. it was gaining more than that earlier. highest net quarterly inflow since the second quarter of 2011. we have seen the stock rise the most this year off the back of that. guy: think very much in need. -- indeed. here is juliette saly. juliette: thank you. japanese exports grew at the fastest rates, supporting a moderate economic recovery in the face of wheat domestic demand. exports rose 12% from one year earlier, almost double expectations. at the same time, imports jumped 15.8%, the biggest gain in more than three years, leading a trade surplus of $5.64 billion. the u.s. secretary of state has heavily criticized a 2015 nuclear deal with iran. rex tillerson said it only delayed the country's ambition to gain weapons of mass destruction and did not take into account its role in sponsoring terrorism and destabilizing other countries. the announcement is the
strongest signal to date that president donald trump may walk away from the agreement. >> the trump administration has no intention of passing the buck to a future administration on iran. iran'sdence is clear, provocative actions threaten the united states, the region, and the world. the federal reserve says the u.s. economy continued to grow at a modest to moderate pace as a tight labor market helps broaden wage gains. the beige book economic report dated knowledge that consumer spending was mixed. separately, fed vice chairman stanley fischer has painted the picture of a bright global economy, saying overseas central banks should be able to manage the spillover of monetary tightening in the u.s.. global news, 24 hours a day, powered by more than 120 countries. this is bloomberg. matt. matt: thanks very much.
three days to go. will france and marine le pen and the runoff, or even jean-luc melenchon? you can see my cron and le pen macron and le pen are still up there. very interesting polls. still, more than 30% of the electorate is undecided, so that makes it more fascinating. still with us, carsten brzeski, chief economist. the risks seem incredibly asymmetric here, but no one is holding back due to the uncertainty, are they? carsten: it is extremely close. from a market perspective, they have been concentrating on le pen. could she become president or not? what has not been discussed is melenchon, the new player who did extremely well during the tv campaign, the cv discussions,
and now he is on the rise and the markets are trying to count him in as well as a factor. matt: i mean, the possibility of a le pen/macron would be a horrible scenario for the margaret, but they do not seem to be worried about it. i question is, are businesses, consumers, worried about it? is anyone holding back spending as of this? carsten: it is markets, i think, foreign investors, who are holding back investments a little bit. if you look at the spread between french and german bond yields, we have seen some tensions in markets, but the gain will continue on monday when we have the results and we really know who is going to the second round. carsten, what does the fact that we have two pretty anti-europe candidates pulling at strongly as they are -- polling as strongly as they are in france tell us about the future of the project? carsten: it is worrisome, and it shows that not only in france,
but many other european countries, there is a part of the electorate that does not really believe in the european story right now. you could also say that actually politicians used europe to become a scapegoat. trump blaming everything on globalization. it is a welcome scapegoat that also means the european leaders need to take these concerns seriously, and that after the french and german elections later this year, i think europe needs to come up with a unique narrative and european leaders really need to change something. guy: but at the moment, we have a situation where a pro-europe candidate in the former mr. macron is likely sitting alongside a pro-europe candidate in the form of angela merkel, mr. scholz, in germany. it seems we have very diametrically opposed positions in europe at the moment. to refresh the question little
bit, the fact that we have got so little overlap on the offender graham between these groups -- on thevenn diagram -- the venn that between these groups, how do we resolve that? carsten: europe to go into two different directions. a push for more european integration or at least for more eurozone integration, which would be welcome for belief in the european project. if all of a sudden, we do not get macron and an anti-european europe coulds, go in the entire opposite direction. if you need to get these groups , you need understanding and trying to accommodate for both concerns. matt: putting the french elections aside and looking forward to the september elections in germany, how much does it matter, scholz or
merkel? scholz was the leader of the european parliament. carsten: i could argue that it does not really matter, but what matters more is the coalition department. would it be scholz or merkel does not relieve matter for europe, but it matters who becomes the first coalition partner. that is the tricky thing here. most likely outcome is the grand coalition, but the grand coalition was probably equal partners, and this would bring a new momentum into german politics. carsten, thank you for your time today. i appreciate you dropping by the office here in berlin. carsten brzeski, chief economist at ing diva. guy: for complete coverage of the french presidential election in the first round, tune into aoomberg on sunday night for special beginning at 8:00 p.m. paris time, 7:00 p.m. in london. remember that will be coming out
of new york as well because everybody is going to be paying attention. be staffed. you could get reaction as soon as trading is taking place in new zealand. next, the oil rally weakens. why crude has been on the slide this week. we will figure out exactly what opec does, next. or are we? this is bloomberg. ♪
guy: welcome. let us have about were these markets are. ftse going nowhere am a tbi spirit that is probably true of most equity markets as we were late to see what is happening with the french elections are trying to figure out what is going to happen and maybe the options market position for it. we are not think very much at the moment. in terms of some of the individual market movers, i want to talk to you about what is going on on the mov screen. b.a.t., and unilever, the main gainers. nestle out with numbers this morning. the markets seem fairly favorable. let us slip into the downside and talk a little bit about what is happening here. as you can see, some of the stocks off. off. dutch shell, bp bae systems are the next dividend stocks this morning. one of the biggest losers out
there, usp or united rentals coming out yesterday saying rental rates remain under pressure. remained under some pressure and that is being factored into what is happening with ash ted this tead this- ash morning. that leads us on to our next conversation, matt. matt: let us talk about the underlying commodity. black gold, as it is called, it closed lower everyday this week. oil bulls have reason to pause. little bit of a turnaround today, but the big drop yesterday is a big story. let us bring in will kennedy, bloomberg editing manager for energy and commodities. what was it yesterday that caught traders by surprise? guest: morning, matt. the big story in the oil market at the moment is this very, very strong rebound in u.s. oil production and shale production.
it caught opec by surprise and a lot of oil traders by surprise. the data yesterday shows u.s. oil production grew. it is back at 9.2 5 million barrels per day across the united states. by the summer, it will be back past the peak we saw in 2014, at the highest since 1973, and all -- the war on to shale would have been for nothing. anchor: what do they do? >> it is increasingly clear that this deal they forged at the end of last year to cut production for six months, they will extended for another six months. it has not done the work they wanted. stockpiles have not yet heard it to fall and the need to see that happen, no they will extend for six months. there were comments about making that increasingly clear. the question will be disciplined. will people stick to the cuts? so far, they have done so mainly
because of the work saudi arabia has done, but the problem that saudi arabia has is that it can be disciplined but if the u.s. is increasing production and other people are cheating on their obligations, they will be back to the position where there are losing market share in the global oil market. they are trying to cash out it's quickly as they can. what does that tell me? caroline: -- that is definitely one interpretation you can put on this -- will: is the middle east -- will: that is one interpretation we can put on this. the middle east had thought there was an endowment they would have for decades. that is increasingly in debate given the huge shifts we have seen in global energy markets. maybe you would think about trying to monetize some of that a little quicker. matt: thank you so much for your time this morning. will kennedy talking about the big moves we saw in oil yesterday and what is ahead for the commodities crude still with us, up next on television, it is
>> global growth in focus. japan's exports surge. a positive tone on the u.s. economy, but not so fast says blackrock chief executive larry fink. >> there are someone in kind here that are getting darker. the uncertain exit as france braces for the tightest votes in years. companies prepare for the worst. we are live in paris for the latest. oil on the up today after a torrid week. crude