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tv   Bloomberg Markets European Open  Bloomberg  July 14, 2017 2:30am-4:00am EDT

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♪ guy: welcome to bloomberg markets. cash is about to open here in europe you the first trade of the equity session in half an hour. cci numbers are out late today. has the recent slump been a blip? has it been more permanent? we are going to find out,
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another voice on the discussion later in the program. kaplan is going to be joining bloomberg after 1:00 p.m. london time on bloomberg radio. pay attention to that conversation. u.k. finally admits it is going to have to pay a brexit bill if -- in thement government. a more realistic look at the divorce. trading is expected monday warned us about that. how week willis actually be 00 == -- weak will it actually be? matt: less than half an hour away from the cash trading in europe. futures gaining, although they are slight. it looks like investors are taking it easy today. i have got a three-day chart of here.
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-- up here. yield bounces back up yesterday. we are back down a little bit today. we will see how that goes. direction as we saw happen yesterday. gmm?is going on on asian assets generally are outperforming. yesterday, a strong performance in south africa. argentina going in the opposite direction. , useful guest later on insight into what is happening in argentina right now. .5%aussie market is up overnight. korean won a trading higher. i think there is a relationship with what happened with canada and what is happening in
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australia at the moment. the euro is trading higher. the pound is trading higher. we are seeing a dollar weakness. let's catch up on anything else. here is the first word news, juliette starling. on the first day of his visit to paris, emmanuel macron woo the president. theye fourth meeting, stressed their common position from military matters to anti-terrorism cooperation. speaking at a joint news conference, he appears to suggest his opposition to the climate accord is not set in stone. president trump: something could happen in respect to the paris accords. we will see what happens. we will talk about that over the coming period of time. if it happens that will be
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wonderful. if it doesn't that will be ok too. we will see what happens. anna: the meeting last year between his --juliette: he says the meeting between his son and a russian lawyer is uneventful. inmp denied the lawyer question was connected to the russian government. president trump: i have a son who is a great young man. a fine young person. meeting with a woman from russia. came of the meeting. i think it is a meeting that most people in politics probably would have taken. juliette: mitch mcconnell has released his new health care bill. he will try to get support by describing earlier plans. acrossr confrontation the conference, meetings with the constituents, and intensive conversations with members.
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updated thece has draft with additional provisions to make it stronger. democrats uniformly opposing the effort, he needs 50 out of 52 to prevail. the draft brexit law has gotten serious backlash from scotland and wales. failing to give them sufficient to vote ineatening their parliaments. acknowledging for the first time that it will have to pay money to the eu on its departure. mario draghi will attend the first annual symposium in jackson hole. the euro area becomes less reliant on stimulants. it will take place between the 24th and 26. less than two weeks in for.
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global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries this is bloomberg. matt? matt: thank you very much. now testifying for the second day before august, janet yellen said it is premature to conclude that week readings of inflation or a sign that it would fail the 2% target. price gains could both accelerate or slow down. meanwhile, randy crossnore. : the bureau for statistics that -- try the best they can. it is no means perfect. hard to keep that in account. janet yellen talked about how -- change for mobile phones can have a big impact. one industry changing the way they charge is -- can have a large impact.
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matt: that is the former fed governor. he emphasized that inflation is temperamental by nature in an interview with bloomberg television earlier today. joining us now from singapore is mark, what do you think of janet yellen's testimony yesterday? it looked like she was going to go one way in front of the house and then she went giveaway in front of the senate. >> obviously is not an easy situation. the inflation readings are not at the level she would expect. forecast to be on the downside again. she is trying to convince people in the market this is a temporary thing. i think people are beginning to doubt whether it is temporary or not. whether it is a sustained
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downtrend. today's numbers are a big deal for financial markets. we could see a lot of volatility rkey.e bond -- bund ma -- market. >> are price for disappointment? are we priced for what the survey expects because they are two different tribes? give me a sense of how the market is set up going into this number. >> you never know until the numbers hit. it appears that it stevens in the last couple of weeks which suggests that people think the inflation number could be on the high side. it is as though they are saying that this is a temporary thing. slightly on the
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hawkish side. a low number would be a surprise. >> the market is looking for a lower yield on treasuries than it had previously forecast. the beginning of the year we were all talking about 3%. now the most recent survey shows 2.6%. >> in the markets we are .2 -- 2.35. still below those forecasts. market to market with their forecast. obviously 3% looks a long way off. the bottom line is most analysts are looking for higher 10 year yields later in the year. is mario draghi setting us up for a situation where he feels he can talk more quickly about what policy will be once he is out of the eurozone? he is going to the united states. he is going to the fed conclave. he is going to be making a speech. we have booked a ticket.
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what can we expect at jackson hole? >> it might just be that he likes the mountain air. he probably is actually going to say something big. it would be a long way to go and do absolutely nothing. he has used that forum in the past. people will be starting to second-guess what it is he is going to say. the word tapering will come up many times. >> we will have that argument another time. there,ro strategist over you can get analysis throughout the day. you want to pay attention to this. mliv on your bloomberg. later today we are going to be speaking to this man. joined the team on bloomberg radio. just after 1:00 london time.
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that decision very important. if you're a bloomberg customer you can watch the show using tv . a function on your bloomberg as well as the video stream you see here on the right-hand side. e blog created there you can see mliv and tv . you can see a blue link where you can message us directly. be a part of the conversation. send us suggestions. we always interested to listen. an american in paris. trump and macron dined in the eiffel tower. were they able to rich the earlier differences -- bridge their earlier differences? this is bloomberg.
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♪ the european open, 15 minutes ago until the start of trading. a loss of data and earnings to come in later throughout the day. that could really influence the way the market trades. i want to go to hong kong for the business flash. the vanguard ceo will step down by the end of the year. he will be succeeded by jim buckley.
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the vanguard size more than tripled as he embrace the low-cost funds. he will remain chairman while buckley takes the helm on january 3 and -- 3. the biggest quarterly increase since 2014 that led to a flood of withdrawals. the management rose $100 billion. they did not disclose how much -- holden by the german government to answer questions about possible emissions cheating. focusing on diesel motors allegedly fitted with cheat devices. the agency used by several. sites -- raids on a number of sites across germany. brexit related concerns in the
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u.k. and if selling days in germany weighed on markets. deliveries in italy posted the strongest gain last month up 13%. that is your bloomberg business flash. on the first day of donald trump's visit to paris, emmanuel woo theanaged to president's, they are each other's oldest allies. theystress,'s desk, and -- stress, positions despite their well-known differences. speaking at a joint news conference president trump appeared to suggest his opposition to the climate toward is not set in stone. something could happen in respect to the paris accords. we will see what happens. we will talk about that over the of time.riod
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if it happens that will be wonderful. if it doesn't that will be ok too. we will see what happens. matt: later today trump and macron will end the deal day parade. paris, what were your main takeaways from the meeting so far? >> just that you have a working relationship to it could not be more different in terms of age or political factions that they represent. they are both outsiders so that helps. they seem to have some kind of rapport. i think it is important for macron to stand up to trump on things like linux. i think that for trump it is not a problem. trump likes that man to man clash. they were able to complete pivot.
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the military cooperation and syria. yesterday their views on trade work in fact falling apart. they both have this free but fair mantra when they talk about trade. each one allowing themselves protectionism. i thought that was quite an interesting point. manus: interesting exchanges in the press conference. let's take a look at one of them. >> a few months ago you mentioned a friend. we told you paris is no longer paris. you are implying that paris was not safe anymore. and germanyd france are infected by terrorism. it is their fault because they let people enter their territory. those are strong words. would you repeat them today and do you still believes france is not able to fight terrorism on its own territory?
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president trump: you have to let me answer that one. that is a beauty. he is the one that asked the president -- question. to be just fine because you have a great president. you have somebody that is going to run this country right. i would be willing to bet, i think this is one of the most beautiful cities in the world. you have a great leader now. you have a great president. you have a tough president. he is not going to be easy on people that are breaking the laws and people that share this tremendous violence. guy: what can we learn from these exchanges? what does this tell us about differing andp's changing view of the landscape in europe? >> with donald trump you cannot take things let's roll. a lot of what he says will depend on who is appealing to. there's no question that
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really enjoyed his tour of historical things. he was flattered and today he gets to be treated to a military parade. what is not to like in that? guy: fair enough. cannot argue with that. great coverage out of paris. thank you very much. taking a look at the movers in today's trading session. including european car sales slowing down. the u.s. banks reporting later on today. -- as well. rolling the dice as the regulators in the u.k.. the share trading aggressively yesterday. that is coming up, this is berlin, this is bloomberg. ♪
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>> what is happening is a search for yield. as investors receive that fence -- fixed income yield, they are going to be lower for longer. some of the stocks have gone that's done well. it has been these yield oriented stocks. they think the fed is going to be more dovish. the chairman speaking yesterday on the search for yield. it is just about six minutes to go until we see the open of
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european stocks. i want to highlight auto stocks not just because i think it is interesting -- interesting but because we had car numbers out an hour ago. car sales in june were up. slightly less than analysts had been anticipating. watch for a little weakness there. january to june. the first half of the year, 4.6% was the game. not a bad price for the first half. let's talk about financials more broadly. u.s. banks later on, jpmorgan pimco. this is the story for allianz. gain trillion, the biggest since gross left. look at the performance that allianz managed to deliver. the top of vanguard, something to pay attention to as well in the sector of the industry.
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another stock you were not think attention to as well. fox has made the decision to roll the dice with a regulator rather than risk a political decision. that came out late yesterday. you can see the decision and its impact on the share price. the charts to really capture the full drop because you can see this on your bloomberg. you get the drop down even further. the market recovers even a little bit as you come up. you have an endless coming up to talk about that later on. at the moment, not seeing much sense of direction. the fair values pointing to a rise of 2/10 of 1%. you can see s&p futures pointing to a very flat and open. we are going to be getting cpi data later on.
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to describe that as a key metric undervalues it. it is one of the pivotal moments in terms of the journey that the fed is on. the inflation problem, do we get an answer today? the openness four minutes away -- open is four minutes away. this is bloomberg.
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manus: minutes ago until cap opens. don't go away. let me tell you what the bloomberg is pointing us to. it's putting us to a similar story we have seen through most of his week. that does not mean it will end up that way. european stocks have ended up. fairly sluggish start. you can see a similar story in europe. plenty of stocks to be watching though. matt miller. matt: there is a lot that's going to happen today. you mentioned the cpi data. here in thert
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70 63, u.s. 's is european banks and white. they have slightly outperformed the european banks. that could change. guy: net interest margins. that's what you need to be looking at. in red, but only just. similar story in most of the other markets, as well. the individual stocks are much more interesting. today, what the asset managers as matt says, watch banks today, as well. what did trading income actually look like? there was a read in the u.s.. what else do we need to be watching?
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manus: janet yellen is one of the highest powerhouses in the market for emerging markets, autos are at a 10 year high in europe, so we are still up there with omentum drifting back a little bit. just trimmed back to a growth rate of 2.1% or 1.54%. you have a robust situation. we had a competition -- conversation with hayes and ceo. beautiful was the line he used. he was talking about momentum in that economy. here in the u k, he has seen the drop from brexit but a flat level and nobody is investing beyond the horizon for 12-18 months. that's the risk for the economy. these all trump and macron together yesterday in paris. to that and come up is a
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question of what is happening next in the term of spreads. mario draghi is going on his road trip to jackson hole. last time he was there, he was talking about the lack of inflation expectations. he could not see them at all on the horizons. he did not consult the governing councils and we had to eat. three years later, he is going to jackson hole. has it tapered or changed in every way? what would it do to the spread? that question for the market because the ecb meets with them. in kits view up to 120. this is the point, here is where we left. here is brexit, here is the great british drop. a rate rise would do very little
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to move cable higher. the dynamic for cable, as you can see, is how much risk is already priced into this market and where is the next level that we go to on the pound? the gilt yields, we are waiting for those two print. i will leave that with you, guy. just a slight tip higher. guy: stories happening within the sectors this morning. some real divergence, particularly with the pharma sector. i've set it up for index points. similar story with the making sector. have rochede, you bids this morning, shire is bid ,s well, some of the banks lloyd's is trading higher. but take a look at the losers, where money is rotating out of. it looks like money is floating out of this company in
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particular. i will double check some details around that. sanofi, as well. run, as well. happeningesting moves within the drug sector this morning. we are seeing the stories surrounding the potential management changes. let's stay in the u.k.. they have acknowledged that it will have to pay money to the eu on its departure. theresa may is under pressure to reach a deal on the brexit bill. that's one of the key areas. now, to investment officer at royal london asset management. guest: good morning, guy. guy: how would you say brexit and the negotiations are going?
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we look at every round of negotiations and say, the eu wants this, the eu says they will not want this. boris johnson talks about whistling. it looks like everybody is whistling on the same tune. it looks like we are wondering down the ecj taking place. is this realism? is this pragmatism about what is coming up, or is it a folding of the deck chairs? yvonne: there is an element -- guest: there is an element of recognizing that after we leave the european union, you have to try to put some proper races of grants for that to take place. showboatingoss of that has been taking place that is not helpful. the hard work is what takes place in dark rooms where the minutiae have discussions about
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how to put this together and interact. some calm has need to come forward and work through it. there is clearly a bill to pay as being a part of a club. there is an obligation to meet those commitments. there is a question of quantum, not unsurprisingly, the eu will throw out a high number, then the -- the u.k. will throw out a low number. most of these things will be linked to commitments over a. period of years. ,hen you are looking forward looking at the u.k., most of these people will be 12-18 months no problem. the real challenge we have seen is a lack of commitment. that is a strategic investment. the real contrast to that is within the property sector. we continue to see strong
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international demand. people see the u.k. is a good place to do is this. combination if you are a yen buyer, the u.k. looks cheap. it's even safe for dollar buys. the point being, what people believe is that what our economy is open for business. i've been on here more times than we have had hot dinners, on the fiscal responsibility to take back monetary stimulus. philip hammond has got to people that uncertainty, not taking long-term commitments, that is job one for u.k. commitments to deal with. it's not how we deal with europe, it's about how we put ourselves on the stage. for a long time, you have got to get inward capital investment. regardless of what happens with negotiations, wiggle welcome you as international -- we will
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welcome you as international partners. guy: are you saying we will see a softer brexit and less fiscal austerity or reversal of austerity and that is a reason to invest in the u.k.? guest: partly what i am looking for is the bank of england to step back as being the only provider of stimulus to the uk's economy. i was critical of carney in terms of the stimulus package last year and the flip-flopping in the last two weeks gives you limited confidence. what worries me is the volatility that has done to bond markets. we should be in a scenario where he go from nine basis points to 130 basis points. that is not a stable financial system that gives people confidence. the bank needs to set up its credentials and engage in the government and the crystal-clear about the government plans and how that fits into what we are doing. we should take some of the
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stimulus back off the table. there are demands from pension schemes to own the assets of liabilities. up: the bond yield has gone over the past few based. guest: mr. draghi is realizing negative rates is something that has to finish. guy: we will find out if he is going to talk about that. if you are a bloomberg customer, you can watch the show using tv . the landing page is the appropriate place to start. living room,about what is happening with the sky story. also, some key coverage coming up. mr. kaplan talking about policy later. here is some of the video, as well. what have you been watching? janet yellen, two-minute testimony. down whatited
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she had to say. that is the most-watched video on bloomberg. matt: i just want to point out that our producers had a headline that the jp white --ersing gains dropping to a jpy reversing gains dropping to a low. trump and macron meet in paris last night, what will there be fireworks? more next. this is bloomberg. ♪
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guy: you are watching the european open with 13 minutes into the trading session. ahead by level, not a lot going on. let's find out what is happening in the big test. >> seeing its for your profit margin ahead of consensus, also saying it cash position enables a dividend increase, something the market has seized on, saying
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there is growth but a decline in the u.k. and ireland. the fourth quarter total of 7%. hayes moving higher, one of the best performers on the stoxx 600. mid-caps, thehe biotech company hitting the highest since 2015, rising the 8.5%since october 2016, up right now. it has received fda approval for the treatment of moderate to severe plaque psoriasis. on the downside, i am looking at a norwegian insurance have any that i will not attempt to pronounce his name -- it's name. its name. second-quarter net income missing, as well. matt: i can't believe you did
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not even attempt it. it would have been amusing to watch you try. the president of france and the u.s. have clashed in the recent past, but on thursday they stressed there, positions at a joint news conference in paris. macron described his relationship with trump as an outstanding cooperation. >> there is a disagreement like i said, to president trump, that i said it heavily. there is nothing to hide. that being said, it does not event us from cooperating in many fields, in particular, terrorism. we see eye to eye and have extending -- outstanding cooperation. matt: still with us is the cio of royal london management. i hear you can pronounce that insurance company. having been a european
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fund manager in my early career, yes. matt: very impressive. when we look at this relationship, it's taken a turn for the better. it seems to me, although obviously trump has had not very nice things to say about harris and macron has had some pretty disparaging things to say about trump, as well. it seems they are cooperating quite well. guest: you are seeing signs that trump has not had political experience before and the weight one would respond to a domestic economy, where you are trying to focus on putting america first and the great outlook, you tend to be offside about international diplomacy. it's only now that he is going to meet politicians around the world, the message seems to change with each geography goes too. he understands about historical relationship with that country
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and the united states. it's his achilles heel in many ways. surprises whent he came president, ragan was not dissimilar. he put people in with that kind of diplomatic and international perspective, which helped him when he traveled internationally. arguably, trump has not done that. guy: let's play a game. we have an american in paris. we have a lot of investors in europe and they are paying attention to what is happening over here. as matt pointed out, european on the ecbgotten numbers. are we at the point where that run, that catch of performance has run its course? generallytch up started to run its course? guest: quite a few points to
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digest. investing is about confidence and effect the economic playing field is improving in europe is evident that actions taken by the ecb have helped with that. although i am concerned about negative rates. the other big thing is to deal with what has happened in spain. they allow you to take 25% market share. the good bits, the government will keep the rest. if that is the game you are playing, that feels more comfortable than the political machinations that are taking place post financial crisis. you think about the engagement of greece, to me when i look at spain, that looks like state a very italians will follow after. the last big domino in the financial system to fall. they need to consolidate balance sheets. once that is done, it looks all
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right. in some ways, that's why you can see why draghi has got to remove the punch bowl at some point. there are a lot of liquidity stimulus and at some point, we need to pair that back. if you look at the underlying ,erformance, economic data european has been on a trend and that is starting to manifest itself. that's where we are in europe. does it mean that banks have run their course? no, because you see the carry trade works for banks. that's how banks make their money. you can see them perform of it. the real challenge everywhere around the world is how much central banks and regulators to be prepared to allow banks to help stimulate the economy. maybe that will enable us to take some of the monetary stimulus off the table. about what to talk
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does and doesn't work. there is a gap low again this morning. you own it. can you give us any enlightenment from a fund managers perspective about what is going on here? we do seem to be in the dark here. guest: there is lots of the chaise that fly around in the stock markets. one of them is stock markets of or the vacuum. the vacuum. they defend a takeover bid by jj because he believed in the pipeline and he was committed to it. a lot of the data had really supported his thesis. if you look at the value of his options, it would seem logical to leave, but we will wait to see what happens. when markets see that, there
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must be something we don't know. the company is blind to it at the moment, but the market will think, must be something going on and he is jumping ship before there is a problem. is, if the company knew something that was material to their shareholders, they would have to declare it. that cannot be the case. what it says is, here is a man who committed himself to business. why is he leaving to join a business? why are we investing in pharmaceuticals? is one thedvice department needs to explain. he needs to make a statement. we need to know something here. guest: you can understand his needes come out, companies to position themselves how they respond and how they form investors. twofact is, they sold 5% in
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sessions, which tells you something. $5 billion of value that is wiped off the cap of the company. that was how important he was to the leadership of the business. the company has to say something. if he is going, let's edit out there, what is the succession plan. if he is not going, let's be crystal clear about that. this is the uncertainty and that's what happened to the share prices. at royals the cio london asset management and he will stay with us on the european open just 20 minutes into the session. we will talk to the market action as we head into the earnings season. we are getting a load of u.s. banks reporting later today. real kickoff to the weekend. this is bloomberg. ♪
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guy: looking back to bloomberg markets european open, i'm matt miller in religion. -- in berlin. the french embassy is right next door, so maybe on bastille day we will get some action in the square. we are getting a little bit of action in the market right now. health care stocks moving things around. guy points out that they are, as a group, the second biggest
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gainer on the stoxx 600. as far as individual movers, i have the index points broken out here. you can see, it is all health care company at the top holding the index of a water right now. shire, and novo nordisk are the big gainers right now. aftersers, you have seneca at the top here, taking away the most index points. we are going to talk about the u.s. banking reporting season beckons all later on. jpmorgan has numbers, wells fargo out with numbers. what are they going to tell us about trading? they already kind of warned us it will be weaker. watch out for that line. the next interest margin is something to pay attention to
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more broadly. that could be an area we could see a performance coming through. when he to talk about the vanilla baking business. what is happening? what happens when rates go higher? what does that mean for lending? ♪
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matt: u.s. cpi numbers are out today. has the recent slump in public as janet yellen suggests, or is it something permanent? kaplan, ansks robert exclusive interview you did not want to miss. the u.k. finally admits it will have to pay a brexit bill. is the government taking a realistic look at the cost of divorce? earnings season kicks off stateside for banks jpmorgan, citibank, was fargo all report today. slump, is expected to
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but how week will it be? welcome to the european open, i'm matt miller in berlin area -- berlin. guy: let's take a look at how things are shaping up or down or actually neither, to be honest. we are going sideways. wee interesting market moves are paying attention to. health care is the best-performing sector. money is rotating into health care but rotating around health care. it's rotating into names like roche over in switzerland. are thets and autos lead loser. we have seen softer data out of the european car sector, a continuation we have seen in place. thanks taking center stage. -- banks taking center stage. citibank, wells fargo reporting
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numbers. trade revenue has dropped between 10-20%. to be honest, that's a flexible number. investors will try to look beyond this and hope the trump administration will actually deregulation. joining us is the analyst, still with us. cio of royal london asset management. good morning and welcome to the show. we haven't been warned that trading is going to be week. how much confidence do we have in that morning? it's a fairly possible set of numbers. we have seen volatility surrounding fixed it -- fixed space. guest: i think we can be confident that there will be a significant drop in trading revenues. it's important to bear in mind that the second quarter of last year's tough comparison. we have elevated trading around the brexit vote and elevated
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training around the u.s. election race beginning to heat up this time last year. i think 10-20% drop is reasonable and probably unlikely to see significant outperformance. aside from trading, what other areas will investors be focused on? what should be -- what should we be watching? guest: we should be looking at loan growth. it's been sluggish and falling for a number of courses. that puts particular pressure on expand market.o management will be asked about the outlook for interest rates. they will be asked about their ability to reprice loans and also to hold off on moving deposit prices up, as well. guy: this is going to be the
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start of a trend. so what does this look like on forward? as we extrapolate forward, janet yellen tells us bond rates will go higher. nevertheless, the story will change. what does that mean for the delinquencies? what can we expect that banks to get us on that front? we are alwaysest: going to be getting high delinquencies. that will be a key question for management. i think we have seen some weakness in the car finance segment in the u.s.. and in credit cards, capital one was one of the major disappointments in the recent fed review. credit cards are going to be an area of focus. guy: taking very much indeed. announces coming through on the reporting season.
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roommall is the wiggle that we have here, particularly for financials? cost of capital going up, financial conditions don't necessarily reflect that, but they will at some point. what happens when that starts to ripple through? when do we see the stresses? guest: we talk about this just before coming to this slot. there is an element that is quite a different this time. quantitative different this time. dozen 7, 2 thousand eight, is probably less than it has been. it will come out in due course and it will be interesting to
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see who owns some of those issues. perspective, it's certainly a benefit to banks and nim?they improve that will be a critical he's of the jigsaw. in some ways, what we have recently, a massive deleveraging exercise. we talked about monetary fiscal stimulus. part of getting that to work again is the banking system and transmission mechanism improves the economy picking up the slack from the fed or it the key thing in the u.s. for me is not the level of rates, but a question of how much the role has starting next year is going to be reinvested? drainill be a liquidity from the system. where does that manifest itself? more importantly, when we get
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into the companies, at this point in the cycle classically, you buy value stocks. you get rewarding as the cost of capital rises. the challenge this time is that we have arguable interest rates for too low for too long. as a consequence, we have zombie companies that survived the financial crisis who got away with low margins and finance themselves with debt. their rates start to rise, competitive tensions start to rise, suddenly we stop seeing sovereignties rise. we will beone thing cautious about, knowing you have businesses in dependable margins, rates start to rise. rates,s the fed raises we get higher net interest margins. also see people trying to
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take advantage of the lower situation when they can? does demand pickup ahead of suspected rate increases? guest: the correlation is not actually as a logical as you think in light of the point you just made. had a rate rising cycle that many market disciplines are familiar with and what the index of those are. there will be a learning curve that goes through with this one. i expect a lot of reprice going on. we have seen that in other geographies. consumers or even corpus are thinking of coming to the end of coming to the end of the cycle. metricsk at some of the that make you concern about reaching a peak in markets, classically, the an end booms
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are in indication that people feel confident and require assets at any price. in previous financial crisis, we have issued high-priced equity to do that. because the cost of debt is so cheap, a lot of companies have been issuing relatively low yielding debts and with relatively limited covenants. that is a concern for us at this point. guy: any names you want to highlight? guest: we talk about some of the u.k. contracting spaces, but really it's about businesses with low margins. where you are constantly renegotiating contracts. that's where you start to see the problems fallout. that have hads problems with negotiation ll start to come out of the woodwork because they have a sustained growth rate.
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their input costs rise and they have limited possibility. that's where we will see it first. guy: thank you for coming to see us. i think he will continue with us on radio. that conversation is going to continue. piers isrsation with not :00 london time. remember, we will speak to the ceo of wells fargo. he will talk about the banking results. that's coming up at 9:00 p.m. london time. 4:00 london -- 4:00 new york time. up next, we will talk about the media sector. up next for fox and sky. talking about the u.s. giant. it will talk about rolling the dice coming to the regulatory environment. that will be next. this is bloomberg. ♪
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matt: we have a live shot of the celebration in paris. a close-up of a couple people hanging out there. it is bastille day because it is towards of july, where they celebrate the storming of a steel. that's all -- but steel. -- bastille.
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speaking in paris during a joint press conference, trump denied the lawyer in question was connected to the russian government. >> i have a son who is a great young man, a find person, meeting with a lawyer from russia. it lasted for a very short. period and nothing came from the meeting and i think it's a meeting that most of us in politics would have taken. >> majority leader mitch mcconnell has released his health care bill. he discarded earlier plans to repeal obamacare taxes on the wealthy. after meeting with constituents and extensive conversations with members, our conference has updated last months better care draft with
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additional provisions to make it stronger. >> with democrats uniformly opposing the bill, he needs 50 of 52 gop votes to prevail. the two governments attacked a plant for failing to give them power. the u.k. acknowledged for the first time on paper that it will have to pay money to the eu upon its departure. mario draghi will attend the symposium in jackson hole. becomes less light on stimulus. the gathering will take place in august less than two weeks before dragging convenes at a meeting of the governing council. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. guy? guy: rupert murdoch's fox will
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compromise for his company's bid for sky that he does not already own. that's according to people familiar with the matter. the media giant is said to be turning down karen bradley's proposal for stronger assurances that sky news will remain editorially independent. instead, it will wait for markets to look into the deal in will approveulator the deal without the additional condition. it took a little bit of a hit, as you can see. the downside close down 2.12%. the president is of research. is that justified, do you think? guest: probably not. the likelihood is that the deal goes through the eventually. the think you have here with fox
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is that fox has decided, but trying to offer more concessions does not make much sense. it would rather go to a full review. this would be taken by an impartial body and then it would expect to get approval. 10.75he deal would be minus the dividend that was paid out. that's where share prices are at. guy: yet. p. matt: what about the politics to this situation? i do not know where skype is positioned politically, the you can understand that a leader would want rupert murdoch to get assurances that he lets his news organizations operate independently. is this a push back against that? newshe want to leave his one way or the other? guest: if you look at the u.k.
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environment and fox's session in u.s., if unlike the you are a tv news organization, you have to be impartial on the scheme of things. that's a crucial factor. obviously, the news side of the murdoch empire has newspapers, but realistically, that has been separated in terms of shareholding in sky. as you compared to last time fox made of it for sky, there is even less reason to block this grounds on news whether it's reduced the amount of news available. the key thing here is political. there are of the day, a lot of people on the fence who do not the murdoch family. regardless of what the murdoch family would do in terms of concessions, it would not be enough. by taking this step where you about things to the competition,
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you are assuming that when the deal is clear, this has been taken by an impartial authority and there is nothing here in terms of the government authority -- government influence on the outcome. this is the rationale that fox has gone through. are acally, the murdoch's large sort of sway on the kingdom. the situation in the u.k. is a very fluid at the moment. i'm going to throw a couple things out there. how important is the pound in this discussion and is the value of this business correlated to consumer confidence or gdp or anything? if the u.k. dealer falls out of bed, does this deal become less vital to the murdochs? guest: you have a couple factors
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here. obviously fox is a u.s. company, it's taking in dollars. so if the pound goes up against the dollar, then they will say there is an issue that. having said that, skype is one of the few u.k. companies where itsakening pound is bad for bnl. if you are fox, you would like to pay as few dollars as you could. consumer confidence is quite an interesting thing for sky because historically what sky has been seen as is bizarrely enough, resilient in a downturn. you go back home, you watch tv and so forth. what has happened in the past couple years, households have more staying pressure. whatever you want to call it, the great recession, leveling, however you describe it, has
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gone on longer than most would less. that has meant households look closely at items that may be in a 2-3 here recession they might have been able to overlook. our feeling is that the traditional pay-tv business, skies of government numbers in the u.k. are probably at best flat, even going backwards in the scheme of things. now what has happened is consumers are taking a close look and there is a structural question here. you have netflix, amazon, people have alternatives that they did not have before. matt: i noticed you have a there, in thisuys media space when you are dealing with giants like netflix or amazon that are increasingly global and coming into the u.k. market, how do you defend against something like that?
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very interesting point because if you look at what has happened in the past broadcasters, advertising agencies as well have seen a significant hit on the share price because there has been a negative view of their structural prospects moving forward. i think that has been overdone in both those cases. if you look at broadcasters, keeping is that most audiences are local. they like local content. if you take a market like the u.k., you look to the top 20 programs, 15 of them are is enters. there are programs that would not show anywhere else. i think the thing you have to remember with copies like netflix and amazon, they are playing on a global basis, so when they buy content, it's
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because they are looking to monetize that content across the world. they have to get a different type of content, content that audiences in italy, the states would like, but crucially also as well, those players are looking for niche in the market. when you leverage that off a global basis, the numbers look extreme the attractive. that is different from the more names, focusing on their own particular country. i was just going to say, in a lot of these cases, there are certainly sectors with the media coming under significant structural pressure. we do not think the agencies and broadcasters are once that -- ones that in the longer term will be restricted.
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pearson one of those areas in me get that is coming under a lot of pressure? they are paring down and you have them as a cell. -- a sell. it's our stocks that we are concerned about, structural factors. profitcally, the biggest generator for pearson by far has sell of higher education textbooks on the market. certainly when you compare them with u.k. markets, in many cases you are talking about textbooks for $250. what is happening is that now students have other options. textbooks,ad those piracy is on the rise.
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with pearsonning is the sort of classic case of when you get a company that not only faces structural pressure and this direction of travel is hurting it, but the speed in which these changes are happening means it's difficult to the company to cope. 2016, higher education revenues fell 18%, that is very difficult to cope with if you are a company. guy: a lot can happen in six months. phone hacking trial regarding the sun in october, further revelations around fox news in the u.s.. is this a risky delight for the murdochs? you are the murdochs, you have to take on the political situation and what's going to happen over the next six months. from their standpoint, there were national -- there rationale would be this. it's unlikely there would be a general election and the
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appetite for a general election would be limited. limited obviously on the site of the conservatives, but also partly the s&p as well. i think their view would be, and election would be unlikely over the next six months, probably over the next 12-18 months, which gives them enough time for a deal to get through. guy: great to see what this might. tv , thego to little blue button in the left-hand corner, you can find matt and i directly as well. just search as an you can find us pretty easily. you are looking at live pictures coming to you from paris at the french capital as they prepare to celebrate bastille day. the u.s. president, the u.s. first lady is there, and as you can see, so is the french first lady.
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with forward to some great coverage and pictures coming out. we will continue to bring you those throughout the day. surveillance is up next. matt and i are going to london digital radio. ♪
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mark: a trend or temporary? will today's numbers give yellen and investors any more clarity on the u.s. inflation situation? those figures at 1:30 u.k. time. climate accord. did donald trump suggest his opposition to the paris agreement isn't set in stone? >> something could happen with respect to the paris accord. we will see what happens. we will talk about that over the coming period of time. mark: after boris johnson tells

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