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tv   Bloomberg Markets European Open  Bloomberg  July 12, 2018 2:30am-4:00am EDT

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guy: good morning welcome to "bloomberg markets." we're live in our headquarters in london. the cash trade is less than 30 minutes away. guy: stocks stabilize, chinese markets are up. we will talk about why in a moment. turkish assets tumbling. president erdogan goes on tv. should investors start to plan for the worst?
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talk aboutarly to capital controls? we will talk about that in the program. and sky, comcast raises its offer, topping the offer from 21st century fox. pockets?are murdoch's let's talk about these markets. futures positive. it was a very negative day yesterday for european equities. there are some interesting stories generated overnight. stabilization in asia. donald trump is tweeting again about germany. we will take you to nato headquarters in a moment. mm.t show you the g we have a turkish market that got hammered yesterday. the banks came under pressure. president erdogan talking about his new economy, and preparing the ground that would allow rate
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cuts. look at inflation. it has to be fascinating to see how investors in turkey start to look at the story over the next few days. down massively yesterday. session did not catch up to this story until around 10:30 p.m. last night u.k. time. european assets were broadly under pressure yesterday. the turkish lira is bouncing back a little bit. we had a 4.9 handle yesterday, we are looking at five. keep an eye on that this morning. steel is trading a little higher this morning, nickel is bouncing back a little. and commodities are generally under pressure. signs of stabilization there this morning. how long will that last? that's get a bloomberg first
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word news update with juliette saly. juliette: chinese and u.s. officials have raised the prospect of resuming talks over trade after trump ratcheted up the pressure by announcing new potential terrorists. after washington unveiled a list of chinese imports worth $200 billion, they have called on america to resolve the conflict. the white house has signaled it could restart talks. of thesels, day two nato session is kicking off. this morning, the u.s. president sent a serious of tweets -- a series of tweets. tryingnts have been unsuccessfully for years, he said, to pay more. they pay only a fraction of their cost. the u.s. pays tens of billions of dollars too much to subsidize europe and loses big on trade.
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strike. is looking to trade deals around the world as part of the brexit plan that will tie them to european rules to preserve open custom borders. theresa may's government is expected to publish the plan in a white paper, spanning more than 100 pages. it expands on a three page paper published by may last friday after she unified her cabinet behind the plan. fund hasbia's world started approaching banks. themberg sources say multibillion-dollar deal will form a court banking group for the investment fund. it has ambitions to become the largest sovereign fund, seeking to diversify the oil kingdoms economy. a spokesman declined to comment. france inll face
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sunday's world cup final after dashing england's dreams with an exit time victory in moscow. england took the lead in the fifth minute, and held it for more than an hour. forced before won with six minutes left. global news, 24 hours a day on air and at tic-toc on twitter, powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. we are going to move on from the world cup and not talk about it anymore. juliette saly joining us with the latest headlines. asian stocks picking up a little bit. despite lingering concerns around the u.s. and the chinese trade war story, the dollar pushing a little higher. crude is studying. yesterday it was down b.
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mark, stabilization, for how long? mark: i think it is not for too long, but it does not mean we will start selling again. the characterization yesterday, the list published in the trade war's was wrong. it was a complete mischaracterization. that list was asked for by trump on june 19. anyone who is following this closely would expect the list to be published, not the exact date. what happened yesterday was a negative for financial markets because it emphasized to all investors there is a trade war going on and it is not unresolved -- it is not resolved. not saying yesterday was not bad news for markets but it was hyped up for a trade war, and that really was not true. there is little relief value today. the other important context is,
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many people got the impression it will be imposed on august 30. the earliest it will come in september, and not much later. before this becomes an economic story, there is time for compromise to be reached. and finally, a perfect example of what may happen, the u.s. took a hard line, and eventually we reached a compromise. that has helped chinese markets. for the be the playbook trade negotiations. guy: what is interesting is you are getting divergence from asset classes. we had a massive move yesterday on the downside for commodities, yet we are not getting a mirror image within the treasury space. which asset classes is right? generally you go with fixed income. will say both are
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correct. they are completely consistent. treasury yields and commodity prices are highly correlated, not because commodity prices feed inflation, and inflation feeds yields. it does not work the other way. in treasury drop yields, that makes speculation and commodities cheaper and the prices rise. because it yields have been low for so many decades, that is less of a driver. treasury yields and commodities tend to be highly correlated because commodity prices feed treasury yields, not the other way around. what is happening at the moment, the common consensus around trade wars it will see u.s. prices rise, inflation in the u.s., but also global growth will fall. you are seeing treasury yields stabilize on the higher inflation story. i think the diversions is consistent with the common consensus in the market.
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that does not make commodities cannot rise or treasury yields will fall, but it will not be for that reason. guy: protestant erdogan -- president erdogan went on television yesterday. banks were down hard, the stock market down. should investors start preparing for the worse, and what does the worst look like? mark: unfortunately, they should repair for the worst. i really don't see how this ends. there are only two ways. erdogan completely changes his mind, and he decides they need to raise rates and do it aggressively, and restore credibility to their monetary policy. unfortunately, the other path, if he does not relent on how he is going, is capital controls. that is scary. capital controls are a scary
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word. i do not see how we could end that outcome unless erdogan changes track. taken this new expanded presidential power, there is no need or him to. i think we are going for capital controls in the month ahead. guy: scary stuff. mark cudmore joining us. you can find all the stories go. mliv how will stocks respond? how deep are this man's pockets? we will find out next. this is bloomberg. ♪
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>> i am not getting any younger, and i want to do more -- one more executive role if i can. i have worked in insurance my entire career. watch francine lacqua's complete interview with leaders with lacqua. indonesia is expected to end a year of wrangling with the copper and gold mines.
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according to the indonesian finance ministry, a ceremony will be held in jakarta at 10:00 a.m. u.k. time. elements of the agreement were not included. the ceo of the venture partner rio tinto has told bloomberg he's keeping his options open. jean-sebastien: we have been very clear, and depending on the we may go as soon as there is something tangible. music streaming service pandora is teaming up to win over a new generation of listeners. you can share songs with friends to listen specifically on pandora. roger lynch said the move will help the company focus on ad revenue, and like rivals spotify and apple music that make money from subscriptions. music likel consume
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they do on terrestrial radio, which is a $16 ilion marketplace -- $16 billion marketplace. andorra is well-positioned for that. we think about spotify and apple for our subversion business to read 70% of our revenue is advertising, and that is more than our competition. it is really more about terrestrial radio. juliette: that is your bloomberg business flash. guy: let's stay with the media theme. comcast has made a bid to take over sky. comcast is offering 5% more than 21st century fox. our media analyst joins us now. more aboutink it is how deep the pockets are at fox.
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they have to get approval from disney every time they raise the offer. how deeper disney's pockets? sarah: it could definitely go higher from here. if you do basic math, in terms you coulds accretion, get closer to 20 pounds, but that does not necessarily mean you are adding value, it just means the numbers on paper make sense. there are sometimes assets that, as a result which people do not necessarily overpaid but pay more than they would normally. sarah: i think it is rare. it has a lot of customers across the markets. everybody tries to go direct to consumer.
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there are few of these assets around. that is really the issue. these are two different things. that's talk about where the shares are. stock was at ahe five-year low. it has doubled since then. would it have got there on its own? i guess the answer is no without the bidding war. and this feeds back into what it is worth. sarah: things have happened in the meantime besides the bidding war. the renewal of the premier league writes. -- premier league rights. sky renewed those at a better price than expected. we do not know how much of the savings will reinvest in other kinds of content, but that was a better scenario than everybody was worried about. in the meantime, the other thing
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you have had is netflix getting bigger and bigger, and putting more pressure on traditional media groups to secure access to the consumer, which is the main strategic driver of this bidding war now. guy: what do you think is going through brian robertson's head on this? iamb wondering what the priority list is here. sarah: -- i am wondering what the priority list is here. assets, sky is distribution. there are two different strategies, and sky international allows comcast to go budge by demographics.
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guy: they did not know the rest and theyrld existed, were very u.s. focused, but now that mentality has changed. sarah: i think it is partly to do with the level of maturity in the markets. the u.s. is perceived as a trailblazer, the highest level of streaming penetration, highest level of advertising to gdp, and it seems likely the non-us markets could have more potential if they follow down the same route. we are getting towards the second half of an economic cycle. the u.s. is a mature market from a media perspective. from there is more growth europe, and that is what the appeal is. guy: do we get to 20?
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sarah: i think so. guy: we believe that there. sarah simon, senior analyst-media, berenberg. we will take a look at some of the other stocks we are watching. this is still a stressed business. we will talk about that next. this is bloomberg. the open is nine minutes away.
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summity two at the nato
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reviewed emmanuel macron speaking to reporters as he arrives at the event. we will come back to this event in a few minutes. we are minutes away from the start of european trading. let's talk about the stocks we are focused on around the newsroom and around europe. let's talk about bmw. billion, this joint venture they have. , this joint venture they have. stock is downnt 1%. they would have a smaller slice of this going forward. would be very significant
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for them strategically if they were to get permission to raise the stake beyond 50%. they might even go as high as 75%. they would be the first global company, non-chinese company to have a majority stake in the business in china. it shows the market is opening up. it would help and diversify their assets. they have a lot of production in u.s., and given the trade war, going deeper in china is important to them. talk about what is happening up in the air. norwegians better numbers. >> unexpected profit. said revenue is at an all-time high, and sales jumped. norwegian will get a nice boost at the open. guy: it is interesting to see the m&a angles around this. a strong message saying they
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,re confident in the success and there was a similar statement earlier this week. hopefully the stocks will have a strong performance, and we have seen broker downgrades on valuation. the multiples are high compared to historic ones. this run may still have more legs. guy: thank you very much. all the stocks and news from our stocks team. it is on your mobile as well. keep an eye on the commodities, they were a big story yesterday. we will also try to bring news on the bond market as well.
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futures pointing up to a positive open here in europe. that open is next. this is bloomberg. ♪
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guy: one minute till the start of european trading carried let's talk about what you need to know. 132.19nd is bid, trading as we see the arrival of the united states president later on. 1.2 percent overnight. asian equities bouncing back overnight. we saw the chinese stock market. trading up 2.2% into the close. oil, what a day yesterday. oil got smashed lower. this morning, climbing back a little, trading 74 point 61. it was a massive day for the commodities yesterday. down .7%.sterday
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futures this morning point to a positive story. deep and i on sky, comcast raising its offer. center, bmw, keep an eye on metals and oil stocks. morning, 7591, bid. the market makers will probably push us up .4%. cac, 3.1%.-- interesting. the president of the united states is not happy about the north stream pipeline or the underinvestment in did -- defense. that continues to be a narrative we watch. .4% and ihe ibex, up expect you will see similar
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numbers around the rest of europe. imap more read this morning. red this morning. financials look at her bid. what is winning and losing, let me break it down for you. we have oil and gas, still down. i will continue to update this, but oil and gas at the moment is down on the stoxx 600 still. media is well bid, basic resources are bouncing back. travel and leisure looking good this morning. we have had news out of norwegian today. have therising, you sky offer coming and we are watching that. screen and the mov look at individual names. ses, sky trading
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up two point 8%. a 15 handle on sky. got 15.36, trading to above the offer price on sky. the market is looking for more to come through. electrolux coming up after yesterday. ior.v bnp is under pressure. there is only one ex-dividend aock this morning, this being thursday. markets showing signs of stabilization in certain areas. see equity markets stabilizing overnight in asia. europe looks like it is stabilizing a little. at socgen joins us. yesterday was a tough day.
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equities came under pressure, , and i amashed lower trying to understand why. the trade narrative came back and the number was big, but it is not a real number yet because the president hasn't made it real. thenow, but it is development from 34 to 200 billion, 10 percent tariffs on $210 billion worth of imports is economichave a bigger hit on everyone. it would affect prices more. these are a bunch of consumer goods, so it will affect the american consumer, the chinese data. it will affect the way global output is designed in the way we think things. it is a big deal if it happens and maybe we are going to be like this for a bit. do i hold my nose and hope for the best if i am invested in this? --: i suppose in the end
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that has been to some degree what people have been doing because there is a belief president trump's by instinct a dealmaker. he wants a piece of paper that with north as he did korea and if you are holding your nose and seeing it through, you have mornings like yesterday morning when you think my goodness, it is really going to happen and you are pretty solidly scared. guy: when you talk to treasury guys, what is the message you communicate? kit: the message you communicate within the foreign exchange market is look, you have had a good run in a lot of emerging-market currencies on the back of quantitative easing, aw interest rate, synchronized global economic recovery and every path of that is in danger -- part of that is in danger. global danger is the monetary policy settings you have been relying on. that is going. this other stuff compounds it,
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some local politics compound on top of it. sea either has nasty waves in it or it is really nasty but either way, good times are behind us. guy: the dollar continued to accept -- act as a beacon of calm. if you see it from the dollar up being a good thing. assets are being the place you want to be. they represent the biggest economy, in theory, in many ways the least to lose, relatively insulated, is that the place to hide? and look, ifeen the condition that keeps u.s. assets happy is give or take some 3% ten-year note yields, it is a fed that moves to neutral, not far above it, if a flat yield curve tells you that the market doesn't think we will get a sustained peak in rates above a level that is not too scary,
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1% real yield rates, doesn't scare anybody, with a new economy that is growing strongly, concerns about a slowdown in the future, but a profit share of gdp still in great shape, then u.s. assets are fine. all of that comes to a head if you think the policies in place now are a sugar and caffeine expansion that might amount to trouble 18 months down the road. kit juckes, sticking around. up next, stocks on the move including sky, up again after the comcast raising of the bid, trading north of 15. we are up by 3%, but also trading with a 15 handle. this is bloomberg. ♪
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guy: welcome back. you are watching the european moment. open. president erdogan, arriving at nato. on tv yesterday talking about the fact that interest rates will be going down. that frightened the market a lot. banking index down 10%, the
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lira market down, the trading with a 4.9 handle against the u.s. dollar. pressure is mountain -- mounting. here is nejra cehic. upsk 3.5 percent right now. the stock has been somewhat trade war but it has been upgraded to a buy at along with another firm. we are seeing the stock trade higher. i am also focusing on sky, up 2.8%, rebounding from modest losses of .5%. 14cast increasing its bid to .75 pounds as share. higher than the offer from fox. sky is trading higher than both office -- offers. looking on the downside, dnb,
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the worst performer on the stoxx 600, down 5%. profit rising 16%, but second-quarter net interest income disappointing investors. some say it may seek to buy back another 1.5% of shares. guy: thank you very much. take you to brussels. day two of the nato summit. we have seen president erdogan arriving. donald trump doubling down on his criticism of america's allies. members to raise their defense spending, pointing the finger at germany. this is hordern, g7reasingly feeling like 2.0. >> that is correct. thenuel macron said
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atmosphere has been nice inside, but on the outside, if you look at president trump's twitter account, the messaging is not. he is attacking germany's pipeline, he says without spending enough on defense. behind closed doors, he floated the idea of a proposal that at some point this should go to 4% as a defense target. today on his twitter account, he said all companies should -- country's should be paying 4% and sooner than 2024. it is looking more like deja vu of the g7 when he was pleasant in person and left in a fury, angrily tweeting at allies. guy: this summit is nearly done. we've got him in the u k and then going to the -- visit president clinton in helsinki. -- putin in helsinki. he is very much pointing the
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finger and germany for its energy dependence on russia. oil also a factor in all of this. he has been pointing fingers at opec recently. end up conflating that issue into the summit with president putin. the kremlin has been extensively preparing president putin for the chance oil talks will be on the agenda when these two meat. people telling bloomberg that putin is prepared to have the oil talks with trump and a lot of this goes back to the fact that he has tweeted so prolifically at opec for artificially raising prices. russia has been a huge partner bring thoseup to prices down and it was trump's tweets that reaffirmed their commitment to pump one million barrels of oil into the market. in june they decided to do that.
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one of his recent tweets had saudi's and russians coming out and saying they will do that. russians and the united states disagree with iran. the u.s.s attacked saying their diplomacy with iran is why we have a different supply demand situation in the oil market. it will be interesting to see these two talk about oil. the firstlikely be time he talks to the russians directly about the oil market and impact of high prices. guy: annmarie hordern, outside of nato in brussels. thank you. at socgenfx economics is still with us. let's talk about his economic policies. he is once again pointing and suggesting that we are going to be seeing rate cuts in turkey. dollars look at five turkish lira, 4.9 is where we are now. kit: there will be bounces.
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there will be people, investors looking at yields available on shorted turkish bonds and having it go because it is cheap. i talked to corporate clients who the cost of hedging is now prohibitive for some, so they will run the risk. there is not automatic selling of the currency in the way there , inflationinst that numbers are up, the current account deficit is running 6.5% of gdp, you can't have these kind of policies of easing policies from here against that kind of background. has is a country that rollover a lot of debt quite regularly at the moment. guy: what happens if he does? what if the central bank cuts rates? kit: it falls significantly. 5.5?
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take the chart back 10 years, this has been done before but you get inflation higher. the question is whether net you can come out as an economy and went from that when you are a big oil importer, the turkish lira cost of oil has gone up a lot and that is a significant part of your cpi basket and so on. i -- dothe issue, what i want? i want to run low negative but is this a, sensible strategy? he certainly thinks so. i think foreign-exchange market would say even if it were for your economy in the long run, we expect it doesn't work your currency in the short run. guy: talk about currency controls. advising someone with real money in and out of this country right now come are there really restrictions? kit: the problem for turkey to
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comes back, president erdogan wants to continue a debt finance investment program. guy: it can go in, but not come out. less money goes in then can go out. if you want to put a control on capital controls, you are forced typically to get rid of your current account deficit. the way you do that is by keeping investment pretty hard and i am not sure why you do that on purpose. guy: is that a tail risk? does that come from right to left? is it moving toward the center? kit: is it a read -- it is a risk because if things get out of control, you are forced in a position to have to do it but you have to rethink your policy to take an economic hit. guy: the president of the united
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states is arriving for gacy -- they two of the nato summit. theill be progressing to united kingdom where we will see him there for a few days before moving on to helsinki. yesterday at this time, a very feisty meeting with the nato secretary-general. tweeted already this morning, indicating he thinks germany is not doing enough, in particular and germany should not be helping out russia by buying its gas and what we should see is defense numbers moving not up towards 2%, but up to 4%. if we are moving up to 2%, we should do that immediately. continues to make this a very difficult meeting in the way it has traditionally not been. we will see what he has to say later on and his arrival in the united kingdom, which could be
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pretty feisty, to be honest. there are demonstrations -- i believe he is going to dinner tonight. it will be an interesting few days for britain and the president. a quick look at the market at the moment. we continued to see pressure, actually, which is interesting. turkey is weakening today. massive move to the downside yesterday. 1.3% now to the downside on turkey. coming up, a focus on britain with theresa may expected to release her brexit white paper today. can the u.k. keep custom borders open with the eu? what happens to services? this is bloomberg. ♪
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guy: welcome back. european market, mixed at this point. turkey continues to be down, around 1%. most of the european markets are trading a little to the upside, .3%. the london market, up .2%. deal.k. is striking a new with services around the world. theresa may will set out her vision for a new free trade area in the brexit white paper today. how will that go down in brussels?
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goods and services, two different phenomena when it comes to the strategy with the eu. where are we in this process? i am confused. kit: our position is gradually giving up on the single market. the single market is the single marketing goods and services but a customs union is pretty much a custom union that is much harder for services. banker and want to trade in the states, you have to have a business in the states regulated in the states. if you are a lawyer or accountant, likewise. that is how services get regulated and move. it is harder to do cross-border trade.
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it seems to me the u.k. is giving up on services as part of anangiving up on services as paf an
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there has been a long enough run of positive sentiment, good economic data, good weather and everything that comes with it, that the q2 gdp numbers will come out and that will probably be significantly stronger than that. in place for an august rate hike. i think it will take a lot to derail that. where our economics likely in the u.k.? kit: slowly grinding up. slowing growth, week activity, we will not get any real acceleration for any significant period of time to a significantly stronger growth rate in the short term. best and slowing steadily. guy: time to be raising rates? we are trapped in the same cycle as everybody else of
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having come out of the global financial crisis with extraordinary policies we would like to unwind. are per --f rates projective lead to low. the time to raise rates is wrong, but when we talk about a rate rise, you might get a second rate rise. fromplenty more to come kit juckes. -- is trading up by 2.44% 2.34%. brian roberts at comcast came back with an offer and we are trading north of that. it will be interesting to see whether rupert murdoch/disney want to raise the offer and come for this asset, as well. some suggest we could go higher or as high as 20, we were hearing earlier. the stock is outperforming this morning. probably in line with the group,
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but outperforming the market. yesterday.l bouncing we will hear from rio tinto's ceo next. this is bloomberg. ♪ phones have made our lives effortless.
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guy: stocks stabilizing, europe following asia higher, but not by much. the chinese market up 2%, europe up .2%. u.s. futures are pointing higher after yesterday's performance. president erdogan suggesting rate cuts are coming. should investors prepare for capital controls? sky, higher. comcast raises its offer. the stock is trading north of 15 pounds a share. welcome. you are watching "bloomberg markets: european open." i am guy johnson in london.
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30 minutes into the trading day. european stocks are up .2%. yesterday, pretty negative. let me show you some of the gains in europe. ses and sky trading up. sky up by 2.8%. let's show you the bottom end of the market. we have a number of negative stories this morning. doesn't feel as bad as yesterday. the mining stocks got hammered, oil was under pressure. the market didn't like what he heard from norsk a bank. -- 3.74%. let's get a first word news update with sebastian salek. sebastian: chinese and u.s. officials have raised the prospect of resuming talks over trade between the two nations
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after donald trump ratcheted up pressure by announcing new rounds of potential tariffs. after washington unveiled the list of imports that could face duties, beijing called on americans to resolve the conflict. the white house has signaled it could restart talks. in brussels, day two of the nato summit is kicking off with donald trump doubling down on -- natom of american members were called to raise spending for defense. he said presidents have been trying to get germany for years to pay more toward the protection from russia. they pay a fraction of the cost. tens of billions of dollars are paid and loses big entree. the u.k. seeking to strike a trade deals with services around the world as part of the brexit preserve opento custom borders with the block. theresa may's government is expected to publish the plane in a "white paper" spanning more
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than 100 pages. pagepands on a three after she unified her cabinet behind the plan. saudi arabia sovereign wealth fund -- loan. bloomberg sources say lenders stake will form a core banking group for the investment fund. ambitions as the largest sovereign fund, seeking -- to boost return. a spokesman inclined to comment. global news 24 hours a day, on-air and tictoc on twitter, powered by more than 2700 journalists and analysts in more this is countries bloomberg. guy: sebastian, thank you. something of a recovery after trade war fears hit prices yesterday. 2%.er falling nearly
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officiallyt announced them yet, but that seems to be the direction. speaking to paul allen in sydney, rio tinto's ceo said his company is keeping an eye on the impacts of the trade war and further chances for expansion. >> we have seen expansion in copper and diamonds, and other commodities. we would like to have more copper in the portfolio. question about diversification. yes, we believe in diversification, but we aren't going to diversify the portfolio for the sake of it because we want create value of for shareholders. business inrong australia, which has been yes, weng more than 50% would like to have more copper and commodities, but only if it creates value for shareholders.
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paul: metals have really been crushed in the last few hours in the ongoing trade war. what -- will it alter your plans? two keys for the mining business. one is gdp growth and that is strong at this time and the other is about trade. 90% from my country to the other. issueswatching the trade very carefully. i have been to china this year, four or five times to the u.s., as well. we are watching it carefully, but i am the optimist in the room. the last 50 years, a lot of wealth has been created on the back of trade. everyone acknowledges it. when you have this in china or the u.s. or canada, some people feel trade is not fair and
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inclusive always and that impacts everyone to sit around the table. we just want to create value for everyone. guy: the ceo speaking to bloomberg. analyst fromo our socgen still with us. kit: -- i think it was overdone. when you think about what hit the market -- yes, trade war is the looming question, but also you have the national company in libya retake control of the easter oil ports, getting flows of of there and those kind reports come out of nowhere. you have these unknowns in the markets, combining to make people nervous. view.ends on your is your timeframe one week or 10 years and the answer to both time frames will be very different.
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seen is awe have correlation that is pretty solid breaking down. treasuries doing one thing, yes and commodities doing another. . isn't rational that is breaking down? is it ok? does that reassert itself? is one wrong and the other is right? stuart: no, and i wouldn't want to take a punt on which one is right. aredapt accordingly and looking at the correlation between asset classes and when it breaks down, we abandon it and it comes back and becomes a good indicator again. guy: you talk about the short-term and long-term. different bits of the oil market react to the story differently. if i am a u.s. shale guy, do i react differently to a seven cents drop in the price? to how thes
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different players within the market react. concern is how do i get production to the coast from the basin. if i am bp, i am a lot more worried about these trade war's. i am more worried about the unexpected things happening. does someone in the shale patch completely ignore brent? no. there is the global benchmark. a major global commodity on a single day. howou are sitting in fx, much do you pay attention to that. do you just say this is a one-off event? i struggle to see how that can be true. it must have an impact into turkish assets and consumer assets. it raises questions.
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when we had a sharp falling oil prices last week when we were surprised by the u.s. inventory data against the backdrop of calls for increased expansion, that tells you something about how markets look at it. it looks as though there are speculative long positions in oil that are keeping the price higher than people think it should be, but the underlying story is that there is economic growth and with venezuela, libya, iran, you have limited oil output. that as thes economic cycle rolls over and your chart of u.s. yields, if 10-year note yields will mess bunch of time, are they dealing to be lower in three years? -- going to be lower in three years? the oil price may bounce around on the top end of its range and be more volatile before things change.
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trade, oilsdo on aren't going up and we are struggling to find spare capacity. a source ofo be volatility more than a source of direction from here. guy: you bring up the positioning. the market is clearly looking at potentially -- it is looking at a more volatile environment. you eluded to some of the issues -- a to issues coming towards us. lluded to issues coming toward us. all are we all the way wrong on anything that stands out as being potentially wrong here? the we are at the point of year where it is not so much the wrong way around as positions don't go on much in the middle of july in most markets. markets are thin.
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markets are distracted by lots of things happening from different directions. i come in and am surprised by most things most mornings. the dollar short at the beginning of the year is gone. we have had a move out of the excess of positions and high beats for emerging markets, so i think the big market positioning is much less extreme, but the market has got no confidence in anything much. guy: one final question to you, stewart. we have a meeting between the president of the united states and russia, what comes out of it? what are the tail risks in this meeting? stuart: you would think -- i am trying to guess what trump might say, which he might not know a lot of the time. about been tweeting a lot opec, effectively putting it on the agenda for the week.
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it is clearly a big issue for both of them. somecomes out of it is sense that russia is going to pump more. putin will make assurances it will pump every barrel it can is a different matter. clearly, they have a common interest there because russia is enormously run alliance on energy for its gdp, half. trump is coming up to the midterms and needs asked prices below three dollars. any chance it doesn't go the way germans wanted to at the moment? stuart: there is a lot of pressure for things to go wrong, but as it stands, it looks to go ahead and that is all we can say at the moment. guy: bloomberg's compared -- executive editor for energy. .p next, stocks on the move down 7.75%.g this is bloomberg. ♪
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market minutes into the session and let's talk about some stocks we are watching this morning. here are the mid-caps with nejra cehic. outlook, have an full-year sales toward the lower end of 25% to 30% range. earlier, the stock dropped as much as 9.4%. it is still down 7.7%.
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intu properties, down 3% right now. downgraded to a sell at deutsche bank. i cap has been downgraded equal weight at morgan stanley, one of the worst performers down almost 4%. guy: thank you very much. asos with a decent sized move. data from the nato summit, donald trump arriving and continuing to lash out at our allies. theresa may is scheduled to unveil her brexit white paper later and president trump, flying from brussels to the u.k. later on, meeting with the prime minister and queen tomorrow. ahead of the u.s. president's arrival in the u.k., let's focus on the political risk.
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good morning. and the macron president work together on bastille day and it looked great. it didn't do mr. macron much good. how does the u.k. play it? >> i think the u.k. government has tried to chart a pragmatic course, acknowledging the need with strong relationship the u.s. post-brexit, but also acknowledging that there is a from themestic concern opposition about positions trump has taken, and indeed, we have seen a bit of diversions from -- between key u.k. positions and what the u.s. has in fact pursued. apparent after macron entertained trump at the steel day last year and the hope --
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theille day last year and idea that this will get france more leverage didn't materialize, as we saw with trade, the move of the u.s. , so we to jerusalem shouldn't overstate the importance of guessing -- getting along on a personal level. a particularly important issue for donald trump? florian: i don't think so. from donald trump's perspective, the thing that counts the most by far is how to deliver to his voter base. when we reflect on u.s. policy priorities since trump has entered office, he has focused on what he thinks will keep his support up and not necessarily what european allies would have hoped. guy: what does the u.k. get out of this? the u.k. needs the u.s. more
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than the u.s. needs the u.k. pursuing aoks to be deal with the eu that involves goods and services. that means the big part of the british economy needs to find a way of progressing in a wider landscape and that presumably involve the united states. what does the u.k. need to happen here in order for this to sink together? and the what the u.k. government needs is a visit that progress is calmly and without the president actually throwing focusingto the work by on controversial issues such as agriculture, which i think the u.k. would like to bracket because demand there, the u.s. has put forward time and again,
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will be almost impossible to meet from the u.k., not least due to the paper that was presented that has effectively butosed -- in that area, for the president, leaving issue important to his base out is almost impossible and we should also not forget there isn't a lot of precedent for trade deals focusing on services or including services to a large extent. guy: one question on european reaction to this white paper. what do you think it will be? this goes to solving some of the problem with the irish border and it deals with supply chain issues. europe runs a big current-account surplus with the u.k. when it comes to goods. in many ways, this is a deal that could work. the question is, can you get over the freedoms aspect of all of this and allow it to work? florian: on a positive note,
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what hashe paper and been referred to as the white that that the u.k. accepts services will be more limited will be taken as a positive message that the u.k. finally accepts that it can't have the cake and eat it. that is good, but i think from the eu's perspective the papers will only be considered a starting point because ultimately, compromising on the four freedoms and allowing the u.k. to have separate too muchnt carries political risk for the eu and the longer term. guy: we will leave it there. florian otto, thank you for joining us at bloomberg. head of europe at maple kroft. bloomberg users can use g tv on your bloomberg.
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catch up with the analysis. we will be talking charts next. it is time for the battle of the charts. this is bloomberg. ♪
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guy: welcome back. it is time for battle of the charts. dani burger kicking things off. dani: there is a pressure cooker building in the u.s. treasury market because speculators have
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pushed their short positions on the u.s. 10 year to an all-time record. look at this. this is about half a million contracts. we don't have any precedent in history for this massive position here. yields hovering around 2.8, around the level we saw this massive best be put on. this toon i am bringing your attention, if we continue to see trade tensions building, if we get any flight to quality, this could result in a massive short squeeze. guy: maria? maria: that is good, but i have the biggest story today. -- had a terrible day yesterday. volatility, 90 day volatility in commodities. the spike we saw yesterday was the biggest since 2015. investigators -- investors have concerns.
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what could happen to commodities and demand if we continue to see it carriesp and significant implications for china and other emerging markets. jump inhe big volatility, some of those concerns piling up. guy: thank you very much, both of you. fantastic charts. i have to say on balance, we will give it to maria. it is a trade you want to watch. what is happening with the commodity market and the trade market interesting. maria, we will give it to you thursday morning. go on your bloomberg this morning. fantastic charts. as we head to break, let me show you the markets in europe. we are not as well bid as we were. china was up 2%, europe only .2%.
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this is bloomberg. ♪
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francine: trade warnings at china's ministry of commerce as --de war's the president arrived in the u.k. this afternoon. comcast raises its offer to 26 billion pounds. good morning, everyone. this is "bloomberg surveillance."

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