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tv   Bloomberg Markets European Open  Bloomberg  October 1, 2018 2:30am-4:00am EDT

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nejra: good morning and welcome to bloomberg markets. europeanve from our headquarters here in london. i am alongside and edwards. i am here in birmingham for the politics but the cash trade on european equity markets is less than 30 minutes away. stocks in asia are largely in the green. u.s. equity futures are also climbing this morning.
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nejra: the u.s. neighbors agree on a provisional trade deal to replace nafta. may is in survival mode facing a critical conference as boris johnson calls her brexit plan deranged very and tokyo turns back time. the nikkei 225 closes at its highest level since november 1991. we are less than a half-hour until the european open. let us take a look at how the futures are looking. u.s. for -- u.s. futures pointing higher with optimism over the new trade deal. europe closed lower on friday. the u.s. was flat with the best quarter since 2013. ftse futures come down 0.2%. going against the grain because elsewhere we are seeing a touch
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of positivity. let us which of the board to take a look at the broader markets to see what is happening. we have our detective of the nikkei closing at its highest level since 1991. pressure on indian equities. a little on south korea as well. australia was lower at one point in the session as well. a mixed picture. the msci -- china and hong kong has been closed. i mentioned canada and the peso. the canadian dollar the best-performing of the g10 currencies in the session. at 1856.eso elsewhere, indian rupee under pressure along with the indian equities. 02 -- 0.2%.up by the euro also slightly soft. reflecting the italian news. moving higher against the curve.
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the euro fairly steady. off by only 0.1%. it tells you something about see thethe investors contagion in italy as contained or not. the 10 year yield the last time i checked was up four or five basis points. the wind spread widening -- the spreadd -- the bund widening also. look at the commodities space. run ofits longest quarterly gains in almost a decade. brent is extending the gains. a little bit of breaking news. the money laundering scandal that hit this giant banking business in copenhagen.
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they have named a new interim ceo. they appointed and interim ceo -- an interim ceo. thomas has been relieved of his duties. is in on an interim basis. they are trying to investigate further the scandal. have some news coming through on ryanair. this is just crossing the bloomberg. ryanair cutting its profit guidance by 12% citing oil and cost. this is the red headline crossing the bloomberg. it cited higher oil prices and higher costs. cutting the private guidance. that is a red headline that you
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will want to focus on. we will see if that stock moves at the open in 25 minutes. the u.s. and canada have tentatively agreed to a trade deal with mexico with an accord signed in november. 20 us now from singapore is bloomberg's michele. good to see you again. thismade the difference time in getting the deal across the line? michelle: there were a lot of issues before they could ink this preliminary deal. what we are seeing is they did deal's text posted. chance to reada the entire thing but what we do new from our trade team on the u.s. side is it includes things like unfair trade practices
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the hot issues. terry. -- dairy. car issues. rules on financial services, intellectual property, and stronger labor provisions to level the playing field among the partner countries. fore are also incentives auto. and steel and aluminum tariffs will be dealt with separately according to u.s. officials. nejra: according to where we go from here, what is the timeline especially if you take sticking points into account? michelle: it is never for sure. can get very sticky even after the deal is inked.
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mexico isead, particularly eager to get this through. the mexican president is out of office at the end of november. we could have a long amber attracted process -- we could have a long and protracted process in the u.s. anna: ok, michelle in singapore, thank you for that trade news. i am here in birmingham at the conservative party conference. few days fortough theresa may who will need to convince colleagues to back her brexit blueprint. i am pleased to say that joining us now is john glenn. very good to have you here with us.
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they are still putting the finishing touches on the set the hind us so we apologize for the noise in the background. let me ask you about checkers. we are involved in a complex negotiation. us into the final stages. the vast majority of contentious issues have been agreed. we are into a difficult final stage. anna: sounds like they have been agreed to within the party. sec. glenn: counter conference -- the conservative party has always had a wide range of passionate views. some people are passionately pro-europe. the prime minister is ringing all of this -- bringing all of this together and acting for the good of the economy. i am confident that she will achieve a good deal for our country. it does not sound as if
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the plan on the table is up for discussion here at this conference. the prime minister has been a passionate member of the conservative party for much longer than i have and she will ofvery aware of the contours the debate. she will know what she needs to do to achieve the deal that we need. i acknowledge that there is a range of views on some of the details of the final package. minister for the prime to lead us through these difficult negotiations. anna: we have not seen boris johnson launch any formal challenge yet. endorse thehe did prime minister staying on as longer she wanted to. he also described some of her plan as preposterous. sec. glenn: he always uses
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wonderful language. anna: you do not think this is the week that we will see a challenge from boris johnson? sec. glenn: boris is a character. he is someone i respect. the prime minister is the person responsible for negotiating and i believe she is acting in the national interest bringing all of the shades of opinion together. we are not going to have another referendum because the prime minister has determined to get us into the next era for our country in a positive way. anna: what kind of feedback have you gotten from the city? there is very little in that plan for the financial services. sec. glenn: the freedom to create a new dynamic and the city is critical to this country's economy. does that mean there is
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nothing specifically detailed in the checkers planned for the financials? sec. glenn: what is important is that we will not accept that the eu commission can make rules for us. what we are working on is a new bilateral relationship between supervisory bodies where the city knows where it stands. wethe eu changes the rules, will know what we can do to deal with that. the city wants clarity on the relationship with the eu which is what will be worked on in these coming weeks. there is a sense of urgency and a need for resolution. it is clear though that the prime minister has the intention to give them the autonomy that they need. anna: we were talking about the possibility of no deal. what percentage would you give to that? there really is no viable backstop. government,across
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we are prepared for all scenarios. treasury, we are prepared for instruments that we have steps to take for all circumstances. i think it is extremely unlikely that we would have no deal. the noise and headlines generated by people who want to demonstrate their commitment to either side of the eu perspective or the uk's perspective, the interest in the deal from both sides is very clear. the city of london is the only place in europe that can provide a hub of services, professional and financial institutions. anna: thank you, john. john glenn, the economic secretary to the treasury. let us get a bloomberg first word news update. let us go to juliette saly. juliette: the u.s. and canada have agreed to a trade deal that would preserve the three-way block with mexico. thenew deal will be called
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u.s.-mexico-canada deal. it sets the stage for the leaders to sign the accord by the end of november. donald trump's team has pushed back against reports that the white house has laid out narrow ground rules for the fbi probe into brett kavanaugh. the president ordered the investigation on friday into the allegations against the nominee following the request from senate republicans. the move was a turnabout for the party that hoped to power the nominee to the top court by early this week. the white house is not getting involved in the fbi investigation in that way. the president respects the independence of the fbi. italian finance minister must sell italy's wayward budget to euro area
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counterparts this week. after initial targets alarmed investors. questionsain to face about the proposal on the sidelines of the closely watched talks. the key detail released so far -- a to .4% deficit target. falling onbonds were friday because of intense pressure. in indonesia, the death toll from a 7.5 magnitude earthquake and tsunami has climbed to more than 800. casualties are expected to reach into the thousands. local media reports that the vice president of the country expected the toll to grow as he drew comparisons between the latest quake and a tsunami that hit indonesia's province in 2004. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg.
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much. thank you so up next, the u.s. and canada agreed to a nafta replacement that includes mexico. will the breakthrough provide more optimism to the markets? this is bloomberg. ♪
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anna: welcome back. this is the european market open. let us get a bloomberg business flash. here is juliette saly.
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juliette: tesla has been forced to find an independent seo to replace elon musk. .o settle fraud charges the company will also have to add two new independent directors and implement controls. oil has extended its gains after ae longest quarterly rally in decade as the slowdown in american drilling added to supply risks while the u.s. and saudi arabia are discussing market stability. king oft trump and the saudi arabia are reported to have spoken on the phone on saturday to discuss efforts to maintain supplies to ensure stability of the market and the growth of global economy. the number of 0 -- of eurozone fail deemed too large to
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has risen to seven. driven by regulatory considerations and a wish to be inside the european banking unit. sought assets outside of the region. >> we need to really be able to have the same competitive conditions as our european peers. the credibility, the stability, and the leather -- and the level playing field with your. that is a natural spin for us to take. juliette: that is your bloomberg business flash. nejra: juliette saly in singapore. thank you so much. news that the u.s.-canadian negotiations have reached a tentative deal. joining us now from singapore is mark cudmore.
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great to see you as always. to what extent has the threat of rising protectionism been taken away as a risk to market? : to a large extent it has been downgraded. isis not as if this new deal particularly brilliant for either mexico or canada. it is the fact that we have reached a deal. it might make more time -- take more time. this shows that overall the u.s. will reach trade deals with many of these countries. one that looks for this to way is the china-u.s. deal. it does send a clear message that trade wars are not here permanently. overall, we can get to a positive solution. that has been a big risk holding down markets this year. good morning.
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commodity markets watching what is going on in the trading conversation very closely. will we see an upside? will it be just about oil or will other areas follow? mark: on one side, you have a better demand outlook. especially as the risk appetite improves. equities seem to have bottomed out. muchll, there is a betterment halliday toward taking risks. on top of that, oil itself is the single most dominant cost for commodities when it comes to the construction and distribution of those commodities. both are now under demand on the supply side. higher prices for commodities. there is a lot of upside in the next couple of months. nejra: let us talk italy. bund spread.
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is the pessimism overdone here? mark: i think the volatility is over down. i think we will see the worst of the stress today or tomorrow. eu will fudgee the situation in the short term. in the long-term, it is not like the italian stress will go away. we have to wait for the numbers next year to see how it will pan out but at the moment, more about -- more volatility this month. we will have to see how the ratings agencies view italy. i do expect though that yields will be slightly lower as we head into november. storywe are watching that in italy very closely. you can follow live up market insights from mark and the rest of the team on the bloomberg. now, minutes away from the start
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of european equity trading. closely following the politics. let us step into the market and get our stocks to watch. we have the latest on linda are. burger is looking at some restructuring. the story you are watching. they have gotten approval but not all of them that they need. >> very important approval came through this weekend. we came from -- we heard from indor over the weekend. this is a merger that these companies have been trying to structure for more than a year. we do not know what kind of verygs if any are attached we don't know for instance if in the u.s., there will be a very painful disposal that they will have to make. , the crucialy
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one that is still pending is south korea-u.s. there were pessimistic people previously so you should probably now see the stock rise this morning. anna: keeping an eye on the effect on the stocks. you are watching the beleaguered casino. why can they do to help their cause? news -- everying monday morning there will be major news. , the ceo who is under attack from short-sellers announced the sale of real estate assets underlying 55 of its stores. it is the crown jewel of the retailers. are usually in the center -- in city centers.
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the company will get a hundred 65 million euros. and on good track to deliver on disposalted asset proceeds. shares are expected to rise. back to you. dani, let us come to you. >> shareholders are finally seeing one of their pushes come to for wisdom. that is after one of their ceos is staying on. let us hear what he had to say. >> leigh wall now create two companies. focused on their markets. their markets are different. lot more value for our shareholders and give a clear orientation for our employees and businesses inside the company. anna: answering the question
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about whether they will or won't flip the business. now we know. you can get the latest stories from our equity team on first go on the bloomberg. that is up next. this is bloomberg. ♪
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>> less than a minute from the open. the euro went into pressure, off .2%. this is pegida yields rising across the curve. up from nine basis points on a 323 handle. the euro shielded from italian contagion, but weaker nonetheless. the nikkei closed at its highest since 1991 at the end of the japanese session. we saw a mixed session in asia overall. hong kong and china closed, two big markets. big gains in australia, india under pressure. let's talk oil, brent trading about $83 a barrel. it's into doing to gain after a
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quarterly run in a decade. ,able pretty much unchanged not doing too much. let's look at futures. ftse 100 futures pointing weaker. it will be interesting to see how italy opens and the comes.ere it the ftse comes under significant pressure friday, drop the most in two years. let's take a look at how markets are trading. we might have to wait for the ftse mid to get going. we're seeing weakness on the u.k. futures. .25cally in line, off percentage points on the ftse 100. the ibex trades lower by just about .1%. a little bit of weakness coming through. cac pretty much dead flat, really going nowhere, edging into positive territory if anything. the stoxx 600 close lower friday
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while u.s. equities were flat. as we wait for some of these other indexes to get going properly, we can look at what the industry groups are doing on the imap for the bloomberg european 500. we want to keep an eye on banks. italian backs were punished friday. financials opening up in the red. it's a mixed picture across the industry groups, which could show through to a flat open overall for the stoxx 600. as we talk about the stoxx 600, what we should do here is get at the mrr to show you the various and history groups, or individual stocks are doing. on a headline basis, the stoxx 600 could see much flat. in terms of bigger movers on the upside, shifting up almost 3%. mutual rallying 2.4%. some of the miners up 2.1%.
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we saw significant gains on the stock friday, up 2%. let's look at the downside to see what's underperforming. easyjet's had headlines in terms of guidelines. a little bit negative and we are seeing that reflected, down 4.5%, the worst performer in terms of a telling companies. some of the banks are there as the lower. telecom italia lower by 3.3%. italy not dominating the red and the way it was on friday. that draws a line on the friday in the short-term, perhaps ryanair and easyjet shares. let's talk about the broad trade story because that's the headline. european markets opening lower. the u.s. and canada have agreed to a tentative trade deal with mexico. the announcement set the stage for the leaders to sign an accord in late november in a region that trades more than $1 trillion worth of products
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annually. joining us is a senior asset specialist at and people airbus. good morning to you. mca,ve to call it u.s. that is what it is tentatively agreed here. does this sound positive about the ability of the trump administration to actually stick to a multilateral format, and to do multilateral trade deals? guest: i think it probably does. the way we would look at it, is that we tended to view the trade wars very specific between china and the u.s. if you read the rhetoric from the u.s., they have been focused on changing certain aspects of the chinese economy. it's that as a base case, no surprise we have reached a deal here with mexico and canada. probably somewhat unexpected as far as the market is concerned. even for us, the strategy team
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thought it may take longer but it's come out quite nicely here. it does back things up that china is the main focus as far as the u.s. is concerned. nejra: the fact that it's a price explains why we had that reaction. u.s. futures pointing higher, as well. does this encourage you to add to risk toward the end of the year, given that the big issue with trade is u.s. and china rather than nafta? guest: great question and the clear answer there is yes. what we have been focusing on as a bank, certainly our strategy team, is that risk in emerging markets will probably do better as we go into the end of the year. de-escalation of trade has been something our economic team has been focusing on very much. it's interesting, you mentioned mexico and canada. both of those currencies have done very well.
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one level i would throw out there is at dollar cad. this is the target we have been focusing on. without the canadian dollar was a little too weak at 130 so we think 128 is where value is with canada. we don't think it goes much beyond here but we are happy for it to remain at the 128 level as a result of this deal. anna: you say this could be good for some emerging markets. what about european assets? i read that you and your team like that you stocks in europe. they have a tough time as of late. they haven't been all the rage where u.s. stocks have been all the rage. when is your's time? guest: good question. we do like value stocks in europe. they are looking value now. what our strategy team has been saying, if you look at a big picture call from economic and strategy teams, a key theme we
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are focusing on is a steepening of the euro curve in the yields on. inflation will rise. mr. draghi has made comments on this. we think the yield curve in the eurozone will steepen. we think things will do better and we think value stocks and financials will be those key wants to own in the eurozone during q4. nejra: you also say elevated trade tensions likely to push the yield lower. we are in october. we are wondering whether the call holds or whether it has to do with dollar strength being the safe haven or if it's to do with the euro. guest: great question. my answer is slightly complicated. nejra: we love complexity and nuance. guest: from the trade side and the results back that up. with think there will be less
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fallout with the nafta countries and even with the eurozone in japan. however, we've had convocations with italy and certainly if you look at the budget deficit that is scheduled for 2019 at 2.4% gdp, that's worse than our economics team was anticipated. we seeing euro weakness on the back of that. our favorite way of playing that is short euro versus len. -- our strategy team is targeting 160. the dollar is a separate issue. is driven by trade, not tensions in europe. we think dollar strength has been the result of concerns about trade. as we get more deals through like canada or mexico, with think the dollar will weaken off again. one of the trades we like is to sell the dollar against the likes of euro, yen, even the pound on de-escalation of trade tensions.
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deals,f tensions turn to that changes things. thank you for your thoughts so far. stephen say will stays with us. up next, we bring you the stocks on the move so far this morning, including ryanair as it has its full-year profit outlook, shares considerably lower and weighing on the tax a. this is bloomberg. ♪
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open,s is the european almost 11 minutes into the trading day. let's get to stocks story with dani burger. dani: i will start us off with casino, one of the gainers after the company said they will sell 55 of its stores. the deal will be for 565 million euros. it gives the company a fresh injection of cash. on the downside, we're looking at dansk a bank after the news the ceo will be living the company. they do have an interim ceo now. this comes as there's already been skepticism circling around the company after the money laundering scandal. shares their lowest since 2016. the biggest loser for the euro stoxx 600 today is ryanair, that after they cut the 2019 outlook
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citing higher oil costs. that.thanks for i'm here for birmingham with less than six months until the u.k. leaves the eu. prime minister theresa may and her checkers plan are coming under further attack from brexiteers in their own party. that is the talk of this birmingham.ere in theresa may will be hoping she can keep the challenge from boris johnson at they. he has been very vocal, talking about how the checkers plan is arranged and preposterous. i talked to the business secretary last night and this is this exchange around the threat posed by boris johnson. is boris johnson getting the momentum? is he gathering support within the party? guest: for what? anna: for taking the brexit negotiations in another direction? >> certainly, the only people
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that can do the negotiations on the government and the prime minister and our team that's negotiating and the parties in the european union. this has to be where the negotiation takes place. what comes out of that will come out of parliament and parliament will have a chance to praise the thatto satisfy themselves it implements the decision taken and the referendum but does so in a way that points to not just continuation of our current prosperity, but actually allows us to relieve some of the investment poised to be able to be made that i think would come if we can see very clearly that there is going to be this agreement. anna: but there is a risk boris johnson gets more support for a leadership campaign and the plan that you are backing not being the plan?
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we're in the early stages of it, but i sense a really palpable commitment to the idea that part of the responsibility of being a government, especially at a time like this is that you've got to read -- unite, keep a cool head, and you've got to accomplish the task you been interested by the people to engage with. so i don't see any appetite for that kind of division. it's been quite the reverse. anna: this doesn't seem like the end of theresa may's leadership? >> quite the reverse. what you seen already is a strong sense from conversations i've had around the conference, from the reaction to statements made in the hole. you can tell that this party has always taken its role seriously in government. now is the time where you need
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to do that and that is what the party i think overwhelmingly wants. anna: that was u.k. business secretary greg clark speaking with mike coanchor anna edwards yesterday. us.en saywell is still with you're recommending long eurosterling. is that to do with brexit? guest: very much so. i will explain the recommendation. it comes from two of our teams, our economics team and fx strategy team. bottom line as far as brexit is concerned, ultimately there will be a deal but we will have to wait until the 11th hour to get that. we don't think it's going to come until october. as a result, we just heard from the conservative party conference, we think we're at a time with a news is going to be poor and sterling is going to be vulnerable to sentiment to bad news.
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if you look at positioning, we have a positioning monitor. what it tells us is the market is not short sterling at the moment. most of those shorts have been covered so there a market for establishing shorts on lack of progress on negotiations. if you bring those together, for the strategy team is saying is there's a strong potential for eurosterling to rise and we've got a target of 92.50 in the short-term as a result. anna: that's interesting. what happens, that's on lack of progress, what's the lack of progress if compounded by leadership challenge? i guess there's room to build even more sterling short. how weak would be go then? guest: i think that's exactly the case. i should highlight the view at the bank is that there won't be a leadership challenge anytime soon. so from that perspective,
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we're not building that in. if that did come into the market, that would be a surprise. who can go through 92.50 on the top and, particularly in the short-term. it's particularly to bring brexit back in the market. we're focused on the fx market. the rates market is slightly different because it's more focused on the bank of england. will they hike rates? when are they going to hike rates? that sentiment factor, the focus on brexit, the fallout. we think it's the pound that would take the brunt of that. nejra: is the market pricing with that boe goes from here in terms of where we stand with brexit? i know it's hard to call. guest: i think this is a tough question. it's a tough question for the bank of england because it's a digital outcome as far as brexit is concerned. it's hard for them to look at
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interest rate hikes in 22019. withu take our assumption the economist is saying, the fundamentals in the u.k. are strong. low unemployment, wage inflation picking up, not too dissimilar to the u.s.. but we haven't had rate hikes come in yet. if exit does produce a deal, the economy is looking strong. there may be pressure on the bank of england to hike. if you put those two factors together, with think the bank of england will hike next year. they'll hike twice next year, more than what is priced into the market, but it's based on a good deal in brexit coming through. anna: important proviso there. steven, thank you. that's the british politics dealt with. coming up, giovanni tree a have the top task of selling the budget to use it euro area
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counterparts when they meet to gay in luxembourg -- meet today in luxembourg. can he study the markets? that's next. this is bloomberg. ♪
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>> this is the european open. let's check in on the equity markets. interesting things to highlight. the ftse up .4% on friday.
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we saw a telling chairs take a beating, dropping the most in two years. -- we saw a telling chairs take sharesng, -- italian take a beating. u.k. equities off .2%. spain is trading flat but the focus on italy and if you want to see intense red on the stock we are seeing a rebound on the ftse and that takes us to our next topic. in we need to talk about the telling politics because the finance minister says they must sell budgets this week while the 2019 spending plan is not on the euro group agenda today.
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they comes after the government's deficit target of 2.4% alarmed investors and put a telling investors under pressure friday. us.en is still with let's talk about where btp's have traded as a result of the news we got last week from italy. is the spread overabundance? ofit capped by the presence the market men, as someone described him? guest: that's the key question to ask. certainly, the way we look at this, and i should highlight the bank published a joint piece on this on friday from economics from fx and from rates, looking at this issue from a holistic perspective. what the bank has decided here is that things are bad for italy. this is worse than anticipated. we're not looking for 2.4%. the key factor disappointing the
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markets is the signaling point. finance minister trio was seen as the voice of reason. he was there for fiscal austerity, but that hasn't worked out. however, there may be a silver lining. and that's the fact he hasn't resigned. remember, previously he was threatening to resign if there was a very large budget deficit that came through. the fact we've got that large deficit but he still there may actually be a slight saving grace for the market. however, the direction is very clear, a widening of italian bonds versus those in germany. nejra: i've got a chart and it goes all the way back to the early 1990's. our own cameron crise pointed out we have three scenarios. one is panic mode, above 300 basis points, one normal between 100-200, and right now we are in no man's land.
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he says we can't stay in no man's land for long. if we don't stay in no man's land, which way do we go from here? guest: probably simple to find out those three reasons. we were focused on 300 as the limit. our view was if you had a disappointing scenario in markets, it's likely to go back to the recent line, which is 300. i think the scenario from here is to wait and see what happens. unfortunately for the market, the near-term risk is deterioration to the downside. we actually have an focused on this as a recommendation in the rates market, but an ice hedge we've focused on from fx and strategy team is to sell the euro, not against the dollar but against the yen. it's a classic risk off trade short euro versus the end. we think that's the best way to play it down to 126.50 rather than an outright rates trade in
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the current environment. nejra: got it. anna: briefly then stephen, do you think despite the italian census, you can get to 120 on the euro-dollar at the end of the year? guest: you seen our forecast there. the forecast remains 120 in euro-dollar. we stand by that. that forecast coming from the fx group is much more dollar weakness than a strong rebound in euro. remember, as we highlighted earlier, we feel the dollar is very overvalued at the moment. the reason if there is because of concerns about trade. if we see more deals like we saw over the weekend in the nafta region, then we continue to think this is more about the u.s. and china, and the dollar will weaken off. we stand by our 1.20 call. saywell, so great
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to have you on the show. he will be joining us on radio. christine lagarde joins us for an excessive interview 4:00 p.m. u.k. time. this is bloomberg. ♪
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anna: this is the european market open on bloomberg television. here are your headlines. canada joins the party. the u.s. and its neighbors agree on a trade deal to replace nafta. the loonie and peso climb on the accord. the u.k. prime minister faces a critical conference as boris johnson calls her brexit plans deranged. i'm on the ground in birmingham. plus, turbulence. u.s. biggest airlines cut profit projections by 10%. the stock hit a two-year low. good morning and welcome to bloomberg markets, the european open. i'm keeping across u.k.
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politics. i'm and edwards at the conservative party conference in birmingham, alongside nejra cehic at bloomberg headquarters in london. nejra: we are 30 minutes into the trading day. let's see how things are shaping up. stoxx 600 struggling for directions. interesting things below the surface in terms of region and individual stocks. here's the biggest gainer, linda up 5%. we got news china improved. we are seeing the higher number. ap up 2.8%. up 2.6%.ta love commodities with trade. the good news from trade talks coming through u.s. and nafta, these are gainers in the u.k. looking at what is moving lower, ryan air very much in focus, down 7.5%.
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it cut its for your profit outlook on fuel costs. we are getting a feedthrough from ryanair moving lower to easyjet, because that's one of the worst performers, down 4.9%. these airlines underperforming. air france down 3.7%, as well. and if that door to the times not done by -- deutsche lufthansa down, as well. italian companies were taking a hit on friday. some suffering some of so they had their trading halted. firstget to bloomberg word news with deadly humphrey in dubai. >> the u.s. and canada agreed to a trade deal that would preserve a three-way block with mexico. the new deal would be called the u.s.-mexico canada agreement, or u.s. nca and replace the 24-year-old nafta pact. it set the stage for the country
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and its leaders to sign the accord by the end of november. donald trump's team has pushed back against reports the white house laid out narrow ground rules for the fbi probing into brett kavanaugh. the president ordered the investigation friday in the sexual assault allegations against the supreme court nominee. it marked a turnabout for a nominate the party had hoped to power through the chamber and onto the top court by early this week. >> the white house is not getting involved in the fbi investigation in that way. the president respects the independence of the fbi and feels that they should be looking at anything they believe is credible within this limited scope. >> u.k. prime minister theresa may is facing the battle of her political life at the conservative party annual conference. that's as top politicians tried to undermine her leadership, including boris johnson.
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he has described her brexit strategy as deranged. she and her team have renewed their call for her party to support the checkers plan. >> part of the responsibility of being government is that you've got to unite, keep a cool head, and you've got to accomplish the task that you've been entrusted by the people to engage with. appetitedon't see any for that kind of division. the typhoon which has made landfall in the western part of japan last night, is moving northeast and has led to more than 1.3 million buildings without power. much of the southern and western japan was at a standstill ahead of the extreme weather. more than 1000 flights were canceled while tokyo train services were down. they are expected to run today.
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global news, 24 hours a day on air and at tic-toc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. nejra and anna? much, doesk you very lee humphrey with the first word news. the latest european airline to cut its earnings outlook. the region's biggest discount carrier lowered its profit guidance by 12% between 1.2 billion euros as higher fuel costs weigh on the bottom line. joining us is benedikt kammel. great to have you with us. i spoke to michael o'leary and asked if he regretted recognizing unions at ryanair. he said he didn't. it seems he's been forced into that. certainly the unions and the and not of strike activity giving him a headache at the moment. guest: that's absolutely right. he famously said not so long ago hell would freeze over before he
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recognized unions. here we are, unions are recognized i am march. -- by and large. he has to do this if he doesn't want to go to this death spiral of continued strikes if you look across the industry. deutsche lufthansa, air france. these are companies that suffered through these strikes for many years. that's something ryanair is trying to short-circuit here. that comes at a cost. if that profit cut that we see, down quite significantly, as is the stock, more than 10%. that is one side of the equation. the other is less within their control, the oil price. something that is crucial for allies. they really depend on the low oil price. fuel is 40-50% of total expense. that has been waiting on them for a while.
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withw deutsche lufthansa an old fleet. that's something they have to address. nejra: you mentioned other airlines and we are seeing other airlines move lower, not just ryanair, the likes of easyjet and deutsche lufthansa moving lower, too. the fact we are seeing this in other companies leads me to question how much of a shock this profit guidance cut came to the market. shock well, it's a because it comes from ryanair and writing are does set the pace in terms of efficiency and growth. they've done so for a long time. this is a company that's grown up doing one thing very well, pushing into established markets or new markets, undercutting local competition, and shaking things up. now caught up in very retro things, which is the oil price, the labor strife. the oil price in particular,
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that's something painful for these airlines. we see the airline stocks go down as they go up. you saw the red across the line, the funds a, ift, easyjet, all suffering from this. anna: oil prices continue to move higher than $83. thank you so much. tip-in chris board has backed a plan to split the company in two. they filled a leadership vacuum as they move months of turmoil. spoke tonny and i guido earlier today. >> we want to create two companies focused on the markets. --think with markets materials focused on markets different to each other, looking
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create more value for our shareholders and give clear orientation and focus for the businesses inside the company. now isjoining us bloomberg's head of european metals. what other predictions from analysts about splitting the businesses like this, that it might be a way for them to hide underperformance? how legitimate is the criticism? >> i think is legitimate, but this is something they been focused on for a long time. the markets are happy with what they plan to do. it's some of the uncertainty hung over. judging by that, you can see clearly this is a step analysts are liking at the moment. you have to wonder how much more of this is to come. we've written a lot about the role of activists in europe.
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and they are seeing more potential and opportunity in europe if they can take down german industrials. you wonder where they go next. >> exactly. you're seeing more of that in europe. you have a couple good examples in the u.k., activists taking a bigger role in companies, being more active and pushing for change. thyssenkrupp is a good example of being successful in that. nejra: mentioning the stock earlier, you were right. they did gain. we are now down. perhaps investors are trying to work out how this is going to go forward. great function on the bloomberg shows the biggest holders into syncrude -- thyssenkrupp and we know the biggest holder, and their statement has been positive. is there anything more they will be pushing for from here, along with the activist investors? guido care cough told me and
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manus this was unanimous support. >> i think it is. the split has come about through an agreement from the labor resented of and the activist investors. they were on opposite sides, perhaps not seeing eye to i. nowfact you're seeing this shows they've come to an understanding. anna: thank you for that. let's take a look at the stories. here's dani burger. dani: i have three companies that have had a rough day in trading. let's start with berkley group, one of the few home groups to fall after theresa may's plan to increase taxes shares lower by 3%, also trading to the downside, is as the hunt for the
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new cfo is underway. shares lower by nearly 6%. deputy ceo will take over those tasks for now. finally, another decliner in the u.k. is sage group, lowered by 1%. that's after a report the company is missi -- putting less pressure on its targets, thought being it will improve morale. shareholders concerned the company won't hit revenue goals. nejra: thank you dani burger. up next, our weekly deals report. this is bloomberg. ♪
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nejra: this is the european open. we are 45 minutes into the equity trading day and it's time for our deals report. we saw linda and praxair get chinese approval for their merger and french supermarket chain announced the sale of real estate, underlying some of its stores. joining us now is a partner at robeson gray. great to have you both. good morning. . happy monday -- happy monday. let's look at the fourth quarter ahead. is it going to the a busy one for deals? >> absolutely.
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we've been incredibly busy through the year, inevitably a downtick, but it's gearing up. there's a number diversifying from the core business and out to infrastructure and real estate and credit. what are the challenges for a standard private equity firm into different asset classes? >> halfing for those that are the performances the have the strong brand, strong track record, they been moving into credit for some time. i think it's interesting to look at the drivers for that diversification, in particular for sponsored. the need to be relevant and to differentiate because it's a crowded marketplace. when we think about challenges, that needs to remain competitive and ahead of the game at all
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times. there is all going to be a challenge and a saturated market. we've seen with private equity firms their ability to do that and be creative and stay ahead of the game, which is a real driver. nejra: you talked about the driver and handed at the challenges. what other challenges are there to private equity firms achieving what you've outlined is really important for them going forward? >> they have to be relevant and credible. credit partners in equity firms -- private equity firms -- there is a willing demand to support sponsors in the diversification process. they want a diversified portfolio. they want to spread risk. for private equity funds, they are looking to do the same. >> you say spreading risk. strategy seen as a cyclical market? is that when investors are keen
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to diversify? >> it can be. private equity market has been through a number of cycles and remains resilient. now we have a market that has high valuations. but that hasn't stopped private equity funds finding the right deal for them. and it continues to perform at a pretty good asset classes. in the classic buyout market, -- ithown itself to be remains to be seen. [no audio] very saturated market now. everyone is expecting a downturn. it will be interesting to see as it's beenms, written on a covenant might basis. nejra: thank you for joining us. partner at ropes and gray.
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the partyds at conference in birmingham. anna: yes indeed. let's talk about our stock of the hour. that is ryanair. we've seen it trading down 12%. that cut the profit outlook. one is strike activity, the other is fuel. it's taken place in five countries. the problem is not just that is its you in time of the strike, but it puts you in booking. it is october bookings. they drop their guidance, down 12% to around 1.1 or 1.2 billion euros. easyjet told us they were concerned about the fuel side of things. we are seeing capacity cutbacks at ryanair. they are dropping their winter schedule 1%. shares down 12%. they were forecasting it will be a horrible year by ryanair standards.
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they were forecasting profit drops from 2014 in this particular year. they've done a deal with irish pilots but have yet to do deals with striking employees. bloomberg terminal users can interact with the charts we're using on gdp. using.the function we're you can browse this charts, catch up with key analysis, and use them. battle of the charts is next. this is bloomberg. ♪
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>> this is the european open. this is the battle of the charts. dani: japanese stocks closing at their highest, what a perfect time. they say that's the recent gains have been fueled by trends following elbows. i have the main equity gauge in blue. the green showing trend followers allocation to japanese stocks. it's reaching a peak, nearing its highs. according to nomura, they are likely to take their foot off the gas pedal and not be supportive for japanese stocks. so the outlook might be getting a bit more grim. nejra: alex, take us through what you've got. alex: they were taking through
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oil prices. we've got oman crude on the top white line. high,barrel in multiyear closing at $87 a barrel. brent crude not quite rallying as much. oman is a replacement for iranian barrels. u.s. sanctions under president trump pushing crude higher. we are seeing oman squeezed at the margin there as consumers worry about a lack of crude. on the other side of things, vying is coming from china. really strong demand coming from the east. those two factors could spell higher brent crude prices going forward. the future for companies like right there could be higher oil prices. not great news for them. nejra: decision time. it's a really tough one. i love both your charts. this is really by a whisker, but i'm going to go for alex because everybody is talking about where oil goes next. big conversation in the market.
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thank you very much. you can see all the charts on the bloomberg by running gtv . anna? anna: let's take a look at what we're watching out for in the week ahead. golden week, hong kong markets closed today and for the next five days in china. we need to be aware of that because it's difficult to get a reading on the asian session with the chinese markets. tomorrow we get a policy decision from the reserve bank of australia. we keep an eye on that one. theresa may delivers the closing speed at the conservative party conference. we have to wait until wednesday for that. remember the last time, the loss of the voice. the mexican central bank is due to make a rates an announcement. we run the week off with u.s. on payrolls. it's that time of the month already. nejra: i know, i can't believe it. we're already in october. let's look at the biggest movers. looking at linde basically over
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the weekend, got the go-ahead from the china regulator, perhaps giving the stock a lift. ryanair down, hitting a two-year low because of cutting its profit guidance on strikes, but also higher oil prices. we've seen it across other airlines, ryanair taking a hit, worse performance on the stoxx 600. the stuffy percent. we've seen other -- that's down 3%. we seeing others down. that is it for the european open. talking to the equity market action. talking about italy with the yields rising across the curve, but also brexit really in focus, which is why you're at the conservative party conference. anna: absolutely. i'm in birmingham because of the conference with a keen eye on u.k. politics. will theresa may last the week? we'll discuss both of those
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questions up next on the surveillance program. also, the ceo will be joining francine lacqua for an interview. lots to come. this is bloomberg. ♪
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francine: the new nafta. the u.s. and canada agree on a new deal. the italian finance minister prepares to try to convince his it euro area counterparts on his budgets. musk.c reigns in elon he steps down as chairman and cuffs up a $20 million fine as part of the deal to remain chief executive. twitter drama in the rearview mirror? ♪ francine: good


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