tv Bloomberg Markets European Open Bloomberg October 5, 2018 2:30am-4:00am EDT
>> welcome to bloomberg markets, the european open. we are live from the city of london. i'm anna edwards. the cash trade is less than 30 minutes away. lenovo leads the selloff in asian tech shares following bloomberg's report on hacking. samsung beats. which team will drive european tech? yields on the 10 year have a near their seven-year highs as investors await the u.s. jobs report.
hurricane florence could dent the data. unilever backs down from its plan to move its headquarters to the netherlands in the face of shareholder pressure. will investors love or hate the about-face? less than half an hour from the start of european equity trading. 7:31 in london. overallxx futures, the picture is unchanged but the ftse futures, tax, and c -- dax and cac futures expected little higher. we will see what the next 20 mine -- 29 minutes throw up. let's look at where we have seen outsized moves. asia, the dominant theme has been around the tech story. we reported around hacking by the chinese in the united states denied by some companies. this is having ramifications on tech companies, in particular lenovo in china. this is a fascinating one to watch.
will this limit china's ability to be the factory of the world and to go up the value chain to other types of technology? india's fintech down all morning. keep an eye on emerging markets in asia. doesn't look to be feeding through into the european session. on -- the dollar up by .1% a little, some bouncing emerging market currencies. sovereign bonds, we are focused on the u.s. 10 year, near seven-year highs. checked,last time i but that has been something we are watching consistently through the program. we have the italian two-year. we will focus on where we go there. and it is jobs day in the united dates. -- let's put these things together.
the dollar is in best run of the year. there has been only one month where the dollar tested higher. fed kept dollar appreciate -- depreciation in august. we have seen the dollar back to a gaining streak. or will the rise in u.s. yields pressure them to stand decided this time around? that brings us to our mliv weston of the day. -- question of the day. will the dollar rally die? us from singapore is mark cudmore, bloomberg mliv strategist. also, we are joined by the head of global fundamental equities at rebecca. let's keep it simple for a moment. do we expect the pboc to halt the dollar rally? i thought the chinese light a
weaker -- like a weaker currency? mark: they have not wanted to see dollar-yuan trade above seven. they don't want to serve -- stir that capital outflow story. a week ago, i would have been clear that the pboc would have come in and stopped dollar rising. after this week of turmoil, given the dollar, interest rates, oil markets, and the itest story on the hack, is hard to know the official reaction of where they want the yuan to trade on monday and the message it sends for the dollar. anna: good morning to you. your thoughts on where we see the dollar rally go because dollar rally was the story of the first part of the year and then it stalled in august -- or september, and now we have seen it stronger of late. what will the chinese make of all of that? >> there are two dollar stories
here. versus the other currencies in emerging markets and the other is versus the chinese yuan. if you look at china, i think it anthe seven limit that is important psychological level for the pboc. we wouldn't exclude that in the short term, it could go over that level, but they will do everything they can to keep it below that and they have the ammunition they need to do so. anna: if you want to weigh in, go to tv . pictures in terms of stocks and equities today focused on the lenovo, this chip story having an impact. once the argue that dust settles, is this positive for emerging markets that have a better geopolitical relationship with the united states? mark: that is definitely an argument being discussed today. one of the issues is this has
been such a stunning and interesting story, people are still recalibrating what it means for each country. will there be changes in the supply chain or will we move on from it? they are not sure of the long-term impact of the story. it is hard to call clear winners or losers, but it adds to the turmoil. it adds to the volatility across assets this week. asia has been focused on what that means when china reopens. not just the yuan, but chinese equities. a lot of the etf's are pricing in a negative restart to the weekend that means all of asia is nervous. , in terms of theel economic story, really strong blowout numbers. that should be good for some countries in emerging markets that supply the u.s. consumer. clearly china is different and the tensions are clear to see.
if we leave out china, are there parts of the emerging-market space you like? fabiana: there are, but 50% of the value added that is in chinese exports to the u.s. comes from the rest of asia. clearly, other countries will also be impacted if the trade war is continued to escalate. we feel like stable countries -- but weiwan, korea are concerned about the further escalation of trade wars and what you see is, although a base case scenario is at some point, we will come to an agreement, you have seen the impact on earnings revisions for countries. with a focus on treasury yields, how high does the market think treasury yields will go? how low do yields go on a bad number? mark: i think we have cleaned
out the week positions -- weak positions, but i long-term basis, people have been long treasuries at the moment. that means we are more vulnerable to a larger reaction if there is a strong number today. either way, the payrolls number tends to be a lottery. short-term reaction and then next week, we probably go back to the underlying trend in yields. we are in a new higher range. it is hard to say where the upper limit is because we haven't defined it clearly yet. to 3.3% isround 2.9% the new range for 10 year treasuries, but it won't keep trending higher much more. year thought on u.s. 10 year ranges? fabiana: i would agree with mark. we don't know where we will be. it will depend on what happens with data going forward, but i think the range he has given is quite reasonable.
i think the issue is the impact it will have on the market. clearly, if we don't have a positive growth impact -- outlook, the negative impact will be much like her -- larger. anna: thank you for joining us. cudmore.edeli and mark market follow life insight -- live market insights on the bloomberg at mliv . that is the place to go and join the conversation on today's mliv question of the day. will the dollar rally die when china returns from holiday? go to tv and click on the ask guest a question. let's get the first word news update. juliette: the u.s. senate heads to a make or break the siege role vote on judge brett kavanaugh later as lawmakers digest an fbi investigation into allegations of sexual assault. a single copy of the report was
made available with some senators grouping together to hear a staffer read the contents. democrats say the white house restricted the inquiry while republicans claimed the allegations haven't been corroborated. mcconnell: the senate should not set a fundamentally un-american precedent here. judge kavanaugh's right to basic fairness does not disappear just because some disagree with his judicial philosophy. juliette: china has hit back at claims by the u.s. vice president of election interfering. beijing branded mike pence's allegations as "unwarranted accusations that slandered china." speaking in washington, he said the country was attempting to sway american public opinion using spies, tariffs, coercive measures, and a propaganda campaign. vp pence: chinese security
agencies have masterminded the wholesale theft of american technology, including cutting-edge military blueprints, and using that stolen technology, the chinese communist party is turning plowshares into swords on a massive scale. juliette: the u.k. starting salaries grew at the fastest pace in more than three years as brexit made it harder for employers to find qualified candidates. -- bying to a report by the recruitment and employment confederation, job vacancies for permanent and temporary positions rose during the month. pay to temporary workers gained at a faster rate, while demand for medical professionals rose the most. european union financial regulators are stepping up plans to avert a market meltdown. the european central bank's head
of supervision set and ensuring tone when she said the ecb is "ready to help ensure a smooth brexit no matter the outcome of political negotiations." the chairman of the european markets authority has called on brussels to make sure the blocs banks don't lose access to london markets in divorce. global news 24 hours a day, on-air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries this is bloomberg. -- countries. this is bloomberg. anna: juliette saly in singapore, thank you so much. lenovo sells off the most in a decade after bloomberg's reports on china hardware hacking. how could the tech slump in asia affect europe? we will get the latest. this is bloomberg. ♪
anna: welcome back, this is the european market open. we are getting a spike up in the pound against the dollar. for the% on the day pound, back over the 1.30 level for cable. eu-brexit negotiators see a deal as close according to reuters. we also had positive commentary from the irish, the eu defense minister says about -- making positive noises about the same
page. october 10 looks like a deadline for the diary, because that is when paperwork would be submitted for leaders to meet in october. that is a deadline we are looking to. let's get a bloomberg business flash with juliette saly. unilever has abandoned plans to consolidate plans in the netherlands, saying it would maintain a second base in britain after mounting opposition from u.k.-based investors. the company said "we recognize releasedsal hasn't support from shareholders and consider it appropriate to withdraw. -- withdraw." supervisorymark's authority says dansk a bank needs to hold more capital, not just to prepare for potential fines, but protect from any market followed caused by damage to its reputation amid a monday
-- money laundering scandal. the comments were made in an interview with the rules program. >> it is premature to speak, on my part. clearly, there is an issue in relations. that is one of the reasons we have increased the requirement, but not the sole reason, so the bank is capable of handling these things financially. musk has insulted the securities and exchange commission days after settling a -- decision that let him be -- remain the ceo. he referred to the sec as short seller enrichment program. an agreement he reached with the agency, which is final, would bar him for serving for three years about comments he made
about taking cuts the -- tesla private. growing heat from sponsors over a rape allegation in the u.s. as nike and videogame maker e.a. sports have expressed concerns over the football stars conduct. he has received public backing events.b he has denied the accusations. that is your bloomberg business flash. anna: juliette saly in singapore. asian tech stocks are slumping as investors assess a bloomberg report that china hacked american computer networks using a microchip built by spies. infotech hit the lowest since july of last year. lenovo dropped as much as 22%. , clearly moving markets but it has been denied by large tech companies in the
united states. joining us, bloomberg's asia tech reporter. great to have you with us. and zte, areenovo people making with the specifics of the story, or questioning the factory of the world role china has adopted? mark: it seems like the markets are bracing for what could be a seismic shift in how the supply chain works for electronics. the news yesterday coupled with the acceleration of the trade war, we saw vice president pence in the u.s. give a pretty damning speech about china in which he accused them of flagrantly stealing american tech. there is expectation that might change how u.s. companies buy semiconductors across asia, and the u.s. government, a major purchaser. what concerns do investors have about response to the
attacks? some u.s. companies have denied this has happened, but our bloomberg colleagues, but what concerns do investors have? mark: in our report, we said it didn't affect consumer devices. we don't expect a big hit on a company like apple, but there -- this is a very convoluted story. it is a very convoluted supply there are companies that rely on subcontracted supply chains and that might change. e,aders like lenovo, zt taiwanese manufacturers, they might need to look at their own supply chain and do more scrutinizing of that. that might increase costs. we expect a company like lenovo, which has a lot of sales overseas, there is expectation those could drop off and that is why you saw the historic drop today. anna: mark, thank you so much.
good morning, this is "bloomberg markets: the european open." let's look at stocks we are watching. we are joined on unilateral, a stunning turnaround. also, danske bank. be awas always going to hard sell with u.k. shareholders, wasn't it? it looks like unilever backs down. >> they did, and as one broker said, this is somewhat you millie 84 the ceo. major blowlso be a to the dutch prime minister, who used to work for unilever, and the shares may go up in london and in amsterdam. anna: i am looking at social media activity, the volume of communication around this stock really surging. bank --me to dansk a lot, the stock is
close to a four-year low after the recent money laundering case. the main thing is there is still uncertainty about the size of may face.danske anna: danske bank and unilateral still in focus. -- still injoining focus. go to first go on the bloomberg. another couple of names, european tech in focus given our hack store yesterday. in european hours, so perhaps the reaction is done. but given the selloffs in asia tech, particularly lenovo, companies that supply -- companies like samsung reported better than expected numbers. danske.r unilever and
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a minuteare less than away from the start of the cash equities trading day. let's t ta a look at our markets are positioned. we have seen a big selloff in asia connected to the tech stocks in particular. could that leave an imprint here? oil trending higher, up by 6/10 of 1%. the nikkei down by a tenths of 1%. -- 8/10 of 1%. the story has been around technology. lenovo really trading down. fascinating spike upward in the pound.
of how close we are to getting some kind of deal. suggesting -- we are trenched a little bit as we get towards the open. the handover from asia has been negative. the tech sector very much a focus. how much has the story we have been reporting over the last 24 hours going to dance china's ability to be the factory of the world? how much of a threat to the chinese growth model is that kind of revelation? we will see. it is having an impact on markets in asia. samsung numbers are better than expected. watching out for that. eye on some land companies as well as real estate companies in london reporting around m&a activity.
a number of upgrades and downgrades having an impact. staples making a bit of a move to the upside. material goods look to be weaker. that is what we have for the sectors this morning. financials in there as well, on the move. i will bring up what we have on the mrr to show the moves we are seeing in individual stock names this morning. a number of upgrades and downgrades having impact. aniston is in their, linked to a stocksf u.k. property that could be active on friday. an offer being considered for a u.k. shopping mall center. brookfield said on thursday its offer was in parliamentary and exploratory stages. that seems to have ignited interest in companies operating in the real estate space.
u.k. assets got a bit cheaper after 2016. hammerson is up there, and british land as well. let's move to the downside. a couple of the downgrades having an impact. royal mail down 3.4%. keeping an eye out for unilever as well, to see if we get an opening price on it. it might take a while to come through, but it is a real focus of the day. they decided to back away from their decision to move out of the u.k. of 1%,stings up by 6/10 outperforming the ftse 100. they still did say they are going to consider their options of supplication. they are not doing the plan they suggested, but what will they decide to do instead? european markets have opened to the downside, but not by much. we will be focusing on the human jobs data later on -- u.s. jobs
data. data shows the jobless rate will fall to an almost 50 year low. hourly earnings are projected to increase by 2.8% from a year earlier. john, great to have you with us. thank you for coming in. let's talk about the united states, with this jobs report looming. that is clearly a focus for us. the markets have been fixated on 10-year gilts, on treasuries. you think thew do treasuries will trade today because of this jobs report? how high could the 10 year yield go? john: if we have a strong job report, it will reinforce the willingness of the fed to keep hiking at a record pace. if you consider the shape of the yield curve in the u.s., which is pretty flat, you are not ready to take a risk on the long-end part of the curve.
you should have a bit of long-term premium and outside pressures. is looking at rates and inflation. you have a relatively low risk to have low rates, but it is significant to have some of a shooting. as we are talking about yields, u.k. bonds dropping, 10 year yields hitting the highest since january 2016. the u.k. has its own dynamic, but there is this story around treasury yields and how the rest of the world response to that. we saw that in asia yesterday, where yields were going higher on asian sovereign debt. today we see yields going higher in the u.k. to what extent are we going to see that globally? we are caught in a higher yield environment. obviously we have a lot of
global investors and some central banks popping money out of the markets, like the fed, who are reducing their injection of liquidity, like the bank of japan. all of this results in less liquidity, and it should be no surprise to see that bond yields are rising. an investment perspective point of view, the traditional correlation we had historically between equities and bonds starts to be a bit , and managing an end of cycle period is more treacherous when you cannot rely on bonds to manage your risk and reduce the risk in your portfolio. anna: is that we are talking about, and of cycle? jean: i think we are. when you look at employment reports, some countries, particularly france, might have a slightly different view because we still have relatively
high unemployment. everywhere you look in the world , from the u.s. to the u.k. to germany to japan, we have levels of unemployment which are close to decades low. obviously this is pointing towards the end of the cycle. i would say maybe a more optimistic note is there is still a question mark in terms of the potential acceleration of investment in some of those countries, and how the growth potential of those economies can improve if we see some productivity gains. that is a big question mark. but bearing any kind of improvement, we definitely are in a period where people have to much more risky. anna: we see the dollar higher. we have the question of the day, rally die the dollar
when china returns from holiday? the chinese markets are at this week. we have seen strengthen the dollar this week. our bloggers arresting whether the chinese pboc will try to put in end to the dollar rally. how long do you see the dollar rallying for? jean: the long-term objective is to make the rajoy -- the renminbi a reserve currency to the u.s. dollar. that's why they are careful not to aggressively play the currency card in order to address this kind of trade war. definitely for them, the stronger dollar is quite a good thing at this stage, considering all the tricky relationships linked to the future trade negotiations.
that is the exchange of conference communications. i do not think the chinese have any interest to save the dollar from appreciating too much. anna: thank you for your jean medejoe mixon -- cin. we need to check the share price. in2 climbs 30% after brookfield ventures confirmed a possible bid. they said they were still in the early stages, but clearly the market is taking this seriously. in gaza go, in nottingham -- in glasgow and nottingham. clearly a cross-u.k. footprint for this business, because they operate in the iberian peninsula as well. intu up by 26% in trade. it is lifting other stocks on the stoxx 600. hammerson is on the rise.
we are moving a little lower. a slightres point to downside to the open in the u.s. the nasdaq points down the most, 1%.n by 2/10 of we may have another day with pressure on tech stocks. now to italy and the controversial budget plans of its populist government, hanging on a view of the economy that could be optimistic. the coalition sees growth at 1.5% in 2020, followed by 1.4% in subsequent years. moreoutlook is far optimistic that other forecasts. as i strained to see the numbers on that chart, it's a fascinating story. the government is making optimistic as options about gdp versus the markets' assumptions. do you think the government is
being too optimistic about the level of growth they can stimulate? >> that is a good case in point of how can asians actually deliver positive outcome. primary budget surplus, the high level of unemployment, it is a textbook case for fiscal stimulus. in that regard, the decision to implement an element of stimulus is not necessarily completely crazy. ifiously the question is, you implement this kind of stimulus, what kind of response will you get from the italian economy? , or you just get a surge will you have a self-sufficient kind of recovery helping italy ?o accelerate growth i think this is a tipping point. the problem in my view is not so much the degree of fiscal stimulus, which is there, which is not complete the out of line
compared to other countries in the eurozone, but much more what kind of measure they will officiate. anna: the eu clearly has numbers and rules, but within those there are other stipulations about what brussels looks for. doesn't matter whether they decide to go ahead with some kind of citizens' income, or whether they decide to invest more in infrastructure? the balance of the two will be important. jean: you are right. this is a crucial debate. aboutbate, i think, is what kind of investment you do with this money. is it something which is going , or is it going to be wasted money? anna: let me show you this chart, the deficit to gdp confirmed that 2.4%.
the deficit has been down compared to gdp, hasn't it, as dictated by european rules, to some extent? i wonder if you give much thought to where the populism story goes from here. brussels a "win" for and brussels gets its way and the markets calm down a little bit, what impact does that have on populist agendas across europe in the medium-term? you look at the broader picture, which i think is quite important for global investors, there is obviously this kind of fatigue of austerity, not just in italy, but also in the u.k., and probably much more importantly for quite a few decades now, we were of the view that what mattered was the size of the cake rather than how you slice the cake. the cake has grown bigger and bigger and the economy has been
growing, so the slice allocated to workers has been shrinking at shrinking. a debate of main street versus wall street, which is not just in the u.k. and italy. anna: i read a headline that italy is reaching out to china because they want the chinese to invest. they have an agreement with china to invest in infrastructure. if you are looking at the levers that the chinese government has at its disposal -- and we saw greece make similar of a jerseys word at the height of their crisis. this is clearly one lever they can pull. jean: this is an opportunity to negotiate with external forces. investment, the ultimate question is always to say whether there is a good reason for investment. that has not always been the case. think there is a lot more
granularity in assessing whether the money spent is going to improve the growth outlook. jean stays with us on the program. as we head to break, let's take a look at one of our top stories, around unilever. we are seeing a bit of a spike up this morning, but over two days, still down by 2.3%. the decision they made today to back away from the signification plan they had, they had announced they would scrap their london headquarters in move to the netherlands. now they have backed away in the face of investor pressure. they would have fallen out the ftse 100, and that had some investors very disappointed. we will talk about this later with colleagues in the netherlands. ♪
>> hardware risk israel. i think the risk is always there , but real manifestations of it that go beyond the hype or the fear that gets generated, those are very important. this will spark a new dialogue. >> this is the fundamental problem, this mismatch of systems. the chinese can exploit their businesses for geopolitical gain, whereas in the u.s., a free market, we cannot. we have to figure out how to solve this. >> it would not make any sense
for china, for the snippets of information they get on some of these companies, to jeopardize their whole local supply chain of what the chinese miracle has been based. that would make no sense. that does not mean it has not happened, but it is not a national program to do that. >> it is a matter of a lot of countries looking for additional data. it is a matter of how you can collect the data and use it to their own benefit. this year, we placed guidelines in regards to what companies we would do business with them were from china, because of some of the concerns expressed here. >> it is about national security and technology. you guys broken interesting story this morning. the science board of the department of defense has made it clear that over the next 10
years, defensive capabilities alone are not going to be enough . we will have to have deterrence to slow down the cyber interference occurring. anna: some of the guests we have had on bloomberg tv reacting to bloomberg's exclusive story on tip china used a tiny in a hack that infiltrated u.s. companies. you can read the full story in bloomberg businessweek. bloomberg colleagues are confident enough in their sourcing. this has had an impact on asian tech names. we saw lenovo with a historic selloff. this is something that we could see through into next week when we are looking at the chinese market reopening. in europe, we are seeing chip suppliers trading lower. we had some pretty good numbers out of samsung, so there was an argument that maybe some of the companies involved in the
samsung supply chain may get higher this morning, but it seems that ship -- the chip story has overridden the samsung numbers. team is still with us. you were no doubt interested in the story yesterday when it broke. it is still having an impact today. to what extent does this peak questions to you about the role china plays in global supply chains? jean: we have had before some issues with equipment where there would be some kind of political agenda . i think from an investment perspective, the opportunity is usually when markets react indiscriminately. the world technology sector in china has been badly hit by this. whereas we know that some industries are extremely
demented -- domestic, also completely separated from any kind of political agenda. also, some companies operating in china have been hit. opportunity is an to react in a broad sense without doing any kind of cherry picking. anna: the research comes later and then some of these moves are unwound. i read a piece of research this morning that said, who is going to buy chinese to make a doctors, that kind of thing? -- chinese; doctors, that kind semiconductors, that kind of thing. does this raise an opportunity for mexico, places that have a better relationship with the united states? jean: on a case-by-case basis,
you will find a few countries where you have a few suppliers that might replace china, but let's not fool ourselves. there is no way you have countries that cannot have the scale of china to replace china in the broad supply chain. i think the american objective is to repatriate domestically some of this activity, not necessarily to change suppliers worldwide. i would be more tempted to selectively invest in companies which are acting in sectors or in business, where you are not truly part of this kind of fight, but where you have seen significant share price correction recently. anna: clear in the emerging markets are you focusing your attention? up ine elections coming brazil this weekend, and we have a far right candidate in the mix. we might not get a decisive result. that could go to a runoff.
political tension in some of these places. where in the emerging markets are you comfortable to invest? i am tempted to invest in domestic companies in china, because a lot of them have been hammered by news we have had recently, and some of them are pretty insensitive to what is happening there. i think this is an area where i would like to put a lot of money at work, an area where we have been putting a lot of money at work within the emerging space. bank we have another big talking about the selloff in china going too far. jeanne, thank you for your thoughts this morning. be joining us on bloomberg radio's daybreak europe live in london. guy johnson and i will be hosting that from the top of the next hour, so tune in. up next here, third time's a charm. the ibi is expected to raise
anna: 30 minutes into the trading day. here are your headlines. giant bows tooods pressure as it scraps plans to close its u.k. headquarters. u.s. 10 years near seven-year high and investors are waiting for numbers. hurricane force could make a dent. expected to raise rates again today after pushing higher in previous two meetings. we are live in mumbai shortly. your -- edwards at bloomberg's european headquarters. let's look at how things are shaping up. a pharmaceutical company in copenhagen up by 3.6%.
we've seen big activity in the real estate space in london and properties in particularly -- in particular. british land, all of those businesses up by more than 2.5%. you up by 1.8%. ydro up by 1.8%. there are intentions and consolidation, up by 3.2%. danske bank down by a .4% with headlines out on interest and our interview making news with past capital requirements. by 8.4% with headlines out on interest and our interview making news with past capital requirements. juliette: the senate heads to a make or break procedural vote as lawmakers had an estimate --
check investigation into allegations of sexual result -- sexual assault. democrats say the white house restricted the inquiry will republicans claimed allegations haven't been corroborated. the senate should not set a fundamentally un-american precedent here. right to basic's fairness does not disappear just because some disagree with his judicial philosophy. house sayshe white chinese cyberattacks on the u.s. validates the u.s. -- the trevor mr. asians emphasis on operations of its own. beijing hacked american computer networks with a microchip. separately to democratic lawmakers showed the risk of chinese espionage to america.
european financial regulators are stepping up plans to over a market meltdown. european central bank had of is,rvision said the ecb quote, ready to help ensure a smooth brexit no matter the outcome of the political negotiations. and she is not alone. the securities commission has called on brussels to make sure that banks don't lose vital access to london's clearinghouses. global news 24 hours a day and that -- an on-air at tictoc on twitter. this is bloomberg. unilever has abandoned plans to consolidate its headquarters in the netherlands saying it will maintain a second base in britain. this comes after mounting opposition from u.k. based investors. the mayor of london says it's great news that unilever has
chosen to keep its headquarters in london and abandon plans to move to rotterdam. despite the government's appalling mishandling of the brexit negotiations, the cap will always be one of the best cities in the country -- in the world to do business. it isn't all about london. bloomberg's european stocks reporter is with us. broke, theriginally question was this or was it not about brexit. the company said it wasn't a lot of people suggested it was. let's talk about why they back down here because u.k.-based shareholders did like this move because it would have lost the position and many index funds would have had to lose their holdings. >> this is a huge victory for british investors. these are major funds protecting this move. some of the biggest british funds said this move was wrong.
the company was trying to consolidate its business but they didn't agree with it. the main reason is they didn't want the shares to tank and decline because of the exit from the ftse 100 index. thought -- anna: you would have thought with the company backing away from the move, the london listing my jump because it the pressure had already been priced in but if you look at london, it's down 0.3% and the dutch are up 0.5% which is a little confusing. massive moves either way. the company said they are still evaluating the next move and are still in favor for consolidation. time, they could do that without leaving take u.k. headquarters which is so important for investors with the ftse 100 presence. another point of concern that i found fascinating is that some investors are concerned about
protectionist measures and protectionist trends in the netherlands. protections from companies for takeover are more aggressive there. in general, when i talked to investors about brexit and the trends, they all say yes, there will be brexit, it will impact the financial markets, not a great way for britain, but they say london remains the capital where free enterprise, where shareholder rights are protected and has the strongest protection in europe overall. anna: i was at the conservative party conference this weekend theresa may clearly trying to turn her back on those controversial, slightly foul language comments boris johnson had made and said the was open for business. make you for joining us. we will see where this takes us. decision day for india. the reserve bank of india is expected to hike interest rates today.
inflation risks from the rupee and oil prices are outweighing worries of a credit crunch. .ith us now is elina ribakova and our reporter from bloomberg economics. i think you've got a slightly non-consensus view here about what the r.b.i. is going to do today. heard lots of investors suggested we will see a 25 basis point hike but you think they will be on hold. why so? >> that's correct. i have a nonconsensus view. they will hold in today's policy meeting. number one, if you look at the inflation project, the last policy meeting in august, inflation has undershot estimations by around 80 to 90 basis points. growth for the june quarter was much higher than projected. underscores my view that
india's potential growth is much higher than the r.b.i. estimates which means we are unlikely to see a demand-side inflationary pressure anytime soon. also we have been concerned about the rising oil prices and the rupee weakness and upside risks to inflation's. you neede same time, to come to counteracting forces taking place. government announced abruptly a 3% each cut in the prices. that should contain some of the upside inflation. also, and interesting thing happening in india. the mystic yield prices are not higheronnected to logistics costs. that is muting some of the inflationary problems in oil prices. anna: let's get another view.
elina.ome to she has a very different view. believes that have taken some measures already, maybe they don't need to hike interest rates. you have a different view. elina: it's much easier to act preemptively rather than change it later. drawinglop markets liquidity, hiking rates, we will have higher oil prices. they're not getting import oil from iran. inflation targeting is about a couple of enterprises. it's not the dramatic fantastic change. past exchange rates and the commodity prices may be higher than some other countries. anna: have already hiked if you talk about getting ahead of the curve. can you argue they have already
done that? it's nonoil, non-gold imports that are stronger. therefore they have to be consistent and have to continue. the measures they have announced so far are very small because their impact in a smaller section that has been growing oil and gold imports. anna: your thoughts on that? transportation freight costs have been contained despite rising diesel prices. you don't think they hire prices are passing through in the government is taking some action, you don't think there's a need as she says to get ahead of inflation dynamics? happening isat is some investors are proposing a rate hike solely to contain the pressure on the rupee. hike sends a rate bearish signal to the economy and that tends to push out
outlooks from indian equities and debts. the defense of the rupee is unlikely to work. noted, if you look at transportation costs, the reform in the transportation sector, it's striving prices lower. recently a study done that says the turnaround times are reduced by 20 to 25% since the production of the goods and services act. additionally, the transport the votingpeded capacity of the truck industry by 20 to 22% which points towards lower transportation costs and may mitigate some of the upside risks to inflation. anna: that's a really important thing to watch. i've been looking at these charts of buying oil in non-dollar currencies and the
rupee, as it falls, it's looking more expensive. withficant concerns nonperforming loans at banks in india. the darling of emerging markets and now one we are critically concerned about. elina: i think there are further risks. there are important structural injuries -- issues in the domestic banking system in the shadow banking system. it's a long-term project. i think that has to continue. it's a protective system but it's opening up and these are coming to the surface. i'm not sure the r.b.i. can do anything about it today. but it's definitely a financial stability concern going forward. anna: thanks to bother you for joining us. -- to both of you for joining us.
that's the indian story, we keep an eye out for that rate decision later on this morning. moving to china, don't forget to join the question of the day on mliv. with the dollar rally die when the chinese come from holiday? what role does the pboc has to play when it comes back? share your thoughts by going to tv . touch.i do get in this is bloomberg. -- that's how you get into touch. this is bloomberg. ♪
anna: welcome back. the europeanrkets: open." on's talk about what's going in italy and the controversial budget plans by its populist government. it's a view of the economy that some say is too optimistic. they ares 1.5% -- seeing 1.5% in 2019 and one point 67 subsequent years which is far rosier than other forecasts. join us now is carsten brzeski -- joining us now is carsten brzeski. give us your out look on in the -- on italy. carsten: they are little bit too optimistic but the italian government says the measures they're going to take next year will be supportive for -- supportive for growth.
therefore cason the plans they put on the table or to some consent extent -- consistent because they say their growth supportive. it may be a bit too high but consistent. anna: the eu would possibly have less of a problem if more was going into infrastructure and investment. the italian government would say given the citizens -- giving the citizens income also boost growth. how much growth do you get out of giving citizens income? the lower paid we tempted to save less than spend more. say it'sthe economists very clear that giving people more money, especially lower incomes, we'll have an impact on growth because they will consume. it will a newly show up in gdp growth numbers. at the same time, investing more in infrastructure and the structural shape of the economy will increase the long-term
potential of the economy. in an ideal world, the italian government would do both. really invest in the long-term potential of the italian economy. aboutlet me ask you market reaction to italy. say it's been overdone we've seen too much negativity on the italian story. you think the market is too quick to jump to conclusions? whenever we see these kind of headlines? carsten: i think they are. the italian deficit or the plans for the topic of the hour, the topic of the week. i don't think the euro will break up unless there's a couple of percentage points or more on the volatility. thing is the government remains cooperative and they are willing to find a compromise with brussels. this is still the case.
it's part of the game compared with brexit. it's a give-and-take but in the end they will find a compromise, they will find a deal and as long as the italian government is committed to staying in the eurozone, all these market reactions we've seen our overdone. how much progress do you expect to see on the reform agenda in europe? one person we spoke to was quite optimistic on what was going to be done on burden sharing. if the process is made, crisis like this might not have such an impact of a michael away more quickly. --you think the populace populist challenge means we won't see progress on that reform? wish your guest was right. i'm a bit more skeptical. i hope i'm wrong. that'sas been done, and
one point. the eurozone is a lot more connected than 10 years ago but a lot more must it done. ruling governments are struggling. they are losing majorities, the political margins are gaining more and more poll and more support. it's getting extremely hard to go out with a pro-european agenda. german government says yes, we are per european. but then you asked the details, are you in favor of a really fully fledged banking units, more transfers, the answers are no. i think this illustrates the current state. skeptical that we won't see any progress on further integration, at least not to the level of the eurozone or the european union. anna: thank you. it's interesting to hear.
thank you very much. joining us from berlin. let's get to our stock of the hour. he used to be caught capital properties. it operates shopping malls across the united kingdom and some in spain. as 37% andmuch currently trading higher by 24% or so. that's after brookfield said it teamed up with shareholders to work on a potential bid for the property company. they are saying take the money. house is faster running out of rope and its current model. -- falling retail rents. this seems to be some expectation that got some advice from analysts that this could be excepted. we could also be seen in reaction to the previous
shorting of this company. another reason what we saw the company go higher. are is the read across we seeing in two other real estate companies in the united kingdom. all of them up by more than 2%. terminal users can interact with all the charts you see. you can browse recent charts and catch up on key analysis for any future projects. up next, battle of the charts. this is bloomberg. ♪
anna: welcome back to the european open. it's time for our battle of the charts. kristine aquino is going to head-to-head with joe mays. i'm looking today at the future of the dollar, especially when china comes back from holidays next week. this is what we are wondering over at the market live action of the day. let's go to happen to the dollar when china comes back? there's a store president for china -- for the dollar to be strengthening. when china wasy, away for the lunar holidays, the dollar was strengthening and then it came back and that move peter it off. we are seeing the dollar strengthened again this week is china was away for holidays. what is going to happen when china comes back? are those offices going to
return? these are all important questions and if you want to find out the answer, make sure you get this chart. anna: christine with the big sell. investing in tech, here's a chart that might be of interest. i'm looking at the market caps on samsung and apple. look how these companies have fared in recent years. samsung had a margin apple back in 2013 and an apple took the lead on samsung. -- earnings that beat estimates and profits over resilient sales of memory chip. perhaps a turning of the tide and samsung regaining some momentum. apple is leading that tech war. i'm genuinely torn. a great story yesterday. i am very torn. i'm going to go with the other option and that's because it is the mliv question of the day.
>> cybersecurity selloff. sales of lenovo slump after china infiltrated almost 30 u.s. companies. 10 year hovered new seven-year highs after investors wait on payroll numbers. the consumer goods giant backs down from a plan to move to the netherlands, bowing to shareholder pressure. hello everyone and welcome to bloomberg surveillance, i'm francine lacqua in london. we have a lot of news, just tryi
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