tv Bloomberg Markets European Open Bloomberg October 12, 2018 2:30am-4:00am EDT
"activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. >> welcome to bloomberg markets. i am anna edwards alongside matt miller in berlin. saw asian stocks recover and continue to rise. u.s. futures showing signs of life. treasury yields ticking higher. u.s. markets open in 30 -- european markets open in 30 minutes time.
clark's -- stocks bounce back. in china, the u.s. treasury department is said to think not not a currency manipulator according to the treasury department but steven mnuchin could issue a different ruling. european start of stock trading. could be a happier friday. if you still underwater are a european investor. the dax, down more than 10%. at treasuries.
waiting for decision around currency manipulation. it seems they are not manipulating. commodities, it looks very green. don't be fooled by what you are seeing. not retracing the losses. the biggest weekly drop since july. expecting weekly numbers to be down. the biggest selloff showing signs of easing. from singapore, good to have you with us. -- put ito context,
into context the rebound. -- only a little bit today. traders taking a breath before the weekend. it means we are a little bit fresher. a majorecide, was this pullback? will global markets follow? i think there are risks to the u.s. market what i expect the overall bull market will continue. overall, we can continue. there has not been a major fundamental shift. a sudden reason for panic. ask, i want to set up our next guest. we are going to go with haslinda amin.
clearly, you are in singapore. why is it important to hear what he has to say? singapore is a trade dependent economy. what is important is they have tightened this year which shows they are not too worried. obviously, they do not feel those risks have arrived. overall, taking the sand when -- sanguine approach. many of their economies can be positive. it is a good sign for asia fundamentally. >> you can check out our blogs.
you can also give a shot at the question of the day. has the dollar peaked? kind of ran to it for safety. let's go over to haslinda amin. us with not only the chairman of the central bank but the deputy prime minister of the nation. >> that is right. emerging markets in focus. engulfedhem have been in this imagined market rout. seeing markets embroiled in this turmoil. what is the reason behind them? moment to theto a 1970's, the 1980's.
morepore and south korea, than 5% of gdp each year career at some point, more than 10% of gdp. look aghast atot that. it was attainable. capital markets, global financial investors had opportunities. what has changed? it is a very fundamental question. marcus focus on narrow metrics of sustainability? case in point, indonesia. argentina, several other countries. here isamental issue not about individual policy weaknesses. system as at the whole has lost its resilience. short-term capital
flows. byntries have responded tightening policy. it is not like the global financial crisis, where you had a major financial crisis that hit everyone at the same time. a recession. this time around, growth is being eroded by still. one country at a time. if you accumulate it, it is a net reduction of growth for both countries and the world economy. u.s.e lucky because the economy is healthy. we will find we do not have other engines. we all have to be concerned about this. >> what policy needs to be adopted. when capital flows in large countries, oro
the mood shifts, lots of money flows into emerging markets, we should not necessarily be cheering. governments have to think hard about what is called macro credential policy. intosure funds are flowing productive investments. happened.ise has imf, together with authorities, when capital flows a risk.tal flows are at it can flow out. investors have a good understanding what is happening. when can it be reversed? we keep moving it. you have to smooth it.
>> how do you assess the risk of -- vulnerability in emerging markets? atwe should be looking whether a country has an open and inviting business environment. look at the real economy fundamentals. the quality of governance. don't look at one narrow metric. if you keep looking at the going totric, there is be growth. >> what is the reason for the volatility in emerging markets? is it dependent on the u.s. dollar? possible alternatives like the yuan? is it a viable option? theou are talking about
composition of trade and investment instruments. is an overdependence but it is going to change. it takes a long time for markets to change. legacy, if youa, talk about 20 years, 30 years, currencies are low in their usage and that is what is happening. fort-term, there is a need dollar liquidity. each time you get financial tremors. this is a serious issue. we had the fed pumping in $500 million of liquidity. strength ofnd, the the global financial safety net, very important. acting in concert, a very
serious issue. we don't yet have the system of coordination, but it can be developed. china, at risk of being called a currency manipulator. what is your take on the perception in the u.s.? you look at the chinese fundamentals, how the currency , it is pretty much in line with fundamentals. fundamentally, it is an economy where you are having gradual liberalization. the currency is being set a market forces. is increasingly going to be a capital exporter. that is the fundamental trend. no longer a capital importer.
people having to buy that rmb. you are becoming an exporter. >> they talked about coming to the global economy. your thoughts about that. cycles never last. stability begets stability. we don't know when, we don't know where it will come from. you have got to be prepared for it. especially outside of the banking sector. >> thank you so much for joining us. also, the chairman of g20.
back to you in london. haslinda amin with us from bali. bringing some of her great interviews over the last 24 hours or so. here is debra mao in hong kong. trump hasu.s., donald said he will not fire fed chair jay powell. he blames and out of control bank for the selloff. he thinks what they are doing is wrong. his attacks are a change from recent white house policy. a white house adviser says trump is just having fun. he has never attacked the fed never interfered with that. he is giving his opinion. it is an informed opinion.
frankly, i think people should listen to what the president is saying. the fed is independent. staff haveasury advised the diminution -- steven mnuchin china is not manipulating the currency. could issue a different finding. it comes as the trump administration to issue a report on foreign currencies. in turkey, the outcome of a court drama could make a decision on interest rates a foregone conclusion. wayling would go a long toward defusing the worst o-matic crisis in decades between the u.s. and its nato ally. it could bring arrested to the -- it islira and
extending its rally into the sixth day. the anonymous buyer of a bank sy artwork that shredded itself is said to be keeping the peace. it will be renamed. and instagram video says he installed a shredder in cory's ever came upe work for auction. bloomberg. anna: thank you very much. the u.k. chancellor says getting a good brexit deal is a vital part of plans.
spent 10 years dealing with a difficult deficit. we will see it start to fall as a share of gdp. that does give us breathing space to support public services while being very clear we will continue to reduce debt. is there risk of a miscalculation? you still have a deficit of 2% of gdp. fall are expecting it to further. time to bringover the deficit down. we have other priorities as well. we have to support public services and invest in britain's future. for a truly prosperous future. to increaseu intend
competitiveness? whether or not there is a deal, there will be repercussions for the u.k.. if there is no deal, there will be a contraction. is atting a good deal vital part. the british future has to be as a highly skilled economy. that means raising our productivity performance. course is we of are behind our principal competitors. that is a reserve we can draw on the key to unlock that. >> you reduce taxes, increase infrastructure spending, could you do that? atthe economy is operating full capacity.
increaseo productivity. as we do that, demand should take care of itself as wages rise. uncertaintytime of because of the brexit negotiations. i have said and will continue to maintain, we will keep an appropriate fiscal reserve so if we can support demand. >> are you comfortable with where the pound is? if there is a deal, you could see an upside. -- we have an independent central bank. as a matter of principle, i don't comment. >> how much would that added?
-- let's talk about the amazon tax. how much would that ad? >> there are a group of businesses generating value added. including consumers in the u.k. do not have a physical presence in the u.k. delivering tax. there has to be a fair distribution. we would prefer to do that through international agreement. i am prepared to look at a u.k. only solution. some of our colleagues are also looking at ways in which they could introduce taxes on the digital economy. chancellor.k.
just over seven minutes away from the start of trading. let's get your stocks to watch. vivendi. covering banks for us as the u.s. earnings start up. , covering -- what is the story on vivendi? tencent music has decided to cause their ipo. that might be an indicator the market is not going to be quite receptive to a music ipo. they are in the process of trying to sell a stake in their music business. to the extent that is an indication of investor appetite, it is not a good thing. a decision in july looks very smart. they decided against an ipo. they are trying to find
strategic investors. part ofl music is a big their business. we will see if there is any pressure this morning. >> banks could be a big story. not just today but threat the next week as well. >> that is right. jpmorgan and citigroup kickoff earnings later today. banks look at how trading revenue of falls. outlook willon the be closely watched. european banks, third-quarter earnings reported later in october. finally, rep us up. >> a report shows they droop in $400 million in new assets. this gives them record numbers. want towhat investors
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anna: less than a minute to go until the start of trading. looks to be a bounce in the equity market. this is the euro-dollar, fairly flat. the oil price motoring higher, up 1.4% on the contract we have on the screen. interesting to note, we are heading for the biggest weekly drop since july. in terms of the stock market reaction in asia, positive, up .5%.. many of the markets showing real positively, but not retracing all that we have lost.
the pound against the dollar, fairly erratic this morning. we listened to chancellor philip hammond speaking earlier about fiscal headroom needed around brexit. we are expecting to see a substantial bounce at the start of friday's trading day. it is an :00 here in london. that means we have the -- 8:00 here in london. that means we have the equity markets opening up. we are expecting to see a considerable bounce. not many individual stocks expected to be on the move. we're expecting to see miners moving higher, commodities stronger. ofk stocks in focus because the u.s. banking seeing. let's get to you. with got a picture of the sectors. it all looks -- we've got pictures of the sectors. it all looks pretty green. matt: we are about to see stocks open and you're going to see all
green across the imap this morning, with the exception of a red slice in consumer staples. with a oneaples sector that did well yesterday. of course it's very defensive, no matter what happens. you still need to buy things like milk and cereal. those stocks continued to do well in a downturn. they get sold off if it's more of a risk on day. it looks like what we may be expecting today. maybe not huge gains across europe. we didn't see gains yesterday in the u.s. we do see positive futures on the s&p 500. but we saw some decent bounces in asia. right now, we're looking at the dac, still has yet to open, but we're looking at gains in london, .5% gains in paris. you are seeing gains across the imap in pretty much every industry group except the one
small slice of consumer staples. any of those pop up? anna: it's an interesting one. it's a market in which the whole thing is bouncing. difficult to pull out the individual stories. this is what we see on the upside. amstrading higher -- trading higher. delivers a broad range of consumer electronics and device manufacturers. adyen also in focus. let's move to the downside. chemicals is a loser, the t-rex a chemical stocks. it had its rating cut at morgan stanley. downgrade for the first time in nine quarters. this is what morgan stanley has been saying in a note. that could be weighing on things. we also see imperial brand moving lower.
the biggest selloff in global equities since february. use futures have gained on the dollar. studied. -- very good to have you with us. talk big picture. do you think what we saw this week was a recognition by equity markets that treasury yields have gotten higher in the united states and something you did to change from an equity perspective? is that what was going on? guest: i think that's been one big factor. to some extent, with known this all year the fed is doing tightening. it is hiking rates. it's surprising how strong the markets have been through all that. i also think the developments between the u.s. and china have also been a factor. we've seen an ancient of negative -- an escalation of negative talks between the u.s. and china. i think all of these have come
together to fall the equity markets to reevaluate optimism. matt: those are precisely the sort of two threads that we've been talking about as the cause of equity slump. was it the china trade war, escalating trade war? or was it, as president trump has suggested, the fed hiking to quickly? i wonder what you think about the possibility of the u.s. naming china a currency manipulator. bloomberg learned the treasury staff recommended to steve mnuchin they don't do that. but if they did, would that be a real problem? do you think equity investors should be concerned with that possibility? guest: absolutely. i think that's a significant escalation. if they did want to call china a currency manipulator, president trump would have done that a year ago. he didn't do that even though he
pledged to do that during his campaign. you have to remember, within the treasury report criteria, china doesn't meet all the criteria to be seen as a currency manipulator. so to move to label them one would be a significant escalation, which would have an effect on markets. anna: i'm trying to find my chart that adds to this conversation. this is around what has been driving weakness in the chinese currency. uan in rate yo differential space to the point of the treasury that maybe this isn't about manipulation of the currency, just reflecting a difference in yield. guest: absolutely. we've seen this shift in rate differentials. there's general dollar strength especially against em countries. it's natural for the renminbi to go up. the chinese currency has been dropping. at one point it was over 10%,
now it's like 2%. there's been a significant drop in the currency, as well. matt: let me go ahead and just point out what's going on and markets here. we're five minutes in and it looks like we're going to see a bounce from asia. we're seeing a bounce. the dac is finally open. we're up in germany about 1.33%. they doesn't help that much because the german market has been decimated this year, down by .1%. you can see the other european markets aren't doing much better. the ftse is down 9% so far this year. when we've had this trouble, you are focused in so closely on fixed income and currencies. it's been the dollar that everybody has run for it, safe haven assets. that doesn't seem to have happened over the past couple of
days during this equities slump. is it over? this is our mliv question of the day. do you think the dollar has peaked? that, inll, i think terms of the past week, what we have seen is that fx and em haven't brought the brunt of the risk aversion we've seen over the past week. the markets have done well throughout volatilities this year. equities and credits have taken the brunt. i think most of the action will be found in equities and credit. too early to say whether the dollar has hit its peak. i do think we're in a dollar downtrend, but it's too early to say whether we fit a peek for this year. a currency like the japanese yen will outperform the dollar. you probably have seen a peek at in the dollar against japanese yen. anna: why is that? is that because we are going to be back to the traditional havens? we saw money going into the yen.
is that because we're going to get more nervous, more risk-averse? or is it something that will deteriorate? guest: combination of both. seeing a return to traditional safe haven markets. there's been a rise in oil prices. increase in oil prices are exacerbating risk aversion, if anything. i would also point out the one thing we've neglected in our conversations, yields will be rising. jumped 15 basis points. that's important. japan is one of the larger supporters of risk assets around the world. there's something unique to japan that's going to support the currency. matt: i wonder where japanese investors go then when they catch out of jgb's or when international investors cash out of jgb's. where does that money flow? guest: that's a very good question. in the past, they've got to europe.
with all the issues in europe, whether italy orioles going up, in the end they might go back home and invest in domestic markets. longer terms, yields are looking fairly attractive. i think they'll start bringing their money home, even into domestic japanese stocks. anna: thank you very much, head of research at emea. up next, we'll bring you stocks on the move, including asml as intel declares a stake. will it be another strong day for the chipmakers? this is bloomberg. ♪
matt: welcome back to bloomberg markets. this is the european open on a friday that you can celebrate if your long equities. celebrate is a strong word. a little bit of a bounce in the markets after the slump in the last couple of days, couple of weeks really. we see the ftse getting .4%, continental indexes up 1% or more. let's get into the individual stocks stories and these markets. for that, we go to annmarie hordern. annmarie: quite a u-turn for asml if you compare to what they were doing yesterday. semiconductors and chip conductors -- chipmakers down the board.
reports a 3%tel holding in the company, according to dutch filings. upside, rose the highest in almost a year. core metals gained today. and then shire up .6%. it gets a broad request from the regulators, one probe into takata's probe. the european union doesn't have specific concerns. anna: thanks very much. the trajectory of turkey's economy and the country's relationship with the u.s. hang precariously on a court case happening right now. if speculations turn out to be correct, andrew brunson is freed, the new era is likely to appreciate further. we're waiting for live images of the court case. we'll bring those to you an
update you on any developments with regards to turkey. the head of fixed income research from emea is still with us here. we have the live pictures coming to us from turkey. 's trial continues. we wait -- his trial continues. we wait to see the verdict. there's more to the turkey story than the face of the pastor, but is the pastor that triggered the sanctions. guest: certainly true. to some extent, the lira is going to price in the release. we've seen a big move overnight and surprising the turkish lira has been a strong performer this week even though equities have tumbled around the world. a lot of this news has been priced in. you might see a moderate bounce, but i think most of it has been priced in. we'll have to look further out to sea with the central bank is going to do. matt: if they release him,
right, if they find that is a y're going tor hold him. we've seen a bounce in the lira. check out this chart. obviously when the lira is weakening, it appreciates. but when we see it come down and strengthening, there's already been some decent strengths over the past few, as you say, because a release is priced in. if it doesn't happen, what do we see? guest: well, i think if we don't see a release, that would be a big setback for the turkish lira. there will be a selloff. we'll start to return to what we saw earlier this week. fixed level back higher in dollar turkey. it sets a bad path for turkey-u.s. relations. with also have to deal with how turkey is going to deal with
sanctions on iranian oil and turkey agreeing to import iranian oil or not. this sets off turkey and quite a bad way if the release wasn't to happen. anna: underlying economy affected by the sanctions. inflation running up more than 24% or so. your thoughts on how quickly that can be brought back down. guest: i think the key thing there is we need action in the central bank. more action, real rates to go up. anna: they did surprise with some. haslinda: they did surprise with some, that we've had much higher inflation prince. we need to tcm be to raise much more to push up real rates. the move from the central bank is they are focusing so much on inflation rates and said they are trying to look at where domestic growth is going in the economy. so far, the sense from the central bank is less likely to
hike as much as the market would want. unless they do, this would be problematic for the currency. matt: they do have a current account surplus. this is a striking chart hillary put together. i was amazed to see how poor their budgetary performance has been until now. the chart goes back to 1999. also what an amazing turnaround we've seen here. does this mean that erdogan, take brunson out of the picture, and a 60,000 people or so he's arrested since that many revolution, does this mean that the turkish government has gotten the economy act in group? -- back in grip? guest: i think this is a response to the currency weakness and slowdown in the economy. the last --een in has been temporary. you need several months of current account services.
if you have a 30-40% currency valuation, you should expect turnaround in those numbers. that doesn't tell you the fundamentals are back on track. you need to see lower inflation and some kind of turnaround and growth, as well. and that is forthcoming just now. anna: thank you very much. some stocks had their worst day in history. we'll take a look at what's moving the markets in a rebound. how far does history go back? this is bloomberg. ♪
>> escalation of trade tensions could reduce gdp by almost 1% over the next two years. clearly, we need to de-escalate this dispute. >> the biggest risk of the economy is of course the trade war. for latin america, maybe it's capitalist outflows. if we get an orderly process because they are increasing rates and capital will move, i will be very satisfied. >> indeed, the volatility has increased. but this, from my point of view, is not very surprising.
because on the monetary policy side, we are in the course of normalization of monetary policy. and that implies that the market find a new equivalent. >> i will not go into the medical diagnostics, but i can say one thing. number one, the fed is doing the right thing. anna: jacob frenkel says the fed is doing the right thing. that was a selection of voices coming to us from the imf world bank meetings in indonesia. welcome back to the european open. look at the themes that are moving markets this morning. factors to watch. we bring in the expertise of dani burger. dani: what a week it's been in factors. i want to dive into the winners. is the mirror image from the beginning of the week. the most volatile shares gaining 1% this morning.
this is a big move for the cohort. a lot of health care companies like and view were also seeing growth and momentum. these chairs have been punished earlier in the week. a pretty big turnaround, investors coming in and buying the debt. -- buying the dip. we also have the downside, basically also the mirror opposite of last week. values towards the bottom. dividends, some of these safer place got a bid. i want to take you into the charts with momentum, courtesy of our queen of charts, hillary. this is one of the most popular u.s. equity etf's. this has attracted $400 billion in assets this year. it logged its worst daily performance in the fund's record, nearly a 2% decline. it's done well through its history. as a reminder of how volatile factors have become to know what you've owned. anna, matt?
matt: thanks very much, fantastic. really and historical day from momentum etf's, just getting absolutely crushed. the head of fixed income research at emea at nomura is still with us. i wonder how you view etf's. it's been such a burgeoning industry in the u.s. for so long but now here in europe, really getting a foothold. does this help or hurt the market, the growth of etf's? guest: well, i think whenever you see drops in a particular market, that doesn't help popularity. most look at recent returns despite telling you they shouldn't. the popularity. i do think in the long run, it is good to have more volatility in the funds for people to liquidity the true properties of these markets.
one of the bigger issues we're facing at the moment, people may misunderstand how much liquidities there are. when you have a bad market, you tend to see outsized moves. i think longer terms, it's healthy. we're also seeing in these performances. in the short-term, the popularity will go down. anna: to you see evidence in the last couple of days of the machine taking over, rather than active decisions to sell program trades, selling what they were selling? guest: absolutely. there was definitely evidence of that happening. certainly when you start to see large events, volatility events, you see liquidation and portfolios. also, there's been outflows. so they have to liquidate, which lowers prices. it's the spiraling effect you tend to see. matt: nonetheless, i mean
volatility, we tend to blow out of proportion the amount of volatility we've seen recently because we're so used to incredibly low volatility. if i look at the vix and max about back to 1999, right now we're trading at 91, 2001 was insane. it's not really that bad, is it? guest: no, i think from a longer-term perspective, the level of volatility is still quite low. the issue here is that investors have come to very low volatility for many years now. as a result, they're over invested in those asset classes. in recent years, you go along u.s. equities, you have sharp ratios or returns above two or three. the smoothness of the gains you've had are incredibly unusual. the question are people over allocated? even though we're at low levels
matt: 30 minutes into the trading day. let's get a check of your top headlines. european stocks bounce back after the worst selloff since february. can today's rally, if you want to call it that, be sustained? is china a currency manipulator? the u.s. treasury department is tussling with. the staff recommends the secretary say no. steve mnuchin could still issue a different ruling. and it's that time again. jpmorgan, citigroup, and wells fargo kick off the earnings season. european banks gain at the open,
but less than other sectors. we'll keep an eye on what's going on inside this little bounce for you. welcome to bloomberg markets, the european open. i'm matt miller in berlin alongside alan edwards -- anna edwards in london. anna: let's talk about the individual stocks this morning. this is the upside. this is the day it's about the bigger picture. we've seen selling for two days i know a bounce and equity markets. this is a dutch-based biotech business. one broker bullish on the stocks reassessing that stock and giving a bullish assessment, up 6.4%. 5.1%,r broker comment, up up to a hold. previously at a sell rating. man group also 4.5%. this one across the u.k.. they announced their numbers this morning. let's move to the downside.
a couple of interesting ones. imperial brand not having a great day, and down 2.7% on the stoxx 600. theirrex -- vittrex, rating has been cut by morgan stanley. also telecom moving lower. let's get a bloomberg first word news update with debra mao from hong kong. u.s., donald trump said he won't fire jay powell but repeated his criticism of his policy. "out of control central bank for the stock selloff." he also says he knows monetary policy better than powell and his team and he thinks his policy is wrong. advisor larry kudlow says trump is just having fun. never attacked, the fed's plan or strategy.
he has never interfered with that. he is giving his opinion. it's an informed opinion. and frankly, i think people should listen to what the president is saying. but the fed is independent. we've always said that. debra: u.s. treasury department staff advised steven mnuchin china isn't manipulating the yuan. the conclusion is accepted by the secretary would avert a trade war. that said, mnuchin still could issue a different finding after the trump administration prepares to issue a report on foreign currencies. in turkey, the outcome of a court drama could make a decision on interest rates two weeks from now a foregone conclusion. a ruling to let andrew brunson tok free would go along way
defusing the worst diplomatic crisis in decades twin the u.s. and its nato ally. for the central bank could bring respite to the lira and reduce chances of a rate hike a month after the benchmark was hosted to 24%. the uk's chancellor has underlined the importance of striking in agreement over the leaving that eu. he spoke to bloomberg in bali. deal is partgood of our economic plan for the future. britain's future has to be a skilled economy. it cannot be any other way. that means raising productivity performance. our big challenge is productivity. the good news is we are quite a way behind our fiscal competitors, and that's a reserve we can draw on to fuel economic growth. debra: and the unanimous buyer of a banks the artwork that
shredded itself is said to be keeping the peace. the auction house said the buyer is a female collector from europe and the 2006 balloon will be renamed love is in the been to reflect its changed state. he said he installed a shredder in the frame encased the work ever came up for auction. 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. anna and matt? matt: debra, thanks very much. earlier in the show, we interviewed tar mancha and were not known and we incorrectly identified him. we gave him a little bit of a promotion to lead the entire country. we just want to clarify his official position is deputy prime minister, and he is of course the central bank chairman. would like to apologize for that
error. hopefully no feelings were hurt. let's get back to the imf and world bank meetings. kathleen hays is there for us. she's been covering it from the get-go. general buzz there? is it all about donald trump attacking his own federal reserve? kathleen: matt, let's get right to our guest because i think he's got a lot more about what the buzz is. when i tell you who he is, you're going to understand. josh joins me now. is the treasurer of australia. he's in his job five weeks now. i bet you're happy to be at this meeting. you said you had an interesting conversation with steve mnuchin. australia, trade is all about trade. what does he have to say about that? josh: nice to be with you.
certainly we are and importing country. we have the fifth most traded currency in the world. and we have a real interest in a free, open, and rules-based trading system. i had a great conversation with the u.s. treasury secretary. he knows how exposed australia is. he knows china is our number one trading partner and the u.s. is our number one investor. i made it very clear to him and all the meetings i've had, we need to recall his prevail. we don't want to see an escalation in trade tensions between the united states and china. and we want to see the wto and be the preeminent forum for resolving trade disputes. kathleen: you mentioned the wto. as soon as the trump team launched its complaint at the wto over intellectual property, japan and the eu jumps right in.
clearly, this is not just a u.s. complaint. how crucial is that to sort of solving this puzzle? josh: it's one with the g20 plays a constructive role. that's something were talking to at the meeting. at the end of the day, free trade means more jobs, more investment. and free trade means higher economic growth. that's the story of the world. trade volumes are up. we see new partnerships, new agreements like the transpacific partnership. kathleen: how big a threat to australia's economy is this if cooler heads don't prevail immediately and this continues and escalates? what is the risk? josh: we haven't seen a large macro economic impact of trade tensions. it's been confined to about 2% of world trade. clearly is in no one's interest
for that to expand. the australian economy is growing strongly, has good fundamentals, and has good momentum. we grow at 3.4% through the year. and that is higher than any g7 country. that's higher than the average of 2.5%. we have a aaa credit rating from all three rating agencies. released thet lowest budget deficit in a decade and unemployment, at its lows level in six years. the australian economy is strong and will continue to be strong. the global economy is strong, 3.5% real growth. that's a good number. we can put that at risk with increasing trade tensions. kathleen: one of the topics of discussions has been emerging markets and federal rate hikes. it's maybe a,
silver affect a welcome one because of the dollar weakens. the dollar strengthens and the aussie dollar weakens, that's good for australia. would you welcome a weaker aussie dollar? josh: we have a floating dollar. it's at parity with the u.s. dollar, now around $.70. it's gone lower in the past. the dollar will be what it is. we as the government don't seek to impose on the movement of the dollar, and monetary policy is run by the reserve bank. we have a cash rate which is pretty stable at 1.5% for some time. what we are focused on at this meeting is if the u.s. dollar appreciates, then there are emerging economies which will see the cost of servicing their debt, u.s. dollar denominated debt, go up.
we'll also see capital outflows from some of those economies into the u.s. as they chase higher bond yields. than some of the things we need to watch out for, and we're also watching the argentinian economy because we want to see those challenges contained. kathleen: when you say it's something we have to watch -- josh: globally. kathleen: how about the federal reserve? josh: it's not to me to give advice to the federal reserve or the american government. we have a wonderful relationship with the u.s. and we do acknowledge concerns. i said that publicly. what we want to see is continued growth in the economy. we want to see the g20 play an important role in the financial reform agenda as it's done in the past. and australia sits at the top table as the third-largest economy in the world. we're happy to play our part.
kathleen: quick final question. i know you have a bilateral coming up with the japan finance minister. what do you expect to discuss with them? josh: they're a key trading partner for australia and strategic partner and friend. i'll just take the temperature on what the minister is seeing in the global economy. my view of that volatility is that you'll see epson downs. -- ups and downs. the markets is digesting the trade tensions. let's keep our head. let's be reassured that the australian economy is strong, that the global economy is strong, and that a we will have learned from the global financial crisis and as a result, our financial system is more resilient than it was a decade ago. kathleen: i would say you've hit the ground running.
thank you for joining us. josh freudenberg is the treasurer of australia joining us on bloomberg television as we continue our coverage of the international monetary world bank. back to you. therekathleen joining us from bali. interviewed -- hisncorrectly identified position. he is the gevity prime minister and bank chairman. we'd like to apologize for this error. have a look at the moves in tencent today. the share price in today's session up 7.7%. what a change that is from what we've deviously seen. [no audio]ech mobile
year, down very bad 10 straight sessions. our colleagues, before we saw this activity where the stock is bouncing, collies were asking on bloomberg, is it time to catch the falling night? seems the answer is yes because this has been an incredibly bad year tencent, the record-breaking selloff has been getting worse until thursday. now we are seeing a change in that. fascinating story. up next, we bring you the stock movers this morning. . heading $114 billion this is bloomberg. ♪
matt: welcome back to bloomberg markets. this is the european open 46 minutes into the session on a day we're seeing a bit of a bounce in the indexes after massive slumps globally, biggest since february. take a look at the mid-cap movers. for that we go back to annmarie hordern. annmarie: let's start with one of the biggest winners on the stoxx 600 this morning. [no audio] they lived asset to a record for the group. they rose to $114 billion.
they also have plans to incorporate a new holding company enters a. zalando also on the upside. finally, victrex to the downside. they lower their price target. morgan stanley was talking about the china demand critical for chemical companies. a positive picture than the last couple of years. matt: thanks very much for that. germany made its trading debut in frankfurt, listing expected to generate 4 billion euros from -- valuing the maker of truck and trains of 13 billion euros total. joining us is bloomberg's markets reporter. jp, how does the first price quote compared to the ipo price? how is sentiment in general right now? it took longer than the
plan to get the first price this year, 80 euros and $.10. right now they are trading at 80.60 euros. not very exciting, but a solid opener. anna: we seem to be seeing a few ipo's out of germany. a lot of talk about whether ipo's might be delayed and yet we see them coming. guest: that's true. the equity market is in an advanced cycle and some of the companies are seeing the door slowly closing going into the market and getting investors intention and money. that's why some of them are pushing ahead even though the market environment is currently not the perfect thing for going public. matt: in that case, how does the pipeline look? were there a lot of companies lined up for ipo's that have shelled their planes? what's the story?
guest: yeah, i mean we have this ongoing theme of bigger companies de-merging some of their units. we seen that earlier with the asset manager of deutsche bank, deeded u.s., -- dws, going public. the automotive sector is in focus with daimler and bringing their truck business to the exchanges. that might be coming up next. deutschehave news that will meet with a small insurance company, might consider going public in november. it would be the first intertec in europe. anna: thank you, jeffrey bernard, bloomberg's market reporter. bloomberg terminal users and interact with the charts on bloomberg tv. go to gtv . best the function to put into your bloomberg. catch up on key analysis.
with matt miller. matt has been keeping is waiting with his chart. let's go to him first now. matt: i'll go ahead. i have a chart, gdp #3926. what this shows is financial conditions tightening and is divided between the u.s. financial conditions in white, the bloomberg index, and world financial conditions and yellow. you can see both have deteriorated, which means financial conditions are tightening. what i think is interesting is that the u.s., which is in the rate increased cycle, back to normalization more than any other central bank in the world. still has the loosest financial conditions compared to the whole globe. so as they tighten, that number will decline and as the fed continues to increase rates, financial rates continued to tighten. this is one of the main reasons
for the stock selloff. does it continue to go down or turn around? anna: thank you very much. dani: i'm looking at what sellers have been in the market. this is the of sales versus down. you can see in the yellow, this is the moving average trending down. you can see the great any -- gray the need. more sellers and buyers. at one point yesterday, there were more sellers than buyers since the flash crash. this is a sign we have panicked selling and the market and there might be automated selling, as well. that might be why we're seeing a rebound. anna: i'm going to go with matt this morning, not just because picking my coanchor would be a good move. but i like the chart in the intellects partners. i was talking to one of our chart producers about the chart, so i do like that one. but dani, thank you very much as
well. you can use all of these charts on gtv . it's the place to go to for that. matt: let's take a look now at how the markets are doing 55 minutes into the trading day. we saw some big gains at the start and we haven't seen those decline. .1% -- .01%. up but keep in mind how bad it's been, the worst global route for equities since february. indexes like the dax are still down 10% year to date. this little bounce isn't going to do much to help you if you're looking at your statements for the last nine or 10 months. stay with bloomberg television. european commission vice president is going to join us after 12:00 p.m. u.k. time. at some point after lunch, he will come on and definitely an interview you don't want to miss. is a man with places to go.
francine: global stocks recover after today route. is china a currency manipulator? the treasury department is said to think not, but steven mnuchin can take otherwise. we talk trade war, global growth, and conditions with the finance minister of new zealand. ♪ francine: welcome to bloomberg surveillance. i'm francine lacqua in london. getting news out of the iea, cutting oil demand forecast. still seeing prices