Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20171123

Welcome to bloomberg daybreak europe. Right here in the city of london, i manus cranny. I happy thanksgiving for any of our viewers who are tuning in late at night. The United States of america, your markets are closed, have another glass. When it comes to the steelmakers of the world, this is the be. Of 172ed operations billion euros. 1. 7 billion euros. Out to 1. 2. Comes earlierounced a merger this year, taking steps to combine the european still business with the regions secondlargest producer. Says itest dealmaker expects the rebate to continue into next year. Thats the question the markets i dividend up . 15 a share. They are riding that Steel Recovery like a bronco. We will have a conversation with the man who runs it, heinrich heise and your joins me just after 7 00 a. M. Just how bullish is he . We will face a squeeze in terms of that market going into next year. What that are way to start your day been a look at the global Steel Industry and what it is producing . Its a personification of global recovery. Global production on the far righthand side, 145 point three metric tons. China produced almost half of that amount. India,roduced 9 million, just under 9 million, but china is carving those chinese exports. What impact will that have on the marketplace . Will have that conversation a little bit later on. How does the world of this morning . Japan is on vacation. They like a little bit of thanksgiving as well. Excluding japan, because japan is on vacation. You have a dovish fed. Several policymakers concerned about the soft inflation data. Ahead, aseng charging sixday winning streak. The price of steel at a sixyear high. Youre looking at the dollar, i love the line this morning that the dollar, the fed at insult to the dollar injuries. Won, ther korean korean won bounced higher, beating all analyst estimates, the most bullish forecasts, we just come back from that in the quarter. Is this synchronized growth story priced into the currency . You have brent trading at 63. 16. An offsite before the big on site. Were talking about opec ministers meeting ahead of the opec ministry in b r. Inventories dropped by just under 1. 9 Million Barrels yesterday in the United States. Heading to bolivia and they need to deliver the cuts. Markets, how can you start any better than with hot roast beef . Philip hammonds brought budget has been broadly welcomed by members of the ruling conservative party. While Prime Minister theresa mays future remains uncertain, the chancellor appears to have won himself a reprieve from his colleagues. He came under attack from his own party both for his unintended gap and is pessimistic approach to the divorce from the european union. Zimbabwes incoming president told thousands of supporters that the nation is witnessing a new unfolding democracy. In his first beach since Robert Mcgarvey step down as leader, he thanked the army forces for taking control of the country after he was fired over allegations he was sponsoring a coup. The jpmorgan ceo, jamie dimon, has said he doesnt think President Trump will win another term in office. Speaking at the Economic Club of chicago, he said as long as the democrats field what they call a reasonable candidate in 20 20, they will lose. I think we should get rid of carried interest, deferrals for head fronds hedge funds, but whatever you do, do not have an uncompetitive tax system in a very competitive world. Mistake for america. And to confuse it, i think it is a huge error. And mark cuban has a question for donald trump. He wants to know if the president is aware of how big an impact alibaba has had on the u. S. Stock market. He tweeted, did you realize that 5 of the increase in stock billion ine, 250 7. 5 times are rough the trade deficit with china has gone to one Chinese Company . Alibabas u. S. Listed shares since theed to 190 2014 ipo. There has been no response from the white house. Turkeys Prime Minister has urged banks to reduce Interest Rates and said his countrys economy has been improving, despite the challenges it has faced. Speaking at a bloomberg event and istanbul. Despite all these hurdles, our economy has been improving. These obviously disturbed circles keep writing terrible stories about the turkish economy. The turkish economy is strong, well rooted, solid, a resistance against shocks. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. Lets check in on the markets in asia with david inglis. About whatre we talk were tracking in the asiapacific, lets give you a sense of the broader picture. , but whenday of gains you look at the gains, its close to record now. Up about 3 . At some point, the upper momentum has slowed in the last three days. We went from 1 to what were. Eeing of about. 10 the other thing i want to point out, the fact that were getting another leg lower on the u. S. Dollar. At some point, a lot of markets due to the negative strength of their own currency. Atsome point a quick look some of the news we are following, chinas largest aluminum producer leading the way higher across the metals producers on the chinese mainland. We looking at the reasons why the long story short, the stock has underperformed. The stock in particular has been the underperformer over the last month or so. Terminal is the that the chinese insurer has been told based on reports to lower its stake in a lot of these banks here. On the prospect of better relations between south korea and the chinese. Manus david, thank you very much. Japan is on thanksgiving holiday and the u. S. Is on thanksgiving holiday. Fedt yellen is the only official expressing more doubt about inflation moving higher. A divide between policymakers over inflation and the policy path. Kathleen hays has more. On tuesday, fed chair janet yellen warned of the dangers of low inflation, even as she continues to bet it will eventually move higher. One day later the minutes of the fed november meeting shows a deepening divide among policy makers over the wisdom of hiking rates when inflation remains weak. In london is at a 16 year low is the rub. Defense key inflation gauges of 1. 3 , far from the 2 target. The fed minute show the general consensus for december rate hike as many officials agreed another would be warranted as long as mediumtermged the outlook. Several fed officials want to see signs inflation is actually moving higher if you even want to see inflation on an upward path before raising rates again. But they can hike three times next year as forecast said it would last september. What does it mean for jay powell as he gets ready to take overs fed chair early next year . It will be up to him to solve the deep inflation conundrum that janet yellen leaves behind. Kathleen hays, boomer, new york. Manus joining me now is jeremy stretch. Welcome to the show. There is a deepening divide, the few who want to see inflation chose a white of its teeth first of all, and several who i suppose want to see concern about the lack of pickup. Its the perennial obsession of the market and has become a little bit lower. With you be in the camp of several who are concerned about signs that prices are beginning to roll over a little bit . There are reasons to be somewhat concerned. A number of these fed officials are expressing those fears that inflation is not going to recover. It comes back to that perennial question. Its the ageold question, a number of Central Banks are wrestling with this particular conundrum. , whether weto see look at unemployment rates or labor market concentration, yet were not seeing a commensurate increase in wages. That is causing severe consternation and thats what were not seeing Inflation Expectations increasing in a way you would normally expect it to. Simply, do you believe when you talk about this, do you and your colleagues say we believe the phillips curve is broken . Jeremy i think the angle of inclined has diminished substantially. It is the yes and no answer. It is still in play, but we are seeing a much flatter relationship. In the current environment it seems a kind of spike in inflation pressures unless you see an uptick in wages which seems hard to countenance. And in that context, we are cautious. For moderate monetary tightening, but not from the context of the u. S. Dollar, that will be sufficient to drive the dollar higher in the year ahead. Manus i think youre saying you see the fed hike in at least twice in 2018. Sin december through to december. He say thats not going to be enough. A little bit of a renaissance in the dollar in the past three months. This is the bloomberg dollar index. Are you part of the exodus in the dollar at the moment . Jeremy i think so. U. S. Nk we will see the dollar continuing the trend and breaking through that 100 Day Moving Average. Renaissance from midseptember. It was predicated on the assumption we would see a fiscal package that could imply that the growth trajectory would be higher, but now we are getting to a scenario where we are may be a deal on fiscal measures, but we will gdp, notonly add. 2 to a substantial game changer. The fed will still be thinking about hiking rates but markets will be increasing increasingly in mind of what is happening elsewhere. Will be more banks important going forward. Me,s the thing that struck i wrote down bubbles with a lot of exclamation marks. Of potential buildup imbalances, adding a sharp reversal in asset prices could hurt the economy. On the prospect of financial imbalances for quite some time. , in a its rather ironic sense they are effectively blaming themselves. In that context, you could argue that we go back to 2015 in the Federal Reserve was rather slow in stopping the cycle. We go back to the summer of 2015 when we expected the fed to start the hiking process and go back. D reasons to concern about events in china, so you can argue that the fed have been a little slow in the process. Up until 2017, we only seen two hikes, both in december. Its almost acknowledgment that the Federal Reserve could and should move a little faster and prevent some of the explosion of the financial markets. Manus inflation has not come in yet. Jeremy but its one those classic truisms that if you wait until the event happens, i think it is too late. In the context that the u. S. , when you think about the growth economicy, the current upswing has been running for about 100 months. The third longest economic expansion in u. S. History, and yet this is the normal rate we are now seeing from the fed. You can argue there is a disconnect the between the duration of recovery and the pace of the fed tightening process. Manus we have a lot more to get through. Work,re traveling to were live on every device you have in your car, in your hand, and in your home. Tune into the Bloomberg Radio show. Coming up, the u. K. Chancellors big moment is overshadowed by a downgrade on britains economic outlook. Philip hammond went over his critics . All eyes on Angela Merkels opponent is senior figures push their leader to consider another grand coalition. This is bloomberg. , the a shot of singapore msci asiapacific japan is closed and the u. S. Nice stasis close obviously for thanksgiving. Japan, we have a number of protagonist for this rally. Several policymakers are concerned about soft inflation in the United States. Still prices are up. ,hats get the business flash Edward Ludlow is standing by. Uber is facing at least three probes in europe following revelation the cap quite for more than year after hackers stole vast amounts of personal data about customers and drivers. Said theyction chief opened a probe into the obvious lack of Adequate Security measures. Privacy watchdog and a British Agency said the ride hailing firm is in their crosshairs. Facebook has said it will show people which russian propaganda pages are counts they have followed and liked on the social network. The move comes in response to a request from congress to address manipulation and meddling during the 2016 president ial election. The tool will appear by the end of the year in facebooks Online Support center. An early investor in facebook sold 53 of its stake in the social Media Company this week. The member of the facebook board shares. Almost 161,000 they spoke stocks surged this year adding 25 billion to cofounder Mark Zuckerberg fortune, making him the worlds fourth richest person. Thats your Bloomberg Business flash. Philipu. K. Chancellor hammonds been broadly welcomed by the members of the ruling conservative party. Prime minister theresa mays future remains uncertain. The chancellor appears to have one himself a reprieve from his overague, even if he won his critics. He stands by his gloomy forecast for the british economy. Today they revised down the ballot for productivity growth and gdp growth across the. Orecast period they now expect to see gdp growth 1. 5 in 2017, 1. 4 in 2018, 1. 3 in 2019 and 2020. Before picking back up to 1. 5 2022. Nally 1. 6 in delivered doom and gloom british doubt in british parliament, jeremy stretch, lets just put it into graphical form, the downgrade that the chancellor personified. If we look back to where we were in march of this year and how significant the drop is. You focus in to 2020. Jeremy if you look at that chart, you can see the differential between where we were in spring and now. These are independent forecasts, the largest differential is in 2020. This is the first year in the postbrexit scenario if we are assuming the Brexit Process continues under its current format. It underlines the structural difficulties the u. K. Economy is facing. Its a very damaging and worrying scenario that the u. K. Is growing at such a slow pace, when you consider we are seeing a Global Growth scenario thats looking relatively robust. As an open trading economy, you wouldve hoped or assumed that the u. K. Could be part of that and upgrade rather than downgrade. What does it mean for the bank of england . Jeremy we have already seen the bank of england revised down there trend rates of growth. Manus those numbers were worse than the bank of england. Jeremy they are. In a sense, when you look at projections,articularly the 1920 period those numbers are below the rise of that trend that tatian for the bank of england. Doesntcontext, it suggest there will be particular pressure on capacity. That suggest the bank of england has that opportunity to remain relatively relaxed. With clearly witnessed that in the post reefing assumptions from the bank of england after the rate hikes this month, but they wont be moving anytime soon. It does suggest that inertia will be the primary factor for the bank of england. Manus this is the chart associated with that story. There is going to be a great deal of handwringing between now and december 21 what we go to have this meeting excuse me, december 1415. I have heard this said before, its a moderately binary outcome for starting. Give me your upper and lower bandwidth. It really depends on what the result is from that summit. Binary reaction is very much a function of that. Looking at the dynamics against the u. S. Dollar or the euro, if are going to see some move toward discussion of trade, that will reduce the fear of that exit, and we will see the value starting to appreciate and we could see a move up in terms of sterling against the u. S. Dollar. On the flipside, you can say the process is being pushed back into the long grass, we could see starting back toward the 130 level. Its very much a binary action. Manus jeremy, thank you very much. Much more, next. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Manus its 2 30 in the afternoon in tokyo. What a Beautiful Day it is there. Talking about volatility, is sending ang started, warning signal that this rates this weeks plunge has father to run. 3000 at a time on louis the 13th cognac, or you more of a scotch person . The Growth Outlook for the full year. They said operating profit came in at 134 million euros. 136market at estimated million euros. They are going for the more u. S. ,ive variations, china, singapore and japan they told us were doing a little bit better. The first half operating profit rose by 11. 8 versus an estimate of 9. 9 . The fullyear outlook is maintained in terms of operating profitability and growth and margins for the first half. How it opens. Their opening a retail store in beijing. 3000 for a bottle of cognac, that would be good. This is what you need to think about, bond and equity markets closed in the u. S. And japan for thanksgiving. The turkeys are now beyond nervous. Theres also an Interest Rate decision coming through from south africa and kenya. Japanese markets closed so im looking at the msci asiapacific next. Modest gains but flat overall. A mixed picture of the industry group, and even split between red and green. Itsid see the index touched decade high earlier with material and Energy Stocks leading the gains after the jumps saw in crude in yesterdays session. You were talking about turkey, this chart asks, will this turkey fly . More of a nosedive that anything. We saw it drop. 7 or. 8 percent yesterday. Several officials showing concerns around inflation even though the december rate hike seems to be in the cards. The bloomberg dollar index reaching its 100 Day Moving Average, dropping the most since march. We saw some broadbased dollar weakness yesterday, down against all its peers and euro strength continuing in todays session. At its highest since november 5 been and it has managed to break through the 55 Day Moving Average which it failed to hold above since the end of september. Manus thank you very much for that roundup. Thats get a little bit more in germany. Pushing tores consider another coalition with angela merkel. They argue their party could with a we can transfer and avoid the likelihood of further punishment but they remain dead set against repeating the grand coalition. Matt miller is back in berlin. Do you really see schulz rolling over on that . A grand bargain for a grand coalition . Matt problem is that i can see him rolling over on this. That could be a problem for the voters as well. Some of the members against the ideas say why would anyone trust us if we swear we are not going to do it, and the we do it just because they pull out of coalition talks. On the other hand, it doesnt look like to have very many options. Schulz is really stuck between a rock and a hard place here. He is stuck between a rock and a hard place. The one thing about politicians that i love is they are survivors, even in nuclear times. This is about already having seen a dissipation in your political race. That a reasonable assumption in germany, which is be speeding, survive, dont take it from the polls. Schultzs up for reelection as head of his party in december. He wants to probably keep that place. On the other hand, you are right, im sure he wants to do what is right for his country, as every honest politician would. The final thing to consider is, its going to be difficult in new elections if they say no to the coalition option. Then it looks like they are not concerned about what is important for the country, at least not as concerned about what is important for their party. It will be difficult to tell the voters we are going to do this, that, and the other if you elect us into government, but we wont go into government if we have the choice to do so. Manus its going to be interesting, if we end up back at the polls. Matt miller, back in the hot seat in berlin. Our guest is still with us. This chart shows the trend line. I said yesterday to simon stoic kind of currency. The politics of germany versus the European Central bank. Relativelykets are relaxed about fiscal risk. We been seeing concerns about the catalonian election, for example. The downside in the euro has been relatively limited. Unless youre going to see a definitive break through that level, its going to be the policy agreement that will be driving and as a key consequence, the resilience in the fundamentals. Levelssumer confidence yesterday with the highest since 2001. This morning, at levels with not seen in six or seven years. Its the fundamental story and the implications into next year. That dominates for now. What would you be most focused on, something about the propensity for dissent in terms of great divorce terms of reduction of quantitative easing should be. Jeremy we are looking to see how the various factions are playing out within the European Central bank. I think there will be a clients a bias, becoming little more vigorous in terms of the direction of policy. That will be the story that plays out next year. Of buying platform in terms the qe strategy until september, we start to see debate as to what happens then. That is an interesting point. The process will be reined in and markets will think about what happens in q4 next her. Marcus will try to react that in trade the euro higher accordingly. Keywords those are our that we will assess about. I like a new session. , a newer debate is this story that European Central bank will review its Corporate Bond buying plan. If we look at the numbers we know qe will hopefully be cut to 30 billion euros. About 7 billion was from corporate paper. Proposition is that that has given the companys access to cheap money which has afforded them to do buybacks and not spend the money on capex. This is the ubs chart. It has not happened, even though theyve been given Corporate Bond buying. Heaven for bid corporate have not utilized money wisely and their buying back their own stock at increased dividend. Who would have thought that that could happen . The context of the debate about the u. S. And reduction of Corporate Tax rates and the hope that will bring to the u. S. , you will find that if corporate stone have good an obvious avenues for increased will channel those funds back into dividends and stock buybacks. If there is evidence in the eurozone that it is not meeting its demand then the debate will increase as to whether the process should continue. As we know, we are seeing that bond buying come gradually to conclusion over the course of the next few months. The ecb will look at how they parcel out that strategy of buying over the course of that time. Manus we have a little more to get through with jeremy stretch. The European Investment Bank Vice President joins the Bloomberg Team at 10 30 a. M. U. K. Time. Tune in to Bloomberg Radio on your mobile device in the london area. Coming up, opec optimism. Pluse live in dubai, writing the Steel Recovery. The ceo will join with the team and myself, Heinrich Hiesinger discussing the great steel market. Manus its 6 45 in the city of london. In new york it appears celebrating thanksgiving, have another glass. 1 45 a. M. In the United States of america. Happy thanksgiving. Lets get a business flash. Uber is facing at least three probes in your following revelations that it cap quite debt of about massive data. Watchdog and a British Agency also said they are in the crosshairs. Facebook has said it was show people which russian propaganda pages or accounts they followed and liked on the social network. The move comes in response to requests from congress to address manipulation badly during the 2016 president ial election. The tool will appear by the end of the year in facebooks Online Support center. Wasionaire peter thiel who an early investor in facebook sold 73 of his stake in the social Media Company this week. He uploaded almost 161,000 29 million dollars. Facebook stocks have surged more than 50 this year adding 25 billion to Mark Zuckerberg fortune and making him the worlds fourth richest person. According to the new york post, citing unidentified people close to the situation, shareholders were told it would sweeten the benefit of bandits is pursuit of in xp. Be gearing upay for black friday but dont expect harris to be involved. The worlds most Famous Stores managing director told bloomberg he thinks black friday discounts cheap and brands. We wont do black friday. That is not in our dna. We want to make sure you have brands and products you can find nowhere else in the world. Thats what drives the customers to brick and mortar. In the end, it has to be uniqueness and something you cannot get anywhere else. That is your Bloomberg Business flash. Manus oil trading near a twoyear high, Brent Holding at around 63 a barrel. A week to go before the opec meeting in the anna. A rally in crude means even more pressure to deliver an extension to production cuts. Thats go to Tracy Alloway joining us from to buy. Good to see you this morning. Driving the crude price, theres a great deal of hope and fervor that opec and nonopec will agree. That is right. You can see the expectation building in the markets. The other thing driving prices this week is the u. S. Inventory data. We had numbers yesterday showing a 1. 8 6 million barrel drawdown in u. S. Inventories last week, off the back of data that showed a big drawdown of about weeks Million Barrels. You mentioned brent in your intro. Take a look at what is been now at almostti, 58 a barrel, the highest in two years. Wti importantly, the entire in something that has not happened for three years. Take a look at the chart behind me, you can see what a difference this is. That will be music to opecs ears since the group is trying to clear the inventory glut. One thing to watch out for is positioning. We know there is a record long position in crude. This gets to the expectation building point, but we have also seen in the most recent weeks, with a little bit of shorts returning to market. Hedge funds beginning to build up their short positions ever so slightly. The question whether that is profit taking our if they think there is a potential that opec disappoints at next weeks meeting. Manus that consensusbuilding program goes on in the background long before the oil. Ver gets to vienna its trying to quantify the risk of disappointment. No complete commitment as yet. What do you reckon the risk is of a disappointment at opec . Youve got it exactly right. The market is basically expecting perfection from opec. Its focused on petition patient of nonopec members focused on participation of nonopec member such as russia. Stretch to say given that long position in crude that you could see the potential for fireworks in the price of oil. One more thing to be aware of, i like the way Olivier Jakob put the opec meeting. He is paraphrasing the famous catchphrase from Donald Rumsfeld , saying that by extending the cuts, opec is making it supply a known known for the rest of 2018. The known unknown is the rest of the supply response. They still have to face the challenge of u. S. Production. Our u. S. Shale producers going to come back online was they are confident opec members are once again cutting back on their supplies. Tracy, theve that, known knowns and the known unknowns. Racy alloway there , you said the relationship between cars, australia and oil, that intrinsic relationship no longer is as strong as it was. Jeremy certainly when we had , youreprice plunging almost trading off wti or vice versa. Of course the oil prices relevant. Aboutint being made supply from the u. S. Is the big variable in play. That is one of the reasons why we would not expect the oil price to materially move over 60 for any prolonged basis. There is that supply element that will come back and from the u. S. , and that will act as catalysts. I dont think you will see the correlations increase anytime soon. Manus lets talk about south africa. The Central Bank Decision later on today. A bigger chance of a rate increase in the years time, a 50 basis point increase by the end of next year. Inflation is running at 6 . Fine, dont get bogged down in the decision today, its more about the ratings decision tomorrow. Jeremy absolutely. We should not expect anything from the reserve tank today. Reserve bank today. A lot of questions about the , there is at form lot of concern about the outlook for the South African backdrop and if are going to see the , whichurate downgrades has been widely discussed, then theres a question mark as to its taken out of the global by market indices. Weve already lost more than 5 against the dollar in the last three months, despite the fact that the brand has had a little bit of a recovery. Manus looking at the turkish , whethern this morning its erdogan going with the central bank or something more substantial. Do you think that pacing is done in terms of the central bank . The central bank saying it doesnt offer funding. The question is, how far does turkey go without a hike . Jeremy theres a lot of questions as regard to the turkish position. In a world where we have seen synchronized Global Growth, that should be good news, particularly if the fed are not raising rates particularly fast, as we were discussing earlier. However, those nations have structural problems, political issues and uncertainties. Turkey and south africa both fall into those criteria. Being you can anticipate those currencies underperforming against their peers. That is still the story. Peopley will find that need to use those opportunities to sell them at better levels. We started the day talking about the dollar and there was at love at the start of the show that the fed minutes at insult to the dollar injury. The question is, where does that injury perhaps manifest itself . Talking about implied an actual vol in the japanese dollaryen. Jeremy the reason is the Central Banks have obviously been very much in focus. If we assume the boj is dormant and going nowhere fast, that perception that they gone into hibernation could be a little bit overdone. If you look at some of the comments weve seen in the last week or so, talking about the influence that are negative, and if you look at the macro variables, the Producer Price process is implying that cti is starting to head higher. Not necessarily getting toward the target, but heading toward it. That suggests it could be adjusted. That is what we are starting to see in the market in the impact of volatility. Jeremy, thank you very much for sharing your thoughts this morning with us. Cibc. Stretch over at if you are a bloomberg customer, you can watch all of the flow throughout the day. Manus fed officials are expected to raise rates next month, they remain divide over the policy path as inflation stays stranded below target. The dollar falls. Grim forecast for the economy and public finance. The chancellor offers giveaways for young votors. Jamie dimon says he would take a higher tax rate in exchange or a corporate rate cut. Welcome today break europe. Very happy thanksgiving to you if youre tuning in from the United States of america. Have another martini. Never too late. Breaking news to set you up for your trading day. The growth story in europe continues with its expansion. 2. 8 yearonyear it comes in on a seasonly adjusted basis up. 8 . You are seeing a strong set of numbers coming from germany. The economy expanded by. 8 in the Third Quarter. That matched the estimates. Will they or wont they . Will they go back to the polls . Thats the question that we ask ourselves. In europes economy, a strong position to weather, rising high trade, up. 4 . Expansion between july and september and you are just seeing a few other lines come through here. A month of negotiations is the biggest concern. German consumption was unchanged in the Third Quarter from the previous three months. Equipment rose by 1. 5 . Exports rose by 1. 7 . A. 9 increase in imports. We get a full breakdown on december 5. Well have a conversation with the c. E. O. Of one of the steelmakers. He joins me shortly to discuss their numbers. Lets get you some of the numbers that have just come through as well. This is one of the big activities near the united kingdom. Adjusted earnings per share around 12. 5 pence. Head count reduction over 1,500. Were saying were going to make people redund and cut jobs to over 1,500. This is coming from centrica. They are on target to hit their target. Europe has taken its foot off the gas. You saw a nice rally in asian market. It is thanksgiving. A lot people will have organized lunch. I have. London, paris and frankfurt are a little bit lower. In germany, something hanging over this market in terms of what happened for angela merkel. Youre also seeing a transfer actually, a bit of an anomaly. Getting backtoback gains in europe is proving harder and harder. Think about that as you go toward the end of the year. Wouldnt you want to bank a little bit . Wouldnt you want to take some risk off the table . The paris market managed to decide whether it wants to go green or red. Let me show you to risk rate now. Excluding japan, because it is of course as i say a closed holiday for japan. We just turned a little bit lower. We had a rally on our hands at 6 00 a. M. We have come back a little bit. We have busted through some of the biggest top line levels that the analysts put out there for dollaryuan. The Global Growth story rhaps a little bit excessive. Rationally exuberant. Inventory slipped by 1. 86 Million Barrels yesterday. Ministers are going to bolivia for a meeting before the big meeting. Opec members, we have opec next week. Oil is off a twoyear high. Dont get too stressed about that. This is how they start the day this thursday morning. We wait for the European Central bank to deliver. Was there ambiguity . A difference of opinion . How to reduce quantitative easing . Such a state of play on your bond markets. The Business Energy performance is disappointing. In this country, were looking at energy caps. Adjusted earnings per share the market r than consensus. Reducing 1,500 people. They are on track to achieve their targets for 2017. They are saying that the Energy Performance to have business has been disappointing and they are guiding the market lower in 2017. Ell keep an eye on centica. Good morning, manus. A december rate hike remains on the cards despiteongoing debate on growth. Policy makers saw an increase in the near term. Tepid inflation drove divisions. U. K. Chancellor Philip Hammonds budget has been welcomed by members of the conservative party. Theresa may mays future remains uncertain. The chancellor has won a reprieve from his colleagues. He came under attack from his own party. Zimbabwe said they are witnessing a new democracy in the first speech since ugabestepped down as leader. Gabe fired him jamie dimon said he doesnt think President Trump will win another term in office. He said as long as the democrats field what he calls a reasonable candidate they will win in 2020. Dimon also addressed tax returns saying he would pay more personally if corporations could pay less. I think we should get rid of referrals for hedge funds. You want to raise my rate, so be it but dont have an uncompetitive tax system in a very competitive world. That is a mistake for america. To confuse the two is a huge error. Mark cuban has a question for donald trump. He wants to know if the president is aware of the impact alibaba has on the u. S. Stock market. Did you realize 5 of the increase, 250 billion has gone from one Chinese Company. Alibabas u. S. Listed shares have almost tripled to about 190 since his 2014 i. P. O. There has been no response from the white house. Turkish Prime Minister has urged banks to reduce Interest Rates. Despite the ng challenges they have faced. Despite these hurdles, our economy is improving. This obviously disturbs certain circles who keep writing disturbing scenarios about the turkish economy. The turkish economy is strong, well rooted, solid and resistant against shocks. Manus global news 24 hours a day y more than 2600 analysts. Thank you. Chinas closed and what a difference an hour makes. Things really kicked off since i was last on about 60 minutes back. Down 3 on the c. S. I. 300. Im just looking at how that is with the markets. Were still not part of msci here. Every single sector is down in china today. Worst hit, healthcare. Consumer staples. That is the worst day going back to february of 2016. When you look at the overall market cap that has been taken out there, 140 billion across chinas 300 largest stocks. That is the negative story. Lets keep it there. Bond yields rising. Threeyear highs. Youre looking at concerns, authorities coming in questioning the market. The rest of asia is doing ok. Third day of gains across some other markets here. Momentum has leveled off. Quick look. Some of the big movers were tracking. We have been tracking all day. Were looking at some of the big still hanging on to those gains. We are getting some big declines in the chinese market. That is a wrap of your markets. Well be talking about china more when things reopen friday. Back to you. Manus the japanese stock market set for one of the biggest declines this year and the dollar is lower. Thissen krupp reported a thissen croup reported a gain in profit. Were joined now from the companys headquarters. Great to see you this morning. Continued operations, 1. 72 billion. How confident are you about your Global Outlook . A very good morning. Good morning to all of you. You know if you look really on the underlying figures, most of the markets in america, asia and europe, the outlook on the growth is quite positive. The figures for germany and europe were confirmed this morning. I think we have achieved a record high in five years growing 18 is already a commitment that also our customers, the most important thing, they are going forward. This is the underlying factor why we have guided the market from 1. 7. We believe that we can grow. Ur earnings to 1. 8 manus thats a nice guidance. I suppose it is a very natural question to say well, you have got now tariffs on china and russia. How linked is your guidance to the heavy hand of tariffs . You know, one of the strengths of our company that we have a well balanced profile. This was a major achievement going forward. This made us quite robust. We have a decent footprint in asia and europe and america. Overall this allows us to find our way through whatever happened. As i said beforehand theover all underlying factor is quite a positive one. Manus could you see a supply squeeze in market . Analysts are saying that is a possibility. You know, it depends which segment youre targeting, because you know, our offering is quite broad. Right now at least the last six months we have seen a positive development. We appreciate that one. You know, we do not misjudge that. The underlying factor that we and vercapacity in remains and our business is developing quite nicely. We consistently work on the joint venture with steel. Manus what more can you tell us, steel europe, i can see the numbers. A glowing report. Up 470 million euros. Talk to in me. What more can you tell us today about this new deal with tata . As i said, all Steel Companies in europe and germany, they have continued restructuring in recent years. Always eaten up by the fact that the underlying problem was never tackled. We tried to overcome that fact. We believe in forming a very, very strong number two in ombination with tatar. Quality leader. A large company. 48,000 people, a strong number in a market. And then over the years, we can the overcapacity problem for the benefit of our customers because they have high innovative product but also the benefit of our employees. To tell you the planned execution, the preparation for the signing is right on schedule. Manus heinrich, one thing that all analysts will drill in on and i know it is very early. You talk about 48,000 members of staff in europes number two. The reality is we need to know about what you think of synergies. Is it half a billion euros . Is it a billion euros . Im plucking those numbers out of the sky looking to you to guide the market. The reyalts is it is not just a market that needs to be rationalized. It is also head count. Is that something we must accept . You know, you hit an extremely important point. I made a reference to the market and to employees. It generates significant value for our shareholders. It was arranged between 4 to 600 million synergies on the cost side. We are really confident that we can hit that number. This generates significant value beyond the individual Business Case each of the companies does have. Manus are you Standing Firm that that is the best that youll be able to do in terms of synergies until you get a look inside the company . Look, this is what we clearly can prols right now. We will not stop there. Thats the reason why when we are together we will elaborate further. To make it a feasible deal, we did not dream. We have substance and the substance con if i weres 4800 synergies. Manus thank you very much for being as frank as you can at this stage. We wish you well with the deal. Well catch up with your numbers in 20189. Ets hope the market is as good to you as it has been. Cop up, the budget, what was it . Was it all good news . Well discuss the winners and losers in the budget. It is all on bloomberg. Manus 8 2 1 00 a. M. In frankfurt. It has been quite a week for Global Equity markets. Asian equities just off their record highs. We saw all of the u. S. Independence sis rallying to record levels. The markets in the states and japan are closed. Shanghai composite. Check this out on your bloomberg. Down 2. 5 before recovering ver so slightly. Youre looking at the biggest oneday drop in chinese equities. That is knocking your european markets. Lets talk about the upside. Record after record. Asia. Breaking through a 10year high. Record after record in the u. S. Do you share the optimism these markets are affording this . We do. We are looking at still a very robust global and growth picture. I think it is fair to say that the positive events that we have seen through the year is unlikely to carry on at the same pace but even a flattening off of the growth at these elevated levels is positive. The debate within the fed yesterday evening, i did this with jeremy stretch. Rising concern about inflation. Of course what im referring to is several of the fed members want to see stronger price gains pick up before they get more aggressive. Likelihood the of real inflationing . Inflation is averaging 1. 6 . 1. 3. So it is an elusive return to 2 . It has been the debate this year. I think very much defines Monetary Policy and therefore the shape of the markets but more of the leadership within the market as much as anything else. It is something we debate constantly. Our view that inflation will pick up modestly, particularly in the u. S. Likely to stay flatter in europe. But therefore that will afford the fed to continue with its hiking stance. Nus a listened to jamie dimon. An open forum. He said take more dollars off me but do not make this mistake. Reform and itax was said, how much of that is already priced into the equity market and they better deliver. If youre going to sustain that rally. Absolutely. When you talk about what is priced in, you can say what is priced in from the sentiment perspective, what people are expecting and the economic impact. The market is very hopeful indeed demanding as you referred to that the reform comes through. From an economic perspective, it will be a mild positive in our view. There is not a great multiplire effect. Positive for sentiment and helpful at the margin. Manus when you listened to the budget yesterday, i was bopping around between a variety of news channels. The flow obviously, the first time buyers. The younger vote was the one definitely being chased after by the chancellor. When the battle is lost and won, what did you make about budget yesterday . The growth, the growth trajectory. Lets take a look at the growth trajectories from chancellor hammond. They are frett anemic. We are not going to kiss 2 growth any time between now and when we brexit. That is in stark contrast to the healthy global picture we were talking about where u see constant upgrades to the forecast. When you look at Consensus Forecast for g. D. P. Growth in 2018, they range from 1. 2 to 1. 6. The main differentiation factor is at one point does the deal get agreed . Manus do you think that could change the growth trajectory . It does. Because businesses need to make decisions and plan. Now all they can do is plan for a hard brexit. I think it does change the outcome for g. D. P. Growth in the u. K. Not to the extent that we think the u. K. Is to exceed european g. D. P. Growth which is still our preffed area, but within that margin, it can make a difference. Manus we put together some of the themes from the u. K. The alcohol and tobacco. There has been a rise there in term turnovers duty on those. As there any key takeaway . The house sector that we have been pretty supportive of. We think obviously the abolition of the stamp duty below 300 is helpful. The vote sold off on use there will be an investigation into land banks and the difference between Planning Commission and new bills. Ultimately we think this is a sector attractively valued. Manus thank you. You the k take the conversation forward on Bloomberg Radio. She will join the radio team. Were going to keep an eye on these markets set for a lower opening. European market open is up next. This is bloomberg. Happy thanksgiving. Welcome to bloomberg markets. This is the european open. Well bring you trading. In around half an hours time. Im guy johnson in london. Matt miller is in berlin. Here is what we are talking about. The chinese correction very much underway. Shares dropped dramatically after the government warns about runaway prices. Bond markets. The selloff is continuing to gather pace. Are the panda bears back in charge