Cash trade is less than 30 minutes away. I want everybody to know there are no circumstances in which i will ask brussels for a delay. We are leaving on the 31st of october. Matt scheduling difficulties. Chinese and american officials failed to agree on a day for their next meeting. Rebalancing the numbers. M s looks seter to drop out of the ftse 100 for the first time in years. Welcome to the european open. Less than a halfhour away from the start of cash trading. Im looking at the pound. This goes back to the beginning of 2017. I see the pound coming down, continuing to drop down to 120 01. Keep in mind, it has not closed below 120 for many years. Just didnt down below there. We are watching closely. Look at futures. Futures, wec, dax are looking at a mixed trade right now. Cac futures are marginally off. Decks futures fractionally higher. Dax futures fractionally higher. European futures looking better than a mixed asian session. Markets come back from the labor day holiday. A little bit of catchup on negative trade news. We are so focused today on the but it doesxit, look like it is still trade driving the equity movements, driving markets. Would you agree . Absolutely. Even the second half of last year, trade is the dominant theme. It is a consistently negative story. Sometimes we get relief. Themes a few percent up, a few percent down. We are eroding policy certainty. Trade is the dominant story this week. We will wait until the u. S. Comes back from the labor day holiday. The u. S. And china cannot even arrange a date to talk. These tariffs coming through are likely to lead to u. S. Inflation. Consumers are going to have to pay higher prices on the good they order from china. It would slow growth. That is the m question of the day. Day. Iv question of the theme for become a the year ahead. It is very hard to answer. Not think we will get stagflation. We are going to move through period. O a deflationary markets will trade off that stagflation for quite a while. Growth is going to continue to slow. They will probably traded stagflation before next year we move into a deflationary theme. More like a deflation environment. That kind of environment will dominate before policy kicks in next year. Quicklyt me ask you what is going on. We are going to cover a lot on the ground at westminster. Vote is an important today. Parliament is going to try and stop a hard brexit. The pound drops below a dollar 20. It looks like sterling weakness. We are seeing real Dollar Strength here. The sterling weakness is a very wellknown factor. It is not just the brexit scare. It is the fact the u. K. Economy is doing poorly. Backed byy is negative real yields. Sterling weakness has long been expected. It is quite broad Dollar Strength that is more of a surprising theme. I am not sure the dollar is going to break out significant topside. Of trump wanting to we are not i think ready for depreciation yet. It does not look like anyone is buying the dips in terms of the pound. It is interesting to look in euro and yen terms. Abovetrading slightly 120. What do you think about the fact that we do not see the pound orrly as weak in euro terms yen terms yet, but that could we could see more downside there . On a shortterm basis, that is where we are seeing the weakness. The dollar is strong against everything. I think in the more immediate definitely there is potential for a larger move versus the yen. Yen versus dollar may not sustain as much as sterling versus euro. As we go into the end of the year, the euro can be a little bit of a haven. Weakness isan weighing. We will start seeing euro depreciation pickup. Eurosterling going higher. People will Start Talking about parity again. Not in cable, but eurosterling. Thanks so much for joining us. Asked today, is stagflation going to become a tradable theme in the months ahead . You can respond by typing ib tv. Give your answer to the mliv team. Become part of the conversation. Lets get the bloomberg first word news. Lam saysg kong, carrie she never asked to beijings permission to quit. I have never tendered a resignation to the government. Contemplateden resignation. The choice of not resigning is my own choice. Lam also denounced the leak of audio from her meeting with business leaders. Hurricane dorian is continuing to bash the bahamas, but winds are weakening. Forecasters are looking for it to turn north rather than making landfall. Dorian has killed five in the bahamas, overturning cars and tearing down power lines. Opecs crude production rose, the first increase since a new round of cuts at the start of the year. Nigeria and saudi arabia led the way. The group increasing output by 2000 barrels a day. Australias central bank has left its key rate unchanged. It is waiting to see how the cuts andon of prior tax relief affect the economy. The market is looking to see if a gentle termters philip lowe predicted last month. 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. Naomi koeppel with your first word news. Or someone in his party is saying it is possible we could have a snap election on october 14. Tensions rise with no deal opponents. Could the u. K. Be on course for 2015 . D vote since 2013 this is bloomberg. Matt matt welcome back to Bloomberg Markets. This is the european open. You can see ftse futures are gaining as the pound weakens. Weakens. Cac futures and dax futures are unchanged. Britain could be heading to the polls. Boris johnson will try to trigger a snap election october 14. If he loses a vote in parliament this evening. The Prime Minister said he would rather risk losing office that having his negotiations with the eu undermined. There are no circumstances in which i would ask brussels to delay. We are leaving on the 31st of october. Joining us from westminster therancine lacqua down on green to cover this dramatic turn of events. What is the likelihood this vote goes through against johnson and that he is forced to call an election october 14 . Morning to you. We are 59 days from that deadline. Votes. A series of there is a vote tonight. On brexit, there may be another vote tomorrow to force the government to seek a threemonth extension. The concern is that all this will lead to Boris Johnson saying he has had enough because he needs no deal at least to be on the table to try to negotiate with the eu. We are hearing from many newspapers they would call an election. The concern is that the market the election could happen october 14. It is unclear whether Boris Johnson would want to before october 31. No deal onpossible october 31. Everything is a little up in the air. It is quite dramatic. You can feel the tension. Johnson says he will suspend parliament. We have 59 days because the government is not budging on that. They only have until Parliament Parliament behind me has until the 12th to find a solution they are comfortable with. Below 120pound drops for a moment. 11986. We are seeing cable come down to lower than we saw it then we have seen it since january 2017. If i lengthen this out to a year, you can see we are down to a level we have not seen in quite a while. Affect does this have on parliament . Sure a look at pound uncertainty. Brexit, is a no deal commentators think it will go even lower. That will have a trigger on the price of the things we import from the eu. See i donto know if parliament looks at this to say we need to suddenly vote Boris Johnson, but it could have a greater impact if they realize inflation would go up. If you are mark carney at the bank of england, in the case of a no deal, which is not really priced in right now, it would be difficult to see how you navigate and actually set interest rates. If the pound falls, inflation shoots up. Drama we arer what going to see in parliament. We have the town crier there, awake already. He has been there a couple of hours already. Man. Ng lungs on that you have broke out coming back after saying bird cow saying. Oming back after this is the beauty from a news perspective. Usually 3000 pages of what you can and cannot do. The u. K. Constitution is different. It is a series of texts and laws. Expectingeople are speakers of the house to try and find a way. Last time, they came out with a law that allows parliament to vote on certain things. Faction, probrexit labor, antibrexit labor, the rebel conservatives, even the speaker of the house himself will try ways of getting around what the others are trying to do. It will be dramatic. This is at least part of what we live for. There are other things. Francine lacqua live in westminster. We have not forgotten about the bank. Get the bloomberg first word news right now. For that, we go back to london. Cathay pacific is under investigation by chinese regulators after emergency oxygen stores were found depleted or completely empty. After chinese regulators threatened to bar the airline from the mainland after staff supported the hong kong protests. A bloomberg scoop. The second time his role has been scaled back in less than a week as the government prepares to sell shares in saudi aramco. He is being replaced by the head of the countrys sovereign wealth fund. Mi shares jumped as the company is fighting to maintain its position. The buyback could mark the companys biggest stock repurchase since its ipo. That is your Bloomberg Business flash. Matt thanks very much. We are minutes away from the open, a little bit more than nine. Next, look at your stocks to watch at the open, including marks and spencer after rebalancing could push the retailer out of the ftse 100 for the first time in 35 years. This is bloomberg. Matt matt welcome back to Bloomberg Markets. This is the european open. Lets get your stocks to watch from around the newsroom. Annmarie hordern focusing on tesco. Lets kick it off with you. There is news out this morning that lloyds is a snapping up tescos mortgage port folio. Acquirens the bank will 23,000 mortgage customers. Tesco can move slightly to the upside when the market opens. Matt thanks very much. Joe from our Equities Team looking at m s. Could be out of the ftse 100. That is right, for the first time in 35 years. They will join the struggling Software Company and also the home insurer on being demoted, according to ftse, which announced results yesterday. This comes with shares down 20 this year following that joint venture they announced earlier in the year. Results will be confirmed after the market closes. Downside. Ee some what is the story with ferguson . I saw a red headline flashed across my terminal this morning. Got to love those. Tore u. K. Operation is going be independently listed. The ideas ferguson can focus on north american operations. Also Management Changes coming with it. Shares called higher by about 3 . Thanks all of you for joining us. You can get the first word news via the bloomberg mobile app. Coming up, the market open. Futures are mixed. In the u. K. , solid gains on a weak pound and sterling drops below a dollar 20. This is bloomberg. At comcast, we didnt build the nations largest gigspeed network just to make businesses run faster. We built it to help them go beyond. Because beyond risk. Welcome to the neighborhood, guys. There is reward. Beyond work and life. Who else could he be . There is the moment. Beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. Take your business beyond. Matt we are a minute from the open of cash Equities Trading across europe and in the u. K. Lets look at markets with Annmarie Hordern in london. 300 with ahe csi gain at the end of asia trading in a mixed session through asian this morning. S p 500 futures are to the downside. U. S. Equity futures are coming back online after labor day. The pound, still below 1. 20. It will be a dramatic day in parliament. Oil, trading below 59 a barrel. Opec saying for the first time this year, producers increased output for the month of august. Lets look at futures. Ftse 100 futures, up. 2 . No doubt due to the weaker pound. Downlightly lower, but cac. 1 . 8 00 and here in the city of london, a dramatic day in the united kingdom. Ftse 100 opening up slightly flat but a little to the upside. You see the british pound is down. 6 on my foreignexchange screen, dipping below 1. 20. The first time we have seen this since january 2017. Point. 1 . Zero stoxx 50, relatively unchanged. In europe, it will be about politics as Boris Johnson may trigger a snap election if he doesnt get the votes he wants which the vote is looking Like Parliament may vote for a no deal brexit. Picture, there are a lot of corporate earnings driving the market so it will likely be the macro and fundamentals that will move the trade war and escalation, and the progress or lack thereof will be key. Will they set a date for september to meet . Defensiveswe saw do well. Financials to the downside. Jpmorgan says it is time to be risky. What do you make of movers . Of winners and losers kamaishi 200 up, 300 down downly ic 200 up, 300 roughly. You will see a lot of u. K. Stocks on the upside this morning. You see bp, glaxosmithkline, unilever. U. K. Or stocks from the trading in the u. K. Vodafone rising up and the u. K. Will have the strongest gaining index. On the downside, we have some defensive stocks. Nestle is falling about. 4 . Down as well as asml. There are some u. K. Stocks that are trading down as well this morning and that is interesting to see the pound falls below. Where are talking about the lowest since january of 2017. It is risk going down below its 1985 low. European markets, struggling for direction across the board. That follows a mixed session in asia after bloomberg learned preparations for u. S. China trade negotiations are not going as smoothly as President Trump has portrayed. The sides are struggling to even agree on a schedule for the planned meeting in washington, and it is supposed to be this month. Joining us, the fx and global macro strategist at ou i wanted to kick it off on trade because that is what is driving the equity market today but i cant ignore the weakness in sterling. It is a stork, really. Belowt think it closed 1. 20 since well before brexit. We see a new 1985 low going into october 31 . I think it is possible. It istainly feels like dark times for sterling and the pound right now, especially when investors cant see the light at the end of the brexit tunnel but i cant help but imagine the next few days todays big day should grant, clarity on what the tunnel looks like shortterm and when i look at the way markets are positioned and see the short positioning as a red flag for chasing sterling much lower here in the absence of any real currency end game prebrexit. Shortterm uncertainty, but there needs to be sequencing when we look at u. K. Political risks and what is driving the pound and right now, the first risk factor is no deal brexit come to the 31st of october and if Parliament Takes this off the table today, i cant help imagine but some shorts get squeezed out of the market and cable moves higher from here. Incrediblywould be interesting to watch tonight. If we do see britain getting ever closer to a no deal nifty, poundit, do you think the is more vulnerable against the dollar in dollar terms, or could you see more weakness in euro terms, in yen terms . What is the most interesting cross . Viraj i think the dollaryen and swiss franc seem to be the safe haven traits here. Trades. Dollar isgnore that below 1. 10. Europeana weak currency complex here and eurosterling could move higher but the reality is cable targets the 1. 10 on a no deal brexit. Matt when you look at the europound, it is interesting we are not nearly as low as we are in pounddollar terms or dollarpound terms. Why do you think that is . Are investors almost as concerned about the euro area in a hard brexit event as they are about the u. K. Economy or is it more to do with the expectations out of the ecb . Viraj i think there are two factors. The risk around eurosterling moving to parity, economy the euro zone from no deal brexit, investors cant ignore that and the bank of england will do their best to ignore anyone avoid any material up into eurosterling, given the implications for both countries in terms of inflation. Forcy act as a buffer blocking eurosterling from moving materially higher. You will stick with us. There is a lot more to talk about. We are focused pretty heavily on the pound and it makes this historic low as the cable rate makes this story close historic low. We have seen the pound fall below 1. 20. A lot depends on what goes on with parliament. With that in mind, lets get to westminster where Francine Lacqua is joined by the former defense minister. Francine i am delighted to be joined by mr. Elwood. Thank you for joining us on bloomberg to make sense of the next five days, what happens. 59 days from the deadline. How will you vote tonight, to see whether parliament can take control . It is all about members. If you cant get your government through come you press the reset button. That is normally what happens but because we have been debating brexit for three years, there has been a hesitation to want to do that. As you suggest, there is a grouping of people suggesting we are worried about no deal, following that direction. Lets take ownership. Of mentioned the 31st october. There is another date and that is the 17th of october, the next european summit and Boris Johnson surprised everybody when he went to berlin and paris and secured extra time to review the withdrawal agreement. Nobody expected that all. I would like to see that play out, an opportunity to present those ideas and see if we can finally conclude brexit by october 17. What we are doing today is premature. Are supporting Boris Johnson and will not vote for parliament to tobias no. The other turn of the wheel is if we see this going through, there is the threat of a general election being called tomorrow. Francine you want also vote to force the government to have a threemonth extension . Extension itself is about what do you then do with the extension . All these people have come together to say we dont want a deal to go out with no deal. I sympathize with that and have been vocal, but they dont say what they want to do next. Many want to stay in the european union. Others want a deal like norway or canada. All of these options, they cant decide. I hear the anxiety and the annoyance from british people saying why hasnt Parliament Got on with it. My colleagues have been very stubborn in not agreeing a deal itself. Even if we extended, where does that take us . Francine you are standing by Boris Johnson. You are now voting against him in anything . Tobias i am keen to have a general election because as i say, you need to press the reset button. Francine a general election on october 13, what has been voted. You worry do you worry poors johnson will say why dont we have it after october 31 and we will be out of the eu . Because then the noises coming the anger, frustration illustrated by those calling to take over will be right. What i understand is they still want to get a deal. We have a chance leading up to the european summit to provide that. Allow that to play out before you are secondguessing that number 10 is wanting to take us to know deal. Tobias talk about your timeline. Electionn october 14 and then a summit the 17th where the u. K. Puts a proposal on how to deal with the backstop . Tobias the timeline is split depending on the next few days. If the order paper is taken over, the opposition gains control of parliament and says we are now going to legislate what happens is the Prime Minister will trump that by saying sorry, we are going to College General election. We disperse, fight a general election up to october 14. Francine what do you want . Tobias i want to conclude brexit in a manageable way. That is what the nation wants. We want to avoid no deal but i dont believe some of my colleagues are going about it in the right tactics. Francine if there is a general election, how can you be sure it would be before october 31 . Tobias it has been hinted that will be the case. Francine you can go back on a hint. Tobias we dont know. The next 24 hours will be critical. I understand the messaging in the media is an election would occur october 14. Francine what if it doesnt . To vote for an election would you need assurances from the Prime Minister that it will happen before the october 31 deadline . Tobias it would be called. We have the fixed Term Parliament act. It used to be the privilege of a Prime Minister to call the election whenever they like. We came with a fiveyear process. If you want to break the routine, you have to convince parliament and get two thirds of the vote. You are right to question this. Are there two thirds of the mps who want a general election now . If you look at the polling, labor is doing so well anymore. Francine if they do want an election, how can parliament be sure the election is called before october 31 . A good question but as far as i understand, the indications will be it will be on october 14. Many of us will be shocked to intentions have been given and mood music is about the 14th of october and suddenly we find they deliberately played the game and had it after october 31. People like myself would find that very disheartening. Francine how do you think the tory rebels will vote . There is the threat of general election and of being kicked out of the party. Tobias and i disagree with that. If we want to earn the respect of the nation, we have to do that by inspiring people. Occasionally, they wont agree with us. That is the same in our party. Of course, there needs to be disciplined but every so often, there will be individual cases where mps do not want to support the government. They should have the right to do so. I dont agree with the message. It will set a bad precedent in future debate. We need mps to challenge, provide competition. That is what is good in democratic politics. Francine thank you so much for the interview. Tobias ellwood, the former defense minister. Plenty more from westminster through the day. Matt fascinating stuff, francine. Francine lacqua on the green at westminster. From bloomberg, we will speak to howard davies, the chairman of rbs. That is an interview you dont want to miss at 11 00 a. M. U. K. Time. This is bloomberg. Matt welcome back to the european open. We are looking at a lot of superlatives this morning. It is an exciting market. First off with the pound, weve seen sterling dropped to the lowest since october, at least october of 2016 tsurenko, were so right now, we are looking at the pound at 1. 1979. If we close below this level are at this level, it would be the lowest closing level since 1985. As parliamentoric gets ready to vote on the possibility of a no deal brexit. An alltime low in the 10year gilts fields. Gilt yields. A 38 basis point return, which doesnt look so hot after you take out u. K. Inflation. I also want to look at the eurodollar because we see the eurodollar increasingly weakening and right now, it should be around 1. 09. We will see the level on your screen. The eurodollar has been in the downtrend and is that because of what is going on in europe . You see 1. 0 942. Or is that because of the strength in the u. S. Dollar . Fortunately, we have somebody all over fx. Viraj patel is our guest from arkera. What do you think about the eurodollar levels, especially considering we are expecting so much from the fed i think 100 basis points might be priced in depending on what you look at, and the dollar is showing strength against the common currency. Why . Viraj there are two faces to the dollar now. When we talk about the dollar, we talked about it against risky currencies and maybe the euro falls into this bucket. We also talk about the dollar against safe havens, currencies with traditional Net International investment positions like the yen and swiss franc. The dollar hasnt been performing too well. It is important to make that distinction. The euro sits in the middle of the two but it is no longer the safe haven we working about in 2015. It is plagued by local political risks, and a currency plagued by downward cyclical factors. They both seem to be playing out at the moment ahead of the ecb where markets are gearing up for package incb easing the next couple of weeks. When we talk about eurodollar below 1. 10 it is the cyclical factor driving it. Matt i want to show you this chart hillary threw together on real rates. I think this is fascinating. Nominal yields are definitely interesting, but when you take out inflation, that is the money you will have left to spend. For me, real rates really hit home. You see the gilt yield in purple. Everything below the red line is negative really yelled. The yellow is real yield. The yellow is jgbs, u. S. Is in blue. We see german nominal and real rates down very low. Gilt are the lowest in terms of real yields. Why do you think this is . Viraj this is typical of late cycle development. One thing is stagflationary environments. Get is typical where you shortterm inflation pressures but offset by longerterm downward Global Growth concerns. When we talk about protecting against that environment, n, safes metals wi currencies, so what you are looking now for is policy reaction. Policymakers will get this coming through in september and it is the monetary space to take some of the real yields and turn them positive. Matt thanks so much for joining us today. Weve got more to talk about with viraj patel from arkera. , stocks on the move including ferguson. Plumbing equipment maker is rising after agreeing to split off its u. K. Unit. This is bloomberg. Matt welcome back to the european open. Into the minutes session and you are looking at equity indexes lower with the exception of the ftse 100. It is gaining on the weakness in the pound. Lets get to our top stock stories with Annmarie Hordern in london. Annmarie in the u. K. , ferguson, a Plumbing Company is spinning off its u. K. Division and will focus on the u. S. Where it gets the bulk of its revenue. And announced a new ceo who runs the u. S. Division. Over 2 . Down the subscriber loss was 92000 and analysts expected the number to be 54,000. Goldman sachs says they need to increase cash generation. Easyjet, down over 2 off a downgrade. Hordern with a look at your individual movers. Lets get final thoughts from viraj patel at arkera. We are so taken by the drop in sterling it is ive got, vision when looking at the fx markets. Outside of that, what are the interesting pairs you see . Viraj i think going back to the two faces of the dollar, you got the virgins against the g10 space and september will see whentheme play out where you are looking for a topdown screening process and look at the currencies and countries isolated from the direct u. S. China trade war, their own idiosyncratic growth stories and also cheap from a valuation perspective, there are a handful of currencies and countries are you can get the value if you look at the yen, indonesia, egypt seem toptier and you are . , weregling secondtier depending on the local politics, you could be looking for value. The message for september is being tactical and selection, selective. This is one way traffic for the dollar and em. In othert do you see parts of the globe as central to lower rates, especially in india where they look to lower even further after their growth slowed the most in six years. Do you see Global Growth weighing on centralbank policy . Viraj it is the primary function for the next three to six months in any Central Banks reaction function. Global growth is the main headwind here. It looks like we are stalling at cyclical lows. Fiscalnywhere there is space to provide support. Just looking for local growth stories. Matt thanks for joining us, viraj patel, fx and global macro strategist at arkera joining us on bloomberg tv. From the 5am wakers, to the 6am sleepers. Everyone uses their phone differently and in different places. Thats why Xfinity Mobile created a Wireless Network that auto connects you to millions of secure wifi hot spots. And the best lte everywhere else. Xfinity mobile is a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy an eligible phone. Click, call or visit a store today. Matt 30 minutes into your trading day and the top headlines, sterling gets pounded. Lowest since the 2016 has the u. K. Government threatens a snap election for october 14. I want everybody to know circumstances in which i will ask brussels to delay. We are leaving on the 31st of october, no ifs or buts. Matt chinese and american officials struggle to agree to a plan for the next meeting. U. S. Futures pointing to the red before wall street returns from a threeday weekend and rebalancing the number, deutsche bursa gets added to the euro stoxx 50 index as m s looks to drop out of the ftse 100 after a 35year run. Welcome to Bloomberg Markets, the european open. Im matt miller in berlin. Into thek 30 minutes session at what is really moving the stoxx 600 index this morning. 441 stocks down, only 141 gainers. There are some british stocks that are really helping to keep the index from bigger losses. , glaxosmithkline, ferguson, diageo, unilever. All british stocks with the exception of sanofi and ericsson at the bottom. In any case, that is because the pound is weaker and the ftse is treading water right now. On the downside, weighing on the stoxx 600 the most heavily is nestle. You also have roche, lvmh, and richemont weighing heavily. Lets get the first word news right now with naomi koeppel in london. Naomi in hong kong, carrie lam said she never asked for beijings permission to quit. Tendered aever resignation to the central peoples government. Toave not even contemplated discuss a resignation to the central peoples government. The choice of not resigning is my own choice. She also denounced a leak of audio from the business meeting. Reuters reported she discussed quitting but in the briefing, she clarified that was only the easy choice and she committed hong kong. A bloomberg scoop, china and the u. S. Are struggling to agree on the schedule for the next round of trade talks after washington rejected beijings request to delay tariffs that took effect over the weekend. Has beenfor a visit set but that isnt necessarily a sign the talks wont happen. Concern there seems to be an impasse that has worsened in terms of the escalation of tariffs and measures applied against one another. Theyet, we dont see offering in terms of how either party is going to get to a point of having successful discussions to resolve it. Opec crude production rose last month, the first increase since a new round of output cuts at the start of the year. Criteria and saudi arabia led the way with theblock prices haveutput struggled against deteriorating demand. Global news 24 hours a day, onair and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Matt thanks for that. Naomi kerbel, joining us out of london. U. K. Assets are hitting new lows this morning. The 10year gilts yield fell to a record low as the risk of an election rose. We also saw a record lows for other yields including btps. Sterling hit a 2015 low, slumping for a fifths consecutive session. Where its still at 1. 1968. It would be the lowest close since 1985 at this level. Sharon bell, managing director of European Equity strategy at goldman sachs. Ask, what your take effects of these things on u. K. Equities. We see u. K. Equities rising today as Everything Else falls simply because of weaker sterling. If weood for the ftse 100 see a no deal brexit . Sharon i dont know if it is good for the ftse 100, but it is probably not as bad for the ftse 100 as it would be for Domestic Companies or the you ftse 250 which are more domestically exposed. All of the ftse 100 companies that are slightly up, reflecting the fact that most of their earnings are in other currencies and if the pound is falling, those earnings are more in pound terms. 70, 80 of ftse 100 sales are outside the u. K. That is the reason stocks are rising. Given the uncertainty, it will hit domestic names. Matt are European Investors still interested in u. K. Stocks . Are u. K. Stocks still featuring heavily in European Investor portfolios . The u. K. Is about one third of the pound European Equity markets are you cant really ignore it. As you mentioned in your report, it is not just gilt yields low, but the whole of europe is low reflecting weak growth everywhere. The trade concerns impact in germany soto. It would be tricky to ignore the u. K. , but the u. K. Is not a favored market or asset or area at the moment given the risk and uncertainty regarding brexit. Where i find more interest is by noneuropean clients and u. K. They see sterling fall and wonder if there is good value in the u. K. Longterm. They are aware of the shortterm risks. Matt the ftse 100 is only up 8 year today, meanwhile the cac is up 16 yeartodate. The dax is up almost as much. But about european stocks compared to u. S. Stocks. The s p 500 is up a little more than the cac, but not much yeartodate. Sharon that is interesting because the last few years, people have seen european equities underperform u. S. Equities because the u. S. Economy has been much stronger. The european economy has been weaker than the u. S. Economy with additional risks like brexit, italian sovereign spreads and politics there until recently. Lots of risks in europe have put fashion off of european equities but yeartodate, europe and u. S. Have performed similarly and this reflects the fact that it is the global slowdown and some of the reason is trade and tariffs, and that has potentially hit u. S. Corporates and their earnings. Year more balanced this rather than the u. S. Being the clear winner. Matt we also see the euro coming to a low level we havent seen since 2017, and i wonder if investors outside of europe may be the same kind of bargains on their mind as investors outside to u. K. Have when they look at a weak currency . Sharon maybe. I havent had too many inquiries on that. It is more on the u. K. As the sterling has fallen against other currency. Is pretty much in recession, a manufacturing recession at the moment and a weaker currency will be something that is his financial conditions. Eurolance, the weaker should help European Companies euro outsidemagine European Investors will become more interested in europe because of the potential for ecb. Stimulus from the weaker currency, more stimulus, the potential for growth into 2020. Even if it doesnt accelerate strongly. There is a good chance investors are more interested in european equities. Matt we expect the u. S. China trade war is the biggest driver for usn chinese stocks. Is it also the biggest driver for european equities . Developmentst the weve seen recently . Sharon i think it is one of the big drivers. It is ironic because this is a u. S. China trade war and in some ways, it ought to have nothing to do with europe but europe and germany are so dependent on global trade. Exports are such a part of what they do. Goods in particular rather than just services. Clearly, these trade wars have an impact on Global Growth. It has hit germany in particular. Youve seen this in the industrial surveys, pmis, the Economic Data and gdp data. It is not just germany. Europe, generally week anyway, so given trends, probably 1. 5 in europe. Take much if Global Growth is pushed down a little by international factors for europe to see weaker growth and that and get closer to zero and that is what is happening here. Matt sharon, thank you for your time. Is managing director of European Equity strategy at goldman sachs. Bahamas. Ian bashes the forecasters away signs the hurricane will head for the u. S. We will map out the damage and the potential path next. This is bloomberg. Matt welcome back to Bloomberg Markets the european open. Im matt miller in berlin. We are 43 minutes into the trading day and looking at losses across the European Equity indexes with the exception of the ftse. Is treading water as you can see, as the pound falls to the lowest level since 2016. Prime minister Boris Johnsons plan to take britain out of the eu with or without a deal on october 31 will be tested in parliament tonight. Lets look at how it is going to shape up. Parliament returns today, mps are likely to request an emergency debate, looking to pass legislation that would force johnson to delay a brexit in the event of no deal. Tomorrow, his first Spending Review and the chancellor is likely to reveal fresh spending plans. And friday, a court case hearing will decide on whether the executive can parliament. Monday next week could be the last sitting day of parliament. Mpsill be the last chance have to stop a no deal an exit without a deal using legislation to play a highstakes game after the queens speech. Also worth noting that talks are ongoing with the eu. David frost will be in brussels seeking to come up with new ideas or alternatives to the backstop. From westminster is bloombergs and she has been covering this the entire time, but she is across everything having to do with parliament and the motions tonight on the green. What are we looking at in terms of a boat tonight . Vote tonight . Francine we expect a couple of days of turmoil. Motions today will be turned into asking parliament whether they will take over the brexit proposal or timeline. There are a couple of votes. We spoke to a couple of people, they could be changed or taken over. 40like a vote but we will know in the next 72 hours whether the parliament brexit, block a no deal whether they can manage the votes, and whether they want to take control of the timeline. If they do take control or force something on Boris Johnson, we also understand he will call an early election, but i think the crucial bit that markets may latch onto is if you have an early election, there is no guarantee a would be october 14. You could find yourself with an election that could be forced after october 31 by which point the u. K. Would be leaving the eu. We will have to watch carefully about market moves as parliament sits through various sessions. They are coming back today after their summer recess. Matt it seems the sinking pound means the market doesnt think parliament can stop a no deal brexit. We had a guest earlier who was saying if there are new elections october 14 and johnson wins, that increases his chances of putting through a deal. If the new elections october 14 he loses, that means brags would be put off indefinitely. Elections would be bullish for the pound. Thats why im saying if we see it drop to below 1. 20 and holding, that must mean the market doesnt think parliament can stop this and force an election. Concern youhe are right looking at the polls, but what would you do if nigel farage, the one person Boris Johnson needs to placate in the european elections, nigel farage with his brexit party did well. Is there an alliance to make sure Boris Johnson can win that itcial vote or does he do october 31 so by then, we will have brexit so he is placated . Even if you have a general election, it is unclear exactly what kind of campaigning, what would labour do, if they have an alliance which we have not seen . There is no clearcut answer, which may be why the market is moving around a bit. Continuescine lacqua to cover these developments in westminster. We are seeing them drive superlatives across the market with the lowest gilt yields of all time. On bloomberg, we will speak to howard davies, chairman of rbs. Dont miss that interview at 11 00 a. M. London time. Hurricane dorian continues to bash the bahamas but its winds are weakening as the storm widens. Still, it remains dangerously powerful and forecasters are trying to map out its path. Annmarie hordern joins us with more. Annmarie hurricane continues to devastate the bahamas, killing five on one island and inflicting colossal damage to infrastructure. Even though now it is downgraded to a category three storm. Winds slowing to 120 Miles Per Hour from as high as 185. It has remained hazardous. Move dangerously close to florida later today and you can see a cyclone of our we are. It will move to georgia and south carolina. Airlines have canceled more than 1000 flights and there have been mandatory Evacuations Ordered in parts of georgia, florida, and south carolina. Putlatest figure on costs dorian on track to be the most expensive National Disaster since 2017. Will cost at least 25 billion of losses for insurers and that figure could rise as much as 40 billion depending on whether the storm hits florida. In general, hurricanes have become much more costly. Scientists say water warmed by issiongreenhouse gas em has made it stronger and flood worst. Re often the hurricane harvey, dropping more rain than any other storm system in history. It is the countrys second most costly disaster and i know you were in new york during superstorm sandy. It was downgraded to a Tropical Storm by the time it made landfall, but the flooding it brought to this highly populated area was devastating. You can see really hear how the cost of these hurricanes and storms have increased throughout the 2000s. Matt and i believe sandy actually caused a fourday closure of the new york stock exchange. The weekend and monday and tuesday. The first time the nyse had been closed for four consecutive days since 9 11. You can see, these disasters really do drive moves in markets. Annmarie hordern across all the hurricane coverage for us. Sterling has gotten pounded. Cable drops to its lowest level since 2016 as the u. K. Government threatens a snap election for october 14. We will talk fx next. This is bloomberg. Matt welcome back to Bloomberg Markets the european open. 53 minutes into a trading day that in a lot of ways this historic. , heating up. Parliament is in session and Boris Johnson has issued mps with an ultimatum. Either we leave or i call elections, a snap election. Cable has hit a 20 low, the u. K. Gilt yield has fallen to an alltime low and cable closes where it is right now, we will see the lowest level since 1985. Joining me in berlin is a man who remembers 1985 well. Bloombergs Richard Jones from the mliv team. It was a great year for me. I remember watching back to the future. Matt i think i was nine. Lets look at wcrs. This shows the world currency moves. Ive set it to one day, showing the dollar against other major currencies. Everything is down against the dollar with the exception of the yen, the aussie floating around but the pound is the biggest loser of all. Why is the pound getting hit so hard if parliaments getting together to stop a no deal brexit . Richard there is a coming together of reasons why the pound is getting hit but the problem with u. K. Politics is there are too many ifs and investors will sell that currency because you need political certainty for investors to believe in the currency. Too many uncertainties with sterling so that is a contributing factor to why the pound is falling but u. K. Data has turned out on the soft side. Manufacturing pmi yesterday was disappointing and retail sales were ugly. Readingse will get pmi into more construction and services tomorrow that are weak. Is a confluence of factors but the Political Uncertainty is the big driver behind pound weakness. Matt you dont see this kind of weakness when you look at eurosterling. I am looking to buy a used motorcycle in sheffield. Right now, we are looking at 91 pence per euro. Last month, it was 93. Why arent we seeing superlatives there . Richard the euro and the pound are both suffering against the dollar. You are right to highlight Dollar Strength as a driver, but the fact that the euro is still gaining against the pound shows how weak the pound is because even the euro, leading against the dollar is matching against the pound. 1. 1840looking at the level in cable from 2016. The levels in eurosterling are 9415. 90 415. It is just a little longer. Matt Richard Jones from bloombergs mliv team. That is it for the market open as we head out, lets recap u. K. Assets. Below a look at sterling, 1. 20 at one point 1965, the lowest level since 1985. Francine at westminster, rebels and Boris Johnsons party vow to defeat a no deal brexit. Pounded, gable drops below 1. 20 for the first time in more than two years as downing street threaten snap elections. Chinese and american officials struggle to agree to a plan for the next meeting. U. S. Futures point lower before wall street returns from holiday. Good afternoon if you are watching from asia. Welcome to bloomberg surveillance.
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