Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20240714

Loses another vote on an early election. And citigroup warns over trading revenue in the Third Quarter as the bank of america exec it if says his traders are doing ok. How is Morgan Stanley holding up . We speak with the ceo later today. Welcome to daybreak europe. I have three words for you. Need for adjustment. That is the tone coming from the germans. And it was the bone that whacked the bond tail. Interesting to see the global picture around bond markets being transformed by the trade narrative last week and also the hawkish talk we are getting from the ecb. Particularly northern europeans. Yes. Big move on 10 year notes over the past four days. 19 basis points. Guest post andr get a Quick Response in terms of what he thinks. Just having some difficulty hearing you. Lets turn our attention to the germans. I mentioned those three little words. Germany plans to run a balanced budget and it could be viewed as a case of an economic slump. Letterng to a finance obtained by bloomberg. Some investors have interpreted increasing chances of stimulus package, the finance minister is due to present next years Spending Plans to parliament today. Interesting stuff going on and a lot of talk about what kind of stimulus we will get. An increasingbe part of the narrative as expectations are trimmed. With the ecb will perhaps do is in the weeks ahead. I have had a lot of conversations in recent weeks. Will it take the form of tax cuts, infrastructure spending. Our colleague matt mona met miller bemoaning this. A lot is in the mix. Back from what our Global Trends in Politics Around trade tensions between the u. S. And china. The other thing that comes into play, we had in the last hour. Christina gard is advised to take over. I had a conversation with my last guest. Sterling could be a haven currency because of the pressure that Christine Lagarde might bring at the ecb. Could she reach deeper into a playbook which may be buys equities and know that is something that the germans would balk at. Interesting to see how that contrarian view, how far will pristine lagarde push the playbook at the ecb . That is a question we need to ask ourselves. Sight as wenot lose gear up for the second and appearance at an ecb meeting, he is betting ready. He is perhaps thinking about legacy. Lets talk about what is going on in these markets. I have the pound in here. Haven or not. Last week we were looking at two months volatility. It is a contrarian view. Anna higher than the mexican peso and the argentinian peso at that point. Anyway, here is the Great British pound. Boris johnson loses another vote. He has not won any yet. It hides a real divergent performance. C wer see weaknessanny we see some weakness from china and new zealand. The Great British peso i suppose is the next subject of convertibility for me. Lets talk about the oil market. Chased so much and achieved so little. We will talk about that later. Look at wti. Rising for five days in rl. In a row. They liked what they heard here in abu dhabi, which is no radical change in oil policy five days are are. In a row. Lets look at the rest of the risk assets. We talked about 10 year Government Bond yields. We have a fourweek high in the u. S. What scared the horses . 19 basis points in four days. Positive. Onds went to there is something to put into the bond market to perhaps something a little more telling about our relief. Lets see who is right. Lets get to hong kong with the first word news. Annabelle thanks. Minister Boris Johnson says he will continue to work for a deal with the eu while preparing for the possibility of leaving without one. He was speaking after the suffered a sixth defeat in parliament, this time over another possible snap election. Ckwould require johnson to brexit to seek a brexit extension. Parliament has now been suspended for five weeks. No matter how many devices this parliament invents to tie my hands, i will strive to get an agreement in the national interest. This government will not delay brexit any further. Hong kong leader carrie lam has rejected calls by protesters for u. S. Legislation requiring annual assessments of the citys special trade status following more unrest this weekend. Lam said such foreign intervention would be extremely inappropriate. I strongly disagree with foreign interference in hong kong issues. I deeply regret such a move. We all have to be respectful to each other, especially on an international level. Annabelle italys Prime Minister has won the first of two confidence votes in the apartment or limit. He pledged to draw a line on italys clashes with the European Union and vowed to work closely with brussels on a 2020 budget. Is Government Faces a senate vote later today. Global news 24 hours a day on air and on tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Thank you very much. China, lets talk about the latest on trade tensions. They have made lots of progress in trade talks, according to treasury secretary steven mnuchin, adding that chinese officials traveling to washington is eight sign of good faith. Is a sign of good faith. Manus and we need all the signs we can get. Newspaper has run accused beijing of alleged cyberattacks, forced technology transfers, and currency mip relation. The current the paper calls them lies and they said quote, they handed the process of the trade talks. Navarro made the comments an interview with yahoo finance. The markets continue told bloomberg the company is resilient. Probably theis manufacturer who is best prepared to volatile markets. Why . Because flexibility is clearly areas, in particular in production, we are most focused on. We know from the past that markets are not volatile. Our guest this morning is president of honda. It is great to have you with anna and myself. Can we get your sense of where we are . The markets got rather enthusiastic about the prospect of a deal. The man in charge of the currency, he is going to the u. S. For me this says the currency and currency war is probably more heightened than ever. Know there are so many things on the table. I think they could be overly optimistic waiting for a trade deal. Is not just about trade, it is about ip rights, the currency, navarro has now raised cyberattacks. There are a whole host of issues now on the table. The idea you just deal with us on a oneonone basis with a small delegation coming from china is not what it is about. Trade negotiations usually involve a large number of parties and committees preparing for the discussions. Is that those discussions and committee levels are not really taking place. So what we are seeing is a show, trying to show the markets, trying to show the United States that the chinese are giving in. The chinese are not giving in. Anna so what will break this then . Will it be the u. S. Electoral cycle . Takeat what is going to away this . Guest it could very well be. I have been an observer of u. K. Parliament and i watched all the votes. They areck me is getting into trumpian politics in the u. K. There is a display of populism that we now see in the u. K. Which is unprecedented. So if you look at brexit, i think many things are on the table. But i think, as we know, government has lost six votes already. The space for finding an agreement is much reduced. What we have heard from some of the ministers, and an mp who resigned, is the government is preparing for a no deal brexit. So that does not all go well for reaching an agreement for the 31st of october. Manus we will get back to brexit in a little bit more detail very shortly. We have some data on the inflation side. We popped this into gtv. Is the inflation data from china telling us and what is the risk to the world . Consistently below 2 . Again, down for a second month. Is there a transfer risk coming from china to the rest of the world on top of trade angst, perhaps deflation . Where would you lean to. Deflation, oh sickly because i think the renminbi will be weakening. And as well i think china will look at lowering its export prices, diverting trade from the United States. We are already seeing that. Asian countries and the eu. Two things are happening. Lower your export prices as much as possible, improve logistics andlower transport costs, export prices being brought down by a weaker renminbi. This is part of what i think china needs to do, but also what the markets are imposing. It is perfectly normal for the renminbi to weaken given the trade wars and economic war more generally with the u. S. So nothing surprising about that. What is surprising is the accusations of manipulation by u. S. , like navarro in the while at the same time the u. S. Treasury has said we do not see china manipulating its currency. How much further can we run on optimism around trade without any facts . We have seen cyclicals in the u. S. , looking at the moves yesterday on the s p. Thearticular circulars in last few days have responded pretty positively to the latest trade talks. Certainly thursday and friday last week. Can we run further on that or do we need concrete facts to come out of trade talks . Guest i think you are absolutely right. You need some concrete facts. Markets are latching onto any positive news, whether it is on trade deals, on brexit, that you might not have a no deal brexit. The markets are latching on. I feel that they are being overly optimistic. I do not think anything is going to come out of the meetings when they meet in the u. S. Simply because you have much more on the table than can be resolved in these relatively short meetings. Second, trade negotiations are not done in the public sphere. What is puzzling about this trade negotiation is that it is on twitter, it is on all sorts of announcements. But trade deals are usually wellprepared months in advance. Then you just declare what you have reached at a conference, at a meeting. This is not what is taking place right now. Anna sometimes it seems we are trying to reconcile two worlds through the narrowness of trade talks. Thank you. You stay with us on bloomberg daybreak. Coming up on the program, talking a lot about cars. Bloomberg races off to the frankfurt auto show where matt miller is waiting to bring us some fantastic interviews. A stellar lineup. Park yourself and stay tuned. Plenty more coverage of electric vehicles and beyond. This is bloomberg. S bloomberg. Manus this is bloomberg daybreak europe. Anna lets check in on the markets now from asia. We are joined from singapore with details. We are seeing the bond selloff continue in asia. Up by six basis points. When it comes to markets, mixed to flat on the asiapacific index. Have banking stocks look looking pretty good in japan. Weaker yen also helping. Not much action in hong kong today. Weakness in chinas market, down by about. 5 . Pork producers doing very well. Of course the weakness in chinas market really as investors tried to scramble to work out what the next picture mixed picture will mean in terms of stimulus. Rise in porkge prices due to the african swine for that saw inflation remain at 2. 8 year on year. You can see the red bar. That is pork prices up by almost 47 . That is the sense we saw in terms of 1. 8 contribution to the 2. 8 inflation figure. Of course we know we saw on the factory floor some deflation so this all as to that conundrum as to what authorities are really going to do when you have inflation meaning strong on those food prices and deflation on the factory floor. It is a global issue. Thank you very much. Lets get you up to speed with your morning headlines. We work and its largest investor are said to be discussing the possibility of shelving its anticipated share sales. Bloomberg understands softbank is pressing the company to postpone the ipo amid concerns about losses. , its Business Model and corporate governance. We work was expected to hold a roadshow to promote the offering this week. Barclays is setting aside some 1. 6 billion pounds in extra provisions after a russian lastminute claims for insurance. The bank has been hit by more compensation claims following a regulatorset deadline to the scandal. The bank ford years and cost the industry more than 53 billion pounds. The u. S. Grupo stays has launched an antitrust investigation into add practices at google. It aims to investigate concerns the company is raising costs to advertisers and questions whether consumers are getting the best information from search results. The Group Includes all but two american states. Bmw has set aside 300 Million Euros to deal with the possibility of a hard brexit. Is bracingcarmaker for disruption from the uks you exit and potential for worsening trade tensions between china and the u. S. We had communicated that we had 300 Million Euros of provisions in our 2019 planning. This was under the assumption that a hard brexit would occur in the Second Quarter of 2019. Annabelle and that is your Bloomberg Business flash. Anna thank you very much. Gets johnsons attempt to approval for a snap election has failed for a second time. It marks his six consecutive defeat in the houses of parliament. He promises to work for a deal with the eu. No matter how many devices this parliament invested time i hans, i will strive to get an agreement in the national interest. This government will not delay brexit any further. Foundere president and is still with us from our studios into by. Dubai. Im interested to explore an International Perspective on what happens with the brexit negotiations. If Boris Johnson or somebody has to go to brussels and ask for an extension he says he will not, but we will see to offer an extension, the eu 27 might not grant the length of extension being requested. I heard someone from the french government saying how they might be persuadable on a very long extension. That could have big implications for the brexit process. Guest i think the eu is running out of patience. We know that. They have said so on several occasions and also on the occasion of the last extension. So if there is going to be a choice i think the eu will say please exit now, we have lost patience. Or if you really need more time, lets have a one or twoyear extension. I think that is probably more on the table. The question is what does the u. K. Government under Boris Johnson have to play with . I think the main issue is one thing they did want to address. Andas to do with migration eu citizens in the u. K. And vice versa, u. K. Citizens in the eu. What is critical for the u. K. Economy is not so much about agriculture, manufacturing and industry. It is about the services sector, and that is about people. You have got several million on both sides. So will Boris Johnson accept the idea that you keep the gates open and have more eu citizens remaining within the u. K. . I think that could potentially be a dealmaker if they are willing to give on that central issue. Quite apart from the back drop backstop. Manus cannot just pick up on a point you made . They would be open to a 12year extension wouldnt that embolden a tory position in the election . You say 1974 is a roadmap we should look at. Should to the country i govern. But that did not work. So briefly talk us through that scenario. I think 1974 is a good example the difference i think would 1974 is that now the u. K. Economy seems to be performing reasonably well. You have had much lower growth. People are pointing to unemployment remaining steady at lower levels. That number on unemployment should be viewed with a bit of attention. Mainly because you also have exits of eu citizens away, and that has kept the Unemployment Rate low. Manus stay with us. More to come. Talk about the new appointment of the new Saudi Energy Minister right here in abu dhabi. Abu dhabi. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Site is basically a healthy market but because of the trade war, china is basically a healthy market but because of the trade war, the entire market is in the recession. The w group is probably the manufacturer best prepared to volatile market. Why because of flexibility is clearly one of the areas in particular in production we most focus on. If something have to deal with. At the, that the day nobody knows what is coming next. We prepare for that. We have transportation transformation going on in the automotive. Top autof the executives at the frankfurt motor show commenting to blue burke on ns plating trade war may mean for the industry. Anna i am anna edwards in london. This is daybreak europe. Manus i am manus cranny in abu dhabi for the World Energy Congress. 2019. From bill as his leaders to central bankers, mario draghi is facing pushback against this final to millis package. European bonds have fallen as some european officials have raised sides over this study of a fullscale qe program. The executive board meets today to discuss policy options for the week. Boostb cut is expected to assets including u. S. Stocks and treasuries. Meanwhile in a new call, Deutsche Bank says the fed will cut Interest Rates by a full percentage point by january. Nasser sadie is a president and founder who spoke with anna and i in our to buy studios. You got pushback at the ecb from the board members. On the others we have the three little words from a germany which rocks the bond market yesterday. Need for adjustment. What is the scale of adjustment does europe need to move the dial . Despite the three little words, there is no consensus that germany needs to take the first steps. Whether it is a fiscal one most likely, most likely an end for structure and greater spending. The space is there. Germany can afford either tax cut or increased infrastructure spending. But at the level of the ecb, i think you are likely to get a cut as well as qe maybe an additional 20 billion euros in terms of qe. I do not think that draghi wants to rock the boat before Christine Lagarde assumes was possibility. They do not want to preempt any choices she make make. But we already know what she is thinking. She is dovish. She is looking for monetary easing. Bothhe has already stated at the imf and more recently in european parliament, that the time is now right ripe for a fiscal stimulus. Overall across the e. U. , particularly i think germany, netherlands, and a couple of other countries. Doesnt seem to you that the countries that have the headroom to do fiscal stimulus are not usually the ones most enthusiastic. This thatur take on we have really changed the narrative here, that nurse germany is converted to the idea that germany is converted to the idea fiscal stimulus . I think this is a delicate moments weathered as central bankers are ministers of finance. Theyre looking at the potential negative effects of brexit. There thing a slowing on the european economy and particularly germany. This is the time at which they need to take action. The action is no longer really on the monetary side. ,ou already have negative rates you have negative bond yields across all, practically all european countries. There is not so much more, not much more you can do on the monetary to millis decide. What you need to do is to move on the fiscal side. I think one other thing you know avenue government in italy. Content is now in power again. Is now in power again and you need rapprochement with italy. Fiscal stimulus or fiscal easing be one of the items that would bring italy on board. So if you look at this configuration, brexit risks, slowing germany, attracting italy back into the fold. All of that points to greater fiscal stimulus, or at least easing at the stage. Anna let me ask you about what is happening at the fed. I was drawn to this chart which talks about Inflation Expectation in and broadly speaking Inflation Expectations trending downward during 2019 in the United States. This seems to be fairly supportive of those who suggest that further stimulus is needed from the fed. What are your fed expectations . Think the inflation figures are not really the indicator that the u. S. Fed will be looking at. I think that would be more worried about trade. There will be or worried about sewing pmi, less growth in pmi. The performance of the u. S. Economy inflation excitations have been low. If you look at swap rates youre talking about manus nasser one of the things i kept an eye on, sorry i interjected. My apologies. Ishave a charge and it called not so great expectations. And i looked at a couple of things before we looked at air today pretty thing a biggest challenge for the fed is this. The language they use tomb move the dial in a Inflation Expectation this is the problem one your rates three or extent take since three year Inflation Expectations are trending down. This is the single biggest challenge for the fed. Thats true but what is that that the fed could actually do. They have already eased, they that stopsny contracting their Balance Sheet theyre probably going to get a cut in rates. My guess is maybe half a percent between now and the end of the year. But theyre so much that you can do on the fiscal side. The problems are elsewhere. Theproblems are in terms of trade war with china, the problem is that the fiscal stimulus from the tax cut has already had its impact. It had its impact last year. You do not see an additional investment in u. S. Corporations. Real investment. They have used a the tax cut to buy back their shares. But you have not really had an investments to millis. So much that really is going to be you have not had an investment stimulus. Most of it will be on the government fiscal side and less on that what the fed can do to revive the economy. Anna all the parts of the u. S. Economy that you think are already in trouble or already in recession . Bloomberg businessweek has a great profile of some of the suppliers to the Agricultural Sector in the u. S. Some of those have been targeted specifically by china and their tariffs, havent they . And really raising question about the extensive resilience in that part of the s economy. Where your fears focus . I agree with you. If you look at chinese, the chinese riposte to the u. S. Trade war, they have been much more targeted, in terms of agriculture, the car industry soon and practically all areas which are likely to be important for trump politically. Where is trump on the other hand has had a blanket approach in terms of imposing tariffs across the chinese products if you look at china the impact has been particularly in a number of areas agriculture, and manufacturing and others. They have held off on technology because they need the chips and other inputs coming in from just manufacturers. But that is i think word is going to hurt. And it is going to continue hurting. And i think will accelerate. If youre thinking about the midwest and central United States, those states are going to be hurting in the months ahead and the are had. Unless you get a big surprise on the trade side which i do not see. Anna right, yes will look for progress there that could change things. President and founder. To itsoil has gone highest level in six weeks. Saudi arabias new Energy Minister committed signal his commitment to production i had of an opec meeting, the j mmc later this week. Stella prince abdullah zazi bin salman and said there will not be a change in the kingdoms oil policy. Rising or nott rising. I think the market now is driven by negative sentiments. Emanating from a negative use. Views. Negative the new mentor Energy Minister someone my next guest the kingdom looks to cut local demand for fossil fuel over the next generation. Were Noble Energy Company medstar want to contract forces first wind power plant in the kingdom earlier this year. Will have the interview with rahaimani as he joins me. New policies, what can you expect what you hearing . Policies that the within the kingdom will not change. During abu dhabi we announcety week, the new Renewable Energy and program which was increased from around nine gigawatts to around 50 gigawatts by 2023, with a mix between solar the majority would come from solar, wind and some concentrated solar power. We do not believe or foresee any change from that policy. Actually currency currently we are involved in an ongoing tender within the kingdom of one for gigawatt scattered in different locations in the kingdom of saudi arabia with like to hear more on detail on that. Why do you expect to be able to tell us more. The tender process is ongoing. We believe that by the end of this year, the First Quarter of next year, the winners will be announced. Ok and for you, if i look beyond the kingdom of saudi arabia, where next for you . Over the past 12 years has been and will continue mena based in the gcc, the region and europe. Also this january we announced a new entry into the americas. A wind project in texas and new mexico. And we are also planning to increase our position in the United States. Manus i would like to go back to the Sovereign Wealth Fund it has been incredibly Important Role here in our kingdom in the uae and in saudi arabia. Have you had any contact with the pif and are they looking for partners in regard to renewable projects. Youre smiling. You had a chat. What has been the discussion. I was in riyadh todays back and had the pleasure of meeting the pif team. We are working with the pif team on different projects. Toyou recall, i go back january because that was a major announcement. The Renewable Energy program in the kingdom of saudi arabia was split between the authority which runs the auctions are was called the reverse auctions, rebdo, and then you have 70 of that were noble Energy Target will be directly negotiated with is a majorf strategic component of the renewal Energy Program that will be executed in the kingdom. Therefore, yes, we have strong relationship with pif. Obviously us and our partners, we have a Strategic Partnership ,ith energy to france, edf which one alongside us the first and largest onshore wind farm in we are working closely with them to hopefully try to get a piece of that. Manus i always like it when we have a ceo that has her sponsor belly for something in the United Kingdom. I want to get has response would like the ok i to get your opinion on and offshore wind farm. We are looking at daily changes on biscuit on brexit. What is the risk if we go for a hard brexit, what have you put into place to ship your power into europe . What is the risk . Like you said, the United Kingdom as a strategic market for us from day one. Still is. We have invested north of a billion sterling in the offshore wind portfolio within the u. K. We are actually working on expanding that portfolio as we speak. By theyoure not put off Political Landscape changing . Obviously has a shortterm impact. You have seen it on the exchange or on the pound. But at the end of the day we are strategic longterm investors. Manus say putting a billion dollars work that gets it. Very successful in the United Kingdom. We recently announced where now you have it. Manus lets go. Alongside the u. K. And for stretcher project authorities and zuke capital. We have cornerstone funds to expand infrastructure for e mobility within the kingdom. Our plan is to double the info structure of rapids chargers across the u. K. And this is just recent. If this was not announced by the u. K. Government, here you have it. Cohostyou know what, my know she likes to say it too, about electric vehicles per great to have you with us today. Thank you for joining us. Thank you for breaking in his. Of muss are. They go, anna, in you like to recharge often and efficiently. Ana very interesting from personal level, that news breaking therefrom i would have a. Abu dhabi. Car theme. Carmakers are the spotlight. One of the Worlds Largest auto shows that kicks off. The industry is reeling from a longest downturn in decades. Can the pressure subside. Here dani burger. The Worlds Largest car markets are facing an uphill battle. Auto sales in china have fallen for 14 of the past 15 months. The latest rating we got 10 slump fromd a year earlier. Even though china rolled out measures to encourage consumption. Here, trade tensions are starting to bite. They are american equivalents, they have not been immune either. Moodys has downgraded fords rating. China said set to impose a 25 tariff on u. S. Cars know the end of this month. Near the end of the air. Near the end of that year. Morgan stanley did recently turn positive on the industry. Still, during the past 12 months, european auto makers have slumped nearly 7 . Things could get worse. Bloomberg intelligence estimates that a no deal brexit threatens at bmwet euro sales because so much of the market is in the u. K. That is problematic for renault and peugeot, the french automakers. There unhedged the currency. It appears they are pulling back from the u. K. Markets but had can the kit still escaped the global downturn. An matt miller doesnt speak to psa groups ceo shortly. Bluebirds dani burger. When youre traveling to work tune into Bloomberg Radio is live on your mobile device and in the london area. The team will be bringing you news on the auto sector from the frankfurt motor show with regular updates. This is bloomberg. This is bloomberg daybreak europe. Anna i am anna edwards in london. Manus i am manus cranny in abu dhabi for the World Energy Congress. A signal of production cuts ahead of the j mmc meeting. Minister, welcome to bloomberg. Good to see you. Youre going to be working with the new saudi minister. What can you tell me that the language he is using is no sick can change. What do you take away from no significant change. What you take away from his message . These are reassuring messages. This is consistent with saudi arabias policy and traditions, surprise. I mean no the summing very good that the Business Community global Business Community would hear from the biggest exporting oiltry saudi arabia minister or Energy Minister to confirm the commitment and plans of saudi arabia. Which is very good. To variousre talking people, you have access to all areas. What do people expect, did expect the saudis to push for more cuts and put the stamp of the new minister on this meeting . I cannot speculate. Whater i would say that effort that was done lets say two years ago, the opec and opec plus meetings is the effort in order to stabilize really, the prices there between consumers and producers. And what is happening with that is the followup of what j mmc is a followup of what the customer and countries are committed to. And hence the latest changes in saudi arabia. The messages are very clear that underwayfull alignment for the commitment toward the previous announcements. Manus lets talk about your own ministry and what youre achieving in egypt. Can you give me your Gas Production now, how much that is going to be next year . A lot of people coming to talk to me and they tell great egypt story. Can you give me your numbers to validate that story . We are talking today the prussian is that the level of 7 billion cubic feet per day. This is on an average basis. Bcfd byo exceed 7. 5 next year. A good plan. Is and an ambitious plan as well. It all relates to do things. The first, when you grow production you need to know where are you going to put this production. So whether the domestic market or in exports. Manus and how is to mektic demand . In artemis to command where not satisfying we are not satisfying domestic demand currently. And we have already x her quantities that we are exporting. So the challenge that is happening now in the Global Energy market, the prices are not that encouraging by the way. Manus you think theres going to be more pressure on the prices . This is what we say until the end of the years of our. This is for energy. Manus how much could a drop by . It is already very low. We save is making an average of btu. Ollars for a million this is not an encouraging export price for sport car. This could change somehow the plan. It could change not only the plan but also Strategic Directions for the future production of natural gas. Manus if it goes lower you could pull back in some ways in production is that we are telling me echo yes and last month we had not last month, for week we had called three cargoes to be exported. On the spot market. We do not receive goods prices and so we canceled. There is no meaning of exporting cargoes manus you came out of dr. So tense adnoc stand. What are you did with adnoc . The investment environment in egypt is attractive. Manus more money into egypt . That is what we were discussing his opportunities that adnoc could seek in egypt. We have a big range of opportunities. Manus what he is interested in. Retained fuel bunkering and aviation perhaps. We tried to grab anything at any of these opportunities manus his a hard man to do a deal with. Your excellency, thank you for being with us joining us on bloomberg. That is Tarek El Molla egypt Energy Minister it is all about the elegy spot price. To all our users, are bloomberg viewers, you can interact with myself, anna, or the dtv chart. Where there are we on tv. Catch up on the analysis, send your questions into the ministers and to the other prime guests we have on bloomberg. Radio is always in your pocket and on your side right here at bloomberg. Manus good morning from abu dhabi. Live from the World Energy Congress with anna edwards in london, its daybreak europe. Relief for now. Bond yields higher. Because of the trade war, that is a new situation that is scary for us. Brussels. Ns in the eu after the u. K. Loses another vote on an early election. Of reducedarns revenue in the Third Quarter as bank of america says traders are doing ok. How is Morgan Stanley holding up . Youre going to speak to the ceo today. Anna a warm welcome to the program. Alsothe city of london, from abu dhabi, where manus is talking a lot about the oil market. We are looking at equity markets , our guests in the last hour, we talked about how much we can continue to rally without any firm news flow around trade. Manus yes, what is a good deal according to the president of the United States . Analysts cutting earnings expectations without something decisive. For me, i know i read a lot. Three little words. Need for adjustment. Indeed. We will be looking for talk around fiscal spending in germany later this morning, what we . Lets talk about futures for equity markets, an hour away from the start of European Equity trade. This is how things are shaping up. We are looking flat. France negative. U. S. Futures point downwards just by a little bit more than this. That could be crucial later on. Point 2 rightro now. Looking for weakness stateside. Have we run as far as we can on last weeks optimism on trade talks . Optimistic. Mnuchin progress is being made. You wonder how that dovetails into what we are expecting from the ecb this week. Investors are paring expectations. There is a consortium, isnt there . A consortium of voices within the ecb that are going to push back on the mario draghi swansong. Letup a look at bunds along with treasuries. Those three little words from the chairman have reengineered pricing. Certainly we saw a huge move last week. Atative yielding bonds record shifts. We see that dynamic at play along with the prospect of fiscal response. Andeally retraced bunds that repriced the treasury curve. We are just off four week highs. We moved 19 basis points in the space of four days. Deutsche bank saying get ready for another 100 basis points of cuts from the fed. We will discuss markets in a little but more detail with our guest host. Juliette saly has your market check with the asian perspective in singapore. Bondtte we have seen the selloff continue in asia. The yield on australias 10 year note up. We have seen a big rise coming through in banking stocks in japan. Of course, the fact we have a yen closing of the session firmer by 0. 4 . The flat in terms of hong kongs stocks today. China lower by a third of 1 as investors start to wonder what kind of stimulus the authorities you have ppi in deflationary territory for the month of august continuing, Consumer Price at 2. 8 year on year for the markets. Slightly above estimates. Most of that was driven by that surge you are seeing in prices. There has also been disappointing data in terms of auto sales. We have seen car sales fall for the 14th time in 15 months. We have seen sales of sedans, Sport Utility vehicles, down by 9. 9 year on year. This has had an impact in terms of what we are seeing with carmaker stocks in china today. They are under pressure as well, but it is starting to move in terms of what we can see from authorities with stimulus because there has already been this move into the auto sector in terms of the assumption. They are not going to like the fact you have seen a decline in car sales for august. The court date in 15 months. Going to likes that. If there are more tariffs from the u. S. , it could get ugly. Have made,d china quote, longterm progress in trade talks according to the treasury secretary steven mnuchin. Adding the chinese officials are coming to washington, all a sign of good faith. Paperchinas staterun has singled out Peter Navarro for accusing beijing of cyberattacks and currency minute elation. They said they currency man if you elation. Manipulation. The bmw ceo told bloomberg the company is resilient. It is the manufacturer who is best prepared. Why . Because flexibility is clearly we must focusas on. We know from the past markets are volatile. Anna lets talk about global trade, the tensions there. Joseph, very good to see you this morning. Let me ask you how optimistic you are feeling around progress on trade. Do you seeur solid progress on trade . It is hard to point to a precise data point that is really significantly improved. I think over the last couple weeks or so in european contexts and more globally. The tensions around trade, the geopolitical situation continues to run blonde. The question is the extent to which that is going to begin to impact and infect the Global Economy outside of manufacturing. Are we going to see any damage be done to the labor market . We are pretty constructive. We think so far we have seen impactmited amounts of on the manufacturing sector. Labor markets globally. To look in much better shape. The critical thing is an environment where policymakers have the tools and the capability to do something to support the macro side. Anna manus . Manus joseph, good to see you this morning. Good morning. Manus my question to you is, Deutsche Bank coming out with a note this morning, another 100 basis points of easing is what they reckon. They say unless donald trump gets a big shocker in the markets, he is not going to look for in offramp. The things i find difficult to put together. Yeah. Clearly a lot of uncertainty around the political issues. The question we are asking ourselves is the extent to which that continues to begin to have an impact in terms of corporate fundamentals or the broader economy. I think what we have seen is not just in the u. S. From the fed, but also in europe in asia, is enough evidence of preemptive policy. Enough evidence of Monetary Policy beginning to coordinate more. Thats really important. In environments of low global inflation, policymakers have the capability to begin to score and favor the macro cycle and financial conditions should they need to. Nejra lets talk about anna lets talk about the amount of negative yielding debt. I have this chart upwards above 17 trillion. In terms of negative yielding throughoutby a touch 16 trillion. Is this the start of something . Do we bring this pile of you negative of negative yielding debt . Government that has been a great diversifier in the past. The rally has been a huge boon for many multiasset investors. It is very tricky. What we know when we do our valuation models is that if a longer Term Duration is rewarding, we are being penalized for taking duration risk. We have to pay a high price we think to have that luxury of duration in our multiasset portfolios. From an Investment Strategy perspective, what you want to do is look at shorter duration strategies in fixed income both in the bond space and the credit space. Thats not quite the same as saying, we shoot for a rapid, imminent reversal in longerterm Government Bond yields. What we have seen is quite strong momentum, a lot of additional reasons, nonfundamental reasons people have been buying those Asset Classes. From our perspective as a multiasset manager, what we want to be doing is taking advantage of short duration fixed income as the element versus our diversified risk element portfolio. Avoiding longerTerm Duration. We are not expressing a very tactical view on that part of the curve. Does that duration, that shorter duration, the whole of the u. S. Curves, by the way, are under the feds futures. Is it still in the u. S. You want to focus . Withere is a challenge taking longerTerm Duration exposure globally at this point, manus. We think the valuation credentials are there. 12 months ago we may have made the argument that we are looking much more favorably on u. S. Government bonds. Whether we are looking at u. S. Or canada, europe or asia, the bond risk premium, the reward investors are getting for taking duration risk, is very negative. To me, what that means is we are being asked by the market to pay quite a high price to take to get exposure to that part of a safety asset class. Investor, i want to issue portfolios, other safety Asset Classes which can help diversify more portfolio. That might be fixed income in the Government Bond or credit area. It might be alternative risk rhenium trend or momentum strategy. You have to get more creative in how we diversify given what Government Bonds have the longerTerm Duration. We are all for creativity on this show. Joseph little, our guest host this morning. Lets get your first word news flow. U. K. Prime minister Boris Johnson says he will continue to work for a deal with the eu while preparing for the possibility of leaving without one. He was speaking after his summit after his sixth defeat in parliament, this time over a snap election. Despite protests by mps, parliament has been suspended for a period of five weeks. Many deviceshow parliament invents to tie my hands, i will strive to get an agreement in the national interest. This government will not delay brexit any further. Conteme minister giuseppe has won the first of two confidence votes. He vowed to work close in brussels on a 2020 budget featuring lower labor taxes and a better wage. His government now faces a vote later today. China fell 8 in from a year earlier, threatening to add pressure to the Global Economy. Chinas ongoing swine fever outbreaks are runaway price increases for pork, which is now higher than a year ago. Consumer prices rose year on year, slightly higher than forecast. Global news 20 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in 120 countries. Thanks very much. Let me give you a little bit of news this morning. Bovis homes and lindon homes trying to reengage in parliamentary discussions regarding a potential combination. If the deal proceeds, it would value the housing business at just over one billion pounds. There is a transfer involved. We will look for reaction. Now, we are live at the frankfurt auto show today, speaking to the host, executive matt miller is on the ground. Matt im just about to speak to the ceo of psa carlos tavares. Y had a record product profit margin. We will see what they can do in the second half with new cars like this. Anna looking come back to bloomberg daybreak europe. 40 minutes to the start of cash equity trading. This is bloomberg daybreak europe. Im anna edwards in london. On 10 19 in abu dhabi. Im manus cranny at the World Energy Congress. We are all focused on oil here. Of course, part of the story is the automobile industry. They are not the only stars at the frankfurt roadshow. Companies are dealing with trade wars that could move to europe as well as the growing specter of no deal brexit. Production. Uld move our and isr is on t standing by with the ceo of psa group. Manus. Ood morning, a lot of these carmakers are going to help consumers use less and less of the oil you reported about. I am here with carlos tavares, ceo of psa and the owner of opal as well. Here showcasing one of your new electric offerings. What kind of pickup rate do you expect for the electric product in general . That is still a challenge for us to forecast that kind of thing. It is obvious people are getting used to electric vehicles. They are looking for the network. They are expecting a higher density of the charging network. The pickup on electric vehicles will depend on affordability. Thats clearly one of the expectations on the range and the density of the charging. Those are the things that need to be aligned. Technologyy with the from psa group with a brandnew opal electric. Hopefully this is going to pick up. Matt do you have a solution or have you talked to competitors or governments about speeding up the charging network inflation . Of course. We are doing that. Authorities are going to be leading. This is what we tell them. To government says you need show the density of the charging network because you would not buy an electric vehicle if you are not comfortable with the idea that you cannot charge it quickly despite the fact many carmakers and psa are bringing chargers. Believe thee we government should do more. There will be a question about, what is the profitability of the charging network for the operators of that kind of service . That question will pop up in that question will pop up with the tax revenues. Fromll have to shift petrol to electricity. What will happen for the charging network operators, that is a question the government needs to verify. If it is not powered by coal, it should be better for the environment, not just profits for government. What about the Battery Supply situation . You proposed building a european champion for batteries. How does that look . That is a prospect we support. We think it is a great initiative. We think it should have been developed 10 years ago. We are waiting for approval from the European Union. This kind of support to the Industry Needs to be approved at the highest level. So far we did not get that feedback. It is expect it in a few months ahead. What about the margins picture . You had record first half Profit Margins at psa. This kind of vehicle puts pressure on those margins, electric vehicles. You are right. Theould put pressure on power of our customers. At least as a starter, it will be more expensive than conventional mobility. This is something people need to understand. Weare here to make sure preserve the communities in which we operate. This mobility will be more expensive. That is the reason why from a Strategic Perspective for our industry, we believe it is best to have a Battery Supply in europe. That is the reason why we are supporting this initiative. Course,to expect, of this mobility will be more expensive. Haveill notice very few announced the prices of their evs. That is not the case. How much . Euros. You have slumping car sales in europe, your most important market, in china. Do you have to focus on cutting costs, on downsizing . Is that the mode psa is going into . Carlos we are used to that. We have been looking at efficiency and effectiveness for the last six years, since we faced near bankruptcy in 2012. We are used to that. We are trained and fit for that. Transformation for the industry is going to be a challenge. It. Re ready for we are preparing over the last few years. We have other technology. Of ave the profitability very clean Balance Sheet. We have the capability to execute our plans. This is going to be very bumpy the next few years. Will you do in the case of a hard brexit . Will you shut down your plant where you produce the astra . I would like to step back a little bit. Acceptable to have a no deal situation. Good sense should prevail. Needs toed compromise pop up. Have not acceptable to positions where people show their muscles and let the two trains crashed against each other. Thats not acceptable from an ethical standpoint. Do notropean citizen, i accept brexit with no deal. I am here appealing to leaders and their open and flexible mindset. I dont want to consider a no deal brexit. That does not make sense for the people. It does not make sense for continental europeans. If bad things happen, we will adapt. We are able to adapt. We have been working with partners in the u. K. We are very pleased by the open mindset of our partners in the u. K. Now we need a deal in brexit of course. Matt thank you for your time. Carlos tavares, ceo of psa. Devices are like doorways that could allow hackers into your home. And like all doors, theyre safer when locked. Thats why you need xfinity xfi. With the xfi gateway, devices connected to your homes wifi are protected. Which helps keep people outside from accessing your passwords, credit cards and cameras. And people inside from accidentally visiting sites that arent secure. And if someone trys well let you know. Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. Anna good morning. Im anna edwards in the city of london. Markets say the cash trade is less than 30 minutes away. Futures point modestly lower. Unease ripples through the markets. Stocks trade mixed and treasury yields edge off their highs ahead of key centralbank meetings this week. The volkswagen ceo gives