Transcripts For BLOOMBERG Bloomberg Markets European Open 20240714

, because it is the trade war the bond market is sparking fear of a recession. That is a new situation. It is scary for us. There arermakers says provisions for brexit as Boris Johnson has to brussels following another defeat in parliament. Ppi bites. A late surge in insurance claims putting pressure on a promise of a buyback. Good morning, everybody. Welcome to the European Market open. This is what things look like in terms of the futures picture. Down attempt of a percent on the dax. If you are looking at u. S. Futures, we see downside. We have been asking this morning how much further can we rally on global stocks . Rally onfurther can we optimism around trade given we dont see any new developments . Progress is being made, perhaps we need another newsline to mo us from that. Suck about whats going on in the asian equity session. This is the gmm section function on the blue bird. A mixed picture for the asian markets. Quite a diversion performance coming through. South korean markets a little bit stronger. Emerging markets and negative territory. Earlier in the session, the australian and new zealand markets under some pressure. A diversion performance, really, for the Asian Session overnight. Fx markets losing ground against the u. S. Dollar on these em trades. The other side of the gmm, i want to point out bond markets. Government fixed income in particular. Sovereign bonds falling this morning in emerging markets and beyond. New zealand as well. Yields going higher. This time in global trade the goebel trends we are seeing, whether its optimism around the trade conversation that caused that risk, that rush in global bond markets, we also overlay on top of that declining expectations for what Central Banks globally are going to do. In particular, the ecb. Lots of hawkish lines from ecb policy makers, particularly the northern ones in recent weeks. That is being digested. Ecb meeting. D that lets get into the markets now singapore. Udmore in start with the bond markets. The is your assessment of driving seat . What is guiding us in a pivot point in bond markets . We see bunds react, we see the volume of negative yielding debt globally contracting. What is the driver for you . Are the driver here. The move in treasuries in august was the largest. We saw 10 year yields down by 50 basis points. An incredible move. Volatility through bond markets globally. This massive surge in debt. We are now seeing a retracement. Some people think we have turned a corner. That was a basic point for 10 year yield and we are going to go higher from here. Most people have been in the camp where they have thought this seemed irrational. This is another group of which i am one, going it makes complete sense. The data has been slowing down. Very sensible. I think 10 year yields can go more over the next six months. This is a healthy kind of position retracement. Yields can get up to 1. 8 and still be healthy in that longterm downtrend. We know the fed needs to cut me cut rates more. There is this kind of fear out there. I think that is serious based on the data we are seeing. Look things just did not right with all that negative yielding debt. That is a separate conversation, perhaps. Lets talk about volatility. The markets life question of the day linking to this turn in the bond markets. Has rate volatility topped out for 2019 . What kind of responses, what kind of conversations are you having on this front . It ties into your last question. Thispeople are hopping on narrative that we have the easing at the same time from the major Central Banks. Is not what i necessary necessarily buy into. The fact they coincidentally all seem to be doing the same month does not make it coordinated. The narrative, we have had a good run in many assets. We are seeing an unwinding of previous trade. Are seeing retracement in gold and silver, in the yen. Overall, trades did very well in august. We are seeing money taken off the table. We are looking for the narrative to go a little bit further before we get back into trading fundamentals. A move back into havens, into a riskaverse scenario again. Anna lets talk about the pound. I spent any a cold day outside parliament talking about brexit. One of your colleagues on the markets live blog saying maybe volatility in the pound will be ued along withog parliament. Typically we hear more extreme views from the political spectrum. That was the perspective. Generally got it more or less. I find it a quite optimistic take at the moment. No matter how much we all wish we could move behind beyond brexit, im not convinced it will go away. Just because parliament is not going to be in recess for the next few weeks. Volatility will remain. I do think this is a chance for a more positive narrative in the pound to continue. We get this pound relief rise a little bit further. Probably by the end of september we will start trading that more negative pound story again. France saying they are ready for an outcome of brexit. One of their ministers speaking what ipo that thought. Think you. Can join the debate on todays question of. He day reach out to us and the markets live team. Birdets get the blue first word news update. For that, we go to beijing and selina wang. Minister borisme 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 he suffered a sixth defeat in parliament, this time over another attempt to call a snap election. A bill requiring johnson to seek a brexit extension beyond october 31 in the event of no was agreedupon yesterday. Parliament has been suspended for five weeks. I will strive to get an agreement in the national interest. This government will not delay brexit any further. The flagship newspaper of the Chinese Communist party is taking aim at one of washingtons most prominent hawks. Areents from Peter Navarro being called unconstructive lies. He repeated what he calls chinas seven deadly sins manipulation. Ency byrie lam has rejected calls protesters for u. S. Legislation requiring annual assessments of the citys special status following more unrest this held a press conference and said foreign intervention would be inappropriate. Factory prices in china fell zero point 8 in august from a year earlier, threatening to add deflationary pressures to the global economy. Chinas ongoing swine fever outbreaks are runaway price gains for pork, which are now 47 higher than a year ago. Overall Consumer Prices rise year on year slightly higher than forecast. Global news 24 hours a day on air and at tictoc on twitter howard by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. You very much. Selina wang with the latest in beijing. Forit, the trade war, and one company, downgrade to junk. These are the themes preoccupying carmakers at this years frankfurt auto show. We will head there next. Matt miller waiting to bring us the latest. Bloomberg radio is live on your mobile device or on dab digital radio. They will have the latest. Live in the london area. This is bloomberg. Anna welcome back to the european open. Futures look negative. We are expecting to see sluggishness at the start of trade. Really we are waiting for the ecb on thursday. That is one of the big themes of this week. The volkswagen ceo is warning any recession caused by the trade war would be, quote, selfmade and unnecessary. The worlds biggest carmaker said the escalation between washington and beijing is negatively affecting customer habit. Especially in china. Matt miller caught up with him at the frankfurt auto show. Beenr business always has a Global Business with different markets and trade barriers. Now we really come into a situation where the trade war is and hasing customers the chance to really disrupt the world economy. China is basically a healthy market, but because of the trade war, the market is basically in a recession. It is a new situation that is scary for us. So far we have defended ourselves nicely. We can gain market share at acceptable levels. We hope that there will not be any recession on the midterm or longterm because it would be a selfmade recession, basically. You plan to invest more in china . We are heavily invested. We have 100,000 people. 90 are china. We have close to 19 market share. Are very much industrialized in china. But we are increasing in the united states. Investing in all major regions. A huge footprint at home. Are you thinking about reducing that is the German Economy slows . We are quite nicely set up. So far, we have full occupation levels. We have the possibility to scalar production side nicely. Introduced,s being. E will reduce our headcount not because electric cars require less labor, but we can manage this transition together with the counsel and representatives. Would you like to see a spending package out of berlin . Do you think infrastructure needs to be improved . I really want for berlin to commit to the electric car. That we make sure the electric but it isly accompanied by infrastructure. Anna matt miller speaking to the vw ceo. Standing by for a second day of coverage at the auto show. Normally when you see an auto reveal. Is about the why do you appear to be standing in front of a covered car . The productionom side, this is all about electrification and the trade war, concerns about global recession. From the gearhead side of it, this show is all about this product. We have been waiting for years to see the new land rover defender. It is especially popular in england, but also america, where we have not been able to get our hands on them for 25 years. Everyone is waiting to see this vehicle. It is sure to be the hit or miss of this show. Note taking a sneak peek. How are carmakers responding to threats they face . There are plenty of threats. We heard one from psa about isxit and how management refusing to accept no zeal can take place. Absolutely. Carlos tavares said, we paid these politicians with our tax receipts. They cannot allow no deal brexit. It is the one outcome that is simply not acceptable. Other automakers have said this really hits our bottom line. Cfo of bmwhat the told my colleague yesterday. We have communicated. Rovisions in 2019 planning this was under the assumption in theexit would occur Second Quarter of 2019. Unfortunately, this is just one of many challenges automakers are facing. Pressurecation means on margins. There is concern about slumping sales, and of course, the trade wars first and foremost. Anna we heard a lot about the density of the charging network and the need to improve the density to increase sales of electric vehicles. Thank you. I know there is also a downgrade to the death of ford. Matt miller at the frankfurt auto show. Lets get a Bloomberg Business flash. Wework and its largest investor are said to be discussing a possibility of shelving its share sale. Bloomberg understands softbanks pressing the officebased amidny to postpone ipo concerns about losses, its business model, and corporate governance. Wework had been expecting a roadshow to promote the offering this week. Citigroup has warned trading revenue is set to drop a quarter amid the volatility that gripped markets for most of august. The cfo told investors Investment Banking revenue is also likely to be down on a year ago. A Top Executive at bank of america said traders are, quote, doing ok. Of states hasoup launched an antitrust investigation into add practices at google. It aims to investigate concerns the company is raising costs for advertisers and questions whether consumers are getting the best information from search results. Includes and serves attorney generals representing all but two u. S. States. Thank you. We are minutes away from the open of the European Equity session today. Next, a look at the stocks we are watching, including a couple from the Banking Sector and barclays amongst them. The bank is setting aside 1. 6 billion pounds amid a lastminute rush of claims. This is becoming a theme in u. K. Banking. Anna seven minutes until the start of the european open. Let us get your stocks to watch from around the newsroom. Dani burger focused on barclays. Paul jarvis is looking at jd sports. Stephen first. Plenty of news flow surrounding the Banking Sector, the , there cfoine there talking about revenue. It is Deutsche Bank you are focused on. What about revenue they are . He said yesterday the revenue outlook is very great. Headwinds continue to be fair and a slowing economy, and he sort of softened the revenue goal for 2020. It is going to impact the stock i am sure. Jda lets talk about sports. Some analysts taking a very positive view of these numbers. That is right. Results this morning are very strong indeed. That is what you expect from a Company Whose stock is the best performer on the ftse 100 so far this year. Performance really is about 5 ahead of Market Expectations on the profit line. A couple of highlights. In the u. K. , sales are up more than 10 . Thats pretty remarkable for a in ataylor a retailer country facing the challenges that is. U. S. , they say encouraging performance to start with. All of this is going to add up to analyst upgrades to expectations. Stock picks up 81 so far this year. Market values exceeding 6 billion pounds now. Certainly these results should support that valuation. Trendmaybe the athleisure is bigger than brexit. Dani, the latest lines on the ppi story. Barclays, and additional 1. 2 to 1. 6 billion pounds for ppi. Their price target cut on the share for 20 . They are likely now a 2020 buybacks story. We are seeing shares called lower by 2 . Anna thank you for joining us. Keep an eye on house bills in the u. K. Will look to that at the start of trading in london this tuesday morning. A minute to go. Good morning, this is the European Market open here on bloomberg tv. A fairly mixed flat session in ashafment asia. We are expecting to see a little bit of weakness at the start of the european trading day. Whether thats treasury to start this move at the end of last week or a more positive narrative or whether you focus on the e. C. B. Governing council. What that means for expectation on thursday. We are seeing a little bit of a move up yards in yields. The pound spiking just a touch against u. S. Dollar as we lef nue to track the for the government in the house of common. Boris johnson yet to win any vote. European equity market expected to be weaker at the start of tuesdays equity session. Lets see how these markets get underway for tuesdays equity market session. Down by. 10. We talked about Deutsche Bank and barclays. Weve had some moves on oil prices. Ey going bia manis cran down. Lets talk about elsewhere on the European Market. Down. 03. The pounds. 02. It seems like thats the only move were seing in the European Markets. As has been the case, these two negatively correlate. And so we see that move there. Elsewhere, we see a more nuance picture. The spanish market, the defensive market. Either side of the flat side this morning. Health care seems be a big area of red. We see financials with a decent side red portion to it and telecoms are glowing red coming through there. On the other side, basic material, energy, stocks. Information system looking airly mixed. Lets have a look at the m. L. V. Screen on the stock 600 to see what it tells us about what is moving here on these European Equity market. 04. Dutch shale up brent up. 03. We see some outside of oil. Totel moving higher. Anheuserbusch up. 7 . Bank santander moving higher. I mentioned oil prices. Oil prices are firm up around alf a percent. Manna is monitoring that. He continues to do that. Minister of th the energy. Everything in terms of dealing with the ministry and codified, an armless relationship. Could i ask you who is top of the agenda . We dont comment on our banks. Where do you need oil prices to be to make this deal happen, sir . Again, we dont comment on prices or this is left to the market in terms of what price of crude oil. In the midst of that melee amin talkingdhabi, about which banks are going to run the listings when they happen. A lot of people are waiting for that news as you can imagine. Lets talk about whats going on n the European Market. Key Central Bank Meetings in coming days. The global bond selloffs. They hit their highest in more than two weeks. Joining us now is puja, the rate strategist at dominion bank. We didnt get to speak to you let me ask you about the latest moves. We saw through august, a lot of volatility in the bonleds base. We saw yields coming lower and lower. And now a turnaround. What is driving this . Is it the better news on trade last week . Is that all it took to turn this around . Yeah, so if you think about how very how we got there, it was basically because of the u. S. China trade war that had this extreme pricing in july. The last couple of weeks, we have seen the boston news around the u. S. China trade wars. I think we have got some pushback are the e. C. B. Members in the recent times we had. We had e. C. B. Not saying that at this stage we may not go for the program. Its basically markets trying to realize that were back in september. And certainly Central Banks dont have all the money that we need right now. So i think its just a pullback on the extreme long position that we saw in the bond market. What are you expecting from the e. C. B. . You referenced it there. Thats also part of the conversation around boons at the moment. The market seems be reigning in expectation with the stimulus and still expecting big things mario dragi. Looking at thursday, we are looking for a package of policies. So we are looking for a dpo is it trade cut. We are look for a cue wi program. This should come along with a eposit system as well as strengthening our trade guidance. The contentious issue is on qui. Theyre still divided. I think if we get brs 30 billion move some people have expected mario will play with the timing the implementation of any q. E. When we see how trade tensions play out towards the owned the year. Whats your expectation of that . Is that one way that he could take on those hawks . In july, he basically did open doors to all packages which included q. E. I think right now if he does this open door to q. E. It would come as a disappointment to market. We have seen some extreme pricing on market. The entire market trading negatively. So i think he will not make markets happy. But ive seen in previous announcements we could get the announcement right now. But it takes place from november on wards to give markets some time to actually prepare for the new q. E. Thats come in. If he wants justification, perhaps he looks to global inflation to guide him. Im looking here at chinese p. P. I. And that does seem to have bearing on the european inflation story. Weve seen chinese p. P. I. Really lagging in recent months. This will be part of the narrative come thursday. Yes. It has not been as bad compared to the global economy. And be have talked about we have talked about brexit and the auditor sector that gets manufacture. As wells as the u. S. China trade war. I think he had the same issues. There are certain issues that have not been concluded and they have to act just because markets have so much better on this its a sort of landry list of it. These executives reacting to the same things. Let me ask you a little bit about volatility there in bond market. Were asking as our question of the day. And as rates volatility topped out for 2019 we saw the guests. Things look calmer on the trade front as you would expect. That . Theyre preparing for easing coming in from e. C. B. Members. We are heading toward a time where we could see some conclusion with respect to everything including brexit. I would say, yes, but this also have lots comes with lot of expectations from central bank, central bank poll mackers. Right now, everyone thinks that fred whoever you talk about in the Central Banks were looking for easy expectations. Thats the global narrative. Stays with us here on the program. Just minutes since the trading day. This around the housing sector. Alex up by 27 in talks with bovis or the housing deal. We talked about that earlier. As a result of those talks that are now taking place between those two businesses to come binal that housing unit. Up next, brexit provision, b. M. W. Set aside 300 euros. Well hear from the interview with the commenter c. S. O. This is bloomberg. Welcome back to the european open. 12 minutes into a trading day. But looks slightly negative really. Things worsening as we go through this european session just getting through the start of it. 1 . Own by. 3 of you see the negative correlation with what goes on with the pound. B. M. W. Is bracing for disruption from the hard exit from the european union. Bloombergs caroline conan spoke with nicholas peter. B. M. W. Is probably the manufacture who is best prepared to volatile markets. Why . Because flexibility is clearly one of the area in particular in production we most focus on because we know from the cost that markets are volatile. We have this facility in the last couple of years. And in previous years, do we like to see a volatile market. Of course not. Its always easy if everything is predictable. But we are well prepared. Why are we well prepared . Because we have a Strong Production footprint on onehand side and the u. S. We invest in the u. S. As we speak. We are strong in europe. We invest you open a new and we extend it. In europe the main concern is brexit. Have you set aside any provision in case of brexit . And do you have exkoreaned concerns and whats going to happen after this october 31st deadline given whats happening in the u. K. R. We mentioned it and communicated over the last year at every possible opportunity. B. M. W. Stands for having said what would we do. From october. Is empty , it makes treatmently likely that w. T. O. Tariffs would be introduced. That ld mean that we have in order to upset the negative impact. And this, of course, we would have volume. Impact and the Volume Impact is finally leading foot action. This is why we really urge to a a solution and to avoid hard brexit. B. M. W. C. F. O. Speaking with caroline conan. Boris johnson, hes attempted to get a approval for a snap election. Has failed for a second time in parliament. Vices tter how many di invents to tie my hands. I will strive mr. Speaker in the national interest. This government will not delay brexit any further. Lets talk about the guilt market there. We saw it in yesterdays session. 10yields. They got royal assent. So no deal at least on october 31st. Got pushed out of the agenda in just a bit. Of course, youve got global trends. And then we have brexit. Ow do they overlay each other. The initial reaction was justified because they produced the probability in 2019. We saw a pretty decent set up in gears. Right now, one is the extension of the deal. And second its a risk of election. Im beating might be around 58 of the way i end up. If youre talking about election. They do come with a lot of fiscal easing. But we also do see a lot of in the u. K. Economy after another bout of mixed certainty. Right now, its on the stage whether they will clear it out. Just because every now and and gain we have will it even though parliament hasnt been sus mended. How to it will turn from domestic politics. How does how should the guilt market view the possibility of Jeremy Corbin as Prime Minister either in co biggs with others or not . I mean, how should the guilt bun. Youre talking about an easy trending trend. Even conservatives like the spending more about home planning. And here so everywhere we are is easier. And clearly it means the average debt. So you can see more of the papers coming. I if the coach wanted to reaction. But the front and still remains and because markets do believe that they will be close for a great cut scenario right now given the Political Uncertainty in the u. K. Lets expend the conversation around the brexit impact. You know, Government Debt into island. I was interested to see a couple contrasting writeups in on investor tie lights. Theyre having sold some of their holding. Whats the outlook there, do you think . This is with prpt to irish cubbies. Clearly theyre moving in the moment of gifment but not to forget that irishborn market also benefits from e. C. B. s program. It would be benefit irish more. We are in a place where the e. C. B. Will benefit. I would play that game. And just looking at the chart, here, if i were german. Johnsons no deal rhetoric. Moving around on some of the brexit headlines and then some of the unwinding of that no deal risk as well in these markets. There we go, a look at the gap between german and irish 10,year paper. Puja stays with us on the program. Up next. Well bring you the moves. They have restarted talks to sell at the Housing Division at a result. This is bloomberg. Welcome back to the european open. Markets. 22 minutes into the trade dage here in europe. E do see some downside, down 1. 04 . The pound a little bit flatter than it was at the start of the trading day. So the pound just a touch stronger not really by much, and yet, we have seen that. Things look weark. And u. S. Futures they have to be down. And lets gets a look at your muy yfment danny burger has. Hes contributing to that marketter in as cured the as debt manager missing mostly on performance either shocked the market since private equity has been one of the strongest areas. Still they say about 16 billion euros. On track for its biggest decline on record. Now, finally of the year, rather. J. D. Sports, they had a good First Half Results in contrast the partners group. Theyre calling them exceptional especially in the u. K. Given the week retail environment. And finally, the big move here with bow arting talks viss about. Some of that had stalled. But it looks like talks are back on. S theyre up 20 . That division valued at 1. 3 bill dollars. The market getting excited about that. Absolutely. That story is really interesting. That would go on in position tegs. Thank you. Theyre not fully. Theyve gone a step furder predicting four redictions now. Still with us. Ive got a chart here that goes falling inflationer exipttations in the u. S. It seize that global weekness and inflation still seems persist despite what Central Banks have been indicating about what theyre willing to do on rates and other tools. Thats the saturday part. They have opened doors to all. So inflation demean. Youll bring. Unable to 3ick up. And how effective these policies are. Following a flattening one. Theres no premium why is it that markets have lost just i mean, some Central Banks dont have that much room, but you know, the fed does. Why do the markets lose face . Yeah, you know, we have limited tools. Even though they did cut rates in the july meeting but we said put the rhetoric saying ts a mid cycle ajustment. Is this or just increase or a cut from the fed thats in the light. Right now markets are fully price. I think it matters. With the set is ready. You were pricing it out on 66 basic points. So its not that much. It has gone down quite a bit. You wouldnt go that far . I mean, the economy does mean ed it. We are seeing a slow down. Last week a labor Market Reports that its all about the retoric and the u. S. China tweefment absolutely. Keep an eye on the tweeter feed. Strategist at dominion bank. Quick check of the markets there as we approach half an hour into the trading day. European markets are weaker. Health care and utilities some of the sectors have gained bond proxies perhaps. So being sell up. You dont see those defensive performing really well. 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. Your 30 minutes into trading day here are your headlights. A needs ripples through the markets. Ahead of key centralbank meetings. His take on the trade war. Because of the trade war, the car market is in a recession. That is a new situation that is scary for us. Anna bmw braces for brexit. Boris johnson heads to brussels following another defeat in parliament. Ppi bites. Prepares for a late surge of insurance claims. Tod morning and welcome bloomberg markets, the european open. I am anna edwards live from bloombergs headquarters here in the city of london. 30 minutes into the trading day. To the upside, jd sports. Date, one of the best performers on the ftse 100. They put out a Trading Update which has gone down well with the market despite negatives around the u. K. Economy. That is an update that was welcomed by investors. This is sorted by percentage change. Barclays up i just over 2 . The market is seeing this ppi ws just as lloyds yesterday. Now, we know what the end game is in terms of the ppi provisions. That part of the story. See the Banking Sector is really doing very well in its entirety. Ubs is up quite strongly. Others also are. Moving off what we have seen in the treasury markets. Treasury yields may be weaker but we have seen of late the yield going higher which makes it easier for the Banking Sector. And it also encourages investors to move away from some of the bond to proxies in the stock market. We do see some bond proxies losing a little bit of ground. Utilities are weaker in the energy the drug space. Some of those stocks moving to the downward direction. Elsewhere, the payments business is down by 4. 9 . We can see some of the utilities in the mix here as we sort it by percentages. If we sorted by points, we would see more prominently the moves in these markets for the utilities and for the drug stocks. To the those are moving downside. We have seen big movements in bond markets whether it is treasuries or what is going on with the bunds. Were talking about what has been going on in the bond markets with our guests as we head towards the ecb. Interesting to get the take from our guest a little while ago. She suggest that if the ecb does not announce quantitative easing this week, they will be disappointed. For the bloomberg first word news update. 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 went. He was speaking after he suffered a sixth defeat in parliament. Needs to seek an extension of brexit. ,espite protests by Mps Parliament has been suspended for five weeks. The fractured newspaper of the Chinese Communist party is taking aim at one of washingtons most prominent hawks. Say in comments from Peter Navarro are unconstructive lies. He talked about chinas seven deadly sins. The peoples daily says such comments are preposterous. Hong kongs leader carrie lynn thearrie lam has rejected call for annual assessments of the citys status. She told a news briefing that such foreign intervention would be extremely inappropriate. Strongly disagree with foreign interference in hong kongs issues. Toall have to be respectful each other especially on an international level. The ceo of psa group says they no deal brexit is not acceptable. Said the u. K. Should use good sense. It is not acceptable to have a no deal solution. We believe good sense should prevail. Acceptable to just have two opposite positions where people show their muscles. Global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Anna . Anna selina wang in beijing for us. Let us check in on the fx market. The yen has dropped to a fiveweek low against the dollar. This comes as their are higher treasury yields. Joining us now to assess the state of the fx market more broadly is neil jones, from mizuho bank. Great to speak with you today. Let us talk about what is going on in japan. We have seen weakness in the and maybeen of late the more positive trends around trade has tiptoed into other situations. Generatek on tends to yen weakness. Anything that moves us towards a ould tendolution w to see a yen selloff. Is a more, when there risk on type of environment, other currencies start to appreciate such as the dollar. What is the Market Positioning around the yen . Looking at this chart about havens. Despite some of the more recent weakness, traders do seem to be preparing or strength in the currency. In partarket based on an expectation of a no resumption of a trade deal. Positioning for downside. Toot of strong reference investors hedging overseas exposure which would mean a higher demand for the yen. And a good prognosis for the yen. Right here, right now, i think there is more pressure on the upside to the short term. The market is not positioned for points toerence which a weaker yen. I would expect to see a demand for an upside and a selloff of the yen long positioning. Anna let me ask about the pound. 123. 34. We saw a spike up in the pound a little earlier on. Now down 0. 1 . How do you craft a way forward for the pound or is it not possible at the moment . Neil it is entirely possible. The moment i sense a return to the pound and that is because of a delay in the uncertainty. We currently have three Political Developments all of which indicate a delay. A delay on the brexit french. A delay on the election front potentially. And a delay on parliament itself. We have a threepronged delay of uncertainty. The temporary bid on the pound i sense volatility would come off the table that would put bids back into sterling itself and temporarily support the pound. I see some upside in the short term based on delay. We remember that in march of this year, the first time we got a delay on brexit, the support for the pound, the pound rallying. It was a temporary phenomenon. I sense that will be the case this time around. We probably maintain a reasonably firm pound into october. As we ran into the queen kicking off the new parliament. The upside on sterling. Anna and we have the Conference Season coming up. Before we hear from the queen opening the new parliament which often produces headlines that could move things around a little bit i suppose. That is the see short then, the allaround delay but delay is not a destination in and of itself when it comes to brexit. Where do you see this heading on the longerterm horizon . Neil i see turmoil kicking off again in october. There are a whole host of moving domestic parts. Reigniting the uncertainty which is likely to weigh on a currency. Nothing disturbs a currency more than uncertainty. We are destined to see that again to see that again. Beyond october 15, there will be much turmoil over elections, parliament returning. It will all caps off again sending the pound down again. Looks less likely. But Jeremy Corbyn is closer to number 10. Neil for me, what affects the pound is not denying the political outcome. Once you have certainty from an election which is likely to be in november, it is some us regardless of who wins. Established, once the Political Uncertainty is out of way, is out of the once it is established, once the Political Uncertainty is out of the way, we know where we are with regard to brexit and the elections, i think money will flood back into the u. K. Regardless of who wins. I am convinced. Jones, head of currency sales for Financial Institutions at mizuho bank with the latest on the fx market from japan to the u. K. Not just germany but france joins its neighbor in the bad data account. With theones joins us latest on that data. As we had closer to the ecb thursday. This is bloomberg. Anna welcome back to the european open. 45 minutes into the trading day. Weakness across European Equity markets. Let us get to the frankfurt motor show where matt merck where matt miller is joint by joined by stuart rowley. The last time ford had a downgrade to this level, they awk the blue oval. How does that affect your business in europe . Disappointed with a downgrade from moodys. We dont expected to have any impact on our business in the near term. We have strong liquidity over 30 billion so we feel we are wellpositioned to finance our plan with restructuring in europe which is an important part of taking our business forward here. That bill ford once said when ratings were upgraded back to normal, it was one of the happiest days of his life. Will this deepen cost cuts . Stuart i think we will stay on our plan. We have a Clear Strategy in europe to transform our business. We also have plans around south america. We are taking action also to improve our business in china. I think moodys reference that in the note yesterday. We are staying on our plan. Matt what are the biggest headwinds here . Is brexit the number one uncertainty that is causing you issues . Stuart clearly that is an uncertainty. We dont know where that will end up. I dont think anyone has clarity. Beenwe have been doing is clear with governments whether it be here in the eu or the u. K. About what is most important to us and that is about tariff free trade. That is what we think we need for our business and what is best for the consumers and the economy. We hope that is where it will come out. We hope there is a deal. Regardless of the eventuality, we will manage our business through this. Cologne,m detroit to how does it look from your point of view . The germanterms of auto industry, it is holding up very well. Ford in europe, the commercial Vehicle Business is extremely important. Year to date, the commercial vehicle industry is up year on year. We are quite happy with where the industry is, the Passenger Vehicles are a little weaker. Will a rate cut from the ecb help mario draghi who looks like he is primed to cut rates on thursday in frankfurt. Stuart lower rates are good for consumers and they help consumers get into one of our vehicles. We are supportive of that and would welcome back. Matt as far as helping consumers, everything here is a hybrid. Is 30ve your fleet which much a fully electrified. Are you confident that is the way forward . Of our standheme here in frankfurt is all about electrification. Vehicle weassenger introduce will have an electrified option. Later this year, we will reveal our all new fully electric mustang inspired performance suv. We are really excited about that. And at ford, we want to bring an electrified solution to every customer. The people will choose highpriced solution but we want to provide solutions at the entry level. We have a fantastic new ford puma. Matt i am also looking forward to the Ford Explorer you are bringing to europe. Let me ask you about the infrastructure. Getting batteries number one, how difficult of a task that is and allowing consumers to charge and building up that infrastructure in europe. Stuart extremely important. And helping consumers make the transition to the elector fried future electrified future is important to us as well as for governments and cities. We are also providing access to Home Charging solutions and to public charging networks. Putting that in place is going to be very important but we see the governments, the regulators being supportive of that as our way. Stuart rowley, thank you. Anna matt miller with ford europe at the frankfurt motor show. Let us focus on the spanish Banking Sector. Some spirit the ecg advocate general giving a nonbinding opinion on whether banks and spain are linked to a certain index and that has not gone the way that the banks have wanted so there are billions of losses possible to lenders. In the red, the banks at the bottom they are well represented on the loser path of the banking index today. Others benefiting from some of the recent moves around bond markets. Up next, we get back to the markets. More on the Banking Sector but also the broader moves. This is bloomberg. Anna welcome back to the european open. Dayinutes in your trading and this is the picture for european equities. We are weaker. Joining us from berlin is richard. Tell me how the markets are looking given the week data we have seen. Plate with in the the weaker german data that we saw as we head towards thursday and the ecb. Richard good morning, markets have seen have grown accustomed to seeing weaker than expected german numbers. Same thing with factory orders. We are looking at the manufacturing pmis of the survey data coming in for germany with germany as a real laggard. The french data has held and. It has not been as noticeably week as the german data. Interesting this morning when we had the french data coming in weaker than expected. Asit is happening in france well as germany, the two biggest economies in the euro area weakening at the same time. This is very intuitive. It should not be a big surprise. The fact that french was holding and was a glimmer of hope that perhaps the slowdown in europe would not be as bad as everyone was fearing. Time,es at an interesting with the ecb Rate Decision in a couple of days, this will embolden the doubts to say we need to act quickly because the biggest economies in europe are slowing down simultaneously. The problem is to cap the upside in european yields. Anna there seems to be a narrative brewing. This is a problem with the german exportbased economic model. Something that would not be felt more broadly. What about volatility in bond markets as we have seen the developments in the ecb narrative but also what is going on in treasuries as well have we seen volatility topping out for 2019 . Make a i think you can strong case for volatility topping out. Thatd very big moves caught people by surprise last month. Just because volatility has topped out does not mean it will bottom out anytime soon. We could have a durable trend of lower yields taking hold across the world. The volatility will stay elevated if not nearly as high as it was last month. We have a fair way to go before we see it bottoming out. Anna richard, thank you very much. Richard jones joining us from berlin. European equity markets under pressure this morning. We are down a little bit across the markets. Down 0. 4 on the stoxx 600. The ftse 100 fairly flat. The cac and the dac picking up the mantle for some of the weaker performers. Weaker on u. S. Futures. Down 0. 4 for the u. S. Equity markets. Oil and gas and banks not faring too badly despite weakness in the spanish Banking Sector. Elsewhere, banks are doing well. And technology and health care are to the downside here in europe. This is bloomberg. Francine losing streak. Parliament has the Prime Minister hands Prime Minister Boris Johnson two more defeats. Brexit comes under threat again. Stuck in a neutral. We are live at the frankfurt auto show talking to the worlds biggest automakers about the trade war, global growth, and exit. Softbank is pushing we works to ipo amid a drop in valuation. To bloomberg surveillance. Good morning if you are watching in europe or in the u. S. I am Francine Lacqua in