Transcripts For BLOOMBERG Bloomberg Markets European Close 20240714

[indiscernible] guy germany Just Announced a package of measures to try and put its environmental targets back on track. Our governments spending enough money are governments spending enough money . Ignacio yesterday in the speech of president macron, he was recommending that the money that already has been taking the necessary step in decision for this has happened. I think the world is investing more and more in renewables. We already invest in that one. Nations, in the united trying to do the best to delay certain action to be taken. In some cases, the delay is a process which the already has to be passed in the Different Countries, so there is action with the political leaders in Different Countries to try to accelerate all of these. To delay andlike postpone the education of those plans, introducing papers and more papers to certain channels in order to delay to make this process not happen or happen later on. Vonnie there was an auction last week in which offshore wind was sold for less than the price of fuel for coal. Are you surprised at how quickly prices have dropped . Does that affect your Business Decisions Going Forward . Offshore. Hat was in cheaper the prices are than those produced in solar, the prices are cheaper than those produced with fossil fuels. In many pieces of the world, it is much cheaper and to generate with coal or oil. The price obtained in this tion in britain [indiscernible] vonnie wonderful to see you today. Thank you for joining us during climate week. That is ignacio galan, the ceo of iberdrola. Guy lets check the european markets. We are now 26 minutes away from the european close. Weve been watching events unfold very closely here in europe, trying to figure out what the applications of Todays Supreme Court ruling are, trying to wonder exactly what Boris Johnson will do next. He will be talking at the unga a little later on. Jeremy corbyn about these because well. We are up about 0. 4 on the cable rate as we try to figure out what Boris Johnsons options are going to be next. Interesting to know whether he knows. Are we going to see a general election . What is going to happen next . I think the market is still scratching his head on that one. European equities absolutely flat. We have seen u. S. Equities nosing over as the president spoke at the u. N. The german tenyear, youll strike the 10 year, yields dropping a bit. 2 . T crude now down by the president pushing back against iran, talking about the lack of sanctions options in terms of withdrawing them. That has pushed the price of crude a little further down today, trading at 63. 53. Maybe not as aggressive as some anticipated, but crude under a bit of pressure. Vonnie we are seeing that in wti, down 1. 75 . Gains offving those of u. S. Equity indices. It does seem to have started when the president talked about meeting with the ceo of micron about china. He singled out china on the world stage. It didnt cause a huge reaction, but we did dip below 3000 on the s p 500. Consumer confidence data earlier was a little disappointing. ,ne more thing to watch, apple there was new coverage at jefferies started with an outperform rating, about a 40 upside. At least 206 was the price target that has apple higher, but apple is shaving its gains as well. Guy u. K. Prime minister Boris Johnson resisting calls to resign after the u. K. Supreme court ruled that his suspension of parliament was unlawful. Reaction to the ruling on both strong. Od and the decision to advise her majesty to Prorogue Parliament was unlawful. I welcome the judgment this morning. It had the effect of frustrating or preventing the ability of parliament to carry out its constitutional function without reasonable justification. Pm johnson i strongly disagree with what the justices have found. N pm it demonstrates an abuse of power by him mr. Mp it demonstrates an abuse of power by him. Today is not a win for any individual because. For parliamentary sovereignty. Guy johnson is now going to return to london after addressing the u. N. General assembly. We are also expecting very in aly some comments bilateral meeting between the president of the United States and the british Prime Minister. As soon as we get those, we will bring those to you. Lets get some analysis on what this all means. , Eurasia Group managing director of europe, joins us now. What impact will this have on the direction of brexit, if at all . Guest thanks for having me. I think it is a big defeat for boris, a symbolic disaster for a Prime Minister to be confronted with such unanimous negative ruling by the Supreme Court. I think what this does at the margins is forced to government to for letter to further compromise with the eu and try to get a brexit deal together at the European Council. He will be forced by virtue of the legislation in parliament to request an article 50 extension, and i think, in light of this verdict today, there was some suggestion from thinking at number 10 that may boris would defy the law, not request an extension if he does a deal at the European Council. I think the government will be consider this in light of this verdict. Guy does this reduce the possibility of a new deal verdict . If so, by how much . Mij it does reduce the risk of 31 october. The remaining percentages are 25 for a deal and 16 for an election. I think an early election is likely. The no deal risk will resurface after the election if there is a tory government, either majority or minority. That government may deliver no deal after the election, so the risk comes down between now and 31 october because of this ruling, but i think it increases afterward. Vonnie President Donald Trump just saying at the u. N. General a some bleak that he was speaking with Boris Johnson General Assembly that they were speaking with Boris Johnson about a trade deal. Is he breaking eu rules . Does that even matter at this point . Mij i think what trump does at this point matters little or nothing. Boris is really stuck in a corner that he and his advisor have painted him into. It is very hard to see a way forward for boris. Either he does a deal at the European Council that converges on the version of theresa mays agreement, or he has to request an extension of article 50, or someone in his government has to, and it looks as if there will be an election after him having not delivered on his pledge to take the u. K. Out on 31 october. So always forward for him but very challenging. Donald trump cant save him. Mij sorry, guy, go ahead. Guy sorry, bonnie. Sorry, vonnie. Vonnie mij, what happens to sterling from here . Mij after 18 october, if there is a deal at the European Council, and it is unlikely there will be a deal, what happens on 19 october . He or some but he has to send a letter requesting an extension. Either he can seek to resign, try to force collapse in his own government through a motion of noconfidence. The opposition may table a motion of noconfidence if he does not request an article 50 extension. All of these suggest significant volatility. That is negative for sterling, so today may be slightly more positive because the risk of no deal has come down, but theres still a lot of Political Drama between now and the European Council in the day afterwards. It will be a very messy political process, and a lot could happen between now and then. Guy we are still going to hear from Jeremy Corbyn. Boris johnson will be arriving back shortly. Parliament reconvening tomorrow. As you say, weve got a lot of politics still to come before that council meeting. Mijk you very much indeed, rahman, Eurasia Group managing director of europe. Vonnie lets get a check on markets with Abigail Doolittle. Abigail take a look at major averages in the u. S. , well off the highs, perhaps on those china comments from President Trump. The s p 500 and the dow up ever so slightly. Earlier, the s p 500 up more than 0. 5 . In the u. K. , the ftse 100 down 0. 5 on the u. K. Supreme court overturning the suspension of parliament, a real blow to Boris Johnson. Brent crude down 1. 7 . Investors not liking saudi arabia putting out the thought that their supply will truly be back online. Another place we are seeing movement off of that Supreme Court decision, the british pound the dollar gaining 0. 4 . It is really the month of september that stands out, up more than 2. 5 , on pace for its best monthly performance since january. Said we couldly see the pound going higher. That is certainly true in the month of september. We have apple trading higher on that overweight that vonnie was talking about with jeffries, bullish about the prospects on 5g. Walmart hitting another alltime high, up 1. 2 . Wynn resorts up 1. 2 . Wynnan is bullish resorts up 2. 1 . Coleman is bullish and has set a higher price target. This is a really interesting chart in the bloomberg. We had Consumer Confidence data coming out today. This goes back to 2009. In white is the present situation sentiment. In blue, future expectations. Consumer confidence and future expectations put in an alltime high. Present situation there with a high in 2019. Perhaps the trend flattening out, maybe even starting to turn down. Something to think about as the s p 500 has still not put in another alltime high. Vonnie abigail, thank you for that. That is Abigail Doolittle with our market check. Remember, the function gtv on the bloomberg allows you to browse all the recent charts featured on bloomberg tv. You can catch up on key analysis and save your favorites for future reference. This is bloomberg. Vonnie live from new york, im vonnie quinn. Guy from london, im guy johnson. This is the european close on bloomberg markets. The british Prime Minister Boris Johnson says he strongly disagrees with the u. K. s highest court after the judges there ruled that his suspension of parliament was illegal. Johnson says he will abide by the decision. For more on the impact on the pound and broader financial markets, we are joined on the phone by dr. Valentin marinov, Credit Agricole head of g10 Ethics Research and strategy g10 fx research and strategy. Why didnt the pound bounce more . Marinov the thought is that the decision is would using the no deal brexit risk in the shortterm. That still leaves the overall outlook looking beyond november, into december and potentially january, rather uncertain. From that point of view, investors who may want to buy the pound are willing to rate are willing to wait to see how things play out. Also part of the reason is the fact that the no deal brexit risk by the end of october has receded already substantially at a time when the Parliament Pass the brexit delay bill in early september. That is reflected in the option prices, the subsiding sterling vol we have seen in recent weeks. So i think it is not looking to noting much in terms of contributing much in terms of moving that uncertainty. What is also important here is that the risks related to a potential snap election in november, and indeed a potential extension of brexit, are still very much there. Guy it felt more like Short Covering today, as you say. It doesnt really seem to change the positioning story. Would a snap general election be taking the sterling positive . Dr. Marinov it depends on the outcome. I think from todays develop and, it will galvanize support for a new deal brexit, or brexit with or without a deal, inside the tory party. That may be on display next week. Lets not forget, the tory party is still expect it to be the Biggest Party in the parliament if indeed there is a snap election in november. Tilting even further towards a hard brexit is not good news for the pound, especially if recent of elements force the party to go into a coalition with the brexit party as a result of the snap election. The no deal brexit risk is still very much there, and the more recent of the limits may actually backfire. From that point of view, i wouldnt be buying the pound from current levels. I still think the outlook is neutral to somewhat bearish. People may went to wait, and that is advisable here. Vonnie if you wouldnt trade the pound, and our previous fx guest also called it untradeab le, is there something you would rather be doing . Dr. Marinov i think the pound is difficult to trade here. You could still express concerns ahead of the vote by going short the pound against currencies that gained, but an interesting topic here would be the upcoming trade talks between the u. S. And china in early november october, sorry. I think they i think their cautious approach i think there, a cautious approach is also advised. Currencies should be hedged against another disappointing outcome from negotiations, so that is another story we are following and advising clients they should potentially express that you. Repoe the volatility in markets in recent days, does it cause you to pause in your trading at all, or is it just a blip . Dr. Marinov we do believe it may have more lasting implications for the fed. We believe the fed will add an expansion of its Balance Sheet to its arsenal of easing tools, potentially as soon as late october, but more likely at its december meeting. This will be seen as the fed easing further beyond what the market was expecting at the moment. I think the repo markets have been responding already. I think the fed may have more reasons to do so, if only because any dollar funding may become more prominent issue as we move toward year end. The markets are focusing on dollar liquidity and issues associated with the lack of liquidity. What investors may be ignoring at the moment is the fact that many exporters, especially in , have produceds dollardenominated debt. Now we see the dollar currently escalating, and that will be another reason for the fed to consider adding more liquidity into the economy, and as a result, boosting the size of its Balance Sheet. Guy one final quick comment. The ecb is deeply divided. We saw the governor of the bank of france making clear he is not with mario draghi when it comes to the additional qe that is going to be applied. How problematic is this for the euro . The ecb has been the center of [no audio] dr. Marinov urging inside the governing council. In fact, we think it may mean the ecb is very close to the rockbottom of its easing cycle more than anything else. Consensus,lative to a benign outlook for the euro zone as a whole. We believe with the latest Monetary Policy stimulus, the ecb may have indeed helped the economy turn a corner for the coming quarter. From that point of view, i think that wouldnt be a concern for the future of the euro. The fact the ecb cannot agree on future stimulus we see as something of a positive develop for the euro zone. Vonnie thank you for your time today. That is Valentin Marinov my Credit Agricole head of g10 fx research and strategy. Guy a bit of breaking news coming out in the car sector, and it all relates back to the Diesel Scandal. Engineer has been charged in the u. S. Over the diesel emissions scandal. Emmanuel palmer apparently conspired to mislead regulators and the public, according to u. S. Authorities. This is a criminal action being them, the first time we have seen this. Volkswagen getting hit on the Diesel Scandal as well. This is simply guy European Equity markets preparing to shut off for the day. The pound going up on the Supreme Court ruling. Dax and the cac 40 trading a little bit negative, but not by much. Theyve faded over the last half an hour as trump was talking at the unga. The european closes coming up next. This is bloomberg. Up next. This is bloomberg. Guy 30 seconds until the end of regular trading in europe. Not a lot happening. France, italy, both countries in the gray, singling there is not much happening. There is surface there is action below the surface. The british pound earlier on rallying on the back of Boris Johnsons defeat in the Supreme Court. We got to 125. We are trending at 124. 64. Not a big reaction. The scale of what has happened politically today and constitutionally, absolutely in remiss. Does it change the trajectory . The market is not entirely convinced. Did have a little bit of an impact to the ftse 100. Are ahe constituent parts factor as well. Ftse 100 down to around half of 1 . Not much of a session here in terms of getting its into direction for equities markets. The markets did fade into the close. Volume has been ok. Not great as of late. Lets take a look at the constituent parts from a different angle and try to get a idea of what is happening. The failuref continues to be felt. Utilities trading higher. Health care, retail, media getting a little bit of a pickup. Food and beverage trending up a little bit. They add a lot of weight. The bottom end, certainly some basic resources continuing to be under pressure. There is a trade narrative in there. The grade the latest company to be caught up in the Diesel Scandal. Volkswagen is front and center. Oil has been trading down. Its talk about some of the stocks. 2. 29 down by 2. 29 . This is about the release of information to shareholders. There is a potential prosecution. Well talk about that in a moment. Qe trading up higher. That continues to benefit from the fallout. That clearly is the biggest only other big Tour Operator in europe. We continue to see tobacco brands continuing to be written the sharply as a result of vaping story in the United States. Days, over the last four trading down. European markets being led by other factors today. The pound having an impact on the ftse 100. Maybe some idiosyncratic individual stories. The auto story in a moment. Vonnie we saw a bounce at the open this morning. The s p 500 is below the mark now. We will get to the components shortly. The 10 year yield at 166. A little bit of treasury buying after the Consumer Confidence data this morning. We wereints below what expecting in Current Conditions and expectations. The oil trade is lower. Definitely lower. We will see that in the Component Parts of the s p. Apple is paring its gains. Initiating coverage and seeing 40 of an upside on the price target. Lets get to the groups. Halfandhalf, 250 higher and 2050 lower in the s p 500. Bysonal products index up 2. 1 . Estee lauder is doing very well. Gas, and electric doing well. The gold index is higher. We are seeing the opposite effect and it comes to oil stocks. They are lower. , steel, andindex manufacturing equipment, also chemicals and copper. That is the china trade story. The president signaling out china for commentary saying he hoped he could do a deal with china. China had not been eager as of yet. The overall indices really rather flat. Guy lets talk about the auto sector. Shales in volkswagen falling after the top leaders were charged with market manipulation in germany. Fcaave also seen an chrysler engineer being charged in the United States. This goes back to the Diesel Scandal. Benedict joins us from berlin. Lets talk about what is happening with volkswagen. This is about the release of information to shareholders. What is the risk . How seriously should we take this . Benedict it should be taken quite seriously. Investors were fairly spooked by the announcement today. The optics of having your top management ceo and chairman charged by prosecutors. Those optics are not great. Volkswagen pushing back on this and saying, in the case of the ceo, to say it is laughable that he withheld information. He only joined the company a couple of weeks before that. What this tries to establish is, who knew what and when. This all happened in late 2015. Best,utors are saying at management was dragging its feet to make an announcement. Knew earlythe time on in the year in may the chairman who was the cfo at the time, he also knew fairly own. Fairly early on. They did not disclose this to show. When it was disclosed, the stock took a serious beating over several sessions. Investors lost a lot of money. That is something prosecutors say could have been avoided had the company been more forthright with the information policy. Vonnie what is the likelihood this forces him into resigning . Benedict as i said, the company says we have full faith in management. He can probably ride this out. It will not look great for him if this does go to trial, running the Worlds Largest car maker a courtroom will not be ideal. We have some experience in germany with companies being run out of a courtroom. We have the case with Deutsche Bank who enjoyed the fate for a well. The question is, will he go to court . Might they have some sort of an agreement before that . For now, it looks as though he is relatively safe. On july 1. Prosecutors say at the end of the month is when he heard about this first. His defense is saying, it is ridiculous for him in the short space of time to take the relevant action. Guy how long is the tale going to be on the Diesel Scandal . We do so and engineer being charged in the United States. This is years afterwards. I am wondering how many more years are we talking about this . Benedict this will stretch well into the future when we are gray and old. This has been going on for four years. This is really a complex exercise. The prosecutors statement is more than 600 pages long. That gives you a sense of the depth to which they are going. You mentioned fca today. Law. So had dime they say they have reached a deal with prosecutors in stewed cart. Stuttgart. You are seeing this going through the industry. Volkswagen as at the pinnacle. This will go on for many years likely. Guy thank. Joining us from berlin. Jeremy corbyn is addressing the Labour Party Conference in brighton. Lets take a listen. Thank you. Conference, thank you. Thank you for that wonderful welcome. Extraordinary and precarious moment in our countrys history. The Prime Minister has been found to have acted illegally when he tried to shut down parliament. Highest court in the land has found that Boris Johnson broke the law when he tried to shut down democratic debate and accountability at a crucial moment for our public life. The Prime Minister acted illegally when he tried to shut down opposition to his reckless and disastrous plan to crash out of the European Union without a deal. But, he has failed. [applause] he will never shut down our democracy or silence the voices of us, the people. [applause] the democracy that Boris Johnson describes as a rigmarole [laughter] will not be stifled. The people will have their say. Tomorrow, parliament will return. [applause] the government will be held to account for what it has done. Found tonson has been have misled the country. This unelected Prime Minister should now resign. [applause] [chanting johnson out] that would make him guy Jeremy Corbyn addressing the conference in brighton. Being sung again. We are also getting headlines coming through from Boris Johnson who is in the midst of a bilateral with the president of the United States. Here are the comments we are getting. He says he disagrees profoundly with the Supreme Court ruling that has taken place earlier on. The government wants to get on with brexit. Dynamic domestic agenda. But, we need to get on with brexit. Boris johnson will be speaking later on at the yuan ga. Hen he is at the unga then he will fly home. Jeremy corbyn saying that Boris Johnson should resign and the government will be held to account. The latest from brighton and from new york. Vonnie some key decisions from the European Court of justice today. These decisions directly affect Companies Like starbucks, fiat, and google. Turning us from brussels is maria taddeo. Who won in these decisions . It appears the decision went to the corporations. Maria these are very highprofile cases. You talk about starbucks and a number of companies. Fiat chrysler and google thrown into the mix. Investors were keeping a close eye on this one. They could offer clues as to how the commission will deer with american tech companies. It is actually a new inspector. It was pretty much 5050. The European Commission both companies underpaid taxes and had to pay back 30 Million Euros in compensation. The court ruled that starbucks does not have to pay any of the compensation. You see a case of 5050. The big one was google, which are the do with privacy. That people have a right to ask for information to be removed from the web. Sidedcited the court ded withthe court si the american company. Guy in terms of understanding the implications of all of this, what are they . What does this mean . The competition commissioner will stay in the row. It is not the fight that she is going to stay the competition commissioner. It is the fact that she has been granted more power when it comes to the digital commission. Tape again at her starbucks, the court was clear there was not enough proof to show that starbucks had received any special tax treatment. This is what apple is arguing in court. They did not ask for any favors. As a big company, they do not need to ask for favors. When you look at fiat chrysler, withcited they sideded her. They sided with her. Apple is a much bigger case. Everyone saying it will have a much bigger repercussion. There were 13 billion euros at stake. Comments going through from Jeremy Corbyn. The currentn saying crisis can only be solved by an election, but not yet. Labor once an election after a no deal is off the table. We cannot trust johnson not to crash out with a no deal although he has no mandate for no deal. A quick look at european markets. We are looking at a negative finish for the london market, which is forced lower by sterling moving higher. We are going to carry on with coverage in new york and out of the united kingdom. Discussingg to be the suspension of parliament and the yuan speech and the u. N. Speech. Jonathan ferro is in new york. We are going to be joining him in london. In london. Mark guy from london, guy from london, im guy johnson. Vonnie thats check and now on the bloomberg furs world news. The future ofit their own country first. That is what President Trump told leaders at the United Nations today. He says the future belongs to those who protect their citizens and respect their neighbors. A says all countries have duty allegations that he made inappropriate demands on a call with the ukraine leader he says are not true. He calls it a witch hunt. I am leading in the polls. The only way they can try to stop me is through impeachment. This has never happened to a president before. It is nonsense. When you see the call, which i assume you will see, you will understand. Learnedberg has President Trump ordered his acting chief of staff to delay sending aid to ukraine a week before he spoke to the president. He says he withheld the aid because European Countries were not also contributing to the defense. Hong kong chief executive carrie lam is calling on protesters not to disrupt her first dialogue event. It will only hold about 150 participants. Her comments, head of protests planned to coincide with the october anniversary of communist rule in china. Global news 24 hours a day and on tictoc on twitter. This is bloomberg. Vonnie this is bloomberg. Vonnie we are about to watch a bilateral meeting with Boris Johnson, the Prime Minister. He suffered the high Court Rejection today. And, President Trump. This on the sidelines of the United Nations General Assembly taking place this week. Was ao had what they say product 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. Man, Jeremy Corbyn, has brought forward his speech. He will be there giving his speech now and returning to parliament tomorrow. Parliament reopened. We saw the speaker of the house making that clear. Find aohnson trying to rearguard action in the United States. Talking about the benefits of b rexit. The benefits it would deliver. Increasingly, it is looking unlikely he will be able to deliver by october 31. Jeremy corbyn saying there will be no election until the hard brexit is taken off the table. Jeremy corbyn at this point not exactly riding high in the polis. The labour party absolute lead divided on the issue. Vonnie two other parties to consider. There have been so many other defections from the tories and the labour party. The lib dems a lot with with a lot of clout these days. Speechohnson does have a to the United Nations. It will be interesting to see if he makes changes. He will be making a speech and then flying back. Parliament resuming tomorrow ing. Apparently as of now, Boris Johnson is not resigning in spite of this unanimous Supreme Court decision. All of the judges were in agreement. Guy absolutely. Thereve also been rumors the attorney general could be stepping down as well. That has been swirling around london. No information on that front. He is obviously at the center of some of the legal advice that was provided to the queen. Prime not going to get ministers questions tomorrow. It is going to be a very bumpy ride for boris as he returns to the u. K. A lot of turbulent a lot of turbulence across the lenny. I suspect he will be answering questions from journalists. We will be waiting to hear what the playback looks like from the bilateral with the president. The president very high up in the speech. Certainly trying to buoy johnson. To a certain extent, johnson leaving the United States with a with his tell between his legs. Back to britain and a very difficult political situation. He does not have a majority in the house of commons. The house of commons is back as a serious force to make Boris Johnsons life very difficult. The questions swirling around london is, who will take the fall for the defeat . It is not sound like it will be jeremy cox. Will it be his chief advisor . That is the question. Will Dominic Cummings be forced to step down . Vonnie we should note it was the former Prime Minister, john maker john major, who took this case to the court. Lets check u. S. Markets. We did see a downdraft after the president singled out china in his speech. The dow is now down more than a tent. The s p down a third of a percent the nasdaq is down three quarters of 1 . Balance of power is next. We will be continuing to monitor events taking place at the United Nations General Assembly including playback of the trump and johnson bilateral. This is bloomberg. David from bloomberg World Headquarters in new york, im david westin. On the brief today, emma chandra in london on Prime Minister boriss sharper you sharp rebuke. In new york, the growing call for impeachment proceedings. It was 11 to zero. Boris johnson came out and said he will abide by it. Listen to what he had to say. Obviously, this is a verdict we will respect. We respect the judicial process. I strongly disagree with what the justices have found. I do not think it is right. We will go ahead and parliament will come back. David he is about to hop on an airplane to rush back to london. What comes next for Boris Johnson . That is the big question. To be told by the highest court in the land he had acted