Entities could lead to sanctions on u. S. Companies. Jobs for cash, unicredit will return 2. 2 billion to shareholders as it reveals a see aear plan that will reduction of 8000 jobs. 30 minutes until the start of the the trading session. Teachers suggest a rebound after. He selling of yesterday yesterday and overnight in asia dominated by negative headlines around the trading story. We expect to see a bounce in the dax and cac. The french stocks in light of the threat of tariffs on wine and other luxury items. We expected it to go somewhere yesterday, and that was not the case. Materials lifted the ftse 100. U. S. Futures pointing higher, and selling on u. S. Equities. The nasdaq weighed down by a number of trade related issues. We can see how this is playing in the asian session, weakness in the asian session. Paring some of those losses as we go through the trading day. Comments are making investors nervous. What would it take for president on decemberp tariff 15 as planned. S on brazil and argentina is also weighing on sentiment. That is the narrative building through the morning on the stabilization of growth story. That seems to be the case in the european data. Add to that the talk of further. Evees on french products we will see how long that positivity lasts. The asian handover has been a negative one. The Australian Dollar up by 0. 4 . Lets get to the markets. Our live managing editor is with us, good to see you. We started december on the back foot. The question of the day is about the trade story and that tariffs threatened for middecember. How far would stocks fall if we see that . Mark i think a long way and it is not priced into the market. It has shocked me how little is priced into the market. We had our morning meeting, and i said the markets perspective, all the real focus is on december 15, and will the tariff s go ahead or not. I was shocked to see the treasuries curve, flat. It includes december 15, no premier priced in. Little priced a in, but if you think it will include the fmoc and nonmanufacturing and the fact that next week is a holiday period does not leave anything extra. Across assets, markets are pricing in no premium for december 15, which shows me investors are assuming there is no chance of tariffs going ahead, and if they go in place equities will make last december look like a small problem in comparison. Anna what do you make there is an interesting perspective on the question, what do you make of what we are seeing at the moment . Asian equities following and following u. S. Equities downward. We see selling in treasuries. U. S. Futures are pointing higher. Are we drawn a line in the sand . The global bond story is interesting. , the fiscalments push we are seeing globally. Both of these price actions are about profit testing because we have had few news events the last few days. Into low liquidity december, and risks are ahead. Ets take money off the table we are seeing those Asset Classes come down and retrenching and the incredible for prominence we have seen through the year, it is a facet of that rather than taking different angles on the trade story. Anna you talked about your expectations about what happens when the fundamentals around have been giving thought to the technicals behind stock markets and come up with a conspiracy theory. What is your thinking . Mark i am not much of a technical guy generally. When theye technicals talk my book, and i am not bearish at the moment. A lot of technicals are looking bearish. The s p 500 has broken the two month trendline. Yuan, anding dollar that conspiracy theory, tesla has worked as a great lead indicator of the s p 500. Over the last six months it has led the s p 500 between four and eight days on the major turning points. Orla collapsed november 22 23, which said by monday latest we would see the s p 500 slump, and we did see the s p 500 slump. Tesla is the leading indicator and we are getting warning signs. We do not have the broad narrative to justify a bigger slump, but the technical side is building across assets. Anna what about consequences of these trade tariffs . The basic materials index went up, and giving some turn in the market, you can pinpoint when President Trump tweeted about brazilian and argentinian steel hepanies and the tariffs wanted to impose. You might think those are negatives, but that did not come to pass. This trade story is rich with unforeseen developments, unforeseen responses in the market. Mark i think that is definitely the case. The article, that was the idea that Global Growth is dominating the tariff story. An extra element brought into their latin american story is the currency side. We are seeing currency depreciation in these latin american currencies, and trump drew attention to that when he said they are depreciating their currencies and the fed needs to lower rates. That is playing to this tariff story. Tariffs feed into growth which impacts the price of the steel imports. Overall, we are seeing that negative when these tariffs are implemented, and it is hard to say who will pay the cost. It is not great for the consumer in the u. S. With decemberly 15. Thank you mark cudmore. You can join the debate, how far will global stocks fall in china if there are additional tariffs on december 15. In terms of positioning around december 15, what is your thinking . Up next, china takes aim at trump and washington. The tariff threats, we will break them down next. Anna welcome back to the european open. 15 minutes until the start of the equity trading day. Markets look like they could he negative in london. U. S. Futures point higher. Thats get a first word update. In the u. K. , the labour party is ratcheting up its attack on big business. Five Companies Arm some of the country are some of the ys worst employers. ,ssets and outsourcing giants in washington the gop report says the investigation into President Trump has failed to establish any impeachment offenses. It said it paints the picture of unelectable bureaucrats disagreeing with the president. Democrats are expected to release their findings this week ahead of the judiciary committees first public hearing. Cyber monday has hit a record of over 9pping, spending billion online, up 17 from a year ago. It is a boost to a robust holiday season, but the totals fell short of some estimates. Kuwait is investing 1 billion in saudi aramcos ipo as the kingdom asks regional allies to bolster the record share sales. Kuwaits Investment Authority had been reluctant to invest significant funds but was told that a stake was in the countrys interest. Global news 24 hours a day on air and tictoc on twitter powered by 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna thank you so much. The threat of more tariffs is looming. The government will publish a blacklist of unreliable entities at could lead to sanctions against u. S. Companies. President trump is considering a levy of 2. 4 billion on french products that would hit big u. S. Tech companies. To discuss all things trade related is Jodi Schneider. Why is china said to be preparing this blacklist of unreliable entities, and what could it include . The communist party daily up. This list could be sped it china is talking about publishing this list of Companies Since may after there were restrictions placed by the u. S. On huawei. They are talking about speeding it up because there is legislation pending in the u. S. Congress. Marco rubio from florida has proposed legislation moving forward that was sanctioned chinese officials for any abuse against the muslim uighurs. Last week President Trump signed legislation that basically requires there to be an annual certification that hong kong is being given sufficient autonomy to justify the trading status the u. S. Has with hong kong. These kinds of things from the congress are putting pressure on china, and they are considering speeding up the list. We do not know what companies will be on it, but there is scrutiny on fedex that could potentially be on the list. Anna it will be interesting to see if the chinese try to join the dots between the trade development and human rights activities. What about the french story . This is something also threatened for some time, french products that could be affected by a tariff. Retaliation by washington. What the french are doing on digital factors will hit u. S. Companies. Jodi that is right, and it seems there was a deal or that the u. S. Gust was not going to go forward and would try to work out, but President Trump and the trade representative are saying they onld go ahead and put tariff 2. 4 billion on french goods including things such as sparkling wine, cheese, handbags, makeup, a range of products. This is something debated, and there will apparently be a public hearings process early in 2020, and they would look at whether this at how this will be affected. It is a serious thing and we are hearing about it from the u. S. Trade representative office. We are hearing a lot about tariffs after the steel and aluminum tariffs, and a whole range of tariffs. S is thece again, tariff word of the week. Why these french products . The u. S. Investigation, they are saying this Digital Services would discriminate against u. S. Companies, so they are looking at french products they say would equal the amount on the u. S. Companies. Are not going to take effect right away, but they are talking about them and the similar digital taxes by countries including austria, italy, and turkey, and potential if they found this to be the case in the investigation. Doubt some of this will be discussed at the nato meetings, maybe not on the agenda but it will come up. Thank you so much Jodi Schneider joining us on the host of trade developments. News, investors rewarded with 2 billion euros in Share Buybacks, the bank will cut 8000 jobs. Joining us now is our finance columnist. How different will unicredits plan the . Plan be . It is evolution rather than revolution. Laying off 8000 people across western europe mostly, cutting europe. in western what they are doing is building 2019 which through has been characterized by simple vacation, a d risking of the model. That allows the company to give more back to shareholders. It will take about 40 back to shareholders. Anna if this is something to simplify the model and we are getting a return of cash to shareholders, does that mean they are not interested in playing a role in consolidation . For nowt is categorical prices could share. Mbark on large m a having said that, there is a lot moving in europe that could change the landscape, a renewed push for the completion of the Banking Union which might make deals more likely. Anna thank you for the update. Start ofway from the equity trading, we will look at stocks to watch at the open. We will keep an eye on unicredit. Keep an eye on luxury goods, winemakers, all of those businesses. We will talk about that next. This is bloomberg. Anna welcome back to Bloomberg Markets european open. Six minutes to go until the start of equity trading. Getting companies in focus because of the tariffs that might be imposed. President trump and Emmanuel Macron cannot come to an agreement, so the u. S. Is proposing 2. 4 billion potentially on french goods. Everything from wine, cosmetics, loreal, all these companies will be in focus and they are set to fall at the open. Joe fullyear earnings are expected to be below expectations largely due to joker doingite well. They have not been able to match declined 10 year to date, but they say the synergies are ahead of expectations, estimated around 190 million from 150 million. Earnings estimates will decline for the year ahead. Wars ande have star as the year comes to a close. When it comes to indexes, easyjet back into the ftse 100, its share prices have recovered. Passive fund flows will automatically allocate to the ftsence it is in 100, and we will see investors arbitrage that move. Thank you very much for the update. Get all the stock stories our equity team is covering on your bloomberg. London just waking up for tuesday morning. The market opens next. Anna one minutes ago until the start of cash equity trading. Welcome back to Bloomberg Markets european open. Msci asiapacific down around 0. 5 . Negative headlines around trade. The possibility of President Trump going ahead with the tariffs, and talking about tariffs on brazil and argentina. And the possibility of tariffs on french goods. Luxury goods, leather goods. Higher. Point slightly some of this narrative is dealt with by markets. The aussie dollar on the move as a result of what we heard from the rba. Previous rate cuts into the economy a little further, and more upbeat than anticipated. Money coming out of sovereign debt into the asian session. Futures could be positive at the start of trade, but will the ftse 100 go its own way. Lets see where these markets are opening up. The pound is stronger, up by 0. 2 . That could be reason to see weakness on some of the london listed International Sterling earning companies. Our us stocks up by 0. 2 the ftse 100 down by 0. 2 . The spanish ibex up by 0. 2 . The dollar is fairly flat. They moved to the upside to the pound. Results from the theiament polls suggest conservatives have a decent lead. As a result the pound is higher. Markets will settle down as we deal from a sector perspective. The markets are broadly green but significant areas of red in particular a decent read chunk on the imap this morning. Mov screen forhe the stoxx 600 are up, and 180 to the downside. Some positivity around European Equity markets coming through. He stoxx 600 up i 0. 3 if we focus on the stocks moving to the upside, the biggest ner easyjet up by 1 . 0. 9 . Dit news up by downside we can see a from various assets a host of stocks. Glencore moving lower. Some Luxury Goods Companies as well. 1. 3 to the downside for lvmh. Loreal down by 0. 9 . We are seeing Luxury Goods Companies, french Luxury Goods Companies as a result of further by the trumpffs administration on french products. European markets slightly to the upside, the threat of more tariffs is looming. Chinese media say the government will produce a blacklist of unreliable entities, and President Trump is considering 2. 4 billion of levies on french products. Steen jakobsen, cio chief economist, saxo bank is with us. Good morning to you. Lets talk about where we are on the tariff story, just as we think we are getting some progress on u. S. China relations, and a phase one deal, there is at least that talk pushing equities higher. Now we are hearing about tariffs and frencha, brazil, products. Are you positive or negative were equities go . Steen all roads lead to lower policy rates in the u. S. Every time there is a bump in the road, global Central Banks are panicking. What will change in 2020 is the ability to follow the Federal Reserve, it will have impact on the dollar. Overall, Federal Reserve policy ifes, with this environment, that continues, you could have told me the same headlines in december 2018. We were close to a deal, and tariffs going up and down. Anna you quickly get the policy rate conversation. You think the tariffs is a way for trump to get lower Interest Rates . Is the market wrong to focus on tariffs . Happened to the q4 gdp growth, in september it was running at 2 , running at zero now. It will be close to zero in terms of rate, but the narrative among everybody i need around the world, the u. S. Economy is doing great. Not true. The u. S. Is at its max, and the policy rate will continue to be the one central bankers in coalition with trump will use. Policy rates is getting u. S. Fixed income, that will start flying again and Interest Rates will go down. We have divergent forecasts about what happens in 2020 on treasuries and Interest Rates. 2020,e on this chart, in 10 year yields forecast lower than consensus. The u. S. 10 year bond yield forecast is telling us that by the end i will ditch that chart. I want to get your assessment of how many cuts we get . There is talk about 4 of cuts in the first part of 2020. Steen what really drives Central Banks is the real rates. They are a proxy on the japanese won. The u. S. Is barely negative, there is at least a hundred basis points to get were everybody else is. Monetary history is a constant repetition of what japan has done. All we do is lower Interest Rates. Real rates in the u. S. Is too high, but in a worstcase if there is a real recession. Anna why do you think the fed has get were everybody elses . Where everybody else is . Manufacturing is troubled but the consumer, not so much. Discuss whether there will be a recession in economic terms in terms of growth, but not whether there is a recession on earnings, which means the bottom line of companies, the semiconductor. Ompany down 8 the return on equity and investment is lower in energy sector. See ise market needs to lower Interest Rates because there is no new income fiscal impulse, and europe it will be delayed, and in the u. S. Close to impossible. Hence we see donald trump come because thatiffs is the go to tool when he is short of ideas. We are destined to continue to repeat what we have done. Anna steen jakobsen, cio chief economist, saxo bank stays with us. Plenty more coming. Could the market woes strike again before the yearend . We will bring you details and dani burger with assessment. This is bloomberg. Anna welcome back to Bloomberg Markets european open. 600 up by 0. 4 . Broadly positive apart from the ftse 100 which is showing weakness. It is the pound that is creating that. Times, not even wall eet playays the chaos that struck this vital financial called. Dani investors a growing concerned that this month we could see a squeeze in the repo market which prompts a buyer sale. Epo is a shortterm loan one party loans cash and they get back government debt. That debt gets bought back at a higher price. This is a lubricant for the financial system. Hedge funds and brokers use repo to leverage their trading activity. This tends to get squeezed that quarter and yearend periods. We get Corporate Tax payments that drain cash from the Banking System. Settlements can prompt a rush to reserves. And banks pull cash from the system when it comes to year close especially in europe. The surcharge is based on the footprint at yearend. It is this time of year they want to downsize. That is only get the year and funding squeeze. It is nothing new but we see spikes in this repo rate which suggest some banks have become wary of playing market facilitator. When we look at the spike in february, the fed boosted shortterm liquidity, and that is something it has not done in a decade. The risk looks contain for now, but analysts warn if these rates jump again this month, it might force a repo dealer to default. Money funds would dump treasuries they are holding as collateral, and that would be a buyer sale that could drag down the greater market. Nna thank you dani burger lets get to the headlines. The ecb and president Christine Lagarde say the central bank will be resolute in restoring price stability under her tenure. Strategy review will be wideranging, including Climate Change as well as inflation. Staff has beency a key driver of domestic demand during the recovery, and that stand remains in place. In the ecb guidance, Monetary Policy will support the economy and respond to future risk in line with our price stability mandate. We will obviously continuously monitor the side effects of our policies. Anna Christine Lagarde at the ecb. Steen jakobsen, cio chief economist, saxo bank is still with us. Christine lagarde said she will be resolute to keep the inflation mandate. Does the ecb have the tools . They know at all, and that. This is code for saying the fiscal handle preferably with the Banking Union, i would not be surprised in 2020 if we saw Christine Lagarde do it draghi said to save the euro. She may need to say i want to save the european Banking System. The only way to get inflation back is to use the Banking System to lend money. Inflation comes from the demand of money suppressed by negative Interest Rate policy. The only way you get more inflation is to help the Banking System, then it becomes the multiplier where you get demand of money. Anna what can the central bank due to help the Banking Sector . The tieredied Interest Rate policy, and some suggest that did not work. The Banking Union is held up by politics. Steen the Banking Union will be a first step in that respect. You needcreate negative capital, and the bank as a service industry. There is no yield curve to lend out on. When you go to your bank it is not about lending money, but Asset Management and derivative product. Now isicy they conduct suppressing inflation. Most importantly it is suppressing Economic Activity because we can hate or love the bank, but is the only place were you create credit, and that needs to go to the productive side of the economy. Anna is it a lack of willingness to lend or a lack of borrowing . Steen all of the above plus regulatory scrutiny. Factors. A number of all are side effects of the policy of conducting negative Interest Rates too long. The experiment in 2019 is you cannot take negative Interest Rates down forever. Reach 90ustomers leave thets, people safe haven of fixed income and go into equities and take increased risks. I go back to what i said, every road in the world as long as we will be togardes lower Interest Rates and conduct policy to survive for one quarter rather than sitting down and looking how to get a Productive Society and increase losses of money and investment into creating technology and a better education system. Before we have that conversation, it will be a waste of time. Anna negative Interest Rates might make corporates invest more money because the money might be cheaper. That may have been the excuse five years ago, but what we are seeing and what has transpired clearly shows the side effects of negative policy. Cannot knows this, they publicly say this, but they understand. That is why they do this fiscal handover, which is difficult. Intoly, we will be weigh 2020 before fiscal expansion in europe. Anna thank you very much steen jakobsen, cio chief economist, saxo bank, he stays with us on the program. President trump considers tariff s on french goods. It is hitting the french luxury sector. Down 1. 6 . This is bloomberg. Anna welcome back to the european open, 20 minutes into the trading day. 0. 2 , the dax up by 0. 7 . We see a stronger pound this morning. Annmarie hordern has a breakdown of the top movers. Lvmh to the downside this morning as the u. S. Proposing 2. 4 billion on tariff s on french good after President Trump and Emmanuel Macron could not agree on taxes for the technology space. Everything from handbags, wines, champagne could come under fire. , they upside, easyjet plan to make their debut back to the ftse 100. We will get that final news today after the close. Unicredit planning a Share Buyback and to shed 8000 jobs, 9 of the workforce. Expect to behey below expectations, they did see a weaker box office but did see higher synergies. People are looking forward to the Star Wars Film coming out before christmas. Anna everything we need to watch out for in the movie theaters before christmas. Donald Trump Takes Center Stage in britains election campaign. U. K. Opposition parties use his johnson will be helping hoping the u. S. President does not take the bait. Returns out of the u. K. Alexa mike everybody else, give us base Case Scenarios what happens in the u. K. Politics and brexit . Steen my assumption is boris troublegoes on to have in 2020, the biggest fiscal expansion in the u. K. Since the 1970s. Your winning the election, have to look at the country which is split down the middle, and the only way you can heal that rift is by having expansionary policy that goes into health care, education. Being out of the eu, we will see a significant increase in spending. Also trying to heal the process they have been through with brexit. Anna and a lot of that spending outside of london to spread the wealth. What level of spending will follow rates . Steen you have opposing forces, the economy is extremely weak and on the brink of recession. Then you have spending going back. People will see the spending is giltoff experiment, and will be all right in this environment. Anna if you are unleashing a big fiscal waves, that does not sound like something you get done in a year. Some of these have long lead times. Steen i was just in russia, they are doing infrastructure. They have the capital and the money to do it, but it will be a longterm project and increase productivity which is what the u. K. Needs. The strengthening of the educational system is where you get longterm benefits from this. I have seen headlines that we are going back to the 1970s. Anna with the fiscal impulse globally, not just a u. K. This ison, do you think a big hope for the Global Economy . Not all debt is created equal. It is done for answer structure infrastructure and a Better Health care system. We have to split, and i think the headline in 2020 will be the climate. There are a lot of things that will be on the headline of Climate Change. To some extent on the budgetary that thisbe excused is not because we want to but because we need to. We have the 2 limit right now, structurally over the next 10 years Climate Change is so significant, and the challenges so significant that we will allow another 2 . Rewritten, will be and worries people had 10 years ago, we will not be so focused because climate will change. Steen ecb europe has changed every rule since the introduction of the euro, so why not change the 2 , that is an arbitrary number. Politicians will grab and use that as a tool to lever the ability to spur more growth in the economy. Anna steen jakobsen, cio chief economist, saxo bank, thank you so much. We will talk about Outrageous Predictions, not forecasts, but possibilities for 2020. Stays with us to talk about the most outrageous calls. This is bloomberg. Anna 30 minutes into the trading day. Welcome back to Bloomberg Markets european open. Crosshairsn the u. S. As washington considers 2. 4 billion dollars of duties on wine, cheese, and handbags. Emmanuel macron and President Trump meet in london today. Entities unreliable could lead to sanctions on u. S. Companies. Unicreditash, reveals a fouryear plan that will see a reduction of 8000 jobs. The stock rises. Good morning and welcome to Bloomberg Markets european open. I am anna edwards, here in london. Lets see how things are shaping up. Upside, ando the the stoxx 600 up by 0. 3 . Rising, wethat are talked about this in stocks to watch, it could go lower at the start of trade. Taken positively by investors, up by 4. 3 . Easyjet also moves higher. On the downside, interesting moves and headlines on luxury goods. Not down by much, but being what we are hearing from the white house and what they intend to do in retaliation for the french digital tax. This is a volatile stock, down by 2. 4 . Some mining names retreating. Anglo american and glencore were moves in fx some markets, the pound on the move. The ftse 100 is losing ground. With whatat has to do topens to profits currency currency for big Global Mining companies. Lets get a first word update. Starting in washington, a gop report says the investigation into President Trump has failed to establish any impeachable offenses, and paints a picture quote, unelectable bureaucrats disagreeing with the president. Democrats will issue their findings this week. Unicredit is cutting 8000 jobs as part of its for your plan four year plan. The italian lender will also reward investors with 2 billion euros a Share Buybacks. In hong kong, chief executive carrie lam is proposing more relief measures as unrest continues to hit the citys economy. She did not elaborate on what measures would be entailed, only they would be targeted. She refused questions on whether she would meet protesters future demands. New antimoney Laundering Agency after a wave of scandals across the regions banking industry. The Current System is vulnerable because it is largely along national lines. Opens the door global news 24 hours a day on air and tictoc on twitter powered by 2700 journalists and analysts in more than 120 countries. This is bloomberg. Jerome powell being fired, germany entering a recession, not all quite ringing a bell . These were some of the Outrageous Predictions of 2019. They were not seriously thought to happen, but possible. Now onto the 2020 calls, including hungary quitting the eu. Lagarde hiking rates. And a democratic clean sweep in the president ial election. Steen jakobsen, cio chief economist, saxo bank, is still with us. Last year these were outrageous addictions, unlikely but possible, and some came close to happening, germany in a recession for a start. Ween germany was one, and saw massive boost on the dax. I think powell was close to being fired by trump, and he would have if he had the ability to do so. Corbyn winning the election is a long shot. Anna a work in progress with some of these calls. Let me talk about these Outrageous Predictions. The ecb folds and hikes rates, talk about how we could ,ee the ecb bring an aboutface Christine Lagarde believing in negative in just rates. Banking sector will drive the ecb and 2020. We are starting to realize the negative Interest Rates, the banks have no ability to create anything but fees on their customers. They use this as a vehicle for the economy. The economic counterargument is banks are the part of credit , so in 2020 she will have to safeguard through helping the Banking Union, or coming out with a statement, i will do everything in my power to save the Banking Union. This is something i could possibly happen, but not your base case. The possibility of stagflation, is this a global phenomenon that could happen. We have not spoken about inflation for such a long time. It seems off the agenda because of technology and other factors. Steen inflation is extremely difficult to create. What we have in the world is underinvestment in resources and Technology Driver and on top of theme, ifverhanging you can get electricians and government is going into fiscal expansion, infrastructure, climate driven, you will have a massive amount of resources from the economy. Hich is underinvested into we saw that when the dam broke in brazil and they could not produce anything. We could see these resources, oil and Everything Else coming to a higher level, and at the same time the Global Economy very slow. If you have fiscal expansion, that would be 12 months down the road. Not fromget a surprise inflation but from supplyside constraints similar to what we saw in the 1970s that would lead to stagflation. If we see stagflation this time next year, we will bring you back to reflect. On the brexit conversation in london, and the eu, you think there are other candidates for departure. Talk to me about hexit. Steen everybody talks about the divide between the north and south, but we think it is the west and east. Subsidies given to countries ary, they are running out over the next two years, and the rhetoric between these countries in brussels is becoming contentious. Is eu has article vii which a code against the violation of conduct. We think one thing that could translate into the political environment in 2020 is brexit happens on january 31. Other countries want an exit. Eal we think one of the most likely is hungary. Corbyn is picking almost every fight he can, and being in h ungary two weeks ago, the locals talk about being blood brothers. Europe has been subsidizing the economy since 2004. He wants to move east toward the turkey line, and Everybody Knows where they stand. We think an increase in the political picture. Anna thank you very much for bringing us your Outrageous Predictions. Steen jakobsen, cio chief economist, saxo bank. Up next, stock movers this morning, including ferrari, higher after Goldman Sachs raises the price target on the carmaker. That is next. This is bloomberg. Anna welcome back to the european open, 42 minutes into your trading day. The ftse weighed down by fx consideration. The Mining Sector and positivity and that sector particularly. The threat of more tariffs is looming. The Chinese Media say the government will produce a blacklist of entities that could lead to sanctions against u. S. Companies. President trump is considering a levy of 2. 4 billion on french products in response to its digital tax. Joining me is our bureau chief. Which of the french products are going to be affected . We are saying market fallout and response to these headlines . At some ofooking frances biggest and most wellknown companies being affected by these additional sanctions. Biggest markets capitalization, over 200 billion number ofy own a wellknown champagne brands, whiskey brands. Of a companyikes famous for its handbags. Loreal, a cosmetics giant. These potential sanctions of 2. 4 billion, the heart of the French Economy and it would be affecting some of the biggest names in the country. Ask you about what response we are seeing in france. The u. S. Says this would be in retaliation for the french digital tax. The finance minister in france is speaking in an interview saying the eu would not be ready to retaliate. They reached out to the European Commission saying these are unacceptable. The suggestion there could be further retaliation, we know how this goes, we have seen this oneupsmanship before. That is the escalation french politicians are saying is one they want to avoid. They see it as a loselose situation. The french government, certain commitments were made at the g7 summit at the end of august between president s macron and trump. They were planning to negotiate a tax regime coming from the oecd. Frances position this morning is that they see this as an oecd proposition on the table ready to implement, and france supports this proposition. It is waiting for the u. S. And its response. Frances finance minister did make some fairly strong comments this morning, saying he considered this threat of further sanctions on french goods was not the way france expected a close ally to behave. He has been in touch with the u. S. Trade representative Robert Lighthizer yesterday to express his disagreement over the u. S. Conclusions, and the European Commission about retaliation. Anna thank you for the update, james reagan, our bureau chief. Place inng is taking the north of london today. And trump will be asked and maybe address the matters. I want to start with minors, a number of i want to start miners. Glencore down 1. 5 . For ari to the upside ferrari to the upside. Race. Icker is in italy, up 60 this morning. The family is looking to buy into the publisher that owns the likes of the republica. Anna thank you to annmarie hordern. The European Union is gearing up for policy against Climate Change, requiring radical overhaul to the economy. They will commit to cut to zero bygases 2050. The eu will look to pressure the u. S. And china to make their own climate commitment. Joining me now is malcolm head of european corporate transformation services, alvarez marsal. A new report Shows Companies are more likely to be targets. I want to ask you about this betweenyou found a link poor scores and the extent companies are a target of investor actions. Are you convinced about the causation as well as the correlation. They might be Old Industrial businesses or conglomerates not as profitable as they should be. Is there a link . I think this matters to investors. That is where the link comes. What we found, it is interesting because i never saw the study before, companies that are 4 rly performing arts why more likely to be targeted by activists than those that are not. In those countries, that percentage is higher. Activists for this is will attack a company as they see it is not performing to its potential. , is aters to investors business is poorly performing on the scores, then potentially it is derated on the market and activist can take action. Because youters think there is a discount applied to these companies, where in europe is this phenomenon seen most clearly . Malcolm most clearly in the countries where investors care about esg scores. U. K. , a big push, a lot of funds and taking esg matters into account when they decide what to include in the portfolio. Another country where it matters is italy. Is a driver on investor behavior, and you can contrast ist with spain where esg less of a driver on investors, and you found a weak correlation. Activists will be interested next, what does that tell us about the year ahead . Does it remain focused in the u. K. Were spread across europe . That is the trend i pull out here, activism in europe started more within the u. K. For reasons to do with Corporate Governance codes and the language and the rest of it. You see that moving increasingly to france and germany. Something like a 30 increase in germany, 50 in france in those activist situations. What has happened is the activists got smart and more savvy on how to navigate the complex. They are getting good returns. One elliott is pursuing in france, they got a good return. You would think it is difficult for an activist to get traction. Is exactlyimes that what they are going after, the family ownership structures is tempting for some activists. Thank you malcolm mckenzie, head of european corporate transformation services, alvarez marsal. President trump has arrived in london, and he may not be the only one questioning the alliances future. Other members are raising concerns. This is bloomberg. Anna welcome back to the european open, 54 minutes into the trading day. Key players are questioning the foundations of the alliance. Emmanuel macron called it brain death. Turkey is at odds over others with its recent military intervention in syria. Who pays what . It is a common talking point. Downing street counting down to the start of this nato summit. Friction,s of Emmanuel Macron and trump criticizing the alliance. What can we expect . Men have cleared talking points going into this meeting, which nato is saying is not a summit. Because of the friction we are says it isald trump about spending more and the u. S. Should not be paying for rich countries to protect themselves. There are new talking points have to do with china and technology. You are thinking huawei. The u. S. Has put pressure on the European Union to veto that technology, and that is not something europeans are ready to do. And Emmanuel Macron said nato was braindead and there is no strategic vision. He questioned article v which is the foundation of nato. That conversation has been overshadowed by the trade story. The two men are due to meet in a few hours. That is really the story that has in some ways eclipsed the nato talking points today. Anna we will focus on attack story between the u. S. And france. What do we expect from turkey . That is the other leader making headlines. Suggesting then french president should take a medical test to see if he is braindead. He suggested france wants to kick out turkey, and Emmanuel Macron said that is something he does not want to do. The turkish media is saying key is testing anna thank you very much for following the nato story as it unfolds. This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because 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. The u. S. Proposes duties on french products in response to attacks on american tech giants. President trump slaps steel tariffs on argentina. The deadline for more duties approaches. The britishn capital with questions about the alliances current direction. Francine welcome to bloomberg surveillance. These are your