Of expedia said there were strategic differences with the current leadership and the ceo and the fo are now gone cfo oregon. Down 3. 1 percent, the worst performer in s p 500. Higher,opean stocks are the pound trading north of 131 against the u. S. Dollar. We have a stronger rate against brent crudel, moving higher, up by nearly 4 in todays session. Opec is just around the corner. We will talk about that later on in the program. Lets talk more about the trade story, affecting markets over the last 24 hours. Economist is a senior , we have been jostled by the trade story. Todays story is maybe we are inching closer. The president talking about the idea that it can wait until after the u. S. Election. If we dont get a deal by the 15th of december, if we dont get additional tariffs what does that do to the Economic Data . I think the Economic Data improves beginning next year into spring if we can contain the current trade tensions. If we get a phase one deal before or after christmas that is a bonus. In a globalpricing recovery in trade and Industrial Production. You dont need further escalation from here, we will learn to live with the current tensions. Guy what if we get further escalation . We get worse in global trade, markets probably start to think that donald trump is pursuing a policy despite evidence that it is weakening the u. S. Policy, does that mean he could reach to the eu ahead of the election . Matters next year is which way donald trump wants to go heading into the election, does he want a Strong Economy or does he of the antion trade ante on trade . Vonnie what are you doing in terms of modeling for those scenarios . It is a confidence game. We have lived for a good decade in an age of caution. It seems to be developing into an age of anxiety where economic fundamentals are actually pretty good. You can see across the advanced world the mastic services and consumption are home holding up. If the trade tensions escalate from here we will get further Political Uncertainty that will depress demand for industrial goods and tradable goods. For the stuff that goes into machines. Over time the industrial producers around the western world which are holding onto their labor will decide things are not going to improve from here. They start to get rid of employees, that would lead to higher unemployment and you would see knock on effects through consumption. You would get a slowmotion downturn that turns from an isolated issue in Industrial Production to a broadbased recession. Base case is things do not get worse from here. Whereas Retail Services remain pretty stable we get a bit of a catch up in Industrial Production and trade, that means for Major Economies you can get in placesck to growth like europe and east asia that are trade oriented. Vonnie that sounds positive. If we see a bit of a rollback button on an entire rollback of the tariffs is that scenario play out . Does the economy stay healthy . Kallum i think so. I dont see any reason despite 10 years of Economic Growth are at for an economic downturn. We dont have the signals that we are due a recession. Good threeare a years away from a genuine economic downturn. What i worry about this the way markets are pricing. Lets go back to a year ago, we had a big selloff when we anticipate in trade and production. A little help from Central Banks and we seem to be not asking will there be a recovery but when will the recovery come . If we are disappointed by trade data or Political Developments that sets the stage for a Market Correction and a Market Correction can be an economic event especially when the underlying economy is showing signs of agility. We are starting to see manufacturing bleeding and services in germany. Isn data outices of the u. S. On a downward trajectory. We are getting payrolls on friday, the consensus is 190 but there is a down turn consensus when it comes to payroll. Why do we not see a continuation out of manufacturing into her mrs. And look or Consumer Holding up the u. S. Economy and the Global Economy . That is aallum political bet that theyll politics stabilize or do not get worse. If we have an escalation you will see a seepage from manufacturing into services and you would be worried about a broadbased downturn. Looking at the data it looks like a generic downturn in industry and trade, much like the downturn in 2011 in 2012. This time it is for political reasons. We must make a political call. When the politics suddenly go right confidence improves quickly and the economy can bounce back. Guy in order to get Energy Markets to stay where they are now we need the bottom line to improve. We need earnings to pick up. In your scenario do you see that happening . Do you see next year ending this earnings recession we are in at the moment . Kallum it depends how much inflation we get. Play out yourio to need the politics not to get worse, to avoid a hard brexit in the global need macro data to improve, then markets can stabilize. I doubt very much that even if we get a positive scenario where the politics go the right way and the global macro improves markets can rally into next year because the good news is priced into this year. We are setting ourselves up for a fall in markets. We meet our own expectations. Vonnie you are not exactly anticipating a downturn, what does that mean for Central Banks . With the ecb are we on hold . Also the federal reserve, will there be a reason to ease further if there is not a downturn visible . Kallum that is a good question. On Central Banks, dont worry about Central Banks not turning if market start to panic. There is no inflation in wages or prices for Central Banks to worry about so i would expect them to step in if markets started to roll bad like they did this year. What Central Banks cannot do anymore because of political wrist and low Interest Rates is stimulate the real side of economy. Central banks are important because they can contain Financial Markets risk. That is largely why Financial Markets have benefited and become risk on over the course of this year. Is on hold,he fed the ecb is on hold and its Economic Data worsens they will step up that it will mean a big improvement in Economic Data of inflation and credit risk for Central Banks to sound hawkish. With the one exception of the u. K. Where, if Boris Johnson wins the majority in december, we get an orderly brexit and a fiscal stimulus, i think they may surprise the market by turning hawkish. Vonnie hiking later next year. I guess we have to get through a few months before then. In the meantime, what happens to the dominant currencies . Does the dollar hold onto its strength . Kallum the dollar holds onto its strength so long as we stay riskaverse. Save haven currencies, bond markets seem to be taking the stress of the market anxieties. Equity seems to be creeping gradually higher. The dollar is interesting in so far as i think it is probably the best measure of the Global Markets risk appetite. Lets take you through the last three years. Hike in the u. S. Economy is doing well but the dollar is weakening. 2018 the fed hiking and the dollar is still strengthening. We worry about the Global Political risk in 18 and we seek the safe havens that are usually denominated in u. S. Dollars. What needs to happen for a strong signal that we have become more risk on is for the dollar to weaken and for money to flood out of the europe, morse the dollar strengthening is a bad time and the dollar weakening is a good sign. Guy staying with us. It is definitely a risk on day. Stocks staging a recovery after three consecutive days of losses. A bloomberg report that the u. S. And china may be closer to a trade deal than we ought. The s p 500 and the nasdaq are both higher while the stoxx 600 is enjoying the rally higher by more than 1 . Are rushing into riskier assets and not as interested as safe haven assets like u. S. Treasuries. Seeing a sizable move upward on yields on the u. S. 10 year. Stocks, we take a look at a few individual movers. Semiconductors are very vulnerable in the china trade narrative because china is big market and it is integral to their supply chain. Higher to the tune of two or 3 . Google, a management shakeup at alphabet. The google ceo taking hold of the entire umbrella company. That does unwind the on bella structure that was created in 2015. If you hop on the terminal you can see how stocks have performed. That was put in place in 2015. You we are looking at it can see that it has been range bound in the past few months. Another asset class higher. On oil, wti soaring up 4 . Part of that is the trade narrative, good for assets like oil. We are looking at the opec meeting in vienna. Remind ourselves of what we saw for oil last week. Friday was an ugly day. With the move higher today oil has recovered. About 58 ang at barrel on wti. Vonnie up more than 4 . Go to the function gtb go on the bloomberg. Save your favorites for future reference. This is bloomberg. Vonnie live from new york i am vonnie quinn. I am guy from london johnson, this is the european close. Lets check in with the first word news team. Added then companies fewest jobs in payroll and six months according to an adp report for november. Business hiring rose by 67,000, the Second Lowest figure since 2010 signaling pullbacks in Corporate Investment and pointing to a firstquarter slowdown. President trump firing back at Justin Trudeau at the nato summit outside of london. Trudeau was captured on video joking about the president s extended remarked the poor reporters remarked to reporters. He is twofaced. I find him to be a nice guy. I called them out on the fact that he is not paying 2 and i guess he is not happy. The president was referring to the amount of canadas gdp devoted to defense. Revived hisrump rocket man nickname for kim jongun and brought back the threat of military action. Newsding to the staterun agency kim jongun is displeased with President Trumps remarks. It willpean union said likely miss its targets for reducing Greenhouse Gases by 2030, a blow to efforts to be a leader in the fight against climate change. The European Environmental agency says it is on course to cut emissions of Carbon Dioxide and other climate warming pollutants by 30 in the next decade, on par with 1990 levels. Global news 24 hours a day on air and on quick take by bloomberg powered by more than 2700 journalists and analysts in over 120 countries. Vonnie courtney, thank you. Back with callum pickering. On brexit, your base case is that johnson wins and in the mediumterm you say assets rise, yields drop and sterling rises. Is that all down to fiscal stimulus and what kind of fiscal needed . Will be kallum it is not all down to fiscal stimulus, it is a confidence effect from more political certainty. Thee get the majority for conservatives on the 12th i would expect january 31 you get an orderly brexit and in spring there is a big fiscal announcement, probably equivalent to two thirds of a percentage point of gdp, the flipside of Boris Johnson winning the election is Jeremy Corbyn loses the election. And his policies present the risks to longterm potential growth. Significance confidence rebound and a focus on Consumer Spending on the business side. Businesses might remain hesitant because there is a risk of a hard brexit at the end of 2020. You can see u. K. Growth at 1. 8 and 2. 1 the year after with annual growth as high as 2. 5. That would bey your base case, what about the rest of europe . Do you get fiscal stimulus out of germany and where did the funds come from for the fiscal stimulus . Kallum that is the big question. There was a big shift in discussions at the end of the meeting from what will Central Banks to to what will central governments do. And the brexiteers in government are committed to improving the pessimists wrong if they can get an orderly brexit in january. Europe it really depends on which countries we look at. In germany, the one country that can afford big fiscal stimulus is already doing slow motion stimulus focused on Green Investments and infrastructure. You have very tight labor markets in germany. The infrastructure deflated that and deflation is running high. You dont want to get in inflation problem. Doing a lot of supply side reform where you may get fiscal stimulus. Elsewhere things are looking tight. The only real fiscal stimulus will be in the u. K. , perhaps in the u. S. And a little from germany. In the u. K. , the bank of england governor, we will probably get a new one quickly after the election. How will the bank play this . You will get fiscal stimulus coming out of the government, the government will pick a governor, presumably Boris Johnson wants to prove the brexit detractors wrong and he will pick a governor that works with him. The u. K. Hasnt inflation has been inflation problem, inflation is higher in the u. K. Than it is in the u. S. U. K. Will grow better next year and the year after but it will be focused on the demand side, supply side will be soft. They are building inflation risks. It matters who you get as the bank of england governor in the sense that it is the committee that sets Interest Rates. The leader of the committee can suggest going for a hike or a cut but eight members have to agree. The council of banking want change too much. Just like in 1997 when they gave the bank of and in bank of england independence because they wanted to spend on the fiscal side and not have markets worry about inflation, a good pick for the bank of england would be someone with hawkish tendencies. Chance the Prime Minister has at borrowing to spend, because markets will get in inflation problem the bank of england will not let it get out of hand. Guy we are told there is a lot of money on the sidelines waiting to coming to the u. K. Howoris gets the majority big a difference in terms of the flow to the u. K. Will there be . Kallum potentially it makes a difference for a big reason. The big risk in 2020 is that the u. K. Or Great Britain could get a hard brexit. You have a transitional period onn the u. K. Leaves the eu january. Unless the future agreement is activated in january you get a hard brexit with the caveat that if parliament decides to go for an extension of the transitional period you give yourself more runway to negotiate the future relationship. With the majority of 10 Boris Johnson may be subject to the fringe of his party, the euro skeptics want a brexit as soon as possible. A majority of 40 he might be able to isolate the fringe and have enough numbers to back an extension if that makes sense. My bet would be if the economy is riding high next year and boris need six months or 12 months more to negotiate you might try to go for it, to go for some kind of fudge to eliminate the hard brexit risk. Guy thank you for stopping by. Senior economist joining us. This is bloomberg. Latest time for your Bloomberg Business flash, the biggest business stories. Uberayor of london says if wants its license back to operate in the city it cannot expect special treatment. Are other examples where drivers who had been suspended or dismissed were allowed to use somebody elses identities are drive people are around. There are other concerns from the regulator. Is the sameto uber i give to any business. You are welcome in london if you play by the rules of the game. Plans to appeal the london regulators decision. A shakeup at expedia, the ceo and the cfo resigning immediately. They clashed with the board over the direction of the company. The chairman and vice chairman will take over while the directors look for longterm leadership. That is the latest Bloomberg Business flash. Look at wheree a european markets are trading as we head into the close. A much more positive day than yesterday. Trading higher today, up by 1. 1, 1. 2 . This market lagging today but take a look at the pound and sterling chart today, you will see we are through 131 on the table rates. Taking a shine off the london markets. This is bloomberg. Guy 30 seconds to go in till the end of regular trading in europe. A positive session. London underperforming a little bit, but it has been a strong day for the british pound. Some of the scandinavian markets doing well today. Norway, finland, sweden, all trading up. We are inching closer to a phase one deal. We are back above 400 on the stoxx 600, up by around 1 and ok volume today, which considering it is december is worth paying attention to. The quick look at the individual markets. You can see the difference in terms of what is happening on either side of the english channel. The ftse 100 only up. 3 today. The pound has been strong. Dax up 1. 1 . The cac 40 up 1. 3 . Luxury stocks coming back. Lets take a look at what it looks like from a sector point of view. Every single sector is in positive territory and it is the risk on ones doing better. Minors doingvices, well, industrials have had a solid session and chemicals and technology doing well. Bottom end of the market is the bond proxies being rotated out. We see the bond market moving softer. Food and beverage, real estate, telecom, the real estate story want to come back to. Lets show you what the individual stories look like from a sector point of view and a stock point of view. As an g on the far side. It has had to freeze one of its property funds, sounds familiar doesnt it. The issue is what is happening with brexit and what is happening with some of the valuations. This is a momandpop fund. This is a Retail Investment fund that has been gated. We will talk more. United placing a big order for the longrange version of the a320 one good that is a double blow for boeing. Thisis a problem because is a boeing Company Switching to airbus and it is a problem because this is the aircraft there replacing the 757 that will compete with the new mediumsized aircraft that boeing are proposing to build but have not done yet. We will talk about that more in just a moment. Orange out of france trading down 4. 45 . Investors not going according to plan. Feelh more risk on emanating around the European Equity market. That was the close. Freeze most 2 in in three sessions. That is the headline from bloomberg. It looks like there is agreement on what tariffs should be rolled back. Not a final agreement but enough to give markets a boost. 500 and backed up to 1. 78 on the 10 year yield. The dollar index down. 2 . We got a little bit of disappointing Economic Data. Ism service disappointed but still well above 50. Crude was up as much as 4. 2 a while ago, still well above 58 a barrel. This is a supply story with inventories down and opec saying tomorrow we will have an even bigger output cost thanks to iraq. Will be talking about that in more detail. Lets get to the components of the s p 500. Moving as you might imagine. A lot of the Oil Production companies are higher. Lets have a look at the movers to the downside. Generally the earnings were good but the outlook is cloudy and analysts taking the opportunity to sell. If we have a look at some of the Companies Performing well, the Oil Companies are doing well on the back of the oil price increase. Expedia is the big story today, up 6. 6 . Investors pleased following a movement from the board to oust the ceo and cfo. We spoke less than a month ago at earnings time the day the stock dropped 20 . It is only now that the recovery seems to be beginning. Guy rn to our stop lets turn to our stock of the hour. Shares in airbus rising after United Airlines placed its first order for the airbus jet. This deals a double blow for boeing. Taylor riggs has more. Taylor i did this one just for you. I know you are the playmaker group. Airbus rising the plane maker guru. Airbus rising after United Airlines is placing 7 billion in orders for the eight for the airbus a one xlr range. This comes when boeing has been struggling with the granting of the 737 max. Received 542w orders and 640 deliveries. Orders, 321et 92 deliveries. If you look at the chart, you can see the competition between the two. Airbus has continued its lead higher. They are up 37 relative to boeing, which is only up 5 year to date. Is not inirplane direct competition with the 737, it is more the 757. The 737 issues continue to play through with some of the uncertainties with the airlines looking to place orders. David you just said vonnie you just said the exposure to the 737 max 8 definitely having an impact on both airlines. Taylor if we look at a chart inside my terminal, since the ground again march of the 737 max the stop is down 15 . And we have United Airlines and white up 8 . It is the airliners that do not have exposure to the 737 max 8 like alaska, like delta, that have been outperforming the market. You are starting to see the haves and havenots it comes to boeing, airbus, and the airliners. Vonnie taylor riggs with our stock of the hour. Thank you very much. Lets go to a huge leadership change in the tech world. Leaders stepping down from the Parent Company alphabet. The google ceo will step in, adding the title of alphabet ceo. Joining us to discuss the move is a bloomberg tech reporter. Are there good reasons or bad reasons or both for this move . This is how its has effectively been going at the company for a while, essentially since the alphabet thing was created the founders have stepped back good google, that core unit of alphabet makes up well over 95 of the entire company revenue. That hea formalization is the one who is running the show. If theres a problem at google, it is on him, if there is success, it is on him. Guy why do we need alphabet in that scenario . That is a good question. People are waiting to see what will happen. It is unlikely he will get rid of all of those other companies that are working on interesting ideas around health care or future technologies, self driving cars. The thinking at alphabet is still these are businesses that could draw cash in the future. The focus will retrench on the core products, and that is not just advertising, that is also clout and some of the hardware. Google pixel phones. Some of the home devices. The message google is trying to send is this guys been running the show for a while and now he is formalizing that title. Vonnie is this about the moon shots going sour in the amount of money it is costing or is that too petty . Errik it is costing money but not the kind of money that will run google into the ground anytime soon. Investors want all the money going towards the business is growing quickly. Google has always said it is a company that wants to think about the future. There is a bit of a change when you see those founders officially stepping back, giving up their title good they are the ones who push that id giving up their title. They are the ones who push that idea. Probably why the stock is up little bit this morning. Guy if this company is going to become more focused, is that a reason for analyst to rewrite it . Errit i think the companies have a lot going on but the core business has been growing quickly considering its size. Analysts will continue to stomach some of these experiments on the side. Will pull in whatever is working into the core google business. He has already done that. That is the home product, thermostats, Alarm Company wasnt Alphabet Company and when it started to throw up cash he will it back in. The same with some of the ai technology. Some of the worlds best ai thinkers were working at the customer were working with the company and they were pulled into google cloud business. Vonnie they are not the only leaders stepping aside. We got word today that expedia leaders are also out. Stocks reacting well. Is that Earnings Report the final nail . Gerrit there was a statement from barry diller, the chairman of expedia. He makes the decisions. He said i do not like the performance of this company. It is not just the quarter but the entire year. He made the decision and those two are now out. My question is what is the vision you want . Expedia is in a tough position with google taking a lot of their business. We will see what he wants. Guy great stuff. Thank you very much, indeed. A quick look at the european markets. A little bit of a pickup as we come through the final few minutes of the session. The ftse 100 finishing just south of 1 . The dax up 1. 1 . The cac 40 up 1. 3 . We will carry on the composition of the top of the hour. The cable taking to the air on dab Digital Radio in the london area. Jonathan ferro is a new york. I will be joining him in london. This is bloomberg. Guy from london, im guy johnson. Vonnie from new york, i vonnie quinn. This is the european close on bloomberg markets. Steel went down to the New York Stock Exchange and spoke to the ceo asking about the outlook for 2020. The brazilian production will continue to grow. Yearwas a different because the growth was very strong. For the following year, it is an upward trend. Next year growth will not be so high, but for next year, for the following years, the brazilian output will grow for sure. Adding more supply to the global. Conomy goo alix what does that wind up doing for production if opec is not happy there is not there is a lot of known a lot of nonopec growth . Weak global is supply continues to grow, we have low price. Our job is to protect against a low price scenario. For much moreason efficiency and lower costs. Part of that is why the oil auction last month did not go well. What is your read on that . What the why did the oil majors not show up . Has to review its Regulatory Framework on oil. It is too complex. We have several things that are not used in developed economies like the production sharing company, estate owned the contractor proving, approving plans what can take costs are not, is veryntest difficult to explain to Board Members of nonbrazil companies. Oil my question becomes majors have shown up in the past. Is there something structurally different now in the energy world that is preventing an exxon or chevron from taking bigger stakes . Options less involvement, much less money. We spent money to acquire the largest offshore oil field in the world and spent almost 17 billion. It involved big money. When it comes to big money, you have to think seriously about. Hat good alix alix the chinese did show up. Where are talks now . We are happy with the 90 . Alix that is a steep price tag. I see. We took a decision to only invest where we are the natural owners. Nobody knows better than ourselves. Cost,a very low living low cost, low risk, large reserve, everything you want. We are very happy. Alix a large part of that for you is asset sales. Can you give me a sense of how your strategy is for that, as opposed using the public market, private sales, etc. . We are selling assets in which we are not the natural owners. Assets in which others can do better than ourselves. For us they have been reducing low returns. And usesell the Assets Investments finance. Use m a deals, sometimes the market. Petrobas made the first privatization in brazilian history to capital markets. A retail distribution company. It was very successful. Petrobat was the ceo of ras speaking to alix steel at the New York Stock Exchange earlier on today. We will continue the conversation when it comes to commodities. We will take you to vienna. Opec getting ready to meet. Expectations growing something will happen at this meeting. We take it to vienna, next. This is bloomberg. Guy brent is trading close to 4 , up today. Lets go to vienna and figure out what is happening with opec. Opec and its allies sending mixed signals about whether they are considering deeper production cuts. Says opec minister should deepen those cuts by 400,000 barrels a day. That is beyond the existing 1. 2 million barrel supply reduction. The focus is on this specific scenario. The addition of 400,000 barrels a day. Guy lets go to vienna. Bloombergs Annmarie Hordern joining us from there. The market is now expecting something might actually happen at this meeting. Annmarie that is exactly right and we already heard from the iraqi minister backpedaling those comments you heard last night. He is backpedaling that to saying he thinks the deal should be rolled over to the end of next year. It looks like they threw the market a bit of a bone, saying we might be able to reduce more than the current production deal. If they not deliver and it is a status quo deal, they are setting themselves for a disaster in terms of disaster. You can see prices sell off of they do not deliver. Vonnie 3 today for wti and brent. I want to ask you about the aramco ipo. What are you hearing . We are hearing it is looking to price at the high end of expectations. That is right. The ipo final pricing we will hear tomorrow. For the detical time facto leader of the kingdom of saudi arabia. We are hearing it is at the upper end of the range, which would make it the weakest ipo of the world. When this was first touted to us , it was supposed to be this massive event in the market ringing in all of this fresh capital, that was the point of it, and to forget all of this fresh capital to the economy. It is just money moving different hands in saudi arabia, saudi households and saudi corporates are the nuts and bolts of this ipo. That money is going to the government. It is a big question for the ipo. What remains to be seen is how much this will mean for the economy. Guy the fact that the ipo will get done, does that change the way saudi approaches opec . Annmarie it is a very interesting question. On the one hand, there investors would want them to produce as much oil as possible. They are the ones who have been bearing the brunt of the production cuts. On the others, we know they need higher prices. 86. 50 a barrel. Right now we are trading in the 60s. It might change the way they approach the opec meetings. Vonnie annmarie, thank you. That is Annmarie Hordern at opec plus. Coming up in the united states, balance of power with david westin on number television and radio. James harmon, the president of institutew wilson joins to discuss the wrap up of the nato meeting. Lets look at markets rebounding after three days of declines. 3 at the s p 500 up least. Up. 75 at least. This is bloomberg. Guy david from bloomberg World Headquarters in new york to our tv and radio audiences worldwide, i am david westin. Welcome to balance of power, where the world of politics meets the world of business. On the brief today, Kevin Cirilli from washington on the first day of the House Judiciary Committee impeachment hearings. From london, roz matheson on the andof a tense nato summit, joe bidens new tax plan. Lets start off with impeachment hearings. What if we heard so far from law professors . Kevin democrats calling on three legal scholars to make the constitutional case President Trump should be impeached. Republicans getting one see on that panel. President trump speaking out forcefully within the last day, saying he would like to see hunter biden testify. Democrats have refused republicans that opportunity. From a procedural standpoint, Mitch Mcconnell making news just last evening, in which he said he would try to work with Chuck Schumer on the timetable and rules of the roa
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