Transcripts For BLOOMBERG Bloomberg Markets European Open 20240713

Iran after the government admits it and suddenly it accidentally shot down a ukrainian jetline. Washington aso china and the United States look to sign a phase one trade deal. Begin reporting with j. P. Morgan, citi, and wells fargo numbers due this week as Goldman Sachs says it plans to double its headcount in china. Good morning. David good morning. Matt good morning. We are looking at futures showing gains across europe. Take a look in terms of the dax and ftse futures. Cac futures are down just a little bit but we do see a gain on dax and ftse futures, just slight, but they are green arrows nonetheless. We see gains in terms of u. S. Futures. In fact, much more strong in terms of u. S. Futures much more strength in terms of u. S. Futures. Atdaq, s p, and dow jones. 3 . Anna lets take a look at where we are. That does seem to be on the move. It was flatter than that perhaps , just half an hour ago or so. Highera tentative push on asian equities. We are without japan. The philippines market is closed isause the taal volcano throwing out ash. This is the picture we have. That is something we need to be aware of. In terms of sentiment as we move into the european session, we are seeing a couple of corporates here in london guiding higher. William hill seeing operating profit ahead of forecast. Adjusted fullyear results of the upper end of forecast so a couple of corporate coming rather with positive news. The focus will be on trade. Interesting moves in the indonesian rupiah as once again, the central bank is not standing in the way. We see the taiwanese dollar on the move, assets in taiwan on the move, and an election taking place. We will move on to talk more about trade this week. We mentioned how a number of u. S. Banks are going to be reporting a little bit later on this week. Thats get a bloomberg first word news update. We stay here in london with laura wright. Mass protests in a wrong in iran for a second night. It follows days of denying it had anything to do with the incident. The iranian army says it was near a sensitive military site and human error was to blame. Iran says the victims families will be compensated. Thousands being evacuated in the philippines after a volcano erupted 40 miles south of the capital. It triggered earthquakes and spewed ash across manila. Financial market are suspended. Experts warn a hazardous explosive eruption is possible within hours to days. There are emergency plans to move up to 200,000 people. The u. S. Is looking at reviving semiannual talks with china to discuss the economic relationship between the two countries. In the past, the meetings were a form for specific disputes. Chinas vice premier is heading to the u. S. And set to sign phase one of a trade deal on wednesday. Many shortcomings, that is the conclusion of a report into Hong Kong Police conduct during recent unrest. The Hong Kong Economic journal says investigation finds a lack of communication and no clear guidelines with firing tear gas. The report has not been officially released. It could become public in the next few weeks. Landslide has won a victory in taiwan. Says taiwan will continue to refuse to bow to pressure from its neighbor. Beijing says taiwan is part of china, whatever happens. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna, matt. Matt thanks very much, laura wright in london with your first word news. Lets get over to the mliv team right now to figure out what is going on in markets to kick off this week. For that, we go to mark cudmore out of singapore. There are some big stories today. , philippines, but none appeared likely to move not necessarily european markets. Where do you see the Biggest Movement in terms of headlines in market . I think that is the reason. All the major global focus for markets this week is for later on in the week. You have the u. S. China trade deal and theres a lot of talk about what will happen next. On, they will focus implementation, so theres going to be the next phase of focus on the trade story. Of course, you have the earnings story which is quite large. In asia, we have china data. These are later in the week then people are focusing on. Been doingssets have so well recently. The currency, bonds, and equities have rallied so much already that it is hard for them to get much more. Even though they are making new extremes today, it is not a wild move. Asia was quietly positive. Anna something that has been quite positive of late has been the chinese currency market. I see a number of comments on the mliv blog around the chinese yuan and elsewhere, looking at where the yuan those now and where it goes after the trade deal is signed because it could feature as part of that trade deal. Is a general there sense that it has come a long way very quickly and the appreciation will be a little bit more controlled, whether by the pboc, or just the market thinking it has priced in a lot of good news. We are pretty constructive on the yuan. The outlook looks ok. If you are looking at dollar yuan specifically, the dollar might be the bigger driver. That is the currency pair, and we see dollar weakness. We think dollar yuan can come a little bit lower this year overall, but in the shortterm, its probably priced in enough of the news, especially as we get to the end of the month and the Lunar New Year holidays. There might be inclination to take profit from that trade. The longerterm outlook is positive on the yuan. Risks are there for weakness, especially if the deal does incorporate some kind of story around there that even though its not going to be a story that allows for much weakness, just the fact that there is negotiation around the currency will make you a little bit more nervous and might see some profit taking in the recent appreciation. Matt there was a great story over the weekend explaining that because of the way Market Participants hedge, the spikes that we have seen during to goitical crises tend away quickly, and prices are really smooth down. Is that the case you think also for safe havens like gold and the yen . They seem to be returning to their precrisis levels pretty quickly. Mark i think it is a little bit different story. Theres actually some fundamental internal kind of motive here in the oil market and commodities market, which makes it different from the haven trade. We have all seen the haven trade but it needs to be put in the context of what we are seeing. Gold in particular had an incredible december. It was having a great year, a great 2019 ahead of the news last week. The fact that it has given back its recent gains should be put in the longerterm context. We actually see gold having a great 2020 even though we are not bearish. The drivers for the gold in the shortterm are often these haven bids. Some of the structural drivers are not necessarily about the haven flows. Will equities had a great year. The yen story is very different. It had the shortterm haven flows. The structural story left positive began for gold. Cudmore, managing editor. Higher,ures pointing looking to erase some of the damage they did post the jobs number on friday. Up next, well take a look at the stocks to watch at the open, including aston martin reportedly making a lastditch effort to bring in fresh funding. Bloomberg radio is on your mobile device or on dab Digital Radio in the london area. This is bloomberg. Matt welcome back to bloomberg daybreak europe. Bloomberg markets european open. We are a little more than 45 minutes away from the start of trading. Futures mixed right now. We have ftse futures, dax futures, and cac futures. None of which are trading much more than. 1 away from unchanged. Lets get to stocks you should be watching on your radar from around the newsroom at right now. We have Philippe A Pacheco we have our guest. Dani burger is focusing a lot of moves. Lets start with you. Looks like aml could bring in a little bit of help. Yes, that is correct. There is a lot of expectation of some high activity with aston martin today. We had of course in the last hour of trading, the stock rose as much as 20 after a reported group is in conversation to buy a stake in the company and then over the weekend, we have news of a canadian billionaire actually willing to commit up to 200 Million Pounds as the company goes through a capital increase. Of course, the company has said they are in conversation with potential investors. Clarity see more regarding migh what might come,s stock could react to any piece of information. Even though it climbed 50 on friday, it ended the week down 12 . Manus worth remembering anna worth remembering. Thank you. Dani it may be looking more seriously on selling its Industrial Solutions unit. That is the factory building unit. Some of the buyers that might be interested include some chinese backed state enterprises. This would be a very Welcome Change for investors. This is one of the weakest units, a cash suck. 100 10 last year, million euros. They are able to spin off this unit. We might see the share prices move higher today. Anna thank you very much to Filipe Pacheco and dani. Astrazeneca closing the phase three strength trial of espinoza, one of the drugs they had been testing. Low likelihood they will get the results they were looking for. It will result in a writedown. Look for any impact. Priorityget fda review status. We will continue to keep the drug sector in focus. We have a number of interviews coming later on today. We will get you details shortly. You can check the latest stock stories by going to first go on your bloomberg and via the mobile app. To the big moves and iran. Antigovernment protesters rallied in iran for a second night after tehran admitted its military accidentally shot down a ukrainian jetline. This came after days of the heavenly denying it was even possible that such an accident had happened. 176 people died. The iranian army said now says that human error was to blame after daring anyone to come forth with some kind of proof. Global condemnation followed the admission of responsibility. Justin trudeau demanded justice werehe victims, 67 of whom canadian. The ukrainian president , vladimir zelensky, said he wants the results of a full investigation without artificial delays, so within days. Donald trump tweeted in english. Donald trump also tweeted in farsi his support for iranians. We spoke with the u. S. State departments francis fanon at the Atlanta Council energy forum in abu dhabi. He reiterated americas commitment to stability in the region. Francis i am here to double down on the u. S. Commitment to work with partners and allies in the region and demonstrate our stability to support here. The other reason why is the message about ensuring stability of markets, of the oil market, the energy market. The u. S. Has a meaningful contribution in that, and that is what we are here to promote. Manus i ask you that because the president last night said deposited 1just billion in the bank account to pay for retention. I have not seen that so i cannot comment on that. What i think you have also seen is the administration deposited 1arabia billion to pay for the additional security they asked for. What i have also seen as the president calling on nato to have a greater presence in the region, and i think that is important. That is inviting the International Community to shoulder a greater degree of burden here in support for the region. At issue, and they have inequity here that they also ought to promote. It was also a demonstration to the International Community and the u. S. Is committed. Fanon speaking. Manus joins us now. You have been at the Atlantic Council meeting. What has the sentiment been like over the weekend and into monday . Got ourselves all rather wound up and it is really all about security. That is a washington voice coming to abu dhabi. One has to look at it through that prism. That was francis fanon speaking to me. I pushed him a little bit. He did not want to talk about American Foreign policy for oil on the back of trumps comments. But the essence of it was he did not see that it was going to be this upswing in reprisals for the proxies, which seemed to be the consideration in the various conversations i had with various people around the room, which was we are foolhardy to rush in and believe all the geopolitics can be priced out immediately. I have written down here supply versus opec class extension versus geopolitics. Those are the trifecta of issues affecting the market. What happens to oil supply in iraq . Cranny,nus, manus bloomberg daybreak asia kirk, doing a bit of reporting on the ground. Thank you very much for joining us this morning. Coming up today, Annmarie Hordern speaks to the ceo of aramco. For the First Time Since the companies ipo, that conversation will take place at the International Petroleum Technology Conference in saudi arabia. Other panelists include chief executives from baker hughes, halliburton, and woodside energy. We will bring you that panel after the open. When you are traveling to work, tune in to Bloomberg Radio. It is live on your mobile device and dab Digital Radio in the london area. This is bloomberg. Anna welcome back to the european open. Past 7 00 in london. The european futures points to an undecided picture. U. S. Futures points higher. We will keep that in mind as we progress towards the market open. The bond market wrapped up its biggest week ever with over 100 billion of new debt sold. 2019 was a record year for corporate issuance but last week lifted 2020 sales ahead of 2019. Joining us to discuss is the cohead of Capital Markets at deutsche bank. Good morning to you. We are talking about the strength of corporate issuance. Is 20 20 going to be better than 2019 on that particular measure, do we think . It is hard to say three market days into it but certainly, the conditions that we are experiencing are extraordinary. I think what you have seen is a calming of geopolitical tensions, and obviously, an election result in the u. K. Which has taken some uncertainty off the table as well, and most importantly, a huge amount of pentup demand for fixed income assets across the world and especially in europe. Anna it is amazing to talk about the calming of geopolitical tensions. That did not disrupt corporates in their plans to issue them . the major concern was the u. S. China trade war, and seeing that, down and hit into a u. S. Election, that was probably the biggest positive contribution. There were obviously some nervous Market Participants when things started to really kick off the middle east, but with a calming towards the end of the week, that set up a good news week for this week as well. Matt why is there such a Strong Demand for euros denominated debt . Henrik theres kind of a macro trend that you can experiencing. With negative rates, allcash accosting people money. Areexcess euros people have being deployed into different kinds of fixed income markets. That is one part of it. The second thing is that for nonzero based issuers, it works out really well to issue euros on swat backs. They have the demand because of negative rates and the supply because the arbitrage works well. A good example is the world bank issuing its largest euros deal for 10 years last week, a 3 billion euros trade at great price. Matt the concern i would have is that we see Christine Lagarde policye Mario Draghis of rate cuts deeper into negative territory and or we see qe boosted. Are those not concerns for the market . Or is it just not big enough compared to the gains they get . Henrik rate cuts is partially whats driving the demand for the fixed income because the rate cuts are obviously just affecting the cash positions people have so its driving assets,s into yielding whether thats Investment Grade fixed income or something we might talk about later. Private equity alternative assets. Anna what about the role of the ecb in other ways . What are assumptions being made when we see corporate come to market with what is mostly i think Investment Grade . They come with this Investment Grade debt. What assumptions are they making . Henrik the ecb restarted its Corporate Bond purchasing program after taking a break throughout 2019. That is helping the market. It is partially explaining the demand by it is not the major determinant. The major determinant is natural demand from long only investors. Matt the strength of the currency is not a concern either native dollar investor, that would be my concern. Henrik i think what matters the price atrs is which they are swapping back into other currencies. Ofhas to do with the shape the yield curves, but essentially, right now, the your has turned into a carry currency for a lot of nonjury based issuers, which is why last week on wednesday, for example, we saw 31 billion euros issued of the various fixed income products, which is the largest day ever. Anna good to get your thoughts on corporate issuance, cohead of Capital Markets at deutsche bank. We will broaden our conversations with Henrik Johnsson shortly. A trade deal signing. Bank earnings and a volcanic eruption loom. We will run you through the biggest events of the week, coming up next. Remember, Bloomberg Radio is also available. Welcome back. This is the european open. 30 minutes away from the start of cash equity trading in the u. K. I am matt miller in berlin alongside anna edwards in london. Anna it is going to be a busy day. Lets check in on what you need to be watching for around the world. We are focused on the potential signing of the u. S. China trade deal later this week. Onare also keeping an eye u. S. Bank earnings. We will be new york. We will be live in manila as bonds and stock markets are closed because of the eruption of the volcano just south of the capital. Joining us to talk about much of this, a host of colleagues from around the world to consider all of the news, including around the trade deal. Tom mackenzie from shanghai, dani burger previewing u. S. Bank news, and news that in the banking sector. With the erupting volcano, joining us from the philippines, claire. Tom, lets come to you first. The arrival in washington today the trade deal. This trade deal is expected to be signed on wednesday. The chinese delegation is heading to d. C. As we speak. We know the broad strokes. Property,al commitment around not manipulating each others currencies, and the big products in exchange for the u. S. Back some of the tariffs that have been imposed. It comes down to trust. Will this be implemented to the pace and degree. It looks like both sides will be setting up offices in beijing and washington to monitor the implementation of this deal. Saying, in terms of Enforcement Mechanisms, they do have the option of putting tariffs back in place. Then of course we moved to the question of whether phase ii is really realistic. It would involve questions around industrial policy. State subsidies would be key. There is a lot of skepticism about whether that would be achieved by the time of those elections in november of 2020. Matt it is the week of u. S. Bank earnings. Tomorrow, the kick off the big six. Wemorgan, we heard of heard from their ceo last month saying that fixed income would be strong. Banking mayvestment be flat. With banking, it has been all about cost cuts. Goldman, morgan stanley. Asia strategy might the focus here. Focusing on doubling the count to 600. This is reflected throughout the industry. We will see if we can get any details of those plans in china. Morgan stanley and Goldman Sachs trading key to their profit this quarter. We will see whether the volatility allows more trading and allows the prophet to sir when it comes to that sector. I should say, overall, for the big sick, we are expect net profit slept. Interest rates in the u. S. Putting net interest margins under pressure. On the other hand, a strong consumer is happily taking out debt, happily borrowing. We will see if that is enough to balance out some of the margin pressures. Entirelyething different that we are following, the philippines volcano, still throwing out. It has caused significant disruption. Bring us up to speed. The secondtill at highest alert level, which means a hazardous eruption is imminent and could happen in the coming hours or days. The warning signs have escalated fairly quickly. We are now seeing magma this morning. We are seeing lava, frequent thunder, and lightning. It is triggered more than 75 earthquakes in the area, which could be a sign of even more volcanic activity. So far, thousands of people have been evacuated. It is a popular tourist site. A lot of travelers have also been asked to leave the area. Power has been shut off in the region and helicopters are on standby for rescue. Helicopters cutting off the area around the volcano. Matt thanks very much for that. Appreciate your work with us today. Lets get to another bank story. For a fairly big year offshore chinese bond issuance in 2020. A decent ipo pipeline as well. In anke with david chen exclusive interview. To be realistic ework type of the w issue, investors will be a little bit more cautious. With that, i think that companies will come to the market. So we are very hopeful. , head ofrik johnson Capital Markets at deutsche bank, is still with us. How do you see the ipo market for 2020 . Henrik i think the ipo market in europe will continue around the same volumes we are seeing, which is down. A lot of rivals for that capital in the private markets in particular. I think the vast majority of activity will be in the debt world. Anna tell me about the rivals for this capital. Low Interest Rates have been around for a while now. Varieties mayll be going to assets they would not have touched previously. How is that changing the way that we are seeing money being raised or putting their money to work . Consequence ised that investors are having to find income to manage liabilities. Insurance companies, Pension Funds have ongoing liability they have to earn money to fund. They are moving out of cash and out of sovereign bonds to a large extent into either Corporate Bonds, financials, or alternative types of asset managers. That includes direct lending, funds. Anna direct buyers for everything, it would seem. Henrik the amount of cash and sovereign bond sovereign funds is much bigger than those markets. Even small allocation will create big effects in the smaller markets. Matt is there any point at which you start to see a shift positiveback to yielding sovereign debt . At anysee Central Banks point in 2020 decide to turn around the negative interest picture and get back toward positive yields . Henrik i think they will be looking for inflation and generally gdp growth. The point to begin with is to try and generate that type of inflationary growth. So far, while we have seen stability of the u. S. Economy and parts of europe, we are not really seeing those inflationary pressures that would cause cyber yields in the short term. Matt with everyone piling into higheryielding debt, are you worried that the economy disappoints and we start to see more bankruptcy and more defaults . I think defaults will go up, but from extremely low levels. On a historical basis, still extremely low rates. Is what is clearly happening that the worlds piling into more illiquid type assets. That does not necessarily mean the markets will crash anytime soon. Because there is so much unspent capital, when you see market corrections like what happened at the end of last year or q4 2018 around the world, there is itsch capital lines that sort of does not allow a 2008 unraveling. Ofa if we are seeing a lot activity, what is that doing for leverage loans in 2020 . Henrik i think that will continue to be the funding vehicle of choice for private equity. Really a second order derivative of the private equity activity that we think will be considerable this year. You are seeing corporates doing spinoffs and things like that. Obviously, the valuations available because there is so much capital. Oft henrik johnson, cohead Capital Markets at deutsche bank. Thank you for joining us. Coming up, siemens coal controversy. The German Company faces down protesters to go ahead with a plan to supply a new coal mine in australia at the same time as bushfires spread across the continent. We will bring you the story, next. This is bloomberg. Welcome back to the european open. 17 minutes to go until the start of cash equity trade. We could see a little bit of upside as we approach the market open. Lets get a Bloomberg Business flash for you. Here is laura wright. Doubleman sachs plans to its headcount in china over the next five years. We have learned that would raise its number of jobs in the country to 6000. It would hinge on beijing opening up financial markets. Goldman is planning a new Asset Management unit in mainland china. The mediumly over term, i would say 35 years, we think the business will continue to grow, and particularly for the banking side. Flight rline airline flyb is in talks for Emergency Fund emergency financing. Ey is on standby to handle a possible liquidation. Flybe says it remains in this. In business. Woodward is taking over accel, creating one of the worlds Biggest Aerospace and defense suppliers. They say the deal is driven by efficiency, and not because of the 737 max. The combined company will have an annual revenue of more than 5 billion. Aston martin is making a lastditch effort to bring in fresh funding. We have learned a canadian billionaire is close to committing a 200 Million Pounds stake in the luxury carmaker. They already control volvo cars, lotus, and have a stake in daimler. That is your Bloomberg Business flash. Siemens says it will go ahead with a contract to supply an australian coal mine. Protesters in germany had called on the company to abandon the project, especially as bushfires linked to Climate Change ravage the continent. The ceo says that he has to balance the interests of different stakeholders. Joining us now, a reporter in frankfurt. Aheady is siemens pushing with this plan to help burn coal . Richard the easiest explanation is they have a contract to fulfill with a customer. A reminder, they are not building a coal power plant, they are merely supplying technology for a rail line that is supposed to supposed to connect the future coal mine with the coast so the commodity can be moved. Still, what is happening in munich, people are camping, protesting great that shows the sheer size and scope of environmental protests. That supplying a is something that environmentalists would favor, but not when it is meant to run a coal mine. So the environmentalists are picking on companies or bullying, as some of the people and the others are saying, trying to bully companies into refraining from fulfilling the contracts in a way to stop or push out the completion of the mind. Of course, the background is the region bushfires in australia. In laymans terms, half of australia is burning and people are making the connection to Climate Change. Anything linked to Climate Change is under scrutiny at this time. As you point out, clearly very active in australia. What are the latest lines from the Australian Government . We know that historically they have been very supportive of the coal industry. Here in germany, the government has committed ending burning coal for electricity. But it is 18 years out. The political decision has been made after phasing out nuclear. Coal will also be phased out as the company tries to complete the switch. Of course, that is a path that takes decades. This 10 years ago, carmichael project was first proposed. Now it is nearing completion. It was an issue last may. The Prime Minister supports coal. The resorts minister of course supports coal. Coal is the second largest commodity that australia exports. There are a lot of jobs, a lot of wealth, a lot of gdp tied to coal mines. , balancingn will be the different interests, with the australian politicians will do if they get the feeling that more or more more and more people say, this is in australias sovereign territory but is affecting the lives of people all over the world. Matt thanks so much for joining us. Richard, a reporter in frankfurt, covering the whole issue for us. Coming up today, Annmarie Hordern speaks to another petro participant. She is going to talk to the ceo of aramco. It will be his first interview since the companys ipo. That takes place at the Petroleum Conference in saudi arabia. There are a lot of other panelists she will speak to. They include executives from baker hughes, halliburton, petronas, and from woodside energy. We will bring you that panel shortly after the open. The new top destination for investors looks like it could be right here in europe. Why jeffries strategists are calling for upside for the region. This is bloomberg. Anna welcome back to the european open. Eight minutes to go until the start of cash equity trading in europe. Either side of the flatline, really, i suppose is the expectation for european markets. Lets get the first word news update. Iran for atests in second night after the government admits it accidentally shot down a ukrainian jet. This follows days of denying it have anything to do with the incident. Near ay the plane was sensitive military site and human error was to blame. They said the victims families will be compensated. A landslide victory shows the people of taiwan reject chinas call for one country, two systems. Any move to formal independence is unlikely. Beijing says that taiwan is part of china whatever happens. Global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Matt thanks very much. Growthuropean economic surprised to the upside . David Owen Jeffries think so. With yourr is here morning call. Dani european stocks have been largely unloved. The region is underweight with investors right now. But that could soon change. One reason may be the pause in attractiveness. Jeffries says the u. S. Needs to take a step back. Meantime, the flows are likely to go to europe. Investors buying European Assets largely thanks to physical per spring that could soon be opened. In the meantime, the economy is likely to surprise to the upside. They said that europe will escape the fate of japan a vacation. That investment spending, that visit we are seeing from Different Countries is likely also going to help the economy. Anna thank you for the update on that. Lets tell you what to watch out for as we work our way through the start of the equity cash trading day. William hill, they are guiding me market higher in terms of expectations. Way, it wouldheir seem, through the year end. Astrazeneca closing trials on something they have been testing. They will write down 100 million on their account. Have twoing up, we great interviews with European Drug acres from the j. P. Morgan health care conference. Fromll speak to the ceo drug maker sanofi, and also the ceo of pharma giant glasgow smithkline. After 4 30oth just p. M. London time. We have some news on a couple of stocks trading in germany. A bunch of companies signing a global collaboration Licensing Agreement to further develop and commercialize the antibody phosys. From mor watch that stock to move. Metagene dropping after gaining the most in five years friday. Anna we are one minute from the open of cash equity trading in europe. No respite. The second night of protests grip iran after the government admits it actually shot down a ukrainian jetline. Heading to washington today as china and the u. S. Look to sign a phase one trade deal later this week. Plus, results season. U. S. Banks reporting with jp morgan, city and wells fargo numbers due tomorrow. Matt . Matt we are seeing kind of a mixed picture in terms of european futures. We had gains in the asian trade have even and we stronger gains on u. S. Futures that indicated only a risk on day stateside. Maybe we can see a little bit of pickup in risk momentum here in europe as well. The cash trade starts in just five seconds, anna. Go ahead and tell us what the markets look like when they get out of the gate. Anna at the gate for monday morning, matt, we are mentioning the European Equity markets. Worth mentioning, we see a big move in the pound this morning. We could see 5100 going its own way. Up 1 10 of 1 . The pound is down by half a percent this morning. Members of the bank of england was talking about how he can be open to the idea of Interest Rates at the february meeting if there is an uptick in underlying data on the u. K. Economy. That is certainly something we are focused on here in the u. K. 3 10 of 1 . Very similar to the german dax. Not going in a different direction as a result of the big move in the pound. The bureau for its part fairly flat. The french fairly flat. Lets see if we have any clues on where were you heading. Talking very much about ledger stocks, aviation, Energy Businesses as well. Energy once again in the green. Health care, a mix. Staples, a little mix. Interesting news out of the Health Care Industry with astrazeneca. The biotech news coming out of germany. A couple of businesses in a focus in germany this morning. What do we see on the individual movers . Matt im taking a look at the gainers here. 400 on the upside, anna. Only about 160 on the downside. A lot more a lot of positive this morning. First off, you see the biggest gainer. I am looking at these in terms of percentage moves. Not in terms of contributions to the index. Of the biggest gainers after an upgrade at Goldman Sachs. Taylor wimpey, and watch out for other u. K. Homebuilders. Seal hunt says confidence is returning to the u. K. Housing market. It thinks u. K. Homebuilders are a good buy today. And you see some other big movers there. Wirecard is bouncing back a little bit today, up 2 . Keep an eye on some of those german stocks that we were talking about also. More persistent for example and medigene. Morning, as a conglomerate of international drugmakers start to use its technology. European markets then opening a little bit mixed right now. Moving downupside, a couple of points. That is ahead of this weeks planned signing of the u. S. China trade deal. It is also seeing the yuan strengthen past the dollar for the First Time Since july. Joining us to discuss is fx and global macro strategist at ar cae. We do see significant Dollar Strength today. I noticed that the dollar is really killing it against the yen, for example, this morning. Why is that . Yeah, i think its, to be fair, there is nothing fundamentally i like a lot about the dollar. Again, fundamentals have not been driving fx markets for a year now. When it comes to the dollar and dollar dynamics, a lot of it has been down to just relative weakness in the rest of the world. I think what we will start to see is two stories to the dollar and probably doing well against the low yield ors like again today. And starting to underperform against emerging market. Highrisk currencies. Of a start to see signs Global Economic recovery. We will start to see the two sides of the dollar play out. There is really nothing to fundamentally like about the dollar, whether it is the material u. S. Economy deficit. Youve got a noisy president ial election coming up. A slowing u. S. Economy led by the manufacturing sector. On top of that, the dollar is over valuation. Cyclical,itical, structural basis, there is little to like about the dollar. In fx markets, it is all relative. Weakness in the rest of the worlds underpinning Dollar Strength. Anna good to see you this morning. Let me ask you about what is going on with the pound. Talking about relative trades. We see considerable weakness in the pound this morning. Down half a percent at the 130 level. Perhaps on the back of the comments by janet yellen. Viraj there are two scenarios that hard u. K. Data can actually dispel growth concerns in the coming months and actually reduce the risk of a rate cut. I think it is worth reiterating the nature of all of these statements from the bank of england officials. Not picking up from very low levels. One would expect fading brexit uncertainty and a slow recovery in the Global Economy to actually see u. K. Investment which has been the stumbling block to growth pick up. Anna still preelection viewed viraj it will be very unlikely that the bank moves ahead of the march budget. To quote the central bank, Central Banks are fiscal price takers. They will wait to see what happens with the march budget. There should be some shortterm boost that has not shown up in the data. If anything, it is whether this u. K. Economy stagnates this year which warrants the need for a second half policy response, which i dont see right now. Matt when you look at the pound, and we are looking at 1. 30 even in terms of the cable rate, but more 85 in terms of euros pound. Viraj we were worried about the frothy nature after the elections. We are back down to reality. It is a different year for the same old story. The fundamental backdrop is still in place. We think these current levels are more attractive to add fresh conditions. There are two miss mice mispricings in market. Underestimating u. K. Growth expectations this year. On the lower bout of the range where we expect it to be. Probably overstating no deal brexit in 2020. Both of those realignments could see some positive reevaluation. In cable and36 euro moving to 83. It will be choppy. Anna lets throw things forward and talk about something that is going to be on our agenda midway through the week and that is the trade conversation between the u. S. And china. We have seen a lot of strength in the chinese currency. It looks like it will get a mention in the trade deal. What are your expectations . Viraj that is probably going to be the message from any sort of trade pact that comes out this week. What is interesting is you get a disparity between the flows where chinese purchases of u. S. Goods, that is dollar demand, weaker chinese demand. But also the geopolitics which commands bilateral is imputed we will expect led in part by the geopolitical angle. Also, the dollar weakness should come through against e. M. I am not really expecting any massive rally. They will prefer stability. To gets that necessary to phase two deal . Does the u. S. Want to see the chinese either keep their currency very stable or strengthen it slightly . Viraj i think the devil will be in the details this week. What i am expecting is Greater Transparency on fx policy from beijing. I think if we were to play ball here given the paradigm we have seen in the past couple of years. I dont expect any Game Changing fx policy regimes. I think it is more stability in the midst of a geopolitical environment. Especially as we head into the geos election. Theres a lot of play for. There could be a different world come november. Anna thank you, viraj. He stays with us on the program. Next, a flood of new oil supplies set to hit the markets this year. We will look at the effects on currency markets. Talk about oil. Big week for oil, big two weeks for oil. Oil prices looking flat this morning. We will talk about that next. This is bloomberg. Matt welcome back to bloomberg markets. This is the european open. We are just about 12 minutes into the session right now. We are looking at gains across all of European Equity indexes with the exception of ftse. Milan down one tense of 1 . In terms of oil, it is steady after erasing most of its gains last week. Here, you can see brent over the last 20 days. That is easing geopolitical tensions in the middle east. Have turned attention back to the flood of new supply that hit the market this year. The executive director of the abundance. An he spoke to manus cranny. Ofthere will be a surplus more than one Million Barrels per day looking for buyers because production is growing. Brazil, norway, canada. Lots of oil coming into the market. Viraj, fx and global macro strategist is still with us. What do you make of the recovery . So many assets that spiked during the u. S. Iran tensions have recovered to prices even below where they were. Oil is back down below where it was when these tensions started. Gold is back down to pretty much its starting levels and the yen is also weaker. Why do you think markets got over that so quickly . Viraj i think the link between geopolitics and oil, oil assets has changed in recent years. Mostly due to the changing composition of oil supply, namely an increase in production from the u. S. That has been Game Changing for across asset coalitions between oil and fx, the spillover into fx assets has been structurally low for oil spikes. That is the new world we are in. Because of the changing composition of oil supply. Petrol currencies are no longer the case. The spillover, the sensitivity of oil changes to fx is very low. What was really interesting last week was the fact that oil imports, the currencies did not get hit as much as we would expect. That is partly due to the nature of the geopolitical shot. It was not long lasting. Anna to matts point, to pull up the function on the bloomberg and set the basket for middle east turmoil. It also shows there is some elevation still in gold but this is compared to the start of the year. The yen year to date actually down by nearly 1 . The swiss franc a little weaker here today as well versus the u. S. Dollar. Some of this has to do with the very shortlived spike up in oil prices. What are your expectations for oil from here . 65 a barrel on brent . Viraj i think the market has enough supply to come online at these levels. The asymmetric risks when it comes to will prices, and think there is limited upside because of the nature of supply and supply coming back online. The market be in good surplus, but it is worth remembering Global Demand has been trending lower and we expect that to come through this year, both structurally from ships towards nonoil sources of growth, in particular. Climate change efforts. But, also the demand in general from china, etc. 60 to 65 seems fair and it will be a flat trajectory from here. Matt you dont expect it to push Inflation Higher either . Viraj i think the link between oil and inflation is tepid at best. I think the sort of traditional channels through which oil from oil onto inflation does not seem to be manifesting itself in headline inflation or oil core inflation. The Central Bank Policymakers can rest assured that they sort of shortlived spikes in oil dont seem to be affecting the higher underlined price pressures. That is why they have been looking through, if not going against those trends. Anna thank you so much. Viraj patel, he stays with us on the program. Heres lower right. Laura u. K. Airlines in talks with the government for emergency financing according to sky news. It comes less than a year after a group fronted by Virgin Atlantic stepped into rescue the carrier. On standby to head of a possible liquidation. Sky says over 2000 jobs are at risk. Flybe says it remains in business. A lastditch effort to bring in fresh funding, lori strohl is close to committing a stake in the luxury carmaker. Also in talks for a state. It controls volvo cars and daimler. Astrazeneca says it will stop testing at the most advanced and expensive stage of one of its clinical trials. The Pharmaceutical Company is abandoning a Fish Oil Pill for bad cholesterol. The medicine did not stand a high chance of showing a benefit when combined. The company says it is disappointed by the results. Analysts expect the medicine could generate a peak revenue of 145 million. That is your Bloomberg Business flash. Anna thank you. Next, the stocks on the move this morning. The stock had a very volatile session on friday. Feds this morning after the is Holding Funding talks. We will get an update shortly. This is bloomberg. Matt welcome back to bloomberg markets. This is the european open. Now, we are 21 minutes into the trading day and looking at green arrows on the equity indexes with the exception of the ftse mid and milan. Lets get the individual stock stories. For that, we go to dani burger in london. Dani we are getting a bit of a turnaround today from aston martin. A rough trading session on friday after a profit warning which showed the urgency for new funding. Seems to have gotten that in the form of lawrence strohl, well known for owning an f1 team that his son drives were. Injecting 200 Million Pounds. Aston martin getting some interest from chinas group. Shares rise by nearly 2. 5 . Morphosys trading at a record high, up 1 . It signed a pact to develop one of its antibody treatments. That should allow the drug to be designed, developed, commercialized. They will get 750 million as part of the agreement. Another huge day of gains for managing. Asfriday, it gained as much 35 after one of his leukemia treatment showed an 80 survival rate after 24 months. Investors liking the results there. Shares gaining 27 , now trading at the highest since last summer. Matt thanks very much for that. Coming up on bloomberg television, two great interviews with European Drugmakers. The Jp Morgan Health care congress. We will speak to the cfo of the drugmaker santa fe. Just after that, Emma Walmsley joins us, the ceo of glaxo smith kline. Those are just after 4 30 p. M. London time. If youre an index investor, these are huge stocks on the indexes. Very heavy weighting. Anna plenty of news from the drug sector this morning as well. Drugs and biotechs. Lets talk about emerging markets because the indonesian aree and south korean yuan getting amid optimism among the u. S. China trade deal. Viraj patel, global macro strategist, is still with us. Thats part of the emergingmarket story, the expectation about the trade deal. I have a chart that shows the emerging markets from a different lens. This is your fx. Your against em fx. The europe falling to the lowest level. Is this about some of that fx, em strength going into the trade deal or is this about your a weakness . Viraj this year in particular, quite constructive on em currencies especially against the dollar and the europe. Partly due to fading geopolitical risks. The recovering global growth. This year and the First Quarter has shown me the growth. Theres only so much that optimism, both around geopolitical and trade deal scanned drive current valuations. I think risky assets and looking through shortterm ebbs and flows in geopolitics, focusing on the recovery and the Global Economy. With think theres enough to suggest that is coming through. We need more hard evidence and data to cistern current valuations. Matt so you do think we are going to see across the emergingmarket, Central Banks helping to boost the economy. What does that do to currencies . Viraj i think theres enough both policy and fiscal and geopolicy for some stimulus and add boosts to the em growth outlook. For the first time in a while, we are starting to see conviction over diversions in terms of u. S. And rest of the world growth differential. At a time when the u. S. Economy is slowing and consensus is building, we are starting to see traction in e. M. Economic activity. That divergence will underpin the flows out of the u. S. , rotating into risky assets. E. M. One thing we need to see is definitely evidence and hard data. It is a tale of two. We think e. M. Will be preferred to em equities. Once that growth data kicks in, we think there will be broader debt into a much bigger potential against em equities. Anna we talked 10 gently about the dollar. Broadly economy more because we have the jobs data out on friday. Did anything change for your . . It is the month of may, but creating a lot of jobs and the Unemployment Rate historically low. Viraj we expect the Federal Reserve will stay in dovish wait and see mode. There is a symmetric risk when it comes to the policy written the u. S. The signals will be there will be in low far to cut rates again but actually hi to hike rates. That Downside Risk in u. S. Rates are pretty much accurately reflected in markets now. Itare not really expecting to drift too much lower in the u. S. , but this is really supported. We talked about em and highyield getting a bit of support. Rupee, mexicann peso these look like top picks in the em space. Anna viraj patel, thank you. Viraj will be continuing his conversation on Bloomberg Radio at 9 00 london time. Around 35 minutes from now. Next, we will focus on trade once again. Beijing and washington prepared to sign the phase one trade deal. We look at the challenges that remain from phase one into phase two and the timing on that. This is bloomberg. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone wifi up there . Uhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your local xfinity store today. Anna welcome back to the european open. Im anna edwards in london, alongside matt miller in berlin. The, half an hour into trading day and we got off to a curious start matt it was a little bit odd. The stoxx 600 dropped even though most of the stocks were rising. It did not look like big heavy stocks were followed enough to pull it down. Now we see the index gaining. You can see, although it is a pretty even split in terms of groups, which one are leading the charge. Tech stocks are up as well as industrial goods and services. Real estate stocks the u. K. Homebuilders rising. On the downside, you see basic resources falling, as well as oil and gas stocks. The things you pull out of the earth. Plus, food and beverage. All of those are falling a little bit today. That is what is bringing us to a sort of even level in terms of whats going on in stocks today. Lets get a bloomberg first word news. Laura . Laura thanks. Mass protests in iran for a second night. After the government retracted its denial, admitting an accident they shot down an ukrainian jet. The army claims human error. Tehran says the victims families will be compensated. Thousands being evacuated in the philippines after a volcano erupted 40 miles south of the capital. It triggered earthquakes and spwwewed ash. Experts warn of hazardous explosive destruction as possible. Many shortcomings. That describes Hong Kong Police conduct during recent unrest. The Hong Kong Economic journal said a report finds a lack of communication and no clear guidelines on firing tear gas. The conclusion has not been officially released. It could be made public in the next few weeks. Wildfires in australia could seek a wallace classified as an endangered species. Fires have devastated huge areas of forest and bush lent. An area twice the size of switzerland. It is putting pressure on the policy. Scott morrisons ratings have tumbled, alongside those of the administration. Global news 24 hours a day, on air, powered by more than 2700 journalists and analysts in more than 120 countries. Anna thanks. Wills vice premier travel to washington today with plans to sign a trade deal on wednesday. Joining us with the preview is our china policy analyst. Good morning to you. Do you think we will be surprised later this week by anything in the phase one trade deal or will the conversation very quickly move on to day two and the timing of phase two . I think the substance of the deal will look similar to what we saw nearly being signed in may of last year. A deal that focuses on trade deficit, currency, ip protection and opening up of chinas financial markets. Some of the politics, the packaging of the deal might be a little different. Really, the important thing to highlight is that tariffs remain on more than half the chinau. S. Trade even after the deal. The incentives around the phase two will still exist. Matt what are the concerns for everybody including robert lighthizer, to some extent, will china stick to within the bargain . What do you think about the Enforcement Mechanisms in place . Eleanor the biggest concern is over this pledge to increase trade from the u. S. To china by 200 billion from the level seen in 2017. Really, in order to fulfill this pledge, we need 6 year on year growth. Given the fact that trade between china, export to the u. S. From china grew at a rate of 10 since 2007 and 2017. We think the pledge is feasible and china will do this to keep the phase one intact. Anna some people suggest because there is no independent body in charge of judging compliance, judging whether the phase one rules and regulations are stuck to, that leaves decisionmaking and that optics to the politicians. Which means maybe this could be vulnerable in the future, or at least getting to a phase ii deal could be made difficult by what is seen. Eleanor absolutely. Its an important factor. Even if there was an independent verifiable mechanism, trump is not really shown respect for procedures and that way. There is this discussion of introducing an Economic Forum between china and the u. S. Something we saw under the bush and obama administrations, that trump got rid of. That could create a more amicable atmosphere to support the phase one deal. Matt what do you expect in terms of a phase ii deal timing . Do you think this is something we wont see until after the 2020 election . Eleanor i think it is something we will see after the 2020 election. The trade war is not going to be a massive driver in terms of u. S. Domestic policy, but trump if he is asked about this will definitely say i have this amazing phase one deal. Reelect me and i will deliver a phase ii deal. Anna we are getting an update on the elections taking place in taipei. From an economic perspective, how is taiwan being shaped by the tensions between china and the u. S. . We talk a lot about how the chinese economy on the mainland has withstood this or not. We talk a lot about where other parts of emerging markets in asia have been affected. What is the taiwan story . Eleanor taiwan has strong Economic Growth last year. Part of that story was this invest taiwan initiative. The government introduced. This was supporting the relocation of manufacturing from the mainland back to taiwan. Part of the incentive of this was to evade tariffs for manufacturers sending good to the u. S. Given the fact tariffs remain on a substantial amount of goods, we will see that policy continuing. Chinaeleanor olcott, policy analyst at ts lombard. Thank you for joining us. We want to turn to a story closely related and that is taiwan and the elections over the weekend. The president has won with a landslide majority. The victory of the Democratic Progressive Party is seen as a rejection of beijings push for the one country, two systems. Lets head over to taipei where Stephen Engle is standing by. Thisuch of a problem is for beijing . Is it a really big deal for xi or just a bump in the road . Stephen no, it is a big deal because we have made a lot out of what is happening in hong kong but the ultimate prize for beijing under very proposed one country, two systems is taiwan. Get taiwan back in the fold. Many people have spoken to say what happened in hong kong over the last six months has been punctuated by this resounding landslide elective victory for a second term of the independentminded Democratic Progressive Party is a defeat for beijings one china policy. Taiwan has rejected that policy of one china. She wants the status quote. She is not calling for independence. She says the way it is going is essentially independence. That really resonated with a lot of the people who saw what is happening in hong kong and said we dont want a repeat of that there. We are also here in the financial district of taipei. New taipei city. The stock market today rejoiced. It was not. It is approaching 830 year high. It could hit a record high. Analysts are saying this year, the taiwan dollar has been strengthening for an eighth consecutive week. There is Market Sentiment and the electorate sentiment is cheering this landslide victory last saturday. Anna indeed. We watched market developments as you suggest. What has been the u. S. Government response . Pompeod from secretary congratulating the government in taiwan. This is clearly in relationship for the u. S. Given the tensions in china. Stephen absolutely. It is a sensitive time too because we have not signed the phase one trade deal yet. Donald trump has stayed fairly quiet on the taiwan issue. Sec. Pompeo has put out a tweet congratulating the victory, as well as the taiwanese people, embracing democracy. Joe biden without with a tweet and said you are stronger because you are free and open society. There has been congratulations from japan as well. The incumbent visited the representative at the American Institute for taiwan which is the defective embassy in taiwan. There is no formal relation the u. S. But there is an envoy and presence year. I guess the democracies of the world are celebrating this. Not so much celebration in beijing. Guaranteeing that. Matt thank you for joining us on this story. A landslide victory. Lets fast after the break, we will talk about the backlash you are seeing in iran. Antigovernment protesters rally across the country after tehran admits it accidentally shot down a ukrainian passenger jet, killing 176 people on board. We will bring you the latest. This is bloomberg. Anna welcome back to the european open. 9 43 a. M. In paris and berlin. European equity markets making some gains this morning, up about 1 10 of 1 . Ftse and the dax up one quarter of 1 . Antigovernment protesters have rallied in iran for a second night after tehran admitted his military shot down ukrainian jetline. The Ukrainian Army blames human error. Global condemnation follows. Justin trudeau demanding justice for the victims, 57 of whom were canadian. Let of your zelensky says he wants the results of a full investigation without artificial delays. And President Trump tweeted in english and in farsi, his support for iranian protesters. Inning us now with analysis the middle east in dubai. What are protesters demanding and do we have a sense of how widespread this protest activity is . Good morning. Definitely, the protesters are demanding accountability. From the beginning since this plane was struck down, the Iranian Regime had not been forthcoming about what happened. Initially, they were accusing western governments of psychological warfare and then they started saying this was a technical failure. Before they owned up to the fact they shot down this airliner. This is not leaving a huge sense of anger on the streets because nearly half of the planes, the travelers on the plane were iranian. Many of those from other nationalities. There is that sense that while hran tooknment in te great care to avoid casualties among the american soldiers in iraq when they hit the basis, they treated this whole thing with carelessness when it was to the safety of the airliner. Matt hang on. Tookay the government great care not to kill american soldiers when they attacked the iraqi bases, but dont they claim they killed 80 americans in those attacks . Zainab well, there is no evidence that anyone got killed. Now, it is obvious that so far no one got killed there. Basically, the indication after the attack is they told the Prime Minister of iraq they were going to launch strikes on those airbases, giving enough time for the american troops to move people at of those base. Hit kind of made sure they on the empty parts in those bases. They wanted the whole attack to ensure that there are no casualties. At the same time, they did not bother to close the airport or ensure the airspace, the vicinity within the airport, there are no missiles around it. Anna we have seen a lot of demonstrations taking place. How are the authorities dealing with those demonstrations . Even the u. K. , and a lot of Media Coverage by the temporary arrest of the u. K. Ambassador to iran. Whats been the reaction of the demonstrations for authorities . Zainab the demonstrations right now are mostly within universities and within some cities. We have seen videos posted on the internet with trails of blood and so on. And let up anger and chanting against the iranian government. So far, we were not able to verify any of these videos. Theree are able to see is were people sent to break up the demonstrations. There are no actual we dont know if anyone died or injured so far because this information is not out yet. A lot of people worry if this goes up quite a bit, we could see a scenario like what happening month ago repeated. Ays,nth ago, we saw for 10 d during that time, reports of hundreds being killed. Thousands being injured as the government cracked down really heavily on the demonstrators. The people who were angry over costofliving increases as a result of the sanctions. Matt all right. Usnab, thank you for joining on this really complicated story. Bloomberg reporter in dubai talking to us about what the government is telling us, with the government isnt. They shut down the internet. It is difficult for the truth to get out there. Lets get to the Bloomberg Business flash. We go back to london and laura wright. Laura Goldman Sachs plans to double its headcount in china over the next five years. Weve learned it will raise the number of jobs in the country to 600. The state of hiring will hinge on beijing opening up its pleasures. Goldman is playing a new ha Asset Management unit in mainland china. We have already definitely over the next mediumterm, three to five years, we think business will continue to grow. Particulate for the banking side. Laura woodward is taking over hexel in a 6. 4 billion deal. One of the Biggest Aerospace suppliers. It provides parts for boeing and says the deal is driven by efficiency, not because of the 737 max. Revenuehave an annual of more than 5 billion. Is in talkss flybe with the government for emergency financing, according to sky news. This comes less than a year after a group fronted by Virgin Atlantic step in to rescue the carrier. Its on standby to handle a possible liquidation. More than 2000 jobs are at risk. Flybe says it remains in business. Matt, anna . Anna thank you very much. Up next, we will bring you some of the stocks on the move. The stock gained after reports that kkr could bid for a part of this business. A u. K. Water company. This is bloomberg. Anna welcome back to the european open. 52 minutes into the trading day for european equities, making gains as u. S. Futures point higher, and Gain Momentum through the first hour of european trading. Here in europe, dani burger has a breakdown. Dani the biggest mover by far and the stoxx 600 is pennon group after a telegraph report that kkr might be interested, has put in a bid for its Waste Management arm. Also, its water assets might be of interest according to citi analysts. Renault declining 2. 5 after nissan considering a slip from the group. A troubling time when a lot of automakers are looking for a combination to help them deal with the macro outlook. Though shares trading at a 2013 low. Finally, Taylor Wimpey up at its highest since 2007 after a report that u. K. Homebuilders are likely to be on the rebound after the u. K. General election with Consumer Confidence back in the market, as well as u. K. Housing demand. Matt dani, thank you very much for that. Dani burger looking at your individual movers today. Month is england this going to be huge, according to richard jones, our fx strategist in berlin. He joins us now to explain why. It is a crucial week. I know there is u. K. Data coming out. What do you expect from the bank of england . Richard in a very short space of time, four to five trading days, we have gone from having absolutely near those zero priced into the bank of england meeting this month to now having 50 of a 25 basis point price then. I think the messaging matt 12. 5 cut . The fact that think jumped up so much was the back of bank of england messaging. They really went out of their way to say, look, the next move will be a cut. They are watching the data very closely. We have a lot of data this week. I think the key is going to be friday. We got december retail sales. November state was really bad. The market is expecting a big number in december. If that is disappointing in any way, then i think january goes from being a coin toss to be improbable that the bank of england raises rates. Anna the pound down half a percent this morning. Our guest earlier was saying the missing piece the reason perhaps to wait is the fiscal stimulus that will come from the government. We wont find out about that until march. Is that something the margin pushes that rate cut call for january later into the spring . Richard lets face it. Realistically, the time for a rate cut will be in may. That is what the market is pricing right now and that is with the bank of england messaging has led to people to believe. If the data, the retail sales data on friday and other bits of data we get this week are weaker than expected, the bank of england might choose to go sooner than what would be the normal technical approach, to wait for that fiscal package and see what is in it. The reason is carney said that it would be better for them to act more decisively because they have very limited room in terms of the actual rate cuts they can enact. Get out in front of it, be aggressive in anticipation. If there is strong fiscal stimulus as well, down the road, the bank can look into undoing the rate cut. I think there have been spooked by the week data and that is why they will act. Matt thank you very much. You can check out richards work on the mliv blog on the bloomberg terminal. That is it for the european open. Surveillance is next. Anna and i are headed off the radio. This is bloomberg. Protestecond night of grip iran is the government admits accidentally shot down a ukrainian jetline. Assan executives prepare for breakup with renault. Whoan reelects a president vows to defend its sovereignty. We are live from taipei. Francine welcome to bloomberg surveillance. These are your markets. Stoxx 600 trading size ways sideways