Transcripts For BLOOMBERG Bloomberg Markets European Open 20240713

Acceleration in investment since june as industrial output eats estimates beats estimates. Could a firmer recovery be underway . Treyew brexit e. U. Chief pulls no punches on his First Washington trip, cautioning President Trump about protectionism and shortterm thinking. We spoke about him exclusively on resetting relations. The objective of the visit is to try to reset the relationship,t ry to understand each other in relation at the moment and find Common Ground with the United States. We started on a positive note. Matt barclays is cutting around 100 senior jobs across corporate and Investment Bank as the lender looks to rein in costs. Morgan stanley plans to 80 dozens of staff at its wealth business in asia. Lets look first at futures. Even after the new record we hit yesterday, were looking at gains in futures, and fairly substantial gains at that. Dax futures up 0. 5 . U. S. Futures, not the same size but the same direction, green a rrows on the nasdaq, s p and dow jones futures. Anna, what do you see on the gmm . Anna lets have a look. Futures, flat to positive picture from u. S. Futures, and flat to positive across asian equity markets. You could say two different interpretations of the chinese data. The market is in two different directions. On the one hand, the gdp number broadly in line with estimates and Industrial Production rebounding nicely in the Fourth Quarter. All pretty positive. On the other hand, headlines like the lowest growth since 1990, maybe not easy to go out so party like it is 1990, muted gains in the asian session. The chinese currency on the move again. Gmm, what is going on with fixed income . We see news from the last 24 hours, meaning movement in the fixed income sovereign bond space. Year, selling off after the announcement they will raise money at the 20 year time horizon. As a result, a little repositioning. Lets get to our markets conversation with mark cudmore, Bloomberg Live managing editor in singapore. Lets get your initial response on the chinese number. The gdp side looking in line with estimates. A surprise. Maybe the intelligence this morning, around retail sales, Industrial Production, other measures . Data was strong, better than expected. What we care about here is Industrial Production and retail sales also matter, but less overall. The gdp number is kind of irrelevant. This number will keep slowing down. Twice asady over fast as the u. S. This is still a high level of growth for an economy that is exceptionally large, and you cannot compare to emerging markets, it does not make sense. The last time the u. S. Saw growth this past fast, it was a much smaller economy. Even if you dont believe the official number, still an exceptionally fast pace of growth, given the size of the economy. The Industrial Production, retail sales, fixed asset investments, all pretty strong overall, sending a message that pboc has done a good job managing the growth slowdown. Terms slow slowdown, in of the rate of deceleration is very moderate and overall positive for risk assets. Matt because we are talking about china and to you, i want to break in with a story about a company that supplies meat products. Bacon,ck provides pork, sounds delicious. They say fullyear adjusted pretax profit will be higher, and it is exports that continue to be strong. China has a lot to do with this story. Cranswick has been talking about china sales boosting their business for a while, so watch cranswick shares in the u. K. Back to the markets, asking you about the possibility the big e. M. Catalyst for the rally is gone. Marcus wong wrote about this on the mliv blog, saying things like the phase one trade deal that everyone has been waiting for, came and was not as great as people may be expected. Are you concerned a lot of the catalysts for the rally have passed . Mark im actually not too concerned. The post this morning was excellent. Marcus is very good and is the expert in this field, but overall i take a slightly different stance. People say the chinese trade deal has come and gone, where are the extra gains here . But not a wonderful deal, it means tensions will be controlled for the moment, or that is the narrative for the moment and no reason not to believe this. The other argument, the real rates easing we have seen in e. M. s, less of a tailwind. Thats not entirely true. Higher inflation means real yield rates continue lower, even though we havent seen nominal rates go lower. The overall environment in emerging market is positive, and generally emerging markets, equities, bonds and currencies can do well. There will be room for differentiation, but generally a year where the Asset Classes can perform well. Not talking so shortterm, as i rarely am, but in the next few months the environment remains positive for e. M. And i am not convinced the drivers have gone away. Matt you make a good point about differentiating the Chinese Market and other emerg ing markets. Amanda wang writing on the mliv blog, she sees increased leverage from the pboc and also buyers, of Retail Private funds coming back in ize, size, as a continuation to the rally in chinese stocks. Do you agree . Mark i do agree with that. I think theres a chance china has one of those positive tail risks. We could see those kind of chinese animal spirits back in the domestic retail market. There is a lot of potential, including domestic stimulus, the return of the retail environment and foreign inflows. Theres also a chance that the general theme of the last 6, 7 years in china has been the wealthy elite have been trying to get their money offshore. As we go further through time and the Chinese Market does not see this great collapse, managing the slowdown well, eventually some of that money might come back on shore. There in the background, that china has a lot of money offshore, and it can come back quickly when they see the environment turn more positive. Perhaps a catalyst for bringing more money back is a revival of animal spirits in the domestic market, which might come from the pbocs actions. Anna let me ask about the kind of responses to the question of the day this morning. The big tech rally in the u. S. Should investors be nervous about this one trillion Dollar Tech Club growing . We have a new member in the last 24 hours. The dominance of tech in the s p, is this something that worries you, or should it not in itself because for concern . Mark im not too worried. Of waystheres a couple to look at it. Obviously, 1 trillion is an arbitrary number. It is great for headlines, gets the market excited, extra focus, but its an arbitrary number. The bigger concern is the dependence of the stock market around the Technology Sector and just a few names really driving everything. Whenever any market is very dependent on key names, it is more vulnerable to something going wrong in those names. So its true to say that overall the u. S. Equity market it vulnerable to major disruption in the tech sector. However, i will say i dont see where that disruption is coming shortterm, and dont see any natural internal reasons for that trend to run oiuut of stea. Until a major shift on how the Technology Sector is viewed, some major change in regulation, i think tech will continue to drive the market higher. Matt the apple market cap, now the same size as the australian stock market, one headline that caught my eye overnight. Anna mark cudmore, thank you very much. You can join the debate on todays question, should investors be scared of the 1 trillion tech club. Reach out to us and the markets live team on your bloomberg. Next, we look at stocks to watch this morning, including casino, the french supermarket operator that cut domestic profit expectations and result resulting from domestic protests. This is bloomberg. Matt welcome back to Bloomberg Markets european open. We are a little more than 45 minutes from the start of cash trading across europe and in the u. K. The new e. U. Trey chief has accused President Trump of trade chief has accused President Trump of being obsessed with the u. S. Trade deficit, saying it will lead to higher costs for consumers. He gave us an excessive interview at the end of his threeday visit in washington. The objective is to try to reset the relationship, understand each other in relation of a number of things, and find Common Ground with the United States on issues. We started on a positive note. U. S. , European Union and japan signed onto a statement saying they wish to see an issue around technology transfer, for the Global Economy and the players in the future. Tho reform the wto. This is a positive agenda. You had a bilateral meeting with robert lighthizer. Did you receive any assurances they will not be new tariffs on the e. U. . We didnt get any assurances. I would not expect any assurances from mr. Lighthizer, who is someone i respect very much. Hes had a very big week, the statement with the European Union and japan, the deal between the United States and china yesterday, and of course the passing in the senate. A big week for him, and we will continue being in touch, to continue with our discussions. In terms of this big week, the threat of 25 tariffs on e. U. Has been out there for a while. Did you get any sense that is still a live threat . You said it barely came up. Where . It didnt come up often in questions asked by the administration or congress, or business organizations. But that doesnt mean it may not come up in the future. We have difficulties at the moment related to tariffs boeing,from airbus and and discussions around the digital tax agenda was important from the u. S. Point of view, and we are trying to work out solutions. The Washington Post had a story that in the days before he trump talks, T Administration had said you need to do this or we will slap a tariff. Did that happen . I dont think that happened. It was not raised with me during any meetings with the administration. How concerned are you that because the president has had two what could be considered wins on trade in the last week perhaps the administration has more leverage . Phase one has gotten done. We respect the fact there has trade, ind moment for relation to the United States and partners around the world in recent times, and now we want to build on some aspects of the deal the u. S. Has done with ofna, move in a common area alignment and cooperation for issues we share in relation to unfair trading practices, and hopefully we can identify common hopefully we can identify Common Ground in relation to a number of these. Hopefully we can identify common according to an independent congressional watchdog that says that the president should not have delayed the money that had been appropriated by congress. A key part of the impeachment case against President Trump. The Senate Approved President Trumps new freetrade agreement with mexico and canada that hands the president a major win ahead of his impeachment trial. The overhaul was a top legislative priority for trump. Senate Majority Leader Mitch Mcconnell called the vote, a rare moment of bipartisan cooperation. Global news 24 hours a day and on quick take powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna, matt . Anna leighann gerrans with first word news in london. Lets get your stocks to watch from around the newsroom. Annmarie hordern is focused on the latest from bayer. Our Equities Team covering casino, the french grocer. And focusing on richemont. How will investors take the results, looking at what they have said about hong kong in particular . Kong had a severe impact on sales. It led to store closures and was tourists at bay, but offset by stronger demand in the u. S. And in europe in particular, so it is likely to be taken positively by the markets. Matt annemarie, what is the story on bayer . Annmarie they might be putting these cancer claims for aroundup weedkiller finally behind them. They could be weeks away from settling more than 75,000 of these claims, according to the mediator, who says he is cautiously optimistic they can get it done in a month. The stock is preparing for a higher open. Anna they did say claims are surging according to the mediator as well. On the French Grocery player, what is the story from casino . There was a dense news flow last night. The company unveiled fourthquarter sales. Not good news. The first big profit warning in france because of the strikes that have been paralyzing the country, ever since december 5. The company cut the full year ebit growth forecast from 10 to the protests. We will see the Market Reaction this morning. We are not expecting the shares higher or lower. Casino shares were soft,. In addition to that, the casinos Parent Company under creditor protection rallied. The bondholders had a vote on the Restructuring Plan and did not support the debt deal, which may also weigh on sentiment. One last positive, the company stripped out leader price, so that asset divestment may help the shares a bit. Back to you. Matt thanks so much for joining us. Get the latest stock stories from our equity team by typing first go on your bloomberg terminal, and get first word news in the bloomberg mobile app. Week before the World Economic forum in davos, and we will bring you the biggest names in banking as more than 115 billionaires to send on the normallysnowy, not so much this year, snowy swiss town. Do not miss our coverage. Even without good skiing, it will be a fascinating meeting. David solomon, james gorman, brian moynihan, michael corbat, all coming out of davos next week. This is bloomberg. Matt welcome back anna welcome back. 25 minutes to go before the start of equity trading in europe, but futures point higher. U. S. Futures look more muted, although a little momentum, up 0. 2 on the major indexes stateside right now. Chinas gdp growth held at 6 last quarter. They economy stabilized after slowing to the weakest pace in almost three decades, with policy support stopping deterioration. Joining us with a look at the Global Growth story, were d of privatee hea Capital Markets at ubs. Just to get your initial thoughts about the state of Global Growth and the state of the chinese economy, a little bit . We had gdp numbers from china. Our colleague in asia was saying it really doesnt matter that this is the slowest pace since 1990, since this is a much bigger economy. Your initial thoughts on the role china plates at this point . I think there is some truth to that, growing superfast and even though its now growing slower, it is obviously still a Strong Economy and a market everybody wants to capture. Its a big driver for the economy. You put that in the context of more geopolitical tension and veryseems averted, that is conducive to the market. Matt you point out in your note that we have much less uncertainty in 2020. I wonder if thats going to be enough to continue driving the price of risk assets higher, or if you need more of a catalyst . Isabelle i think its a fair comment. I think two things at this point. A lot of what we have seen in 20182019 has been driven by uncertainty, and some of that uncertainty has gone away. What we will be watching for, what are the consequences . People are riskon on u. S. Stocks, but what are the impacts, until the trade agreement was signed, what were the impacts on the economy . People will watch for that before they make further conclusions. Anna isabel, thank you. Isabelle toledanokoutsouris, more with you as we talk about the low yieldeturn in a environment. It is the week before davos, and we will bring you the biggest names in technology and other sectors. Dont miss walltowall coverage. Bloomberg radio is also available on your mobile device, and dab Digital Radio in the london area. They will also have the best of davos. This is bloomberg. Matt welcome back to Bloomberg Markets european open. 30 minutes away from the start of cash equity trading across the continent and in the u. K. I am matt miller in berlin alongside anna edwards in london. Anna lets get a look at what you should be watching out for for the next week. On monday, u. S. Markets are closed for Martin Luther king day, but a very busy day ahead on tuesday, the beginning of trumps impeachment trial. Netflix earnings and the World Economic forum in davos, all of that to look forward to. Matt maybe you want to catch the davos coverage that we have until friday. Ceos coming of out of davos. Rateursday, the latest ecb decision and president Christine Lagarde will unveil the scope of the Central Banks strategic review. Blackstone and apollo delivered a simple message to the sec this week, private markets are here to stay. They said less liquid investments perform much better than stocks and private equity produces bigger gains with less volatility than publicly traded shares. Isabelle toledanokoutsouris is with us. She is head of private Capital Markets at ubs. Your job seems really exciting. Thatink Investment Bankers have these companies that need to be funded with private markets that can give them the capital they need. What kind of companies are you seeing that need to go to private markets or preferred to go to private markets rather than to go public . Isabelle thank you very much for the vote of confidence. Thats great. In terms of companies, i think companies that look to disrupt businesses. We spend time focusing on Growth Companies will look to raise money, be it through equity or other instruments. My focus is on debttoequity. You have also familyowned businesses, privately held businesses looking to raise money in different ways and do not necessarily want to or cannot access Public Markets. Anna what is it about Public Markets that makes it difficult for some of those businesses to successfully raise money there . You have mentioned in the past the shortterm nature, shortterm thinking. Is that a reason to go to private markets or a reason to fix the shortterm nature of private markets . Isabelle that is a question i am not sure i can completely answer. First things first, these destructive businesses have been either prerevenue or revenue generating, not profitable, which is clearly not suited to the Public Market at this point. Are ak private markets more longterm focus as opposed to Public Markets. Whether you should change Public Market or if it is good to have a private market thats here to stay to cater to that, thats something to think about. Matt we know the complaints of famous cases like michael dell, who want to get out of the quarterly reporting process and focus on growth. But i wonder if private investors arent even more active than public investors. Do private investors tend to take a more active role in your experience . Isabelle they do. You are absolutely right. In terms of direct investments, people tend to be active. We have a very different pool of private capital. Bringdifferent pools different skill sets to the table and different ways of being active. Anna one area where we have seen a lot talk about activism is esg, and in particular, the climate, the environment. Do you think markets have to be less concerned about that given maybe less scrutiny in the public space versus the public . Or will it preoccupy thinking in those boardrooms as well . Isabelle i do not think there will be less because i think it is a very exciting trend. If you look at the way that government regulation is progressing in that space and in the shifting consumer trends, that trend is here to stay. If you look at the wayit is oneg Growth Opportunities of the next decade. Anna it is exciting in the growth space. What are their thoughts about stranded assets and companies that are in spaces that will not be as exciting or attractive . There is some concern that may be they will find it difficult to be in the public sector. Maybe they end up in the private space as a result. Isabelle i think when we look at private investors that we surveyed, 82 of them say they want investment sustainable business. 80 of them want to invest in companies that feed their values. 44 of them have invested in sustainable companies. That gives you the shift that is happening. Aret how illiquid private Company Investments . If one of your investors comes and says, i need to get i need to monetize this asset, can you do it quickly . Isabelle so they tend to be liquid. That is the nature of the business. I think the market is moving towards bringing some form of liquidity for, you know, investors in general and secondary markets are progressing and developing. I think as private markets are here to stay, you will see increasing ways of creating liquidity, even though it is never going to be as fast and liquid as a liquid markets. Sale still ipo or a the preferred exit for a private investor . Or are they happy to hold their orke and collect dividends watch Capital Increase . Isabelle i think so far, exit was the more transitional traditional way and ipo as well. It is a mix of people. Anna thanks very much. Good to speak with you this morning. Thanks for joining us. Isabelle toledanokoutsouris, head of private Capital Markets at ubs. Sixhe sixth biggest biggest u. S. Banks saw net income top 120 billion in 2019. We will wrap up the weekend u. S. Bank earnings week in u. S. Bank earnings. Impeachment story rolling on. We will continue the banking conversation into next week. Bloomberg radio is live on your mobile device or dab Digital Radio. There is the team putting together this hour of programming. This is bloomberg. Matt welcome back. This is Bloomberg Markets european open. We are about 20 minutes away from the start of trading across europe. Lets get the Bloomberg Business flash. Bayer may be close to reaching a settlement on roundup. It could be only weeks away from resolving the over 75,000 cancer claims against the weedkiller. Number almost double the of cases disclosed by the company in september. No detail on the terms of the possible settlement. Facebook has been sued for anticompetitive behavior. Judgeanies are asking a to order Mark Zuckerberg to give up control of the social media giant. Facebookfacebook if is not forced to sell instagram , it will integrate them into the social network, stifling competition. Morgan stanley it signals the banks confidence in the worlds fastestgrowing region. The hiring contrasts with the job cuts at ubs, which is cutting headcount in europe and asia. Microsoft wants to go carbon and negative. The software carbon negative. The Software Giant is investing 1 billion in technology that can remove carbon from the atmosphere. Alphabet has joined apple and microsoft in the trillion dollar club. It solidifies tech giants as the ns of wallta street. The only other company with a more than trillion dollar market cap is saudi aramco. Anna leighann gerrans in london for us. Lets wrap up a big week of earnings for u. S. Banks. President trumps tax cuts saved the six biggest banks 18 billion last year. The tax savings have spurred the banks to record profit, with the six firms posting 120 billion in net income for 2019, including past the previous year. Joining us now is tim morgan, u. S. Financial specialist at keefe, bruyette and woods. He has 20 years of experience in u. S. Banking stocks. Very good to see you, tim. Good to have your analysis. Obviously, President Trump very happy with the profits of a jp morgan. He made a comment earlier this week, are you going to say thank you to me . The gains they have made on that front, the moves in the yield curve also perhaps instrumental here. What is it for you that has led to a strong reporting season for the banks . Tim youre absolutely right. There is no question going back over President Trumps administration, the tax cuts were a big impetus to higher valuations. We frankly ended up still not up really from where we were a year and a half ago. Its been a very dramatic ride. A lot of that has been based on Interest Rates. Back in august, stocks were down yearoveryear quite significantly. We were expecting the u. S. To be slipping into a negative Interest Rate scenario. Here we are not much more than six months later really with Interest Rates having started to move back up. In the u. S. , with the fed having taken another cut in the shortterm. The banks make money off of essentially that type of a spread. That has been really good for the last six months. Our worry coming into this year is that we are not expecting much more help to come from Interest Rates. Anna ok. Matt . Matt i want to step back and take the bigger view. Londonned the office in what . 15, 16 years ago. U. S. Banks have just done a much better job at rebounding from the financial crisis and making money than european banks have. Why do you think that is . Is it because of rates, because of the federal system, is it just because they acted more quickly . What is the reason behind that. Tim good morning. The bottom line is that the opean banks did not get from the sort of aggressiveness that the Previous Administration had in the u. S. When it came to the crisis. Put quite simply, the u. S. Was faster to encourage the banks to eliminate or at least two hive off to hive off bad debt. U. S. Banks were just much more aggressive about moving out of that negative environment by cleaning up. I think the perception with a lot of investors is that the year and being is that the european banks have taken a lot longer. A lot of people mentioned the level of nonperforming loans in europe and a lack of consolidation. I wanted to show you this longterm chart of jp morgan. This is the jp morgan a price outperforming peers. It did some of its own m a around the time of the financial crisis. We have seen this strong outperformance by jp morgan. This comes back to the fixed story. Tim it has been a fantastic quarter. 6 had triple digit, 12 yearoveryear improvement in that business line for Morgan Stanley yesterday. Stock was up 7 . While those numbers sound impressive, it was a roller coaster here. About 8 while equities were down 7 in total revenues and Investment Banking was down, too. When you look at that total Investment Banking group of revenues, you have a fantastic end to the year and exciting, but for the year, we are up a whopping 1 . Anna we had such a stronger for equity market performance, and yet, the banks not managing to turn that into a positive. Tim it has been a joke in the industry that as the market goes up, we still feel in certain parts of it that we are in a very competitive environment. Between that and some changes in regulation in the last few years, we are still seeing headcount go down. Tois a different environment be in the banking industry. Matt speaking of competition, i wonder what it is like for bankers themselves . Europe is a great place to live. If you want to make more money, i guess he would probably go to wall street. Is that right . Do u. S. Banks pay more competitively . Tim i am not sure how to answer that. As a canadian who came over to sell u. S. Stocks in europe, i think i have gotten the best of both worlds. I am not sure where to go to make the most money. I have not been successful enough to leave yet. Matt cost cutting has been a huge issue. We have a story today that barclays is firing 100 senior bankers. What is the cost does the cost structure look like for u. S. Banks . Are they starting to cut down as well on pay dramatically . Tim well, that is a really interesting point, matt. I am not going to complement comment on pay, per se. Technology is becoming a much more important part of Cost Management for the banks, both because they need to invest a lot in order to keep up with technology and cybersecurity requirements, but also because there are a lot of cost cuts that they want to achieve. The short story on efficiency for the banks is actually one of the slight negatives from this quarters earnings season. A number of the banks essentially seem to be hitting floors, in terms of the ability to cut costs. We have seen essentially jp morgan, citigroup, bank of america starting to trough out at 65 cost as a percent of revenue and unable to go much further. Morgan stanley still up over 70 on that number, much higher than those companies. A lot of that is explained by business mix. It is no surprise that one of James Gormans focuses is to get that number down over the next few years. Anna we talked a lot about china this week with the traded deal and Growth Numbers coming in overnight. How important is the access to china markets for the u. S. Banks that you cover . Or is it still a peripheral part of their story . Now it looks like it they will have a more free reign and be able to own assets more freely within china. Is this an important part of the growth story . Tim at the margin coming out at the margin, no. It is not something that my analysts or clients are talking about. China is still very important and arguably becoming the worlds most important market. It has to do with whether the beginning of the easing of the trade tensions leads to more confidence, more spending, and higher loan growth. Matt great to get some time with you today, a canadianu. S. Financials specialist based in london. Thanks so much for joining us and talking us through what is really such an incredibly important industry this week. Obviously, with the earnings out, has been fascinating to watch. It is the week also before the World Economic forum in davos. We will bring you the biggest names in banking next week. You heard tim talk about james gorman. He will be on our airwaves next week, as well as david solomon, brian moynihan, and michael corbett, all from davos, as they gather together with 115 other billionaires. Do not miss our coverage of this annual meeting of the minds and celebration of skiing and 43 hotdogs. Up next, alphabet joins apple and microsoft in the trillion Dollar Tech Club. We will bring you the morning call next. This is bloomberg. Matt welcome back to Bloomberg Markets european open. Right now, just about six minutes seven minutes away from the start of cash trading. Morgan stanley is getting more bullish on apple. Here with the details of your morning call is Annmarie Hordern. Good morning. It is all about technology today, first with the morning call. Morgan stanley more bullish on apple, raising their price target, remain overweight. This is to reflect the smartphone replacement cycle peaking. We could also see this upcoming 5g upgrade cycle for apple. Yesterday, alphabet was able to surpass a 1 trillion valuation mark. Also, just that momentum we see in tech. Annmarie hordern on the tech sector. Lets get a bloomberg first word news update with leighann gerrans. Chinas economy stabilized in the last quarter. That is after Annmarie Hordern e tech sector. Slowing to the weakest pace of growth in almost three decades. Gross domestic product rose at 6 , the same as the previous three months. China also sold the first accelerated investment since june. It signals a firmer recovery could be underway. President trump is obsessed with the u. S. Trade deficit with ocseu, according to the bl trade chief. The comments came during his threeday visit to washington. Lawwhite house broke the and withholding aid to ukraine, according to an independent congressional watchdog, saying the president should not have delayed the money appropriated by congress. This is a key part of the impeachment case against President Trump. Global news 24 hours a day, onair and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Matt thanks very much. Leighann gerrans there with your first word news. Lets take a look now at some of your stocks to watch ahead of the open. Onte that cameem out with sales about 6 00 this morning london time. Sales ofquarter constant fx up 4 , in line with estimate. It says there is a contraction in hong kong. That is not unexpected. The Third Quarter was encouraging. Rbc says the Third Quarter was encouraging, with the julie restores healthy with julie restores healthy Jewelry Stores healthy. Anna keep an eye on u. K. Insurance as well. Hastings coming out with a warning that could weigh on others in the sector. Guidance from that meat production business in the u. K. Of interest, removing the limits on noneu buyers. We will watch that and of course bayer, we talked a little bit earlier on about the news flow surrounding roundup. Next week, the World Economic forum in davos. We will bring you some big names. 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 a minute to go until the start of the cash equity trading day. It is friday. China sees its first acceleration in investment since june as industrial output beats estimates. Could a further recovery be underway . Joinset joins Alphabet Google and microsoft with a trillion dollar valuation. And barclays is cutting around 100 senior jobs as a lender looks to rein in costs. Morgan stanley plans to add to its wealth business in asia. Matt we are looking at futures pointing to gains at the open and they are pretty substantial gains at that. Tax futures up more than 0. 5 right now. If you see it oh then at 13,559. 6, that will be a record. Pay close attention to the possibilities of another record high. What are you seeing . Anna let us see if we see those upside moves at the start of trade. The ftse 100 up i 0. 2 recep. The spanish market up by just shy of 0. 5 . This could be headline making. Movements. On fx watching reaction to the richemont numbers. By 0. 5 . H market up we are seeing some optimism. We were told in no Uncertain Terms by our colleague that it was not the gdp number. It was really about Industrial Production and some other measures rebounding. In the Fourth Quarter that matters. This seems to be what the markets are responding to. Let us see what we are seeing from a sector perspective. Let us see if we have a decent picture. Not sure we have the graphic for you at this point so matt, im coming to you on individual leaders. Matt first off, you can see my move screen here. Gaining. 85 stocks the movement is overwhelmingly to the up side. R top, we have ichemont. You also have some luxury companies. Including lvmh. Watch that on the back of richemont. Bp as downside, you have well as anheuserbusch. There is a cd project it is delivering a cyberpunk game launch. I can understand why investors would be concerned about that. You dont want to delay cyberpunk game launch. Down 12 on the back of that. And casino falling the most since august 2018 as the forecast is hot on protests. Groups, of the industry to bring do that quickly. You have basic resources, industrial goods and services and industrial leading the pack. Oil and gas is the only Industry Group down in the stoxx 600. Bp taking points away from the broader index. Is a sector showing weakness. And you rightly point out the supermarket story. That one just jumped right after you covered the gaining sectors. European markets opening higher following a bumper data regarding china released this morning. Are choosing to focus on solid retail sales and Industrial Production. Negative capital for the year ahead has also been moved i head of this week signing of the chinau. S. Deal. Let us talk to some experts this morning. Is here along with janet henry from hsbc. Janet, coming to you first. You worked a long time in asia. It was interesting that the market seems to be focusing not on the gdp number which was in line but on the Industrial Production data for the Fourth Quarter which may be shows some rebounds. Are we clutching at straws . Janet the december data was certainly better. Also what was good for december was investment. Manufacturing investment which we have been waiting for for a long time. I think the market is taking the right view. They may be in danger of getting overexcited is thinking this is the beginning of a typical vshaped recovery in china. We also get an end of year rebound. A prechinese new year advance sales. It could be we get some filtering of the data. The general bottoming out story is still in place. Matt greg, let me come to you or do have the bottoming out inpled with less uncertainty terms of the u. S. China trade war, centralbank activity, what do you think about the market . Gregory last year was very much hats i had my investor on so it was about buying and withholding. Now, we have to put our trader are obsessedaders with getting confirmation. Often, markets will rally in advance of some developments. Since we saw significant rallies across the board in equities last year, we will look for hard evidence that this can continue. That is why i am focusing more on prove it. Matt is the signing of the phase one trade deal positive or negative for stocks . Gregory all i care about as an investor is how weekly we go into phase 2. Our main theme is confirmation. Matt janet, what do you think ceot we had one big talking about the fact that the u. S. China trade relationship this new relationship will play out over the next decade. Will this be solved at the end of 2020 . Is there a paradigm shift in global trade we have to watch from now on . Janet there certainly seems to be a new normal. How long the new normal last four, we will have to wait and see but in terms of the outcome of the phase one trade deal, we are starting from a position now where i lateral tariffs are bilateral tariffs are a lot higher than they were a year ago. That will continue to play out until we get the next round in negotiations whether it is in 2020, 2021, or well beyond that. We will also see what avenue it takes the aunt tariffs beyond tariffs. It could take other forms in the coming years. In the nature of the outcome could have implications on other trading partners. Interesting to see phil hogan talking about that. Whether there will be reactions taken at the wto. Certainly, that is interesting. Gregory, how do you trade around phase 2 . Is it just about removal of tariffs . Some of the other issues are very structural and longterm including intellectual property regulation and support of state industries. It goes to the heart of how china wants to play in the Global Economy. Gregory we continue to hold that position. In terms of investor sentiment, moving beyond isk taking and what is the prospect of recession in the u. S. Which is declining. And what Collateral Damage could there be in the runup to the u. S. Election. Whether we like donald trump or not is almost irrelevant. If an extreme left candidate gains ground, investors will hone in on that and it will dominate our screen so to speak. Matt gregory and janet will stay with us. Gregory perdon from arbuthnot hsbcm and janet henry from will stay with us. Be the year that European Value stocks finally outperform . We will discuss that with a fascinating contrarian take. This is bloomberg. To bloomberg back markets, this is the european open. 12 minutes into the trading day. Gains on the5 continent. The dax index, by the way, not opened at a record high but we are watching it closely. If i check out my hpci. Record, we get to a need the closing record to be at 13,059. 6. Will the rotation into European Value stocks continue into this year . Our guest this morning, reg repaired and says after 13 years of underperformance, this which to Growth Stocks in the lecture half of 2019 could have a further run. Janet henry from hsbc is with us. Gregory, what is behind this . What do you see driving a continued gain for value stocks . Gregory i would paraphrase by saying the main theme is confirmation. While we believe the value rotation and cyclical could potentially have legs, we need confirmation. For example, we need to see some of the inflation data be in line with something that is more indicative of a growth scenario. We also need to see a rise in rates. Look at the correlation between value outperforming growth, that tends to be an environment of rising rates. The challenge is we see exiting negative rates could be more difficult than we expect. We would like to see an exit of negative rates in europe which could put a close on this ultra, longterm pessimism which is symbolized by the yield curve in germany being negative. Anna janet, that is what gregory was like to say. What is your expectation . Janet i think gregory is going to be disappointed. See emerging from negative Interest Rates in the foreseeable future. To thek is more skewed Downside Risk rather than further easing. The longterm outlook should be towards stabilization. Inflationl below the number. Why do you think it will be difficult to get out of negative rates in europe . Gregory to oversimplify it, lagarde is more of the diplomat. There will be more influence on the germans then draghi. What the germans want is to stop the negative rate scenario. This is the dark horse trait. The probability is low. We have seen a lot of low probability events manifest themselves in the last few years. We could see lagarde very diplomatically exit negative rates. That way they both get what theyre want. Matt that way they both get what they want. Matt i expect this is a higher likelihood then getting away from negative rates. I asked bank ceos all the time, can you give Christine Lagarde advice on how to go about getting out of negative rates and they always tell me they dont know how it could possibly happen even though they want to get back to positive territory. What would it do to the economy if the ecb brought us back to positive rates within the year . Janet i think it would come as a real shock to the market. When we look at the real economy , growth is still quite low and potential growth is still quite low and inflation is way too low. For the ecb to be raising rates in the next year, i think it is more likely for markets to view it as a hollis emr and you could get a financial Market Reaction. The ecb is in a world where Monetary Policy a loan cannot return inflation to target. Only monetary and fiscal policy together have a hope of returning inflation to the 2 level and that is the only time we can hope to get an increase in Interest Rates coming through from the ecb. Anna what you expect to see in europe then . Still goingnk it is to be quite modest. In the case of france, that is in line with what we saw in 2019. And as we know from the u. S. In 2018, one year of fiscal could have ath meaningful impact on the real economy and through to productivity. It needs to be every year for about five years and it needs to be appropriate and not just in terms of supporting consumers. It needs to be an economy that can lead to more sustained growth. Eventually, we may go down that path. One year of fiscal stimulus is just a sugar rush that will quite quickly unwind. Anna stay with us, both of you. Janet henry from hsbc and Gregory Perdon from arbuthnot latham. The Economic Forum will be taking place in davos. The biggest names in banking. We will have them all right here on bloomberg tv. Do they have any ideas on how to get europe out of negative rates . Up next, we will bring you all of the moves in the markets. Protests are weighing on Food Retailers and france. This is bloomberg. Matt welcome back to the european open. About 20 minutes into the session and looking at gains across the board. Top stock movers for that, we go to Annmarie Hordern in london. Richemont is up. They met analysts estimates. It was able to weather the storm with the decline in hong kong and making up sales in the u. S. And europe. To see note to the downside, down more than 11 . Out with a profit warning for their home country in france. The protests are impacting their bottom line. And plunging this morning, cd product. Down more than 12 . Our producers said it was the best stock in the last decade. The cyberpunk aim is going to be delayed. They may lose credibility. I am not a gamer myself, matt. I will leave this one to you. Play a lot of games. Keanu reeves this is his game which makes me want to buy it even more. Anna let us move from gaming to detect. A trillion dollar club has a new member. Googles parent alphabet pushed it to that zone. It is not all about tech. And janet henry are still with us. I have a chart underlining the ascent of alphabet into the trillion dollar club. 50 of the s p are made up of four names. Is that cause for concern or celebration . Gregory it presents a significant conundrum for discretionary investors. The conundrum is about we are going to be judged by our results relative to the index. It is difficult to forgo those huge names. Realistically, what would be the catalyst to defray 2d thrown them to dethrone them . The only thing we can come up with is the prospect for higher regulations. When three a concern stocks make up such a large part of an index . A fifthor five make up of the index, isnt that worrying . Gregory we are worried but ultimately, as i mentioned earlier, we are looking for confirmation. One of the big thanks we are looking for in terms of confirmation is earnings season. Earnings were disappointing last year. Expectations now have corrected to the upside. If we can see the confirmation from an earnings perspective, that can work the prospects thwart the prospects of recession in the u. S. Anna picking up around consumers, i was interested to see the consumer comfort numbers of late. It is something that has been since 2009. Ighting consumers have been incredibly important in supporting the Global Economy. All that continue . Will that continue . Janet hopefully, manufacturing will show some signs of stabilization. We are seeing a Global Economy in which Consumer Spending is likely to be the main engine of growth. Anmany has been in industrial recession for the last 18 months but it has only been in the last month or two that we have seen the labor market softening. Hopefully, we will see a little bit of expansion even in europe in the coming year. Confidence at still pretty high levels, we still think the consumer will be a major engine of growth through the coming year. From hsbc, henry thank you very much. And Gregory Perdon from arbuthnot latham, it has been a pleasure having you as well. Janet will be with us on Bloomberg Radio at 9 00 a. M. Where anna and i will go after this stint on tv. If you get tired of watching us on tv, switch over to the radio. Renewable energy we speak to the Bloomberg New Energy Finance team. When you move homes, you move more than just yourself. Thats why xfinity has made taking your internet and tv with you a breeze. Really . Yup. You can transfer your Service Online in about a minute. You can do that . Yeah. And with twohour Service Appointment windows, its all on your schedule. Awesome. So while moving may still come with its share of headaches. No kidding. Were doing all we can to make moving simple, easy, awesome. Go to xfinity. Com moving to get started. Anna welcome back to the european open. 30 minutes into a positive trading day for european equities. I am anna edwards in our european headquarters. Alongside matt miller. Matt let us take a look at the stories so far. We have the price gain on the broader stoxx 600 index. Take a look at the Industry Groups. All of them are gaining, even oil and gas which was a loser early in the session. It is now showing gains. The leaders are basic resources. Utilities as well as automakers. They are doing well today. And travel and leisure. Oil and gas is the least positive performer but even that group is up 0. 2 as brent crude rises about the same amount. 64. 74 a barrel. Let us go to leighann gerrans in london. Leighann chinas economy stabilized in the last quarter after slowing to the weakest pace of growth in almost three decades. Gdp rose 6 . China also saw its first acceleration in investment since june signaling a for the recovery could be underway. President trump is obsessed with the u. S. Trade deficit with the eu according to phil hogan. The America First policies are bringing about a crisis moment for global trade. Comments came during hogans threeday visit to washington. The narrative that the United States and the trade deficit is in an unfair relationship with europe. Isreality, the relationship more balanced and highly mutually beneficial. This cannot be stated enough. The facts are clear. Leighann President Trump plans to nominate judy shelton and christopher while her to the Federal Reserve board. A formal announcement did not come until yesterday. It will now move to the senate for confirmation. From them is they are open. The u. S. Is tightening control over the release of Major Economic data. It is banning the media from using data. To ensure as it is level Playing Field but it could also spur an arms race among traders to get the numbers first. 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. Thankleighann gerrans you so much. Investment in Renewable Energy came in at more than 280 billion in 2019. And bloomberg is forecasting that it could rise above the mark this year. Our team has just released its predictions for 2020. They seem more investors to committing to it a cleaner future and a record year for onshore winds. Albert is the head. Happy new year. A little late but what are your key predictions for 2020 . Outdoor we are calling for 300 billion in clean investments compared to about 280 last year. Last year was pretty flat. We see more opportunity coming for this year. What is really interesting is n though investment has been flat, the Power Capacity is growing rapidly. We think this year will set new records and could exceed 200 gigawatts. Matt i wonder about the battery technology. In terms of all of the technology that you cover, does moores law apply . Do you expect a doubling of capacity and a halving of price . Not many things in life are getting cheaper but batteries are one of them. Costcost about 1 8 the they did 10 years ago and that will carry on. Tose are big opportunities build storage plants. Be about 5ere will billion invested in storage in solar plus storage. A lot of that action is in parts of the u. S. Which has great resources. Anna you said investment was fairly flat last year in Renewable Energy. That is almost surprising given so much protest activity around Climate Change and a lot of talk sg priorities. Why so little growth in that area . Still based one the power Market Designs and how countries go about designing that. Ofna reduced the amount money it was willing to put into the solar industry. China is the biggest Renewable Energy country in the world. When that happened, even though pretty much every other part of growing, the global total still looks quite flat. Anna talking about the concept of the circular economy. Somethingt seem it is that is reinventing the economy so to speak. A lot of businesses though are responding to the circular challenge. Sector ise material responsible for a significant portion of our Global Common omissions. Every bit of plastic or chemical that you can use less of is meaningful. One of the ways you can use less in terms of virgin material is through recycling or extending the life of existing products and remanufacturing things. It is being driven by the consumers saying we want to buy sustainable products and policymakers are also asking companies to do more. Time how close are we to a where companies will be made responsible for the recycling of products that they manufacture . Albert we are talking about extended responsibility. It will not be extremely sudden but it is on its way. Matt germany must have the most per capita in step installations of windmills. They are everywhere. I think they are awesome but the german people dont seem to like them very much. I wonder the difference between the wind market and the solar market. I would think solar panels become obsolete fairly quickly. Which is producing more energy . Which is more cost efficient . Albert they are both extremely cost efficient already. We think either wind or solar is source of power in the world. What they do is provide different profiles of generation for the grid. Solar helps you meet the midday peak and wind helps you ride through the winters and evenings. If you look at the installed terawatt is one about the same as the generation in the u. S. Anna very complementary. Albert exactly. Matt it is a pretty exciting industry you are covering, albert. Thank you for joining us. We hope you can get you on again we hope we can get you on again. Sure if there is a set f. Ight say that bne also that hit aim alphabet hit a milestone on thursday hitting a one trillion dollar valuation for the first time and it now forms a trio with microsoft and apple. Alex webb, our opinion columnist covering tech. These valuations are they starting to concern people . Oil companies are worth this much. Is the bigger concern im not sure people are taking into account the regulatory overhang. Particularly over google. It is less of a concern for microsoft and apple which as you say are the pioneers in this space having broached the 1 trillion market cap. Google does have a regulatory overhang. Next 5, that over the 6, 7 years, there might be a risk that the company will, under more pressure. It might become more regulated and the price they are able to charge could come under closer scrutiny. Anna we spoke to a guest earlier on who was asking himself, what could dethrone the big names . And he came up with the same thing, regulation. But he said it will not matter in the next six months. You talking about a longer horizon. Studiesere are market by the cma into digital advertising. They have mentioned the idea of possibly forcing google to ad exchange. Where people did in realtime to place ads. It would have to trickle down into regulation in europe or the u. S. And that takes a considerable amount of time let alone the legal processes that could push back against that. A long horizon. Matt let me ask about tesla you write about it a lot. Is sometimes a strange character and will fall on the wrong side of history in certain cases. On the other hand, he is stomping all over the shorts anyan, i cant think of bigger losers on wall street right now then tesla shorts. I feel like they must be embarrassed although they dont seem that way on twitter yet. Elon musk is closed to clinching a massive reward as the shares in his company just sore. Alex just soar. Alex he came up with a new remuneration scheme or plan a few years ago which would see him receive a bonus, Something Like 350 Million Dollars if tesla has an average market cap above 100 billion. At the moment, it is valued at billion2 billion or 93 and has gone as high as 97 billion. People are looking at that and saying that he is in line for a potential payday in the next 12 months. An important year because we have seen in the past six months and at the frankfurt automotive of show we saw a lot carmakers coming out with their electric competitors. To the extent that they are able take a share from tesla will determine its growth. Anna we have two different stories. Tesla Short Interest on the rise in the yellow. Part of that has to do with the value of the stock we are talking about here. The rally in tesla shares. In the white, a percentage of the equity that is floated and that has been coming down. This has been a really interesting discussion. Thank you so much. Up next, we will bring you some of the stocks on the move. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. Gains across the board or than 45 minutes into the session. The dax up three quarters of 1 . Let us go to leighann gerrans in london. Leighann bayer may be close to reaching a sent a settlement on roundup. It could be only weeks away from settling the counterclaims against the weed killer. That is him was double the number of claims disclosed by the company in december. Casino is slumping today with the outlook in disarray. Year,gs rose just 5 last half the rate it forecast. That is after strikes and weighed on france sales. And bondholders rejected a plan to repay debt over 10 years. Microsoft is not just going carbon neutral. It wants to go carbon negative. It is investing 1 billion to back technology to remove carbon from the atmosphere. Efforts to simply remove less is not sufficient to eliminate Climate Change. Is to cut about 100 senior jobs, mostly in trading roles. We understand the bank has started trimming mainly director positions. They will go in london and the Asian Financial hubs. Let us get more details from our reporter. Good morning to you. Is this all part of a broader focus on costcutting . Definitely. They are committed to the strategy of costcutting. Did not seeuarter them reach their profitability target matt . Matt who is out . Businessesads of across the sector. Mainly trading positions. Senior trading positions. , the head of the americas will be going. There are a few seniors. Anna we have a while to wait before we get the european reporting season kicking off. Ubs next week. Strengths of certain banks in the u. S. Remains a theme. Will costcutting remain a theme for others . Keep doing it because they need to reach their stability targets. Costs to improve your stability. Matt thank you very much. Anding to us about barclays how they will be cutting 100 senior jobs at the Corporate Investment bank. Top stock stories with Annmarie Hordern. Derisk on day. All of the indices are higher. Iag of over 4. 5 . Removing the limit for maximum noneu shareholding. Removing a large overhang. The shareholders. Boosted theirthey fullyear forecast. They are also seeing strong sales in certain drugs. Keep the investigator on and they will release a report ahead of the next financial reports. That goes back to what happened in december. Ben carson block took a short position. Anna next week, the World Economic Forum Takes Place in davos and we will bring you the biggest names in banking. The ceos of bank of america and citigroup among others. All right here on bloomberg. From the snow topped mountains of switzerland, probably. Do not miss our coverage. This is bloomberg. Matt welcome back to the european open. We are 54 minutes into the session right now and looking at gains across the board. The dax is currently up almost 13,526. Ts at we are on record watch. To go before we get to that. The bank of england is set to cut rates no matter what the sales data looks like out of the u. K. According to richard jones. Richard come it is a done deal now basically. Richard if you were to ask me a week ago i would say retail sales are in important reading giving the bank of england some insight into how the consumer performed. And that would be a big input into their decision on rates. But i think the inflation data on wednesday with a game changer. Having fallen so sharply in the last six months, i think it spooked the bank and i think they are looking at the inflation data and that is a mandate. Keep inflation at 2 . It is heading the wrong way. As a result, it probably takes this team out of todays retail sales and any Market Reaction we get on any potential upside the on retail sales will be limited because the inflation data on wednesday was a game changer. Inflation numbers gave us some comment on the retail space. Some weakness though some retailers talked about strengths in november and december. I want to ask you about the inflation story in the eurozone. It looks like we might get an uptick in the eurozone. That is later on. How material will that be . Richard i think this is a tried and tested story. Inflation in the eurozone is way too low and that is why the ecb has reacted. Core inflation above 1 is better than it wassnine months ago better than it was 69 months ago. They will keep pushing for fiscal stimulus from the government. I dont think the inflation data in the eurozone will be a game changer. Anna richard jones, thank you so much from berlin. You can reach out to the market live team, tv is a function to use. Join in the conversation on Interest Rates in the u k or the euro zone or the tech rally as well. European equity markets up by 0. 6 . Solid gains. Matt absolutely. By the way, it is friday as well so we have the weekend now. Next week we have the World Economic forum at davos. A 13 inch hardpacked base at the bottom but we will have the richest people in the world there are on tv for you. Francine chinese economy and the year on an upbeat note gdp stays steady. The premier pulls no punches on his washington trip as he cautions trump. Alphabet joins apple at microsoft in reaching a 13 digit market cap. We talked tech evaluations. Welcome to bloomberg surveillance. These are your markets