Transcripts For BLOOMBERG Bloomberg Markets European Open 20240713

Maintaining ties with venezuelas president. And sprint to the finish. Deutsche telekom sees profit rising as the companys tmobile unit edges closer to stealing a landmark u. S. Deal. Just under 15 minutes away from the start of cash equity trading in europe, lets take a look. Irst off at futures green arrows across the board put futures up. 7 , more than 50 points right now on that optimism about more stimulus injections coming from beijing. Take a look at u. S. Futures for the second trading day of the week. Remember, shorten holiday week. Still have a solid seven hours until u. S. Markets start to think about opening up. Throughout the morning. Lets take a look at the risk indicators we can glean from the gm them here. In terms of equity indexes, you can see in asia, we have decent gains here. In terms of forex, we can see a intle bit of a mixed picture terms of the hong kong dollar and japanese yen, little changed, but we do see some yen strength. You see that in some other assets as well for example. Aboveample, gold climbing 1600 a troy ounce as investors in some corner of the market look for some kind of safe haven. With our into markets mark cudmore. Lets start with what we see in terms of the risk mood today. The markets seem to expect more stimulus injections from beijing . Is that smart, and do you see it coming through . Mark i think absolutely, they do expect more stimulus. Actually, i think they expected globally, not just from beijing. All eyes are on what china does and how they reacted to the virus, but we are in this consolidation phase. We have equity markets doing ok, generally slight risk on those, but there are sections that look a little bit more negative. It is a consolidation phase after a period where markets have generally been doing ok. This whole paradigm where we will see a lot of stimulus against the negative Economic Impact from the virus. We are in a stage now where investors are looking at how quickly stimulus will affect assets. Matt we do see, though, big packages coming through. For example, in singapore, youve got the biggest sort of deficit spending going on. We were talking about the 5. 6 billion singapore dollars since the 1990s. How does that affect much assets close to you . Singapore is very much at the front and center. Also it reflects the whole region. Because it is so central to shipping, singapore stretches the sentiment everywhere across the region and they are a very practiced government, so i think it debuts extreme measures. It was the first government to come so soon after the virus news, so it is not as though they have change their schedule but that they arc right proactive they are quite proactive. Matt youve got also a Turkish Central Bank decision coming today and movement in the turkish lira. What are you expecting . Banke turkish central impressively got away with quite an extraordinary round of easing last year and i would not have anticipated it. Again today, the general anticipation is that they cut rates for 50 basis points, but theres a lot of variability in the forecast. I think that in an environment where u. S. Treasury yields are heading down toward these all twoyear lows and generally, we see global yields come much lower, turkey can get away with easing aggressively. The problem is inside environment changes, you will see turkish lira we can aggressively if you get into a more risk off environment or an environment where global yields kind of move up at a regal pace. That is when the turkish lira will really be vulnerable. Matt it is interesting because earning an did anticipate this erdogan did anticipate this. Everyone thought he was nuts. He brought inflation down with forced cuts. It does not seem to go in line with econ 101, does it . The question of the day, what does a ushaped or vshaped china path mean . What are you expecting . This idea that the markets have become obsessed with eu shapes versus vshaped or, of course, this a shaped or lshaped recovery. Is economic damage permanent, or is it temporary . Gettingmany people are very consumed, but even if you resolve discretion and do some complex economic analysis, it is not clear how you would actually change your portfolio allocation. Perhaps more important for asset policyion is the reaction, so if you notice the Economic Outlook being more severe or maybe over and rinse around the world during more aggressive easing, maybe it is a sign china will have a more severe aggressive downturn in the next few months. Ratesd might cut aggressively. Overall, i think the economic path of china is not only one part of the picture, perhaps a minor part of the picture, but investors are getting worried the economic damage might be more sustainable, might be more longterm, but we will have to see the official data over time and how that communicates through onepage emails onto the policy side. Mark thank you for joining us, our bloomberg mliv economic manager live out of singapore. You can join bloomberg on the question of the day what does a u or vshaped china path mean . Tell us what you expect there, a lot of questions about what type of recovery, if any, we should be looking for. Reach out to us on your bloomberg terminal to take part in that conversation. Up next, we take a look at the stocks to watch this morning, including Deutsche Telekom. The german phone company expecting operating income to rise again this year as it edges closer to a landmark wireless tmobileits u. S. Unit, u. S. Remember, Bloomberg Radio is live on your mobile device for Digital Radio and the london area. Tune in. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open right now, about 50 minutes away from the start of cash Equities Trading and looking at green arrows across the European Equity index futures. On optimism, we will get more stimulus out of china to recover from the coronavirus. Lets get to bloombergs first word news. Thea in the u. K. , government will end what it calls the nations dependence on cheap or low Skilled Labor and a new immigration system will come into effect for january 2021. Skilled workers must speak english. That is part of the governments pledge to end freedom of movement from the eu after brexit. Hong kong is headed for its first backtoback annual recession as the coronavirus cripples an economy already battered by months of political unrest. Economists forecast a contraction a more than 1 this year, following a 1. 2 decline from 2019. It would mark a slower recovery than from the sars outbreak. Singapores budget will provide a fairly large fiscal boosted to the economy as it works to counter the impact of the coronavirus according to the countrys deputy Prime Minister and finance minister. He and Virus Outbreak. Economies already in trouble after the slowdown in this Virus Outbreak will have a fairly negative impact on the Global Economy as well, on the singapore economy. Laura trump the fire has announced a new set of clemencys and pardons, including a financier who was convicted of securities fraud and a former illinois governor who was convicted of corruption and trying to sell former president Barack Obamas vacated senate seat, but President Trump said his 14year sentence was too harsh. This is bloomberg. Matt . Matt thanks very much. Laura with your first word news. Lets get to your stocks to watch around the newsroom. Dani burger looking at renault for us. Lets kick it off with you. What is the story with the carmaker . Dani rough run for the carmaker. Moodys cut their rating on the company yesterday, putting their corporate debt at junk, so now it is just one below Investment Grade. They are looking at sales falling 16 , and they say that given the companys outlook, it looks like their margins will not improve significantly in the midterm. I should say s p still maintains their Investment Grade rating, but again, thats just another piece of poor news for the carmaker. Telekom, this story, i have to say, i started my professional career covering bn ina reporter for frankfurt. There was already the talk of a possibility of a sprint deal. Now we see that finally coming to fruition. That is very much the key part of the story today. The wireless market is competitive and getting more competitive as well. The sprint deal, as you said, is the key part of the earnings and what will be driving shares this year. One thing to note as well is tmobile u. S. Is doing well itself, winning market share, so adding sprint to that should be good for the stop. Overall, numbers look pretty solid across the board. They are still optimistic about the outlook, but they have outperformed on Telecom Stocks already so far this year. Matt thanks very much for joining us. Get the latest stock stories by typing first go on your bloomberg terminal. You can also get it via the mobile app. I also want to point out iag, a stop to watch, the Airline Operator getting increased investment from Qatar Airways. Qatar increasing its stake to 25. 1 from 21. 4 percent, so a boost there. China. Up, could beijing be about to unleash billions of dollars more to support businesses . That is why we see futures up today, on that kind of optimism. Also, when you are traveling to work, tune into Bloomberg Radio. It is live on your mobile device. The citylso get it in on Digital Radio. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. We are a little over 40 minutes away from the start of cash Equities Trading. We do see gains in terms of futures both here in europe and in u. S. Futures on optimism that we will get more stimulus out of china. That as the death toll in that country rises past 2000. Despite Hubei Province reporting the lowest number of new cases of the coronavirus since it changed its methodology last week. Authorities considering more measures to support businesses such as direct cash infusions and mergers to bail out the countrys Airline Industry, and hong kong has reported its second death from the virus. The city bracing for its first backtoback annual recessions on record as the outbreak cripples an economy already battered by months of protests. Head of theow, the mea Equity Capital markets the head of em ea Equity Capital markets. Lets look at how the virus has impacted your universe. In some cases, like the csi 300, completely recovering losses since the virus was announced. I think investors generally have been willing to look through the issue and focus on central bank liquidity. Matt you have probably the biggest share of private in thers of any bank world. Are those High Net Worth individuals still optimistic that we could see more Profit Growth from a continued Economic Cycle here . Through this longrunning equity rally, the challenge for investors, both private individuals and institutions, has been to commit money into the equity markets. We have seen cash levels all the way through at quite high levels, and that is why these fallbacks are being seen as an opportunity to put money into highgrowth tech stocks. Got next week im going to to the super return conference in berlin. It is like to trillion in p d. Is there that much cash as well . Are the markets awash with cash everywhere . As we continue in this interestrate environment, there is a lot of cash on the sidelines. You are seeing Asset Allocation out of effectively negative Interest Rate yielding fixed income into the equity market and i think the private equity world has equally benefited from that. Matt do you see a recovery in the ipo market . We have seen some ipos that are very high profile very poorly. How does it look to you right now . Investors remained binary. If you can deliver strong dividend yield and deliver a very strong growth story, there is a strong amount of demand for that. Anything else we have seen over the last 18 months has been challenging to get price in this environment. Seen late Stage Tech Companies avoiding ipos . Are they staying with private placement . I think it depends which region you are in. If you focus on this time zone, you have a market that is relatively starved of good tech growth stories, so the ipo route remains positive and worthwhile globally, there is there more mandated money in the private space that are willing to take that route, but ultimately, it comes down to a choice from the issuer, and i think the stockspecific story. Matt what are the most exciting deals in your pipeline . Do you see more hesitancy to go from private to public and the u. S. And then you do here . I think the time zone has some difference. There is no doubt about that with the underlying market. I think encouraging for issue is, the ipo route represented Good Opportunity for exit, but this story is about competing the private space where there is a lot of money on the sidelines, and lot of money in private equities. They are cherry picking a lot of these assets and taking them into private hands, and the other side of the competition is a public equity market that is interested in tech, interested in growth, and you have some very attractive multiples to compare to. Matt it does not seem like there is much of a virus effect on what you oversee on a daily basis. The ipo story, the convertible bond story, it is more about then it isaybe trade about i think that is right. We have a very seasonal business and reality is we are about to see the ipo season open. What we have seen to date i think is a block market that has , blown upy active readily by the Investor Base, and really, investors wanting to put money into the market, struggling for ideas and the secondary market and using blocks as a way of finding liquidity and putting money to work. Matt we have seen some stories recently, how are investors looking at it . It seems like from the press coverage ive seen on convertible debt, they have gotten a lot of positive looks. From an insurance perspective, particularly if you think at where equity reference levels are, we are very attractive. From the buyer base, they have had almost a scarcity of supply, and if you bring good quality credit to the market, you will have a good response. Matt absolutely. We are going to keep you with us. The head of ema the head of emea ecm. Goldman sachs losing staff overseeing 10 billion in assets to rival banks. Ubs is one of them. It has poached a team that manages 6 billion worth. Another which looks after about 4 billion with is leaving for public. Our chief finance editor joins us to talk a little more about this. When i talked to guests, especially when i talk to their pr people, this is the kind of thing people in the industry are whispering about a lot. Absolutely. Especially in the Wealth Management space, this is an area where everybody, not just Goldman Sachs, not just ubs, everybody sees it as an increasingly core part of their business and an increasing profit driver because so many other pieces of the business, the prophet stories have been somewhat questionable. Matt it is hard to make money anywhere else. We see everybody diving into Wealth Management, notably Goldman Sachs. Matt why i mean, Goldman Sachs is at least in new york, the pinnacle of the industry. Why are they leaving Goldman Sachs to go to other places . Are they not getting paid enough . Is the pantry not very nice . Must be the pantry. Obviously, it has to do with whatever money they were making in whatever piece of the pie they will be taking home. Again, unlike, lets say, in dealmaking, you know, wealthy people, people whose money the potential customer base, they dont follow the brand necessarily. They follow their Relationship Manager. If their Relationship Manager goes from here to there, then the Goldman Sachs cachet does not have as much power as it might to a Company Going public wanting to do a deal. Matt right, High Net Worth individual, and that is why it is a problem for them. Right. Matt i think that was one of the primary concerns, when he leaves credit suisse, that is why they had him watched because they do not want him taking any more business. They dont want him poaching their Relationship Managers. That was the heart of it. Matt thanks so much. This is a story we will obviously continue to cover. Our Senior Finance editor here in london. A surprise bid for a rival has launched one of the biggest european banking deals in a decade. A lot going on in this industry. Will it mark the start of an m a spree in the sector . Remember, Bloomberg Radio is live on your mobile device and the london city area. Tune in. This is bloomberg. Matt welcome back to Bloomberg Markets. Just 30 minutes to go until the start of cash equity trading across europe. You can see we have green arrows optimismof futures, so about the possibility of more coronaviruspite the is really helping the equity trade. It looks like it will help us get a risk on wednesday started this morning. Send hello has made an bid for its smaller rivals launching one of the biggest banking deals since the crisis. Sector hads banking looked set for another slow year of dealmaking, but when company taking the punch, and equivalent of about 5. 3 billion. The last time the industry in italy sought it nearly this. Arge was 2017 throughout europe, banking m a has really fallen off since the financial crisis. Bankers freak will he blame the patchwork of National Regulation and limits on moving money between countries, and it has been especially anemic in italy. Coming virtually to a standstill over the past 30 years with some of the economic struggles in india. Regulators have been advocating for consolidation. They need these banks need to reduce cost and improve margin since they are dealing with intense competition from american rivals and not to mention negative Interest Rates. Dealmaking would be a Welcome Change for dealmakers. It is a topic management teams all across europe will need to be thinking about in the background. Their recognition that scale and our Competitive Position relative to the u. S. Banks is something of an issue over time that we would need to address and consolidation is an answer to that. Now we wait to see if intesas offer does spur others to take the leap. Matt thank you very much, talking about the banking m a picture. Danny points out dani wants out the issues there, especially with banking mergers. What do you think about the m a picture in general . I think ceos in europe are struggling to find growth gannett lee. The Equity Investor debate has forceilling and able to ceos to go down the route of making acquisitions. It comes down to the specifics of the industry you are in and what you are really looking to solve for with that m a activity. Matt where do you see then the hottest area for m a activity . I think it is quite broadbased and difficult to pick up specific themes. I think this is a topline challenge with the Interest Rate environment that we are in. Investors are desperate to see that consolidation happened, but again, it is really cross quarter consolidation that has been difficult historically to do for various political and other reasons, so that is likely to continue to be a domesticonly story, but i think ambassadors are looking across the market and will support any m a that supports growth. Were just talking about the Wealth Management business, which is huge. Everybody wants to get involved, and there is some m a happening there as well. Its really a scale game and bringing that together. Pressure, performance challenges are also driving consolidation where again you are really bringing platforms together, bigger scale and allowing you to take out costs at the bottom line. Matt theres a lot of other franklin and legg mason was a 1. 5 million deal announced yesterday. Do you expect to see more of that . I think we will and i think a lot of that is driven bible markets and equities which active investors are struggling to replicate. If you look at Asset Allocation, we are seeing yes, it is coming into equities, but a lot of the money is going into passive funds, and i think last year was the first time we saw more passively manage money in the market then actively managed. We have seen that crossover happen. Matt how is that going to change the business . We bring it specifically back to our world. From an ipo perspective, i think it makes the Investor Base you are looking to target narrower, and i think it is also important you have a much Broader Distribution Network to address that. And who are the winners in this game . Its at lot longer duration asset players. You are trying to bring them into the ipo story to offset some of the challenges we are. Eeing matt you are doing obviously syndicate ipos. You are doing convertible bonds but also putting together vehicles, maybe creating products that investors want. Does it make it easier when there are trends like passive investing or esg . I think the esg theme you had on is key, something we have been at the forefront on. I think being able and being it is aboutreally tracking where funds growth is going and into that Wealth Management space, and into the index theme, all of those are places that we need to be very nubile about and thoughtful about and how we can actually address that pocket of money and have a process that can bring them into the ipo story earlier. Matt how is your industry how is your business set up in terms of people, in terms of employees . Are you looking for more people to work in ecm . I think if you look in the european time zone, i would say we were very much in a consolidation period at the moment. We had a very strong run 2012 through 2017. A lot of that was driven by the market reopening. A lot of it was driven by the private equity universe monetizing a lot of their theate equity projects are private equity world is sitting on a lot of cash. If anything, it is probably deploying that cash rather than monetizing at the moment, so i would say we are in a stable to low environment right now, but looking forward we can see the back end of this year and into 2021 actually a pickup in that activity, particularly from private equity. Matt we are going to keep you with us a little bit longer. Toht now, want to get Bloomberg Business flash. For that, we go back over to laura wright. Laura Deutsche Telekom expected operating income to rise again this year. As the german phone company edges closer to a wireless deal for its u. S. Unit tmobile. Evenwill help you gain more market share. Of u. S. Sanctioned a unit pressures Largest Oil Producer for maintaining ties with venezuelas president. Russia says the sanctions will not affect International Relations with venezuela or any other country. Is under an agreement for private space tourism, but there is no price tag yet for the orbital site. Matt thanks very much. U. S. Sanctions over ties to venezuela. Russia says the sanctions are illegal. This is next on bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. You can see we are looking today at futures higher on optimism for more stimulus from beijing to fight the coronavirus. Yesterday, we had the coronavirus news from apple that push markets lower, concerns it would hit revenues as they threw their targets out. Today we have hopes for optimism assets higher. Which pushes risk it is all about the virus lately. It has become kind of the new trade issue. It also affects the oil market closely. Wti climbing now above 52 a barrel as supply risk shifts the focus away from virus driven demand concerns, that is as the u. S. Sanctions units of russias oil producer for maintaining ties with venezuelas president and its staterun oil company. Meanwhile, Russias Energy minister and his saudi counterpart have discussed the situation in the oil markets. It comes as pressure rises to deepen production cuts for opec and friends. Equity capitala markets u. S. Is still with us. What is your take on the oil market right now . I mean, prices have in down because theres concern about demand, and it does not seem like opec is able to affect anything with its talk of production cuts or even with action. It is just not moving the markets. Know, i think the market is really taking a stance, which is they are going to take a barbell approach. I think theyre hedge is to buy gold and you see gold and you siegel performing very strongly. They have offset that with this barbell approach to equities which is growth, tech, and bond properties, utilities, to give them that dividend yield. Oil, i think, has been more a background story. Matt the idea is demand is going to fall because you have the trade issues, the coronavirus, all just sort of taking animal spirits out of the market. How come you do not see that effect in equities . I think it has been a longterm view that investors have taken. If you look back while we have had these unusually low Interest Rate environments, the right thing to do has been to take advantage of any fallbacks. I think investors are looking at a pretty nice scenario in which inflation is under control, growth is looking relatively solid, and i think earnings expectations have been coming down so you are allowing companies to beat on that basis. Matt we will get back to equities because oil is not really your wheelhouse. When you look at the records we have seen, and ive got a great chart here. 2689 is the number. Let me just pull it up. The chart will mean nothing to you because you work with this every day. How much longer do you expect that to continue . An equities perspective, i think what is unusual from my world is you got the perfect conditions for issuance. Youve got equity markets at record highs. Youve got the volatility index, the vix at record lows. He would have expected to see, i think, more issuance than we have seen, and yet the sequel for europe was lower. Why is that . One is theres relatively little distress in the economy, so you are seeing Balance Sheets and Pretty Healthy places. Theres no need to replace that with you equity funding. On the other side, i say you have this binary approach to ipos. Matt are your clients putting on big hedges . You mentioned gold. You mentioned treasuries. In general, yes at the margin, but the real story here that goes back to the same theme again and again is as long as Central Banks stimulate putting money into the economy as long as the bulk of fixed income assets you can own are negative or practically zero yield, any equity story that gives you a dividend yield is going to be attractive. Secondly, in a world where growth is quite scarce, which is why leadership in the s p market has been so narrow, that will trade at a premium as well. Tot do you expect that continue . We talk about the fed and ecb being on hold. Lagarde is doing her investigation and the fed does not want to get political. Arehe other hand, the risks all to the dovish side. The likelihood is that they will do anything, they will cut both of them. Do you see that happening . I agree, and i think that is equity market supported. We have a u. S. Election toward the back end of this year, which will take a lot of news flow, but if you look back over the last two or three years, Equity Investors have proven resilient to equity shocks, two macro shocks, and the core of that is that the underlying economy continues to grow. This equity rally is seeing multiple expansions, but with enough Earnings Growth to burn that off slowly. I think we are in a benign more of the same environment over the next six to nine months based on what we know today. Matt that is not sound like it is necessarily bad news. We are minutes away from the open, just about 14 to be exact, preparing for a little bit of a rebound today. Pain in the Mining Sector will be shortlived. We will have your morning call with dani burger next. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open and it looks like weve got a risk on wednesday on our hands. You can see futures gaining across the board both here in europe and in the u. S. As well. And optimism for more stimulus from beijing. Lets get to bloomberg first word news. For that, we go to laura wright. Laura the death toll from the coronavirus has topped 2000. The number of people affected worldwide has risen above 75,000. That is as hong kong reports it second death from the outbreak. But good news the number of patients discharged from the hospital is also rising, now over 14,000. China is considering measures to help its Airline Industry crippled by the coronaVirus Outbreak. We have learned beijing is mulling direct cash injections and some mergers. There has not been a final decision on what the bailout package will look like. Hong kong is heading for its first backtoback annual recession. Anthe coronavirus cripples economy already battered by months of political unrest, economists forecast a contraction this year. It would mark a bigger dip and slower recovery than the sars outbreak. In the u. K. , the government will and what it calls the nations dependence on cheap, low Skilled Labor. A new pointsbased immigration system will come into place in january 2021. Skilled workers must prove they can speak english. They will also need an offer for a job paying at least 25,600 jobs as part of the governments pledge to end freedom of movement from the eu after brexit. Eu leaders are getting ready to debate over the blocks budget. The extraordinary summit will never down a sevenyour spending plan. A new time limit has been set and diplomats say negotiations could drag on through the weekend. One issue britains part your leaves a roughly 16 billion hole. President trump has announced a new set of clemency and pardons including a financier who was convicted of security fraud and former illinois governor who was convicted of corruption and trying to sell former president Barack Obamas vacated senate seat, but from sir fire said his 14year prison sentence was too harsh. Global news 24 hours a day on air and on quick pick quicktake by bloomberg. This is bloomberg. Matt laura, thanks very much. Laura wright with your first word news. Lets look at some of the bigger stocks we are watching ahead of the open. A lot of big stories out this morning. Joining us now is joe easton from our equities team. Lets kick it off with Deutsche Telekom. I told everyone in the whole world im not sure i told you i started when two years ago covering dt out of frankfurt, and the sprint merger rumors. Ere rife even then this is sort of the full ending of the story. Yeah, that is something that has been going on for a long time and shares have been doing really well as the deal nears. We are seeing numbers from the company themselves which actually looked quite strong as well, so im seeing analysts at citigroup saying there could be some small risk. Its not huge but looking pretty strong in terms of numbers. This is another boost, really, for the Company Given they have had this amazing news following the news we saw from sprint earlier this month, so it could be another strong day for Deutsche Telekom. It is an industry that is really looking to lift the margins across the sector. Theres a lot of competition. It is not a high earning or high dividend yielding industry. Certainly looking like it could be another strong day for that one. Matt i have to say, i continue to refer back to the stock charts. Ive got it here from 2000, and it is unbelievable, the amount to telecom here over the longterm has really just not moved. They have been stuck at 16 since i was 26. Check out. At one point, they were up, and that was when they bought voicestream and got their 3g licenses, back when 3g was supposed to be this revolutionary mobile phone technology, but since then, they have just been down in the doldrums. Quick that has been going in line with very low yielding industry, very safe. It is the way you see when we see down days and we often see the sector declining for that reason, but probably that is why they are looking for more m a in the sector. You remember the sprint deal we have seen. It is another way for investors to try to get that yield up. As i mentioned, it is a stable industry, but it should be a positive day. Matt lets talk also about iag. It operates British Airwaves airways as well as the spanish yes. It is kind of halfandhalf between madrid and london in terms of their key bases, and iag sold an initial stick to qatar back in 2016. That was big news. You know, a middle Eastern Company coming in for a stake in the main british institution, which is british airways, and now we have seen them increase it. There was actually a rule change recently where they changed the allowances for Foreign Ownership in airlines. I think it was up to 26 , and there is actually a rule in the u. K. That if it went up 30 , they would be required to make a takeover offer for the company, so we would not inspect to see it coming up much further now given it is heading toward that 30 already, but, yeah, it is kind of a little bit controversial in terms of the investment but definitely something i think investors will take on. Matt so they increase their ownership to 29. 1 . It is interesting because it comes at the same time there is speculation, optimism that china is going to start doing some airline m a as well. Airlines are all suffering because of the coronavirus and maybe they will start getting into more european hubs. Thanks so much for joining us. You can get all your equities news by typing first go on the bloomberg terminal. You can also get first word news on your mobile device. The severity and duration of the coronaVirus Outbreak may be unknown, but ubs strategist are confident that the chinese industry will be back up and running by the second quarter. Here are the details of your morning call. Dani i hope you are not sick of hearing about the vshaped recovery from the coronavirus, because that is essentially what ubs is describing. They say when china comes back online, they are estimating second quarter, they will have a sharp reversal. That will benefit ace metals the most because they are getting stimulus into the picture. Thanks very much. Quick morning call there, but definitely pertinent to the green arrows we are seeing on futures right now, pointing to a higher open. The start of cash trading is up next. This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Matt we are just under a minute from the start of cash Equities Trading. Lets get your top headlines off the bloomberg terminal. Coronavirus deaths in china pass 2000, but beijing considers offering even more support to the economy, boosting european and u. S. Equity futures. Supply risks. The u. S. Sanctions a unit of rosneft for maintaining ties with the venezuelan president. As a result, we see gains in wti and brent crude jumping back above 58 per barrel. A sprint to the finish. Finally, Deutsche Telekom sees profit rising, as a companys tmobile unit edges closer to a landmarksealing u. S. Mobile phone deal. We are five seconds away from the start of cash Equities Trading. We have seen green arrows in terms of futures. Lets see how the equity indexes get out of the gate, in terms of the cash trade. 0. 3 , the ibex up 0. 4 andign rising. You have it deals like the iag increase, qatar owning 25. 1 of the operator of british airways. That is the kind of thing boosting equity indexes across europe. Euro stocksroader index up about 0. 4 . Lets take at the a look at the Bloomberg Europe 500 index. There is green all over this pie. Brighter green even in energy, in financials, banks are gaining today. We see Consumer Discretionary stocks rising. Thoserisk onin sectors, or highrisk assets are rising, whereas you see the laggards in defensives, Consumer Staples, and utilities, as well as health care some of the only red pieces of this pie. Lets take a look at the individual movers. Yesterday, we were down on coronavirus concerns. Today, we are up on optimism for more stimulus to help turn that around. You can see we have almost 500 up come 470 stocks are about 96 are down right now. The rising tide lifting almost almost. Hsbc adding the most points to the stock, 600. Reckittownside, you see benckiser and unilever falling. Those Consumer Staples producers are down. Afteran markets are up signs that china may be planning to offer more support to its economy reeling from the virusinduced slowdown. Joining us now is john roe. Thanks for coming on. Let me ask about this. I was talking to our previous guest about this as well. The virus is such a concern, has become the trade war of 2020, moving markets depending on the headlines of the morning. Yet, we are still hovering above record highs for equity indexes. We see a recovery on the csi 300. Are people so long risk weets still and buying, as have this possible pandemic emerging out of china . John i think the combination of stimulus from the chinese government, coupled with the baseline assumption that this is a sharp v still. Q1, we some point during see all of those Chinese Workers not just to go back to work, but actually do more than normal ships to get back some of the lost production and consumption. This is not risk. This is just uncertainty. Nobody really understands this pandemic or the risk of it becoming a pandemic or where it goes from here. There are some really encouraging figures, like in china, down to 100 new cases per day in the province. And some other areas, it is still pretty concerning. Nearly 1000 international cases. And some of those countries, the majority of those cases not clearly linked to contact with going to china. It is those risks and that uncertainty that we feel is somewhat underpriced. If you look at chinese activity, down 40 ,mption property sales down 90 , passenger numbers down 80 , and congestion and traffic down about 20 . This could be a very slow burn. There has been some movement of sporting events from april, which highlights how long this could go on. Matt we saw the mobile World Congress canceled in barcelona, formula one postponed or canceled. And we saw yesterday of course apple throwing out its revenue targets. I think that highlights that this goes beyond chinese coal consumption or chinese property sales to the kind of global businesses that have driven, at least in the u. S. , this rally. What does that mean for profits for stocks . John that is the risk, that you get that disruption that you are talking about with china. It is those complex International Supply chains coupled with the deleverage. In china, they are already using forbearance to help reduce the cost of rent. We are starting to see the impact in areas like european luxury goods as well, where of course the asian market is such a significant proportion of purchases. This is the danger. It is like tipping over. None of these things appear worrying until you start to see those headlines. The apple add line came as a surprise headline came as a surprise. It is a known hotspot from that perspective. Thats what makes it so difficult, is this combination of, if the chinese successfully add stimulus and if we get a v shape, this still looks like a very strong year for equities. We have this ugly, alternative scenario where the return is much slower and in Leveraged Companies with large amounts of debt, which we have globally, you get those spillovers. Matt so how much of the equity rally that we have seen is momentum . Tradersknow, clearly want to buy the dip. We should have known apple was going to have to throw its revenue targets. We knew that they are heavily based in production there. There is a lot of demand for their products there. They still wanted to buy those dips. How difficult is it to break that behavior and how much of that is what we see in the rally . Big today, we have the trend following strategies out there. Those were very positive coming into the year, they were buying equities, adding to that momentum. We saw that the start of january. The news of the general was entirely discounted it despite the response from them. There is not extra capacity left in those trend following strategies to buy from a systematic perspective. The net purchases need to come from the fundamental side. That obviously becomes a lot more about sentiment and it is much more easy for it to be knocked off track than it is when it is those Quantitative Strategies adding to the net lungs. Ongs. T what kind of reverie recovery do you expect . What kind of recovery do you expect in terms of the underlying economy . John more of a ushaped recovery. If you take current levels of disruption and slowly correct that to the end of march, you could be looking at a q on q fall in chinese gdp of 10 . That is a huge contraction. Matt massive. John off the back of that, of course you get the stimulus. Stimulus works when people are back to work. Doing that and a partial lockdown would be less impactful. They will wait until everyone gets back to work until we see the full impact of that stimulus. We could see this rolling over beyond q1. We are looking at a more protracted recovery, as areas like tourism take time for people to regain confidence. Nobody quite knows what the impact will be for confidence in asian consumers generally, Global Consumers in certain sectors and china itself. Matt in terms of the stimulus, people warn they have 2 trillion in fiscal reserves. What kind of firepower do they have . John when it is bad to use firepower is to perpetuate and overleveraged economy growing debt quickly. Short shocks are the perfect occasion to do it. I would agree that they have almost unlimited firepower. Unseen,l about these unintended consequences of Global Supply chains. If you have Companies Say china helps companies there, but you have companies in other countries that have got leverage, then you need their government to come in. We had the south korean president come out yesterday and talk about it being a national emergency. Matt we are going to continue to talk about this throughout the day and probably throughout the rest of the next month as well. John roe is our guest cohost for the hour, head of multiasset funds at legal and general investment management. Covestro is planning an additional 200 Million Euros in savings after an Auto Industry slowdown drove quarterly profit to its lowest since the plastic maker separation from bayer. We will speak to the ceo next. This is bloomberg. Welcome back to Bloomberg Markets european open. We are looking at some decent gains 12 minutes into the session right now. The ftse 100 up about 0. 6 , 43 points. The dax in frankfurt gaining a quarter of a percent. Plans toy, covestro make an additional 200 Million Euros in savings this year after an Automotive Industry slowdown helped drive quarterly profit to its lowest since the plastic makers 2018 separation from bayer. Fourth quarter profit fell 5. 1 , but that was in line with estimates. The market was prepared. Joining us now is the ceo of covestro, markus steilemann. Before we get into your outlook, tell us about the year that was. Clearly, there is a big slowdown in the Automotive Industry. How is that playing out for covestro . Markus good morning, matt. Thanks for having me on the show. Think webout 2019, i delivered not only on the fullyear guidance but also the narrow guidance we had given. I think overall, we delivered a solid year with 1. 6 billion eb itda, a free operating cash flow of the 437 million, we were able to have a return on capital employed. I think it was a solid year in a very challenging environment. Matt right. Year, they are down by about 20 . I am assuming that has a lot more to do with the industry than covestro specifics. Would you say that is right . Markus that is how we look at it. While the market price is always what the market price is, the stock price is what the stock at thes, but if you look challenging environment of 2019, i think covestro has done in this context a very solid job. Because we were able to compensate entirely for the losses in the Automotive Industry by going into the construction industry, electronics industry, but also highgrowth and highmargin business is like the medical industry, for example. It was that, despite the strong headwinds from the Automotive Industry, we were able to deliver a solid 2 core volume growth. Our materials are still in very high demand and that is exactly also how we look at the longterm future for our very sustainably driven overall strategy. And corporation. 2020 lookhat does like . Do you expect any rebound for the Auto Industry this year . Markus i said that earlier and that is part of how we communicate with markets. We try to be as concrete as possible to build credibility because we are in Cyclical Industries and we have industries that we serve that are cyclical in nature. For us, it is very important to look at 2020 from what we know today. One to 1. 5deliver million ebitda ebitda. Matt what do you expect about a Market Recovery . When do you think that will happen . Markus we know there are people out there that bank that said last year in the second half. I am lacking a little bit of fantasy to see where the major Growth Drivers for 2020 and the Automotive Industry should come from. Look at consumer confidence. Look at how many cars are still sitting on stock. And on the other hand, look at what we currently see with regards to the coronavirus. That is why we are looking at the year, particularly the Automotive Industry, currently with a lot of caution. That is built into our guidance. I would not expect that we would see a quick recovery. Also, not to watch the end of 2020. That is our current view that we have built in into our guidance. Matt as a result, you are delaying projects, postponing investments, saving money. We talked about this 200 Million Euros in Additional Savings that you found in 2020. Will you invest in your own shares with that money . As the price falls, and i think you just finished a buyback program, do you put money back into covestro . Markus well, we have a lot of opportunities to let investors participate in our corporations success. Also asked atave last years meeting that we get the permission for a Share Buyback program. Our clear priorities that we weather through this very challenging environment. This very challenging environment has been tackled by the management in striving for more efficiency and effectiveness. 2017 start,to the the longterm effectiveness and Efficiency Program which we delivered this year, 250 Million Euros of additional ebitda. We also entered into a shortterm Savings Program and cut back on our investments for the next two years in the magnitude of half a billion euros. That is what we are focused on, so we are close to our customers. About thee talk longterm Strategic Development of our corporation. That is of absolute priority to us. Matt what about m a markets . You are putting money aside and i know you have been looking for encodings, adhesives, specialties in that area something to do. Have you found any targets . Do you think declining prices in industry will help you find one . Markus how can we, through m a, create value . That is the highest priority. We have a lot of interesting targets on our short list. It always takes two to tango. Polymers in the polycarbonate area are in general perspective of interest to us. There is currently nothing to report on that. That does not mean that we are not active, but it only comes out on the day it comes out. Matt thanks very much for joining us, appreciate your insight. Covestros ceo, dr. Markus steilemann joining us after earnings. We will bring you the stocks on the move so far this morning, including Deutsche Telekom. The german phone Company Expects operating income to rise again this year, as edges closer and closer to a landmark wireless deal with sprint. This is bloomberg. Matt welcome back to Bloomberg Markets european open. We are 22 minutes into the trading day and still looking at green arrows on optimism for more stimulus to come out of beijing to fight the coronavirus. Lets get our top individual stock stories for now. Starting out with the Plane Company iag, with qatar taking more of more than a quarter of the companys share. The ceo departing as well. Now that they have a quarter of the shares, they get their say on some of the issues like iag would have to go to them to improve a name change, for example. Ageas falling. They are the belgian Insurance Company reporting week earnings. They are saying that there fourthquarter missing net income estimates. The company talked about some of the coronavirus impacts, saying that in the asia business, they might feel some of the pain from the indirect consequences of slower Economic Growth and market activity. Finally, Deutsche Telekom, a Strong Quarter of earnings, saying that their operating income is going to rise this year and getting closer to finally sell their u. S. Tmobile business to sprint. For those who have not yet heard, matt miller started covering this company 20 years ago as a reporter. If for no other reason, a good stock to keep your eye on. Matt i actually flew to seattle with that then ceo when he bought a company that became tmobile. He throughout the first pitch at a mariners game as well, which is pretty cool. I think you are dating yourself. Now you have been there for nearly every deal for Deutsche Telekom. Matt thats right. I will talk to the ceo later today. Thanks very much for those stock movers. Here in the u. K. , getting back to a domestic story, i am here for the week, which i appreciate. The government is going to end what cause the nations dependence on cheap, low Skilled Labor. A pointsbased immigration system will come into effect from january of 2021 as part of the governments pledged to end freedom of movement from the eu after brexit. Jobs at economy created an impressive pace in the Fourth Quarter, defying the political turmoil from the impending exit from the eu. Cpi is expected to show a pickup in inflation driven by Higher Energy costs. Theres a lot to talk about but i have john roe here. Hes the head of multiasset funds at legal and general investment. The most fascinating thing is what the new budget is going to look like. We have a new chancellor coming in was going to offer a new budget i think in march. The speculation is that there could be some extra spending in there. What do you think . John i think that is exactly why the old chancellor left. It is very clear Boris Johnson wants to capitalize on the votes he won in the north and midlands. That impart is making sure we equalize some of the inequalities. That very clearly looks like the direction of travel for his conservative government, so moving away from some of the traditional conservative policies. And may not even be that the fiscal rules only announced a few months ago, that they even apply going forward. Even if they do keep them in place for 2020, it is very likely they will remove them soon afterwards because they have these ambitious spending plans. They talked about the low skill labor. They want to phase out the selling of petrol and diesel vehicles. All this seems to be a drive to try to encourage the monetization of Technology Driven activity in the u. K. So i a lot of activity comes out of universities, but historically, it has not created a lot of larger tech companies, tech unicorns, etc. You talk about innovation, automation. You bring forward when you bring electric vehicles, you might encourage innovation in that area. It feels like a coordinated effort. Matt it is absolutely fascinating. We will keep you with us. We want to talk about esg with you, a huge topic. This is bloomberg. Matt welcome back to Bloomberg Markets european open. I am matt miller here in our European Headquarters in london this week. Lets take a look at the stories so far in terms of the equity indexes or the broader equity indexes. Stoxx 600 here looking at gains. You can see that most of the Industry Groups are rising today. Auto parts, interesting, we just talked to covestro, which is up today. E bit auto parts and automakers are down as a group, insurance is down as a group, but we see gains for basic resources, as the underlying prices go up. Health care. I did see some health care losers. Financial Services Also gaining as we see more m a activity. Lets get the bloomberg first word news. The death toll from the coronavirus has topped 2000. The number of people infected worldwide has risen above 75,000, as hong kong reports its second death from the outbreak. The number of patients discharged from the hospital is now rising. China is considering measures to help its Airline Industry crippled by the coronaVirus Outbreak. Ulling direct cash injections and mergers. There has not been a final decision on what bailout package will look like. In the u. K. , the government will end when it caused the nations dependence on cheap, low Skilled Labor. A new pointsbased immigration system will come in effect from. January of. 2021. They will need an offer for a 25,600ing at least pounds. In brussels, eu leaders are getting ready for days of debate over the budget. The extraordinary summit will nail down a sevenyear spending plan but no time limit has been set. Diplomats fear negotiations could drag on through the weekend. One issue, britains departure leaves a roughly 60 billion euro hole. Hong kong is heading for its first backtoback annual recession. That is as the coronavirus cripples an economy already battered by months of political unrest. Economists forecast a contraction of more than 1 this year. That follows a 1. 2 decline for 2019. It would mark a bigger dip and slower recovery than from the sars outbreak. 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 . Matt thanks very much. Aura wright in london with your first word news. Esg is one of the fastestgrowing areas of asset management, thanks in part to demand from Pension Funds and other large investors who want to do something right for the climate. About 31 trillion was held in sustainable or Green Investments in 2018, up 34 from 2016, according to the Global Sustainable investment alliance. About 31 trillion wassuch demae specter of greenwashing, where misleading descriptions create an exaggerated image of environmental responsibility. A lot of people are asking what exactly is esg and are you really investing in it, even if you think you are . John roe is here. It has been a huge trend, obviously. We talk about it now every day. Is it standardized enough to make sense . Are you finding that there is a lot of greenwashing out there . Standardized. T when you look amongst the large providers of data, they dont agree with the scoring of individual companies. You can find a company that in some ways looks great, like tesla. On the g side, it has historically been a bit tricky. Even the scoring is not consistent. Is it about omissions, their role in the overall supply chain of carbon . Exclusions,ing, engagement place probably a more important role. That theagement largest asset owners can put real pressure on companies to change. We saw that with bp. Matt i think it is fascinating that people will buy British Petroleum for esg purposes, right. Because you would think they are one of the biggest problems when it comes to e. Say, i justuld wont invest in oil and gas at all. You could say oil and gas is a necessary part of the economy for the next 1030 years. I want that oil and gas to be produced in the most ecologically friendly and responsible way possible, through engagement and efficiency and through ensuring the environment is damaged as little as possible. In other cases, we have seen some very large Oil Producers who have not really engage effectively on esg. We have seen some companies actually have future exclusion lists, where we name, shame, and exclude Certain Companies from portfolios. Matt you are very active in this . John engagement side, for example. Y theyset managers save are very involved in this. Only 25 of climate related resolutions actually supported a gm. That is quite a remarkable number. Matt you are saying legal and general is literally putting its money where its mouth is. I want to talk about something else, also an acronym that a lot of my team found interesting. You talk about trend following. Are something that not a lot of people have heard of. Nichet is a fascinating of the industry. Dani burger is really into it. Environment,ding what is that . John a lot of that is related to commodities. Matt they have done well and commodities have done poorly, right . John exactly. A trend a lot of ct following strategies. One genre are basically following what has recently been done well and systematically buying into that momentum. They have done extremely well this year because they have been long equities come along bonds, and that combination has turned out to be year to date a very effective mix. They have been outperforming fundamental investors year today on the basis of this trend following approach. Matt what do you do to mimic that . John we do use of some trend following strategies within our funds. Trend following strategies using a lot of futures, derivatives. Thats not right for all clients. You can build in similar strategies that effectively buy equities as they rise, by bonds as they rise. We put certain tweaks to avoid buying into bubbles. We tend to get performance at the same time as those broader, trend following standalone strategies. They help us deal with our behavioral biases. It was quite hard to going into the year, with equities having already risen, to convince yourself that we will now go and purchase them. Having strategies that more systematically buy into momentum could be more effective. Matt it has been an awfully long Economic Cycle. How much longer does it last . John the narrative will change dramatically over the next three months. I think the talk of late cycle will dissipate and we will go back to talking about a midcycle pause, lack of inflationary pressure. I think the whole industry and narrative will change off the back that. The coronavirus will provide a type of relief in that area. I think we will go back to, we are nowhere near the end of the cycle. It will not be 2020, 2021. Will understand why that is there but we need a lot of u. S. Inflation protection. The one thing that would change that narrative would be an unexpected pickup in u. S. Inflation. Matt john roe is the head of multiasset funds at legal and general investment management. He will be continuing the conversation with us on Bloomberg Radio at 9 00 a. M. U. K. Time, so i encourage you to tune in if you are in the city. You can listen to it on london dab Digital Radio. We will bring you some of the stock mowers this morning, including covestro. The Company Planning an additional 200 Million Euros in savings after an Auto Industry slow down that it does not expect to end this year. This is bloomberg. Matt welcome back to Bloomberg Markets european open. Right now, 42 minutes into the trading day. We are looking at gains across European Equity indexes and still looking at gains on u. S. Futures as well, on optimism that beijing will come through with even more stimulus to fight the coronavirus. The economic slowdown related to the coronavirus. Lets get to our top stock stories right now. One of the biggest losers in the stoxx 600 today is come party, the spirits maker campari, the spirits maker. They said their Fourth Quarter was weak and their guidance for the 2020 fiscal year is very limited. Prices areagave really going to squeeze their margins. Lt also dropping after moodys cut the rating. It is now one level below Investment Grade. Moodys saying it will be difficult for the margins to improve significantly in the medium so there will be continued difficulty there. Covestro finally, shares gaining analystsing earnings basically characterizing as better than they had feared. The Auto Industry faces a lot of weakness. The ceo said they are doing well and had a good year despite the challenging environment. A negroni are you drinker . Not really but i dont want that to influence where the shares go. Matt on a personal note, i like to drink campari with orange juice. I is where the negron it is at. Wti claims to above 52 per barrel, as supply risks shift the focus away from virus driven demand concerns. That is as the u. S. Sanctioned a unit of russias Largest Oil Producer, rosneft, for maintaining ties with the president of venezuela and venezuelas staterun oil company. Alexander novak and his saudi counterpart held a phone call discussing the situation in the oil market. The call comes as pressure rises to deepen production cuts. Annmarie hordern joins us from riyadh, where a joint Energy Meeting is been held. Where are we now on the issue of deeper cuts . Is pressure on board . Russia on board . Good morning. That is still the question everyone is asking and we do not know yet whether or not russia is taking into account what the opec plus Technical Committee suggested, which is a cut of 600,000 barrels per day. It could potentially be around that target or a little bit more. Many are expecting something on top of that 2. 1 Million Barrels per day they have already agreed upon from the previous opec plus agreement. Goldman sachs is assuming a 500,000 barrel per day cut. You can imagine what the market is going to do if they do not cut. His Royal Highness is in riyadh. He just wrapped up some comments. It was closed to the press. He was asked about the demand story. He says he does not know yet the impact of the coronavirus. What is certain now is that they need to mitigate this uncertainty with supply and demand. He was asked about building consensus. He said sometimes, people just do not get along. I read that as they have yet to build a consensus between riyadh and moscow. Matt when you look at the power of opec, do you see it as diminishing a little bit in light of the coronavirus hit on demand . I think, matt, two things opec plus is struggling with right now. We are going to see a surplus in the first half of this year due to shale. Opec plus is now on top of that struggling with what is going on in china. Of course, china is the biggest consumer of oil and gas. Iea says about 30 will be slashed in consumption due to the impact of the coronavirus. In this quarter alone, they see Oil Consumption declined for the first time in more than a decade. So they are struggling. , as oneould say is opec unit led by saudi arabia, is struggling as a whole amongst opec plus. It does seem that Vladimir Putin holds the cards here. Worlds putin is the energy czar and that is definitely taking place right now. Matt great to get some time with you. Thanks very much. Our intrepid oil reporter on the ground in riyadh following that developing story for us. Deutsche telekom is close to finishing its deal with sprint. This is a deal that has been speculated on for two decades in one form or another. Now, it has been approved. As soon they get the price right, they are going to do it. They say that will add to profit this year again. We will talk to the ceo. For now, the shares are rising. This is bloomberg. Matt welcome back to Bloomberg Markets european open. 50 minutes into the session and we are still seeing gains across the board. Not quite the strength of which we saw earlier. Biggeste will post its budget deficit since at least 1997 to tackle immediate headwinds from the coronaVirus Outbreak, as well as broader growth risks. The deputy Prime Minister, who is also the countrys finance minister, spoke to bloombergs haslinda amin. I think the economy is already feeling the effects of the global slowdown. HaveVirus Outbreak will fairly negative impacts on the Global Economy, as well as on the singapore economy. If you look at chinas integration and the Global Economy, it accounts for a much larger share of the gdp global gdp than our economy is a lot more integrated with chinas. How dyer could it potentially before singapores economy . It depends on the duration and severity of the outbreak. Today, the Global Supply chains are a lot more integrated. Therefore, the ripple effects of what is happening in china will have a critical effect on the rest of us. That is why we think it is important to stabilize the economy. You said during your budget announcement that there is further funds to spend if needed. I mean, are you concerned at all the kind of signal on fiscal prudence you may be sending across to investors if it comes to that . We have th it is because a fiscal prudence that we have these large reserves that we can use. We also have our past reserves it. E ever had to call on before now, the government has been very prudent in the last few years of our term. I have enough fire power deal with this for now. Prior to the budget, Singapore Cut its growth projection to within a range of a contraction of 0. 5 to as high as 1. 5 . How confident are you that the worst is over . That the contraction of 0. 5 can be avoided . Our central scenario is that we will have some positive growth this year. This budget will provide fairly large fiscal boot to the economy boost to the economy. But as i said, it all depends on what happens to the Global Economy in the coming months. That, in turn, depends on how far the Virus Outbreak spreads and how severe it is. Are you concerned about a potential recession . The possibility of a recession is there, it has been said. We must always be open to upsizing and downsizing and this is a scenario we are always plan for. Matt singapores deputy Prime Minister is also the countrys finance minister. Lets get the Bloomberg Business ght. H now with laura wri Qatar Airways is increasing its holding in ia it willg. Iag. It will now own more than a quarter of the stock. The ceo is preparing to leave. The u. S. Has sanctioned a unit of russias Largest Oil Producer, rosneft. Maintaining ties with Venezuelas Nicolas Maduro and its state run oil company. Andmove marks on collation in efforts to oust president maduro. Russia says the sanctions will not affect its International Relations with venezuela or any other country. Matt thanks very much. Laura with your business flash. Duration telecom expects its operating income to rise again this year. That is as the Deutsche Telekom expects its operating income to rise again this year. Joining us now is joe easton from our equities team. Shares actually are not getting that much anymore right now. They had been, but i guess investors may have expected good news today with sprint deal. The stock is trading around the highest since june of 2017. It is only a few Percentage Points getting today. The earnings are quite strong in terms of their european revenue. The german top line is really good, german sales. Some of the other countries that have not performed well recently like the netherlands, romania and Eastern European countries out there reporting strong numbers. That is really important, given that the company has been quite dependent on the tmobile u. S. Unit over the years. With that deal looking to go through, they need to make sure they are getting the numbers in and terms of sales. That is quite a positive. With the stock trading around a 2. 5 year high, there is probably not too much upside left. Matt you are right. 3 are seeing almost a gain today. Why is the sprint deal so important to them . I guess tmobile is there moneymaker, right . Thats right. It is time to cash in on all the positive growth that they have had from tmobile. It is still unclear how much that deal will go for. Deutsche telekom is interested in perhaps renegotiating because sprint shares have declined. It is kind of constantly evolving in terms of how the deal will go through. It is really a way for them to cash in on all the energy and growth they have put into the unit. Matt i will talk to the ceo later. Of course, i am going to ask him, do you need to get a better price in order to make the deal go through . I do not think they want to block or stop the deal, hold up the deal on that issue but he does not want to be seen as overpaying either. Right. s they are trying to make sure they get the best deal for shareholders that they can justify going forward. They have increased a lot of their spending on some of their fiberoptic infrastructure. They are looking to make sure they are spending wherever they can. It is a deal they are positive about so we expected to go through. Matt joe easton there from the equities team. Check out his work on the work of his colleagues typing first to go on your terminal. I am headed over to radio. This is bloomberg. Francine coronavirus deaths past 2000. Hong kong has its first fatality. The coronavirus spurred many cancellations of flights. Turkey has straight rate reduction during rising inflation. Good morning, good afternoon, good evening. This is bloomberg surveillance. Im Francine Lacqua in