Transcripts For BLOOMBERG Bloomberg Markets European Open 20240712

Japans chief cabinet secretary is set to win his partys leadership race, ushering in the countrys first change of Prime Minister in nearly eight years. His shot in the arm, pfizers ceo says it is likely the u. S. Will roll out a vaccine this out of aping stocks twoweek slump and oracle wins the bidding war for tiktoks u. S. Assets. The deal is said to be a partnership, not an outright sale. Just under an hour away from the start of cash equity trading throughout europe and in the u k from bloombergs european futures are positive. Futures and euro stoxx 50 futures. U. S. , but bigger gains of more than 1 across the major equity indexes. Futures rising 1. 7 on the nasdaq. Anna good morning, matt. Nice to be back in the studio. Lets get to the gmm on these markets today. Optimism around the vaccine is certainly something we are dealing with once again and a relief to see. Indonesia to the upside, south korea higher, india higher. Many markets moving higher and the msci asia up. 9 . Virus vaccine optimism. Another part of the risk on move in markets is dollar weakeness. M a, tiktok and nvidia buying arm or gilead and the cancer space. Plenty of m a this morning. We see equity markets in asia moving to the upside and a little dollar weakness. Lets get a first word news update with laura right. Laura oracle is said to be the winning bidder in the battle for tiktoks u. S. Operations after the main rival microsoft announced its offer had been rejected. Sources tell bloomberg the deal with oracle is narrower and appears more like a Corporate Restructuring than an outright sale. Terms are still being discussed. The chief executive of pfizer says it is likely the u. S. Can deploy a shot to the public before the end of the year. Speaking to face the nation, the pharmaceutical giant said it is dependent on Regulatory Approval a good chance of knowing the efficacy by october. The uks justice secretary warned he may quit over the brexit plan but speaking to the bbc, he says it hasnt reached that stage yet. The controversial law heads the parliament this week. Boris johnson is facing a growing rebellion over plans to unilaterally override parts of the divorce agreement already signed with the eu. Israel is imposing a second nationwide lockdown starting friday. Netanyahuser government is brushing aside appeals from the Business World and the religious community. Coincides with a major holiday season. Restrictions will remain in force for at least three weeks. 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. Right in london with the first word news. Lets get into the markets with laura cooper, bloomberg mliv strategist out of london right now. Laura, when you look at the hopes for a vaccine, does that mean we are going risk on . Is that how it goes these days . Laura it is interesting markets have dismissed this back to back weekly declines already and that is based on the usual suspects vaccine optimism. I think the question at this point is whether we are going to see this rally return. We are seeing froth come off tech stocks. To leadershipd transition because we are seeing a small cap the small caps gain traction and when you look at the magnitude of the corrections seen in the s p 500 over the past two weeks, it is in line with the magnitude we corrections in the last decade. That points to the correction easing for now but at the same time, i would say the risk ahead for this week is all around central banks, notably the fomc wednesday because if they do strike a less dovish tone, then markets expect, then we could see equities on the back foot again so it is a crucial week ahead to determine the next direction for stocks. It is interesting, Goldman Sachs and Deutsche Bank both suggest the u. S. Stock selloff may be nearing an end. When we hear those views, what is the justification for thinking that . Tech only rallies so far and can only pull back so far . Those who are optimistic, what is the reason, do you think . Laura when we look at the underlying conditions that have theylled stocks higher, havent materially changed. We still have exceptional accommodation, vaccine optimism with headlines coming back, and we are still seeing signs of the Global Growth recovery still gaining traction albeit at a slower pace. Those things are still supportive of stocks and when we look at the u. S. Market in particular, declines have been concentrated and a relatively small handful of stocks. Only a quarter of the s p 500 has declined by more than the index and that is largely in tech stocks so what it does tell us is this was a muchneeded correction in terms of stemming some of those frothy valuations of tech and that could lead the rotation trade into discretionary materials, the energy that has been battered if ultimate conditions remain in place. Matt we are seeing gains in be unrelated,ay but we are going to get a new Prime Minister i guess in formally today, which will be confirmed on wednesday. This is your mliv question of the day can a new Prime Minister put japan back on the investor map . Laura what we are hearing is that it is a case of the transformation from abenomic. That the ultra easy monetary conditions will still remain in place and is likely to do even more, even if taking on more debt. On focus that investors have japan now comes after Warren Buffett took positions in five Trading Companies in late august. That has refocused investors to that area. That could potentially see more propelom foreigners and foreign appetite more and really, japan is seen as a value play. Stocksconsumers, energy that Warren Buffett has targeted. That could propel the stock index further. We are going to see a Material Change in terms of policy given this leadership transition. Will it proved to be if that is the direction of travel. What about oil price . We see oil prices a little further up this morning, but this was supposed to be the week where opec meets to celebrate 60 years of what theyve been doing in the oil market, but maybe the market is not tightening in the way opec had hoped for. We saw oil now, prices slip below 40 a barrel last week and oil has been driven largely by supply, whether with opec beginning to curtail some production cuts, whether that could actually impede the price recovery, but focus is now shifting back to the demand side and the fact we are seeing signs of a sluggish demand. When we look to china, their demand is stalling and theyve been a bright spot for the recovery. Crucially, this week with allplus, the iea, they are providing updated forecasts in terms of the direction so that could certainly propel this nearterm direction for stocks. The curtailment of opec, are still working. They will give indications on whether they want to extend and whether certain markets like the uae, whether they are continuing to participate in their cuts. All of that information will provide nearterm direction for the oil prices. Anna we knew you were talking about oil. Laura cooper, joining us on a host of subjects. Coming up, vaccine optimism. Pfizers ceo says the u. S. Will likely get a vaccine to the public by the end of the year. We will discuss that next. This is bloomberg. Matt welcome back to bloomberg market the european open. 48 minutes from the start of cash trading. Lets get the Bloomberg Business flash with laura wright in london. Laura the semiconductor industrys largest ever deal, arm foras agreed to buy 40 billion. Over have to deal will be paid for in stock and softbank will see they bonus if arm meets targets. Regulatory approval may prove challenging. The deal needs sign offs from china, the u. K. , eu, and u. S. China is tightening rules on the finance arm of its sprawling conglomerates, the latest attempt to curb risk to the industry. Requireons will licenses for nonfinancial Financial Companies that do business across at least two financial sectors. Gilead has agreed to acquire premium for the maker of a promising Breast Cancer development. The Company Plans to file for full approval of the medicine later this year. That is your Bloomberg Business flash. Anna pfizer has injected optimism into the race to find a covid19 vaccine. The ceo has said it is likely americans will get a shot before the end of the year, a shorter timeframe the most Public Health officials have suggested so far. The ceo spoke on cbss face the nation. I cannot say, but i think it. S likely scenario we started manufacturing and have manufactured hundreds of thousands of doses. Just in case, we have a good steady readout and the fda feels comfortable, but we will reap be ready. Anna the are joined by the deputy cio at totem. Good to speak with you. Focused, as any investor is come on the rate of infection but no doubt hospitalizations. What is going to be crucial from an investor perspective as we go into the winter in the Northern Hemisphere . I do think it is important how the virus threat continues because it is a bad time for the backts if we have to go into lockdowns in major economies, but also emerging markets. This is a situation that needs watch closely. Data, i think investors will watch closely because times seem signs seem to be better than expected, but this could be and we will see what follows, but these are important points. Tensions areina around, but clearly, investor will be focusing on the evolution of the virus. If we get a vaccine that works, how much room do you see to rally in stocks . Tatjana i think to some extent, there are already a lot of hopes priced into the markets. There will be more upside if atial coming from vaccine is found, but there is still so much uncertainty, it will be hard to estimate. Today, it is very unclear for everyone, is there going to be a vaccine . Is it really going to be effective . Onhink it will depend a lot the timing and on the certainty investors get those rounds of questions. Anna how quickly can it be distributed and where, as well. How will tech stocks respond when we get something definitive on an effective vaccine . Responseee a kshaped from the tech sector . Some stocks bouncing back, but others that have done so well during the pandemic retreating a little to make way for cyclicals . That if i do think there is certainty, there is room for stocks that have been beaten badly to recover and to recover. You might see tech stocks, because tech stocks, the big ones, the faang stocks in the u. S. But another markets, theyve profited a lot. Theyve been the ones who were supposed to take advantage of the lockdown and when markets rebounded, you could see they were lagging behind, but what happened was Retail Investors it is time for me to buy google, apple, so on, but i think tech stocks will continue on a positive note, but i think in a moment where it is clear we have a vaccine, other sectors are likely to take more advantage of the economic hopes. In those prices and other sectors are beaten a little bit too much. Matt people have suggested maybe pricetoearnings isnt the way to look at valuations right now. Do you have a better measure . Do you agree or disagree . Tatjana well, we personally at tobam dont look at valuations. We are more interested in looking at markets in terms of risk concentration, so basically if you look at markets, what you can notice is we are at an extreme level of market concentration and you can see this across the board. It is most pronounced for u. S. Markets, emerging markets, and what i find frightening about what we have at the moment in terms of risk concentration is on one end, it is high sector concentration but it is also high idiosyncratic concentration because you have a few big stocks. From an acid allocating point of view, it is something i would Asset Allocation point of view, it is something i would find concerning. That is something i think is something that investors today perceive more and more and they start to think about how to correct in their portfolios and reallocate, and expend their assets. Matt you will stay with us, Tatjana Puhan is the deputy cio at tobam. She is our guest cohost. Coming up, we will talk strategy, including why diversification is the name of the game right now. This is bloomberg. Matt welcome back to bloomberg market the european open. 38 minutes into the session. We are looking at gains, cac futures up. 7 , dax up a little more than. 5 . We are getting confirmation candidate has won the party vote. There will be an official vote from the rank wednesday, but they typically follow their leaders call and who should be the successor to the current Prime Minister shinzo abe. Ets get back to Tatjana Puhan investmentes to philosophy, diversification is at the heart of your strategy. Tobam has created its own measure of diversification to capture risk premium. Talk about it. Tatjana the core of the measure is the idea that everyone has been talking about diversification, but no one has found how to measure it. If you want to diversify, you hasld know tobam developed the diversification ratio comparing the risk of the portfolio if you were to sum up the single weighted risk of every asset and compare them by the overall risk of the portfolio. What you can see is that if you are looking at different markets, you can remeasure a degree of diversification the markets have and even Say Something about the independent effective risk factors the portfolio is exposed to. Anna and we are just looking, or are going to be looking at live pictures coming to us of the location where this voting has been taking place in japanese politics. I wonder, can you link your strategy and how it deals with what we are seeing in japan . A new Prime Minister being elected . Pictures,ting live the elected leader of the ruling ldp party by overwhelming majority, we understand. How does your portfolio, your focus on diversification, how does it respond to news . You are not driven by shortterm moves, but the last prime haster of japan shinzo abe been at the post for nearly eight years. This is perhaps not a short to move. Tatjana indeed, our portfolio at the basis of our portfolios theory, we dont make bets. Were not saying we know the future, so we know how to time the markets in any way. That is why we rely on diversification to play out its strength. To that extent, we didnt protect predicted there would be this policy move in japan so we wouldnt take advantage of changeut whenever happens in correlation structure in the japanese market, what you would see is our portfolio changes. For instance,pen, due to a different policy taken, sectors start to correlate more or less with each other, different stocks correlated differently with the overall market and that is something you would see. As long as the general risk factor doesnt change and the risk factors you are exposed to in that environment, you would expect your portfolio to necessarily change. There is no medium to longterm to reposition the portfolio. Anna Tatjana Puhan, deputy cio of tobam. Thank you for joining us. Interesting to get the link between the news flow this monday morning and that longterm strategy around diversification. , ldp party by overwhelming majority japan. Votes fors are 377 suga. This is bloomberg. Welcome back. 30 minutes until the start of the cash Equities Trading in europe. Futures suggest a little upside. Central bank watch this week. Lets look at what is coming up. Wednesday, the fed holds its last meeting before the president ial election. Expected to keep policy flexible. Will also get brazils rate decision. The boj decision coming straight after the news we just broke out of japan. See a rate cut after an annualized in the second quarter. Friday, further details from the bank of russia, which has already published a draft guide from 20212023. The Central Bank Says Monetary Policy will remain loose for a long time. Matt lets get your morning calls. Withng us is Juliette Saly the ecb out of the way last week. We are looking at other catalysts and analysts saying that some of these things could affect the euro. Juliette Goldman Sachs saying that with the ecb policy decision out of the way, they are looking undervalued and ising their longterm target one dollars 32 the dollar. 1. 30 tohit target is the dollar. It could hit 1. 25. Saying that the euro remains under own. Target,ed the 12 month 1. 25. Anna you are following a host of m a stories. Nvidiak following the deal. Juliette we remember when softbank bought the chip designer arm, now selling it to nvidia for 40 billion in cash and stock. At one point, they were up by as much as 10 in the japanese session. This also on news that the company is considering taking the company private. He has been looking for a management buyout for around five years. In singapore, they say the privatization could be the last arrow in the quiver. Also seeing that a management led by outlook is feasible because of asset sales and share buybacks. You can see how big the market cap of softbank is. Anna Juliette Saly with some of the research she has been following and the market moves she has been following. Sticking with news from asia, suga wins hishide party vote. He will likely succeed shinzo abe. Japansat the legacy of longestserving leader. Arrow asot his first he started his second term, his liquidity campaign of massive bond buying. It was accompanied by direct Government Spending on critical infrastructure. The challenging third arrow aimed at structural reform. Getting more women in the workforce to nurturing a tourism boom. Doors open to foreign investors. Reformsr big bang missed the mark. They did break the back of deflation but like the fed and ecb, it has not been able to reach its 2 inflation target and keep it there. Government spending did spur growth that pushed down unemployment but also left japan with the highest debt to gdp ratio in the world. What many consider abes biggest misstep, an illtimed tax hike right before the pandemic hit, leaving the next Prime Minister to fire his own arrows to lift the economic prospects of a nation. Matt great explainer by Kathleen Hays on abenomics. The ruling party in japan has chosen, as expected, Yoshihide Suga, to be the new leader. Onwill be formally elected wednesday, tasked with leading the nation out of the pandemic. Still trying to do anything he can to bring about inflation and growth. Ema, andrkets, International Securities at musg. Let me first get your take on abenomics, the effects of that. Was it successful . What do you think of the attempt . There are lots of ways of looking at it. If you take governor kurodas comments generally, it was about changing the psychology of the household in japan in relation to deflation. Certainly, there is evidence they were definitely moving in the right direction. Had before covid hit, japan 39 months of consecutive positive annual inflation, the longest run since the bubble burst and we had deflation for the first time in 1995. Progress was made. Gdp,f course, debt to other measures now, you could make the argument that not much progress has been made. Perhaps the fairer measure is to look at where the economy was before covid hit. There was evidence that abenomics made progress. Anna do you expect a continuation under Yoshihide Suga. He is saying they must continue abes efforts to overcome the virus crisis. Obviously, the virus is the immediate focus. S to lookect suganomic different from abenomics . Especially because the virus background is so different. Derek it could do, eventually. Suga sanlicy, perhaps could be more conservative. I think right now, as of today and the next couple of weeks, couple of months, i think it is going to be all about policy continuity. The one key variable that changed and remained changed throughout the entire period of abenomics was a week japanese was a weak japanese yen. From today, it is down 20 before abenomics. They do not want to change that key dynamic because of course that would be very disinflationary or deflationary. I think the message that sugasa abenomicsg right now, will remain in place. Governor kuroda, when he speaks after the policy meeting on thursday. I would certainly expect to see a message with him as well in terms of the relationship of the government. Matt we think of the negative rates, the asset purchases by the bank of japan as the first arrow in the quiver of abenomics. But, the bank of japan is independent like western central banks. How serious are they about that independence and how much can kuroda be expected to do what suga wants him to do . Derek they are independent, but parts of the abenomics structure put in place was the statement in early 2013 emphasizing the strong working relationship that would take place between the government and the Central Bank Going forward. That has been integral to the Monetary Policy plus fiscal policy combination. Given what has happened in terms of the degree of stimulus put in place post covid, that relationship is integral. Formerly, the bank of japan is independent. The policy framework required makes it imperative that they work extremely closely together. Anna i was reading some comments at the chief economist at bloomberg over the weekend, he was talking about how the unconventional has become the new conventional and Monetary Policy, not just in japan but globally. Your outlook for the yen, because abenomics has been successful, you suggested made weakening the currency. In the yenee a move driven by the change in leadership, but more by risk appetites and response to the virus . Derek so far, that policy stimulus has been successful. The announcement right now of sugasan winning, there has not been the slightest move. Dollaryet has been very tight to dollar moves. Key toket drivers is dollaryen at the moment. Covid has changed the dynamic that was very favorable for a weaker yen. That is the collapse of global yield. The policy framework of the bank of japan is now consistent across all central banks. It will be much more difficult for that to keep the yen week Going Forward. The risks are to the upside. San starts to make slight changes like the consumption tax comments last a policy sense of Going Forward is likely to reinforce upward pressure of dollaryen. Assuming our broader view on the dollar is also correct, which is dollar depreciation. Matt what does a stronger yen mean for the japanese people . They can buy more stuff, but it is harder for them to sell their things. Are they as much of an exportrelated economy such as germany . Derek absolutely not. In gdp terms, people often think japans exports are huge. They are actually not. In a lot of the period since the bubble has burst, it has been more dependent on exports. From a gdp perspective, it is certainly becoming less important. Yenl, it is crucial to keep stability. My forecast is a reflection of the broader dollar move as well, on a tradeweighted basis, i dont think the yen will be disruptive in terms of dismount in terms of domestic policies. The risks are there in uncertain if it startstainty to emerge, and that from an inflation perspective is unproductive. Matt derek, to get some time to get somegreat time with you. We have learned some lessons about the japanese economy at a time we need to be thinking about it. Thanks so much for joining us. Coming up, vaccine optimism is also a huge part of what is going on in markets. Says the u. S. Will likely be able to get a vaccine to the public by the end of the year. This is bloomberg. Anna welcome back. 15 minutes until the start of equity trading for this monday morning in europe. Futures suggest a little upside come up half a percent on europe stocks 50 futures. Cbss faceking to the nation, the ceo of pfizer says it is likely americans will get a shot by the end of the year. That is a shorter timeframe than most Public Health officials have said so far. Restarted a study about their vaccine after it was paused. Update, samith an who sally, sam fiselle, leads our coverage. How much have they given us more insight into the timing around a vaccination . Sam i dont want to get too hung up on timing from ceos, frankly. Oftentrials, as they prevail or caveat, are called event driven trials. You have to wait until you get a certain amount of infections. Anyone is basically guessing and estimating. Based on what we know, if astrazenecas trials and the rest of the world restart. It only restarted in the u. K. Then it is possible that they get enough data to get an approval by the end of the year. Matt approval. To quickly will they be able ramp up production of these . How many millions and billions of doses will we get . The we have been tracking kinds of things that these guys have been saying regarding the number of doses they will be providing for each country. Thatzeneca have suggested they will have upfront doses, not necessarily in 2020, but upfront doses of close to 1. 2 billion. I dont expect them to be able to deliver that this year. Pfizer company sort of numbers adds up to about 300 million doses possibly into the first quarter. Approved of having an vaccine for the population is a little bit stretched. Any will be potentially approved vaccine. If it is there, it would be for some members of the population, not all. Anna i have heard some of the logistics, this sort of airlift planning that needs to take place. Tell us a little bit about appetite for a vaccine among populations. I was reading a piece by cassis nstein,en by cass su the u. S. And the u. K. , 30 of the population saying they would hesitate taking a vaccine. Sam you know what, your guess is as good as mine. When you look at what is going i mustocial media, and profess that i dont have access to all conversations going on, but you do feel that there is a lot of information that is not complete. I dont want to call it misinformation. That is being bandied about. I expect this side effect issue that astrazeneca suffered, it is not it is normal that they are not detailing at all. But that is likely to add a little bit more fuel to some of these worries will have. Governments have to act responsibly and effectively to try to get people vaccinated. That is their job then, not the peoples jobs. Matt you have to get a lion share of the people to take the vaccine. If there are too many antivaxxers, it wont work for all of us. Sam there are lots of people who have reasons, past experience, issues of health, who do not qualify or do not want a vaccine. We have to listen to people when they have that view. At the end, it has to be a discussion they have with their physician. Thanks so much for joining us. Azeli talking about the possibility of a vaccine. Minutes away from the start of cash trading. Here stocks next including submitting offers. This is bloomberg. Anna welcome back. Seven minutes until the start of cash Equities Trading. Futures pointing to the upside for europe. U. S. Futures also point higher by more than 1 . Nasdaq futures looking pretty strong. Lets get to bloombergs dani burger, looking at some of the stocks that could be on the move. Dani as you were just discussing, astrazenecas trial resuming for their vaccine. That news over the weekend. In terms of what effect it could have on the stock, astrazeneca did take a hit last week when it was announced. At it could be more of just change in sentiment that could boost astrazenecas share price, along with the news that pfizer says we can expect a vaccine by the end of the year. Maybe look at other people focused on a vaccine to rally today. It hast has confirmed submitted a bid for borsa italiana. We learned that Deutsche Boerse had also submitted a bid. Euronexts deal is valued at around 4 billion. There is no certainty, they say, whether this will lead to a transaction. Four bids were today. Jd weatherspoons chairman tim martin set out a press release today bashing media and the Scientific Community that has said pubs are unsafe, and people are making bad decisions based on what they are seeing in the media. Notng that pubs are dangerous places. They have given out some stats saying there is 66 cases of coronavirus among their employees but they do employ 44,000. They are saying, we are safe, clean, please come visit us. Matt they really want you to go to the pub. I usually want to go to the pub, but not on monday morning. The market open coming up next. Futures pointing higher on vaccine hopes. You can go your own way go your own way your wireless. Your rules. Only Xfinity Mobile lets you choose shared data, unlimited or a mix of each. And switch anytime so you only pay for the data you need. Switch and save 400 a year on your wireless bill. Plus, get 400 off when you buy the new Samsung Galaxy note20 ultra 5g. More voluminous hair instantly. All it takes is just one session at hairclub. Introducing xtrands. Xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. Theyre personalized to match your own natural hair color and texture, so theyll blend right in for a natural, effortless look. Call in the next five minutes and when you buy 500 strands, you get 500 strands free. Call right now. upbeat music the a minute to go until start of cash Equities Trading. After abe. Yoshihide suga wins his partys countrysring in the first change in Prime Minister in over eight years. Theer ceo says it is likely vaccine will be ready by the end of the year. And, oracle wins the bidding war for tiktok but it is said to be a partnership, not a sale. Matt futures are pointing higher. They have been moving up throughout the session. We are looking at gains on european futures about 0. 75 . About 0. 7 on the heavily traded stoxx 50ks euro futures contracts. Here you see it company left hers the lefthand column, 0. 2 . Gainsready up right away. Climbing on londons benchmark index. When you start to see other indexes open up, we should see similar gains are more. The ibex in madrid up 0. 6 . In paris, up 0. 75 . It is interesting to see, i think especially the ftse. While the pound gains as well. Arecally, these two inversely correlated but we are going to have a guest on i think a little bit later who points out that the pound has been acting like a risk indicator lately. When it is risk on, the pound gains and vice versa. I think that is pretty fascinating. Opening higher. European markets opening higher. Lawmakers set to vote on Boris Johnsons lawmaking proposal. Thestine lagarde says depreciation of the euro has partially offset the impact of the Central Bank Stimulus effect on boosting inflation. She repeated that policymakers must be ready to adjust their instruments if needed, but she did not seem to focused, or maybe not focused enough. Jones, matsueil well matsuo bank. You talking about the pound as may be a risk indicator these days, which is why we see the inund gain as we see stocks ga in london. We have seen the inverse of that normally. How related is that to the brexit brouhaha . The pound gain, a strong currency that correlates with risk. 1. 15,traded down to followed by a global stock market recovery. Toturn, cable trading up 1. 25. I would suggest that the pounds risk correlation remain intact. I would suggest that we remain in the future. There is a solid reason for that risk correlation given the u. K. s status as a financial center. A high proportion of the economy is devoted to financial services. The pound being one of the financial economy globally. I would expect the risk correlation to remain. That said, the the that said, we do see domestic politics perhaps pulling the pound in another direction. To what extent do you think the market is pricing in the possibility that we can know trade deal between the u. K. And its current biggest trading partner . Neil i sense there is an element of complacency currently. The chances of a no deal brexit are elevated from about 10 only a few weeks ago. Probably something in the region of around 30 . Own sense of things is the percentage stands at approximately 5050, quite frankly. Sense it is anything remotely factored into the pound. I think there is a possible chance of a no deal brexit. That being the case, then cable is positioned pretty light, really. Probably a move to small short. Cable market was pretty much flat. Even now, the positioning is nott and certainly reflective in any sense of a no deal brexit, a breakdown in trade relations. Passing through the house of. Ommons and house of lords in aing is not factoring hard brexit at all. We have seen cable move down but the last big figures have seemed to begin to reflect the hard brexit. Matt it is fascinating, i understand if you divorce the brexit concerns or optimism with the moves in the pound and you look at it as moving more on global sentiment, the only question i would have is, we look at stocks, the ftse has gotten absolutely crucified this year compared to all of its national competitors. The s and p is a gainer. Gaining year to date. All the times during brexit that we heard it does not hit ftse stocks that much because they are all global stocks. Crematede ftse gotten while a lot of other major indexes have come back to parity or outperformed . Neil the u. K. Is a very internationally traded economy, very open economy. U. K. ,rtiary sector of the we have a very open business type approach. We see this correlation between stock orchids, internationally traded ftse stock markets and currency appreciation and depreciation. If you are based in the u. K. But you are an internationally traded company, a cheaper arrency is likely with cheaper stock price. This move we have seen from toch, from 1. 15 to 1. 35, 1. 28 and change we are at now. It has reflected International Stocks and the performance of ftse relative to global stock markets. There is a strong correlation with the price of your currency and if you are an internationally traded stock. Exit, it see a hard would be a benefit for internationally traded stocks. You could see sterling plummet on a no deal. Anna that negative correlation. Neil jones, head of currency sales for financial institutions. We need to also talk about what is going on in japan. Coming up, Yoshihide Suga claims an overwhelming majority to become the new leader of the party. He will almost certainly replace shinzo abe as Prime Minister. The challenges he faces. And whether we had to an election. This is bloomberg. Matt welcome back to bloomberg markets. This is the european open. We are 10 minutes into the session. We are looking at gains of seven to 8 10 of a percent. Optimism it seems for a vaccine. Also possibly a little bounce from the drops we have seen. Lets get the Bloomberg Business flash. Laura the semiconductor industrys largest ever deal. Nvidia has agreed to buy softbanks Ship Division for 40 billion. Regulatory approval may well prove challenging. The deal needs signoff from u. S. The eu, and the attempt to curb risk in the 49 trillion industry. Licenses for nonFinancial Companies that do business across at least two financial sectors. Gilead has agreed to acquire a company for 21 billion. A premium for the maker of a Breast Cancer therapy. Treat forms of the disease that does not respond to current treatments available. That is your Bloomberg Business flash. Anna thank you very much. Back to japanese politics. The japanese secretary Yoshihide Suga has been elected leader of the ruling democratic party. They are expected to use the parliamentary majority to install him as Prime Minister in a separate vote on wednesday. Shinzo abe resigned for Health Reasons after serving almost eight years as premier. Bank head ofizuho sales, is with us. Does it move on other things . Neil it is the classic buy the river in terms of dollar yen. The expectations for suga victory were really high. Initiale action, an spike but traded with a more subdued tone since then. My sense is the surprise wouldve been dollaryen well, 1. 05treated down to if you factored in the price, from here, i would suggest the overall trajectory for dollaryen is to the downside. And that is kind of outside of politics. Abenomics, theof reference to it becoming already suganomics already. I would suggest there are factors beyond the domestic little situation that would in time take dollaryen lower. Moved through the vote. The next question, when the election will be. They would probably have a snap election. Potentially in october. This should keep the downtrend into the dollaryen intact. But for reasons beyond the domestic political situation. Matt we were hearing similar comments from Derek Halpenny earlier, one of your competitors thinks, saying that he 100 could be a number that we see in the future. Weaker dollar clearly versus the yen. Is that just because the greenback is losing its luster . Neil i would say there is a lot more to it than that with the dollar side. I would continue with the theme of dollar weakness. Or term is that the risk overall remains intact. Yen is veryo, the much in the premier league of risk aversion type currencies. I am sensing a shift in the flow dynamics. Japan is very much the holder of the world again. Domestically held currency, unlike the dollar, for example, which is held as a global reserve currency. Yen,pan is holding the up,ing yen, dollaryen goes the end weakens. If japan is not selling yen, then dollaryen will go down. A shift inflows, which in the last few years have been very much japan investing overseas. My expectation is that there is somewhat of a shift in that flow. Indeed, recent flows from overseas moving into japan as opposed to a the we have seen how japan buying overseas assets. Because of that shift in the flow of trade dynamics, i am not expecting japan to be the world s major center of domestically held yen the way it has historically. Fdi flowshat is how impact here. What about safe haven flows . What are the relative parents of the relative merits . Neil they are very much up there in the frontier of a been of haventype currencies. I would expect to see the yen outperform. Assets, commodity stocks come , ibling down, we see a crash would expect to see the yen strengthen across the board. The risk off, risk on type trade is most effectively and most efficiently played through crosses as opposed to straight dollaryen. To an extent. On i think Going Forward, then the yen will actually outperform the u. S. Dollar. So we should see downside trajectory on the risk scenario. I think the yen will come back to being the worlds risk aversion currency. Sense is that it will regain leading as the worlds risk aversion currency. Even against the dollar, eight should outperform Going Forward on the severe stock market type of conditions. A breakdown in the correlations because of the dollar. I think that is why it is more efficiently played through the crosses. Yes, a long yen position would prove a solid investment. But i would recommend playing hrough short t sterling, for example, as opposed to the dollar. Matt thank you so much for joining us. Bank. Ones, mizuho he will be continuing the conversation with us on plundered radio at 9 00 a. M. On Bloomberg Radio at 9 00 a. M. U. K. Time. Softbank securing a record deal. We will look at some of the m a moves, next. This is bloomberg. Welcome back to bloomberg markets. This is the european open. Were 22 minutes into the session, looking still at gains across European Equity index. The three majors up more than three quarters of 1 . Abandoned talks with microsoft to sell its app in the u. S. And is reportedly looking or aacle for a partnership restructuring deal. Lets get more on some of the biggest happenings in m a with dani burger. Dani when it comes to tiktok, as he said, abandoning talks with microsoft after reported opposition from beijing. Oracle, it would not be an outright sale of the business. It would more so look like a Corporate Restructuring. There is some question whether this will be approved by the u. S. Government and beijing as well. The government has that september 20 deadline to sell the business. This is more likely to look like , at the moment, what we understand is that oracle will likely take a stake as well as become their tech partner, house the data in their cloud servers. This would be a win for oracle. Maybe not straightforward why oracle would be interested. Hosting the data on their services would certainly be a win in oracles book. Anna what about softbank . This is a really global story . Dimensionuropean because the asset we are talking about being exchanged here is sold in the very height of the brexit drama, i suppose, the aftermath of the brexit vote. Nvidias headquarters is here in the u. K. The last time we saw a deal this bid was one softbank acquired arm to begin with. Chips are used in one billion smartphones annually. It is also used in everything from Household Goods to machinery. There is a huge reach here that more than likely outweighs the revenue nvidia would get. There are a lot of regulatory hurdles. They need to get approval from the eu, the u. K. , the u. S. , and china. There is also a question as to whether arms clients would be ok with this. Clients include apple and intel. Would they walk away . Nvidia pledging that arm would maintain its neutrality. Bether hurdle for what would a gigantic deal. Matt would love to know what softbank made on that. Gilead is set to buy im munomedics for a drug that i think only makes like 20 million a year, they will pay 20 billion. Dani they are paying about double for what the last closing share price was. Eightats Breast Cancer, type that is difficult Breast Cancer, a type that is difficult to treat. Gilead is betting that this can be used for other types of cancers. Anna plenty of m a news. Of todaysahead Virtual Meeting between xi and merkel, we discussed the state of euchina relations. This is bloomberg. Give you my world how can i, when you wont take it from me you can go your own way go your own way your wireless. Your rules. Only with Xfinity Mobile. Matt welcome back to bloomberg market the european open. We are 30 minutes into the trading day right now and looking at gains across European Equity indexes. Take a look at the broader benchmark stoxx 600. It has been a choppy session, and if you look at the ranked returns screen, all with the exception of health care, all the equity index groups, industry groups, i should say, are gaining. Being led higher by travel and leisure. Of course, they would certainly be relieved if there was a vaccine found. Oil and gas with a little upside today and technology, which has had a big dip over the last three weeks of trading, a little bounce. It is interesting to see health moving much at all, especially on a day where you got so much m a. Is some big,r that heavy stocks in health care, novartis and roche are still down a little. Novo nordisk as well as santa fe sanofi. A lot of Health Stocks are down fractionally, but they are such heavy stocks that they weigh on the group. Lets get the first word news with laura wright in london. Laura breaking news this morning, japans chief cabinet secretary Yoshihide Suga has won the race to replace shinzo abe. Hes been elected by the ruling liberal democrat party. The group will install suga in a vote. Turkeys Credit Rating has been dumped into junk by moodys, warning of a balance of payments crisis, assigning the lowest grade it has ever given to the country, b2, five levels below investment grade. Uks rule of six comes into place. Sharply at aing pace not seen since may according to the institute for employment studies come at u. K. Faces twice as many job losses in the coming months than the session following the financial crisis. 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. Anna thank you very much, laura wright in london. Lets get the latest on europes political outlook with our new weekly segment taking place every monday. It is called the brussels edition. At the son of every week, we will bring you an essential need to know guide to the political week ahead in the 27 countries that break european union. You never know, we might talk about the u. K. In the current climate. Lets get more now with our colleague maria tadeo. Today really is all about china and cdu. Call is an important between angela merkel, the head of the european council, and the chinese president xi. This is about reworking the trade relationship. The word we hear a lot in brussels is recalibration, recalibrate the relationship so it becomes more balanced and to talk about this, we are joined by the chief Strategy Officer at rasmussen global. He is joining us from my home country of spain and santander. Made itpeans have clear, they want to rework the trade relationship Going Forward, but given the fact negotiations are not going well, do you think we get this by the end of the year or can we kiss it goodbye . It is not going to happen . Fabrice well, i think that is the point of this Video Conference today. It is to see whether the chinese leadership is willing to make some progress on what fundamentally is a relationship that has been stalling and degrading since the beginning of the covid crisis some it is more important than a show of engagement between the leadership. We need to test whether xi jinping is willing to make progress, especially on the euchina investment agreement. Maria what if we dont get a joint statement, because we already here that today, that we may come to the end of the day, no statement, that shows negotiations are stalling. Can we just say this is not going well, we dont get this done by the end of the year . It is not going to happen . Fabrice absolutely, and if we dont have a statement, it will be the same as in july were there was another summit where there was no joint statement despite the fact that the chinese were eager to have one. If that is the case, everyone is digging in for a long, difficult negotiation and we have to see, but my hunch is i think the chinese leadership might be willing to give something to the eu. There was some progress on the investment negotiation. There might be something on climate change. The chinese know this is where the eu care about working the chinese. Maria so when you say they might give something, if i guess you know the climate targets matter for the European Commission, but access to chinese market, that they are willing to budge on that because you could argue they get a lot of access here but in European Companies in china, they are not getting a fair deal . Fabrice exactly, and that is the point of the investment agreement. It guarantees to europe and firms european firms who invest into the chinese market. The European Commission is proposing a screening mechanism on foreign subsidies so the chinese dont give something on the investment agreement, the European Commission would probably accelerate the pace of implementing this new screening mechanism and they know that, so i think this is where we have to watch carefully the meaning between the lines if there were ever to be a joint communique today. Maria right, so they are talking about this, if anything, retaliation from europeans come in the form of regulation, not the tariffs. But im also curious to see, i do hear this idea that the chinese engage in predatory behavior when it comes to european and monday. Is that something you european m a. Is that fair, they are almost a predatory country on europe . Fabrice yes, absolutely. Stu thousand eight, Chinese Investment in europe have grown tenfold and not just in big infrastructure or all industry, in hightech industry. Chinese firms often receiving indirect or directly state subsidies. Commission put together a new system to screen foreign firms investing or buying things in the european internal market receiving foreign subsidies, the commission would have the mechanism to stop them. That is pretty potent and i think it is a way to create pressure on the chinese to open up more of their market. And how about germany, because we talked about this from the european perspective, from brussels, but germany is a country that is reliant on china. They are good at making things, but they need to sell them. If you are angela merkelhow worried are you about this relationship . Fabrice i think germany is a different mind on china. Part of the german strategy community, including the bdi, wanting to be much tougher on china because they have seen over the last 20 years, there is very little access of European Companies into the chinese market. On the other hand, you have chancellor merkel and members of government who believe in the relationship and that trade can actually transform china, and i think this is what you have seen , withing now with merkel xi jinping hoping there is enough progress that before the end of the german presidency, with the 27 eu leaders and the chinese leader. If you arefly, angela merkel, do you worry more about trump or the chinese . Fabrice well, thats the predicament of europe. Fit between the big power and the strongman politics . That is the place the eu is without we are embracing the china without embracing the chinese way of doing business, which is the detriment of europe. I think that is the big issue facing europe. Maria thank you for joining us on the brussels edition on a day where trade is very much front and center in brussels, waiting for that call. Thanks very much, we will follow the relationship between europe and the chinese and other matters imitating out of brussels closely this week. Thanks to maria tadeo. Coming up, the rebellion is growing against Boris Johnsons controversial plan to renege on the Withdrawal Agreement. We will speak to the mp introducing an amendment to that bill, giving parliament a veto. This is bloomberg. Matt welcome back to bloomberg market the european open. We are 43 minutes, almost 43 minutes into the session. Still seeing gains, not the kind of strength we saw 10 minutes ago, but if you look at the graph of the stoxx 600 right now, it is very choppy right now but maintaining its positivity. Lets get the Bloomberg Business flash, the top corporate stories from the terminal with laura wright in london. Laura amazon plans to hire 100,000 new employees in the full andcanada, parttime positions that pay at least 15 an hour plus benefits. Opening 100 new operations buildings in september across the film and centers, delivery stations, and other sites. The semiconductor industrys largest ever deal, nvidia has agreed to buy arm for 40 billion. Over half of the deal will be paid for in stock and softbank may receive a cash bonus if arms meets targets. Performance meets targets. Regulatory approval may prove challenging. The deal needs sign offs from china, the u. K. , eu, and u. S. China is tightening the rules on the finance arm of some of its sprawling conglomerates, the latest attempts to curb risk to the industry. Regulations will require licenses for nonfinancial Financial Companies that do business across at least two financial sectors. That is your Bloomberg Business flash. Anna laura write, here in london. The rebellion is growing against Boris Johnsons controversial plan to renege on the brexit Withdrawal Agreement. U. K. Lawmakers debate the bill today, even if they dont vote it down, they may back an amendment giving parliament a veto. Lets talk to the member of parliament who brought that amendment. , theng us is sir bob neill conservative mp who introduced this amendment. Thank you very much for joining us. How do you fancy your chances with this amendment . Do you think you have got the numbers to beat the government . Might eitherrnment accept or come out with its own proper mise companies. We wont be voting until next week, in fact. This is only the first stage in the process. There is a way to go yet, but i hope they will do that because they raise significant unhappiness with the idea of a British Government departing from an International Treaty obligation, which it only recently entered into. We shouldnt be using our commitment to law as a bargaining chip in these things. Anna you think if the government does not change course on this, it will not be able to get its plan through the house of commons . And it may have difficulty, it will also have to get the bill through the house of lords. Unless there is some change to the way these particular clauses operate, they will have a real problem. They ought to think about that, because most of the rest of the bill is perfectly sensible and all of my colleagues would have no trouble supporting it, the provisions which will allow us unilaterally breached International Law are as a matter of principle and defending the u. K. s rebbie kit reputation, that is the problem and the area they need to revise. Aboutwhat do you think the possibility of a hard brexit, a wto brexit . Does that concern you, because it seems like it was made to ofrorize citizens a couple years ago, whereas now, it could be a little more hohum. Bob i still think that would be damaging. It would not be good for the financial services. I dont think it would be good for the situation in northern ireland. The whole point of trying to avoid that was making sure we make hold up to rule of law in the ireland agreement. The government rightly say that is not what we want to achieve. I take them at their word, and i think you have to be careful in the way you up the ante in negotiations, that you dont make it harder for yourself. It is a fine line, but im behind the Prime Ministers objective of trying to get to a deal, but what im saying is you cant say the ends justify the means in that regard and in terms of breaching International Obligation is a jurisdictional choice. So much financial litigation and legal work precisely because we are seeing this being a true life reliable jurisdiction. Anna you have a legal background, for International Viewers unfamiliar. Let me ask about the conversations with the Prime Minister and his team. Have they reached out about your amendment . What has the conversation been like . Bob it wouldnt be right or constructive to give details of , aversations, but obviously number of ministers are friends and i keep in touch. Everybody understands im attempting to come up with a positive way forward, but im hopeful we can continue that discussion over the coming days in that spirit. A second reading, with the opportunity to not make any changes to the bill, for the government to read. There will be some who oppose the bill, maybe others like myself who abstain to give the amendments a chance and others who say we will support the bill at this stage, but wont if it isnt changed going further. They will need to listen quite carefully to what is said. You mentioned the importance of bertens international reputation. Bertens international reputation. Trading partners wont want to do business with a company that reneges so brazenly. Do you think downing street understands that as well . Bob i hope they do and if they didnt before, perhaps this will help to reinforce that. Getink sometimes, you can so close to the details of the negotiations, you dont see that. Ig a picture bu need theyeir need to start remembering much more the bigger picture. Anna do you think the Prime Minister has given a suitable explanation for why he, the government signed the Withdrawal Agreement and promoted it so wholeheartedly if it does, as he now suggests, allow the eu to claim jurisdiction over u. K. State aid rules and bring about the possibility of a food blockade over the irish border . If it does allow that to happen, why was it signed . Bob that would be a good question. You read on the assumption you work on the assumption you read the agreements for you sign up to them. Isthe specifics, there within the Withdrawal Agreement and arrangements and arbitration mechanism where you can resolve disputes around its application, so why not go down that route before you start pushing a Nuclear Option of breaking an International Agreement and a physical blockade isnt something realistically the eu can do. The eu doesnt have gunboats it can put outside of ports. They might take Legal Proceedings for infringement, but there is an arbitration mechanism to deal with that so im not sure that was the phrase i would have advised him to use about it. Wet sir bob neill, appreciate your time. U. K. Conservative mp talking to us about his amendment and the complexities of brexit. Two industrial commodities are painting contract sting contrasting pictures of the strength of the Global Economic recovery, so which one is a better guide . We will discuss the emerging pats of copper and paths of copper and crude. Matt welcome back to bloomberg market the european open. Almost an hour into the session and we are looking at green arrows across the major equities indexes. The ftse, up a little more than quarter of 1 . The dax up two thirds of 1 . Two industrial commodities are painting a contrasting picture. Wiped out all the pandemic losses, but brent crude is down by one third. Which one is a better read on growth . Joining us for more is bloomberg mliv editor eddie vanderbilt. Copper had been on such a tear. It has always confounded me because we know it is dr. Copper. China and therefore the global economy. Is it wrong . Eddie i think this time, it is wrong. I think copper is a really good longterm read on growth. At the moment what we need is something that is really fast cycle because what weve seen throughout this crisis is everything has moved faster, both the contraction and expansion seems to be happening faster than we were used to. Store is a metal you can very well for a long period of time so that is one thing that leaves it leads it to be not as accurate as it was in the past. The second thing is people are buying copper because they believe in the shift to the green economy. If you are going to use an electric car, that uses a lot of copper. Makesat puts copper copper a sentiment play rather than a pure demand play. Crude, crude is suffering, down by one third over the past years. Anna eddie, thanks so much for your thoughts. Market slide editor eddie van der walt, this is bloomberg. Francine the chief cabinet secretary overwhelmingly wins the partys race to become the Prime Minister. Oracle is the winning bidder for tiktoks u. S. Operation. Boris johnson prepares to send his proposals to parliament. The justice secretary warns you could quit or the issue. Over the issue