Fires rockets at u. S. Military base its. Tehran says it doesnt want war. Boeing737 jet crashes in a ron shortly after takeoff due to stateat stadia media describes as technical issues. All people on board were killed. Carlos ghosn says nissan used him as a scapegoat to block further integration with renault. He speaks out in a press Conference Today in beirut. We are also getting german factory orders in the economic data. It does not look good. November factory orders dropped 6. 5 yearoveryear. November manufacturing orders dropped 1. 3 month over month. That we haverders been waiting for here in germany just dont look good. You want to pull that up on your bloomberg, type ego go. Pull down on the german flag. The picture is fairly dire. Just under an hour away from the start of cash equity trading in europe. Before the factory ders came through, they were bad enough. Now you can see, dax futures are down even more. 1 . More than double the losses that we see on ftse futures. In terms of u. S. Futures, we also have red arrows. If youf of a percent look at dow jones, as in previous hundred, nasdaq. You can see the drops are between 3 10 and 6 10 of 1 . What do you see on the dmm right now . Anna a negative picture coming through from the Asian Session. The board for equity markets in the Asian Session. Asian markets being broiled overnight by the latest in the escalation between the iranians and the united states. We saw oil go higher and gold went higher. We saw the yen go higher and stocks going down. In terms of u. S. Futures and retraced some we of those losses since we saw those initial attacks. Oil, we hungld and onto half of the Market Reaction that we saw in the wake of those attacks by the iranians onto u. S. Iraqi airbases. Yes, negativity on these equity markets. Said, it does seem as if investors are assessing the latest escalation and asking, it is that it is that it . We will talk about this with our mliv team in a moment. Lets go to the other side of the dmm. You can see where we are on the oil story. We do see elevated levels on brent crude. Up by 1. 3 compared yesterday. Still flirting with that 70 a barrel mark. Gold push through the 1600 mark. It continues to flirt with that 1592. Lets get to all of our headlines. Plenty to cover this morning. Bloombergs first word news. This morning, a boeing 737 bound for ukraine has crashed in a ron. Iran. All passengers are dead. Early assessment suggests the crash was caused by a technical issue. Owing says it is aware of the incident and is gathering more information. Ray dalios Flagship Fund has suffered its first annual loss in two decades. The fund dropped 0. 5 last year. Despite many peers posting their best returns to the financial crisis. It was the only Fourth Annual loss for the fund since it began in 1991. The fund has returned 11. 5 on an annual basis. The next act of the carlos ghosn drama begins today. The former nissan chief is holding a News Conference in beirut. It isto tell his side of the story. He is accusing the former employer of making him a scapegoat to block further integration with renault. He escaped japan in late december, fleeing into lebanon. 10 years ago, it was the biggest story in the world, but now the saga is coming to an end. The International Monetary fund is ready to leave greece for good. Closing its offense athens office. It plans to repay more this year to prove the crisis is really over for good. Global news 24 hours a day, onair and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Matt thanks very much for that. Your first word news. Lets get back to our top story. Has launched a missile strike on u. S. Iraqi airbases. The direct attack on American Forces is in response to the killing of the top iranian general qasem soleimani. It was not clear if there were any fatalities. The pentagon says the bases had artie been on high alert. Donald trump tweeted, all is well and, so far, so good. Adding that battle damages as ms. Continue. He says he will make a statement this morning in washington. Irans leader is speaking right now in tehran. These are live pictures of the ayatollah speaking. We will bring you any headlines that come from this presentation. Lets get more on this top story in hong kong. We have our Senior International editor standing by. Jodi schneider, what is up next . Jodi he indicated through that tweet that this was an expected action. Relief thatar, some the response from tehran was not escalating. For instance, they could have done other things that would have escalated this further and provoked a counter response from the u. S. If there are not shown to be u. S. Fatalities or major damage to u. S. Facilities, President Trump will be somewhat measured in that response. Of course, we will have to see. Things can change. President trump is famously changing his mind about things and changes his rhetoric. What we are hearing from people from the white house who spoke on condition of anonymity, this was expected. Tehran had to do something. At the same time, they did not want to provoke a war. Tehran can ill afford a war at this point. Its economy is crippled by years of economic sanctions. Very much. You we have not heard about the assessments of any fatalities. They say there were no iraqi forces killed. We wait to hear from the white house and others on the u. S. Side on that front. Jodi schneider joining us there from hong kong. Lets get to the Market Reaction now. Our mliv editor in singapore is with us. Interesting reaction. , andw the markets understandable kneejerk reaction. By havens. In some cases, all of that has been unwound now. Gold, other oil and up all ofually giving the moves that they made in the wake of the arabian attack on these u. S. Iranian attack on these u. S. Bases. What does that tell us about how markets are positioned here . Mark if you come in this morning as a european investor, it looks like it has been an extremely subdued reaction to what happened overnight. The path was different. A whiplash and kneejerk reaction. A sharp selloff in the shortterm. Much more severe than we saw last friday. It appears the narrative shifted dramatically over the last few hours. The initial reaction was, iran is taking direct responsibility for this attack. That was not expected. It was expected to be a proxy attack. It was seen as a more severe escalation initially. Since then, the narrative has changed. Many investors are talking about the idea that iran has managed to thread the needle. This was seen as the best possible outcome for markets. Reallocateen able to retaliate. Maybe this gives a path for trump to and the situation here. A lot of uncertainty remains. Speakslarly until he tonight or this morning in the u. S. Time, the markets will stay very nervous and sensitive. Particularly if theres a casualty. The story is that we are going to retain a little bit of extra risk premium and volatility. Overall, assets might start increasingly good optimist get optimistic. We did see a decent rally in the days ahead. Point out that this story will come back later this year. It might be put to bed for now. Matt we saw an incredible rally in gold. Ounce. Ugh 1600 an we have only been up through 1500 for the last few months year. Here. This situation looks like its going to be a deescalation, global selloff gold will selloff . We do see a disk deescala we will see haven assets selloff. Golds performance has been so strong. It is exceptionally stretched. It has a very good backdrop and framework. I have someone who is a gold bull for 2020. Overall, higher prices drop the year. Shortterm, it has come to far, too fast. And next colleague of mine message me earlier to say, in response to the question of the day, they think gold will pull back to 1540 on that thread the needle ideal. The 1540 target seems very far away now. We opened the year at 1517. 1540 is not a conservative price. It is not an ambitious target. To go lower than that. Im a longterm gold bull. Gold has the most downside in the shortterm from here. Particularly, oil and gold have retained a bit after this mornings move. Every other asset has retraced the kneejerk reaction. Anna we will keep an eye on that. Is there room for the german factory data . It came in below expectation. We will move the conversation on some of that data we are getting this week as well. Conservative data out of the u. S. Yesterday. You can join the debate. Our question of the day, will gold again be the haven of choice . Reach out to us and our mliv team on your bloomberg. We will look forward to getting your responses. Irans leader is speaking now in tehran. We have been bringing you live pictures of that. We will cover any news that to therom his statements gathered audience at the press. Up next, a look at your stocks to watch at the open including Semiconductor Stocks after the worlds biggest chipmaker posted in earnings beat. This is bloomberg. Matt welcome back. This is the european open. We are 45 minutes away from the start of cash trading. We are trading in terms of futures, down across the board. Losses have been paired a bit. We were down 15 minutes ago more than 1 . Now they are off only three quarters of 1 . Bloombergs Annmarie Hordern is looking at oil stocks. Sam on stead focused on chipmakers. Dani burger is covering sainsburys for us. Lets start with oil. What is the story with these retaliation, hopefully behind us. Annmarie we now see that geopolitical risk premiums are back on the oil price, spiking through 70 a barrel. Watch the big names. Shell, bp. On top of that, a tiny u. K. Company as well as norways dno. Both were cut by rbc. They have assets in the kurdistan region of iraq. This is a region to watch out for. Anna we will return to the oil story many times during the Program Including getting comments from opec. What is the latest on chipmakers . Samsung is a major chipmaker. Their results beat expectations. It was primarily due to memory chips. Pricing looks to be turning around. Demand is good because we are moving into a super cycle for funds, upgrades as chips are coming in the future. This is very positive especially on the pricing front. It may well be on the face of it that none of this shows through because of the shortterm reaction to the rainy intentions. The underlying picture for chipmakers is more positive. Matt weve got a new picture to focus on for supermarkets in the nikkei. U. K. Sainsbury out with her thirdquarter sales. It was a mess. Miss. They said there is less and demand and intense conversation best competition. , lookrocers as a whole for the entire sector to move lower today. Us withanks for joining the stocks to watch. Get uptodate with all the stoxx that our team is covering. Lets get to another corporate story with a different flavor to it. Carlos ghosn has leveled a blistering attack on former employer nissan. He is accused the japanese carmaker of scapegoating him to block further integration with renault. Thats ahead of a press briefing today in lebanon where he has been living since his escape a couple of days before the new year. Yousef who is is currently camped out in beirut. Tracking the story for us. Reiteration of an accusation he has made before that he was used as a scapegoat by those who wanted to block the coming together of nissan and renault. What else has he been saying . Yousef this comes as a surprise. We have been counting down e present conference. The defense team put out a statement where he basically says that what nissan has been saying is a gross perversion of the truth. Nissan had never sought to interview him as part of their investigation. That gives you a flavor of what we are likely to see at this press conference. Mentioned, the picture that is being painted from his team is one where this was an attempt to take him down. We understand from the people that we have been speaking to, some of the names could come out during this press conference. Potentially some government officials in japan as well. Nissan will take the appropriate legal action, japanese government has been fighting the pressure here locally with the lebanese government. They have met with the lebanese president. An arrest for it has been issued in japan for the wife of carlos ghosn. Matt thanks very much for that. Bloomberg daybreak europe least anchor yousef gamal eldin will this the ground covering for us today. We will go back to him in a bit for this story. Calm as oilestore retreats from sevenmonth highs. We will hear from our interview with opec secretarygeneral Mohammed Barkindo next. This is bloomberg. Anna welcome back to the european open. 7 22 in london. We will expect to see further downside for European Equity markets. Futures have been light on a dance by the latest geopolitical news flow. We have unwound some of that. Lets catch up on one of the stories you need to know about overnight. Oil prices jumped after a ron iraqi bases. S. The risk of disruption is spooking the oil markets. Joining us now is manus cranny. I know that you have been speaking to big voices on the oil front. Interesting to see that oil is holding on to some of the gains it made overnight. Manus it is. Is the tripleere ours. Ratchet, reflect, rest. Try to find a new level in this market. We discern between targeted response from iran versus real escalation, to voices of stoicism. The uae oil minister arriving here at the Gulf Intelligence gathering. So timely that we were here. His base Case Scenario is not an escalation. He warns that the world cannot afford one. The world cannot afford 100 oil. Reflected quite reflective about, lets have a support for g escalation. The escalation. Are leaders in this region our leaders in this region are doing Everything Possible to restore normalcy, to arrest the situation before it spirals out of control. Speaking here at the Gulf Intelligence roundtable. What is normally seen in the oil market . This is the first gathering of a new decade. See 60he audience here for the rest of the year. 36 at 70. Supply is paramount. The strait of hormuz is critical. The world must Pay Attention to those supply risks. There are no outages. Supply Oil Flexibility for as long as it remains. The risk premium is capped. Matt thanks very much. Manus cranny with that interview. We will show more of that to you throughout the day. Joining us now is james mccormick, global head of sovereign and supernatural ratings at fitch ratings. Reaction to this iran . Ation from a ron james the hope is deescalation. We think about what we have seen so far. It is a region that is prone to these kinds of episodes. If it levels off from here, the ratings are finally they are. We downgraded saudi arabia back in september. That was in response to when attack on the oil facilities. That caused us to reassess the vulnerability of the economic infrastructure of saudi arabia to these kinds of developments. Perspective, we have it reflected in the ratings where we are. Here,ngs escalate from there are a couple of other countries in addition to saudi arabia that would also be vulnerable. The ones that come to mind are q, a veryrock, ira fragile country. The other country would be lebanon, which we rate at double c. Thats a country that requires continued inflows, foreign currency inflows into the economy to support the government and to repay debt. That will be difficult to come by. Anna we will continue the conversation in just a moment. Up next, tensions rising in the middle east. Russia and turkey making a show of unity. The event to look ahead to today. This is bloomberg. Matt welcome back to Bloomberg Markets european open. Miller in berlin alongside anna edwards in our European Headquarters. We have seven hours until u. S. Trading, but u. K. And roean will kickoff in a half hour. What you should be watching around the world, we are live in beirut as carlos ghosn gets ready to face the press. In brussels Boris Johnson tells the eu he wants to broker a freetrade agreement. ,nna we are live in brussels and because of the meeting we will see later with Boris Johnson. We are istanbul because of the carlos ghosn press conference. We are also in beirut, fascinating conversations surrounding istanbul because of the pipeline conversation. Let me tell you European Equity markets futures point to losses after iran retaliated on u. S. Missile outposts in iraq. Important to keep on these other three stories because they could bring interesting news later during the trading session. Joining us is yousef gamal eldin. We spoke to you briefly earlier about what is going on with carlos ghosn. He has spoken up ahead of his press conference later on, unexpected. Yes, it gives a flavor of what this rest conference is scheduled for this later afternoon may bring with it. A blstering attack and he describes a mischaracterization of the story. They never sought to interview him. And now the stakes are much higher because of what could come at this press conference is the unveiling of names connected to what the ghosn team believes is to bring him down as an thestry titan and derail deal between renault. They just started to try to patch up their relationship with nissan. Tremendousder pressure, multiyear lows. The timing could not have been worse. Matt Boris Johnson has put the emphasis on speed, but the u. K. Will not align with the eu rules, and that was the point of brexit. Deal by yearend realistic . That is a big question, and commission who is meeting Boris Johnson today. Michel barnier who led the brexit negotiations will attend the meeting. The focus point and tension of the story has to do with timing. Both sides agree they want a freetrade deal and a comprehensive freetrade deal, just how comprehensive will depend on how much Boris Johnson decides to move away from eu standards. The tension has to do with timing. He wants it done by the end of the year, he says he is not asking for more time. The europeans are more skeptical in terms of the timing. We are being told there are no Technical Details that will come there the meeting because is not a mandate from european leaders to negotiate, but it will serve to set the scene for that conversation that will take place next month perhaps. Much, mariayou very tadeo on the ground in brussels. This is the third gas line between russia and turkey, what does this display of unity mean if tensions continue to rise for the south . This natural gas pipeline between russia and turkey signifies strengthening trade ties between the nations, especially amid simmering geopolitical tensions in the middle east. That is exactly what russian president Vladimir Putin and turkish president erdogan will talk about when they meet in istanbul in a few hours. Both leaders will want to help defuse tensions between the u. S. And iran. There is also the situation in libya were russia and turkey find themselves on opposing sides of the civil war there. Then there is the situation in wartorn syria, and the humanitarian and security crisis happening. Moscow and ankara are hugely invested in finding a solution there. The leaders will want to talk business, especially defense ties which has angered turkeys nato ally, the u. S. Anna thank you so much. Plenty of stories to keep across today. We should tell you the iranian Supreme Leader Ayatollah Khomeini is speaking in toronto saying that the u. S. Presence in the region must and. Of iraning the people gave the u. S. A crushing response. We will see what the meaning of that is. Lets get back to the conversation about local risk. It. Marketsresponse to from fitchmack ratings is still with us. We started our conversation briefly before the break. We talking about the ratings implications in the region, and another implication you must be thinking about is what it oil prices are elevated and sustained at, and what that does to countries. Does your mind go to countries in asia or the middle east . What is the oil story . James the source of the uncertainty is something the middle east benefits from an economic stance, and the u. S. Benefits from that. Quite a transition in the u. S. From being vulnerable to benefiting from Higher Oil Prices. When we think about countries that are vulnerable, it is the emerging asia more broadly, japan, india, but also turkey is vulnerable to that. There are a number of companies that would keep external pressures, but remember what happened to oil prices the last time we had the saudi arabia episode in september. They went up and came back down quickly. Matt are there countries for whom this is a problem in terms of ratings . If you look at countries already extended too much, and the oil price rises, is that a problem . James i guess on the import side not really. Turkeys rating has come down a lot. The one any emerging asia are strong on the external side, they can with an Higher Oil Prices. On the export side, countries in the gulf need higher prices. They are generally higher with the exception of kuwait and the uae. We need a break even for Public Finance and need Higher Oil Prices in the gulf. There is giveandtake, but our expectation is oil prices will not escalate. Anna let me ask you about other factors affecting ratings in 2020. Fiscal policy stepping up, is that still your expectation . ,e talk about this as a theme and some countries will do a little fiscal spending. Germany seems more hesitant. What is the geographical push for the fiscal impulse . James we think it is widespread. Most countries will have marginally weaker Public Financing positions this year compared to last year. We put it at the start of the year the number one issue, but things have changed in the last week. U. S. Public finances are very the economy is performing well. China is in a meaningful stimulus, not enough to move the rating. Being a that a more transparent. But away from the big economies, in germany we think fiscal stimulus is something we will see globally. Across the board. It is taking advantage of lower Interest Rates which will persist almost indefinitely. And the realization that Monetary Policy committee has gone as far as it can. From one cynical member on the mliv blog that he thinks we will not outlive negative Interest Rates in europe. Do you agree . Tough one, it a is hard to see where the inflation will come from in the eurozone. Only think about potential growth rate in the eurozone, we are around the 1 number. It is hard to generate much inflation with growth levels that weak. Willing just rates get up off the floor . From where we sit now it is not obvious. I agree a long period of low Interest Rates. For regions were we think there is the possibility of inflation picking up, we could see that in the u. S. That would be a surprise to everyone, but the labor market is tight. Some leading indicators like unit labor costs are picking up. It is possible to get higher inflation and that spills over to europe. Based on European Growth alone, it is hard to see where it will come from. Anna thank you for joining us, james mccormack, managing director head of sovereign supranational ratings, fitch ratings. Up next samsung earnings Beat Estimates as chip prices rebound. What are the implications for European Equity market opening in 19 minutes . Fore onces to the again. This is bloomberg. Matt welcome back to Bloomberg Markets european open. 16 minutes away from the start of cash equity trading. We have futures down, but they are paring losses from earlier. Lets get first word news. Has retaliated against the u. S. After killing its top general. It fired missiles at airbases housing american troops. Donald trump said the u. S. Was prepared for an attack. Irans foreign minister says has finished its operation and is not looking for war but will defend itself. A 737 down for ukraine has crashed in iran shortly after takeoff. All the passengers and crew are dead. The crash was caused by a technical issue. Boeing is aware of the incident and is gathering more information. Opec is looking to reassure oil markets as tensions rise in the middle east. The Energy Minister says the escalating conflict between the does not pose a risk to the strait of hormuz. We are not forecasting a shortage of supply. Unless we have a catastrophic escalation, which we do not see. 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. Daimler is looking for a bigger piece of the car market. The automaker has been increasing in china. In an exclusive interview, the daimler ceo tells bloomberg what is next. We have a longterm relationship, that is our joint venture partner in china. That has been a joint venture, the relationship developed 15 tovely over the last 20 years. We are intensifying that in growing our footprint in china. It is not just about capturing the chinese market. We want to do r d there. We are looking at a supply network which is very interesting. A lot of new Tech Companies are Offering Solutions that will be interesting for our customers. We are dedicated to china. Who we have another partner took a stake in daimler a couple years ago, and the first Big Corporation out of that is to put the smart brand in a new joint venture. We will develop smart together. You will see the fruits of that corporation with a new generation of products coming in 2022. We are excited from that. Would it be from an investor if they arew a risk increasing investment in daimler . When chinese ownership be a concern, or do you not mine where your investors come from . Eight years ago we took close to a 10 stake, so the Parent Company of our joint venture. We at daimler are committed for a long time. On their side, a 5 stake in daimler of december of last year, which is a demonstration of how valuable this relationship is to them. We welcome investors who have a longterm view and see the longterm future of the Auto Industry and daimler, and share our views. The investment is a different one, we have an entrepreneur that in the same spirit sees the future of mobility with daimler. Have investments do not anything to do with each other, but they are long investors, and we want long investors in our portfolio. Matt that was daimler Ceo Ola Kallenius speaking exclusively to bloomberg in las vegas overnight. Samsung earnings Beat Estimates after a rebound in chip prices. They reported operating income of 7. 1 trillion one against an. Verage of 6. 5 trillion won joining us now is to least and from are Equities Team to explain how much money that is and what is driving the chip rebound. Joe it is coming from the cloud industry which is strong, and that is pushing down inventory levels. This is before we have seen the 5g rollout that is coming, and we will see the newest iphones toward the end of the year and into next year. At the moment the Cloud Division is driving it. We also have better sentiment with u. S. China trade and tensions easing. It is the Cloud Division coming in and looking ahead to the 5g rollout which could lead to 350 applen new iphones from alone. It looks Like Companies are positioning for that, and it is coming through the samsung report which is weaker on the companys own divisional levels. Anna the chip sector is a big beat and suggests we could see european chip companies, which ones in europe could be impacted . Infineonre looking at and companies that supply samsung. It is a broader move throughout , but theyy like asm rose around 2 , the best performing sector of the year after Microchip Technology in the u. S. Be estimates. Beat estimates. Tensions,eopolitical that will probably heard some of the stocks today. Anna it is interesting how the tech sector forges its own path through these geopolitical tensions. Thank you joe easton from are Equities Team with the latest on a chip sector and samsung. Coming up, doubling down, we discuss in our morning call and get you caught up on what to expect at the start of european trading. The geopolitical tensions between iran and the u. S. Dominate. To what extent do we draw a line. Will talk about the next we will talk about that next. This is bloomberg. Anna welcome back to Bloomberg Markets european open. Seven minutes into the start of the european trading day. Markets are negative, listening to tehran. The comments reflect on the activities overnight, and the way the market has rebounded from a risk off response. The greenback has defied get to ours, lets morning calls with dani burger. , by fareaking overnight his biggest conviction when he was speaking was the continued weakness on the dollar. He says as the yield curve continues to steepen, we will see investors flee the u. S. , and he thinks commodities india markets will be stronger this year. He was bullish on gold saying it would be better longterm. He could see it moving as high as 15,000, nearly double from what it currently is. We have heard him say he thinks recession odds are 30 to 35 , and he reiterated that calling the indicators a flashing yellow signal. He mentioned oil, saying it is a bad time to short with the possibility of another oil refinery attack. Matt thank you very much, dani burger. Speaking of oil, annemarie is looking at the options market, what is it telling you . Annemarie all the price action this morning is really in the options market. You can see calls at the highest since september and the premiums are the most expensive since september to put. Investors are paying up to prevent future spikes. And volatility, a key measure in how expense of these options are is the highest since december. Down from the gains, but the risk premium is coming back into the market. Everyone is worried and it is spooking the market, that is why you see call options spiking. Everyone is looking for protection. Anna all these things very much in focus. Keep an eye on what is going on in the mining sector. The chip stocks beating estimates. 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. Go until thee to start of cash equity trading, here are your headlines. Iran response, brent jumped after iran fires missiles that u. S. Military bases. Has finished its retaliation. A boeing 737 jet crashes in iran shortly after takeoff due to technical issues. All 176 people were killed. Nissan used says him as a scapegoat to block further integration with renault. He speaks later today in a press conference. What are futures telling us . Matt markets are prered for a negative start. A may not be as bad as it looks it may not be as bad as it 0. 6 . Dax is off about we are paring some of the losses we have seen, and the markets are open. Anna as you say, futures leading up to expect a weaker start for European Equity markets. Tosee iran sending missiles we sawbases in iraq,hat kneejerk reaction in asia and some of it was unwound. Leaving aside gold and to some kneejerk, some other reactions have been unwound. We will look to see how long these negatives last. Stoxx as a whole down by 0. 4 . Similar moves in the netherlands and on the ftse 100 in london. A sizable jump in the british pound. Lets look at things from a sector perspective. Need to focusr we on, we have seen the oil price spike, and some is held onto by markets. We are seeing aviation stocks in the middle east region and Global Players shifting around flight plans in response to the level of tension in the middle east. And an eye on Energy Stocks basic materials stocks, we are seeing m a in that sector. He big picture dominates flights to havens and some of the initial selling of assets unwound during the Asian Session. Matt absolutely, we have stocks down across europe. Off, and only 52 are gaining, and most gainers are recies of commodity price benefits. Up onyal dutch shell all the rising oil price. We do see gregs plc in the seventh slot, the maker of the raisedgan sausage roll its outlook, saying it is doing better than expected. Thata look at the losers, play is the biggest loser, one s onhe top three weighting the stoxx 600. It makes sense it would take the most points off the index. Novartis, also huge. Down 1 . Siemens are you have for the most part losers and the Big Companies off the stoxxt 600 index. European markets opening firmly in the red after Iranian Missile struck u. S. Facilities in iraq. Tehran stressed it is not seeking war. The ayatollah has been speaking just now, and he has said the ran have given the u. S. A crushing response. Joining us now is john roe, head of multi asset funds, Legal General Investment Management. , doou look at the situation you look at iran as having threaded the needle, the response is something you can sell to its people is measured, but not needing to escalate things further . John i think that is the narrative markets are going to quickly, as you can see from the fast reversal of initial losses and gains in oil. I am not convinced that makes much sense, it puts a lot of certainty and understanding trumps reaction, when both of those have been unpredictable. From our perspective, we are seeing a strong market narrative that this is fine because they filed missiles at american troops. Fired missiles at american troops. To us it is surprising that with so much uncertainty that markets are so sanguine about where we are going. Anna others are sharing your review, saying it was an outright move rather than a proxy move, and that ratchets up tension. Looking at how equity markets have responded, we have seen a selloff and that is expected to be 0. 4 on the stoxx 600. The only positive is oil and gas , the brent price at 69, up 1 . Does this move higher in oil prices warrant a move into oil and gas stocks . John i think oil and gas stocks, the big positive is that sentiment is beaten up. They were a massive underperformer, and the sentiment is as negative as for any sector or any asset. That would make it more attractive. A lot of people say lets go oil, but it went up a lot in december, but it is that negative sentiment around Energy Stocks that makes that more interesting if youre concerned about the energy price risks and the reintroduction of geopolitical risks. Looking at one asset to try to measure how the market is reacting to the ayatollahs speech, is it gold, oil, the yen, what is the main asset to watch if you want to gauge the markets reaction to risk . John i would like the yen because it is a risk off asset where there is not a lot of enthusiasm. We worry gold is becoming , a consensus trade, so you have momentum, but it is vulnerable to that it is heavily bought. Oil is more difficult because saudi arabia has been quick to say we can manage this disruption. Do not worry. Unless this is a catastrophic escalation, we can manage the oil price, which President Trump would have been keen to do. 2019 he got nervy when it got to 70. Anna i just pulled up the gold price, it did talk 6,000 eight troy ounce in immediate response. John the sentiment is externally positive relative to the assets that underlie the gold price. It is significant with the u. S. Dollar and u. S. Real rates. In the dollar is not stretched, but the sentiment around gold seems stretched. It is one in four peoples top trade, which is a large area for what is a small asset class. Will definitely get bigger in 2020. John roe is our guest cohost for the hour, head of multi asset funds, Legal General Investment Management. Up next, building the car of the future. Daimlers new ceo says he will cut costs to fund innovation. We will hear more from our exclusive interview next. This is bloomberg. Anna welcome back to Bloomberg Markets european open. The markets down by 0. 4 . The Asian Session we saw a kneejerk selling of risk assets, but some of that has unwound. Lets get a first word news update. Iran has retaliated against the u. S. s killing of its top general. It fired missiles at two iraq bases housing american troops. Donald trump said the u. S. Was prepared for an attack. Irans foreign minister says it is not looking for war but will defend itself. This morning a boeing 737 down for ukraine has crashed in iran shortly after takeoff. Passengers are dead. The crash was caused by technical issues. Boeing is gathering more information. Ukraine international is suspending flights to tehran. Ray dalios flagship has suffered its worst loss in two decades. It was only the Fourth Annual since it begannd in 1991. The fund has returned 11. 5 on an annual basis. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Matt thank you very much. Daimler is looking for a bigger piece of the worlds biggest car market. The automaker has increased his joint partnership in china, and in an exclusive interview, the new ceo told bloomberg he is looking for partners with a wide time horizon. We welcome investors to have a longterm view, that see the future, the longterm future of the Auto Industry and share our views how this industry is developing. Matt john roe is still with us, head of multi asset funds, Legal General Investment Management. What do you think of the Auto Industry . It has been a tough time, and they are going through some change. Want a car, right . John yes, the problems for germany, they have recognized on the production side, the one Silver Lining is that shipment is higher than production, which cannot continue ad infinitum. At some point you have to up production. Yes, it is seeing problems and we need innovation. The Biggest Issue is that period where we all hold on for electric cars, and then you get a big dip, because no one wants to be caught with the last petrol engine. We got german factory orders falling 1. 3 in november,he estimate of a 1. 2 gain gloomy, just one month and a volatile set of data. What does this tell you . We are looking for signs of bottoming out. John german manufacturing is looking as bad as it has since the 20122013 eurozone crisis. Bad on the manufacturing side. Does it feed over into the Services Side of the economy, and we have seen upward revisions to germany which tends to be a sign of future improvement. Historically upward is an indicator of better numbers. Pmis have services started to improve, so you would say so far we are not seeing that between manufacturing in the services. Matt what about Consumer Spending here in europe . Are you concerned about that . Is it a bright spot in germany . John i think the consumer side is less important in europe than the u. S. In germany is a bit over half the economy, but less reliant. The most important thing for them is they have those a fiscal power, but they consistently say they do not think it is necessary. They have the lowest rate of unemployment that they have had, and things look decent for the european consumer. We do get the spillover into the Services Side. If it stays in the manufacturing side, it is not enough to help the european economy. Anna thank you very much john roe, head of multi asset funds, Legal General investment with us. T, stays we are looking at live pictures of an official briefing by Ukrainian Airlines after a ukrainian aircraft crashed near irans capital killing all 176 passengers and crew on board. Briefing, thehe plane was one of the companys best. From iranl reporting where the crash took place seems to suggest this is due to technical failure. We will see if we get further insight from the Ukrainian Airline itself as to what caused the crash. Flights are suspended over iran and iraq. Ukrainian. Ers were we will keep up on all the developments. Up next, the stocks on the move this morning, including minerals. Anglo american is in advanced talks of a possible takeover for the development company. More on that next. This is bloomberg. Matt welcome back to Bloomberg Markets european open. 20 minutes into the trading day acrossseeing red arrows equity indexes, the dax down 0. 5 . Our top individual stock stories with Annmarie Hordern. Marie oil and gas companies, the sector is up, not a huge move. It is the only sector on a stoxx 600 in the greek. 70 a barrel. No oil supplies have been interrupted, but the worry is there and that is spooking the markets. American,glo confirming advanced talks about afterible takeover a day nmc health is down more than 18 , it has had a tough 2019. Last month they were shortselling this company, and nmc health was unsure of the reasons why, but two shareholders are dumping. Anna the u. K. Wants a freetrade deal with the eu by the end of the year. A meeting is set to take place in london. Speakjohnson is said to against realignment with the eu. John roe, head of multi asset funds, Legal General Investment Management is still with us. I have a chart showing how much u. K. Equities have underperformed other Global Markets in the last year. You are happy enough that you know where the brexit conversation goes to get involved with u. K. Stocks . That is right, some of the extreme outcomes have been removed. Antagonistic exit where we refuse to play the divorce bill hey the divorce bill, and you end up with a court case and refusing to talk at all. That will go away with the withdrawal bill, that is great news and takes extreme risks away. It narrows the range of outcomes. Has put into legislation that we need to be out by the end of the year. You could see industry specific deals, pharmaceuticals, autos, those industries more worried about what a disruptive brexit may mean. As you get that, the valuation and sentiment case become more important. Know it is incredible we so little about what the Services Industry will look like, the relationship after the channel after the end of this year. Isn absolutely, but time helping get the required changes in place. We are seeing Companies Using european subsidiaries to manage assets. Time is so important, by not itting the early crash out, makes it less disruptive. That is why we are seeing broker estimates, and the same from the bank of england last year talking about less than 1 a year even in a disruptive brexit. As extremes come out, you can be more confident. Anna thank you very much, john roe, head of multi asset funds, Legal General Investment Management. John will continue the conversation on Bloomberg Radio at 9 00 a. M. U. K. Time. Ghosn has been leveled has been leveling a blistering attack on a former employer, nissan. Ghosn has accused the japanese carmaker of skate goading him scapegoating him. Is where he has been since he escaped from japan before the new year. Joining us is yousef gamal eldin. What do we expect to hear from ghosn today . Yousef we thought we would go into this press conference smooth sailing, but overnight we had a statement from the team of carlos ghosn who responded to allegations made by nissan earlier in the week. Ghosn describes nissans as a perversion of the truth, a gross mischaracterization, and pointed out in nissans internal investigation, they never sought to interview carlos ghosn. That gives an indicator of what we can be in for as the ghosn team tries to betray this story as an attempt to take him down as one of the titans of industry. The pressure is capped on the local authorities kept on the local authorities. On the corporate front, nissan is saying they will take all necessary legal actions. When we hear him talk today, will he give details of his escape . Yousef sorry, i did not get that. Matt do you think we will get details of his escape . Yousef i doubt we will get any details on the escape or the way he made it out. He wants to keep the focus on his experiences in japan and not expose any of his contacts which have checkered military backgrounds, and that would not serve his purpose at the moment. Matt very good point. Thank you for joining us, bloombergs daybreak middle east host covering this for us. European time, 1 00 p. M. U. K. Time. The official briefing from Ukrainian Airlines in kiev after a Ukrainian Airline crashed, we heard from the airline that they will not comment on the cause of the crash. Anna they are not commenting on the cause of the crash, because of the attack by iran on u. S. Bases in iraq. They say they will avoid iranian and iraqi airspace. Anna welcome back to the European Market open. I am anna edwards bloombergs European Headquarters in london at alongside matt miller in berlin. Matt we are continuing to follow the top stories today. Both of which center around iran. This Airline Crash of ukrainian stories,s one of the and as a result or in some way related to that, you can see a number of other airlines have today they will divert all flights from tehran. Antas, lufthansa, all avoiding that airspace. Porter joins us from dubai and in hong kong, our Senior International editor jodi schneider. Read storyhe most and the main bar, irans retaliation on the u. S. , does it look like they have finished now because we have heard a number of people say this may be the first big slap at the u. S. It would be wrong to pull back at this time and it continues . At least the iranians are trying to signal this is it. They are not interested in escalation, they dont want a war, they dont want to see this theyict dragged on and said it was a proportionate attack that complied with International Laws and did the job. Some will be hesitant to believe that. They may think the u. S. Undertook the killing of solar soleimani and the iranians decided to do Something Like this and adopt it as the state but some believe iran will definitely, maybe in the future resort to other ways using its proxies in lebanon, hezbollah evenvenge the death, after time. The newsare awaiting of concluded proportional proportionate measures. A slightly different take on things. What is the u. S. Perspective from here . President trump held a press conference late last night and did not hold a press latece like tha last night. What is the expected next move for the u. S. . Odi part of this will depend on whether there have been any loss of lives of americans and whether there was serious damage to these facilities. President trumps initial reading of the situation seemed situation. T a relief which based on the iranian both the attack being portion of, but also the fact that they said they were not going to escalate at this time, and the markets steadied on that, as well after the initial spike in oil and equities going down. If there was no american loss of life, this will be viewed, and we are hearing from those in the white house, this will be viewed as an expected reaction to the i, thatf general soleiman iran had to do something, but they were not in the mood to do something that would escalate the situation further. Irans economy has been crippled, partially by u. S. Sanctions and it can ill afford war, certainly one that involves the u. S. It is them saying this is a proportional response, a defensive posture after the u. S. Anding of general soleimani the u. S. , it appears, at this point, they will view this as proportional and perhaps not yeact in an escalator fashion. Of course, President Trump rcurial, but we are not expecting that kind of reaction. Anna jodi schneider, bloomberg International Editor and our golf reporter joining us from dubai. Keep across this story in the many forms it seems to be taking overnight. Gold has surged after iran attacked military facilities in iraq hosting american troops in retaliation for the killing of a top general. Joining us is bloomberg Senior Editor john authers with us to talk about gold and the spike we have seen. Good to see you this morning. How can we work out the fair value of gold . It doesnt have as many industrial uses. It is difficult to value. John it is more or less impossible given any other financial asset you judge it based on the income it throws off and there is no income stream from gold. Its value is literally in the eyes of the beholder, but there are some things you can do valuee over time, gold does overlap closely with real yields. The very Exciting Events last night in iran caused a brief spike, but in the longterm, it arebout the yields that available on bombs after you have subtracted inflation expectations. Worried aboutmore inflation, more suspicious we get a pickup in inflation in the future, gold rises. Generally speaking, when you see a spike in the gold price, it tends to mean yields will follow, signaling and ease. Anna we are back to thinking about what is happening with inflation. Drivenhis seems to be purely by geopolitical risks and ishink the american theory when every thing goes wrong, you need gold, guns, and bottled water. That seems to be what has driven the drop price up through 1600. John if you are talking about the still pretty brief incident 316night when we got after the reports, that is correct. If you want to look at a longerterm perspective, i dont think that is the case. The continued relationship with shifts in beliefs about monetary backdrop remains almost total. Weve gotten back through the in 2013at it was at just before the taper tantrum started, just last few days. That is very significant. The point of the taper tantrum was the Federal Reserve announced it was ready to start climbing back from qe and inflation still hadnt arrived. Evenwas the moment when those who strongly believed in the began to accept exceptional Monetary Policy after the crisis wasnt going to cause another big irruption in inflation. The study turns over the last two or three years in the gold ultimately, this is about the feds uturn and the fact we could be ready to see inflationary conditions return. Anna ive got a chart from your story this week, an inverted gold price, the drop in gold and the relationship it has with the u. S. Real yield. John it is almost total. Anna what is this telling us about inflation . Is it telling us inflation will come back in some runaway sense or inflation is just smelled in the air . John much more the latter than the former. People joyfully that on runaway inflation seven or eight years ago. The way the dynamics of money works with the economy have changed. They are not quite as simple as people thought they were immediately after the crisis, but we are tentatively moving back. If we genuinely believe the economy is as robust as it needs to be to justify were stock markets are at the moment, that does imply inflation possibilities coming back. Anna john authers, joining us on set. Bloombergs Senior Editor talking about gold and inflation. As oil to restore calm retreats from sevenmonth highs. We hear from our interview with the opec secretarygeneral later. That has an impact on inflation. Foreolitics at the overnight. That is next. This is bloomberg. Matt welcome back to bloomberg market the european open. We are 43 minutes into the session and looking at equity indexes that are falling. Opec is looking to reassure oil markets that tensions as tensions rise in the middle east. We spoke to the secretarygeneral Mohammad Barkindo. Confident our leaders in particular in this region are currently doing everything normalcy, toestore arrest the situation before it spirals out of control, and i just want to use the opportunity given to me by asking this question to respectfully ask all toders across the regions rally around and support normal efforts of the leaders in this region who have embarked on these initiatives to restore normalcy. ,e in opec in the last 60 years severalfailed at challenges including wars, and this, oil cycles, time, we tried to insulate ourselves from the geopolitics and depoliticize this beautiful resource, oil. I believe we are going to continue to do this in order to remain a reliable, dependable nations to consuming such as bangladesh, india, china, and many other emerging markets, and to ensure that this beautiful resource remains competitive in the energy transition. Anna i was the opec secretarygeneral Mohammad Barkindo speaking to manus cranny earlier. Lets get a bloomberg first word news update. Iran has retaliated against the u. S. Killing of its top general. It has fired a series of missiles at iraqi airbases housing american troops. Escalations, coming hours after President Trump said the u. S. Was totally prepared for an attack. Is not lookingn for work, but will defend itself. This morning, a boeing bound for ukraine has crashed in iran shortly after takeoff. All 167 passengers and nine crew have died. Early assessments suggest the crash was caused by a technical issue. Boeing says it is aware and gathering more information. Ukraine international is suspending flights to tehran. Ray dalios Flagship Fund has suffered its first annual loss in two decades. The fund tell half a percent last year despite many peers posting their best returns since the financial crisis. It was only the Fourth Annual loss for the pure off a to fund since the fund began. It has returned 11. 5 on an annual basis. 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. Barclays is the first European Bank facing a vote on Climate Change. A group of shareholders have filed a resolution taking aim at the lenders support of fossil fuels. Theyre calling on barclays to say how it would phase out firms that dont align with the parrott paris climate goals. Our guest, responsible for the final strategy of investments, which operates energy businesses. Thek you for joining us on program. Let me ask you about the expectation for green finance through 2020. Clearly it has taken on a legal aspect, the ins how much appetite do you see and what are the barriers to more appetite for investors for Green Investment . Rise we are seeing a real in the interest in investing in the green sector. We are seeing this from Pension Funds. Didnt havego, we Pension Funds wanting to invest in the sector and now we do. Survey, we asked global institutions what their thoughts were around the sector. Over the next 10 years, they expect to double their out locations to the sector. I think it is being powered by pressure from a variety of stakeholders. Pressure on corporates from shareholders becoming more important. We are also seeing a rise in pressure from the public, from students, pressure on endowment funds to change. A broadbased surge in demand and it is also driven by expectations being set at the national level. Looking ahead to 20 six, governments are more keen to inject into the process. Cite interesting, you also in the research that half of global responders, money toagers site a key blocker getting involved in Renewable Energy infrastructure. Is the uncertainty about the relative pricing of green energy seeus oil, because we plenty of Oil Market Volatility this week, dont we . When you look at a solar or wind farm, you are making an investment that is 30 years long so your pricing the expectation of what you can sell the electricity for throughout that time period. Going back five years ago, they were heavily subsidized. Now, we are building solar wind farms where there is no subsidy. Visibility of that revenue stream is critically important. There are ways to the risk that risk that, purchase agreements with owners of her google assets. Range ofider businesses want to lock in power prices. Anna we started this conversation covering a legal challenge to barclays, but on the other side of things, how do investment firms balance their fiduciary duties to investors to get returns and maybe some of that is possible in fossil fuel related investments. How can they cover that with the adjustments we expect them to make . Chris in the u k, the pandians pension firms are expected to think about Climate Change as part of how they approach their investment policy. In october, rules were changed that meant it was required to think about Climate Change. The mindset is starting to change and i think the u. K. Is a leader in driving change from the pension side fund and other countries will probably follow. Every pension fund cio is trying to think about what is their approach to sustainability. You cant duck it. Anna and perhaps recruit accordingly. Chris hulatt, cofounder of octopus group. Next, what is moving the markets with Richard Jones in berlin. This is bloomberg. Matt welcome back to bloomberg market the european open. Dayinutes into the trading and we are at losses across European Equity indexes after Iranian Missiles struck u. S. Bases in iraq. Richard jones is here to talk more about the Market Reaction with us, our mliv fx Energy Strategist in berlin. Where do you see the biggest move in safe haven assets . Richard the most interesting move has been in the short end of the u. S. Curve because one week ago, we had about 18 basis a bikini livein easing for the fed next year and was hit lastn friday, weve had it this week and weve had 10 additional points of easing priced into the curve. That has made in material difference a material difference into 2020 and that has been one of the big important haven moves. The other one that is interesting is euroswiss. Matt i happen to have that on my screen. Richard you read my mind. That is netting to levels we havent seen for around two and a half years and i think if we get below this 108 level, we could open up 106 in euroswiss driven by the geopolitical risk. Matt tom keene used to tell us euroyen is what the pros watch. That relationship has changed a little bit in terms of being the best risk indicator in the world. Do you look at euroswiss . Richard being based in europe, euroswiss is one of those things we would look at as closely as euroyen. Right, but is euroswiss is another key indicator. The advantage it has is it is a bigger market. What is the safest haven of all . Switzerland remains that and euroswiss you need to look at it with euroyen to look how high investor anxiety is. Matt the euro side of the equation has changed a lot in the last couple of years. It doesnt look like inflation is coming here anytime soon. Richard jones, our mliv fx rate strategist in berlin. You can check out his work by typing mliv on your bloomberg terminal. Weve got a developing story here with airlines. More and more are now being added to a list that are avoiding iranian airspace since the crash of the ukrainian jet that killed 176 people on board. Heres a list of just some of the airlines diverting from iranian airspace, including the funds and air france. Anna we continue to watch that story and we continue to watch further commentary coming after we saw the iranians launching ,issile attacks on u. S. Assets u. S. Air bases in iraq. U. S. Futures, like many risk assets sold off as a result of the initial attack and we saw those losses being paired. Theome of the comments from foreign minister suggesting the activities of iran have been concluded in proportionate retaliatory measures. To be treadingm water in the face of conflicting comments from others in the isnian leadership, but that what we iranian leadership. Expect more weakness at the start of the trading day. From here in london, this is bloomberg. Iran retall yates, tehran fires over a dozen missiles. Threats rises and stocks sink. A boeing 737 crashes in iran, everyone on board has died. State tv suggests technical ssues with the aircraft. In bay route, ahead this highly nticipated press conference. Welcome. In lond, even though iran has retaliated it hinted at