tv Bloomberg Markets European Open Bloomberg January 16, 2019 2:30am-4:00am EST
♪ drew: good morning, welcome to "bloomberg markets: european open." we're live from our headquarters here in the city of london. i am anna edwards who is in westminster. >> flat after the uk's crushing defeat in the commons. will theresa may survive today's no-confidence vote? european trading starts in less than 30 minutes. >> brexit on the brink. suffersmay's agreement
the most spectacular defeat in all of british history. she now faces a confidence vote. we are live from westminster. caution prevails in the markets. equities in asia traded mixed, but europe point tentatively higher as investors assess policy makers' reaction to a slowdown in global growth. drops the ceo, is $60 million dispute from's of the spanish letter to cancel the appointment of its new ceo. u.s. bank earnings are in full swing on wall streetp good morning, less than a half hour away from the european open, features are little changed. i should point out, the pound is little changed as well. we do see gains in continental futures. up dax, features trading
point 3%, cac features trading up a little more than that. positivelso showing moves in terms of equities. yesterday.s&p 500 up yesterday's ftse closed, close markets are here so you can see what happened before today's open. currencies, you see em putting updoing -- the big. movement the pound is not moving very much at all. ,e are still looking at 1.28 pretty much the same level we saw yesterday before the historic vote. anna? anna: matt, while the pound is in limbo, let's get back to politics. theresa may faces a vote of no-confidence today after her divorce deal suffered a crushing defeat in parliament. the opposition labor party is vote.ng to force a i am joined my manic guest.
the you really think you can win this no-confidence vote this evening? nicky: if you add up the numbers of the opposition party, we expect to win. but. in the atmosphere in parliament at the moment, anything could happen. yesterday was completely beyond anyone's estimation, the scale of defeat. anna: but if you lost today, you another?e back with >> yes, we have that right. you have to judge of the behavior of the government. anna: if you don't win, and you are unlikely to win, where dewey had next, john? john: the president says she is enter into talks on a cross party basis? she hasn't. she has done it in a way which are undermining at the potential of the talks anyway. she hasn't said if she will talk to the leaders of the opposition parties, that is the first
thing. second, she has laid down conditions for the talks which will prevent the discussion of a customs union, which is watched most of the opposition party wants? anna: that she need to revise her red lines, then? john: definitely. parliament demonstrated yesterday that they have no confidence in her? anna: that she have to revise her red lines to get you to the table? john: absolutely. we have been clear on the longer we need a permanent customs union. have said about the protection of the employment regulations, regulations for the environment and consumer rights. we put those on the table but she hasn't even picked up to call us. anna: has she said that she will not revise the red lines to anybody in the party? john: we haven't heard from her. i think that was one of the reasons she lost so badly yesterday. do the had two years to discussions and it was only last
week that she picked up the phone to talk to our major trade unions, for example. anna: what is think of talk of the members of various select committees taking charge of the legislation if the government cannot deliver anything within three weeks? john: i think parliament will play a much bigger role, and we will be saying to our own parliamentarians on a cross party basis that we will put our ideas to a vote. we think those. there is a compromise to be reached if discussions are open. but as i said, the prime minister is closing them not already? anna: why do you think there is a majority for? john: i think there is a majority for a customs union, a close relationship with the central market, that can be done. there is also majority for regulations for consumer and rights.ental
there is a package that we put forward, but as i said, the prime minister has been in terms ?f giant -- intransigent anna: so to reopen negotiations with the e.u. would take more time. delaying article 50, do you think that could happen? john: it can on the be the government that requests it. before yesterday were angry but here's a prime minister who seems to be deliberately running down time so we can and your the end of march for about? anna: she expressly denied that she is running down time. the government and that is what they don't trust her? with do trust of labor party to deliver? john: in the conference, we were very clear that if we reach an impasse, that would be one of options? anna: so if party membership tells you they want a second referendum, that will be the policy of the leadership of the
labour party? john: we have a unanimous decision? anna: to keep it as a movie options? john: yes, but to go with the sequence which is job security, seek a general election and if we can't do that, then yes, another compromise can be reached. and if there is an impasse, that us?lways open to anna: if anybody watching the program is fearful of the labour government and what it might do to united kingdom assets, suggesting maybe that socialism 1980's day in the 1970's, and they are reserving judgment, what would you say to them? john: the key element of what we're saying is that we are open and transparent. there are no tricks up my sleeve. we will implement the policies we have been implicated. if they look at our manifesto, they see investment in growth. are we as a country doing is stagnating growth.
this was happening even before brexit became such a controversial issue. if you look at what we are saying, we will invest to grow the economy and create a prosperous society. wishes start investing in our infrastructure and our social fabric. that is exactly what business leaders have been telling us is needed? anna: john, thank you for joining us this morning. the uk's shadow chancellor, here with me in westminster. let's get to the bloomberg first word news of desley humphries. >> thanks, anna. the euro areaays is not heading for recession. but the ecb president warned members of the european parliament that the current slowdown could be longer than expected. investors have been questioning whether the central bank will be able to start raising rates this year after disappointing data from the region. china's central bank has boosted injections via open market operations to the most on record. the pboc found a net 560 billion
yuan into the financial system yesterday in an effort to ease demand for cash. meanwhile, home price growth in china slowed last month in a latest sign the property market is undergoing changes. that was the slowest race of growth in eight months. renault is preparing to remove carlos ghosn as ceo. they say the board has concluded that a decision is urgent after he failed in his latest appeal for bail in tokyo. . he has been in jail for eight weeks now, although he denies financial misconduct. the board of directors are expected to meet in a couple of days and reports say he will be replaced as chief executive regardless of the case against him. global news, 24 hours a day, on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm does the humphreys. this is bloomberg. anna, matt? matt: des, thank you very much.
anna: welcome back to the european open, we are minutes away from the start of cash equities fo -- cash equity trading. theresa may is facing a no-confidence vote after her brexit deal suffered a crushing defeat in parliament it with. -- it would set britain on course for a general election. that is a big issue. may's dealor theresa last night, along party lines. that she need to revise any of ?er red lines nicky: she will absolutely need to tell build a consensus in parliament and to get a deal through. i think there were elements of the plan that will survive, there is a lot of detail in a those 600 pages. to need a way agreement because we are
leaving an international treaty? me rightn just told now that there is a possibility of a customs union, that you need that to even get the labour party on the table. >> i think there is some form of consensus that can be found, around a single market and customs union, a customs arrangement. i hope very much that the prime minister this morning and her team are thinking, harvey going to explore that? anna: so it seems that she will consult with other parties. she said as much yesterday. s, one of your colleagues, has been talking about a plan for aliment terence to take control of the process. how long do you give theresa may before you have to do that? nicky: we will seek to amend the deal, a deal that allows the government process three weeks to see if they can agreement.
at the same time, we will allow the committee's senior mps to see if they can find a consensus. they would then take it back to the house of commons to be voted on. if consensus cannot be found, we would have to say to the prime minister, you have to ask for an .xtension to article 50 and if the government is able -- a look like they are clearly finding something that the mps can unite around, then our process can slightly fall back. but at the day, the government had two point five years, they have known for over a year that this vote was going to happen and so far, the majority in parliament has not been found? anna: one of our guests yesterday said to those who spoke after the vote, anybody who has something to test, a view that they want to see expressed in parliament and voted on would get their chance. there could be a lot of votes on a lot of potential brexit deals. i think theome house of commons will be narrowing down the options to see where the majority
lies. it is like any commercial negotiation. and expects the viewers will understand, testing the waters. testing on the other side where thatits of tolerances is people can live with, the no go areas, that is what will have to happen. but it will be in a public forum? anna: and in a short space of time, because the clock is ticking. the northern border with ireland land is being considered as a gordian knot. what solution can be offered on that front of that would get the back? nicky: i think that is rather customs arrangement but you were just talking about with the shadow chancellor, that would help sort that out. there is talk about technology sorting that out one day. the thing about last night was that it was just the end of the phase. we still have a long way to go in terms of talking about a permanent trading relationship with the e.u.? anna: do you think the
conservative party survives the next few months? i was going to say that one of the mps who put forward the amendment yesterday, he was suggesting that if there was a delay to brexit or a second referendum, that it will be something that would split the conservative party irrevocably. nicky: i think the party can survive it. sides ofrs of of all the debate will have to decide if they want the conservative party to survive. they will always be a need for a center-right party in a u.k. politics. in all other issues, we agree with each other. economic policy, welfare policy, it is just one particular issue where there is a real worldview. the prime minister will have to try to keep the show on the road and at the end of the day, do the right thing for the country. getting a majority in parliament has to be the right way forward. anna: others see it differently, they think should have a second referendum.
i understand they will be a move today, to launch the campaign for a second referendum. you would not back at? nicky: at the end of the day, people have had a decisive say on a june, 2016, so i think the european union. the question is how we do that. that is for members of parliament to hammer out and find the consensus. is second referendum would take a long time, it requires more negotiation and provokes more uncertainty for business and for others. anna: ok, thank you so much for joining us. nicky morgan, chair of the committee in the house of commons. the au brexit negotiator michel barnier speaking in strasbourg. plenaryhat european session, let us listen. >> not speculate under different scenarios. what yesterday's vote showed was that the political conditions
for the ratification of the recent agreement are not yet their in london -- are not yet london. this regret is obviously linked to the intense work we have done together with you and with europe, and with year existing group for two years, but also we and the british government, also with the- british government and based on the red lines of the british government. should we profoundly regret this we drafted a withdrawal agreement together. with the british government on an objective basis taking into account our shared a demand to ensure we don't have a border , and preserving,
allowing the u.k. to preserve the integrity of its territory, and together with the british government, we mapped out the framework for the future relationship which we would like to be close and ambitious as possible. british red lines will allow. , listen togentlemen the public statements made by the members of this chamber, the house of commons. that it made us said. due to various motivations, they were sometimes contradictory and opposing views. objectively speaking, this vote is not clear manifestation of a positive majority, which would define an alternative project, an alternative to the proposal on the table today.
context, it is up to the british authorities today or tomorrow to assess the outcome of this vote and up to the british government to indicate how we are to take things forward on the 29th of march, towards an orderly withdrawal. president of the european council reminded us last night, ladies and gentlemen, contrary to what has been said over the last few days and weeks, the agreement we reached with the british government has almost 600 pages, is a good agreement, actually. it is the result of a compromise , but it is the best possible compromise. worked in an objective manner. legal certainty everywhere where brexit has actually created uncertainty.
such as is the case in all therations, certainty for uk's citizens, for european other 27of the states all that you, their rights are not guaranteed sustainably. these rights have always been our priority, your priority here parliament, and protecting these rights will continue to be our priority whatever the outcome. now, public or private bodies, whether we are talking about the u.k. or authorities in the various any seven member states, all the undergoing programs will be maintained thanks to the agreement we have reached. security and stability for ireland and northern ireland, the return of a hard border would be avoided thanks to a solution which would preserve the integrity of the united kingdom on the one hand, and the
single market on the other, the good friday agreement, which we committed ourselves to. this is where the backstop, which we agree to with the uk's must remain a backstop. it must remain a credible backstop. the backstop must be a backstop. it must be credible. for businesses who would be given a transitional , in a legal basis, i might remind you, is a withdrawal agreement under which they would have time to prepare and a depth to the new situation. so this compromise also, of gives us with the transition, time to negotiate our future relationship on the
basis of the political declaration which we have also ratified with the u.k. government. this political declaration allows various possible options but still respecting our fundamental principles. any case, whatever happens, it ratification of this withdrawal agreement is necessary. it is a precondition to create mutual trust amongst ourselves in this. we are looking forward to the second round of negotiations. with regard to the future is importantwhich for the future of our continent, i would like to remind you that your parliament and members of the european council have always said that if the united kingdom chooses to shift its red lines in the future, and if it makes
the choice and makes a choice to be more ambitious, to go beyond a simple free trade agreement, which would be quite something, then the european union will be immediately ready to go hand-in-hand with that development and to give a favorable response. ladies and gentlemen, i am not only talking about economics and trade and exchanges that are so important for growth and jobs, i am talking about sectoral cooperation. your committees, of course, are very, very -- are following these of allotments closely. one important sector, aviation, transport and others. i am talking about police and judicial cooperation, which will be necessary after brexit, and i
am also, of course, talking about stability on our continent, security. a member ofingdom, the security council of the united nations, an ally, friend and partner in foreign policy and development and cooperation, and in any matters related to defense. ladies and gentlemen, we work collectively -- we have worked collectively over the last 18 atths and this was validated all key moments by the british government, but the european council and by yourselves here in the european parliament. now, with this standstill, until we have cloud our way forward, what will receive a majority, we will not be of a to move forward. this is where the future steps
must be indicated clearly by the british government. president and ladies and gentlemen, an orderly withdrawal will remain our absolute priority in the coming weeks. having said that, as i speak to you, we cannot exclude any , and this is particularly true of the scenario we always wanted to avoid, and that was about no deal scenario. it is the 16th of january today, we are only 10 weeks away from the end of the month of march. that is to say, the moment chosen by the british government country.hird 10 weeks from that date, we are fearing more than ever that there is the risk of an no-deal brexit. we still are focused on avoiding scenario.
but at the same time, we must remain lucid and clear in our approach, which is why we are stepping up our efforts to be prepared for that possibility. working ing, this the service of the commission that the secretary-general began and we will have to speed up our efforts, working together with all the stakeholders and partners who will be called on to take continued measures to face possible consequences -- barnier,t was michel chief of brexit negotiators ataking live this morning the european parliament fascinating to get his insight. and regret to what has been heard from westminster where i am. talking about how the backstop is credible, seemingly trying to stick to the backstop.
whether any other credible backstop or amendment to the backstop could be continents we will have to see in the weeks ahead. u.k.sting that the authorities, it is up to them to show the way forward. we got the same message from jean-claude juncker yesterday as well. crucial, what kind of brexit does the house of commons have a majority for. matt: all right, we are less than a minute away from the start of equities trading after this historic vote, this crushing defeat for theresa may. let's take a look at a couple of indicators of how we can expect the equity trade to start in europe. the pound right now really not moving much at all. , and it has28.50 been like that since yesterday before the vote. we saw gains, slight gains in asian stocks, and we see gains in oil, as well, while the euro
falls against the u.s. dollar, this after mario draghi said the economy in the e.u. is still weak enough to require significant stimulus from the ecb. futures are pointing higher, even ftse futures are up slightly as we slide into the open of continental the u.k. stocks. you can see that futures -- let us see how the cash trade looks like. the ftse barely positive coming out of the gate, the imax in madrid -- the ibex in madrid also trading a quarter percentage point up, so it looks morning.ld gains this we may also see some really light volumes here, that is one of the things we noticed yesterday and today, in terms of the pound trade. traded.st very thin the
although, you don't see the kind of volatility you may have expected, not a lot of bouncing. it is holding pretty tight. you might maybe see some light volume in a stocks as well. as far as this, we have really to the upside, 490 stocks rising, and you can see as far as the biggest additions to the stoxx 600, we have the oil stocks of their, total up, shall also up, with gains this morning. , as well as hsbc up some of the other banks and financial stocks. dating today, barclays gaining, b.n.p. paribas, ing group is also up there yet wall street earnings are disappointing on the trading front, but you also have the santander story. that should be very interesting especially for andre
orcel. in terms of individual stocks, they are just starting trade this morning and you can see some of the defensive stocks falling. ,e do see unilever down anheuser-busch also falling, as well as interestingly ,bp. it goes one direction while to tell and roil shell go the other direction -- royal -- it goes one direction, while total and roil shell go the other direction. you can definitely see that today. astrazeneca is also down. in general, european markets are opening higher today as theresa may faces a vote of no-confidence later on following her crushing defeat in parliament, a historic defeat in parliament last night. joining us on set is freddie lait, ceo and founder of management.estment
what you make of what we have seen happen in westminster company what happened last night, and what we are expecting to happen tonight? freddie: it looks like the chaos we have had the last couple of years is not getting better. one of the reasons you are seeing the low volumes is that we have not had any new information that any deal with us. if anything, there is a dovish tone to the market goes most people are suggesting that may be in is becoming less and less likely. we have to get through the confidence vote, which is likely that she will pass, then we will have to see what michel barnier comes up with. matt: do you think investors expect an extension of article 50, or do you see the u.k. possibly leaving the e.u. on march 29? freddie: i still think we will leave on march 29. the problem is, the whole problem with the brexit has been that you are trying to average something that you cannot average. the country is divided across parliament, across the government, so we are not going to get any mutual expectation.
there are people expecting us to remain,eople's vote to and others expecting a hard brexit, and. everything in-between it is incredibly divisive and i am not sure how you bring cohesion to the issue. anna: friday, good morning. guest tell us about the low volumes were are seeing and currency markets, even of the big pound swings, are no indicator of hedge funds and investors not putting any value at risk at this point because the path ahead remains unclear. to you see that is understandable? freddie: a bit understandable. there is a slight twist, that those who have taken a position of already taken it. the crushing defeat for theresa may was very well broadcast, i don't think people were betting on an alternative
outcome. i think people had heard he positions long or short the pound before that, but personally, i think the pound is undervalued. 128.50, you think it has a long way to run, where do you think it would go? 150.anie: i would say matt: in your optimistic scenario, your best case, you think the pound will rise, you also think we will leave, the united kingdom will leave the e.u. on march 29. what kind of outcome are you be so goo?n freddie: i think we will leave with a softer brexit on the one andosed by theresa may, there is even a chance that we delay article 50 or that we don't leave it all, and have a referendum which would probably leave to a remain vote. even with a no-a deal scenario, i am an optimist. the pound is undervalued. pent up consumer spending, etc.,
etc., it is so high in the uk's situation that there will be a flash brexit. we saw this around the trump election, in the last five years in europe. once everything happens, the road most forward. was a have some certainty, i think you will see the pound and the u.k. assets in general are deeply undervalued. anna: you just wonder how long you have to wait for that certainty, don't you? report just last night suggesting that there has been a big drop in consumer spending. it would be understandable if the u.k. economy were to wobble from here . freddie: it has certainly been wobbling, it has been a relatively resilient even what we see in consumer confidence numbers. so we are still holding ourselves together slightly, given the level of uncertainty we've had.
i am not suggesting that it would cause uncertainty in the short term, but plenty of people have been suggesting to me that united kingdom stocks are undervalued for the last couple of years. but i do think at the end, the end is near. matt: alright, friday. we have a lot more to talk about with you including their rest of europe and the global economy. chief investment officer and founder of latitude investment management, stays with us. brazil says of the world's biggest aluminum factory can resume production. you can see shares right now up 5.5%. this is bloomberg. ♪
♪ matt: welcome back to the european open," we are currently about 20 minutes into the session. you can see the dax is up a quarter of a percent, the down100 up down -- it is .10%. i want to give you some breaking news on one of the most horrendous retail failures in all of history, sears. the bankruptcy there, the sad that with eddie lampert and his hedge fund has finally found an end to him and waiting, he and
his hedge fund winning their bid to buy sears out of bankruptcy. theably, eddie lampert put company into bankruptcy in the first place with the purchase of kmart. au can see him there, he has won the bid and will not receive from searstcy assets that he caused. now we get to our top stories with dani burger. what do you see in terms of the movers this morning? >> hard to believe that there is more going on with brexit, the twin sears and these other stories. the biggest gainers on the stoxx 600 today, brazilian companies. the brazilian president lifted an embargo on one of the largest aluminum factories. there is a federal embargo, so that is the next hurdle for the company. the other side, the worst
performer today, pearson. earnings on average, not too in a line with the guidance, but they are cutting on their debt. this is one of the least loved the stockeurope, so is not done more than 5%. finally, michelin is down 1.5%, in sympathy with its u.s. counterpart, goodyear. goodyear yesterday reported earnings which missed expectations, due to a weak tire sales in china, europe, the globally.ggling we will keep an eye on continental today as well, with european car sales falling for the first time since 2013. thanks, so much. vote theresa may faces a of no-confidence today after her defeat inl suffered a
parliament. she refuses to negotiate. >> we went as far as we could with the agreement and in trying to resolve a problem of internal british policy, we will not abandon the interests of europeans. >> it is time for the u.k. to tell us the next steps and our side, we will remain a united and determined to reach an agreement. >> we have a tentative date on the 29th of march, and it is important that we come to a deal. on one need to set table, the opposition and the majority, to sort out what the national interest is the best relationship between the u.k. and the e.u. in the future. they need to do that as fast as .ossible anna: joining us now for reaction from europe, bloomberg's murrieta day out in brussels. good to see you this morning. what have we heard some -- so far from brussels. ticking, no room
for negotiation, and others are sounding a little bit more even minded. maria: good morning, anna. i think if you expect that e.u. to come to the rescue, it probably will not happen. dale of it -- it is clear as a day that the deal in its current shape will not clear the government. they cannot put anything on the deal that would make 200 mps switch their vote, so it is up to theresa may to come up with a plan b to be had there is a sense of frustration because of this is to years after the vote. the u.k. still has not decided what kind of relationship it once with the e.u.. until you get to that point, there's nothing they can do. the focus today will probably switch to article 50, extending brexit. that date, march 29, an extension. of the au is probably saying it, might have to extend
and that would clash with the european elections. matt: thanks very much for joining us, maria taddeo in brussels. i want to get back to our guest, founder of latitude investment management, freddie lait. recovered brexit and we will continue to cover it all day today. look at theke a european angle of things. from europe's point of view as an investor, how does the e.u. looks here. they need the united kingdom, maybe not as much as the u.k. needed the e.u., but there is a slowing economic growth scenario and they don't need any problems if they can avoid them. freddie: yes, ultimately theresa may's weakness becomes bears. it will hurt them -- becomes their weakness. major countries in the european
union are on the brink of recession and they are having massive local slowdowns and political uncertainty which they have had for far longer. we all need a positive resolution to this. that said, i agree with most of those quotes you just had on camera at an think there is much they will be able to do to move forward and give us some icing on the cake. potentially some better wording on the backstop, maybe an easier ,xit from the transition period but i can see a huge amount of concessions coming back for any amended deal in the future despite about being in their best interest. anna: i just wonder if red line's change, if that changes the response in brussels. will be that for another time. on the subject of europe, you talk about flirting with a recession. germany just dodged a recession with slight growth in the last quarter. mario draghi gave a very tepid assessment of the eurozone growth. the you expect the ecb to hike rates?
freddie: i don't really understand why, the motivation is to raise rates at the moment. i can understand that central get rates up so they can cut them in the future, but whether it is in recession technically. or not, there is no growth across europe there is no real growthr catalyst towards coming out of europe from domestic demand, in particular. why he would start to tighten financial conditions, monetary conditions into the wave of that, i just don't see the logic. but he may well do it because of the longer term structural reasons. matt: what is the view -- your view on the economy? we saw germany narrowly avoid a recession. but they still have major issues they're basically trying to kill their own automotive industry themselves. a huge driver of growth. does that turnaround this year? freddie: talk about anti-protectionism. matt: it seems like there is a
trend, countries wanting to shoot themselves in the foot this year. freddie: i have thought for a while that there is very little way to generate the mustek growth in europe, there is too much debt already, you're not generatehave -- to domestic and growth. there is too much debt already. i am a more positive on emerging markets. but relying on other people for their fortunes, which is the european fate, is causing more fraction, more disarray. matt: by the way, automotive stocks in and european banks were the worst performers last year. looks like people have been buying those, kind of bottom feeding. ? freddie: do you think that is a stupid play i think european banks have no value. european cars, i see lots of value. my biggest issue is that we are going through a transition in the whole auto industry, towards
an electric vehicle. that is in motion. it is sad but true. the problem is people are not going to spend an enormous amount of capital and cash flow on the same thing. there are going to reinvent the wheel all around the world and we need to see more alliances like ford and volkswagen before we get rational capital spending. matt: absolutely, sergio was a huge proponent of this, may he rest in peace. he wanted people to work together more. freddie lait will stick with us for the hour, he is in the cio and founder of latitude investment management. let's take a look at the sectors , speaking of, as we go to break. this is the group-rank to 600.ns screen on the stoxx you can see that so far today, basic resources are the biggest winners. utilities are the only losers. up next, sterling stability.
ftse has fallen about 13%. other european indexes are up -- percent.out .3 the resilience shown by the pound and other u.k. assets raises doubts about how much has changed today. we are asking the question on the mliv blog, what key issue is brexit drowning out? -- cio and, the founder of latitude investment management continues with us. it does matter if you are an investor but it tends to be the only thing we are focused on a now, but the art -- there are still things going on. in the world would he think of this saga? freddie: i think the most important thing to pay attention to is the fed cycle. i think it is what is a driving prices around the world and i think the dovish tones will
continue. we may get one rate rise this year, but i think it is stalling. and that is positive for monetary conditions in america and also globally. if we see the dollar going down a little bit, and it till remains very high on a global basis, it will ease pressure across the world, particularly china. when monetary conditions are tight, the weakest hand at the table falls first, and that has clearly been china. they need a reprieve, while also stimulating their economy, and it would rebound and be very positive. matt: what do you buy the dollar really turns over, what do you think the best assets are? freddie: i still think u.s. assets are well hedged. any stocks you have, maybe you invest directly in china, those stocks have been hurt as of china exposure, so i have stocks on things like starbucks or shis
companies that sell a lot of their stuff in china and they have been hit hard in china in the past few months, they will see a nice relief when china comes back. anna: friday, you were talking , you the fed -- freddie are talking about the fed, how accommodative policy is. -- there was someone from the fed yesterday talking about how the balance sheet is removing accommodation. comments around the balance sheet really surprised or unseated markets in december. freddie: the truth is we never had an idea what it meant when it was going up, and we still don't have an idea what it means when it is coming down. quantitative tightening is something that we still haven't got our heads around. it was interesting to hear the comments, she has been pretty hawkish for a while now, and to see her advocating for it was seems like a very pragmatic and
data dependent approach from the fed. i think it is very important building a narrative around that for the next of months of trading and toward. matt: a more dovish fed cycle. matt: if we have a slowdown in youfed rate hikes, are -- and a positive brexit, are you position for gains? freddie: we are still position -- all of our individual names that we like, we only the own about 15 or 16 stocks. we are more individual stock pickers. foreignreduced our exposure back to sterling. we do have a strong view that in most future scenarios, sterling will rise, and dollar will go down. i think that is very important. matt: to read, still more to talk about with you. ofddie lait, ceo and founder latitude investment management. we see here on the european world map, very little change in
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♪ anna: good morning, everybody. 13 minutes into your trading day. brexit on the brink. theresa may's divorce agreement suffer the worst parliamentary defeat in british history. hug her government now faces -- a government faces a confidence vote. european stocks trade higher as .nvestors are set -- a $60 million pay dispute with ubs promised the spanish letter to cancel the appointment of its new ceo. u.s. bank earnings are on full swing on wall street. welcome to bloomberg markets:
the european open. i am anna edwards here in westminster. of course, alongside matt miller , who is keeping check of the markets at bloomberg's european headquarters. matt? matt: just 30 minutes into the trading day. we don't see huge gains and indexes, but we see good breadth >>. . stostocks gaining on the xx 600. you want to see the financials taking the lead. ing group is rising, voices rising. qb -- lloyds is rising. , so a numberhere of the banks, deutsche bank rising as well. here.does appear -- is up obviously it's one of the bigger stocks.
it only has to put up half a point percentage gain in order to be the biggest addition to the stoxx 600, but it matters a lot in terms of which way the indexes are going. if you look at the downside, there are far fewer stocks following this morning, but it is interesting that you see some of the defensive stocks on the downside. unilever,usch, diageo, these companies make stuff you need, no matter what happens to the economy. as crude prices are rising. let's get the bloomberg first word news. >> theresa may's brexit deal has suffered the biggest defeat for any government in modern u.k. history. lawmakers voted by a majority of more than 2-1 against her eu withdrawal agreement, with pro-brexit conservatives uniting with anti-brexit labour party
members. mays deal is all but dead with 10 weeks until brexit. labor party leader jeremy corbyn will try to force a general election, calling a no-confidence vote later today. may expects to win. >> it is clear that the house does not support this deal, but tonight's vote does not tells -- tells usut how nothing about how or even if it intends to honor the decision the british people took in a referendum parliament decided to hold. >> kenya's president says the security forces have ended on attack on an office complex in the capital with all assailants killed. at least 14 people were reported dead in the incident in nairobi. local reports, explosions and heavy gunfire were hurt early this morning as security officers engaged the assailant. if the first apparent major
attack by an al qaeda affiliate in kenya and almost four years. brazil's president has signed a decree loosening the country's restrictive gun laws, and hinted at further measures for armed citizen to combat. rampant crime. bolsonaro scrapped the requirement that residents need to prove their need for a firearm. brazil has a murder rate six times higher relative to his population than the united states. the world's debt pile is hovering near a record $244 trillion. the institute of international finance says the debt to gdp ratio exceeded 318% and the third quarter of that -- in the third quarter of last year. it's a fraction above the record seeing in 2016. global news 24 hours a day and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.
i am does we humphrey. this is bloomberg. matt? anna? francine: petulant do you -- anna: theresa may faces a vote of new confidence today. how does it give -- a vote of no-confidence today. it would set burden on course for its third general election in six years, but is that likely to happen? joining us is bloomberg's executive government director. can jeremy corbyn really win this no-confidence vote this morning? >> it is a numbers game. german khan -- jeremy corbyn does not have the numbers on his own, so he's needs -- chinese lawmakers from other parties, -- he needs lawmakers from other parties.
a key party that is allied with theresa may, the dup, says it does not like the deal, but for now it wants to work with her. as you said, a successful motion could end up triggering an election, and who wants that? there's a lot of frustration and division between the parties. anna: maybe we will see if anybody else does. matt? matt: maybe a lot of people in britain wants an election. after all, theresa may has been negotiating a dove that nobody seems to like or two years, and has no apparent plan b, and has not prepared for a no deal brexit. is an election inevitable? >> well, it's not inevitable. you would have to say that theresa may's government certainly is in an incredibly weak position. she's very boxed in. she's got people at very polarized ends that want very
different deals. what she is going to try to do now is rally some kind of cross party support. if you are in the labour party and think this deal might work in some fashion, come and join her. that is a very -- a very tall order. her government remains vulnerable, even if this no-confidence motion today is voted down. anna: if she does manage to hold on this evening, and it does look like she will manage to defeat it, but if she does manage to win this evening, you wonder where it sets the deal. within the structure of those red lines, it seems difficult to get any kind of guilt across parliament session it seems difficult that any deal across parliament -- it seems difficult that any deal across parliament could be reached. >> that's why she's so boxed in.
if she goes to other parties and says ok, we will go for a softer brexit, we will look at the customs union, that will only antagonize a decent amount of her tory party allies. no matter what she does, she's in a difficult position. if the deal gets amended here and she still gets that point, she still has to go back to brussels and say ok, i changed the deal that we agreed on, and can you come you come and support -- can you help me out, and support? day: she is very busy every , but of course the last couple of days i doubt she has gotten very much sleep. u.s. bank earnings are in full swing right now as well, and they have been a mixed bag, although for the most part down errors, starting with arrows -- arrows, starting with citigroup. yesterday j.p. morgan also reported a miss in fixed
income currencies and commodities trading, but record eight equity revenue lifted shares. wells fargo is the only u.s. bank so far to report a drop in annual revenue, so that's not good. still to come, on wednesday we will hear from bank of america alongside goldman sachs, and finally thursday we get morgan stanley, which has seen their upgrades in a season of pessimism for financials. freddie lait is still with us on set. two-putt brexit to decide for a ut brexit to the side for a moment, what do you think about u.s. financials? freddie: we looked at the numbers that came out of jpmorgan yesterday. i think the banks aren't fantastically well. jamie dimon said we knew we were a little bit slower for two weeks of the quarter, so we slightly missed, but i could
care less. and i tend to agree with him. there was such poor performance last year. i think jpmorgan is on 10 times earnings, bank of america the same. they have two times the capital they had before the crisis. i think they are fantastically well positioned to take advantage of the growth coming through in this system. matt: it's amazing that trading revenue would fall in this kind of environment. you have all of the volatility that everybody was wishing for in 2017. how does that not lead to an incredible surge in trading? freddie: i do agree with you. that was always my assumption, that when you get volatile prices, you get revenue getting to where -- the reality is that the volatility with trade uncertainty is that traders don't really know what to do. sure. is actually that
it feels very volatile and uncertain, but i don't think people are changing their mind dramatically, because the answer to these that you just stick. anna: when it comes to the banking sector, how long before we start to see pain and some of the retail stocks in the u.s.? when do we start to see nonperforming loans hitting either on the corporate side consumer site? maybe on the consumer side it still seems a long way away. .reddie: people are nervous the deposit visa has been getting worse for the retail businesses, but that's still always an incremental positive for the business. you are getting an increase in earnings from the net income side of businesses. my belief is that the corporate is more likely to be sections of the economy. two years ago we saw a large head to the oil and gas industry in america.
there were a meaningful amount bankruptcies, i think over 100. the banking system hardly blinked. i think that's what's really interesting. we have already seen an isolated industrial recession in the u.s. , which the banking system dealt with incredibly well. and i believe anything other than a broad sweeping recession across the economy, which is not my prediction, the banking sector should be able to deal with the corporates. i don't believe we are going to see an issue there either. matt: that is a sigh of relief. consumers have consolidated and are now more responsibly borrowing. freddie lait is the cio and founder of latitude investment management. let's take a look right now at what's going on with relative gains across europe at the individual movers that we have. for that we go to dani burger. >> -- up more than 27%.
this is going to be its biggest gain on record. they received a bid from another logistics company for $4 billion, that's dsb, sending shares higher than the bidding price of 170 swiss francs. -- cindy world -- c a 7.2% increase in revenue, still investors sending it down. homes now up more than 3.5%. it says it sees the full-year profits slightly ahead of estimates. this is just one of the latest u.k. homebuilders surprising to the upside. we heard from persimmons the other day also reporting that. very interesting that we are seeing homebuilders gaining,
welcome back to bloomberg markets. this is the european open. 46 minutes into the trading day and we have gains on the continent. a slight loss in the u.k. as far as the equity session is concerned. theresa may faces a vote of no-confidence tonight after her brexit deal suffered a crushing defeat in parliament. the eu said it was horrified by the scale of the defeat, the biggest in all of history, and refused to renegotiate the contract. joining us now is bloomberg's maria tadeo in brussels. rror coulduess ho be one word for the reaction. what else are you hearing in brussels? >> there is also frustration must because in the eyes of many european officials the bottom that two years after the referendum, the u.k. have not figured out what kind of relationship it wants with
the european union. until you get to that point, there is really very little you can do. they also think at this point given just how big this defeat was yesterday, there is nothing that they can on the table that can get 200 votes. the backstop has got to be in , and it's crucial for the eu 27 to stick together at this point. some speculation i am hearing today has to do with article 50. the u.k. has said many times we are not going to leave the eu. we will be deal or no deal march 29, but in the eyes of the european union, they say this is mostly inevitable now. it's just not enough time to get this done. matt: thanks very much for joining us. anna: thank you very much, maria tadeo. matt: sorry, anna. anna: let's talk about emerging markets. 2018, emergingnt
markets are seeing a change of climate this year. the fed more dovish tone, falling volatility and rising commodity prices are driving investor optimism. here are the key events to watch out for this week. turkey's central bank such interest rates today -- sets interest rates today. the president of argentina and brazil meet. on thursday, indonesia's central bank is expected to keep rates on hold, on the same day the south african bank is widely anticipated to keep rates on hold. up next on the program, we will take a look at the market drivers to watch with richard jones from the bloomberg markets live blog. he will be keeping us up-to-date with everything happening on these markets, as we move towards a confidence vote here in westminster. this is bloomberg. ♪
global policymakers to stop -- growth. richard jones, our bloomberg and live strategist joining us -- mliv strategist joining us. richard, you know, we were talking a little bit earlier --h freddie lait for from from latitude and his ash you to the -- answer to the question of the day, he says the fed has to be the most overriding issue are investors run out globally -- for investors right now globally. >> i would agree with that. i think we have seen softer rhetoric from the fed. frederick that is a little more etoric that is rh more into with them positing -- pauisng.-
if you are getting the more hawkish members of the fed thing that, i think it's more of a base case scenario that the federal indeed cause in its hiking scenario. does the market then take that is the impetus to actually price further easing into the curve? there is little preston for next year -- this year -- priced in for this year. if we get softer rhetoric from the fed, we might start to price rate cuts more than we are now. matt: what do you see as far as yields are concerned, richard? i think it's interesting that you still have some very good test big names out there forecasting that -- very big names out there forecasting that yields could fall further. >> i think if we look at where the yield is and where we were, just north of 3%, we have pulled back a little bit.
if this new narrative does start to take hold, i think we could get some further downside in those yields. not just in the 10 year space, but i think along the curve. it will take the fed it to actually start to really change the narrative beyond what they have done already, investors to start to price further easing into the curb, and then we could , and thene -- curve we could see more downside. i think the longer we stay sort of where we are now, the more sort of pressure that we had to just drifted downward in those drift -- draft -- downwards in those yields. matt: when you look at the ecb and draghi's's speech yesterday, is a chance that they are going to be able to raise rates much more than they previously were in 2019? >> i suspect having gone over the initial hurdle of ending qe
last month, the market is now starting to price the ecb not actually doing anything until 2020. i think that's probably consistent with what we have been hearing from draghi. i think having that first step out of the way, they can now take their times in terms of what further policy normalization to engage in. the ecb does not live in a vacuum. if the fed starts to talk more dovish, it will be difficult for the ecb to raise rates this year. i think the markets are head of this. the surprise would be if the ecb moves quicker than the markets. matt:matt: richard jones, bloomberg and live strategist at of our berlin bureau. you can join in the debate, by the way. whichs or the mliv team issue you think brexit is currently drowning out that's more important for global
♪ francine: on the brink. after a defeat in parliament, theresa may's government faces a confidence vote tonight. markets brush uncertainty after jpmorgan, wells fargo, and bank of america report earnings today. -- will no longer become chief executive at -- welcome to "bloomberg surveillance." i'm francine lacqua lived for a second day in westminster, where theresa may suffered a pretty big blowout loss to date. she faces a vote of no-confidence tonight.