tv Bloomberg Markets European Open Bloomberg January 29, 2019 2:30am-4:00am EST
anna: good morning, welcome to bloomberg markets, the european open. we're live from westminster. i am anna edwards alongside matt miller who is in berlin. lame today the market say the china slowdown. asian stocks case you as losses following a disappointing first batch of text earnings. european futures point higher. the cash trade is less than 30 minutes away. ♪ anna: turning up the heat on
while way, the u.s. charges the company with bank fraud and i.t. theft. will the allegations complicate the round of trade talks between washington and beijing this week? blame game, asian stocks follow u.s. session into the red. caterpillar and nvidia site slowing demand from china. european futures point higher. -- investors becoming more our investors becoming more forgiving? theresa may abandoned her own deal with the eu in hopes of securing one with her party. ahead of a crucial vote today in parliament. where less than half an hour away from the start of european trading. take a look at the pound. we have a three-day chart. yesterday we were up over 132 in the beginning of the session. we are trading at 131.5. asinteresting asset to watch
we get these amendments tabled in parliament and later on in two the vote. as far as futures are up, we did have gains in japanese stocks, we had gains on the csi 300, gains on the kospi. we have some risk on signals in today's market as well with the end little changed, the treasury yield little changed right now, gold little changed. it does look like we could have a positive start to trading in the european session. u.s. prosecutors have filed criminal charges against while way, the other big story after earnings and brexit. they allege that china's largest tech company has stolen trade secrets from an american rival. they claim they finally did the rainy and sanctions. the filings are the latest
escalation in the china-u.s. standoff that has world markets but not really a surprise and this anyway,ted especially as donald trump likes bargaining chips ahead of the trade negotiations that are said -- you set to start tomorrow. thisdo we know about lawsuit, what do we know about what we are seeing the u.s. push for here? peter: what we had was the u.s. unsealed two different lawsuits, one filed in new york and a different on filed in washington state. the one in new york is the lawsuit that alleges huawei violated these iran sanctions misled american banks into helping them violate those sanctions. in which the cfo of the company, the one who was arrested in canada has been indicted for for participating
in this violation of alleged -- alleged violation of iran sanctions. the other in washington state is different. that one charges huawei with having a couple of its employees trying to steal technology from t-mobile. t-mobile had developed this robot that would test global phones and was effective at helping them increase the quality of mobile phones. while we wanted that technology and allegedly these two employees try to take pictures of it and take specs and these sorts of things. huawei has blamed those two employees and said they were rogue employees. prosecutors took that apart in the lawsuit. they pointed out that while we had a bonus program under which they would pay money to employees that got valuable intellectual property from other companies around the world so they took a hit at huawei. there were a couple of responses today in asia, huawei denied any wrongdoing in these lawsuits,
saying it is confident it will be proven innocent in court. the chinese government took a very aggressive stance once again. not say the u.s. is prosecuting these crimes for legitimate reasons. instead, the u.s. is trying to hold back china's technology industry by going after these high profile companies like huawei and charging them with wrongdoing. anna: thank you very much for the explanation. fascinating timing given that it comes the week that we see u.s. and china trade talks ramp up to peter elstrom -- trade talks ramp up. >> china weakness is spreading far and wide to companies from industry to check. signs of slowing demand in the world's second-biggest economy. earnings sending a gloomy signal when it posted a profit shortfall.
the biggest maker of chips for cards nvidiahics cited deteriorating conditions when a revised down its forecast. both companies slumped. voted to filepg&e for bankruptcy protection to avoid such a move. bonds could convert into shares. the group that includes said adel and it apollo global management is putting forward its own plan. pg&e is expected to file for chapter 11 bankruptcy protection as soon as midnight tonight. the five-week partial u.s. government shutdown will 'stimately cost the world biggest economy just $3 billion according to the congressional office which reported the budget gap is widening. the department sees the deficit topping $1 trillion in the fiscal year 2022.
the last time the u.s. had a budget cap that large was between 2009 and 2012 following the financial crisis. saudi arabia expects to reduce oil output in february and pumped the six months at levels well below the production that was accepted under oil courts accord. energy minister -- the energy minister talking to bloomberg. >> i believe our target for february is below that. approaching 10.1. there could be small adjustments to domestic demand. we will find out in february. it is going to be well below the voluntary cap that we agreed to. for the four to six months.
>> global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. anna and matt. thank you. let's talk about what is going on in westminster. theresa may faces losing control of brexit in a series of votes that will shape britain's divorce from the eu. they are devising a draft that backstop.e irish great to have you with us. good morning. essentially the compromise gives the backstop and an extra year of transition. how much support does a command? guest: widespread support and
there are details to be worked out. has to be discussed with the eu. the majority of mps want there to be a settlement. they have less than 60 days to go. one of the big debates is about how do we make it clear that a no deal with nothing in place is not acceptable to parliament. people are interested, they want to explore it further and we heard from the prime minister in an amendment -- they will be able to save this is a plan we can take forward. anna: how do you express interest in the compromise through the amendments that are being voted on area the focus is on brady. nikki: -- nicki: there are other issues of the brady amendment. the government is backing
at? will supportot all it. there is a bit more detail in that amendment. getting the vast majority of the conservative party and to the same [indiscernible] rules out thek it possibility of no deal brexit. if an agreement cannot be reached -- this is a big thing. standstillying for a period, which is what businesses have made clear, they will carry on operating for some time. your compromise talks about the new backstop. it does not specify what that
would look like. some text that goes along with it. we will have to discuss the future relationship which will be contentious. there's always going to be [inaudible] i said this before, the u.k. is not ready, our resilient structures are not in place to deal with a no deal brexit. a bit more time, neither side wants there to be a no deal. here's the plan around which the majority of conservatives, mps and ministers can: us. i hope the prime minister will take it forward. anna: this sounds like recasting from scratch the brexit deal at the 11th hour. both sides are compromising. it is one of the things that has
been missing from this process. certainty,give that the backstop moves to the front of the process and becomes an indefinite proposal for trade and no -- all sides commit. anna: does it have any reach across the aisle? there arewill, but people who are not sure about it. there are a lot of labor mps who know that we are not -- they want to see an agreement in place but are concerned about an extension to article 50. i hope people will look at this. can move forward to talk about the next stage. anna: you want an extension. which what you're complement -- your extension includes. >> this also gives space to bring a back to parliament
before any extension has to be applied for. the important thing is for parliament to agree a negotiated settlement which provides a way forward and i think many mps will do what we can to get there. anna: thank you for talking to us, nicky morgan, chair of the treasury select committee. coming up, tech giants are reporting earnings this week. we discussed the impact of the trade war and the china slowdown. more on that next. this is bloomberg. ♪
matt: welcome back to bloomberg markets. this is the european open. 14 minutes away from the start of cash equities trading. there was mixed trade in asia what tech stocks facing losses, investors juggling concerns over the trade war as the you as decides to file criminal charges against huawei. let's get into the markets. you make an interesting point about what way maybe not being only important for the u.s.-china trade negotiations or business, but also possibly affecting europe, do you want to expand? absolutely, the focus for investors is on the u.s.-china trade talks and that is understandable, it does dominate
every thing else including the fed meeting how those talks will go. huawei does it -- play into that. there's a little bit of a worry beyond theatters trade talks. the trade talks are most important but this risks going down the five g network in europe and europe is the currency union, it is the third-largest economy in the world. this really matters. by implication australia, israel, all around the world, businesses will be disrupted if there is a ban on huawei technology. me put to you also the mliv question of the day and see what kind of answers your hearing, you posted the question early this morning, how hard will china's slowdown affect the faang stocks, we'll start getting earnings from facebook, amazon, alphabet, net clicks, google, what are you hearing? was: the theme overnight
companies were blaming the chinese -- china slowdown for why earnings were poor and guidance was negative. tech stock is the leaders of the bull market over the last two years, they are important and symbolic for many investors. to how they guide in the earnings that are coming out will be important. what they say about china not just for the earnings but what they have said with earnings going forward, with their guidance is around the china slowdown, that will set the sentiment today. matt: we will get apple out in a few more -- in a few hours. you can join the debate, you at home or in the office, if you think you have a good answer to do, the china slowdown will send us your synopsis. next, theresa may faces losing control of brexit in a series of
westminster, 8:51 a.m. in berlin with matt. the pound is drifting lower as. said may faces losing control of exit. would prevent a no deal departure if an amendment passes. very good to have you with us. let me ask you, is the labor leadership going to back the amendment to delay the brexit process? cabinet,or is a shadow the managing body is the labor caucus in parliament. , that will make the final decision but it is no big secret to say that we have been complaining for a long time --t theresa may has been [indiscernible] we cannot accept that.
for us today the single most important thing is we take no deal off the table. it is a no deal, many will know -- ithe peace process is cannot be put in jeopardy. we are determined to take the no deal that could see the return of that hard border off the table. if we can achieve that we have and maket the question sure there is a proper space for us to negotiate a realistic deal with brussels, and the european union. if the labor leadership with the party to back the amendment, will there be a well that one amendment be selected and pass? tony: most people who are
opposed to no deal would recognize that if you take no deal off the table, we have to have the time to look forward -- for what is the right bill. parliament voted in huge numbers. --say that theresa made theresa may steel was not acceptable. if we take no deal off the table we will say that her deal is a complete., we have to have the time to move forward. people in parliament, there will be a consensus. you heard from one of the conservative members who made it clear which way she will be voting. there is a good chance that today, we will see the timeframe began to move away from that march 29, very arbitrary deadline. there was no, nothing anywhere else that said march 29 had to be that date. incompetents and
-- anna: until it was decided. do you see a path between now and the general election, can you see a way of getting to a givenl election giving -- attempt at no-confidence have failed? tony: we want a general election. the government has no majority. that is not good for the u.k. but that is not in labor's hands. we will seek an opportunity to bring that about but if not, we have to make sure that parliament plays its role and fill in the consensus around the kind of deal that is in the interest of the u.k. and in the interest of our powers in europe. anna: thank you very much, tony lloyd, u.k. shadow secretary of state joining me in westminster. it is the market up and coming up. we see a negative session coming through in asia. that also with negative numbers
♪ matt: we are less than one minute away from the start of cash equities trading. let's take a look at the markets. annmarie hordern is standing by in london. annmarie: kick it up with the euro-dollar, under just 1.15. forjust under $60 a barrel brent crude, markets shrugging off the u.s. placing sanctions on exports of oil from venezuela to the united states. chinese stocks getting a bit of a rebound. earlier this morning they were down. trade talks will be pivotal between the u.s. and china this week in washington, d.c., and
cable so much in focus, hovering around 1.31. anna edwards is outside parliament today with those votes. ftse futures higher 0.4%. u.k. stocks will be in focus. dax slightly softer, cac is up. european market is open. let's see what's going on in the equity picture. u.k. stocks opening higher. a crucial day for london with brexit votes. ibex also higher. a mixed bag at of asia. a lot of pressure on chinese stocks, especially technology stocks, as the u.s. decides to go after huawei in a criminal probe. huawei, the biggest chinese smartphone maker. let's look at what's going on in the sector picture, looking at the imap on the floor, financials a bit of a mixed bag. profit warning a yesterday from nvidia and s.a.p. this morning setting the
tone. s.a.p. really seeing growth in cloud, but a bit softer, a bit of a mixed bag. , interestingr given the sanctions in venezuela. miners as well higher. individual movers, what are you seeing? we see onar as what the stoxx 600 right now, a pretty even split. 250 lower.gaining, here are the winners. british american tobacco, roil off hold -- royal ahold. roche, novartis adding as well. hsbc the second-biggest gainer, over 1%. it is the more defensive stocks. banks and pharmaceuticals helping to push you up.
bp, royal dutch shell, total all up. as far as the losers, swedbank earnings disappointing, down 3.5%. louis vuitton moet hennessy down 1%, daimler down 1% as well, so some of the companies down with earnings, daimler not out until thursday, but some earnings missing here, and some jockeying to get ahead of earnings coming up next week, bringing down or weighing down on the stoxx 600, which is however still gaining about 0.1%. , european markets opening very slightly higher right now. the u.k. standing out as a patch of green here, after asian stocks were mixed overnight, fears offell on the trade impact on corporate
-- earnings. joining us is lucy macdonald, cio of global equities at allianz. we are not getting much direction one way or the other in stocks, but for the overriding theme, what is the most important issue to watch this week? is it brexit? is it trade talks? is it the fed? where is your attention? two: the fed, trade, the most important things, and then corporate earnings. corporate earnings, a lot of tech this week, and that has been one of the leaders of the market the last two years, so we are watching the top line there. it is extremely important. we are only 20% through the earnings season so far, and until yesterday there wasn't a huge amount of evidence of oract of the trade war,
slowdown in china, and now we are beginning to see it, which we expected. but getting more evidence on that impact is useful. matt: we have got real earnings growth, lucy. the surprises are not huge, but we do have, if you look at the companies reporting in the u.s., 13% earnings growth year-over-year, 5.5% sales growth year-over-year. you expect to see worse numbers here in europe? lucy: yes. well, we are not getting the benefit in europe from the tax reform you had in the u.s., so the overall growth rate is lower. that is expected. more of aives, negative from china because there is bigger trade exposure expectedeurope, so we lower, but you also don't have such a big impact from technology, because it is a smaller sector.
matt: what is your reaction to news?awei not like you could not have seen it coming, but a fairly aggressive step one day ahead of trade negotiations. mark cudmore on the mliv blog says it could not only affect the u.s. and china, but in europe, where companies like deutsche telekom say they are reliant on huawei for 5g technology. lucy: we are interested in watching her china response. so far, the issue has been escalating, but china has been relatively calm, and not responded too aggressively. as we escalate, we need to see how they respond to it. matt: all right./ allianzdonald from stays with us, our guest host for the hour. we want to go back to westminster, where theresa may
faces a series of crucial votes shaping britain's divorce from the e.u. joining us exclusively is nicola sturgeon, first minister of scotland, who has called on theresa may to rule out no deal, consider extending article 15 . thank you for joining us. which amendments to you expect to go through in parliament today? which are you behind? snp will seekthe an amendment opening an extension to article 50. i hope that one passes. of course, it is entirely possible none of the amendments debated today get a majority in the house of commons, and they will be no resolution to the deadlock that has gripped the house of commons now for 2.5 years. the closer we get to the 29th of march, the date the u.k. is due
to leave the e.u., the more important it comes to contemplate an extension of article 50 to avoid the possibility of crashing out without a deal. the conservative party still negotiating with itself oblivious of having to reach agreement with the european union. the whole thing has been a shambles, and unfortunately it is the people of the u.k. who will pay the price if they crash out at the end of march with no deal. matt: what kind of economic effects would you expect if the u.k. crashes out with no deal? a lot of accusations of project fear, people talking about death, issues with shipping goods. on the other hand, there are people who run businesses, pro-brexit who think they would have no problem. how do you see it in scotland? ms. sturgeon: before answering deal,in the context of no
let's say first of all we are already feeling the effects of brexit. investment decisions are being delayed or canceled. businesses across scotland and the u.k. find it harder to attract talent, as people from other european countries, even farther afield, are less keen to come to the u.k., so it is having an effect already. and even if a deal is agreed in advance of the 29th of march, that's a withdrawal agreement, and there would still have to be negotiation about the terms of the future relationship, so that uncertainty will continue for the next couple years. the economic effects are being felt and will continue to be felt, even if there is a deal. if there is no deal, we can expect significant consequences of that, significant impacts. the scottish government likes don'tk. government, we want a no deal scenario, but we are planning contingencies, and we could see disruptions to food supplies, to medicine supplies.
aviation would be affected. it would potentially affect every aspect of daily life, and that is why it cannot be allowed to happen. this prime minister should without any further delay rule out the prospect of leaving the e.u. with no deal. she should make it clear, if she cannot strike a deal that wins a majority in parliament and is sheed with by the e.u., will not allow the u.k. to leave without a deal in place. the longer she waits to do that, the more culpable her government becomes for the implications. anna: ok. can i ask you about the implications for a further independence referendum, nicola? i know you said in march she will give more details, you suggested more details within that kind of timeframe. the longer the brexit uncertainty goes on, does that leave you with a lot more uncertainty as to when you will hold another independence referendum? as yourgeon: my views,
just indicated, will come out over the next few weeks. we need to wait and see for the moment which direction the u.k. takes, whether it is leaving the e.u. with or without a deal, whether article 50 will be extended, whether there's the possibility of another e.u. referendum or even a general election. i will wait until hopefully a little more clarity on that, and then set out my views an on the timing of independence referendum at that speech. the whole experience of the last 2.5 years for scotland has underlined the importance of having decisions about our future taken in scotland rather than at westminster. scotland is in a position right now, facing exit from the e.u. against our democratic wishes. more than 60% of people in scotland voted to remain in the e.u., and we face being kicked out of one of the single biggest
markets. the views of the scottish parliament has been ignored. that strengthens the argument scotland should not allow future to be determined by westminster, and we should take more control of these matters into our own hands. anna: how much pressure is there , first minister, within your party to hold another independence referendum? ms. sturgeon: clearly, my party supports independence, so most people in my party would want scotland to have the option to choose independence as soon as it was practically possible, but there's also a sense of pragmatism. people understand that there are uncertainties around brexit, and these uncertainties were not inevitable. the mismanagement of brexit by the u.k. government has caused more uncertainty than was essential. there is a pragmatism in my party, but i think there is a growing sense in scotland, not just in my party, that the time is coming to take matters around our own future into our own hands. as somebody who has long
supported scotland being independent, not as a way to turn inward, but to play a four part in europe and the world as an independent nation, that is music to my ears. do, would you, like to see another brexit referendum as well? do you think that is what the country needs? ms. sturgeon: on a u.k. wide basis, if parliament can't agree a way forward, it seems to me the only credible thing to do is to put the issue back to the electorate. let me be very clear, although i want scotland to be independent, i still care what happens in the rest of the u.k., and it will always be in scotland's interest for the rest of u.k. to remain in europe or with a close as possible a relationship to europe, so if it is an option of another e.u. referendum, that is one that should be taken. parliament and the u.k. government have had 2.5 years to try to come up with a workable
plan for leaving the e.u., and they have completely and utterly failed to do that. circumstances, allowing the electorate to determine the fate of the issue seems a credible way forward. anna: do you see a path between where we are now and a general election? clearly you wanted corbyn to call a no confidence vote. he did that and lost that. do you see a path to a general election? ms. sturgeon: right now, i don't think anything can be rolled out, including a general election -- ruled out, including a general election. in my lifetime i have never known a period as unpredictable as this. we don't know what will happen by the end of today, never mind by the end of the weaker the month, so a general election is a possibility. i would welcome a general election. fingertips --r theresa may is clinging to power
by her fingertips right now, as well as the tories. the government is in paralysis. nothing other than brexit is happening, and that is not good for anybody. a general election would be something i welcome, but whether that is possible remains to be seen. whether that is a second e.u. referendum or general election, nothing can be rolled out. matt: thank you, minister, for your time. nicola sturgeon, first minister of scotland and the leader of the scottish national party, talking to us about scottish national independence and brexit for the u.k. we have breaking news on pg&e. the california utility first made world-famous in the movie "erin brockovich" has filed bankruptcy because of $30 billion in potential fire costs it faces from the california cal
wildfires. pg&e is looking at liabilities of over $50 billion in the bankruptcy filing it put in just around midnight california time. obviously the stock has been absolutely crushed since the fires, down 74% in the last three months. and we have a fantastic map, which you can access with the bloomberg terminal, showing all the assets that would come up for sale presumably in a bankruptcy. you can see all of the different plants pg and he is operating. plants, being diesel the yellow being agricultural byproducts, green natural gas, and the big bright green spots are nuclear plants, so very interesting news. not unexpected, but you may have thought investor proposals could have taken it out instead. pg is filing for bankruptcy -- p g and e is filing for
let's get top individual stock stories with annmarie hordern. annmarie: let's start with phillips. saying upbeat on china, that is where they see sales and growth coming up. they also announced a buyback plan and beat estimates for earnings. sap to the downside. a bit of a mixed bag for sap. looking at the outlook for 2019, they are at the lower end, the stock down over 2%. norwegian air really plunging this morning, 15.5% down over a rights issue, as iag scraps plans for a takeover. matt: annmarie hordern, on individual stocks. a lot of earnings effects and m&a action. s&p posted mixed -- s.a.p. posted mixed earnings after more than $10 billion in acquisitions last year as europe's biggest software company shifts further toward the cloud. dutch held technology company phillips seems to shrug off the china slowdown thing,
with niche markets feeling sales growth and expanding the order book. lucy mack donald of -- macdonald of allianz is still with us. i wonder, is europe less exposed or even in an advantageous position when it comes to trade with china, considering the problems the u.s. has there? lucy: it has more exposure to china macro, probably less exposure to the politics, and obviously the trade dispute. so it will be very interesting as we go through, to see where those come out, the exposures. have seen quite a deceleration of earnings in europe as a result of the china macro last you already. so that is both in the earnings and in valuations, whereas what we are seeing now in the u.s. is
both the exposure to the slowdown, but also some impacts from tariffs as well coming through on their cost line. point, andaise that it ties in with our mliv question of the day, which was, hithard is a china slowdown the faang stocks, the big technology stocks? annmarie: it is the big one -- lucy: it was the big one and was already preannounced, so if it comes out today, will they meet those figures that have already been downgraded is the question. and they are seeing double-digit down in iphone shipments to china, about 15% as a whole. to be not just
the market slowing down, but could be some loss of market share as well, and that is something to watch, to see whether there is any backlash against u.s. products within china. so far, that has not been very clear, and we have been looking at that, doing surveys to see if there is any backlash against u.s. companies. so if there is more evidence of that, that's obviously a concern for u.s. companies. matt: lucy will stay with us. allianzdonald from global investors, joining us on a really important day for markets, although a day when the equity indexes appear to have trouble finding any clear direction. up next, mario draghi reiterate state is "weaker than expected" as europe slows down. we look at where you should be putting your money. this is bloomberg.
anna: welcome back to the european open. we our 25 minutes into your trading day, and let's get some final thoughts with lucy macdonald from allianz global investors. we heard from mario draghi talking about how the slowdown in europe was more severe than expected by the ecb. how are you investing in europe so you are not caught out by the slowness in the data? lucy: well, within europe i think, as we said, there has
been quite a lot of de-risking already, for areas which have been exposed to china. and although we are now seeing that coming through in the numbers, as we go through the isr, the stimulus in china highly likely to come through with a stabilization there. and so i think that looks like quite an interesting area if you are thinking in the medium-term, which is what we do. looking at some of those areas that are a bit depressed in valuation, currently seeing downgrades. as that stabilizes throughout the year, that could be interesting. industrials in particular. within consumer, there are definite pockets of decent domestic demand, germany being one of those, so there are places to invest there, and that is where we are looking in europe. anna: lucy, thank you very much. f globaldonald, cio o
♪ matt: 30 minutes into your trading, let's get the top headlines off the bloomberg terminal. turning up the heat on huawei. chinese charges the company with bank fraud and ip theft. will the allegations complicate a pivotal round of trade talks between washington and beijing this week, or was that actually the point? blame game. asian stocks fall of the u.s. session into the red, as caterpillar and nvidia cite slowing demand from china, but european stocks trade flat. and, ditching the irish backstop. theresa may abandons her own deal with the e.u., in hopes of securing one with her own party.
the pound drifts lower ahead of crucial votes in parliament today and this evening. welcome to "bloomberg markets." this is the european open. i'm matt miller in berlin, alongside anna edwards in westminster. anna: matt, here in westminster, we will see a day of voting, but not what we saw previously, where the house votes on may's specific brexit plan. this is a series of amendments we will see voted on that could give us guidance into what direction brexit will take, at least from a u.k. perspective, because even after all the voting on the amendments is done it is on ther brady amendment, we have the government is backing that one, after all this is done, we need to take whatever conclusion is reached behind the house behind me to brussels and see what the e.u. site says. let's get a bloomberg first word
update. >> californian utility giant pg and e has filed for bankruptcy, after the board voted for chapter 11 protection. the court filing indicated powerrnia's biggest company has over $50 billion of estimated liabilities, including for a series of wildfires in 2017-2018. u.s. prosecutors filed criminal charges against huawei, accusing it of stealing trade secrets and committing bank fraud. the allegations may come to get a pivotal round of trade talks between the u.s. and china this week. >> i am also announcing today a grand jury in new york has returned an indictment alleging 13 additional crimes committed by huawei, its cfo, its affiliate in iran and one of its
subsidiaries here in the united states. >> donald trump's state of the union address will not take place on february 5. the president accepted house speaker nancy pelosi's invitation after the nationally televised speech was delayed because of the u.s. government shutdown. meanwhile, acting attorney general matthew whitaker says of special counsel robert mueller into russian interference in the 2016 presidential election is "close to being completed." saudi arabia expects to reduce february, again in pumping at levels below the production limit it excepted under opec's oil cut accord. the energy minister spoke to bloomberg in riyadh. >> we've brought it down to 10.2 in january. our target for february is approaching 10.1. there could be small adjustments in domestic demand, so we will
find out in february. but under all conditions, saudi arabia is going to be well below the voluntary cap we agreed to. >> for the full six months? >> for the full six months. >> global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. matt, anna? matt: thanks very much. now, u.s. prosecutors filed criminal charges against huawei. they allege china's largest tech company stole trade secrets from an american rival, and the charges claim huawei committed bank fraud violating iran sanctions. the findings of the latest escalation in a u.s.-china standoff that has world market. joining us from hong kong is bloomberg executive asia editor
for technology, peter elstrom. what do the lawsuits allege, and do you think the timing is such use this asants to a bargaining chip in trade talks? peter: there are two different lawsuits that were filed. one filed in new york that alleges bank fraud at huawei, and that its cfo violated sanctions against iran. cfo allege huawei and the misled these banks into helping them violate sanctions against iran. the second lawsuit was filed in washington state, a little different. it alleges a couple of huawei employees tried to steal technology from t-mobile thatology, around a robot would test out mobile phones and try to improve the quality of the mobile phones. the details in these lawsuits are hard-hitting, particularly in the case of the employees who
allegedly stole technology. -- at firstforced portrayed them as rogue employees who did this on their own. in this lawsuit, they detail how huawei was rewarding employees for stealing intellectual property. they had a monthly bonus pool, and they would pay out money to employees who got the best intellectual property from competitors around the world. those allegations are very damning. the u.s. has maintain these are on a different track than the trade negotiation's, just based on criminal allegations against the company in these cases. however, inevitably they will complicate trade talks as the two biggest economies in the world try to reach some common ground on trade. anna: peter, a number of things to keep an eytee on. what has been the response of our from china and from huawei's management?
putr: first of all, huawei out a statement reiterating it had done nothing wrong in either of these cases. it says the case in washington has already been tried, they already reached a settlement with t-mobile over this, and that there is no wrongdoing they can tell in terms of the iran violations, either. the china government attitude was a little different. they have accused the united states of trying to hold back their technology industry, and say this is not about legitimate concerns about what huawei did, and in fact the u.s. has strategic goals, that they want to stop the chinese technology industry from evolving through big important countries like huawei, because they want to protect their own companies within the u.s. so they have taken a much more aggressive stance. matt: all right, peter. thanks very much. peter elstrom, bloomberg executive technology editor with the latest on the huawei case.
we are live in westminster, watching the political story in the u k trading is mixed to positive this morning. theresa may faces losing control of brexit to parliament today in a series of crucial votes shaping the british divorce from the e.u. joining us on the phone is the chairman of whether spoons, -- weatherspoons. he has campaigned for brexit. weatherspoon b chairman, joins us now. good to have you with us on bloomberg tv. you will have noticed that we saw a message yesterday from retailers in the u k, and from food groups like pret a manger, kfc, an mcdonald's who talked about risks to maintaining the quality and her ability of food if there is a no -- and
durability of food if there is a no deal brexit. to you agree? >> not at all. i think they are having a collective nervous breakdown, and the president of calais ports on the french side of the channel told the bbc on the ninth of january, there will be no delays, and he also said there will be no additional checks. maybe he said it in french, so no one understood, but if there's no delays on the calais side of the border, why in the name of have been would there be delays created on the dover side of the border? so i don't think it is realistic. the other thing is, i just don't think people understand this, perhaps because of the level of disinformation, is the e.u.'s highly protectionist, especially on food, which is what they are talking about, and charges on over 12,000 items heavy tariffs which the u.k. can abolish unilaterally on the 29th of
march if we leave without a deal. so food prices will go down if the u.k. parliament decides to abolish these tariffs, and the terror of income at the moment doesn't even go to the u.k., but the brussels, soi i don't know what is going on with this whonformation from people supported remain. anna: i heard what you said about dover, about -- but i suppose there is an unpredictable nature do things if there is a no deal brexit. it is unclear what anyone what do -- might do, what tempers might fray, what voters could be put up, so people are preparing for the worst. i was looking on your website, some of the delicious options, one particular burger that contained lettuce and tomato. and 80%, 90% of lettuce
of tomato in the u.k. are imported. how can you be sure you were not face scarce supplies of fresh food items if they were no deal? tim: if you want to be really pessimistic, you know there is ports, but ie.u. suppose you could say there could be short-term delays if we cannot buy lettuces and tomatoes from the e.u., we would have to arrange delivery from other countries. in the meantime, the sort of -- sword of damocles his over those growers in the e.u., because we are a big market for them. they are desperate to continue to do trade with the u.k., desperate, and that is the biggest factor. matt: i think the issue, tim, is not whether or not there will be problems. it seems people on both sides of the argument acknowledge there will be a period of hardship if
there is a no deal brexit. how long do you think that would go on? i know, for example that you import and sell a lot of lavazza coffee products. would you be able to get that easily? that is something you can't get outside of italy. tim: it is not actually true, i had a conversation with lavazza, they said, no problem, we make it in india, and if necessary we will make it in the u.k. i don't think there should be hardship unless there is ill-will, people genuinely messing around. he's quite unequivocal, says, there will be no delay, so he doesn't share your quite pessimism there about inevitable hardship. matt: where do you think the u.k. stands to benefit the most, in the event of a hard brexit?
you talked about the possibility of unilaterally dumping e.u. -required tariffs. where does britain have the best advantage. tim: i inc. in adopting, like singapore -- think in adopting, like singapore, canada, australia, slashing tariffs is a huge advantage, because they are a range of products that consumers consume and rs need.ure saving 39 billion pounds, 600 pounds per person in the u.k. is a good start. if that were invested in the u.k. instead. regaining control of fishing.but above all , adopting the mantra of free trade. free trade never made anyone poorer a good summing up. but also the increase in democracy. for some obscure reason, the elites of europe have moved away
from democracy as they seek an ever-closer union, and democracy is economic steroids. just look at north america, which is democratic, versus south america, which has had tremendous problems. that is the main benefit, more democracy. tim, thank you very much for your time. you mentioned the boss of calais, which i meant to refer to, not dover. rspoonrtin, jd wethe chairman and founder with his thoughts on brexit. let's get top stock movers. henry horton has been looking at them. annmarie: let's kick it off with phillips, up more than 1.5% this morning, the ceo shrugging off any slowdown concerns in china, now saying a buyback plan. let's listen to what the ceo said to nejra cehic this morning. >> if we do that on the basis of confidence, we are four years into the transformation, four
years of profit expansion and strengthening revenue growth, with a payout ratio now well into the bandwidths of our policy, we felt a 6% dividend increase would be a good proposal to our shareholder base. speaking phillips ceo, to bloomberg about that share buybacks this morning. royal mail to the downside, nearly 9% this morning, seeing letter volumes continue to slump. at one point also hitting its, dropping to the lowest ever for the stock. zalando also down nearly 6.5%. gen,raded yesterday by soc this morning by wells fargo, so a little pressure for sure on the online retailer. matt: thanks for a much. cerberus capital is raising it germany'ss bet on banking industry. nordlb would add to
exposure in a shrinking industry of an economy that is barely growing. other holdings include stakes in the two largest listed lenders, deutsche bank and commerzbank, which obviously suffered a real drop in valuations over the last few years. let's get more with bloomberg's german banks reporter in frankfurt, steven arons. see in theerver us german finance sector that others outside of maybe qatar clearly don't? : the question i ask everyone i meet about cerberus. answer is always, well, they believe in the german economic potential and believe german banks are undervalued. the price-to-book ratio of deutsche bank and commerzbank is extremely low, the lowest in, among all peers in europe.
so i guess they do hope there will be a turnaround. they invested about two years ago in commerzbank, deutsche bank, and the stocks have been declining, not as successful bet, but they hope this will change, and they are holding out for that moment. anna: steve, good morning. dge fun interest in deutsche bank, commerzbank make a merger more likely? steven: i think it does, but maybe only slightly. the major drivers determining whether there will be a merger is not cerberus, but cerberus does play a role.the most important players are the ceo of deutsche bank , at commerzbank, the german government and regulators, but severus plays a role, with stakes in both banks. so if they were to agree to a merger, that would facilitate a deal, but i don't think they
have the major voice on this. ven, thanks very much. steven arons, our german banks reporter joining us out of frankfurt. don't forget, bloomberg users can interact with all the chart to see on -- you see on bloomberg television, just type "g tv " into your bloomberg. save charts for future reference. i mentioned that, because up next we have our world-famous battle of the charts. this is bloomberg.
the prospects of a second referendum are rising and the prospects of no brexit at all are rising. ♪ ♪ welcome back to "bloomberg markets." just about 54 minutes into the trading session, looking at gains for the most part in europe, slight gains on the continent with a loss on the dax. ftse is up 0.8% as we get ready for this tabling of amendments and votes on brexit issues in parliament. time for a battle of the charts. annmarie hordern is going head-to-head with dani burger. annmarie: everyone in the oil markets is talking about the fact the markets seem to be shrugging off sanctions against the venezuelan state oil company, so i am looking at why. the sanctions are on exports of oil to the u.s., u.s. refineries will be hit hard, but there are
other buyers like china and india, as you can see in the blue and white, so it is not a matter of supply and demand. it is the fact it will be rerouted, with tankers going more east instead of to the united states. matt: very interesting. makes you want to look at the stocks of the u.s. oil refiners as well. dani? ani: speaking of stocks, remarkable thing in this rally in europe. even though some of that pickup has stalled, we still see cyclicals outperforming defensives, the ratio of which i have right here. check out what has happened here today. a big pickup in cyclicals versus safer stocks, and this is remarkable because we had those global growth concerns. this ratio will be especially important during earnings season. did we see a floor in the selloff last year of the more economically sensitive stocks, or are earnings going to impact
them as the negative news gets priced in, matt? matt: also an excellent chart, making my decision very difficult. it is cool to see investors are less defensive right now, and willing to take more risk like that. i will give it to annmarie, because i think her chart is fascinating, talks to an issue we are focusing on really today, and gives investors a chance to er into those issues and place bets where appropriate. thank you very much to both of you for joining us. by the way, you viewers and listeners, can see all of our charts, just type "g tv " on the terminal. why don't you tell us what we are waiting for in terms of brexit? i'm in westminster following the progress here. a number of amendments will be voted on into the evening. we will have to wait until the
♪ francine: doj indictments. frauds. accuses huawei of and ip theft. backing down on the backstop. theresa may abandons her brexit deal and tries to secure one with her own party. she says parliament will have a series of crucial votes today. the trump administration plans new sanctions on the venezuelan oil companies. how long can maduro's regime survive? ♪ francine: good morning, everyone. good afternoon if you are watching in asia. this is "bloomberg