Bloomberg, Matt Miller, United States discussed on Bloomberg Daybreak: Europe


External pressure is going to be able to he for reform in China liquidity more generally across financial markets is an issue and a concern. Thanks. In in a much better place than they were five years ago. Would it be great to have a go now trae conflict with the US Olympic anybody else? I'm never be one from westerly will be a new a madman new Bloomberg daybreak on Bloomberg radio. Good morning from London. I'm Anna Edwards and from the German finance capital of Frankfort. I'm Matt Miller. Yes. Matt Miller, of course, says de de come to Frank fat. Because of the b we'll talk more about that shortly. Matt, let's check the markets. We do that every fifteen minutes, of course, on Bloomberg radio. The stock six hundred down by three tenths of one percent. US futures have been pointing downwards three months of this morning. So it looks as if we can continue to check all those concerns about global growth that hit US equities yesterday and then played the Asian session. MCI Asia-Pacific down by half of the cents overnight as a European equities as I say down three tenths the first one hundred down by around half a percent the tax down four terms. The cat down four tenths of it. Seems it's pretty broad base. This sell off that we're seeing across the European equities in terms of the sectors being here's no surprises that it. Some of those great stories said basic resources, autos and auto parts industrial goods all trading lower. We're not necessarily seeing a flight into the havens, you might expect. So healthcare is also down by around six tenths of one percent. And we've also got X dibs in the basic resources space. So that likes of Rio and be HP now trading without the rights to the to the dividend. And so as a result, we see that sector is weaker for a couple of reasons now's the equity story, then let's talk about what we see on the oil price. We are consolidating it seems just about that fifty six dollars a barrel level on WTI fifty six forty two is where we trade up by four tenths of one percent. We continue to balance the stockpiling data out of the United States and the OPEC cut story. We are looking at a US tenure. Guild at two point six eight percents of that's dropped down below the two point seven Mark, which is interesting of goes and the dollar index fairly flat this morning after making some modest gains in recent days, Matt. All right now. Let's get over this morning too. Or are we going to get to Fabio valuable bony to Schwetzingen? I think I. Yeah. I thought I thought I spoke with Fabio. I'm sorry. I'm looking in the in the wrong script here. This is the difficulty of doing radio show from the road. I've got to I've got to rely on a whole bunch of other. Next to me. Maybe I should bring her into the conversation was on with us on Bloomberg television earlier, and she was managing director for global macro and European economics at CS lumber. Have you once again, she gives you you start. You told us on Bloomberg TV about your expectations for the c b let's let's go through these different points. I suppose one by one let's not with the global growth estimates and inflation estimates not global sorry. European growth and inflation estimates that we're going to hear about do you expect them to cut those estimates for two thousand nine hundred twenty twenty. Yes, absolutely. Based on our estimates. The zone would struggle to to grow above one percent. So we're looking at growth of around just just north of one percent for this year. ECB has in the in the macroeconomic projections in December. It's got one point seven percent growth for this year. And roughly there about for next year as well. So clearly there is room for a big downgrade. Their for instance, in the Bloomberg consensus Elway the numbers have come down to one point four percent from two percent when the FX war kicked in and even there we see room for downgrade. So clearly the ECB will have to push push a little behind the cabin. Can we get? I mean, you mentioned the FX were that hasn't been on for a while now and we've seen this incredibly tight range. A why do you think that is better? Why do we see the euro dollar not moving at all lately? I mean, the the dollar yen isn't moved very much either. And be will that change after today? Right. So the war story, I guess the euro is has not really moved much against the dollar, but on a trade weighted basis, it has appreciated by around five percent since since since the FX war kicked in, and that's because of the weakness in emerging market currencies not the least the the Chinese renminbi. So that is weighing on the euro zone competitiveness. And I guess the reason the dollar and the the euro hasn't moved much against the dollar is because there are quite a few conflicting forces at play. For instance, the dollar seems to be quite over in in an overbought territory, and we expect the fed to cut interest rates, but on the euro-zone side, a lot of negativity seems to be gradually getting priced in. So that keeps a floor on the currency. And I guess there are a lot of concerns about the what the ECB will actually deliver. And that's also weighing on sentiment and keeps the floor on on the euro as well. So I guess there are a lot of moving parts that prevents the euro dollar to to find a direction at this point in time. What are you expecting to see on the Tel chose the cheaper loans to the banking sector? Are you expecting them to just hints at what could come today, but not actually deliver? Or do you think we might actually here today about some concrete plans, if the be gives a concrete plan that's a positive markets because I think the expectations as for a proper plan to be delivered later than today. So that would be a positive surprise. But I guess what's more important is the is the structure of the the the breadth of the program and the conditionalities attached to it. So that will determine what sort of boost it gives to market sentiment. But even more important, I think is looking beyond the short-term boost because I think what's important to realize is is that credit easing measures such as Culturas. It's sort of heads banks, meet credit demont if there is credit, and if they're facing credit supply issues, but in the euro-zone what we we are seeing is that is the weakness in demand. That's the main problem it's not as much about credit supply. And that makes us less less optimistic about the positive impact from a measure suggest that sounds like a great question to be asking the CB what you small trails if there isn't the underlying demand for that credit in the euro zone. If that's the slowness of the growth story. Yeah. And maybe I'll pose that. When I go over there at two thirty one thirty UK time Choi to what do you feel like the though is behind the curve because they've been resisting. Kind of fessing up to the sluggishness of the the European economy. And I mean if you look back at their their inflation forecast. It's absolutely ridiculous that they expect reflation to sort of go vertical every single year for like the past four years. Of course, it hasn't happened. Are they using the wrong tools? I mean, what are they done wrong? I guess I've got a still have sympathy for the. Because they are doing whatever is in their mandate or whatever tools are available to them to to get Konami going. But I guess the problem really is not as much with monetary policy. It's more with fiscal policy, and it's more with the political mandate. And I'm sure that behind first of all I want to point out that they have to be sort of outwardly. Bullish the economy, right? It would be horrible. If you're central Bank said, we're going to go intercession and crash, and Secondly, I think behind the scenes they've really been pushing for some fiscal stimulus, and they're just not getting even not even behind you right now. But also, quite vocally. I think. Cold on politicians to support him in his activities. Yep. Absolutely. And going back to your first point. Yes, whenever you look at the economic projections from the be the medium term is for inflation. In particular is always around one point five percent. So close to two percent. The target range. Not talking more about the recent events. I guess if the ec- be did not sound optimistic on growth forecast. It would have found it really difficult to justify the exit from its QE program at this time. So it wasn't a really difficult at a really tough balancing act to do at one on one hand attached to defend why it's ending its QE program and on the on the other hand attached to sound reasonably dovish to prevent unwarranted tightening in markets, and the reason it had to end its Curie parameters. Difficult time is because it was running out of assets to buy. Okay. So that's where it sort of detaches from maybe the the real the growth story a little bit of the inflation the real inflation on the ground. Thank you very much wetter. Thanks for your analysis. Good to speak t- shredder seeing managing director for global. Macro and European economics at yes Lombard. Yeah. Real pleasure. Opening get shredded back in the studio very soon. Now, it's getting your world national news headlines for that we go to Leon guarantee. Good morning, Matt. According Thailand has ordered the dissolution of a party linked to. Exiled former prime minister tuction Chinnawat for conducting hostile to the constitutional monarchy. Tie rupture chart executives aren't being banned from politics for ten years for breaking rules by picking a Princess as prime minister candidate the move is seen as a setback for democracy ahead of the election at the end of this month in Brexit news. The UK government is already mapping out. What might happen? If Theresa May news is vote on her deal next week. Bloomberg's Alex Morales says positions of hardened after talks in Brussels this week. The prime minister is unlikely to seek further concessions from Brussels. And instead the government thinks parliament is likely to take control of proceedings by first ruling out and no do Brexit and then voting to delay. Britain's departure from the block in Brussels. EU officials a pessimistic a deal can be reached and a reluctant to make concessions only to see any compromise fall to defeat in the house of Commons of through burst of optimism earlier in the week positions are hardening again and maize teams. He's Monday morning is the absolute latest. They can security changes to the deal after that the fate of the deal rests with the house of Commons in Tuesday's vote in London. Alex is Bloomberg daybreak Europe. In Hungary, Prime Minister Viktor opens party appears to be on track to be expelled from the European Union's largest political group. Bloomberg's Zoltan Shimin reports Manfred Weber the European People's Party candidate in legislative elections said time was running out for to prove his still wants to be part of the group is conditions. Include an apology from the liberal leader for running an anti you campaign in Budapest Zoltan, Bloomberg daybreak Europe. And President Trump has said he'd be very disappointed if North Korea's confirmed to be rebuilding a rocket launch site satellite. Images published yesterday says jespin young is restoring is cited a pledge describe last year talks between President Trump and North Korean leader, Kim Jong own broke down at a summit in Vietnam. Last week they will use twenty four hours a day on Aaron at tick tock on. Twitter powered by more than twenty seven hundred journalists and analysts symbol one hundred twenty countries. I'm young guarantee. This is Bloomberg Anna, leeann thank you now with your morning sports news. Here's Joe Walson,.

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