tv Bloomberg Daybreak Europe Bloomberg January 23, 2019 1:00am-2:30am EST
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>> good morning from bloomberg's european headquarters in the city of london. i am nejra cehic. manus: and i am manus cranny. this is "bloomberg daybreak: europe." davos, day two. trade concerns dominate as mike pompeo defends president trump's disruptive policies. we are live at the world economic forum. the bank of japan cuts its outlook for price growth once again as it keeps policy unchanged. a bloomberg exclusive, the fed is said to probe deutsche bank suspicious this -- transactions. it could be one of the biggest money laundering scandals ever.
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manus: welcome to "daybreak europe." the machine maker saying the first quarter net sales, 2.1 billion. that is below the market consensus of 2.7 billion. margins also under pressure. they are saying, in the fourth quarter, that their margins came in at 44.3. 48.1%.ket wanted this story,balance raising the dividend. you are seeing a number of their players. their customers flashing warning signs. samsung talking about their. the guidance from margin in terms of the first quarter also being reduced. it will be 40% from 47.3%.
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raising the dividend by 50%. and in terms of the other news, they are seeing full-year shipments at -- first quarter negatively impacted by about 300 million euros. we will dig deeper with the ceo. good morning. to the ceoill speak later. one of the big questions will be how much other industries can offset a slowdown in the smartphone market? and of course big questions around the customers, tsmc, and samsung. what does it mean for the business of asml? let's head to davos. business leaders are gathered for the world economic forum. haslinda amin is standing by now. great to have you with us again. tradems yesterday around war and also some of the risks the government could pose to growth, although the resounding sort of response from people seems to be no recession to see
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here, just a slowdown. what are the themes today? recession this morning. we will speak to a number of the top minds in business, including casper, the ceo of adidas. bill gates as well. of microsoft. and james quincey, the ceo of coca-cola. all that coming up live from the world economic forum, and shortly, i will be joined by others and we will discuss the trade war, brexit, and it will be a lot of guests today. manus: chockablock. let's see who you are going to help. we will be back with you shortly. let's put these markets in context. dollar-yen on the move. what is inflation? bank of japan slashing its outlook by .5%. you are seeing the dollar rise. you are seeing the yen. qe. twomarkets are dealing with
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juxtapositions. kudlow saying discussions. on the other side, the usa rejected china coming to do that. the oil market is a little bit better bid this morning. we took a spanking yesterday on the growth. productions will come. the market has started to respond positively, so that is riskrisks lori, your -- story, your commodities story, and your global growth story. just reflecting back on the asml numbers. they have been hit by 300 theyon euros in terms of have settled all of their litigation. those are the markets. what have you got? asml: we have just broken and that will be one of the stocks to watch when the european equity market start trading, when cash trading starts in under two hours. taking a look at u.s. futures, yesterday, we saw the s&p 500
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dropped the most in three weeks. we saw equity markets pushed around just a little bit by headlines on trade, so there were reports there would be a cancellation of these preliminary talks on trade between the u.s. and china. larry kudlow denies that. little bit further today, up .1% on the s&p 500 and too just to take his back asml, focusing on that this morning, we did see the semi conductor stocks heavily hit. meanwhile, the yuan strengthening despite the fact we have seen the pboc boosting some liquidity, so we are seeing 6.7856. yields steady on a 2.7 four handle. juliette saly in singapore has more for us. good to see you. a little bit of a stall in the rally today. yes, it certainly seems like this january rally has come to a halt for now. second session of losses across asian markets, although it has
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been a very choppy session. we did have the positive lead from wall street. we had a comeback after the pboc is injected $38 billion into the system in a new operation. weakness come through in china. the csi at 200 off. hong kong fairly flat. it has been in the green. japan closing out, weaker by .1%. movere seeing yen on the after the boj left its policy unchanged but cut its inflation forecast. a little bit of upside coming through in korea. we are seeing some mixed movement in tech stocks today. indian stocks higher. itc and enter globe amongst the ter-globe amongst those companies. you verylia, thank much. those -- juliette, thank you very much. those are your markets. off the world
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economic forum, where the attendees have been expressing their concern about growing political risks. let's get back to switzerland to haslinda amin. our special guest this morning -- haslinda, good morning. haslinda: good morning again. i am with the chairman of hitachi. thank you very much for joining us. brexit, u.s.-china trade war. for businesses like hitachi, what is the biggest risk? the trade wared between the u.s. and china. it is setting up the next stage of the economic background. the technology, some of the intellectual property. those kind of things. strong?happening, how
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we are not sure. we need to make a very clear path. already, we have some of the, -- especially the electronics materials area. but not all. haslinda: but what kind of impact in particular? can you quantify that? hiroaki: the iphone. the semi conductor industries. those kind of things. haslinda: what kind of impact are you seeing? hiroaki: materials and tools. those, too. but it's not a big one. the fundamental of the japanese economy is still powerful. but we're watching very carefully and also not simply watch them negotiate with the u.s. government, china, setting up -- the next stage. haslinda: you have operations in
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europe with the threat of brexit, with the threat of trade war, what kind of impact are you seeing in perhaps your revenue, you're operating profit? did you expect that to be hurt? hiroaki: very special things like automotive, different areas, but the operation in the focused on business. we don't have a very serious interest. but now, we are really worried about what is going on. avoid the noant to deal brexit. [laughter] haslinda: like a lot of people. but the thing is, other measures can be implemented for you to minimize the impact. abe visited the u.k. last week and had a frank
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discussion with theresa may, so the u.k. is a very mature to there will we hope be some kind of more practical result than expected. haslinda: on the bright side, when you talk about growth of hitachi, which businesses will drive growth in the next 12 to 24 months? hiroaki: the increasing of india. those areas, right now, they are watching very carefully the u.s. and china, the trade war, but now, they are basically -- they have a very strong requirement to establishing the infrastructures and setting up the various industry base. so it's a great opportunity for hitachi. you beingwhat are impacted by the fluctuations of the current euthanasia? -- of the currencies in asia?
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hiroaki: there may be a big opportunity. we have conversations with business dealers in asia. haslinda: hitachi has talked about being interested in acquisitions. what are the plans? are you interested in the assets that may be sold off when siemens and alstom come together? [laughter] we don't have an idea for the area. very sensitive issues right now. very serious discussions from the antitrust issues. target not strictly the now. but recently, we -- there are very important acquisitions for hitachi, the
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global operations of the power distributions area. haslinda: but you talked about wanting to make more acquisitions. what might you be interested in? hiroaki: we are now pushing our business to be more solution oriented, not simply products and technology. how can setting up various delivery capabilities for regions to setting up real solutions to that region? in our target acquisition area. getinda: are there plans to out of the nuclear business? hiroaki: in general, nuclear very business is facing difficult situations. some of the security and safety issues. japan,o, especially in we are very much having a big challenge.
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the next stage of the discussion is required to break through of the nuclear business. hiroaki nakanishi, are there plans to totally pullout? hiroaki: the nuclear business is very consistent long-term. with the nuclear power stations, we have to maintain them for 50 years. short-termt have decisions for those kind of things. pres. trump: hiroaki nakanishi, before we let you go, you have identified a growth business with a lot of asia looking at developing their real systems. where do you see opportunities? what might you be interested in? hiroaki: not only asia. it is a renaissance of the railway, even in the u.s. and europe. so we are looking at the global operation of the whole, total
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railway solutions. more simply, the manufacturing of the cars. push moreow want to the smart railway operations. haslinda: ok. good luck with the business. hiroaki: thank you very much. [laughter] haslinda: hiroaki nakanishi, the chairman of hitachi. thank you for joining us. nejra: thanks so much, haslinda. we've got lots more coverage to come from davos all day and all week, particularly with a focus on a lot more corporate leaders today. we will speak to you again tomorrow. bloomberg first word news with debra mao in hong kong. one of the biggest money laundering scandals in history could heat up even further. the federal reserve is going to investigate deutsche bank. sources told bloomberg the fed's probe is in an early stage as it looks into whether germany's biggest lender adequately monitored funds.
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admitted that the money may have been dirty. the u.k. parliament is moving one step closer to stopping a no deal brexit. the opposition labor party is now increasingly likely to support extending the march 29 brexit deadline, according to shadow chancellor john mcdonnell. billionaire inventor james dyson , a strong supporter of brexit, and now the wealthiest brit, has decided to relocate his company's headquarters to singapore. he says the move was not due to fears surrounding britain's exit from the e.u. brexitoday, as uncertainty continues to swirl, we speak to secretary liam fox. that conversation, live from the world economic forum in davos. china's central bank has injected around $38 billion of liquidity into the banking system.
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this, as the world's second-largest economy faces a slowdown amid a trade war with the u.s. chinese officials are said to be buying as much as 7 million tons of u.s. wheat depending on progress in trade talks. larry kudlow says a deal hinges on china acting fairly. >> we are saying to them, if you play by the rules, whether they are structural rules or rriff rules, ifa you open up your economy and that americans come in, we will have a huge flood of export sales across the board. debra: and for more on how the trade war could be impacting businesses around the world, we speak to the ceo of adidas. don't miss that conversation, live, from the world economic forum in davos.
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the u.s. economics forum continues into its 33rd day. it is not clear if any measure can pass. tomorrow, lawmakers will vote on president trump's plan. it includes funding for a border wall as well as a democratic proposal. 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. manus: thank you very much. rollsll call from davos on. we speak to a number of top business leaders and minds. we will be speaking with the founder of adidas, bill gates, and james quincey, the ceo of coca-cola. nejra: we will also hear from some of the top people in the world, christine lagarde, and
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manus: it is "daybreak europe." i am manus cranny in dubai. nejra: i am nejra cehic in london. the boj stands pat on policy but cuts its inflation outlook. the outcome is a weaker yen. 109.64.en at we are a little weak on the msci asia-pacific index. concerns swirling around global growth and trade.
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the pboc pumping liquidity through the banking system. the one strengthens -- yuan strengthens. manus: miles to go before i sleep. copper bounces. bit --is just a little in terms of the run. a six-day winning streak. u.s. equity futures indicated just a little bit higher. we got dumped yesterday, 1% slump. second worst day in the s&p 500. who is right here, larry or talks?on after chinese that is the mood in the market. ceo stephen schwarzman, corruption investigations are stymieing growth in the chinese economy. he also believes there is a failure to ensure china's compliance in any trade deal which could cause a breakdown in negotiations with the u.s. he spoke to bloomberg erik schatzker in davos.
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the chinese economy is slowing. that is pretty well-documented. there are a few reasons for that. including the corruption investigations in china, which are making approvals on things more difficult. there is more government intervention in the private sector. beings tariffs that are discussed, although the financial impact of those, per se, is not that great. and so they've got three things going on and literally an endless cycle of economic growth. whether they grow 5% or 6%, it is still a lot, but it is off what their growth rates have been, and it's normal to be sensitive. it is particularly important to them because they were trying to
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pay down debt and be more conservative financially, but when you hit an air pocket, all of a sudden, you have got to borrow money, you have got to restart your economy. you have a window into the u.s. trade negotiations with china. how are they going? >> it's going pretty well compared to all other times. need someu perspective. it's been 70 years since we have had a trade agreement with china. that is a lot of failure in a lot of places. and we now have certainly what appears to be the head of state of china and the united states, who would like to progress. erik: do you think we will see something by the end of february deadline the president set when he held off the tariffs in december? stephen: you will see something, either success or failure. erik: are the chinese prepared
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to make the concessions that the trump administration wants? stephen: i don't think, in a nato -- in any negotiation, one side prevails. i think there will be something much more in the middle than just what the u.s. wants or just what the chinese want. think one of the important things that most people do not think about as they talk about those discussions, they talk about trade deficits, talk about terrorists, talk about intellectual property, one of the things -- terrorists -- ariffs, talk about intellectual property, anything that is agreed upon actually occurs. that enforcement mechanism becomes key. stephenhat was schwarzman speaking to erik schatzker. and larry kudlow, the head of
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the council, a growing that issue on enforcement, saying promises are great, but enforcement is what we want. let's get the bloomberg business flash. here is debra mao in hong kong. ibm gave a positive forecast for 2019 and reported earnings that beat analyst estimates. they dropped almost 25% in the past 12 months. sources told bloomberg the tech giants agreement to provide cloud services to bnp paribas could be worth as much as $2 billion over the next eight years. company has been working to reverse revenue declines by transitioning its business to faster growing areas of technology such as cloud software and artificial intelligence. washington's scrutiny of tech companies has intensified, big tex has spent more and more on lobbying -- tec has spent more and moreh on lobbying. according to federal disclosures, google spent more than $21 million in lobbying
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in asia soft session today. the msci asia-pacific index off by .3%, perhaps taking its cue from the u.s. session yesterday as concerns around trade world. we saw the semiconductor stocks hit as well. great that we got these numbers through from asml today. we will be speaking with the ceo later. a great opportunity to talk. the biggest of the them of the issues with asml's customers, not least the smc -- not least tsmc. erik: we will see if that ties back to the ceo's statement.
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they responded to slowing demand in there and markets by delaying some of the deliveries. which of the markets onto under pressure and how late in the cycle did that delay come? that will be one of the questions. nejra: absolutely. a real reflection of cyclicality in asml and the slowing smartphone market. what parts of their business might offset that potentially? conversation to have. lots to discuss with the asml ceo. manus: we will certainly get his take on trade wars. why not throw that in to the mix? bring you one of our scoops. it is a bloomberg exclusive. one of the biggest money laundering and in history is intensifying. proving said to be deutsche bank over how it handles suspicious transactions with dr. bank -- with another bank. billions of dollars flowed from
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an estonian outpost through new york. let's get to our german bureau chief, chad thomas, who joins us. set up anid he investigation. he has not seen any evidence. we understand the fed are set to investigate. this is the last thing deutsche bank needs now. manus.'s right, bloomberg breaking that story overnight. and it's very telling. we have the deutsche bank ceo here in davos today. he is talking to investors and customers. deutsche bank is hosting a big event this evening and this is the last thing they need. he is trying to move beyond all of these investigations as the new ceo and they just keep popping up. there's another investigation going on in germany, and there are still probes into what deutsche bank did during the panama papers scandal, so it seems like every time they try to get out from underneath all
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of these investigations, that is apops up again, and it distraction for someone who is a new ceo who has only been in the off as for a little less in a year, trying to focus on turning around the business. nejra: chad, or to speak with you this morning. just to make this clear for our global audience, what this is about is danske relying on the global presence of banks like deutsche bank but also others to handle conversions of foreign currencies into u.s. dollars on 2007f of its clients from 2 as recently as 2015, so just outlined some of the details for toabout what exactly -- 2007 as recently as 2015, so just outline some of the details for us. deutsche bank should have known what was going on, what sort of illegal activities could have possibly been happening, so it is difficult for us to say to is an investigation
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into deutsche bank itself or the activities they did on behalf of bank. none of this has been announced publicly at this point, so we will have to also see to what degree we hear from deutsche bank as well. tous: and of course, just give some context for the whole story, $230 billion flowed from into theestonian bank system. this is one of the biggest money laundering scandals in the history of money laundering, so if they did not know what is going on, may be that brings bigger questions as to what were the internal controls within deutsche bank? it's not the first time. they have had $40 million to settle allegations on money laundering in the past. get the heaters out. we look forward to you coming up with the latest. make sure you are at that party. chad thomas on the track of deutsche bank. let's get into these markets. we have got the team standing by. our partner in mumbai and london -- excuse me, in london.
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i am in dubai. annmarie hordern. i never know where i am without a producer. let's take it to you first of all. how is india looking this morning? i'm right here in mumbai, and i know where i am, and india is not looking that great unfortunately. it is very flat for the indian markets. wantbly during -- moderation markets have done. the mid-caps and the small caps may be slightly higher, but that does not move the needle, doesn't? there,atic movement out but something of particular interest. you must be wondering what is happening to the stocks, because every other day, there is a news bit on a result which pulls the stocks down. in today's case, the insurance companies have come off because the results have not been particularly great. the insurance companies have been beaten down after a
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slightly weaker set of numbers. that may be of interest to some of the people who might be holding the shares, because it is a widely held pocket, insurance companies. all in all, a very flat a of trade. nejra: thank you. and marine -- annmarie in london. a little bit of a mixed session. it looks like they are taking their cue from what happened in the u.s. yesterday, because u.s. futures pointing higher. annmarie: these traders are juggling so much news. msci start with the asia-pacific index, down .3%. we have the trade news. there fresh concerns that beijing mdc will not strike a not strike d.c. will a deal. on top of that, we have central bank needs. of $38c, fresh injection billion. the bank of japan keeping their stimulus unchanged. the topix down .6%.
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exports dropped for a second time in four months. and we are weaker than expected. that is weighing on exports. nymex crude, $53. that meeting is scrapped. alexander know that will not be attending, and it is likely khalid al-falih will not make it to the swiss else. i want to take a look at what is happening in the currency of choice, the yen. it is down against not just all of its major peers, but extended major snapping the rallies. this is the inflation target cut again, fourth consecutive time from the bank of japan. theust goes to show how far boj is away from the target, and the question is, what does governor haruhiko kuroda have left to do to get it even closer? in mumbai andhah annmarie hordern in london, thank you. breaking news from j&j. a hot headline. j&j is said to pursue a deal for
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the robotics surgery company -- j&j is said to seek this purchase at a premium to its recent valuation, so these are some of the details coming through. at $2said to be valued billion in the last funding round. this headline coming through from j&j, set to pursue this deal for robotics company auris health. their eps forecasts, midpoint missed estimates. if these slowing 2019 growth and what has been seen as a warning to the health sector. let's get the bloomberg first word news with debra mao in hong kong. : the u.k. parliament is moving one step closer to stopping a no deal brexit. party isition labor increasingly likely to support extending the brexit deadline. that is according to shadow chancellor john mcdonnell. billionaire inventor james dyson, a strong supporter of brexit, and now the wealthiest
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brit, has decided to relocate his company's headquarters to singapore. he says the move was not due to fears surrounding britain's exit from the e.u. later today, as brexit uncertainty continues to swirl, we speak to u.k. international trade secretary liam fox. that conversation, live from the world economic forum in davos. the u.s. shutdown continues into its 33rd day. now senate leaders have agreed to vote on rival proposals for reopening the government. although it is unclear if any measure can pass. lawmakers will vote on president trump's plan which includes $5.7 billion in funding for a border democraticl as a proposal which would reopen shuttered departments february 8. central bank has injected around $38 billion of liquidity into the banking system as the world's second-largest economy faces the slowdown amid a trade war with the u.s.
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chinese officials are said to be considering buying as much as 7 million tons of u.s. wheat, depending on progress in trade talks. larry kudlow says a deal hinges on china acting fairly. larry: -- the world's biggest privately held company says it has no plans to ipo. the minneapolis-based agribusiness had revenue of $115 billion in 2018. the chief executive told there have been no internal discussions about going public. we like the long-term view that a private company can take. we are still family-owned. we have seven generations of family and mcmillan members. i love being privately owned. we can take a longer-term view. debra: 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.
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nejra m&s. -- and manus. manus: thank you very much. mr. kumutha is speaking. he expects cpi to pick up towards 2% towards that target. the bank of japan cut their inflation outlook today by .5%. many people are saying this is a very tricky position for the bank of japan. the direct impact of oil prices is temporary. they must continue the current easing persistently -- that's the word being used. let's bring in our policy observer and our editor for daybreak, brian fowler. he joins us from tokyo. inflation picture is weakening. they have guided lower. what are the prospects? one or two people have said that they are running into the buffers in terms of what they can do and what they can own. what are the prospects for more persistent easing from the bank of japan? brian: that is exactly right.
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that is the perfect question. i assume mr. kuroda will be asked that question shortly. i think you will talk about two things. first of all, external factors. oil prices have fallen. also talk about prospects for global growth having clouded over because of trade friction. itsave the imf cutting outlook for global growth just a couple of days ago. those are things he cannot do anything about. there is the domestic challenges. number one is the challenge of demographics. n aging population in a pool of potential consumers, that has been affecting the mindset of japanese manufacturers for a couple of decades, and it has only gotten worse. what he will have to do is tell us what kind of problems the console and how he intends to address them. key lime that has caught my attention so far is the fact that haruhiko kuroda does actually expect cpi to pick
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up towards the 2% target. theow he is blamed a lot on cutting of the outlook of inflation to do with oil prices, but is this really a realistic forecast, expecting cpi to pick up towards that target, brian? think some people would say a time of wishful thinking. the boj does still have something it can do, and he will talk about this, too. he's got ample tools on hand to her dress the situation. he may talk about flexibility. of course, we saw the boj adjust its asset purchases in the autumn when the stock market was looking pretty weak. officials we have spoken to off the record have said there's really no limit to what kind of asset the boj could buy, in theory. realistically, it's a little bit more challenging. i think he is going to say that he's got options. he wants us to believe that 2% is possible. i think most people would say it
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really is not possible. manus: and he does say there's no big delay and hitting cpi target from the previous report. what comes to my mind -- you have to go back on tv and watch michael avery. he said fire them all. in the bank of japan, that is. jgb's are going to go back into negative territory. big calls for michael avery. what does it mean for the sales abenomics?r that is the other piece of the equation. do you think they can really still do the sales hike with this kind of downgrade to inflation? keep in mind the boj did bump up its forecast for gdp growth this year and next, a tiny bit, but it was something, and the imf did as well. growth globally, even the imf thinks japan is going to do a little bit better. but i think that is going to be a key question mr. abe is going to be talking about in the month
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ahead. they have done it before. they may have to postpone the sales tax hike. they were already planning to do some fiscal and jackson's in advance to -- injections in address to soften the blow. what can they do on the fiscal side in order to boost the economy? nejra: thanks so much for joining us. brian fowler, bloomberg's editor for daybreak in tokyo. you can follow all the developments from haruhiko on thepress conference tliv blog on bloomberg. coming up, we speak with your ierre moscovici. do not miss that interview from davos. this is bloomberg. ♪
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>> it needs a fresh look. in terms of the balance and thats that are going -- they are going after, that it is important because, politically, it is manifesting itself in this form of protectionism, which not just the u.s., but most places in the world, expect their politicians and government to go after. >> i think one of the important things that most people don't think about, as they talk about those discussions, trade deficits, tariffs, intellectual property, one of the things that i think could potentially be a dealbreaker is compliance. focused on. is very making sure that anything that
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is agreed upon actually occurs. there is a 90 day cooling off period but it is not anywhere near the volumes they were before. they are being supplemented. there were 30 million metric the countryut of into china. we are not back to those kind of volumes. >> i hope something positive will, from the latest round. i am not too optimistic about lasting deals. manus: those are just some of the voices coming from davos. you can pick up all of those interviews. quick snapshot of the markets. you're looking at the bank of japan leaving policy unchanged. japanese stocks are lower. it is like a rerun of last january. go defensive is the call. hardly a swant is song.
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nejra: we certainly have the missed firmly -- finished firmly lower. larry kudlow came out and denied reports that these preliminary trade talks between the u.s. and china have been canceled, so a bad day in the u.s. yesterday. thatonductor stocks did leak. futures firmer today. the global economy is stumbling but not falling over. that is the analysis of some of the probably made -- policymakers attending the world economic forum in davos this year. what are the biggest threat? and how can they be mitigated? let's head back to davos, where francine lacqua is joined by a guest. day two. great to see you. francine: yesterday, we heard from the president of brazil. we will year from a number of heads of state and the focus is on the global economy. how much is it flowing and how does this trade war play on the rest of the world?
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joins me now. i am delighted. it is his first interview of the day. quite early, commissioner. thank you. talk to me a little bit about the global economy. what worries you for europe? is it that you need to resell the single currency to your citizens? is it actually that year of inevitably will suffer from the u.s.-china trade dispute? pierre: at the current juncture, our growth forecast is still perspective for the eurozone, rn 1.9%. bitight adapt that a little in the weeks to come and as i look at our situation, the economy is robust, solid. some risks clouds or coming mostly from the external situation. meaning trade tensions between china and the u.s.. maybe a global slowdown. of course, we are i would not
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save vulnerable, but sensitive to that. our house into order. that is why, yes, we need to reinforce the eurozone. we need to complete our euro union. but mostly, i would say external threats. we also have internal -- francine: how much time do you spend talking about brexit? pierre: a lot. brexit, the italian situation, and, well, overall imbalances. we are going to have elections in may. i would say,e delicate, if not dangerous, because we have got the rise of populism in europe. this creates a climate where growth is still there. but we need to be watching carefully the events in the last month. in the next month. francine: is the u.k. going to last for an extension? on that you said, will they -- e.u. side, while they accept it? pierre: there are two things we
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know now after the two contradictory votes of last week. the first one is that the agreements, signed with madam may, was rejected. we reject that. very clear vote. a very massive vote. we alsor thing we know, don't want a no deal. they don't want a no deal. it is time for them to tell us what they want. not only a negative opinion but a positive opinion. happens, when this clarification intervenes, we are ready to discuss. francine: what does the e.u. want out of this? pierre: that you --
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if they want to go there, of course, we are ready to discuss. i come to this. this is a possible scenario. for that, there are two things that are required. first, we need to have unanimity on that. reallyow, they acted united, and i do not see why this would change really. the second thing, we need to have a request. we are not going to extend because we are not there. we need to know why we extend, what for, what is the plan. so that is why it is so important that now the parliament -- i think there is a new vote. fromarifies the options the u.k. side. the ball is clearly on the british side. i could talk to you
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about brexit forever, but i need to talk to you about italy, too. are you confident the budget issues in italy are resolved? pierre: we made a huge step in december after very tough, delicate negotiations. i think we were right to get a deal with the italian government. i appreciate that. if there would have been no deal between us, we would have created the conditions for a crisis between rome and brussels, italy, and the e.u.. we had the solution. is budget as it stands basically on track, but we need to look at the execution of the budget. we need to look at the growth forecast. they need to be serious in implementation. for the months to come, we are quite ok, and we are working together. commissioner, thank you so much. i will have to get you back to
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manus: good morning from dubai. i am manus cranny and this is "bloomberg daybreak: europe." nejra: i am nejra cehic. live from bloomberg's european headquarters in the city of london. these are today's top stories. manus: davos day to come up political hazards and taken to as mike pompeo defends president trump disruptive policies. we are live at the world economic forum. vanishing inflation. the bank of japan cuts its outlook for price growth once again as it keeps policy unchanged. and a bloomberg exclusive -- the fed is said to probe deutsche bank over suspicious transactions from danske bank, further intensifying what could
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be one of the biggest money laundering scandals ever. nejra: good morning, everyone. welcome. just under one hour from the start of cash equity trading. every confirming its outlook -- burberry confirming its outlook. new collection. it could see growth. first quarter comparable sales up. missed sale. third quarter retail sales coming in at 711 million pounds. burberry is confirming its outlook for the full year. manus. manus: little bit of breaking news. the engineering company specializing in --, may have
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recommended a final cash offer. the group has recommended a final cash offer. is the price. it's all cash. to the will be entitled previously declared dividend of eight pence. a little bit of breaking news coming through on our pc and the cash offer and the for them. that is breaking news coming through. in terms of the other little pieces of news coming through from that, you get to keep eight pence. also had their numbers. let's have a look at that very quickly. about the capital expenditure and the copper production. tons. 790 thousand , $1.2 billion. you got the futures, the markets, and there's a little bit of angst in the market. nejra: there certainly is in
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europe today. a third day of declines for the stoxx 600. manus, they opened at 8:00 a.m. london time. cac 40 futures lower. u.s. futures edging higher after we saw the second worst day for the s&p 500 of 2019. yesterday, we saw a drop of one point 4%. semiconductor stocks led that down. also oil and gas stocks. the concerns around trade were pushing around the u.s. equity markets. preliminary talks on trade between the u.s. and china could be canceled. larry kudlow says that not true. the u.s. ends lower. futures getting a lift. that is not feeding through anti-europe. the session could be weaker as well. one of the stocks in focus, asml. manus. manus: it is indeed. we will talk to that ceo shortly. if your equity markets are lower and you're feeling fragile, and you hear that inflation is something of a nascent issue in let's have a look at
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the bond board. jgb is focused in. inflation has been cut by the bank of japan. i spoke to michael avery earlier. he reckons we go negative again. kuroda says they will be persistent in terms of their plan. treasuries dip ever so slightly. hard data, soft data. you see the data hitting a three year low. new year home sales. you look at the bunds. just looking at the column this morning, it is expected you will fora net positive issuance germany. those are your bond markets. keep an eye bank on the dollar -- keep an eye on the dollar. we have asml. nejra: we do. europe's largest semiconductor equipment maker has forecast first-quarter sales that are well below analyst expectations. the dutch company is a seen as a bellwether for the chip industry, so i am delighted to say that joining us now on the phone from his first interview of the day is the companies ceo,
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peter benning. great to have you with my and manus in dubai this morning. as a bellwether for the industry, we will want to ask you about the trade wars, but first, let me ask you about the capex cuts announced by samsung your big two of customers. are you having to do anything to upset that right now? peter: first of all, also good morning to you. the announcement of our major customers is a reflection of where the industry is today. we are seen a softening of the industry starting in the second half of last year, and it is continuing, and i think it is clearly a result of the uncertainties we are seeing today, which basically are calling the trade were between the u.s. and china -- it is definitely not helping. manus: peter, very good morning to you. it is manus in dubai.
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you set our customers responded late in the fourth quarter to slowing demand in there and markets. where are the markets that are most under pressure at this stage as you look at the world? is clearlyink it most of the softness we are seeing is in the so-called memory chip market, which are the memory chips that you have in your phone to store data. it is also the memory chips that have helped microprocessors to work fast. that market is suffering from some overcapacity. i think the logic market, which is a sickly the central processing units in your mobile phones and pc's, that is actually quite strong still, although they are suffering somewhat from weakness in the mobile phone market. but generally, they are looking forward to the next generations, which are particularly valuable, so there a lot of investments coming for the next generation microchips for the logic segment, and this is where we
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are particularly strong. so that will be the main driver for our sales this year. and that means that although the memory market is clearly weaker, the logic market will be stronger this year, so we do expect growth in this year. manus: so that is how the world is going to divide. i want to dig deeper. are we at peak smartphone when you see apple warning for the first time in 15 years and you see a weakness in the handset market? are we at saturation point in your view? when you saw that, what did you think? the mobile phone market has been growing low single digits for the last couple of years, so that is not where i believe the biggest growth areas of the semiconductor market is. the growth is really in the server parks. basically, everything that goes over the internet. it is the cloud. it is the data processing in the cloud. it is the storage in the cloud. that has been the big driver also from last year and 1.5
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years. mobile has been single-digit growth for some time. nejra: let's talk than about some of the other areas with a slowing smartphone market that could help us set that for you, peter. newton techns such a5g, ai, autonomous driving, the data. which of these areas do you see most picking up the slack as we see that smartphone market slowing? peter: i think it's basically to of it, and when we talk our leading customers, and you just mentioned them, and their focus on the next generation onic, you know, chips, is that market of artificial intelligence. it is 5g. it's on the cloud. it's on virtual reality. autonomous driving cars. this is where you need the , so i would compute say the high-powered computing chips. they are absolutely needed the next couple of years, so there is short-term softness, but we
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clearly see a very strong demand high-powered computing chips for the areas you just mentioned, and that is going to continue, and that is going to drive our sales this year. nejra: looking forward to this year as well. i wanted to ask you about m&a. have you had any conversations with the dutch company, mapper? any interest at all in them? peter: i actually mentioned that early this month, when it became clear that mapper, which is a company using -- technology, became bankrupt. we are actually in discussion to see what we can do to actually help them out. this is dutch technology that has been, you know, around for 15 to 20 years. i think it is good technology. and there's clearly a desire not only from us, but also from
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society and the netherlands in general, to keep that technology in the netherlands. manus: peter, you mentioned a couple of business areas very clearly. the market on the cloud. what does asml need to buy to accelerate or to jump that rubicon to be business-ready? more business-ready for cloud and logic? do you need to buy something in those spaces? what do you need to do? peter: no, i think we don't need to buy anything. we have all the ingredients and building blocks to do what is needed. what we need to do is we need to step up the research and development efforts, which we are going to do. i think we spent close to 1.6 billion euros on r&d last year, and this year, 2019, that will rise to about $1.9 billion -- 1.9 billion euros. that is anticipation of the
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developments in artificial intelligence, the cloud, 5g, autonomous driving cars. if we want to make that happen, we need to invest in r&d, so we are pulling in several r&d projects and 2019 to be fully ready when the demands for those products pickup. francine: peter, we wish you well with the endeavor. let's hope that every ceo that joins us this quarter can be as exacting and answer the questions as you have done. the ceo of asml, thank you for joining us on bloomberg today. let's get into the markets, juliette saly. you can never escape the daybreak team. juliette. [laughter] juliette: i never want to escape, manus. ever, ever. we are seeing a second session of losses in asian markets. taking things as they were, but they cut their inflation forecasts. you see the yen weaker. interesting and china because authorities are opening the caps on's again. $38 billion injected into liquidity. chinese markets have been fluctuating. the csi 300 closing marginally
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lower. we had a weaker session coming through in australia today. in terms of some of the stocks we are watching, tech was under pressure following the wall street session, but japan did go in tokyo and had a very solid game, rising the most in around five weeks after reported talks with some of its chinese investors, if we can get that coming up on this screen. and is a financial player, it's actually cut its forecast, citing market volatility. not a great start to the new year for its new ceo, who came on board a couple of weeks ago. this is a fascinating story you can find on the bloomberg. it is a chinese meat giant. its founder disappeared. they came back today and we saw the stocks jumped by 25% and interest or trading volume in the stock 18 times the three-month average just ahead of chinese new year. manus. nejra: juliette saly in singapore, thank you so much. coming up from davos, we will
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speak to a number of the top minds in business, including kasper rorsted, bill gates, and james quincey, the ceo of coca-cola. manus. to heare are also going from some top political leaders. we just heard from moscovici, including italy's prime minister, the president of south africa, and the president of ukraine. when you are traveling to work, bloomberg radio is with you all the way. we are live on your mobile device and dab digital radio in the london area. this is bloomberg. ♪
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nejra: 7:16 a.m. in london. we are 43 minutes from the start of cash equity trading in europe. this is "bloomberg daybreak: europe." i am nejra cehic in london. manus: i am manus cranny in our dubai studio. we flashed the apollo buying the rpc business in the plastics business, bang on the money, but we have a little bit of an indication for you. 3.32 billion pounds is the right number. rpc.s the valuation for you get your dividends. let's get to the world economic forum. haslinda amin is braving the rooftop this morning. haslinda, good morning. add [laughter] haslinda: manus, good morning. .ith me is the ceo of japan -- thank you so much for joining us.
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so many headwinds. what is the outlook for japan's economy this year? 10 years ago, japanese potential all ratio in or 0.3rms was only 0.2% percent, but thanks to many policies, including abenomics, it seems to be 1%. as of now, we are growing by a 1% growth ratio in real-time. good. several other risks are waiting for us. view, theoint of biggest risk is the so-called u.s.-china trade war, because since the year 2000, many engines those japanese growth were export first and capital expenditures to a certain degree. chineseecause the great economy and great u.s. economy.
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export have always been number one engine of japanese growth. if and when something very that happens, based on this so-called u.s.-china trade war, we must be impacted to a certain degree. haslinda: u.s.-china trade war, volatility in the markets. is this the right time for abe to push through with the consumption hike to 10%? can the japanese economy take it? masatsugu: the reason why we have to raise the consumption tax -- this is the third time, actually -- but it is to try to cope with the huge government debt problem. japanese government debt is 2.5 times the japanese gdp. number one in all the nations in the world. so by taking time, we have to cope with this program. to do that, we have to increase tax and consumption tax is the fairest tax for the japanese people. so i think abe is going to do
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this as expected in october. but it's only 2% hike. we did it twice before. and we learned some lessons. we do know, by doing this, by increasing the consumption tax, we are going to have some side effects. the economy must be affected to a certain degree. to cope with those problems, we are preparing so many things. many fiscal policies. this think as far as consumption tax hike is concerned, impact should be very minimal. i don't see any impact because of this hike. said before that japan is likely to keep its pat for rates standing at least two years. is there concern that if there is a slowdown that the central bank will have very little option to rescue the economy? masatsugu: still, i think japan has room to try something for
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policies. also, governor kuroda has been always saying at the central bank, if and when he has to do some otherhe has means also. so i think, you know, yes, interest rates have been very low already. i don't think we can lower the interest rates much more than the current level, but maybe some qe policy. he said, you know, he is going ,o buy about ¥83 each year additional jgb purchasing by the central bank. as of now, they are not purchasing that much anymore even though this is not the qe exit policy. but if and when, they may have to do it, they may do that. of index stock to support the japanese economy. japan, the bank of financial policy wise, we can have some other means also to avoid those negative impacts,
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even though i don't think the negative impact is going to be that they got all this time. haslinda: given the uncertainties, the yen has become a haven played. are you comfortable with where the yen is right now, and where do you think the yen is headed? masatsugu: japan is ok. the economy is growing. and politics is very stable. prime minister abe is going to the prime minister for many more years. it's very stable. that's the reason why i understand why international traders would like to buy japanese yen. but i don't think yen's level exchange rate can be 10 are meant -- can be determined by the appetite of traders. it has to reflect fundamentals of the german economy. china is growing more than 6%. japan is one only by 1%. are they going to stick with japan always?
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i don't think so. so it's going to be in balance. 105.ybe, 115 to appreciative side or appreciative side, i -- depreciateive side. $3 total assets are trillion. $2 trillion asset wise in japan. 94% of this tax revenue comes from investment by using $2 trillion. yes, the interest rate has been -- yearsn we go to privatize ago, the share of jgb investment, a bait -- 88%. it is down to less than 30% so that we can hope with this low interest rate situation in japan. yen, theapanese
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denominated currency bonds, some equity, terms of investment, we are in the process to diversify our investment portfolio. haslinda: you bought a 7% stake in aflac.will that be enough to compensate for for then in -- slowdown in the postal service? masatsugu: this is in additional revenue in the future. even though we only have 7%. according to the company, if and 20%. -- it is going to be it will be a big curve for our additional revenues. haslinda: we'll have to leave it there. thank you so much for your insights this morning. masatsugu nagato, ceo. also from davos, we will be speaking with a number of the top minds of business, including kasper rorsted, bill gates, and james quincey, the ceo of coca-cola. all that, coming up live from the world economic forum.
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nejra: looking forward to it all, haslinda. thank you so much, and stay warm. let's get the bloomberg business flash with debra mao in hong kong. of the biggest money laundering scandal is in history could be about to heat up even further. the federal reserve is said to be examined gene how -- examining how deutsche bank handles transactions. the feds probe is in an early stage as it looks into whether germany's biggest lender adequately monitored funds. from an estonian branch of danske bank. they have admitted that the money that flows through its tiny estonian outpost may have been dirty. ibm reported earnings that beat analyst estimates. they had dropped almost 25% in the past 12 months. sources told bloomberg that tech giants agreement to provide cloud services to bnp paribas could be worth as much as $2 billion over the next eight years.
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the company has been working to reverse the revenue decline by transitioning its business to faster growing areas of technology such as cloud software and artificial intelligence. and that is your bloomberg business flash. manus: thank you very much. with a quick snapshot of the market before anna and matt get on set. the bank of japan cutting the inflation outlook. stocks in asia lower. that the chinese really offered to go to the usa and were rebutted? nymex crude manages to bounce ever so slightly. there will be sharp reductions. fear ye not. nejra: s&p futures pulling back a little from some gains we saw earlier, so struggling for direction. indicatex 50 futures we could see a third day of declines for european equities with asml, one of the big stocks in focus, called lower for the open.
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anna: welcome to "bloomberg markets: european open." alongside matts miller in berlin. matt: the markets to say wait and see. stocks are little changed as traders juggle with prospects for trade progress and the u.s. government shutdown. cash trade is less than 30 minutes away. anna: down to the wire. the u.k. parliament
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