tv Bloomberg Daybreak Europe Bloomberg December 3, 2024 1:00am-2:00am EST
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growing their markets. the great companies in the u.s. are the companies hitting the cutting edge. that's a different story. get the inside track on what's buzzing in markets with the players who are shaping the narrative. if you have bad earnings reports, you're going to get punished. they're not buying what the industry is selling. join us on bloomberg open interest weekdays at 9 a.m. eastern only on bloomberg. banana room. da na na na na na ni na na na na na na. you na na na. losing the fear of looking foolish comes with age. who did you steal them from? losing your way in your own home. doesn't confusion with time and place. may be a sign of alzheimer's? are you okay? yeah. i'm fine. early detection gives you and your loved one. time to plan for the future. learn the warning signs of alzheimer's. good morning. this is bloomberg daybreak europe. i'm tom mackenzie in london. these are the stories that set your agenda. the french prime minister warns of a moment of truth with the government on the verge of
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collapse, the euro and french bonds sell off. fed governor christopher wallace says he's leaning towards a u.s. rate cut this month, with other officials making clear they expect more cuts next year. plus, a court again rejects elon musk's bumper pay package as tesla ceo. but over at spacex, a tender offer sees the startup's value rocket to. about $350 billion. happy tuesday! so despite the apparent imminent collapse of the french government, european futures are actually pointing to gains after upside modest upside that came through for european stocks yesterday.
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things unfold and ftse 100 futures in the u.k. looking to add .2% and a 54th record for the s&p stateside monday currently looking to add .5% and nasdaq futures gained 1% by the end of the close. let's flip the board and lacrosse asset with the focus on the euro. the 10 year on the back of the comments from williams and waller suggesting more work needs to be done to the neutral rate but not fully committing although waller suggested he is in the euro. the 10 year on the back of the comments ballpark unless the daa changes. the u.s. 10 year currently yielding 4.2% and euro-dollar dropping about 1% yesterday, getting closer to the parity level, just down .1% and we continue to monitor that with
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sensitivity to the senior -- to the currency. gold currently at 2462 and opec-plus stabilizing tomorrow. the french prime minister says the government is close to collapsing with marine le pen pledging to join a left-wing coalition to topple the administration after they invoked a constitutional mechanism to adopt a social security bill without a vote. >> this bill is now here. and now is the time to act to implement it. we have reached a moment of truth that confronts everyone with their responsibilities. it is now up to the members of the parliament to decide whether our country adopts responsible financial texts essential and useful to our fellow citizens. >> let's bring in caroline in
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paris. is the barnier government then living its last few hours? is collapse imminent now for this french government? >> it seems that the collapse of this government is almost inevitable if the national rally joins forces with the left-wing alliance because they will have a majority to support this vote of no-confidence, which should happen by wednesday night or thursday morning. he might be the shortest lived prime minister of the french fifth republic since world war ii and it does not seem like there's any way out unless it does manage to get two thirds of the socialists to abstain from this vote of no-confidence but at the moment the socialists have said they would also support it so it does seem that the collapse is inevitable and
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until the last minute michel barnier tried to respond to the request of marine le pen in the middle of the afternoon on monday and in fact the markets rebounded when he announced he was giving up on reducing drug reimburse by marine le pen but she said that was not enough and at the last minute wanted to add an amendment on raising old pensions from january and according to the budget ministry this came too late and could not be included in the bill so michel barnier had no choice but to provoke himself with his photo of no-confidence. it is ironic because at the moment emmanuel macron is in riyadh on a trip to saudi arabia with some ministers and those ministers might actually come back tomorrow without a job. >> it is quite a moment.
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you talk about the short-lived tenure of michel barnier if the government is toppled and that has flashbacks for us in the u.k. around liz truss. so what happens next if this government is toppled this week? >> what happens next is the president will have to name a new prime minister. he could actually be named michel barnier, who will remain as a caretaker until the new prime minister is named and that could take a while. because there is no majority in parliament it took two months for emmanuel macron to choose a prime minister. and whether he will actually turned to the centerleft this time like we expected last time remains to be seen. this alliance could still rake up with part of the centerleft
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joining forces with the right wing but that seems like a long way out so some mps from the left are actually calling for him to resign. this would obviously be a bad scenario for the markets but it is clearly a scenario that is not totally off the table at the moment and some parties are also saying that marine le pen is not acting rationally since her trial. she is on trial for alleged embezzlement of european union public funds. the verdict is expected on march 31 but she risks being banned from running for office for five years, which would make her miss the 2027 election so according to our own analysts, they say that le pen at this moment might prefer political chaos stability. >> so marine le pen's own court
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challenges possibly a factor going forward. thank you. let's stay on the market reaction to this story. the euro and french bonds coming under renewed pressure as the finch that's the french government faces that collapse -- as the french government faces that collapse. we have seen the spread widened versus their german counterparts. how much is priced in at this point? >> probably not enough for the uncharted territory that he was speaking about. the prime minister himself said that investors are watching the risk that if we have a no-confidence vote in the government for an. it is difficult to price the risks involved in various french assets, particularly for bonds and the derivative curve. we have seen a spike and that means the cost of insuring
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french government debt is the most expensive it's been in about four years. people are paying more so all those things are coming together. probably more so this and the credit curve are much more sensitive specifically to the french government and the risks around that and that is what investors are focusing on so if we get a situation into this so-called uncharted territory, we could see a tremendous spike. we have not reach 100 basis points yet but people are also looking at the other spreads against spain, portugal and greece and they are closing the gap with italian yields as well, which is significant. france on italy -- france and italy on the same page is shocking. >> and it seems there's a high likelihood of that happening according to our reporting out of paris so watching for the
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potential for a blowout in spreads. meanwhile, fed officials have been making comments about keeping their options open before the next policy meeting. chris waller says he's leaning towards a rate cut later this month barring any negative open before the next policy meeting. surprise on the data front. take a listen. >> i lean towards supporting a cut to the policy rate at our december meeting. but that will depend on whether data we received before then surprises to the upside and alters my forecast for the path of inflation. >> what is your assessment of what we're hearing from fed officials and other people this week? it seems they are leaning towards further rate cuts but have not lock themselves in but they do want to see rates getting back to whatever the
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neutral rate is an think there is further work to go on that. >> you can see that is where the bond yield curve is going in the u.s. market so we are getting an early taste are getting an early taste of the bond vigilantes in the treasury curve so we are seeing it flattened substantially and almost back into inversion so for a big chunk of this year we have yields below short-term yields and we are beginning to go that way again and if the fed goes ahead with a rate cut you can fully expect the treasury curve will start next year with an inversion and will probably hold it for some time because the thinking from investors is the risks expected from the next administration will be inflationary for the u.s. economy. it is still to be proving what he does but that is the thinking for now, that whatever is enacted will stimulate the american economy but at the risk of raising inflation but the track record on trying to tame inflation is one of being reactive and not preemptive we have seen in this cycle where they took a long time to start
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raising interest rates and wanted to see cpi on the upside and having some sustainability before they stepped in and that's what investors are looking at again as a potential repeat for next year that if inflation does come back they will allow it to go first and that will be reflected in the fact that the bond market will push short-term yields up, trying to edge the fed to going back to raising rates while long-term rates stay down in that will possibly be the scenario into 2025. >> interesting. markets may be bracing for a fed that is again behind the curve on any inflationary impasse out of this incoming trump administration. bloomberg mliv strategist mark cranfield. a closer look at what's happening in china. some lines crossing that will be of significance to market watchers. what are you looking at, avril hong? >> absolutely.
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that line crossing the terminal is bloomberg sources saying that the china central economic conference will be happening over two days next week and this is a high profile, closed-door gathering of the top leaders, including xi jinping, in which they could discuss the gdp targets and stimulus so of course what we have been seeing on this day that the news hit is china growth concerns that affected the stocks and the currencies and we saw earlier today the offshore yen hitting 731. the weakness against the greenback -- the weakest against the greenback in the year. the news seems to be helping the currency to pair some declines but it's underperforming compared to the rest of the region. thisthis next page will show yow stocks in this part of the world are faring.
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we have been seeing the cfi 300 and honks saying clocking declines earlier in the session so it does look like this information is help -- is helping but still that bit of underperformance versus the rest of asia, still with that side of relief that u.s. restrictions on ships and other components to china are not as bad. this is what we are seeing out of china and the rest of the region today. >> a bit of a turnaround on that news when it comes to chinese markets and the upside in japan and more. avril hong, thank you for the market check. let's get to a major corporate story and further challenges for elon musk. tesla says it will appeal a ruling that rejected elon musk's record-setting pay package, saying the decision is wrong and a judge in delaware ruled the board was too much under must's influence. it is very close to trump and has benefited from that in terms of the upside. let's bring in peter for the details.
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why was it struck down and where does it leave must's pay? it is oddly paltry, isn't it? >> the judge who steele down in january put it back to shareholders, who voted in favor. so overwhelmingly in favor that he should get this pay package. he went to the judge, who had a ruling today. a similar reason that she struck it down in january. she said the board capitulated to her terms and did not negotiate. there were other amounts it could have offered rather than just being taken to shareholders as this big package ora similark it nothing so tesla have said that they will appeal the decision but at the time it was granted in 2018 it was worth about $2.6 billion
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and when it was struck down in january it was worth $56 billion and given the rally we have seen in tesla shares since the election in november, it is now worth about $110 billion, so it's a fairly significant chunk of money, even in musk's terms. he is still far and away the world's richest person. he is worth about $353 billion at the moment according to the bloomberg billionaires index but it again comes down to whether they can get this pay package through. if they lose the appealed and tesla will have to put together a new package. >> it is not too stingy in terms of net worth and part of that is what's happening with spacex and the value of that company just keeps being on a tear what is the latest in terms of what's happening with spacex?
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>> what he loses on one hand he picks up on the other. we had news spacex will conduct an insider -- this is an opportunity for employees and shareholders to sell stock back to the company that will be conducted at a valuation of about $350 billion. we recorded a valuation on spacex around $255 billion last month and at the beginning of this year it was valued around $210 billion in a separate insider tender and musts owns 42% of spacex so you can do the math there. the value has risen about $40 billion just in the last month and that makes spacex the most valuable private startup in u.s. history and to put that in perspective it is worth more than arabesque and boeing combined. >> that is the perspective.
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from biden's visit? >> good morning. what are the tangible outcomes from biden's visit? >> good morning. for angola and for the u.s., the expectation is we will hear and see more commitmentswhat are ths from biden's visit? >> good morning. for angola and for the u.s., the expectation is we will hear and see more commitments both publicly and privately about the investment commitments made to what are the tangible
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that? is that a number? oh oh, yeah. no. kari. kari. kari. you want to talk about the significant significance of that? is that a number of the investment? yeah. the significance is really a number of the investments that we have seen have been coming from china, especially here in angola. even the airport has been chinese invested
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for interrupting. in terms -- you have touched on the significance and it's clearly for the continent of africa. what is the risk that this gets unwound under a trump presidency? is that part of the conversation or an anxiety for people on the ground? >> it cannot not be and we have heard people talk about what does this mean now when we see joe biden leave office in just under 50 days and what it means for a trump presidency but what we have heard from a number of officials both public and private sector or stakeholders and particularly the railway that will be key to the electric field full transition. they say they don't expect to see a u.s. administration that would lose interest in investing
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in this part of the world, especially because a number of the mineral deposits that were going to be for the transition are focused on this part of the world and we are seeing has of state gather to talk about that and so it is unlikely they will see a position change from the angolan government when we see a new trump presidency coming in but time will tell whether anything changes in terms of the bilateral relationship. >> jennifer zabasajja on the ground in angola. thank you. the intel ceo is forced out. we bring you the details. stay with us. this is bloomberg. ♪
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what do we? robert: ok, this could mark the beginning of the end but a lot of challenges for the ceo and the company lost its leadership so they need to decide if they're going to stick with the business or house it to someone else and what growth market will they go after? increased competition and finally integrated business model, more restructuring, so who will take pat gelsinger's
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tom: good morning. french prime minister warns of a moment of truth with his government, bonds selloff. chris waller leans toward a rate cut, more reductions next yeah. a court rejects elon musk. spacex value rockets to 350 billion. modest gains and asset moves around french political story, adding 3/10 of 1%. ftse looking down, 54th record
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yesterday and modest upside on the gains of yesterday after jumping around. let's have a look, yields up, price down. euro-dollar in focus after the drop that we soar. brent is up as we look ahead to opec-plus and gold is up. closing in on 2000. the spread has widened with the government very lightly to collapse by wednesday.
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i'm joined by elsa from rbc capital. fanks for joining us. how much is priced in? also: what we have seen, it seems like we are heading to a vote of no-confidence but my colleague peter reiterated most expects the government to fall. tom: why -- why? they can get a budget fru, are you suggesting market sensitivity will be less than expected? elsa: short positioning despite
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hike, what is your latest target around -- around -- around -- around the currency? elsa: everyone was long dollar and only in people were circumspect. there is still some risk because of the u.s., our call has been a higher terminal rate and you may have people debate a hike, not great news. think of japan slowly tightening. tom: yeah, ok.
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above -- above 4%, not -- not consensus. do you get dollar strength? elsa: u.s. exceptionalism dominated, we saw that happening through august and september, links to fears about a slowdown, fundamentals are firmer than anyone expected. tom: is the pound looking richer? elsa: bank of england reluctant to cut, forward curve is well priced. tom: when? next year? second half?
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>> skipping december, every meeting. carry trade but you need new news. tom: elsa indeed. giving views on the yen and the pound, looking for new news. elsa from rbc capital markets, indeed. trump is set to travel to paris for the reopening of notre dame which was devastated by fire. macron will meet with him. justin trego -- justin trudeau an obvious had meetings. staying with donald trump the
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nominated republican doughnut lauren stevens. it comes as keir starmer said england does not need to trade off its special relationship. must choose, that somehow we with america or europe is plain wrong. plain wrong. tom: ok. joining me more is lizzy burden who has been chanting this for us. what have we learned given the differences and the eu? >> before trump's victory there was tension between the two
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camps but it is about realism and not a binary choice, warren stevens is a prominent donor and banker so he fits the bill. this is a landing spot for pomp and circumstance of london. tom: this is all about favors. lizzie: that is the personnel side and i was speaking to jonathan healy, do you prioritize the relationship?
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ukraine has got to the side and until then u.k. will be steadfast. tom: he talked about this strategy. whizzing: when they announce the deadline on defense what is the point of the target? not quite the certainty donald trump business wants the point is you diver spending so take a listen. >> we will direct toward british-based businesses to drive jobs and innovate, learn
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and the idear is to hit the reset button, labor saw democrats lose and failed so now they're concentrating on changing lives so they feel there's been a difference made. tom: really interesting. indeed. coming up germany's crisis, how the sluggish economy in uncertain is hitting sme's. this is bloomberg indeed. ♪
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>> 66 thousand workers participated in walkouts, indicative of the crisis of competitiveness facing the jammin economy. according to the association of small and medium enterprises sme's bore the brunt of burdens. oliver crook stands by indeed in berlin that exclusive guest. >> yes, tom. we don't talk enough about sme's , the impact on the german economy, 51% of jobs, 2.7
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trillion euros of sales and an important pipeline. apprentices learn their trade but it's hard to get a gauge on how they feel and we are joined by christoph howell house. last time we spoke there was a grim appraisal. what has the last year brought? christoph: it's getting was, who timidly last year we had a
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coalition paralyzed, a nightmare for the german economy. small and medium companies struggled. ollie: what needs to be addressed? what -- what do they need to hear? >> tackling germany's bureaucracy, new solutions for the labor shortages, these are the biggest problems. >> do you have an idea of who is offering the best plan? seems germany is running a traditional campaign when something more radical is required. >> people feel with politicians
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they have a kindergarten and only discuss strategy for parties but not country, big problem. they need more confident confidence. what is right way to bring country to its old string. >> do you have a sense they are prepared to move but are being held back? >> i think so, yes. small and medium-size companies long for clarity. what i have been hearing, they say government needs to ensure
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we can do our work. we want to perform for germany. we need confidence to perform. >> how concerned are business owners about trump and tariffs? >> no, you know, it's hard to say from europe what the americans have to do. america is the most important partner for europe. we have to discuss more with
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each other and not about each other. >> does there need to be a greater effort to find new markets? china has been a huge part, both markets are at risk. >> yes, they are in the middle of the process, supply chains are changing, back from china they will be organized in a new way, back to euro, south korea, there is a chance for many germans to make a new feeling, they can be successful. >> i would like your view of the
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demise and we watched the spread of o.a.t.'s and yield, trading will start in the next hour, back above 3% benchmark 10 year, how much is priced in? how much fervor is there to go? pressure on finances and not many are willing to dip their toes indeed given that yields are week. in 2012 the eurozone debt crisis, getting back to that. once have a look at the gender, jobs, adp, payrolls to round
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