'Bloomberg Surveillance: Early Edition' Full (11/23/22)

'Bloomberg Surveillance: Early Edition' Full (11/23/22)

Show Video

This is Bloomberg Surveillance early edition with Francine Lacqua. Good morning, everyone, and welcome to Bloomberg Surveillance early edition of Francine Lacqua. Here in London, here's what's coming up on today's program. Trouble in iPhone City. Violent protests hit Apple's main plant in China as workers and security personnel clash over Covid restrictions and wages.

The offshore one fell on the news. Wealth management troubles while Credit Suisse sees a fourth quarter loss for the unit. Shareholders vote on the capital increase at the embattled banks AGM today. Shares slump. Plus, collateral crash. RTX founder, sound banking freed

apologized to staff after financial buffers plummet by 51 billion dollars. Sequoia says sorry to investors for backing a RTX, but defends its vetting process. Now, first things first. So let's check in on the markets across the board. We did have or we did start a little bit higher in European stocks and we had a bit of a lull. And now we're getting about one tenth of

a percent in terms of what's moving the most. The sectors I'm looking at energy and some of the other ones, European stocks, of course, awaiting the release of policy minutes from the Federal Reserve's latest minutes. I know they will, of course, come through with a fine tooth comb to understand exactly what they've been thinking. Attention is focused on that. It's from the November 1st and 2nd gathering.

The U.S. 10 year yield ahead of that three point seventy five. And then I'm looking at bitcoin. We have some great, fantastic interviews actually coming up on crypto today and tomorrow, sixteen thousand five hundred and twenty. If you look at the European map, it's also always interesting to see whether Germany's doing something different, for example, from France that we had some PMI figures both in Germany and France. Germany was interesting because they were both for services PMI, but also manufacturing PMI on the lower side, or certainly they were below 50, which indicates a contraction, but they were better than expected from economists. The CAC in France actually a little bit different. PMI was a bit disappointing on the

services side. Now, euro area November manufacturing PMI coming in overall for the eurozone at forty seven point three. That overall is better than expected. Services PMI unchanged at forty eight

point six. Not a huge move when it comes to euro dollar 1 0 3 1 4. Now, RTX founder, sandbagged and freed, has apologised to staff in a letter that outlined a crash and collateral from 60 billion dollars down to nine billion dollars.

No court hearing. The lawyer from RTX said a substantial amount of the group's assets are missing or stolen or. Bloomberg's crypto reporter, Salvatore Ghosh, joins us now from Singapore. So, Salvatore, what what do we know now? How how bad does this look? Is this fraud like? What are we looking at? Hi. Yeah, it looks pretty bad. Firstly, that, you know, as v.f. Sandbank BANNERMAN Freed, he wrote a

letter to FTSE staff saying that, you know, he was apologizing for the for the crypt collapse of the crypto exchange. He mentioned, as you may, as you said, that you know, that although the value of the collateral has crashed and how they were left with nine billion dollars worth of collateral and the liability was two billion dollars. He even said in the in the letter that that Bloomberg has got that I didn't mean for any of this to happen.

And I would give anything to be able to go back and do things over again. That shows that, you know, although the contagion is pretty much going ahead and, you know, it's spilling over to other other crypto exchanges, crypto evil companies, brokerages. And we have seen that happening across all of it in terms of, you know, the markets are pretty much pretty much, you know, stable today. But it has come down from two to the. It came down to November 24, 20 levels after this contagion spread.

Thank you so much for the update, so buttery. Gosh, they are joining us and we'll have plenty more, of course, also on by NANCE throughout the day. Now we're joined by global market strategist at JP Morgan Asset Management.

He's Mike Bet. Good morning. I want to ask about PMI as you talk about the Fed and, of course, inflation overall. But how do you read this fight and crypto? Does it actually impact? I don't that's a liquidity, but market sentiment overall. I don't think it's that relevant for broad publicly listed markets. I mean, it's RTS. There's gonna be some people who take

some losses on it, but I don't think it's got a big read across for listed equities. So you don't have any exposure. I mean, was there was there a call again? Is there something that you're looking at to give us a sense of what happens next to crypto? Or does it just shut it down? I certainly don't have any exposure. I wouldn't go anywhere near it with a barge pole. I'll leave it at that. I think Mike Reed talked about the Fed and you look at what markets are pricing in. Are they underestimating how aggressive the Fed still needs to be to get to around 2 percent? I don't think so. I actually think if you look at where

mortgages are in the US, you are about 7 percent on a 30 year mortgage. To me, that seems like enough to slow the economy down. I think it's going to be enough to trigger a moderate recession in the US next year, and I don't really think they need to do any more than surprise. Obviously, that's a bit more than they've done so far, but I think getting to around 5 percent on Fed funds with mortgages at 7 percent on a 30 year, that's probably enough to slow the housing market and cause a moderate recession that brings wage rates that. Are you expecting correction in equities

because we haven't even started seeing a real recession yet. Yeah, that's interesting, isn't it? I actually think that saying if you look at where we were at the end of September when the S&P was down 25 percent, I think that the market had probably largely priced in the kind of moderate recession that I expect. Now we come a little bit off those lows, but I'd be surprised if we go much lower than we were at the end of September.

We may sort of bump around a bit over the next few months. Generally, markets don't bottom before unemployment starts rising. So it would be early. If we have seen the bottom now.

But that said, I do think this is then it was a great time. It just yesterday showing professional forecasters probability of a recession. And this is if it happens, let's be most forecast recession in history. True. There's a good chance that the market could have priced it in sooner than it normally does.

So you believe we can still avoid a recession? No, I think we're going to get the recession. I just think the market price that at the end of September. I mean, maybe not fully. But I think it went a long way to pricing the type of recession. So you expect me this is a good time to get into the markets or is still a little bit of work through? Yeah, it's very hard to say. But I think that by the end of next

year, it's more likely than not that stocks are gonna be higher than where they are now. OK, so if you've got a 12 month time horizon, then I think the markets did a fair amount of bad news pricing in this year. And so next year will be going be a better year for stock market. So broadly speaking, I think. Yes, okay. Broadly speaking.

But where which part of the market you know, we're looking at liquidity concerns. We're also looking at leverage in certain parts of the markets. I mean, we had a guest earlier today talking about asset bubbles. Yeah, I mean, so there's a couple of things that concern me. One is that parts of the market are still expensive. Yes.

So I'd be more focused on the cheapest. If you look at the value stocks, the PS on that is pretty reasonable by historic standards. Whereas the growth stocks came from very high valuations down to just high valuations. So I'd be more focused on the kind of value stocks, particularly in the US, where given that the majority of people on these long term fixed rate mortgages, it's hard to see how it gets really bad.

And then I also think China is very cheap. So I'd be tempted to be kind of moderately overweight US value stocks and overweight in China as well. All right, Mike. Thanks so much. Mike. Well, the global strep market strategist at JP Morgan Asset Management stage with us will talk a lot more about China. Coming up, the IMF first deputy managing director miscarried. Well, Cop in office speaks to Bloomberg about the slowdown in China. The challenges facing the global

economy. That exclusive interview is coming up next. Also, Manchester United shares raising 11 percent as Glazers. The Glazers are weighing the potential

sale of the club. This is Bloomberg. China is a large economy, which means that its growth has very direct implications for demand for certain kinds of commodities, for example, metal prices. We've seen the metal prices are highly sensitive to what's happening in China in terms of growth, in activity, in terms of construction. So that's one direct channel to commodity prices, especially metal prices that we see that happening. For the region, China is very connected with Southeast Asia, with trade with East Asian countries, Japan, and again, any slowing of demand in China, but also any kind of supply chain disruptions has effects for the rest of the world.

So I think these are some of the important channels through which it has the spillovers to other countries in terms of what's happening now for China, obviously the drivers are very different. It's the Covid pandemic that continues to lead to shutdowns and lockdowns in China because of the policies that the government has adopted in 0. Covid policy worked very well at the beginning of the pandemic. But now we have a different strain of the of the virus, which they still need to adapt to. And then the second is the property sector, which, you know, has to be corrections have to happen by the ideas to get it done in an orderly manner. Well, that was the IMF first deputy

managing director. Keep it up and off. Speaking exclusively to Bloomberg's Haslinda Amin now, violent protests have erupted, Apple's main iPhone making plant in China. That's after hundreds of workers clashed with security personnel following almost a month of living under tough Covid restrictions. Well, joining us now is Bloomberg's buddy who.

Betty, what can you tell us about what exactly happened on the ground? Right. So Wednesday, very early morning Asia time are at apples for apples, major supplier Fox on site in general, which is called the ISE City. Hundreds of workers streamed out of their dormitories and then clashed with the guards. Based on based on our reporting, that was due to a lot of resentment due to unpaid wages and also fears of further spread of the virus. Betty, thank you so much. We we'll continue, of course, following this very closely with our buddy Buddy who in Taipei.

Now we're back with Mike Bell. Global market strategist at J.P. Morgan Asset Management. Mike, I know you were saying that actually you can see also opportunities in China right now. The new story, you know, we're trying to find out more, of course, on the ground.

We have reporters that, you know, are going to have a look. But how do you mix match two? Can we see does it mean that they're going to be less regulatory or, you know, are going to to support the economy more and raise wages? Or how do you see the mismatch? I guess the way I think about it is almost every client I speak to is so bearish on China. And you can see that in market action, the price is still down. Even after quite a strong rally in November, it's still down about 55 percent from its peak. So there's a lot of pessimism baked in to Chinese stocks. And, you know, I think ultimately the catalyst that's required is them moving past Sarah Covid. And it's not obvious how or when that

happens. But it also is, I think, quite obvious. They can't stick with zero Covid forever. And so when they do eventually move past zero Covid, I think that's substantial upside in China. So that's really why I think there's an argument in favor of having a small overweight when China reopens. How inflationary will that be for the rest of the world? Well, I mean, I think the interesting part of what you're seeing at the moment is some of the supply chain disruptions are easing. So, for example, the cost of shipping from China to the west is coming down quite materially. So that's actually going to have a bit

of a disinflationary impact. On the other hand, the demand coming for things like perhaps metals particularly. Then once they reopen, do do some more fiscal stimulus, you know, that could put some upward pressure on things like metal prices. But overall, do you how do you play commodities? If you play them. Yeah, I'd be inclined to not take big bets on commodities at the moment.

Just be sort of broadly neutral. Obviously, that's supply constraints in the commodity markets, which is why we've seen such high commodity prices. On the other hand, if we're white right there, we go into a recession in the major developed market economies next year and historically that hits commodity demand. It's very hard to say given you got potential China reopening, affecting metal prices and then the West going into a recession at the same time. So I don't have high conviction on it, Mike. I know we talked a little bit before

about equities and the fact that actually you think that broadly over the next 12 months we'll be in a better shape in terms of equity prices than we are now. What will happen in between, though? How volatile are the next 12 months going to be? Yeah, it's fascinating because you could easily, if you look at the kind of lost three bear market playbook, then it's too early. You would be saying the market shouldn't be bottoming at these at this point because unemployment hasn't even started rising. The Fed aren't cutting rates and historically those two things happen before the market bottom. So you think it's too early? On the other hand, the market doesn't normally go down 25 percent before anyone's even lost their jobs. Yet on a net basis, as you look at 0 8

or you look at the 2000 recessions, the market basically only started to go down as jobless claims rose. And of course, this time around it went down 25 percent before jobless claims even started picking up meaningfully. So I think the market has moved in advance, which means that it may be the the traditional playbook applies and we will have a bumpy period for the next few months. Perhaps we could retest the lows we saw in September. I'd be surprised if we go much lower.

It may just be that the market priced in early and we've already seen that. But my guess is on the assumption that, first of all, we've hit peak inflation for the moment, which doesn't mean that it falls off a cliff. But certainly it doesn't go higher than this. And is it also the assumption that dollar doesn't go higher? So I don't think the dollar is key to the call, but I do think the inflation picture is important. I actually think what's fascinating is

that it could end up looking a lot like it did in the late 60s, early 70s, where stocks and bonds sold off together as inflation picked up and the Fed slammed on the brakes. But then once you saw the peak pricing in 10 year Treasury yields and the peak in inflation, both bond yields peaked and stocks bottomed at the same time. And everyone remembers those. 70S is a period where you have that positive stock bond. Correlation is a bad thing. But they didn't just go down together. They went up together as well. And I can see how that could happen

again. This time you could see bond yields coming down and equities going up together. Mike, thank you so much. Mike Bell. Global markets registered JP Morgan Asset Management. Coming up, Credit Suisse Falls after it warns it's expecting a net loss in the fourth quarter, citing more outflows and poor market conditions.

We'll have plenty more on that next. And this is Bloomberg. Economics, finance, politics. This is Bloomberg Surveillance, the addition of Francine Lacqua here in London. Now let's get straight to the Bloomberg first for. Here's Laura, right? Hi, Laura. Mike Brown saying the EU has watered down its latest plans for a price cap on Russian oil exports by delaying its full implementation and softening key shipping provisions, according to a document seen by Bloomberg.

The bloc proposed adding a 45 day transition to the introduction of the cap. The European Commission also proposed an emergency brake on natural gas prices of two hundred seventy five euros per megawatt hour, well above current price levels. The Kiwi dollar jumped as New Zealand's central bank raised rates by a record 75 basis points and signalled further tightening ahead. The Monetary Policy Committee lifted the cash rate to four point five percent on the property market. The RBA NZ Central projection now includes a 20 percent fall in house prices from their peak a year ago.

The leader of Malaysia's former ruling bloc has told a news website that the country's king has decreed his coalition must join a so-called unity government. The king is to consult fellow royals as he continues to deliberate over the appointment of the new prime minister after last weekend's inconclusive election. Global news 24 hours a day on air and a Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts in more than 120 countries. This is Bloomberg Businessweek. Laura, thanks so much. Credit Suisse shares have fallen after it warned it will book a loss of up to one point six billion Swiss francs for the fourth quarter. It comes as the embattled Swiss lender undergoes another sweeping overhaul of law in all of this.

Let's bring Bloomberg's Charlie. Well. Charlie, good morning. You're keeping a smarter was having it pretty sweet. I mean, asset outflows were huge. And it feels like every week there's a problem at Credit Suisse, like how do they get out of the spiral? Yes. So, Francine, this was supposed to be a day of turnaround for Credit Suisse, but it's instead in just a few hours, turned into a day of turmoil.

So shareholders are voting in Zurich today on a plan to raise four billion dollars in capital. This is a part of that turnaround plan. But, of course, what we are seeing in this announcement from Credit Suisse is bad news, not just for its investment banking unit, which we sort of predicted. Well, we've known about for a long time, but also our lost projections and outflows from wealth and asset management in the end of the third quarter totaling to about 90 billion dollars. Which analyst from JP Morgan have just said is concerning? So what does that mean for how how shareholders will vote? The extraordinary general meeting. This is tricky. So proxy advisors have been telling

shareholders that they should vote in favor of this change of this capital is of four billion dollars. That involves issuing new shares to the likes of Saudi National Bank, which would take a 10 percent stake in with those new shares, but also giving a rights offering to existing shareholders. The issue, of course, is dilution. So those shareholders, which who are unhappy today because of the dramatic decline in the price of that share, also would see their shares diluted because of these new issuances. But they probably don't have a choice because we're talking I mean, otherwise, if they don't have that capital, what do they do believe and survive? That is so on point. They are stuck between what I would say as a bolder and a hard place because, you know, they would have the dilution of potentially 34 percent on earnings per share. But if they do not approve this measure,

that dilution would be about 40 percent. So they really have few options here. And what happens to Credit Suisse going forward? I know there was a lot of concerns about solvency, which the chief executives really pushed back against. But where do you see this bank being in the next 12 months? Well, look, the plan was to really focus on private banking, to focus on wealth. But when you see that 90 billion dollar approximate outflow at the end of the third quarter, you just think this is a real challenge of trust. And banking at the end of the day is about trusting someone to be a custodian of your money.

And what we're seeing from these claim outflows is that trust is in short supply. Credit Suisse right now, do we know where these outflows are going? Is there another bank that's benefiting? I think that will come to light in the days ahead, of course. You know, there are other banks in Switzerland. This is just Switzerland's second largest lender.

We know that, you know, Credit Suisse had kind of set itself apart by being the bank that did not need to take a government bailout during the financial crisis. Other banks in that country did. But that may have created an atmosphere inside the bank of risk taking, of failure to check on complaints in the way that other banks that did struggled perhaps more in the financial crisis did not. Charlie, thanks a lot. Charlie Wells there, of course, bringing

us the very latest on Credit Suisse coming up. The European Bank for Reconstruction Development urges policymakers to remain focused on greener energy and free trade. We have more on the banks global economy report. That's coming up next. And this is.

Trouble in iPhone City. Violent protests hit Apple's main plant in China as workers and security personnel clash over Covid restrictions and wages. The offshore one fell on the news. Wealth management troubles. Credit Suisse sees a fourth quarter loss

for the unit as shareholders vote on a capital increase at the embattled banks AGM today. Shares slumped. Plus, collateral crash. RTX founder Sam Backman, freed, apologizes to staff after financial buffers plummet by 51 billion dollars.

Sequoia says sorry to investors for backing FTSE, but defends its vetting process. Well, good morning, everyone, and welcome to Bloomberg Surveillance early edition of Francine Lacqua here in London. Now, the European Bank for Reconstruction and Development says policymakers should not lose focus on the long term goals of greener energy and free trade in the bank's latest transition report entitled Business Unusual. It argues that these will continue to be the main drivers of future growth as the global economy seeks to recover from the pandemic and Russia's ongoing war in Ukraine. Well, we're delighted today to be joined by the chief economist of the European Bank for Reconstruction and Development, Beata Jeff Covid Beata. Thank you for joining us. Do you worry that because of all the concerns of recession ongoing, we're taking a back step to the progress that we had made towards cleaner energy? Indeed, I worry very much about the fact that governments which are focused on immediate needs on fighting fires daily, weekly, monthly, are losing sight of long term goals by dealing with problems they are facing today, by trying to remedy the problems, they are pushing the burden of debt, they are pushing problems into the future. So think about

protecting firms from creditors. A measure that's quite popular in emerging Europe. By protecting firms, banks are creating costs for the banking sector in the future and they risk creating zombies. Many firms borrowed a lot of money when interest rates were low. Now interest rates are high. There is a downturn and many firms will have a hard time coping with this new situation.

So they will be pushing governments to extend this emergency measures, protecting them from creditors. But that's only going to be DAX was on bifurcation. And I. I mean, this is very difficult. And actually, I've lost four to five years on this program. We talked a lot about zombification, which was one of the main concerns of the G 30 of the group of thinkers like are we too late to this? Because actually inflation is so aggressive that interest rates have to rise quite quickly. And so the leverage will create zombification of certain companies for sure. Well, we are not too late.

We just should be careful about not prolonging the problem. We document in our report that emerging Europe has is particularly vulnerable because of high presence of state owned banks. State owned banks are much more enthusiastic when it comes to lending to zombies, either because they are instructed by governments to do so or because they know that if they get into trouble, the state will bail them out.

So either we need to prevent state owned banks from becoming super spreaders of zombification. So better is there a part of the corporate world and industry that you worry about the most, where beautification could actually have longer term consequences? Well, you know, this problem of zombification is connected to the green transition. If we keep capital and labor trapped in firms that are not productive, in firms that are kept artificially alive by subsidized credit, we are not allowing capital and labor to move to new activities. And we need big structural changes in

our economies in order to adjust to the greener future. In order to go through green transition. So, again, who's listening at the moment? Better what is is the window to make sure that we don't get down that road and create something even uglier than than what we've had last 10 years. Is it something that we need to be cutely aware in the next six months or will it take much longer? Well, we need to be acutely aware now because many of the measures governments are taking are actually counterproductive when it comes to green transition. So think about zero V A T on energy. This is not helping just vulnerable households.

It's actually helping everybody. And it's lowering incentives to save energy incentives among households that can afford high energy prices. And we really need to this higher energy prices in order to change the way we consume things. Better are you seeing peak inflation or do you think it'll get much worse around the world? And again, what's the second round effect of VAT in 12 and then 24 months? So we think that in emerging Europe, inflation has not peaked yet because high energy prices have not been passed onto the households yet simply because of the way contracts on supplying households have been structured.

And forecasts say that we are going to have high energy prices in Europe well into 2024. Then we also see that producer prices increase much more than consumer prices. So producers have not passed on the higher costs onto their households yet. And in emerging markets, we have the additional issue of inflationary expectations rising faster simply because many people have lived through hyper inflation in their lifetime. They remember it and therefore they tend to expect high inflation much faster than people in advanced economies who have not experienced hyperinflation firsthand. Better how are you expecting? I mean, it's very difficult to know, of course, how the war in Ukraine will end.

But how are you expecting the war changing the long term economic prospects of Europe? Well, I think what we need to think about now is reconstruction. Now, the whole discussion about reconstructing Ukraine focuses on physical capital, but human capital will be equally, if not important when it comes to the reconstruction phase. And the best way of ensuring that Ukraine has the human capital when it comes to reconstruction is to prevent another massive wave of refugees. And that means supporting Ukrainian government now and supporting firms, state owned firms that provide basic services to people so that Ukrainian population can make it through the winter. And I'm happy to say that the DRC is contributing a lot.

We have extended loans to help enough tear gas, make gas purchases for winter. We are supporting farms, producing and distributing electricity so that life in Ukraine will be easier and that people there can make it through the winter. All right. Thank you so much better. Jeff Covid there, the chief economist of the European Bank for Reconstruction and Development on that very important auto paper that they put out. We'll have plenty more, of course, on the markets and plenty more on inflation. We also have some breaking news out of China. Beijing is asking residents not to leave

the city unless necessary. This goes back to our main story about Covid restrictions and the fact that just two weeks ago we thought that it could be a loosening, certainly zero policy. And actually there has been a reversal because of deaths due to Covid in China. Coming up, Manchester United's owners say they are considering selling the club. We'll discuss what that means for one of the world's biggest football teams. That's coming up next. And this is Bluebird.

Economics, finance, politics. This is Bloomberg Surveillance early edition of Francine Lacqua here in London. Now, shares in Manchester United are higher in U.S. premarket trade, one day after the club's American owners said they're considering putting the iconic Premier League side up for sale. Now, the Glazer family is working with financial advisers on the process, which could lead to a partial sale of the club or investments, including stadium and infrastructure redevelopment. Now, to unpack this, it couldn't be more

excited. Simon Chadwick, professor of sport and your political economy that's come to business school and Bloomberg's Joe Easton. So thank you both for joining us, Joe. Even I'm excited and I'm not a huge football fan, but it feels like you could clubs are up for sale. Yeah.

Yeah. Well, yeah, I think that's definitely the case. And I think it's quite a unique opportunity really for football club valuations. And I think that's probably what the Glades have seen her. And if you look at where, for example, my beloved Chelsea priced when they sold three point one billion dollars, which is about a billion dollars more than where Man United was trading before this news broke.

So clearly there's some value to unlock. But you're a Chelsea fan. This is breaking ISE. I submitted it online. I have to say, I mean, you're a Chelsea fan. What do you know? Would you buy right now? How do I buy Middlesbrough, which is which is a far superior to Chelsea? So, of course, these are really interesting times because I think undercurrent in current operating conditions, it is almost as though we're at peak value because in your previous package, I was listening to the commentator speak about harsh economic conditions. And clearly football clubs are not not immune from those harsh economic conditions. So it may well be that the Glazers want

to cash out now before any any problems hit. But I think also there are future opportunities, for example, particularly around the metaverse, around digital and different broadcasting platforms. And so it could well be as well that what they're doing and doing is that they're on a fishing trip to see what additional investment they can in to help them with those digital investments.

I always heard Joe for certainly from investors that maybe wanted to take something in Man United saying, look, the Glazers just wanted too much. We're talking, you know, potentially seven, eight billion. I mean, that's crazy money. Yeah. And I think that they're probably getting a little bit worried now. I mean, it goes to ties in with what someone was paying about saying about peak valuations. And I think that probably a little bit

worried about the Middle Eastern money that's in the game now with Manchester, Hang Seng, Newcastle, who haven't really dipped into their deep pockets yet and they're still flying up the league. So I think the peak valuation story might be like coming true now. I think Simon, is a Super League going to be back? If you have Americans buy him and I know last time was an absolute last year for it for all those involved.

But if you're going to make this a viable option and if this gets sold to Americans, I mean, we have no idea who could bid for it. SIMON But do you think that we'll be back on the table? The first time the super early conversation first emerged was 2008. So the 2021 conversation was actually a revisiting of an old and much older conversation. So simple a simple answer to your question is the super early discussion will never go away. Certainly the current conditions, because inevitably those bigger clubs, the likes of United, Real Madrid, Bayern Munich and others like Bayern Munich is possibly an exception. They believe that the revenues that are

coming into the game are really driven by them. They're not driven by clubs from, for example, Estonia are hungry or kind of even at the clubs in the likes of the Premier League, an elite league, La Liga. They are there. They are the value drivers of the industry. And so they want a bigger share of the cake. Who's likely to buy? Man United? Joe, I think most likely private equity, and I think he's obviously saw that with Chelsea. And I think that, you know, there is there is a lot of value to be made, particularly in Asia and United.

You know, they claim to have around a billion fans in Asia. Whether that number is quite true. Not really sure, but they definitely have a big Asian exposure. The private equity looking to get into. I think I mean, we know that, you know, Mr. Ratcliffe was looking at Chelsea. Do you go, Joe, to the list of people

that wanted Chelsea and say, actually, they're digital, still this club or is it just a different ballgame? Because the money is it's different. You know, the money involved. I think if you could see someone coming in and buying it as it is a trophy club. You know, with the individuals that we spoke about with Chelsea, I think that that could be an option. But again, I think that it will most likely be a consortium, maybe a consortium of private equity seems to be most likely.

I think there will be a bidding process. I don't think it'll be one better comes in. Deal is done. I think this could be back and forth. I think it could be, you know, potentially several bidders coming in and then it could be a drawn out process. Simon, who do you think will buy it?

I think I agree with Joe. If we look to the Gulf region, it's very hard to see who right now would be inclined to Dubai United. There's a lot of talk about Dubai. I think if there is any money coming out of the Gulf region, it's more likely to come out of Dubai than anywhere else. The other region of the world, though, that would alert people to this kind of South Asia, Southeast Asia. There was what appears to be an untrue

rumor about the Ambani family buying Liverpool. I think India potentially is a very interesting possibility. But Southeast Asia, Indonesia, Malaysia, Thailand. We already have owners in the Premier League from from from this region. But otherwise, I think I agree with your consulting consortium of private equity buyers. So a reminder, a curiosity, but also a

reminder towards the big football stars watching this program. I know that if you were to give an exclusive interview to Piers Morgan, you can also call on leaders with Lachlan to give me an exclusive interview. I mean, what happened? Were the two linked in yesterday? There was so much news from and United, certainly Renault believes.

But then they're also looking at selling the club completely unrelated or is are a web of ideas. I think that the and this is just my my guess. But I do think that maybe the news was leaked in order to bury them for an alto store and take that out of the headlines. But, you know, that's speculation.

But I think it was too close timing. I mean, there were nowadays story broken. Then within 30 minutes, you know, the Man United sell story breaks. The timing seems like somebody might have wanted to do a bit of PR work for Simon.

Mean, who do you think or what club do you think has the most potential in the UK overall? In terms of investment from from academia and the one that I think has kind of stuck in my mind for quite some time now is West Ham, and there were stories going about four, five, six years ago about the Kathleen Hays being interested in acquiring West Ham. And keep in mind that a large part of the Olympic Park where the West Ham Stadium is based is owned by the Catholic government. And if you think about the West in many ways, it's in an ideal location very close to the center of London, modern stadium, great infrastructure, great access, some history there. And obviously West Ham have performed well in Europe back in that the kind of 70s and 80s big fan base. So West Ham is a really interesting one, but obviously United for lots of reasons is still a showcase asset. I mean, it's really interesting because again, you're breaking news about China.

Manchester United has got plans to open three experience centres in China and for the first one is open in Beijing. And I think in some of those overseas markets, the club is still very, very popular in spite of its recent problems on the field and off the field. And so now, if not West Ham, then certainly United. Obviously, there are other Carol Massar Legion at Leeds United, for example. There are stories about Leeds United

being up for sale. But, you know, the reality is the Premier League still is the world's biggest sports league, certainly rivaling the NBA in commercial terms. And so I think media have so much potential. Yeah, they've always got also deep pockets. Juliette Saly, thanks so much. Simon Chadwick, a professor of sport and your political economy at Skimmer Business School. And of course, our very own Joe Easton

looking at what the Glazers will do. Join us tomorrow for much more on the Glazers potential sale of Manchester United. I'll be hosting an in-depth discussion of Britain in the balance. And we speak to the guy that loves Man United, maybe more than anyone else. Jim O'Neill. He'll be joining us at 930 a.m. London time on Thursday. Coming up, the UK Supreme Court is set

to deliver a crucial ruling as a fight for a second Scottish independence referendum heats up. These are life pictures. We'll have the latest next. And this is Bloomberg Daybreak. Economics, finance, politics. This is Bloomberg Surveillance early edition of Francine Lacqua here in London. Let's get straight to Bloomberg Business Flash.

Here's Laura, right? Hi, Laura. Hi, Francine. Some Buchman freed founder of the collapsed crypto exchange FTSE has apologized in a letter to staff saying, I didn't mean any of this to happen. The memo seen by Bloomberg outlines a

crash in collateral from 60 billion to nine billion dollars. Meanwhile, a lawyer for FTSE group says a substantial amount of the crypto firm's assets are either stolen or missing. A hearing on the issue is set for mid December. Hundreds of workers at Apple's main isolated factory in China have clashed with security personnel as tensions boiled over after almost a month of tough Covid restrictions. Mobile phone footage shows staff at the

Foxconn plant streaming out of dormitories in the early hours of the morning, jostling and pushing past guards who they vastly outnumbered. Anti riot police were reported to have later restored order. The EU has watered down its latest plans for a price cap on Russian oil exports by delaying its full implementation and softening key shipping provisions, according to a document seen by Bloomberg. The bloc proposed adding a 45 day transition to the introduction of the cap. The European Commission also proposed an emergency brake on natural gas prices of two hundred seventy five euros per megawatt hour, well above current price levels. That's the Bloomberg Business Flash Francine Law.

Now the UK Supreme Court set to rule on whether Scotland's parliament can legislate for a second independence referendum without Westminster approval. Now the Scottish first minister, Nicola Sturgeon, wants a new vote in October next year. That's despite opposition from the UK government in Westminster. So we are expecting, of course, that judgement to be passed on very, very shortly. It should have happened about six or seven minutes ago. Covid major implication, of course, for the future of the UK and whatever the decision is, it is likely to trigger a massive political battle.

Now for more, let's talk to Bloomberg's managing editor for European economy and government. He has been Charles. Ben, there's a lot at stake. How do you see this happening in the next 12 months? Well, the consensus seems to be from from the people we've spoken to that the people are expecting the court to block this vote, which is going to be a big sigh, a big sigh of relief for the government for both really soon CAC and Keir Starmer, the opposition leader who is hoping to take over in a couple of years time. Neither of them really want to open up this whole can of worms over Scottish independence again. So how does it fit into the broader political challenges facing this unique. Well, so Scotland is is a bit of a kind of outlier in the British political scene.

It's dominated by the Scottish nationalists who are pushing for this referendum. But traditionally it was a big source of votes for the Labour Party. So Sue Nack, one of one of snacks, main tactics, main messages in his attacks on Starmer has been that storm is weak on Scotland. He's going to do a deal with the Scottish nationalists. So if if if the vote comes, if the vote is approved, Saddam is going to be exposed to those sorts of attacks.

But soon, CAC. He's a prime minister who's going to potentially see the UK split. All right. Ben, thank you so much. Ben SEALs there, of course, are managing

editor for European Economy and Government, and we're looking at live pictures of the Supreme Court with Lord Reid. He's a president of the Supreme Court, saying just minutes ago that they had decided that it does have the power to decide the question. It has been asked. We're just now waiting for the verdict. This is Bloomberg. Given the high level of inflation, restoring price stability remains the number one focus of the FOMC. This inflation is having a tremendous impact on people's incomes. Right now, our Synthes scenario is not a

recession. Sluggish growth, but not our recession. And my question for us is how deep the recession is going to be and how long this is Bloomberg Surveillance. Early edition with Anna Edwards, Matt Miller and Kailey Leinz. It's 10:00 a.m. in London, 5:00 a.m. in New York and 6:00 p.m. in Hong Kong. Top stories today. The disgraced founder of FTSE speaks out Sandbank when freed apologizes to staff and says that collateral collapsed by 50 one billion dollars.

Ask the crypto exchange crumbled. A warning from Credit Suisse. The bank says its fourth quarter loss may hit one point six billion dollars to massive outflows of wealth management funds. And violent protests erupt at the Chinese factory. That is the biggest maker of iPhones, work workers, a battle security personnel. If a top Covid restrictions. Welcome to Bloomberg Surveillance Early Edition.

I'm Anna Edwards in London with Matt Miller and Kaylee Lines in New York. And big news here in London just in the last few minutes. Caylee is that the Supreme Court has thrown out the Scottish government's attempt to hold another independence referendum next year.

So stand down on indirect to the pound moves a little bit higher on that. The broader market action, though, following the ebb and flow of the Fed in a week that is holiday shortened by Thanksgiving. Yeah, I know. I speak for Matt and myself where this is our last day at work this week. So we certainly are excited. And when you look at the markets, they seem like they're pretty excited this morning as well in that things generally are moving in a positive direction. That was certainly the case in Asia overnight.

The MSCI Asia Pacific index as a whole, only up about three tenths of one percent. But part of what was helping that was a small rebound in the Chinese technology sector. The Hang Seng Tech Index up a little more than 1 percent. A large part of that having to do with the fact that Chinese regulators have signed and group, which of course, is controlled by Jack Ma. A little more than a billion dollars. But that is seen as a sign that it

perhaps ends the regulatory reformation of that company and perhaps the regulatory crackdown on Chinese tech overall. So that's giving a little bit of a lift to sentiment. The other big story in the Asia Pacific overnight is from New Zealand. The central bank hiking rates 75 basis points and also saying that the peak rate is going to be even higher than expected. So overall, a very hawkish decision from the RBA NZ and as a result, the two year yield in New Zealand up 19 basis points on the day to just shy of before fifty eight level and the musical and dollar Kiwi dollar, the strongest in G10 this morning, that strengthening against the US dollar by about four tenths of one percent. All right. Very interesting up. The US dollar really bouncing back and

forth in gains and losses, not doing a whole lot today. We do have futures higher after the gains that we saw in the cash trade yesterday. The S&P closed up over 4000 for the first time since the beginning of September.

So we're at relatively high levels right now. The U.S. 10 year yield is coming down, but just by a bit to three seventy four, eighty three. If it continues to decrease, that could be a tailwind for risk assets. Now, Max, crude rising about two thirds of one percent right now.

Eighty one dollars and forty nine cents a barrel for West Texas Intermediate. And we see Brent getting closer to ninety dollars as well. And then bitcoin right now, two and a half percent, but really still holding at the same levels that we've been seeing since the RTX collapse, about 16 and a half thousand dollars. So it doesn't look like the underlying asset is moving even as we get more news out of the business or the failed business. And what do you see in terms of the European markets? Yeah. European equity markets then getting a bit of a boost.

If you have a weighting towards energy stocks and mining stocks in London doing pretty well in that context, up by around six tenths of 1 percent, the German market and the French market a little flaccid this morning. Glencore is one of the businesses that has been doing well. I mentioned energy and mining. Well, mining includes Glencore and Glencore. Is that one of the stocks that's moving

a little higher? The business talking about copper analysts in the sector, though, talking about what's been going on with that thermal coal business. You can see the stock is up by just over 4 percent, is the biggest it has been for much of the morning. The biggest gain on the stock, 600. This is also an energy story. Natural gas prices. This is the European benchmark.

This is the benchmark that the European Union attached a cap to yesterday. Is it a cap with any teeth, though? This is where we trade right now, 130 euros a megawatt hour. The cap is coming at two hundred and seventy five euros a megawatt hour, not a region. The prices have been above for very long. And therefore, how meaningful will that cap be? You can see that the actual price of gas jumping nine percent in this morning session. That has to do with expectations around cold weather. In December, though, the pound is at 1

1916, a bit of a bump up in the pound just in the last half hour. Also, as we heard from the Supreme Court here in London, throwing out the Scottish government's push for another independence referendum. The government here in London has always said this was supposed to be decided once in a generation. In 2014, the SNP has a longstanding position once to push for independence. And they have said that the Brexit vote

changed that calculation. Credit Suisse is down by four and a half percent. And we are, of course, focused on the AGM and all that is going on at Credit Suisse. We've had new forecasts out in the business. We've had some of our reporting talking about pullbacks in terms of staffing levels over in China. So there's a lot to digest when it comes to Credit Suisse. For more on this story, let's bring in

billions ISE Johnnie Wells, who has details for us. Charlie, how damaging is this update for the bank? Because they're talking about a big loss and this has to do with outflow. And this is very not good for the bank. Today was supposed to be a day of turnarounds for Credit Suisse, but instead we are seeing turmoil in that share price hitting record lows, but also projected one point six billion dollars of losses for the fourth quarter and also massive outflows.

Those are actually the words of strategists. Massive outflows of nearly 90 billion dollars. Now, JP Morgan analysts have said that that is concerning and that is concerning, particularly because the whole turnaround plan for this lender was to focus more on private banking, was to focus more on wealth management. But if we're seeing clients take funds out of the bank, that is very bad for this turnaround plan. How bad is it? I mean, are there any questions about the possibility that Credit Suisse doesn't survive now? I mean, that really is the existential question that we need to think about here.

Right. This is Switzerland's second largest lender. A failure would be incredibly damaging. But let's just remember that we are in a very different position than we were, say, during that Lehmann era. Executives have been very keen to note that capital ratio is strong at this bank.

And let's think about the history of Credit Suisse. It goes back 160 years. They were actually able to weather that financial crisis without taking a government bailout. But that does not underestimate the challenges that they face, especially getting these data points like we're getting today. All right. Bloomberg's Charlie Wells, thank you so much. Let's turn from turmoil.

A credit squeeze to turmoil in crypto FTSE founder Sam Bacon. Fareed is apologizing again in a note to staff. He claimed the firm's collateral had crashed to nine billion dollars from 60 billion. He also claims that funding interest came in eight minutes after he signed bankruptcy papers. Joining us now is Bloomberg crypto reporter Emily Nicole.

So, Emily, we continually get updates, but I think the question on everyone's mind, especially as the bankruptcy hearings began yesterday, is who is going to get their money back and how much? Well, it was definitely a bit more of an unclear sentiment than we were hoping for from the bankruptcy hearing yesterday. We were told that we're unlikely to know which creditors are owed, how much. As this process goes on, maybe the judge may revise that later. But as we heard from from afraid in his letter as well, it doesn't sound like there are there is much assets left for creditors to get hold of. In terms of other fallout or other reaction, Kathy Wood says grayscale is now the crown jewel of Berry Silver, its digital currency group conglomerate. She spoke with Bloomberg yesterday. Take a listen. We know that the gray scale investment

trusts are the most valuable part of that company right now. They're cash cows. They're revenue generating. We think they're going to try and hold on to that. If nothing else. So we are we're looking at a 41 percent discount of that's first relative to bitcoin today. And so we actually think there's a lot of upside.

Yeah. Grayscale is trading at a massive discount. The other, I guess, jewels, if you will, in very stillbirths crown include Genesis. Is this business going to make it? If you think of our reporting that day this week, they said that they were sit out for one billion dollar loan.

But, you know, bankruptcy is right around the corner. Then who knows what the genesis will make it? I mean, it's still very much up in the air as to whether or not we're going to see anything progressing from Genesis on that front. But they the spokespeople for the company, at least are telling us that it's still definitely on the table, that fundraising could happen and bankruptcy is not a given. All right.

Bloomberg's Emily Nicole keeping us up to date with every twist and turn in this saga. Thank you so much. And in related crypto news, New York Governor Kathy Hochul signed one of the most restrictive laws in the US on regulating crypto mining, citing environmental concerns. The bill triggers a two year moratorium on new permits for crypto mining companies and, of course, into the environmental concern, something that is continually raised by regulators and lawmakers. But they've been given a lot more to think about when it comes to this industry over the course of the last several weeks. Yeah, absolutely. Certainly another strands of the crypto story that just keeps on giving lessons to a different story that's been making its market movements, actually having a market moving in pies over. Violent protest at Apple's main iPhone,

making plants in China. That's after hundreds of workers clashed with security personnel following almost a month of living under tough Covid restrictions. Joining us now is IBEX Betsy who who can tell us a little bit more about this. We saw this weighing on the Chinese

currency. Actually, Becky, as these reports came in and the video that we've showed them will show that it was it was going around on social media. What more can you tell us about what happened here? Right. So in early, early Asia morning Wednesday, hundreds of workers at the world's biggest iPhone plan rushed out of their dormitories and then where they weren't involved in violence in violent clashes with the guards on this site, are witness at the site told us that this was mainly due to because some workers were upset about not getting the wages and the subsidies that the company promised them to get. And then we had just received an official statement from the company that which confirms that the violent occasions were true and that they are working very hard to communicate with the workers to prevent this from happening again. How have the markets been reacting? Right.

So the offshore rule one. It slipped up after Bloomberg reported on the news, making it the worst performing Asian currencies as of Wednesday. And I think what's also worth watching is how Apple's shares and also other Asian technology shares, technology shares do in the following day. Because this this news obviously signals the market that, you know, there is still a lot of uncertainties regarding China's bull reopening. And that's is something that would definitely in the market. Everybody definitely needs to watch.

All right. Apple shares little changed in premarket trading at the moment. But as you say, Betty, we'll continue to keep an eye. Thank you so much to Bloomberg's Betty Ho in Taipei. Now to another story that caught our eye

this morning. Football club Manchester United might be up for sale. The owners, the Glazer family, are exploring strategic options and working with financial advisers on a partial sale of the club or investments, including stadium and infrastructure development. That follows news yesterday that soccer star Cristiano Ronaldo is leaving the team with immediate effect. But investors seem to be much more focused on the sales news this morning because in premarket trading, those Manchester United shares are surging by about 10 percent. Another stock that is gaining in

premarket this morning is Coinbase. That's actually extending the gains we saw yesterday when the stock rose about 5 percent. Just more positivity, it seems, coming into the crypto space as we have seen a stabilization stabilization in coin price. Coinbase is up about 3 percent before the bell. One stock sinking, though, in early hours is Nordstrom. It reported earnings yesterday. Its margins missed expectations,

profitability, taking a hit by the fact that the company is having to do more markdowns. This is something we've heard from a number of retailers over the course of this earnings season. That stock is down 9 percent. And of course, we're gonna talk more about retail and the unofficial beginning of the holiday shopping season later on today into. Yeah. Absolutely. In fact, coming up shortly.

We will dig into the health of the consumer with holiday season almost upon us. Stacy Willis joins us, presidents, MSW, S.W. Retail Advisors. Is it going to be all about that inventory? Plus, Ethos Foundation CEO and credit squeeze shareholder crucially, Vincent Colfer. Councilman joins us. His thoughts on Credit Suisse is restructuring efforts. Which of the changes at the business proposed at the AGM will be supporting this easily? Welcome back to Bloomberg Surveillance is the early edition on Matt Miller here in New York. Kailey Leinz Anna Edwards with us out of

London. Now we are looking at one month of real inflows into JFK and H Y G. These are two high yield ETF and it looks like investors are willing to take that risk that they haven't previously been. Joining us now is it needs Escobar,

Bloomberg cross asset reporter to tell us why you need. So what's going on here? Yeah, well, overall, we're not seeing a strong risk on sentiment case. We know equity exposure is still quite low. If we look at that, if markets, there are actually some signs that investors may be willing to take some risks. As you said, June Bond ETF, for example, that H Y G is having its second best month on record. This is 4 billion flowing in so far this

month. If we just look, for example, the QQQ, which is tracking the Nasdaq 100 and tech stocks, which this year hasn't been getting big inflows, we're seeing very strong inflow. This month we're seeing close to 7 billion and the second best move this year. So a different corners of the ETF markets. Th

2022-11-27 21:48

Show Video

Other news