tv On the Move Bloomberg January 28, 2015 3:00am-4:01am EST
patience is the word. investors await the latest federal reserve decision do this evening. the american company bemoaned the strength of the u.s. dollar. i am looking at futures markets pointing a little bit higher. it looks like it is going to be higher. >> we have the equities a little bit unsure of their direction. currency trading was the most active. it is a record for market since 2004. nine central banks have moved on rates. they have tried to toy with and surprise the markets and move their currencies. japan bought 50% of their gdp cumulatively in terms of quantitative easing. the federal reserve bought between 20% and 25%.
if they want the same bang for their buck, they would have to hit 6 trillion euros worth of purchases in assets. there are some individual stocks making our attention. we have europe's second-biggest retailer. fourth-quarter profits topped estimates. net income was a little bit lower. january sales expected to rise by 14%. stock up. it is trying to find a level. if you are a stockholder you are getting a big bump in dividends. they raised the dividend by 44%, and that is a 70% payout. that is a pretty substantial payout. we are waiting for roche to open. you are seeing a little higher this year.
earnings missed estimates. operating profit missed estimates. they have gotten too low single-digit sales. i caught up with the ceo, and he said we have a natural hedge. 82% of our business is executed outside of switzerland. stock down 1.7%. john, can you talk about singaporeans joining the trail of central banks? nine banks moving, and it's not the end of january. this is the singapore dollar down and the u.s. dollar rising. i am seeing calls for this currency to move to potentially 140 in the next three months. the singapore is at its weakest level since 2010. they have reduced this moving their currency. they cut their inflation target. that is going to come in and
deflation, 0.5% from the downside. i love the aussies, because they kick back. these boys have a little bit of inflation. that caused the fx markets to shift their thinking. they moved to a near 50% of ability of a rate cut to 17%. the aussie dollar back to the level. that is between the level. a lot of people were saying you would open down to 75 over the near-term. it looks like we have just eaten in a base for them -- have just been dipping into a base for the moment. it will be a statement as opposed to a news conference. it will be the tonality of what janet yellin and her cohorts say. will they remain patient? what does that actually mean? we are in a different economic situation.
is it right to assume the patients is six months? over 70% of the people in the polls we look at suggest the fed will not be concerned about lower levels of inflation. this is the dollar index i am showing you. we are back in the green for a day. up a third of 1%. don't fight the trend. even the bloomberg story talked about clichés. deutsche bank says the momentum remains intact. >> i don't mind a cliché. you are welcome to give me that every morning. i am looking at a stronger dollar. that is the story ahead of the federal reserve meeting later today. the markets are opening a little bit higher. a selloff yesterday in the united states on wall street. you had losses over 1%. the s&p and the nasdaq. there is one company riding
high. that is apple. apple crushed expectations delivering the biggest corporate profit in history. up five point 74 percent. let's get to caroline hyde. give us some of the numbers. high bar, and they beat. >> the investors wanted records set. they smashed them. $18 billion in profit. that is up 30%. put that in perspective. what is $18 billion? that is the same size as the entire yemeni economy, the entire botswana economy. it exceeds those annual economies. it beats microsoft and google's profits all rolled into one. this is the size of the profit the company is rolling in. it makes more in one quarter than general motors makes in an entire year.
why is it so much growth? the new products, it's about the iphone six. it's all about the biggest screens, up to five and a half inches. we saw china go wild. the asian community in particular loves bigger phones. chinese sales are up 17%. 25 unveiled in the next two years. more students buying computers at the moment. look at those stats. ipad is the area of weakness. we are likely to see iphones eating into the ipads. you need a slightly bigger screen. there is also caution about the strength of the dollar, which you keep talking about today. most apple products are sold
outside of the united states. bring those sales home. even though that might knock sales by about five percentage points, they are likely to see sales ramp up in the next quarter 14%. sales up 38% last quarter but it was a holiday season. everyone was buying gifts. we have chinese new year to look forward to with gift eyeing, but this is a company winning on all fronts. we're seeing apple pay being picked up. two out of every three dollars spent on smart phones are being eaten up by apple. they are making inroads. we have the apple watch to be looking forward to. there is not much of a bad word you can say about apple. killing it i would say. >> stunning numbers from apple overnight. other american companies have a tougher ride.
earnings disappointed across the board. many of the companies including procter & gamble as well as microsoft are pointing a finger at the stronger dollar. investors await the latest fomc statements today. for how long will investors tolerate an ever decreasing u.s. dollar? dollar strength, problem for the reserve or the treasury? >> the u.s. economy is growing. the federal reserve is expecting to raise interest rates. in addition to the damage from earnings from the oil sector and the mining sectors. >> is there something they should be concerned about? >> at the necessary price to pay
-- it is a necessary price to pay. it is inevitable. i think the federal reserve is going to be deterred by some downgrades to corporate earnings. the view is corporate earnings are going to be high enough. >> do you imagine this is going to be the big theme for corporate earnings and 2015? >> the big theme may well be the u.s. struggles a little bit. we're already seeing that. while we see continued downgrades in u.s. corporate earnings, we are seeing improving trends in some of the markets. later in the year we might see some positive u.s. surprises. the reason is it will eventually feed into better growth. >> are you talking about the economy or markets? >> i am talking about markets.
i think the markets massively outperformed. it is not going to continue forever. i guess the u.s. is going to take a breather. >> the secret sauce last year was probably holding apple. what is your view on apple? what is your view on tech? >> not just apple. a lot of text do asked -- techs do extremely well. apple has done very well because of the iphone six sales which is a breakthrough product. sales are going to continue. at some point people are going to think where is the next product coming from. >> we have been talking about that. where is the next product coming from? the iphone keeps going ahead.
>> the sensible investor is stuck with apple. people try to be clever. >> should a sensible investor beholding bonds with a negative yield? coming up will talk about greece as well. grease ways into the russian section debate as ministers prepare -- greece weighs into the russian sanctions debate as ministers prepare. ♪
>> a new government comes out swinging in greece. the prime minister unveiled a cabinet. they hold a meeting in a few minutes time. it is no surprise the tensions are already getting a little bit high. let's turn to marcus. he joins us from athens. it looks like the new government is already disagreeing, not on debt, but on russian sanctions. >> yes indeed. yesterday the eu president issued a statement calling the meeting of the foreign ministers tomorrow to discuss sanctions. the greek government objected that they weren't consulted about the statement before hand. they said it was a breach of the
protocol and they didn't agree with the sanctions. the new prime minister's background is a close adviser with russia. it has always been the position they have been against sanctions. the newman pointed out the issue of debt would force them to surrender sovereignty on other issues. it would be a big test to see tomorrow if greece vetoes sanctions against russia, which would mean right from the bat we have a flashpoint. >> i want to talk about markets lower. what was the news that surprised markets? why are bank shares being hit so hard when the result wasn't a surprise to anyone?
>> the results were not a surprise. markets are reacting to the prospect of things to come. the result was not a surprise. there hasn't been any sense now that the election is being done that some people were hoping for. immediately almost as soon as the election results came out they formed a coalition with date -- with the independent party. what markets are really reacting to is this prospect of bring mentioned to come between greece and its creditors. in particular the banks. this is the vulnerable spot. if brinkmanship were to result in a breakdown of relationships people would start looking at the banks because a lot hinges on what the ecb decides to do in terms of green lighting
continued liquidity support. >> thank you very i am going to bring in matt cain, the investment strategist. brinkmanship not just over the dead package but over russia as well. how explosive could this become? >> there is a run going on greek banks. great depositors are taking their money out because they realize inevitably there might be a compromise. that means the deposits in the bank will be devalued. they want to get the money out. as for sanctions, there is more to it than meets the eye. they would like to get that back. i guess what greece hasn't realized is russia has embarked on import substitution.
really those exports are coming back. the greeks want to try. >> they want to try. bonds. i want to talk about bonds. you pull your money out of greek banks. where are you going to put that money? this is historic stuff. try and rationalize it for me. >> you have to think what currency do you want? it has to be the swiss friend. it's very hard to open a swiss bank account. you have a very significant negative interest rate, but you can buy swiss bonds. you pay the government 10 basis points to look out -- after your money. >> why wouldn't i just hate treasuries? >> long-term the swiss franc is better than -- why wouldn't i just take treasuries? >> long-term the swiss frank is
better than the dollar. you would rather have a safe currency than a volatile currency. >> on the bond debate you look at treasuries. you look at eurozone bonds you look at the way yields have performed already. positive returns this year? >> we were pretty positive on the government bonds last year. we have had german bonds, u.s. treasuries, sadly not swiss franc bonds. it is getting harder to justify keeping positions. at some point this year we are going to have to make a decision of taking our money out, but only when we see circumstances changing and yields going up. >> swiss franc bonds he would have made a killing if you bought them before being capitulated. what is the lesson you have learned? >> i don't think we have learned a lesson. i think we have talked about it. we have done something about it.
apple crushed estimates with a record-breaking quarter. let's bring in caroline hyde for a little more. run us through the others. staggering. >> the profit from google and microsoft you still don't match what we got in that corridor. if you add up the entire year's profit for general motors, you still don't get what apple has made over one quarter. $18 billion. that is 30% higher than this time last year. that has smashed every single record hoped for by analysts and investors. it is staggering what they have achieved. it shows you what new products can do to apple. this company is a juggernaut. it is worth $600 billion. still, there seems to be innovation and new product that
flows through. maybe the call to make it worth $1 trillion is not far off the mark. we saw phenomenal amounts being sold, so much that this is a company managing to make $2000 per second. it has made half $1 million. sales up 70%. it is phenomenal. it is not just the product we are seeing do very well but also the pay. the new inroads they are making that you can pay by your smart phone. they say two out of every three dollars used by the major credit card networks is dominated by apple. they are already dominating that space. >> i go back to january and everyone discussing when this would end. there is no new products, and then the stock jumped 38% on the year.
everybody's saying concerns about future growth. the ipad? >> that's a key issue. maybe it is slight cannibalization. when you are making bigger phones why do you need a slightly bigger screen of an ipad? we understand they are going to be making bigger screened tablets, so you may fill in that realization. it is interesting they are working with ibm to get the corporate consumer using tablets. perhaps that is why it is interesting. the fact it is that much more tailored for business use. there is a slight issue with tablets. there is a slight issue with the dollar as well. another big multinational but when you are selling most of your product outside of the u.s., less bang for your buck when you're selling in asia and europe. that is when you're going to
knock about 5% of the overall sales. it is about $300 for the most basic range. you're managing to marry together design for luxury and design for fitness. that is the innovative product. the first new product range for apple. i think we're going to start to see this driving higher. maybe the biggest will work. they are yanking up prices in the apps in europe and canada. the company is doing a lot to offset the negative. >> stunning numbers. other companies struggling to shrug off the strong dollar. a big selloff. the dollar weighing on corporate earnings. how long can the united states tolerate this dollar?
>> welcome back. this is how the equity trading session is shaping up. stoxx 600 is climbing higher. the big event for the next 12 hours. the federal reserve. policy is expected to remain unchanged. the rate hike remains to be seen. it is time to get some watches. >> earnings. that is chief for one of the
against rises. washing machines. it is higher and beats analyst expectations with profits up. they are forecasting market growth. as much as 2% in the european region this year. they say, we have our act together. this is producing and managing to turn itself around. it is on the upside and helped put a smile on faces of investors. there is an uptick in the dividend and be earnings estimate of -- it beats earnings estimates.
the dow is down 6%. the reason is they are saying the slower investment in chemical investment is affecting the entire industry and it does not require action yet. back to you. >> here are the top stories. the first meeting was in athens and the members were confirmed. paving the way for new sanctions. >> apple has reported the biggest quarterly profit ever made. revenue jumped 30%.
the company sold 34,000 iphones an hour. >> stocks dropped in the u.s. and the nasdaq the most since last year. many cite the surging u.s. dollar. the dollar strength is another on a long list of considerations. the word so far has been patience. how long will the u.s. tolerated the dominance? it is great to have you with us. >> good morning. >> i do not think we are going to get the reference of the dollar's strength. you can hear about the strengthening of the currency.
at the same time, there is a massive collapse in oil prices the filters to the real economy. and, i think, in general it remains robust. at the current stage -- >> a look at the yield and they do not match up. what is the story? >> what is driving the dollar is higher yields. >> since the beginning of the year, the story has changed and the dollar has kept going higher.
i suspect that, since the beginning of the year, it has been less about the strong dollar story and more about what is happening in the rest of the world. the euro has a launch does a large weight and the weakening of the euro has been on the back of the expectations. it occurred moving the floor. it is a done deal. >> i look at that commodity relationship between treasuries in the u.s. economy and it has broken down somewhat. >> eventually, it has been a
story. >> eventually, it will start going higher. if i see real yields and what is happening, it seems to be completely lapsing. >> the yield on the 10 year is one point a percent. how aggressive does it have to be? they might start some of the treasuries on the balance sheet. as far as the aggressiveness is concerned, it is clear. what they have been monitoring is the labor market. the latest segments have made it
clear that they are quite satisfied. the thing about what we should pay attention to is the wage growth. as far as the wage growth and compensation is concerned, it is fair to say it is picking up. it is falling below that. it starts getting more aggressive and we are approaching that level. >> a dollar yen goes higher. >> as far as the euro-dollar
there is a downside and it is a good thing. there is the cheese -- the qe and markets. having said that, there is the resumption of real yields going higher. i think there will be forces with a euro-dollar and it will boost a lot of banks. we are likely to see some influence in the euro zone. >> it will be significant again. >> it will be the fed tightening
and it will be an inflow into the euro market. it will stabilize at lower levels than they currently are. >> if i'm sitting at home and thinking, strong dollar, weak euro, i want to bet against the dollar. which currency? >> the norwegians want to benefit over the medium-term. i think it is relative to oil and there are signs of stabilization. i would expect it.
i remain bearish on the end because of the fact that i cannot get excited. >> a lot may share the opinion with you. i look at monetary policy and i want to get your opinion on it. the ninth nation to do so. you have been surprised by how quickly that moved this year. >> to be fair, i have not been surprised by the move. i have been surprised by the speed that most of the banks have. it comes on the back of the deterioration of expectations.
i think the next one to watch closely would be the rba and the rbz. >> thank you very much for joining us this morning. we await the statement from later today. we have optimism for the next year. currency is in play. i turn to rbs in the u.k.. rbs is set to expose most of the bad bank assets. that is the scoop and that is one year ahead of the plan. i am looking at the stock prices. we are up a little higher.
impact of the swiss franc. he is optimistic for next year. revenue and profit will increase. profit missed analyst estimates. i want to bring you in a man who knows a lot about the industry. what did they not give us this morning that the market wanted? >> there is not really something you can go "yes. code -- yes." that is what a stock is weaker. we have had failures. there is not to hang a hat on. companies have reported suffering from currents the exposure. you have u.s. dollar strength. the point is, most say that this
is what they expect to have happen and, assuming average interest rates and exchange rates remain, this is what the currency impact will be. they have given us a lot of detail in the presentation on the website. >> for somebody who does not hold the stock this is about what they say about the swiss franc. the impact on the balance sheet is somewhat limited. is that not enough? >> it is all fine. the reality is currency and the webpage. you can work all of this out. >> let's talk product and pipeline.
>> nothing really. we have done an analysis on the pipeline today. trying to get the human immune system to fight. we count up to five. new combination trials they are doing them. it is important. they need to be at the forefront of the development. they perhaps are not at the forefront. they are playing catch up really fast. that is important. >> here is a word. where are we? >> it is interesting. in the flight deck, rather than the presentation, they push back the expectation of competition to a biological drug.
the have pushed back the expectations in the 1.5 hours i have been looking at this. i have been try to figure out why they are pushing that back and i cannot. that is a positive for the company, if they turn out to be right. it gives another year or nine months to prepare to fight against competition from pfizer merck, and novartis. >> when there are earnings, he will be here next to me. no doubt about that. we had to break. 48 minutes into the session here. the ftse 100 is up. the dax in germany is up 44 points. if you want to know what is happening, i will bring you the price. it is down for a third straight day.
the royal bank of scotland is set to close the housing unit. we are joined by manus cranny. ahead of schedule. decent news. >> they set up the bank and took the most toxic assets that nobody wanted. they stuck it in there. they got rid of that and they are way ahead. there is a reason why he was the only executive at the level to really march out the door and go , i am a bonus. he is ahead of the task. he is one year ahead of schedule. 15% of stuff that god would not want to touch.
we talking about derivatives that last for 40 years. they managed to rid themselves of this and targeted the capital. rbs has to hold this for the whole story. the people that are there and the position of capital. i am tempted to -- i do not want to front run they news team. >> it is fine. it is ahead of schedule. >> that is really saying something and i know a thing or two about it. $19 billion worth.
>> banks in total. nearly 80 billions -- 80 billion pounds worth and properties. they drove so many matters. who bought them, the usa. investors bought 77%. that is up from 2013. what bank is there. there are hot properties and northern island is different, i ensure you. you have a boom year for the
full thing and toxic assets. that is what they have done. where du go next? >> also, the treasury. cameron is away from the election day. it is not bad news. it is just below the break even price. politically, it is a two. >> the biggest investor is -- >> you and i, the taxpayer. thank you very much. that is in for on the move. the pulse is next. we head to the break and here is a picture of the equity markets for you. the ftse stays in positive territory. it is dead flat now. of 16 points. the dax climbs higher by 0.25%. we are counting down to it. we are awaiting the fomc statement janet yellen and her
board. there she is. i look at the euro dollar and it was always weaker. then we got the pop. we are up and going a little lower again. it is off of the 2003 high in the dollar index. can the u.s. tolerate a stronger dollar question mark -- dollar question mark -- dollar? the yields are low but higher. -- are a little bit higher. maybe that is a little bit more remarkable. if you want to talk markets you can follow me on twitter. good luck for the rest of your day. ♪
>> apple reports a record profit. shady merchants. and, renegotiating with the eu. greece's new cabinet has to work. the first clash may start with russian sanctions. welcome to "the pulse" live from bloomberg's european headquarters in london. i'm francine lacqua. apples $18 billion profit. the tech giant