tv On the Move Bloomberg March 30, 2015 3:00am-4:01am EDT
is greece any closer to getting those much-needed funds? that is what we're watching this morning. will the equity markets get a little bit of a boost? let's get to manus cranny. manus: european equities are set. a slightly higher opening. all eyes and ears will be what on tsipras presents. it is a bit like a nuclear war. actually doing it would be so disastrous that they won't. that is letting greece exit the eurozone. we had a conversation this morning on "countdown," saying the worst-case scenario is keeping greece inside this grouping of the eurozone. in many ways what is needed is a political union and we are so far from that. echoing the discussion.
look at these equity markets across the area. denmark up 27%, portugal up 25%. japan up 10% on the quarter. this is putting it in context in terms of what the market has been doing. in japan and those markets the japanese markets up 10% over the year. then in the united states of america, barely up 1/10 of 1% hanging on by its think nails in terms of the overall adding of value this year. the business world will hear what labour once in terms of their business message. they'll get a net pretax gain of 365 million swiss francs. lvmh, what we saw was them
saying -- down as a result of china and they are bringing in the lower priced products. slightly cheaper than what went before. what they are saying about china and hong kong is something to take across. morrison has been downgraded by goldman sachs. it is down one quarter of 1%. here is the trend. the dollar just taking. -- ticking. it is in the mid--undecided quadrant. we see them dollar going lower and the yen going a little bit higher. some of the numbers in japan were higher than numbers anticipated. is there more qe on the horizon?
240,000 is what is expected, janet yellen says get ready for higher rates. anna: we just had inflation numbers through spain. we got a reading of minus zero point 7%. for the most recent months. that is stronger than had been expected. either of those would have been an improvement on the prior months where he saw prices fall. the dis-inflationary forces are very much in the conversation as to what the ecb is doing. they have enacted a quantitative easing plan to address some of those. we just had the markets open up in europe. one of the big stories we're focused on comes out of china. green across the board in equity markets.
they say growth has fallen too much. and greece has failed to act. let's get details out of beijing. we are joined now by bloomberg's cheap -- chief economist. what is behind the central bank concerns? guest: there is some genuine concern about what is going on with growth. the numbers from the first two months were week. if you put them together and try to gauge the strength of the whole economy, by our estimate gdp is in the mid-6%. that is way below what the government wants. fast-forward to march, we don't have the official data yet but the early signs from business surveys are also week. the hs bc market came in week. the inflation data is also
suggesting very limited demand. cpi around 1% in the first couple months of the year. part of a global trend toward disinflation. also pointing to lackluster demand here in china. anna: how does that change expectations around policy. guest: the message from joe at the forum over the weekend was an acknowledgment that the economy is weak. growth is slowing. disinflationary trends are real. and a promise that the central bank has the firepower to deal with it. we already had two interest-rate cuts in china. one in november and one in february. i think the governor joe's remarks over the weekend really
concerned that we see more of the same and perhaps on an accelerated timetable. that has raised expectations of the quick move to cut interest rates again. supported by liquidity. anna: and out of japan industrial output fell more than 3%. what does that tell us about the economy strength recovering. guest: there are probably seasonal factors at work. i would tend not to read too much into one month's data coming into japan but i think what is interesting is how this latest find of industrial output will play into the bank of japan's thinking about the next round of stimulus.
as you know, the bank of japan has staked its reputation on hitting this 2% target. of course if you cutting the impact of the sales tax increase last year is going to zero. what the bank of japan has been saying is, don't worry about that, we seem to be underlying if leigh in the economy and remains strong. we think growth is strong, labor markets are strong and even though we have seen them come down we will see part of that. we think it is oil and we will wait until the second half of the year when there is underlying inflationary trends that bring it act toward target. a lot of the bank of japan's arguments start away. if inflation is zero, and growth starts to look weak that will raise expectations that the bank of japan will be forced into another round of quantitative easing. anna: thank you for joining us.
let's get an investor take. we're joined by francesco, the cohead of global and market research at goldman sachs. what's her of action to you think we are likely to see from the chinese -- what sort of action the you thdo you think we are likely to see from the chinese? they have let the currency appreciate over real terms and nominal terms. from those angles there is tightness in financial conditions. there is now easing of interest rates and allowing banks to take over more liquidity.
we also have a very poignant equity market -- bouyant equity market. that seems mostly driven by by the retail sector of the economy. these offsetting forces. anna: they have arty taken some action. we have to seek -- already taken some action. we have to see. guest: this is one where they want to make the whole financial market responsible for prices. for instance, there is a big speculation about the currency weakening. we think it will find equilibrium and they will steer from here onwards, mostly the domestic interest rates. what happens overall is there
will be something that follows from oil price development. anna: the global interconnected world. china on the global stage. how do you see what has been taking place recently? we have this asia infrastructure investment bank being talked about. a number of european governments send to go in at the tart -- start of that. it will allow more use of the renminbi in international trade. this is a glowing trend. guest: let's start with the last one. we are getting used to this stop and go to reject or he for the chinese economy. they are rebalancing the economy and we have these areas where we are worried about too fast or
slow down. we had this dynamic in place for a year now. structurally and strategically where they want to bring economy is a deeper place in terms of financial integration. everything in terms of infrastructure including the asian development bank are just ingredients for that strategy. alexis tsipras heads home to face greek lawmakers. we will discuss when it returns.
anna: welcome back, this is "on the move." redlines in athens. alex tsipras will update on negotiations with creditors over greece reforms saying certain measures are off-limits. hans nichols has been following the developments. with debt deadlines moving in and cash running dry, what will they do and will they satisfy creditors? hans: creditors are looking for specific reforms.
here is the list that has been submitted that will be discussed. they will raise another 2.5 billion the in revenue. they will increase the vat on some of the islands. the value added tax. nothing on labor market reforms and nothing on pension reforms. when you look at what he is saying, it is clear he doesn't want to give ground because he things it will lead to recession. whether it is cutting wages and pensions or liberalizing regulations en masse demand. what we have here is basically a list of reforms that might not be enough to unlock any part of that 7.2 billion in leftover money that greece may need to
make big payments. they met today's deadline on getting the list to brussels. later we have the ecb meeting. up to this point they have been doing this on an incremental basis. then they had that 458 billion payment due to the imf later. that is the next big payment eight. 1.4 billion euros in treasury bills. april 17 another billion. on friday we had to downgrade greece to a substantial credit risk. credit default swaps all the way to 72% to and sure greek debt. that is a measure of how likely they are to default, up from 67% earlier in the month. two things to look at. what are members of the coalition saying? you have the weekend saying
confrontation was the only way forward, and the other thing to watch for -- are there meeting scheduled? everyone will have to get together to approve any bailout money headed out the door. no meeting scheduled as of now. if and when that changes we will update you. anna: thank you very much. hans nichols joining us from berlin. we're still waiting -- talking to francesca. bondholders will want their money back. a 72% chance that greece reneges on its debt, how does this end up? guest: it is a hard question. i wouldn't be able to say how exactly. i think any restructuring within the euro makes the euro stronger. we have seen that happen once before. we had a huge amount of spillover effects and a
response from policymakers. this could be a template going forward. there could be a hard one agreement to push more cash into greece, within the framework covering subsequent years and eventually some restructuring of the stock of liabilities on the official side. anna: so any sign of a deal in done any kind of agreement could be seen as positive? guest: i think so. the deal is now focused on the lows are you the flows and have cover the greek funding needs. we know there is a hot in redemptions -- hump in redemptions this year but as the cash flow that greece owes to
collectors fizzles out quickly. it is really a matter of finding an agreement now covering the next couple years and letting things evolve there. anna: pimco has been saying the only option for the eurozone is to move toward a union the united states of europe. is that the direction of travel for you? doing need more infrastructure that looks like a united states of europe to enable this project to have legs into the future? guest: we think that europe needs to go forward and not fall backward. this is definitely the case. the fact that they are talking is part of this dialogue across fiscal policy makers which is part and also -- parcel with the idea of deepening that fiscal integration which eventually would lead to joint responsibilities and eventually also joint funding. it is a process that carries a
lot of political consequences. so it needs to be slow. anna: are you talking at goldman sachs about what you would do if greece leaves the euro? do you have a backup plan in place? a contingency plan, this is the investment strategy the moment it looks like greece will leave? guest: it has been an issue that has been with us for two or three years. so the height of tensions were reached a couple years ago and everybody started doing contingency planning and looking at pieces of covenants around their exposure to greece. the paradox in this situation is as the crisis unfolds, the amount of private sector exposure degrees continues to fall. we just heard about that ela being up again. all it means is more and more of the private sector claims vis-a-vis big government are
being funneled into the official sector, be it the bank or for the europeans. this is like a sunol me. you feel more secure. obviously if there would be an exit, or any sort of rearrangement. that wave would fall back pretty quickly we suspect on other european numbers. >> let's switch gears and talk about the u.k.. the election campaign kicks off officially today though it feels like we have been talking about them for a long time already. ed miliband will be speaking later today and he will be saying that it is important that the u.k. stay in the eu. what does goldman sachs think on whether they should stay or not. is there an economic argument that you can make around? guest: there is a great
incentive for the u.k. to stay in the european union. we have seen a continuous deepening of the relationships between the u.k. and the continent. obviously the continent is doing its own thing. succumbing together with the banking union and going forward and the capital markets union. the idea here is the prominent financial center has much to contribute to the projects to shape them in a way that is consistent with the ideals of how the capital markets should be wrong. >> good to get your thoughts this morning. with that in mind, later today ed miliband will set up his party's pledges the business and we will bring you a first interview with the labor leader soon after he speaks. now here is a picture of the markets. green across the european indices this morning. and what the chinese might do to
gains. and lashes out at francois hollande. despite gains, the national fund failed to take power in anyone district. the china central bank chief says the nation's growth rate has fallen too far and policymakers have room to respond. the shanghai composite jumps 2% -- more than 2% in fact. meanwhile, in japan industrial production fell more than forecast. output dropped by 3.4%, missing analyst estimates. the data is the weakest since june of last year. coming up, the bitterly contested nigerian presidential elections. more on those latest political developments when we come back. ♪
anna: welcome back to "on the move." we're 30 minutes into the trading day let's see how things are shaping up. you can see many of the markets getting a bit of a boost partly in response to what we're hearing from china, perhaps not what we are hearing from greece. the ftse 100 up by around half a percent. let's get to some of the top stock stories. caroline hyde is here. caroline: a bit of m&a is
leading the charge. the swiss company paying 2.6 billion euros to get hands on the italian rivals. investors like where this is taking the country -- happening. they will dominate a quarter of the market. they are buying a 51% stake in will go out to tender for the rest of the shares. clearly, investors liking that top performance sales. also liking what is happening in spain. managing to offload some risk year loans and get a quarter of a billion euros from pimco. pimco is the buyer of real estate developer loans. that is according to the spanish press. they take 30 to 40% of the nominal value. but the real estate debt is as
of yet unpaid. meanwhile, they do not like what is happening with lafarge. this is a merger on the cards to create the world's biggest cement company. we thought they managed to agree on the terms changing the management in the future and financial terms, the problem is one of lafarge 's key shareholders does not like the deal. so polson's second-biggest shareholder says they do not like the way the merger is going and they will vote against the wholesome lafarge merger. that is olson's second biggest shareholder. they don't like the way the deal is going and they will vote against it which is bringing lafarge down. back to you. anna: thank you very much, those are some of the stocks we are
watching this morning. let's get to a political story this morning. nigeria hosted presidential elections over the weekend and the professional -- official results are unannounced. bloomberg tv's analyst joins us. what is the latest. >> we are still waiting on the independent collection to announce the results. they have said they are collating those results and they will begin at 12:00 p.m. and we will begin to get picture of what the results are telling us. so far most of the voting went peacefully according to the electoral observers. it was generally peaceful. like you mentioned there were some tensions in the country. tensions rose high in an key
oil-producing state. when it comes to the result all eyes are on the torah commission and we're waiting to hear from them areas -- them. anna: tell us about the two main candidates. jonathan sending off the opposition. tell us about the main two men involved. uche: the president has been in power for about five years. in the people's democratic party has ruled in nigeria or 16 years. -- for 16 years. his party has never seen a bigger challenge from the opposition as they have now. the head is a former military dictator. he took power in 1983 after a military coup and this is the fourth consecutive time he is running for president.
as a result what observers find worrying is both sides feel strongly that they will win. nigeria is divided along religious and ethnic lines to they represent ethnic and religious divide. jonathan is a christian from the south and the general is a muslim from the north. >> you mentioned some of the challenges the government faces, not east of which are the economic woes but also the insurgency. this has been gaining momentum over some six years. what do these issues mean for the election? >> i think everyone is looking to the next leader to see exactly how they are going to handle those issues. like you mentioned, book around is a major security issue in the northeastern part of nigeria. they have in leading a bloody insurgency where they do control some areas today. in the past four years human
rights watch says they have killed over 5000 people. but the next president will have his hands full with the economy. as you know the oil price has been falling to 50% of what it was. nigeria is africa's biggest oil producer. also the nigerian currency has lost about 18% against the dollar. all of these issues in security and political uncertainty way heavily on the nigerian currency. anna: thank you very much for joining us. let's keep the conversation on nigeria and the emerging markets. the country's credit rating was cut to a negative by falling oil prices and rising political risk amid the tightly congested election. we are joined by miguel, the head of asset investing at citigroup. tell me your initial thoughts on how the election is going.
you visit nigeria on a frequent basis, are things developing around the election in a way that is expected? guest: i think that yes. the good news is the election took place and we will see some noise around the elections, but i think overall that is the important thing. no one is expecting things to go quiet in the near term future. but people are seeing beyond that. that is not enter issue for investors. anna: when you talk about nigeria how excited are they for the investment opportunities there? how do they way up the risks -- weigh up the risks surrounding the falling oil price? guest: that is important that nigeria is a 180 million population market. the population is growing at 4%
per year. there are not many countries around the world like that. what is driving the interest is demographics. on top of that you have urbanization, gdp growth, so this makes it a very interesting country for everything there is. manufacturing, consumer goods banking, insurance and everything that is mass market related is very interesting and people see beyond the very short term. anna: the demographic story tempered by corruption. that has been talked about in the oil sector. is that something people are still investing in? guest: nigeria is well known for that. you can differentiate things from the outset and you do what you can do and you don't do what you cannot. it is not a big issue because you can prepare in advance for
that. you see a american and european companies doing business and they know exactly who they can do business with. anna: companies like unilever that have business in nigeria -- if they want to increase their exposure, how much do they do it and with their own business? or how much do they get a business inside to run it self and they can be at arms length? how involved on a day-to-day basis are these internationals? guest: the example of you deliver. they have -- the letter -- unilever they have been there for decades. a week before elections, it is a clear signal that the elections are important but are not the end of the story. they are keen on putting more money to work in the country and
unilever there are all in there with their own operations. others are not in there and are really trying to go back and catch up. take the example of dannon a large dairy company. two years ago they invested in one company in nigeria. big money. they are still trying to do or things. there are plenty of investors trying to come into the market. anna: you work in investment banking and are dealing with international businesses but also nigerian businesses that want more of a presence outside riyadh where does nigerian money -- outside. where does nigerian money go once it leaves? guest: the clear trend for nigerian wealthy people to invest in the country. in the past it is well-known they put money outside but right now there is a strong move for
people to take advantage of all of those opportunities. probably there is more of an asked in play as well. hopefully it will go even bigger. >> but i think right now for nigerian investors that are already used to the country they are seeing the risk on the country so they can live with those risks they should invest in nigeria. that is what i think is happening now. anna: so how do they stack up as an investment destination alongside other big economies. south africa is a completely different beast if you like where are the other opportunities that you are excited about? guest: i think is africa will have a good time in the next few years. when you have the oil price up everybody gets focused on oil-producing countries. now that the shyness off the oil price. we are asking if the importer will benefit from that.
and at the same time nature can you i think the government is now really focus and they have some other issues that they were fighting for behind them. now they are focused on delivering economic homages, some once you get can you up and running you will get the old block of running. anna: it could be time for the east in the spotlight. great to see you. miguel acevedo. coming up on the program, the latest on the iran nuclear talks. as it ticks closer to the march 31 deadline. ♪
anna: welcome back, i am anna edwards. this is "on the move." the deal to reach with iran after nuclear program before the deadline. both sides saying the other needs to make some tough choices. >> ultimately this is a negotiation, so in a negotiation you what the other side to make as many concessions as possible. what both sides seem to be saying is there hopeful for a deal and will be working hard for the deal. what the world powers want is they want the toughest regime possible when it comes to the nuclear program to and sure it is unable to build a bomb or the ability to build a bomb is
kicked down the road that they can rest more easily. this relates to the amount of research and development they are allowed to do and the amount of enriched uranium it is allowed to do as well. iran wants to have sanctions scrapped almost immediately as compared to the staggered relief the world powers want and they want us to make a few concessions vis-a-vis the nuclear program. they have until tomorrow night to reach that agreement. from what we hear, they are meeting right now on what is a fixed it talk. they have until tomorrow night and it could go either way. at the very least we are expecting to go down to the wire. anna: remind us of the broader context. what is at stake? >> for a run -- four iraor iran it
would be more of a normal state than a revolutionary state. it would be re-integrated into the global economy and they want to trade freely with the rest of the world. particularly when it comes to oil. the sanctions have been costing them with hundred $20 billion in lost revenue. -- $120 billion in lost revenue. there are european companies queuing up to get back into iran. for the obama administration they're looking for answer achievement a can show they got done on their watch. initially perhaps the hope was to make some headway with the peace process -- that is not going to happen. if you can get a deal as far as iran's nuclear power is concerned, one he can sell to
anna: welcome back i am anna edwards. french voters have delivered a new low to president francois hollande. the former president nicolas sarkozy took the lead in the france local elections and there were significant gains for the national front as well. bloomberg news reporter from paris. what were the results? >> as you would expect this is very much a protest vote to french voters are angry with the lack of economic growth, high taxes, high unemployment. that is what is coming to. heavy defeat for the ruling socialist party who have gone from running 61 departments running close to 30. the real gains have come from
sarkozy's ump. it is in opposition now and it typically opposition does well in this midterm mandate type of boat. the national front was expected to do very well and it didn't actually capture any governmental seats in the department or in they have done very well in terms of the popular vote. so, it is also something to watch. anna: how much of a preview are these elections to the presidential elections? do they tell us anything useful? >> i think they underlined the size of the challenge that is facing francois hollande. he as two years left and if he wants to return to power in 2017 he has a lot of work to do to make the socialist more positive
again. at the same time, these are elections at midterm and midterm elections often go against the government. hollande is not totally without help but the defeat is very marked and there is a lot of work to do. anna: thank you very much. mark dean joining us from paris. from that u.k. now, the campaign officially kicks off today. prime minister david cameron will dissolve parliament and we will have full coverage throughout the morning. we're joined now by my cohost on bloomberg politics. it feels like we have been talking about this for a long time but is it officially start? guy: we are starting to ramp things up a little bit as well. we'll have a speech later on by ed miliband here at bloomberg hq
and he is really going to go to the business community and say here is why you need to support me. we are not opposing referendums. that is not what you will get with the labour party. anna: i thought it was fascinating over the weekend how you saw both of the major parties stepping in and away you had not seen. david cameron talking about the nhs and now ed miliband talking to the business lobby. it seems as though the starting gun has been fired and both parties feel able to walk into enemy territory. guy: and it is really personal. david cameron really stepped it up and i think that will make a campaign fascinating. the labour party will be trying to avoid by that time. others don't worry but you kind of sense that things are
beginning to move a little bit, just maybe because the planes have been so static. today, hopefully things start to get interesting. >> phase getting interesting info scotland as well. the leader of the s&p talking to a packed conference much more popular as an it had than it has been in devious years. membership having increased so many times over. and she was calling on labor to form a barrier to keep the alliance. guy: to bring this conversation full circle, there is this real concern within the business community that you'll will end up with a minority level government backed by the snp. you heard alex simmons talking about the fact that the party would have to put the greek speech under the noses of the s&p to get approval and that is what is concerning at the moment. it will be interesting to see
whether ed miliband can address the issue of the referendum which he sees as a positive to the business community and labour party. at the same time he is balancing out the key concerns. anna: maybe we will get to them a little bit later on concerns over europe. pimco thinking the future of europe is that united states of europe. and they walk that way? guy: the labour party has made it clear if there were further transfer of power there would be a referendum. it is not without the opportunity to make changes, but nevertheless that is an extrapolation that the additional election may not take us far enough. anna: we will be back on the u.k. election later on. don't miss our coverage later today. ed miliband will set out his plans. then, just after midday, we will have the first interview with the labour leader. you can follow me on twitter.