Skip to main content

tv   On the Move  Bloomberg  September 3, 2015 3:00am-4:01am EDT

3:00 am
points, shanghai is shot, a little bit of relief for the market maybe. caroline: a call moffett -- a calm off the chinese storm. to the markets opening. many people tweeting me today saying better late than never for the imf. they say by the way, downside risks have gone up. they do weigh in on central-bank policy as well saying the ecb should try to do more quantitative easing if the market doesn't seem to show an extended sufficient improvement in inflation. little evidence of a meaningful wage or price pressures. all eyes on the ecb later today. more qe mr bond buying coming from mario draghi and a downgrade in inflation.
3:01 am
suddenly, this appetite is out there. let's have a look at what is happening in metal. the volatility has avid as the chinese market shots. but victory parade, but no such luck for oil. president obama getting its approval it seems for the iranian nuclear deal. .7%.own by pompeii and was in the dollar gained a little bit against the rest of the currency. one dollar buying you for swedish currency. the number coming out of sweden later today. no change is expected for the europe is a little bit lower. i want to focus on some of the giving aboutngenta
3:02 am
$2 billion back to shareholders will stop barclays sales is portuguese assets. jonathan: fantastic work. we are up by 1.2%. also up this morning. early moves for the markets here is what is coming up. -- will be talking with the ecb decisions. one of our guests sits a 40% shot at china flexes and markets take a breather. the political story takes his and stage. don't miss our interview. that is in less than 30 minutes. the top story is the ecb in frankfurt. the question everyone will be asking, will mario draghi reach for a statement? investors will be listening
3:03 am
closely to any statement from him. hans nichols joins us from berlin. say, will he be speaking a lot of mandarin? hans: we was see has get his mandarin and greek is. the one thing we know we would get today is what mario draghi and governing council say about inflation. three months ago, they expected to be at 0.3% that really hasn't happened. we haven't seen that much inflation so they may have to revise that. three months ago they said oil would be $63 a barrel. it reached a low of $43 a barrel. you will see how they factor in inflation. if they revise it down once, the give any hint about extending the length of quantitative easing? will they change the type of
3:04 am
assets they are buying? those are minor tweaks they could potentially do. talk the euro down a little bit. but the main issue will be inflation. they haven't seen the kind of inflation they expected. i amis the big thing looking at. then, when they get to the press conference, how does he handily china volatility question? is the ship sailing straight , the deputy finance minister -- they are not panicking. will mario draghi strike the same note? jonathan: thank you very much for breaking that down. for all you need to know on ecb decision day. i am pleased to say we can bring in cameron who is with the
3:05 am
blackrock. great to have you with us. mario draghi, we've gone from qe two more qe talk. on the plus side, the euro towards 179 but we are closer to parity now than last year. what is the big red flashing light? ron: it was always noise about china, i think whether or not this year's inflation is -- and they do make it to the oil price they will say that is fair. they will change the 2017 forecast which at one went eight is the lowest 2% target in any case. if you are thinking about an extension of qe be on next year you have to link into stuff like that. markets have gone from
3:06 am
complacency to near panic. was a justified -- it's a justified? cameron: it is like holding a beach ball underwater. it bounces pretty high. you have a. of very low volatility. corporate bond spread start to widen. leverage is becoming a little bit more disruptive. that said, i don't think you can explain the degree of volatility without asking questions about equity market structure. had big swings in the bond market with a big drop in treasury yields. you see a move in the oil market what do you think of the market structure for equity specifically never mind bond market? look at it ase to an investor not a traitor --
3:07 am
trader. good stuff goes down. if you get opportunities what you're being paid for as an asset manager is to take those opportunities. if the index overshoots than that is an opportunity as well. everyone is trying to be a momentum trader which is kind of stupid. jonathan: you sit here and look at the federal reserve and you can blame so many things over the last two weeks but if we pick out the fed history tells us to only sell on the final hike. -- with the bad monetary policy against? n: i don't think it is the normal course of events. actually, we are now in the psychology what people are so worrying about growth momentum that if the fed doesn't raise
3:08 am
rates people say hang on, what do they know that we don't know? rise which at think is still the most likely if you don't have that people could be more worried. final question on this segment, you talk about eight -- a trader versus an investor. do you really think it will pin the rate decision on the labor market? look at the base report yesterday which basically said the state has fulfilled its employment mandate. a bit of employment inflation they said they have fulfilled quite a lot of financial stability, but what we haven't done is inflation. the fed is not unique in that respect. jonathan: stay with us step up
3:09 am
next, should -- china flexes from a world war ii victory. investors get a break from volatility. the political story is front and center.
3:10 am
3:11 am
3:12 am
jonathan: welcome back. let's bring you up to speed with him a bloomberg's top stories this morning. barack obama has secured enough his iranian for nuclear deal. the president can stop opponents from overriding it. both chambers flanked a debate next week. commodity prices and a global make it like to the ecb will downgrade its inflation forecast. they will be watching for language indicating the ecb's 1.1 trillion euro program could be expanded. the imf, they said the obvious and say downgrades risk of global economic growth and those have increased ahead of the g-20 meeting. global growth remains quite moderate.
3:13 am
fearsna, the epicenter of about to growth. the hang seng are closed and the shanghai composite as well for the parades. there will be no trading on the mainland until monday which gives investors 100 hours of call -- calm. not all markets are closed. juliette: certainly a much-needed reprieve of the asia-pacific index today. it is up by about .1% in early trading today. asing from financial stocks you would expect on the weaker oil price. generally, the mood was more positive and the focus of the fundamentals. tomorrow they will be open in
3:14 am
hong kong but will be closed -- china remains closed tomorrow. we do have a weaker yuan in korea and a weaker yen in japan which is helping stocks. it did payback some earlierlosses. led the region down today. the disappointing retail and the biggest concerns of the aussie dollar all weighing into that picture. the leadingne of brands. we had a breather from those shanghai swings. jonathan: a big sigh of relief in london where they might be no action in china to shift from the political scene.
3:15 am
the huge parade marking the defeat of japan in world war ii has taken place in beijing. it showcases hundreds of new weapons. ewen, we forget that the last two weeks the government has been trying to stabilize the market ahead of this. that screams that the equity market -- you want that a means of the to the economy? politically it is huge. the: it has to do with suppose it in solubility of the government to organize everything. infallability of the government to organize everything. jonathan: we can talk about the transformation of the chinese
3:16 am
economy. at the end of the day it will stabilize things politically and make her the labor market stays stable as well. whether it is south korean exports come aims that that in china right now? n: the labor market is not that bad. has comelabor sector up with loss of jobs in the manufacturing sector. sales are good because wages are rising. the employment thing is with the policymakers are worried about. that is what they feared most of all. we both said that if australia was the canary in a coal mine that died about two years ago. this is a surprised nobody. if we presume that we had 7% growth come down to 5% growth,
3:17 am
fine, but a silly to reprice global assets. that is a difficult task. -- does it take to shake that out? ewen: i think it takes a while. western australia is in recession but the east coast is not doing bad but is not doing enough to offset the deeper session taking place on the western side of the country. this has come as a surprise for some people that haven't been following china as closely. to see the market down 4%, they get on the phone and want to realize losses. what do you say back to them? n: that it is their money. that sounds trite, but it is their money at the end of the day.
3:18 am
valuation tell you a lot about the long-term rate of return but nothing about the short-term rate. valuations are very supportive of asian markets now. you always made money on 12 month basis, evaluations in europe are pretty decent. valuations and japanese equities are pretty decent. in a bearish market patience is your friend. scared, wewho are say how we make are long-term growth? there was time in the market, not timing that people saving should be thinking about. up, the votesng are in, president obama has secured enough support to further the iranian nuclear deal. ♪
3:19 am
3:20 am
3:21 am
thethan: 21 minutes past hour china is closed. to step in the% u.s. lawmakers want to be able to block a deal on the iranian new grip program. president obama gain the final neat -- vote needed.
3:22 am
obama said he would veto any attempt to block the deal but he doesn't have to follow through on that anymore, does he? >> what these mean is that he will have enough support in the senate to be able to exercise his presidential veto. that, thent gotten he wouldn't have been able to veto that deal. senatoras that and barbara mikulski pushed him over the hill. she was the 34th two back president obama. other democratic senators casey. up casey -- bob bomb ande to stop the stop them from going in that direction. i think this agreement does that. that is a lot of tough verification.
3:23 am
as long as we do the right thing in terms of implementation and back it up with a strong deterrence policy. over time, i think it will work. >> when they do try to block the deal, obama does have the votes veto go it -- the show -- it. another reason to with the cell button with from north of $100,000 to $46 a barrel. industry, whether document mining or energy they are taking a kicking this year. anyone with a 5-10 year time horizon they are waiting for the moment to get in. : you have to see capacity actually being closed down.
3:24 am
it takes a long time for to drop down. the numbers were saying that production is still rising relative to demand which is the shell story. appears to be coming off just a touch. you really have to see this stuff eating taken out over time. there -- of being taken out overtime. are not that crisis point for china, but we are at a crisis might for basic resources and companies that operate. mining,has meant for that transformation hasn't happened and many way people think, is the future fewer players? ewen: there is plenty of interest in buying energy assets if you can get them on a
3:25 am
distressed purchase basis. that runs through whether or not there were special opportunities. i think let's come back to china. ultimately, china has to have and say this is a great opportunity up we can do it. we are seeing that willie happening at this stage yet. jonathan: when do we see the transformations? i can only think of one company that is cutting dividends. is it safe to go to these to get that big junk -- chunk of dividend yield? en: you really want to be in areas where dividends can grow. your income stream doesn't look clever if it might be being cut. , i think people
3:26 am
find that, dividend growth over time accumulates points. jonathan: where do you go for that? : health care, some technology names, one of the most interesting technologies lies in the financial services sector. i think european financials, we think of as valley with some of the european automobiles. jonathan: thank you very much. we talked to one of the european financials, moments away from a rate decision. downwith us, we will break the decision. ♪
3:27 am
3:28 am
3:29 am
3:30 am
jonathan: good morning and welcome back to bloomberg tv. i am jonathan ferro. 30 minutes into your trading day. a look into the equity markets for you or it we are up by 1.23%. the dax and frankfurt, germany 1.5% in germany. a lot to talk about. the ecb decision later. over in sweden, the central bank decision. let's go to caroline hyde for more. caroline: the swedish kroner strengthening. that is the reaction that most help. no change, of course the overall rate remaining at minus .35%.
3:31 am
economists had hoped for more of a cut. more stimulus. they hold off. the swedish krona strengthening. down .4%. krona atwer swedish the moment. strengthening off the back of the fact a hold up in stimulation. they need to focus on trying to boost the overall inflation. way off target at the moment. they allowed the market -- perhaps they did not move fast enough and stimulating their economy. stimulate, they must. after that surprise rate cut back in july. at the moment, swedish krone strengthening against the dollar. jonathan: remarkable situation over in sweden. they downgraded their forecast for 2016. 3.4% gdp.to
3:32 am
they are running a qe program. remarkable for the academic, the traders alike. a very special guest i want to get to now. joining us live, deputy ceo of the corporate investment bank, regis monfront. great to have you with us. it is hard to get a read on what is happening. when a client picks up the phone and says what is happening, what do you say? regis: very good to be with you today. it is true we are going interesting times. -- we are undergoing interesting times. i am not an economist, but we believe the current situation is triggered by a combination of factors. withoutidentify for particular order. the first one is the liquidity
3:33 am
injections that the place during qe's -- duringg qe's and u.s., china. there is a slowdown of the chinese economy which is undergoing structural changes. going from an export led economy to a consumer driven companies. have inflation expectations with interest rates hike, which is keeping everyone in the mind of our friends. last but not least, the fact that the environment has reduced -- providing liquidity to their clients. impactthis has made an on an increase of volatility. some of the big factors, the level of fear is higher as we
3:34 am
speak or jonathan: regis, i want to talk to you about that. talk to me specifically about your own business. we talked about the bond market, inventories at the banks and how liquidity has dried up. in the equity market, the dow jones index is behaving like a penny stock. down a percentd the next day. what you make of it? the asset order of classes are very volatile. you have bonds and so on. we believe that what is happening is the liquidity volumes which have been injected into the market are so important. onhas a significant impact the size of the moves. we believe investors are trying
3:35 am
equilibrium here they are very dependent in their behavior on the latest piece of news. at the moment, their focus is on more until they reserve visibility on what is going on there. take time forould that to settle down. friend referred to volatility as the good, the bad, the ugly. would it be good for your bank? regis: it has been very neutral. we monitor it very closely all of these movements. on theirvising them long-term plans, investments across the world. expenditure projects. importantt is a very way for the way we advise our clients.
3:36 am
that we do not have any proprietary training activities, we are servicing our clients through service markets. to finance their projects, i would say the last months have been neutral. ,onathan: the european bank that was clear across european financials. you think the second half of the year can match the first half? regis: we think so. finds its the market footing, we will probably be able to keep going back to the fundamentals. , our banksin europe are finally -- are fairly modest. up from southern europe, germany. it seems all of these factors
3:37 am
are pointing in the right direction. jonathan: i want to talk to you about the ipo in this environment. of in -- in an environment volatility, do you expect people to pull back from your own bank? what are your views on the likelihood that that could be pulled back as well? , at this this front juncture, there is no change in our clients behavior. we have been working actively on ipos. markets have to stabilize before we provide them with the best opportunities. there is a silver lining around any cloud. with violations going down slightly with the current correction adjustments, probably it will be much easier for sellers and buyers to have a renewed trust. we are positive on the
3:38 am
transactions and ipos we are working on. jonathan: to wrap things up, we talked about stabilization and how that will help the ipo, m&a environment. it is been central banks that have done that job for market participants. when you look at the ecb, nevermind the fed, is in their work just beginning? banks i think the central played a major role in stabilizing the market. we have to keep in mind the situation in 2008, ever since the central banks have been key. , they arerack record able to solve the issues. such a banks don't have all of the levers of course. central banks do not have all of the levers, of course.
3:39 am
banks do not have all of the levers, of course. all of this together with structural changes in europe, in terms of adjustments to the new labor laws. the adjustments, in terms of , in terms ofhina reorienting its economy more to consumption, more than export, should really help. yes? jonathan: i was going to wrap it up, but please finish. are -- ourink we all eyes are fixated on china. germany, where i am standing, we have to keep in mind that china is important to germany exporters. u.s. and the second one is france. china is important, but we have to have a holistic view.
3:40 am
the positive factors outweigh the negative factors. jonathan: regis, optimistic view. i thank you very much for joining us. of -- is more qe on the table? we will speak to one economists. mario draghi will step up quantitative that's quantitative easing today. find out why after the break. ♪
3:41 am
3:42 am
3:43 am
jonathan: good morning. welcome back to bloomberg tv. i am jonathan ferro. up.stoxx 600 the ftse 100 up by 1.4%. we have a rally here with you 101 of the biggest gains. we will to that in just a moment. killing hide will break down this stock movement -- caroline hyde will break down the stock movement. let's get this top stock stories with caroline. caroline: the leader of the pack it is easyjet at the moment. the best day for easyjet stocks since made. this is been driven higher on the back of trading. they have raised their full-year forecast. they are good to see profits up
3:44 am
to 700 million pounds. desk that much as set is as much as 12% higher. the revenue is so strong, they are able to offset the costs. they had disruption back in april and a fire in the room. overall, easyjet is up. the u.k. stop up -- the u.k. stock up. progress is being made. they say maybe don't pile into the stock quite yet. they raise their full-year price target to 175. a little higher than what we are trading at it they say management is making good progress. the consumer is recognizing the improvement. .n the downside, edf down by 4.5%. the project in normandy, the nuclear reactor really problematic. they're not good to be starting
3:45 am
until the fourth quarter, 2018. the cost, 10.5 billion euros. this project was meant to be 3.3 billion euros. edf not having a good morning. jonathan: caroline hyde, thank you very much. let's wrap up some of numbers top stories right here. china, says it plans to cut its army personnel, the biggest reduction since 1997. he made the announcement at the start of a military parade in beijing to mark the end of the second world war. hundreds of military hardware is on display. is -- hasip fund fallen below -- investors pulled $1.8 billion last month. it now manages about one third of the money it did in 2013. u.s. economy expanded across
3:46 am
most regions and industries in july and august, that is a court -- that is according to the fed page book -- the feds face paint -- the fed's next announcement is two weeks away. big announcement today, we have one of our own, the ecb deciding. how dovish will mario draghi be. 40% chanceest says the ecb president will step up to the today. we are joined by nick kounis from amsterdam. no, great to have you with us this morning. i know it is not your best case scenario. come -- the cold -- no: -- nick: inflation will be lower for longer.
3:47 am
we have seen a decline in market inflation expectations. there are rising downside rates to the growth outlook, because of what is happening in china and other emerging markets. jonathan: to come off the back of that, to bring a positive pitch, the external edge -- the euro close to a dollar tech. spread is relatively tight. have things deteriorated that much? no, they haven't. that is the dilemma for the ecb. we have seen the the mystic economy holding up well. the recovery seems to be continuing. we have seen core inflation forming now. that is why we think they will keep policy on hold today while keeping the door for additional
3:48 am
quantitative easing wide-open. jonathan: at the door wide open for more qe. now we are talking about more qe. what do they buy exactly? that story hasn't changed. what do they buy if they want to expand qe? nick: that's a very good question. they would have to increase the pull assets. the eligible universe, prime candidate is regional government bonding. germany, because that is the market. a lot of bun this to it. more utility bonds. jonathan: clearly, their plan
3:49 am
with the credit channel, but people argue the only way to stay late this economy, the only ammunition is to push down the euro. will it even work? clearly the euro is a very crucial transmission channel in terms of growth and inflation. we up -- we have seen the credit channel. we have seen bank lending rates coming down. we have seen availability of credit going up. euro.broader than the make no mistake, the euro is a vital part of this. jonathan: a final question on the euro, what is the trade? is the cost of a parity? is it all about differentials between central banks? the old story we have been pushing for 12 months.
3:50 am
how quickly can we hit parity? paritye are calling for by the end of this year. we think that even though the first fed rate hike will be delayed now. we still think the fed will hike rate in the december. -- in december. we see increasing chances of qe which is -- which should push down on the euro. certainly we need risk sentiment to stabilize for the euro to start going down was significantly though. jonathan: nick kounis, thank you for joining us. he looks like my brother, but i promise you he is way smarter. refugees, thousands of into budapest station. we'll have more after the break.
3:51 am
3:52 am
3:53 am
jonathan: hungary have's -- hungary has suspended trains. hans nichols has more. talk me through the latest. the train station in budapest is open to refugees, but only to travel within
3:54 am
hungary. potentially to refugee settlement at it -- settlement areas, outside of the area. receiving access to the transition. have been barred. they are shutting down service from budapest to western europe. regional trains are not in operation. we have news this morning from the interior minister in germany. he is indicating they could have more funds sent to those hotspot countries. in country -- and hungary where they really have this crisis. they can process the refugees there. the prime minister of hungary is off to brussels. there is talk about a quota system. what you need to do to have mechanisms in place and how you enforce that. we are at the beginning of a very difficult conversation that will take place not only in brussels but capitals across the eurozone. jonathan: a huge issue.
3:55 am
i will be keeping a watching on those the elements on bloomberg tv. our eyes over the ecb. we will bring you live coverage from 12:45 today. 55 minutes into the session. equity markets at session highs. 54.9, the final reading for services pmi. france, a disappointment. that -- the diversions -- manus cranny up next. germany ok.ata, for for everyone else, not so good. more qe eventually. manco amazing how we have -- manus: amazing how we have gone from no qe and now they're calling for more qe here it -- more qe.
3:56 am
bena, perhaps we should asking for reprieve and european equity markets. volatility tiger is closed for a couple of days. the ecb is front and center. goldman sachs says we are going to be back in parity by 2016. parity is back on the writing agenda. you want all heck of a lot of qe to get yourself back there. au want the fed to go on hiking rampage. we're going to look at political issues in china. jonathan: looking for to that. manus cranny and francine lacqua coming up on the pulse after this break. follow me on twitter. the dax, a session high. 56 minutes into the session.
3:57 am
the dax up 200 points this morning. best of luck for the rest of your day. ♪
3:58 am
3:59 am
4:00 am
francine: inflation in focus as the ecb meets in frankfurt. mario draghi will address market volatility. manus: chinese markets on holiday. stocks get a breather as the country commemorates the end of world war ii with a massive military parade. francine: the latest report says risk to global growth have fed should the remain data dependent when it comes to raising rates. welcome to "the pulse" live in

25 Views

info Stream Only

Uploaded by TV Archive on