francine: the fomc prepares for its crucial september meeting. is the world economy about the strengthened by the fed? the new labor leader prepares for his first comments clash with the prime minister and we speak to a top labor donors urging people to stay loyal to the party. welcome to "the pulse." i am francine lacqua.
european markets are up this morning following from gains in asia and the world's count down to the federal reserve policy decision. members of the fomc begin their crucial meeting later today. for more on how the markets are cross straight over to mark. mark: gains, but why? that is the big question. because the odds of a rate increase our 32% and on monday it was twice 6%. so investors are less certain that the fed won't raise interest rates. 50-50 asked much whether they think they will raise rates. china did rising and what it always does is bounceback in the last hour.
two-day three-day. it was lower 75 minutes ahead of the close. all the way up today and closing up by 4.9%. rose as highst 5.9% which was the biggest rally since -- when the market does that it is often associated with state intervention. don't forget this is an index which sunk 20% since august 11 and is tracing -- trading or deny percent below the record set on the 12th of june. have a look at a currency we don't talk about every day, the south korean. today it is risen to a three-week high versus the dollar. i am charting it against all 16 major currencies in the world and as you can see every major
currency is falling against the yuan today. standard & poor's upgraded its credit rating. rating whichinus puts it on a path with china and japan. way, this one went 7% against the dollar this year. this is a stock i have been fixated with recently. this is glencore. the shares are rising after the commodity trader sold $2.5 billion of new shares to shore up its balance sheet. what's amazing is since it came to the market in may the stock is never risen from its price of 530 pence. in fact it has fallen by 75%. billionates to 20 dollars of value in selling shares to shore up the balance sheet.
it 30 billion and wants to reduce that by 10 billion light selling shares. exhausting stuff. francine: tune into bloomberg tomorrow for a special report on the fed. janet yellen will take to the podium 30 minutes later and tonight, radel you will join bloomberg for an hour-long conversation. i suggest you watch that. that brings us to today's twitter question? is the world's economy about to be stress tested by the fed. we have a great story on the bloomberg terminal and our know the mining route. sharesld 1.3 billion new to pay down debt and avert a
credit rating cut. bloomberg's reporter joins us now. is this a good result? we knew that they had to do something but this is drastic. >> it is drastic and it is a plan they originally announced last week. $30 billion of debt in this environment is not a good place to be. concernedwere very that credit rating have been cut. big commodity traders rely on that. 2.4% discount yesterday. the have a record low of 118. so i think they're very happy we maye result tree in even see some new investors. but let's be clear this is not a good news story.
they didn't want to do this. francine: but the result could have been worse. withso know that glencore 25% of the whole thing. did they participate? >> they did. they promise to not elude their shares. so they sold 10% of the company effectively. so someone like the ceo earns 8.4%. so he is committed to spend two point 1,000,000% -- of his own cash. so there a lot lighter in the pockets today. the debt also reduction program, what is next? >> them announced a number of measures. the next key point to look out for our asset sales. they've set that out and targeting precious metals which
means they will be up to sell gold and silver byproducts from around the globe to companies in the u.s. or elsewhere and that is quite a lucrative sales process and some analysts are talking anywhere in the realm of one to 2 billion for that. francine: you are one of the really rare interviewers who gets to speak to adam. he told you about three weeks ago it is too early for anyone to read china. >>e we heard from him since? that comment four weeks ago, in hindsight the company may regret that he said that. it may not a center-right single to investors. he's facing a lot of pressure from investors in the u.s. and i don't think that comment helped give them confidence that the
ceo had great insight into it the behavior of their biggest customer. francine: thank you so much. here is a look at what else is on the radar this wednesday morning. in the tech has reported first-half profit in line with analyst estimates as it added more shops and online businesses. the owner reported 26% rise in net income. hewlett-packard says it will have 33,000 more jobs and plans to refashion business for the rapidly changing technology market. hp is splitting into two separate industries in november. they will sell personal computers and printers to the organizers of this grand prix so they are keeping a close watch. many schools to
close in malaysia and singapore and the indonesian president has invited troops to join the fight. facebook is working on options besides the like button so users can express emotion such as at the on news posts. mark zuckerberg said people have asked about the dislike button for many years and said we have finally heard you and we will deliver something for the needs of a larger community. corbyn prepares for his first clash since becoming labor leader there are those urging him to remain loyal. despite concerns. chairman and founder john mills coming up after this break. we are on the pulse and just getting started.
they spend billions cutting taxes for the richest families and the most profitable businesses. what they are is poverty deniers. they are ignoring the growing queues at food banks and are cutting tax credits when child property rose by $500,000 to over $4 million. francine: as business leaders voiced their concern, one top labor donor has called on party members to stick around and remain loyal to the party. he joins us now. great to have you on the program and thank you for coming up. to put everything into context there have been claims that you labour.op fighting >> that is untrue.
manus: you told me that -- francine: you told me that jeremy corbyn would not have been your choice. >> i think he has been very clever in articulating what a lot of people are concerned about with the way things are going that austerity isn't working. people are saying it's starting to be sent to take just for people on lower incomes. but whether the policies advocated are solid is a big? . francine: if you look at the u.s. and the u.k., the problem with a free and liberal economy is it does create inequality bigger and other countries and it is a problem that has to be addressed and this probably taps into jeremy corbyn economics.
but there has been a fragmentation or it >> we have had quite a large section of the labour party who have gone along with austerity being the solution. there is a big problem with the government deficit but we have had jeremy corbyn coming along with a much more radical approach and i think this has split the labour party. what i hope will come out of this is some really serious thinking about where it ought to be going and what it can hope to achieve an offer the electorate in 2020. francine: if you're seeing many more defections and you say i don't feel comfortable being part of the shadow cabinet because the position in europe is worrying, we could see the emergence of another big party with former big labour party backers. >> i think that will probably
happen is that the labour party will stay as one party. there will be a big debate howde but will have to see jeremy corbyn plays with the electorate over the next few months and what i think may come out all of this is some which willf views provide a framework for everybody to be happy. i think that is the best outcome. forcine: so you are looking he or mr. mcdonald to be much more moderate, saying he's expecting that england can retain the power and setting interest rates. >> i think there will be a big debate on economic policy and one thing i do believe is if we're going to get the economy to perform better we have to get growth investment up and have increased visitor -- business confidence taking the view that
this is a secure place to invest in the kind of tone that is set and policies he advocates will be very important in terms of securing that confidence which we need. francine: do you think that if mr. corbyn does not become a little more centrist that he would survive as labour party leader echo >> think it is very hard to tell. changing a leader is quite difficult. electionggers another and finishes with jeremy corbyn being elected again it would be a huge amount of a with no gain. swat will have to do is see how things shake out over the next months and years and see whether some accommodation can be found so that we can present an attractive proposition in 2020. allaps they also i am at
convinced that the conservative parties will work. people may be more interested in looking at alternatives. francine: you have been a backer for labour party for such a long time and the problem now is that conservatives don't have any real opposition that makes sense. are you not concerned. what would it take you to say i cannot act this anymore. abandon the labour party i would say as i did in the 1980's when there was the same set of movements as we have seen now to keep trying to get it changed. going back to your point about the opposition it is important the conservatives have a strong opposition in one of the important things for labor to do is to get its act together. danger in theis a conservative party that will be
damaging. yesterdayunion bill which substantially apprise them. that does not see to be basis -- sensible way to reduce the balance. francine: i know we are talking about the federal reserve possibly raising interest rates for the first time tomorrow. you're feeling is that they should wait because the state of or economy is unwarranted just clear guidance to the business community? >> in the long-term, interest rates have to go up but i think in the moment the world economy is in a fragile state. i would've thought myself that putting interest rates up at this stage was quite risky. i think the pound is far too strong at the moment. manufacturing is very poor at
francine: welcome back to "the pulse." -- the world's largest clothing retailer, intertec has reported a 25% rise in net income. first spanish company ever to surpass a 100 billion euro evaluation last month. charles, great to have you on the program. this is good news for injured -- inditex, but how much does it have to do with a weaker euro? guest: in terms of sales, not too much. 16.5% of the sales increase was that. in profits it is more important. though they did not qualify, broadly speaking they make stuff in the eurozone and sell quite a bit into the euro area and asia. francine: if you look at same-store sales, they are growing at levels prior to the
financial crisis. guest: this is a great result for them. 7%, of what is broadly speaking a mature store base. maybe 20% of their stores are immature. they have growth throughout the business. i don't think we have seen it reflected to the same degree elsewhere. prime market afforded -- reported last week that they were flat, broadly, over the same period. francine: inditex is doing so well because zara is doing so well? guest: that is the other kind of noticeable thing. zara isom zara home, the strongest business within the whole of the mix. their most mature business has done the best of all. francine: thank you so much. charles allen, our retail analyst with the latest on iniditex.
product shares surged in hong kong after shares came in better than expected. the luxury company slowed expansion of new stores. product sales have been slowing in china as the government clamps down on extravagance. now, angular merkel's us -- defense or actions. what will they mean for her legacy as chancellor? that is what we will be seeing next. live pictures at the border of hungary and syria. today is an important day because of the fed decision tomorrow. analysts are still split. it has increased from a 26% chance monday to a 36% chance of the fed hiking rates. we have that decision tomorrow night and we will hear from the chair, janet yellen. shares rising in europe for the second day as we approach the countdown to the decision.
we are seeing gains and energy producers after we have worse than expected forecast data. we saw some weakness in the u.s. recovery yesterday. we are expecting a little bit of data out of the u.s.. investors are still split on what action the policymakers will take. 32% chance of a rate increase. the shanghai composite today has actually gained 4.2%. the biggest daily gain since the beginning of august. yesterday, we had the u.s. indices up. now you can see that the futures are unchanged. investors are trying to figure out whether an interest rate hike is positive or negative. if they do it, at least we will start normalizing. some emerging markets a is a good thing, other saying it is too fragile. when we look at some of the data from the eurozone, it is just a worry because it is not strong
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2008. you to believe with companies having to raise wages , spareact workers capacity in the labor market is the key metric for the bank of officials consider when two and six years of policy at record lows. is this a further piece of the puzzle leading to high interest rates? i will leave that for you to decide. francine: thank you. every bit counts. mark. here are the top headlines. we will find out whether the federal reserve will raise interest rates for the first time since 2006. janet yellen says it would be a mistake to hike this month. the central bank should hold 2016. steady well into
shares to payold down debt. they are the worst performer on the u.k. ftse 100. a refugee camp growing on the serbian side of the hungarian border. in thefleeing conflicts middle east and africa have been using the crossing as an entry point to the european union. angela merkel has defended her position to allow refugees into reimpose border controls when the numbers became overwhelming. for more on this, let's bring in ryan chilcote. ryan: donald said he will make
his call on thursday after he consults with all of the eu countries. what he is going to want to see is there is the framework of some kind of deal, should eu leaders get together. yesterdaykel decided that what took place on monday, they kicked the can down the road. enough, was not going to solve the problem. guess, angela merkel gets what angela merkel wants. we will find out from mr. tusk. francine: how did she become a refugee crisis hero? ryan: the germans were perceived, at least in greece, the villains, if you will, calling for more austerity, being heartless. are talking to the same greeks i was talking to.
all of a sudden, last week, angela merkel is the conscious of europe. herself withsting the prime minister who has been quite strict. to be control and refugees or asylum-seekers need to apply properly and go through order points. moved to seal off some of the german border, has put members ofas the army to office duty. itshungarian has to ploy military to the border with machine guns. deployed its military to the border with machine guns. s&p yesterday, saying this crisis, the one uncertainty out
there when it comes to sovereign the eu canwhether act as a cohesive unit. it suggests there is a governance issue and governments throughout the eu, when you look at other financial issues, and it is an interesting thought. rating with a conscious. concern about this x essential question that is still there. this xern about existential question that is still there.
make of: what do you this? this is linked back to the economy. germany has an aging population. >> cc this crisis as a chance to get skilled labor to germany and maybe fill this gap. if you ask people here, many say bes is not a hope that will fulfilled. mib adapt for the german labor market. this is a high guess.
she is under a lot of pressure here at home. bavarian sister's party leader, who bears the brunt of the refugees coming to bavaria criticized her for letting refugees in from hungary. there is also the security issue. somelation that might be ..s. terrorists she had to restore border controls. jeremy corbyn is the man of the moment. he is most known for his anti-austerity stunts. he has come out against fracking, the method of extracting shale gas from underground. he has called it dangerous to
the environment. says it released today should be explored as a potential source to meet britain's energy needs. chris smith, thank you for joining us. talk about what you are saying in your report. chris: we are looking at the climate change implications developing. the long-term future has to be renewable and low carbon. that will not happen overnight. it has to be part of the energy mix over the next 40 to 40 -- 30 to 40 years.
we are looking at shale gas as opposed to liquefied natural gas .hat comes from qatar the carbon footprint of shale gas produced domestically is less than the carbon footprint lng shipped from qatar. it has to have been nine the right way. the government has to get on and move on over the development of carbon capture and storage. the second thing we are saying is the government should deploy the revenue it gets from the energy related taxes and royalties. into ald deploy those
new technology in the field of renewables. francine: do you think we will see shale gas fracking in the u.k.? in this country, there is so much opposition, that it would be, even if you have a lot of gas underground, it would be difficult to push it through. of the things that disappoints me is the argument up to now has been characterized by extremes. one side of the argument saying this will solve all of the energy, the other side saying this is the worst environmental issue there has ever been. neither side is true. we have been trying to find where the truth lies. yes, there needs to be
safeguards and regulations. we need to carry on deploying money into the development of renewables and low carbon. despite that, shale gas could have a -- francine: it is a sophisticated argument. theou think that will get backing of british citizens? chris: i hope people will look at the evidence and arguments. communities -- francine: politicians need to -- what i am saying is -- chris: politicians need to stop taking gesture approaches. they need to look seriously at the evidence and take a approach.denced-based this is the future of our energy needs and the future of the climate. is what you make of
jeremy corbyn and the future of the labour party? there is a lot of potential. i agree with him on some things, i disagree with him on some things. francine: do we need a more moderate? decides would hope you he is going to support britain's continued membership in the european union. that is something i believe in passionately. he has taken a more nuanced view of it. i hope he sees the view -- the virtue of staying in. francine: we will see. thank you, chris smith, on the force of shale gas. coming up, find out what google is making its mark outside of the capital after the break. ♪
francine: welcome back. 11 billion pounds in almost a quarter of a million jobs. that is how much google claims it adds to the u.k. economy. these announcements were made at company's hq,e where we had exclusive access. you one, great to have the program. you spoke to the head of google here in the u.k., eileen not in. -- eileen not in -- e ileen naughton.
her line: -- caroline: it is trying to woo the british public. regulators, how much they bring in and how much they foster entrepreneurship. up givingalking access to digital skills, getting into companies. garagell it the digital for companies to upscale themselves. the u.k. is our second largest market. we do care. we invest a lot in skills training. .e have two presence we announced we are going online with google digital academy to train and bring digital skills
to anyone in the u.k. who wants to participate. google has held itself to train one million people across the eu over the next year or so. the reason is to combat the regulators' concerns. i feel 11 billion pounds in the economy would spark more concern about their dominance, particularly as a search engine and are accused of promoting their own tools. they give with one and take with another. they voice their anger at them. written responses from google have quality you -- have called peculiar.or demands they are trying to say we are up scaling and investing in your area. please do not hit us too hard. francine: what did eileen make out the -- make of the splits?
caroline: they are changing their structure. google is the actual active company. basis, how much is this changing things? not much. it has allowed us to have corporate structure that is rational instead of worrying about a big business, which google is, and having these longer-term bets like the google the self driving car, google fiber. we now have ap or operating structure where the activities within google are managed coherently and the new or bets are managed across the corporate structure. it is a simple setup. caroline: they have passion for the u.k..
they call it a pathfinder market. we have 75% of all adults have a smart phone. we are digitally savvy. when we talk about driverless cars and some of the other areas ingle fiber as it is used the u.s., will be rolled out in the u.k. first. we are going to be adapting to them more. francine: sooner than the u.s.? caroline: already being tested in the u.s. francine: italy and france have a lot of start ups that will be at the front of that. caroline: i wanted a time frame, there is no short-term future. us from clearly putting and center as to where they want to go and expand and test. they want to show off how many entrepreneurs are helping build.
i think there is help to be had by clocking into the google ecosystem. francine: caroline hyde with the latest on google on a the u.k.. here are more of the top headlines. ony cutting the cost of ps 4. president considers the consul a centerpiece of his plan profits of the electronics maker. facebook looking at options besides the like button. mark zuckerberg said people have asked about the dislike button for many years. we have heard you and are working on this. we will deliver something that
meets the needs of the community. jeff bezos envisions people living in orbit one day. he announced his exploration company will put $200 million and new rocket assembly launch sites in cape canaveral, florida. jeff: there are no shortcuts to space. you put one foot in front of the other. you make progress. up next, how technology is changing who invests in art and how. stay with us. ♪
francine: welcome that -- welcome back to "the pulse." investing in our used to be the reserve of the rich. caroline hyde has been finding out more. art, an investment opportunity for the well-off and well-informed. a startup is striving to make it accessible to the masses through crowdfunding. can become a patron of contemporary art with as little or as much as they want. caroline: pick a piece you like and pledge from as little as $10.
>> it allows you to discover new talent. it is a new model of patronage. artists are attracted to the model. they get cash fast. >> this makes it affordable to everyone. at the same time, it supports the artist. caroline: the creator can sell the art for 40% of the art's value. midas -- get the rest, minus the cut for the curate. is the new model a threat to the more traditional galleries? >> it is a broadening of the horizon. we do not feel threatened by them. it is complementary.
they have to work in harmony. caroline: artists agree. >> there are two ways. the modern and the traditional. it is good to keep going with both. caroline: if you are picturing your first art investment, now is your chance. caroline hyde, bloomberg. francine: bloomberg "the first word" is next. is this the question they are talking about all morning -- more on the fed meeting. we will have mark barton looking at the markets. earnings.ada what it means for angela merkel's germany. is this the legacy she wants for her chancellorship? ♪
francine: the final countdown, is the world economy about to be stress tested by the fed that is about to meet. $1.3 billion shares are being sold to protect its credit crating. at glenncore. and corbyn prepares for a clash with the prime minister. after labeling them poverty deniers. francine: good morning to our viewers in europe and africa. good evening to those in asia and welcome to those just
waking up in the united states. i'm francine lacqua. this is bloomberg live from the headquarters in london. the inflation is at 0.1% versus the.0eu92 estimate we had. a little bit of concern if you're an investor that worries about deflation. the market is holding up looking at gains in asia and the fed's countdown to policy decision begins today. and they meet to decide whether to raise rates for the first time since 2006. for more on how the markets are behaving, let's go to mark barton before the home announcement. mark: 33 hours until the fed announces the rate decision and will it be the first rate hike since 2006? the probability of a rate hike, 32% on monday, the chances were
26%. he economists split down the middle. is china propping up its equity market? come in and have a look. this is the index chart. this is the circle. 75 minutes ahead of the close. the index was down by .6%. all the way up there. this is what happened in the last hour or so of trading. at that point the index was 5.9% higher. the biggest rise saints 2009. e index closed a mere 4.9% the biggest jump since august and the two-day drop which was the biggest in three weeks. the index is down 20% since the yuan was devalued august 11 and trading 39%, below the record set on june 12. look at the south korean yuan because standard and poor's upgraded the credit rating and
the yawn is rusing and the other ones are falling. the british pound is up. reports cited a sound fiscal position and relatively strong economic performance. the new rating is aa minus and puts the country on par with china and japan. and it has dropped against the dollar. let's get to glenncore the mining company and commodity trader and sold $2 billion worth of shares to shore up its balance sheet. glencore at one point sank below 8% at the lowest level ever. this is an incredible story and the stock never rose from the i.p.o. in may of 2011. there you go. that's the beginning and been
on a downward path since china devalid the currency. t's down by 77% since the i.p. that equates to 20 billion euros because of concerns by china. yes it's selling shares you a about is quite an incredible fall from grace from what was a massive i.p.o. in may of 2011. francine? francine: thank you so much. mark barton. here to talk more on the fed, c.p.i. and some of the industry groups we're watching and whether the fed will raise rates we're joined by brooks mcdonald with $7.4 billion under asset. kevin, great to have you. kevin: thank you very much. francine: this is going to be
tricky. you have a fed almost itching to pull the trigger. we have so much volumity. will they were on the they? to some extent the feds backed themselves in a corner here though i'm imprying they want to raise rates. in our view it would be wrong to raise hates and therefore them until the late year. francine: are you concerned about domestic or are you concerned the rest of the world can't take an interest rate rise. kevin: not so domestic but the rest of the world. the consumer is not in bad pain. but part of the fed's mandate is keep inflation at a reasonable label. below that level 1.2% or .8% if you exclude housing. federalation is higher than the target and everyone suggests
the inflation will full further pnd there is a deflation pulse coming else where in the economy. it's the agility of a market that will take in account. francine: we've had calls to say please raise and then we get the certainty that the first one is done and we'll see. do you think we're risking a global recession. citigroup has 550% chance in the next 18 months of something big like that happening. kevin: it is a risk without a doubt. i think they have to take that into account and be aware of the international environment and all the inflation and reports coming out of china and emerging markets. certainly that's something very they have to take into account and not be careful to make her mistakes and there are
interest rate rises in australia and sweden and norway that have to be reversed subsequently. and even the fed themselves, there's history of them having made a mistake in the late 1990's which is a period our analysis shows is quite similar to today. if you look at that period, the u.s. economy was recovering from a banking savings and loan crisis, the unemployment was high, inflation was very low, there was a be for less report and they raised rates and had to reverse that in 1998 where the emerging markets got in full tilt. francine: since the end of the financial crisis, 15 banks hiked rates and reverse it. posen talked and said the federal wouldn't be doing a policy mistake and unfortunately the previous one had to reverse that. this time it's different because janet yellen almost overcommunicated what she wanted to do so it would be
events outside her control and wouldn't be considered a mistake. is there any truth to that? kevin: i think what's equally is whether they do not or is make you communicate afterwards. and the guyance they give and the rate price. if they convince the market and if they do raise and convince the market, they'll keep the policy extremely accommodated for a long time and the so-called fed dots come in line with where the market is thinking, the market may not take that too bad in the short term and in which ways might not be seen as a policy mistake. they have to take into account a certain amount 6 tightening that's already occurred either through higher corporate bond spreads, through the weak equity market to a stronger dollar. that's done some of the work for them as well. of course you won't know if they made a mistake until we see how economic events evolve the next few months.
francine: kevin bosher at brooks mcdonald. we'll be talking about mining in china next. tune in tomorrow for a special report on the fed and the decision and that janet yellen will take to the podium 30 minutes later. tonight ahead of that rate ray on, a hedge fund dalio will be here at 11 p.m. in london. here's a look at what else is on radar this wents morning and official quigs show u.k. waging grew at their fastest pace in more than six years and unemployment rate unexpectedly falling. pay including clonuses rose 2.9% in the three months while the jobless rate fell to 5.5%. the world's largest clothing retailer reported first quarter profits as it added more shops and online businesses.
the owner of the chain of stores voted a 26% rise in netting compared to is.7 billion euros. hewitt packard will cut 33,000 arrange they try to re the market. they're putting together hewitt packard enter vice surprising businesses with high-technology . d h.p. ink which will sell and they're keeping watch on the smoke haze covering much of southeast asia and forced many cools to slow it singapore and malaysia. they are trying to fight the fires. facebook is working on options ibbeds the like button. now, makeing the announcement. people have asked about the
there's a spike in the share price if ever you've seen one in the last few minutes sore so. there's a huge speculation it could be a takeover target of a larger lival ib inbev which makes bud ricer. investors seizing on the fact the a.b.i. didn't appear in conference. and that was citing a investor block. the biggest share shoulder in s.a.b. is skimming an upcoming event because the company has seen as pivotal as any possible perjure between the two. by the way, this 20% rise in shares is the biggest rise ever since the company listed in march president second 1999. this equates to 8.96 billion pounds of value in one day. the volume is only valued at
55 billion, this is $8.9%. srment a. -- s.a.b. attempted to buy heineken and was a move that would have strengthened any forces by a potential bit by a.b. inbev. the a.b.i. chief executive carlos prieto has said he's will willing to make acquisitions if the circumstances are right and slowing growth in emerging markets have made it harder for s.a.b., and ab inbev to make scales with organic expansion alone. that's something you don't see often in the markets, a massive spy cup. there's speculation it could be a takeover target of larger rival a.b. and of course brews budweiser. francine: let's get straight to brook mcdonald, chief investment officer. he's kevin bosher.
we'll be talking about glenn core ink in a moment. you've been covering consolidation in the drinks industry and looks like it will get closer and closer because of cost pressures. kevin: because of cost pressures and weak growth . globally there is a lack of command which is why global growth is below trend and in a normal environment companies have to do what they can to maintain top and bottom profit growth and maintain margins. we'll see more accommodation. francine: if you talk about consolidation in most industries, how can can an investor take advantage of that? kevin: you're looking for industries where companies are cash rich and where margins and sales growth are under pressure, the strong companies that can look to take over into
that industry. and pretty much true across all sectors at the moment but certainly the consumer discretionary space is prevalent because of the slow down we've seen in emerging markets and sales. francine: stick around, we're talking mining next because the mining helped glenn core score $1.6 billion pounds to pay down yet -- debt and avoid a cut. energy's reporter joins us with the latest. glenshare sold these shares at 2.4 discount and isn't great news but could have been worse. >> they're pleased the way it got away with the existing support and don't have detail whether they brought new major investors on to the register. hopefully we'll get notification of that today. but yeah, look, very positive to the company as favre as they see it. francine: glen core owned by
25% by the management, it did they arts pate? jesse: it was flagged last week. the share shoulders own 8.4% of the business. key names do and that committed $550 million of their own cash to this racing which is remarkable. in context of the total dividend they received signs the company has been public, it's 20% to 30%. that's been paid over $750 million in difference dents quite well and can cover that recently. francine: $10 billion is what they need in terms of debt reduction program. jesse: glen co-has been a threat the whole year. 30,000 on the balance she's and have a rang of investigate tores with asset sales in the
works and shouldering two big operations in africa as part of the plan to cut deaths by 10 billion. the next dress would be the asset sales. francine: one of the only few reporters who get to speak and ollow jesse on twitter @jp underr imbing s bmbing orough. we're talking about consolidation and we talked so much in the mining industry. we're talking in the mining industry. the wining tri is so much pressure and why would you hope it if you pay for a good question. kevin: we're into a bare market and why would you hold it? you only want to hold the strongest companies and those you can have high conviction. and are going to get through
this crisis in a stronger position than they entered it. companies like glenn core will get that bill and we're going to see some companies probably becoming solvent before this is finished and companies are going to have to focus on any way they can to increase cash and make sure they can hopefully maintain dividends and include reductions in cap dep and sales of as petsened equity rating. francine: in terms of we talked about it with jesse before because he does get access to davin glacenberg. a couple weeking ago said no one can read china and probably got more pressure off its shareholder. can anyone do that at the moment? kevin: it's very difficult and all we can say is what china does because of the policy action and the data that comes out of the economy and in
particular what happens to the currency is of significant importance for the global economy and financial markets for the next couple years. in a way what thean does is important for the federal foam. because they're the second largest company and a very large part of fedex. and we've seen the currency war over recent years. francine: given all this, we talked about the fed and the turmoil in china and the conso solization, what's your favorite -- consolidation. what's your favorite play? it's difficult at the moment. kevin: it's very difficult. i think equities are in a cyclical bull market based on three pillars and now there's stable growth in earnings and economic though it is well below trend. reasonable valuations that are more expensive in the u.s. but
less so else where together with plentiful liquidity and don't see that changing soon thanks to central banks. equities is still our best long term positioning but the relative positioning is changing. u.s. market is outperformed for some time now, pretty much since the crisis and it's had some very good tailwind such as the support of the fed. the banking secondor repaired itself quickly and a cheaper currency and lower financing costs. some of those tire wins are turning into headaches and from an eerge point of view and central bank support point of view in areas like japan and europe. that's not to say to discount the u.s. completely. there are some sectors, which should continue to do very well. we're in a stock pimming environment. if you look at the u.k. the u.k. looks great compared
to the rest of the g.-8. you have a position and a strong pound and as an investors because of the e.u. referendum, my question to you is should we be a lot more weary? sure you have great companies in this country but we don't know what the u.k. will look like three years from now. kevin: and that's clearly a concern, a concern in particular because it might put companies from investing in the u.s. because of that earn correspondent. political situation you can argue it in a way and perhaps labor will be looking within itself which might give the conservatives a path to maintain its economic policies this keep to be working. if the new government is more pords -- and the yet, no vowed, that will become cumplet economy. the economy is doing fine and seems to be better balanced but
the u.s. stock market is full of energy and commodities related companies which is one reason stock is of late. francine: thanks for coming. kevin bsks oscher, president of brooks international. on to retail and the world's largest retailer reported a 20% rise in net income as their first half results, zzara was the only spanish company to pass a $100 billion last month. charles allen to but that yue. the good news is they're in such high numbers they yellow bit on currencies but not that uch. charles: they have a tailwind and have made stuff in portugal and spain. francine: that increases, right. this is a story. they've been strong and in terms of fast fashions and get turned around and get seen on
the cat walk and put out in the stores quickly. it's always been stronger than their livals and cementing the fact they're the leader in this. would that be fair? byron: 70% on a mature store base doesn't happen if you haven't got the clothes right and other things haven't gone well for you. it's an extraordinary good performance given their level of maturity. francine: there is inditex and a story not really about clothing. >> it doesn't seem to s. lothing seems to be mixed. you have to say this was inditex having a brilliant soap and others being somewhat subdued. it was quite poor in the u.k. over this same period.
francine: thank you. hong kong's first profit came in better than expected and the luxury goods maker closed stores. the government clamps down on extravagance and because kevin boscher is still here i'll ask him a question. when you look at retail, they've done well because it's products people want to buy. prada, because we're so dependent on china, are you concerned about it? >> absolutely. they've been a key market for anything luxury related and is a concern. and in china the authorities have enough momer toing fiscal firepower to a void a heartlanding but they need to use it because the economy will weaken in the short term further. we shouldn't forget what they're trying to do long term which is open their markets and financial legalization should be grate news for consumers in
francine: welcome back to "the pulse." live from european headquarters in london i'm francine lacqua. these are the top headlines. members of the open market committee start their crucial meeting today and tomorrow find out whether the fed reserve will raise interest rates for the first time since 2006. meanwhile, a former a-2 janet yellen said it wouldn't be fair to hike it this month and should hold policy study until well into 2016. now, glen core has sold 1.3 billion shares raising $1.6
billion pounds to avoid a cut. they are the worst performer on the u.k. ftse 100 this year. hewitt packard will cut more jobs as the c.e.o. tries to refashion business for a rapidly changing technology mark. h.p. is splitting into two separate entities. hewlett-packard enterprise which will provide business and technology and h.b. ink selling computers and printers. 's and let's check in on the market with johnathan. john: day one of the fomc meeting, a decision tomorrow. this is how the markets are trading. the bench park in frankfurt up .7%. here in london, a second day of gain and the ftse up .9%. excuse the pun but there's a deal brewing in the drinks industry. and is a up 23%
rumor for a long time and sab miller batted that rumor away and this morning admit an offing from a.b. is in the pipeline and this time they don't bat it away and the stock rises 24% on the day and the biggest one day move on record. that's the market situation sorted out. let's get to the f.x. market and look a at a currency pair. a pound buys me $1.5411. and the situation in the u.k. reflects the situation in the u.s. 3 labor markets away the united king dom this morning, unemployment drops to 1.5% and wage growth the fastest in six years. match the labor market against the inflation picture and that's very, very similar to the debate that will be coming on the federal reserve the next two days, which one will drive policy, the inflation outlook
or labor market data? a big one for janet yellen and her team. back to you. francine: in 25 minutes it's "surveillance" from new york with tom keene. you're looking to the fed and different angles and looking forward to hearing from ray dalio. tom: it will be 11:00 p.m. u.k. time this evening. i spoke to mr. dalio at length and looking forward to speaking to ray on our "surveillance" primetime not only his thoughts on the greater american economy and productivity and global debt but we will speak with mr. dalio about the controversy over risk parity and before that the controversy of the fed meeting and thrilled to bring you julian emanuel from u.b.s. and talk to cathy joens as well from charles schwab. yes, we're in fed countdown. francine: we certainly are.
i'm looking forward to the show, tom. this probably has been in your eyes the most important fed decision in the last 10 years? tom: i think so because of global events and certainly the chill migrates to october and december. the distance between the market and what economists think should or could happen is very wide. we'll have a lot of nuance on this, francine, beginning with "surveillance" and go to our :00 p.m. show. it will be really interesting and the way we come out of that 2:00 p.m. decision tomorrow will be very variable. there's great uncertainty and all there is to is. francine: thank you so much, tom keene with "surveillance" in 25 minutes. the world's largest clothing retailer report 20d% income
from the first half results and benefit from retail markets and is the only spanish company to pass a 100 billion euro valuation last month. prada shares have surged after the company's first half profit came in better than expected. the luxury goods maker cut cost and slowed expansion of new stores. we're joined by the global research director daniel yushta. retailers had a star performance from inditex. this is down to the products that they sell, right? it's not that we're spending more but seem to be getting it right. daniel: yes. you have to say a fashion player in the value space that the insulated from any kind of cost and price pressures you've seen in the luxury sector and things like that. that plays into it but you're certainly right, they're
absolutely well known and famous for going it right so they're integrated and the supply train wrecks to the latest trends and we know they deliver to stores twice a week and can always be bang on when they need to be. so definitely. they got it right. francine: you mentioned the luxury sector but if we stick to the clothing sector, we're in very uncertain times. the fed may raise rates and there's been volatile market turmoil. overall how do you describe the fast fashion market and is catering for a younger audience which may be looking to save more if we hit a global reception. daniel: sure, sure. it's trying to get to groups of the millenal shopper, the whole fashion segment. you almost have to look at a couple other players like gap and j. crew and they're all struggling on that preppy image seems to be out a little bit.
inditex and health care system&m is doing much better and face a big challenge going forward. francine: why online because they're selling less? daniel: they're doing so little with it. if you compare it to amazon or ebay for that matter and asus and pure plays like solando, they're basically taking sales away and for a business such as inditex, the share online is 5% globally and is far too little. there's a lot of potential and more they can do and you have to think how they integrate that store and how they can collect and things like that. if you compare it to the u.k. sector, they're quite a bit behind in how they roll out these industries. francine: presumably they're looking into it and we're expecting it to be addressed i
guess in one year or should because it seems how obviously about you look at the shopper buys and chooses things they'll put their effort in getting the online strategy perfectly right. daniel: they're rolling out more stores and h&m is bringing in wi-fi at the dars. but again, if you look at it, they kind of missed the boat on this a little bit but i'm sure will address it going forward. francine: going back to prada, the problem with luxury companies is in the past they were relying so much on china and no longer can do that. where will they find growth? daniel: that's a very, very, very good question. obviously china came to the rescue after lehman brothers and most of the luxury companies. the chinese consumer was still feeling flush, so to speak. right now it looks a lot more difficult. when we see -- when we look at
what these luxury companies did driving st by suddenly down the bling factor and going more for an understated luxury experience. that might be an option. i don't know how well it will play with the chinese consumer and there's the whole cost cutting, it can bring it in which again they've done more or less in the west. but certainly the growth picture overall. so luxury companies at the moment is not as good as it used to be. francine: thank you for coming on, daniel lucht there. coming up on "the pulse" an struff conversation with the m.d. find out how they are making their mark outside the capital after the break.
11 heck out the five minute billion pound spy kid s.a.b. miller shares. get in close and have a look at s.a.b. miller and happened 0:07 local time in london. in the space of a few minutes shares leaping, the biggest surprise since they listed it miller 1999 and sab and ab intends to make an offer to bring together the world's
ab has st beermakers, informed sab of its intentions and no details according to sabmilliner a statement. massive minutes ago the shares are surming. -- are surging. have a look at the other shares on the stock 00 today because the biggest movers or the bear remi kwan y 7% and throw the spirit company up 25% and for m & a watches, this was sort of the last big merger many thought could happen because charlesburg and mine ken are basically controlled by their families. so the two have been seen as an end game for global beer consolidation which soared in forcing ab imbev
revenue with billions in excision. let's get to the chart of the day, possibly the chart of the week. the 11 billion pound five -minute spike, francine. francine: mark, the s&p gain 2-2%. a makeshift refugee camp is growing on the serbian side of the hungary boundary after the enclosed with barbed wire. angela merkel allowed refugees but reimposed border controls when the numbers became overwhelming and is calling for a e.u. summit to discuss the crisis. r me let's bring in ryan chilcoat. we're yet to know whether this e.u. leader emergency summit takes place next week?
ryan: we're supposed to learn from the spokesman because he tweeted yesterday that he had received angela merkel's request for a emergency summit and angela merkel making that decision after the summit of interior members took place monday and failed to list the rule everyone was looking for and five million refugees the union pledged to take. and there is desire to have binding quotas for the distribution to those and they didn't agree to it and kicked it to october 8 and angela merkel perhaps watching the live pictures we've been seeing and thinks it's too long to happen. my guess is mr. tusk will provide that venue next week in brussels and presumably he wants to make sure when they do get together, there is sniff dependsings. francine: how did angela merkel
become the refugee crisis hero? ryan: it's interesting because during the crisis we were hearing how angela merkel, and the german finance minister are really sort of the villains by pushing austerity on the greeks and here we see angela merkel last week really changing not only her image as being sort of cold and calculating to the conscience of europe and changing the image of the country of germany as a country that's prepared to accept people. it's prepared to accept race and people of other religions. you contrast the perceptions of angela merkel for the hungarian prime minister. over the last 12 hours we learnedage la perk ell plans to deploy 800 members to office duty to process some of these claims that are coming in for people seeking asylum even though she's clamping down and
sealing borders to some vens. -- some extent. and moving to expand the razor wire fence to the romanian border, armed policemen on the border. so there's been quite a transition but a lot of people are still saying you seem like you're going to be really nice last week and now you're pushing back and that's pressure she's facing within her own country but other countries saying this is not a consistent policy. francine: thanks so much. ryan chilcoat on the refugee crisis. here's the headlines, sony cutting the price of the playstation in japan, facing a global war with microsoft. the sony president considers the console a centerpiece of his plan for reviving profit at the electronicsmaker. nd they are working on new
like buttons. according to mark zuckerberg people asked about the dislike button for many years and we finally heard you and are working on this and will deliver something to meet the needs of the larger community. and jeff bezos imagines millions living in orbit and he announced his exploration company will put $200 million in a new rocket assembly facility and launch site at cape canaveral in florida. jeff: there are no shortcuts to space and have to be disciplined and put one foot in front of the other and make real progress. francine: now straight to mark. sab miller gained 22% and wouldn't call it a little but call it a lot. mark: and canada had their credit rating cut to a plus from aa minus and outlook is
stable from negative and is interesting because earlier we were telling you about south korea whose credit rating was raised by a notch to aa minus and was telling you that puts it on par with the likes of japan and china, aa minus was the other one and yeah pan has been cut one notch to the fifth highest rating. interesting development. let's see how the yen responded to that move. little change against the dollar ahead of the federal reserve's announcement on interest rates. tomorrow of course the two-day meeting kicks off today but seems as if standard and poors are busy changing the ratings on asian nations. the one received a big boost after south korea's raising was raised by one notch and japan's rating has been cut by a notch as well. there you go, francine. francine: investing in art used to be the reserve of the rich
and now web companies are changing who can invest and how it. caroline hyde has been finding out more. caroline: art, an investment opportunity for the well off and well informed. one startup is striving to make it accessible to the masses through crowd funding. caroline: we're opening up the markets to anyone, anyone can become a patron to contemporary art with as little or as much as they want. caroline: pick up a piece you want and pledge $10. art for curate represents 160 artists across 30 countries. >> it allows you to discover new talent. it's a new model of patron auge. -- patronage. caroline: artists are attracted to this way and gets cash to fund their work. >> this is makes it comfortable for everyone interested in art
at the same time support the artist. caroline: by selling stakes the creator can raise 40% of the art's value and if the art sells they get another 30% and the investors get a rest minus a cut for art for curate. >> normally they'd get 40% to 50% commission and ends up to be higher than that for the artist which is great. caroline: is the new model a threat to the more traditional gallery? >> it's a broaden of horizon. we don't feel threatened but feel it's complementary. for the two to work together they'll have to work in armonny. caroline: they have two different ways, the modern and traditional and it's good to keep going with both. caroline: if you're picturing your first art investment, now is your chance.
caroline hyde, greenberg. francine: european markets are up as they await the federal reserve policy decision. and members of the fomc begin their meeting later today as they discuss raising rates for the first time since 2006 and we had japan cut from a plus to double a minus so for more on the world currencies and what they're doing ahead of the decision from the fed and also this rating cut to japan and oined by the head of g-10 f.x. strategy, steve barrow. thanks for joining us. let's talk japan. his came out and the bullish japanese economist and he was saying give it time. it's going to work. they ruled maybe in october and maybe not. what does the s&p rate cutting signify?
guest: it doesn't have that much of a bearing. for investors, less than 10%. so doesn't mean a great deal in the national context. ank of japan owns 35% of j.j.b. and may have a bearing on q.e. going forward in japan because although it seems to me to be a number of members of the bank of japan perhaps thinking in easing policy further, there are some quite certained can the market and the banking pinch continues to own more and more. i wouldn't be surprised if we see an easing but not in the form of more q.e. and perhaps need cut i rates and go and make it successful. it's not like a decision makes a great difference. the yen will still weaken but weaken more because of the ease and not the downgrade. francine: what are you expecting from the fed tomorrow and will we see parity with
euro or no chance by year end? steven: maybe by year end. i think we'll see euro-dollar lower than that and the next couple years is 90 cents. it's not as if we'll start a parity in my view. as far as tomorrow's concern, i don't think they will at this stage and am favoring more december and the basis for that view is not necessarily because the economy is not doing so well in the u.s. is not even ecessarily perhaps because borrowing money is more fractious and would be the first opportunity for the fed to raise rates because the fed said it wasn't going to do anything before june and if you assume the fed is more likely to do liftoff when it has a press conference which is more likely, then maybe the september meeting is the first opportunity. the market is not quite priced for it. the economists obviously split. so i actually think maybe the
tapering decision of two years ago, the fed will let the market sort of overdiscount. so i think by the time you get to the market, that's where it will be delivered. francine: when you look at the emerging markets were saying, a lot of them were saying please get on with it, at least we know and don't have the turmoil. what does it mean for currencies? steven: she's right. she looked at how the dollar has moved over the last 12 or 15 months and 20% plus in weighted terms and most recently most of that against emerging market currencies rather than current currency. by we think the fed will raise rates? i don't think so. the worst part is the anticipation and once in the timing cycle things will calm down and understand that perspective from emerging markets but don't think the fed will raise tomorrow. francine: your favorite currency, what would you buy going into the fed decision? steven: in this relatively
short term i like the aussie. francine: thank you so much. steven barrow, head of group 10 tragedy at standard bank group and following the 10 f.x. currencies. sab miler is the one corporate country we're nearing a possible mega deal in brewing and anheuser-busch intends to make a deal for sab miller and will bring in the two biggest beermaker and control half of the beer industry profits. sab miller as soon as the news broke we heard and sound it may happen, the stock price is now gaining at 20%. that's it for "the pulse" keep it here on bloomberg tv and the "surveillance" team is up next. follow us on twitter. the twitter question of the day. i urge you to read simon jay
ramifications of janet yellen's actions and her potential in action. finally, there is debate. jake tapperiver as contains mr. trump. this is "bloomberg surveillance ," live from our world headquarters in new york. it is wednesday, september 16. i'm tom keene. we have blown up the show with two major breaking stories. first, japan with a major breaking cut. brendan: i did not know what their debt to gdp ratio was. it is 231%. japan has always been a special place where that kind of dead load somehow is sustainable, and i think that is what is being called right now. anticipated, but we will go to tokyo in a moment. the other story is -- i have not had a miller in 22 years, but