started to see the pharmaceutical sector taking the edge off of markets. the dow average was a little higher, the s&p was down. day, this had a good on the back of what is happening with this dollar. sessionless, a negative delivered yesterday. one of the stocks that stood out, let me show you the chart an -- arands had terrible after-hours session. really the fact that we had a revenue mess. yumchina recovery story for not quite as tasty.
in terms of today, we are looking forward to the u.s. session. this is the percentage miss price. this is where we think the terminal expects the u.s. market to open. it looks like negative sentiment. we will not get a bounce back. u.s. futures showing at a flat open. no bounceback after yesterday's selloff. bank of japan is front and center -- they are keeping a record stimulus unchanged of its growing speculations the signs of a recession will press it to act towards the end of the month. the media focus turns to the press conference of the governor later this morning. brett miller is in tokyo and is used to attend -- due to attend. what happens next?
: what happens next is the press conference. iswe remember, the governor -- fifth key job is to end deflation in japan. he came in with the goal of getting price gains to about two percent. we are nowhere near that. any comments on that will be key. the governor has said to look past the impact of oil prices. as we know, falling energy markets have stripped out the impact of price gains in japan. the emphasis he gives to the impact of oil prices could get a hint to the way he sees inflation going. that, he has made comments about a virtuous economic cycle in japan. by that he means that companies are making record profits, they should pass that on to wage earners with higher pay. in return, we would get people spending more.
listen carefully to anything he might have to say about wage gains, tight labor markets, and corporate profits. some would argue that it's more of a fiscal question. that leaves us to the relationship between a fiscal and monetary side of things. plan for whatj's they want to sue the economy? -- c with the economy? bank has been doing heavy lifting in terms of getting things moving. we have had no change today. october, no change in that really puts the emphasis back on the government to think about fiscal spending as another way to get consumers to spend more. if we look right now we have saying5 of 36 economists there will be a boost in monetary stimulus come at the end of october. the ball goes back into the
government court. guy: we will watch on the end of the month, a lot of things happening. it is amazing to watch what is happening. thank you very much. mentioned the governor's news conference kicks off around 7:30 u.k. time. are out of japan, we expecting the pricing of japan's post. they are preparing an $11 billion ipo. it is the sixth day of gains for asian stocks, shery ahn has more. >> good morning, another day in the green for asian market. -- markets. energy producers
gain after oil extended its gains past $49 a barrel. players areenergy gaining more than 10%. samsung is also driving the benchmark index higher. they just announced a better-than-expected earnings. they are the heaviest weight of stocks in the cost be -- it is now gaining 7/10 of a percent. been fluctuating, it is up 7/10 of a percent. emerging-market stocks make a come back. malaysian stocks are up for tenths of a percent. biggest asiathe exporters. waiting fore still
mainland markets to open in china. chinese stocks in hong kong are climbing. cei is up 2.6%. saying that people might be more optimistic ahead of the session. --course china is now head is experiencing the slowest growth. brands are getting hit by the slowdown in china. more than half of the revenue comes from chinese markets. they traded down 18% in after-hours trading new york. guy: thank you very much. the story out of hong kong. let's talk about one of the , samsungat is a focus
shares jumped almost 7% after posting earnings that beat analyst estimates. let's take a look at the dollar affect. caroline: a phenomenal move. we are above 7% for samsung. this is the biggest move since january 2009. it tells you how much of a downward trajectory they have been on. it is a big move in profits, of 80% -- up 80%. karen --gely about foreign currency moves. the dollar is about 12% stronger versus the south korean won. -- one. strength of to the the chips area.
it is a company that makes chips for other rivals. they also make screens, led displays have been selling well. profit estimates are up 54%. these numbers are not the full and numbers, we get those in one month. these are the initial estimates coming from samsung. breakdown, gotten a but analysts say it is up 54 percent for chips. they are expecting curve displays to sell well. smartphones are doing positively, but not nearly as well as the other units. we expect smartphone profit up 24%. iphone, iphone 6,
iphone 6 plus, that sold in record demand -- that is doing well. the low end is eating into the market for the lower than $200 area. clearly the smartphone is still an area of concern. they saw demand far below where they expected for the galaxy s six. at share prices, yes, we have a massive rally if you year's it from a perspective, up the most since 2009, where it has come crashing down from earlier this year. when you think about the apple share price, think of samsung -- i can tell you that $27 billion worth of market cap has been lost since april. guy: thank you very much. that is the market update out of asia.
let me tell you what is coming up, we'll be watching what is happening inside tesco earnings. german industrial production, 7:00 a.m. u.k. time. then we have the u.k. industrial production at 9:30 a.m. u.k. time. exxon ceo will be speaking at the oil and money conference at 11:00. i think 11:00 is the merkel addressed. -- address. -- french and german leaders i think they are getting a joint of the conference later this morning. i think you will hear a lot about changing planning, the housing crisis, that represents
a big issue in many parts of the u.k. right now. i think that will take center stage of his address later on. australian up, from to germany, the global recovery remains uneven, that is the view from the imf. >> we see a pick this year in the u.s. and the euro area, japan had a strong q1 showing that is beginning to look wobbly. within the advanced economies of course there is also heterogeneity. some of the advanced economies are commodity exporters. canada, norway, australia, are facing headwinds. guy: we will look more at what the imf sees in the future any trouble ahead it expects. plus, how do you fix 11 million cars. german regulars have told vw they have until today to set out a plan.
guy: it is 6:15 in london. here are the stories that you need to know. the bank of japan has kept its record stimulus unchanged with today's monetary policy decision. growinges amongst rumors that the -- the governor speaks this morning and he focus will be on any hint of adjustment for the october 30 meeting. has told as at vw german newspaper that he be -- intends to begin recalls in january. he hopes all cars will be repaired by the end of next year. he faces a deadline today. afterg shares have surged
third-quarter profits beat estimates. chips and displays have become central to reviving the company. the weaker korean currency is also helping to boost sales, i.e. a stronger dollar. start recalling 2.8 billion vehicles next year. they have told the company workers they should be prepared for pain. let's go to hans nichols. the implications of what the new boss said yesterday. hans: he is the head of the works council that heads about 50% of the seats on the board. he says there will not be in a shouldses and workers not pick up the tab.
the new ceo was not quite as definitive. he warned of pain to come. here is what he told 20,000 workers yesterday, he said we will review all plant is notents, and what vital will be canceled or delayed. i will be completely clear, this will not be painless. billionview is this 86 long-term spending plan, it also included cost-cutting. that is under review. cut,are potential areas to there is a billion dollar upgrade in mexico. some analysts were talking about scaling up back. you have executive bonuses, they have been clear that they will not provide those if they will have job losses. you take a look at other spending, research and development, they spend way more
than competitors, more than gm and ford combined. annual r&d budget. you look at their percent of what they actually spend on their worker salaries, it is about 16.7% of their total sales. that puts you north -- on last year's numbers, $30 billion. those are some areas, they obviously want to be more efficient and have profitability. that has been a challenge these last few years, it has only gotten more difficult. guy: what do we expect to hear? hans: today they formally submit the plans to be german transportation authority. what we heard yesterday in that interview is they plan to start oft recall at the beginning
january 2016. the question is, will it be expensive or cheap? that the carsis in germany will require a software upgrade. that could be a 20 euro fix. it depends on their jurisdiction, how drastically they will have to fix it. what he is saying is, they do not want 1000 fixes for different jurisdictions. they want three. for places where they do not need to comply, they will do a light fix, at the other end, an entire new car. guy: that sounds expensive. thank you. what do we investors need to hear today? arndt ellinghorst is the head of research at investment bank, to my. -- good morning. what do we need to learn today? what will give of clarity -- us
clarity? arndt ellinghorst: so far there is limited clarity. they need to make big steps to restore confidence. i think drop by drop, area by area, country by country it will take till the end of the year. guy: it is a long time before we can put a number on it? arndt ellinghorst: we can put a number on the recall. 6.5 said it would cost billion euros, i want clarity on that. the next thing is, how much market share will they lose in europe and the u.s.. thirdly, all of the legal fines, that might drag on for years. be apresumably there will sales head, but the sooner they get the fixes in, what is the lag time between that and starting to see sales recover? arndt ellinghorst: i think it is
between 3-6 months. if you compare it with toyota recalls, the consumer usually comes back quicker. some people put the numbers in spreadsheets and come out with big numbers. the consumer is normally rational if the company is honest and fast at fixing. -- theyl use discounts use discounts? is there a package that will affect the bottom line? arndt ellinghorst: they clearly have to help their dealers. their competitors are all over them. some of their peers are offering conquering bonuses. cheeky.bit is included in the 6.5 billion so far, it could be more, it needs to be seen. guy: can i take a step back, you
this,vw in me about some ways was in need of a shakeup. this may not be the way you ultimately have wanted to do this, you would like to manage it on your own terms, but you look at them, do you think they will emerge healthier? arndt ellinghorst: many people, including us, have insulted them for being overly german, overly bureaucratic, running the company for growth and not efficiency. a rate of destruction moment. what has probably been needed for the company to wake up, they need a complete change in leadership and culture. many people say because he has been run too much with fear. said working for the
company is like working for north korea without labor camp's. in the atmosphere, people do not run the business as efficiently as it could be. ,hen you look at the cost base it is unparalleled to any other company. guy: how do you think that cost-cutting will work? and next plus one? -- x plus one? : they have aorst huge amount they spend in r&d. it is also about complexity, sharing components, using what they have within the root to develop new cars -- within the group to develop new cars. complexity, and more shared components, and rethinking the number of brands and products that they are running with.
guy: the stock is trading at 97, i listen to you today and i think, i want to own this stock for a long time, it will generate -- not returns now, but in the future. is this a place i want to look at? or do i need further understanding? arndt ellinghorst: it depends on your risk profile. model, they look at it the way you described it. it could be interesting, if they get their act together. this is a company that should be earning 15-20,000,000,000 euros a year. if you look the -- through the current pain, it could be interesting. as a buy rating, it is not great. it is a very unfortunate situation. it could be an opportunity for
some, but we need more clarity. the company needs to be more shareholder friendly. guy: thank you very much. arndt ellinghorst, the head of automotive research. no way to there is prepare the 2016 budget and break and for the sovereign wealth fund for the first time. the imf is facing severe headwinds. more of what western europe's biggest crude producer is up against, when we return. it was like a fairly negative market this morning. u.s. futures are not great at this moment. we will take a break, we will take -- talk norway when we come back. ♪
guy: welcome back, it is 6:30. london. let me tell you about the stories you need to know about this morning. the bank of japan has kept its record to know if unchanged with the monetary decision. will presscession them to act of the end of the month. the governor will speak this morning, the focus will be on any hint of a change of policy at the october 30 meeting. has told as at vw german december he plans to begin recalls in january.
he plans to have all of the cars repaired by the end of next year. sources say that renna may strip -- restructure. ventureear-old joint was created when nissan was on the verge of bankruptcy. nissan has become more profitable, it is now worth twice as much as rental -- renault. caroline: we are taking stock after the slight pause in the rally in the u.s. yesterday. we are seeing the u.s. s&p 500 faltering yesterday, down 4/10 of a percent. , especiallycky road in context with the rally we have seen, the longest since december. a rally of 5.6%.
we are coming off of those highs. futures are starting to point a little bit higher for the u.s.. digest thewill still effect of a no fed hike this year. many feel the probability will be 2016. japan holds still in terms of its central bank stimulus. optimistnot all of the -- optimism. at the moment, let's have a look at oil. currently, the longest stretch in six months, look at the surge since october, up more than 9% for wti crude in the month of october. this is all down to inventories, apparently dropping 1.2 3 million barrels last week.
that was reported before government data comes out which they -- later today. that is helping asian stocks go higher today. keep your eye on one european stock or -- stock, nokia is in talks to buy out another company. it is trying to diversify themselves away from wireless networking gear to more clouds networking. they just outlined their restructuring. they say they will conduct their network businesses through four separate unit mobile networks. applications, analytics, and ip optical networks. that is a bit of restructuring. guy: thank you. minority government reveals the budget plan later today. they could start tapping into the $830 billion sovereign
wealth fund the country has. the fund was set aside for future generations. they might use it early to ward off a recession caused by dwindling oil prices. us, wass in context for this inevitable for us to use the reserves? the oil price drop has been dramatic. >> clearly, people here did not think this was anything that was inevitable, the same. -- this soon. the economy is struggling. the government will probably later today announced record use of its oil fund. the finance minister told us she wasning as we -- as walking out of her home, the budget will be expansionary. it will be set up to tackle the challenge of norway, which she claimed were challenges they
have not face for many years. what has been leaked so far is 9-10 and cutsout to the corporate tax rate. targetedthere would be measures to tackle the oil regions of the west coast of norway where people are losing jobs by the tens of thousands. fund, it willoil be a razor thin margin, if they need to withdraw from the fund next year. the fund is set up so it is used as a buffer. income, theo oil fund will probably use dividends should the government decide to start withdrawing. we will see -- we will have a better idea at 10:00 just how
much it will need to take out, if that is the case. -- we have heard noises about how he will change his investment travesty, in a low return environment, it must be struggling? >> yes. it has a return target of 4%. whereo said that given bonds deals are, that will be hard. ,t has been shifting strategy going into emerging markets and frontier markets, which obviously has not paid out that well for them recently. given the lack of new funds coming in, it is making it harder for the funds to shift strategy. they used to use inflows to go into new markets. potentially, that could mean if they want to shift strategy in the future, given that they are not seeing inflows, they would
have to sell some assets. it is also looking to expand its real estate holdings, and potentially getting into infrastructure down the line. it faces a lot of challenges. guy: thank you very much. norway government has made bets on the price of oil. debtdary distress investor, thanks so. he said that predicting the oil price a year from now is beyond us. >> knowing the mike doyle in six months is credibly valuable and impossible. one thing i try to convince people is they have no idea about the price of oil. i make it clear to them by of the take the price year out, add and subtract five dollars. i will bet you $100 you are wrong. whatever your prices, i will bet
you you are wrong. i had one guy take me up. saidve me his card, he $100 we are on, i take $35. i am going to win. i will do that debt -- bet all over the place. guy: interesting. nick carn is the founder of carn advisors.- how do we predict oil? carn: if you are experienced rating and you have an 80% confidence in the market that will be between 80 and down 15, it is weak. guy: had ecb world -- how do you
see the world? nick carn: you can set your sales by broad trends. we went through a long inflationary trend during the late 1960's and through the 1970's. then we went through a time where stock market -- with the stock market ready the stocks were cheap after high inflation. the name of the game in financial markets was essentially lbo's taking company's private from the public. then we went through a phase in the 1990's were the opposite was the case, public market values were higher than private. the name of the game was ipos because you could create private companies and take the public. you get these long shifts in evaluation. guy: where are we? thiscarr: we are in
dis-inflationary environment. 10 years ago when the fed had interest rates above 5% and people were talking about commodities recycles -- super cycles. you can see we have been in this environment for a long time. closer, u.k. shop prices have been falling continuously for 29 months, that's a long time. is thee next question market has pushed out the first u.k. rate hike. late 2016, early 2017, people are talking about the fed not raising rates at all next year. to see ant not going interest rate cycle for the next two years -- few years? year it will be
10 years since the fed raise rates. since we got out from under the worst of the financial crisis, the story has always been, it is about to happen, but it will not happen next time around. we are still in the environment. that is my own judgment. the idea that there are are headwinds to use a popular fed there is aidea that temporary set of circumstances holding back the u.s. economy. the only problem with that is as time goes on, that story to fold -- gets old. random speaks for disturbances, where they never tailwinds? guy: and depending on where you are, the u.s. economy is maybe a tailwind. given that, i am sitting here watching this program as a ceo,
how i plan? -- how do i plan? how long before this environment bottom andenerate a we see inflation returning. nick carn: that is the big question. i am always conscious that one tries to learn from one owns experience, but not over learn. in my case, some of my formative experiences were in japan doing the boom and bust and the long disinflation. it is striking if you look there. at the gdp deflator level, japan has been in disinflation essentially since the mid-1990's. that is to say since most of us do not take notice of stuff until we are in our 20's, because until then it is your parents problem, that means you can be in your 40's and all you
have ever known is falling prices. that mentality, once it gets set in place takes a lot to dislodge. we run with this disinflationary environment and it becomes more difficult for central banks to jolt people out of it. that is pertinent, even in the context of today with the press conference coming up. if you look at numbers for japan, it has been a disappointed -- a disappointment. guy: more to discuss with nick carn, he will be up later. have data to, we talk about, u.k. industrial production out later this morning. we will talk to tim coulter about what the cooling u.k. environment means for carney.
.uy: it is 6:46 in london let me tell you the stories you need to know about. the bank of japan has kept its record stimulus unchanged with the monetary policy decision made today. besides a recession that will press the central bank to act of the end of the month. the governor will speak today and he focus will be on any hints of adjustment to policy. the new boss at vw has told german newspapers he plans to begin recalls in january. he expect all cars to be repaired by the end of next year.
he faces the deadline of today to submit plans to the german regulator. shares have surged after third-quarter profits have , this is after samsung's galaxy failed to compete with the iphone. now, it seems early, it depends on where you are. asking vodka magnet is font holders to accept a restructured plan that will free up 30 billion rubles to ensure his banks survive -- to ensure his banks survives the countries of first recession in six years. maybe i have been drinking. he spoke exclusively to ryan chilcote.
>> they are declaring they own 25%. they did not confirm that. we met with them in london last week. them our proposal is not classically structured. i don't have much to offer to them. ryan: you are offering $.10 on the dollar in terms of cold cash. 90% of the value of the bonds would be turned into another seven-year bond that would be collateralized. why not offer $.20 on the dollar, or $.30 on the dollar in cash, would you do that? a believed depend, the central bank would not allow that. it would practically create several problems. first, it would decrease may capital of the bank.
moreover, in order to pay this 20%, we would need to take that from a deposit holders which would be negatively perceived by the central bank. i believe it would be unrealistic they would allow that. we had already settled with the in thest week transaction and how it is structured. today it is approved. i would need to go to the bank. the third problem is we do not have time -- the central bank would not react fast enough. ryan: can you improve your offer at all? can you imagine that the offer you made an early september, a certain portion of bondholders are saying they will not accept. can you imagine proving that at all? about the cashly in the transaction. maybe these holders would go for
another creative solution. if you talk about the cash, i do not believe it is realistic. guy: ryan joins us now. where does this fit in a broad picture? ,yan: he has a vodka business he likes to service consumers. it is a consumer facing bank. that is why it is in trouble. it does not have a corporate lending business. what you have effectively, on the one hand, you have the declined oil price and the devalued wrubel eating into russian purchasing power, their ability to pay back old loans. on the other hand you have the sanctions which in part have raised funding costs. he has gone back to the bondholders and said i have an issue.
they have said, what you are offering, $.10 on the dollar is not good enough. all of this comes ahead on october 16 when they vote. what is interesting is -- if there's effectively the biggest restructuring of any russian corporate, in terms of bonds that i can think of. exactly how this plays out, whether he decides -- guy: it has become a benchmark? is this the front runner of what comes later? ryan: absolutely, as a window into the consumer and how russian corporate deal with western borrowing. guy: thank you very much. as part of bloomberg's market toluential summit, i spoke guy hands, he spoke about his future in the union. >> they had a consensus that is
breaking down. it probably does not exist today. cameron will not find it easy to get the u.k. to stay in. i think he will, but i do not think you will find it easy. i think it will be a tough, hard, slope. much harder than he expected. guy: david cameron speaks later today at the conservative party conference. his birthday is on friday. let's take a look at what we can expect for the u.k. economy. now.oulter joins us ahead of david cameron's birthday, we have a big decision. you look at pricing, it is fascinating, they are pushing out further. tim: not like the fed. the conversation has changed a lot. i was not long ago we are
talking about carney looking at maybe being the first bank to move. ira is coming, since then we have seen u.k. inflation go to zero. --nk after bank continually pushing back, when will we see this higher rate? guy: if you look at market pricing, you're looking at late 2016 an early twice 17. -- and early twice 17. tim: it is the end of the forecast. -- nick: market pricing has not been good at predicting rates. tendedy, the market have to reflect the same rhetoric as the central bank, it is not going to happen now, but it is happening over the horizon. now latemarket is 2016, the noise has been from the central bank it is almost
imminent. next: that is certainly true. , thelike the central bank market has always expected rates to go up, when they get there, they tend to postpone it forward. there has been a difference between the flatness of one curve and the other. it seems to me the more interesting question is if not now, when? and if not win, never. , never. it is all well to talk about current inflation, but really, at least in central bank beak, you do it -- speak, you do it ahead of inflation. this is why the fed is starting to get slightly boxed into a metrics, labor market you should do it now, not because the current inflation, but because of where inflation would normally be taken to given
where the labor market is. as soon as you draw that in, to some extent you draw into doubt your own model. tim: you have to wonder where the inflation will come from? if you look at where prices are, energy prices do not look like they're moving anytime soon, the labor market is improving. it is still not great. nick: i am very much with you on the conclusion. as we both know, the arguments ise are the low inflation the product of low commodity prices. it is essentially temporary in nature because it is a question of price, not process. what is the underlying process, that is about the labor market tightening up and wage inflation becoming a continuous process. that should -- at least if you believe the fed model, the we are at the squeak point now.
guy: cost correction. ceo says recalls will begin as early as 2015 as he sets the deadline of today to submit claims or effects. -- submit plans for a fix. signs of a recession, and a samson surprise. surges as a strong dollar boosts sales. welcome to "countdown." we are starting to get some german data coming through. it doesn't exactly make great
reading. remember, this is for august, china, not vw. industrial output has fallen by 1.2%. .2% gain.te was for a a huge miss. low,dollar trading is at a 1.1259 is where we are trading. construction is down by 1.3, energy output down by 1.4, consumer goods down. a mix in terms of where we have come at this week number. the data out of germany are looking fairly bad. we have seen some variable numbers but the consensus has not been great. let's get a sense of where we think european markets are going to open. our fairke you to value calculation, giving us a good indication of where prices will open.
a mildly positive open is what we are looking at. over the last hour, u.s. futures firmed a little bit. european equities look like they will enter just on the front foot, but there is a long way to go. 58 minutes to go until the markets open so we will wait and see. let's get some news with caroline hyde. hisoline: ab inbev -- t could be one of the biggest deals, making a revised offer for sab miller. andoffer had been rejected now they come back with a formal one. 15 per share in cash, in excess of $100 billion. pounds.s of 66 billion they say that this proposal should be highly attractive to sab miller.
the combined company group would generate a revenue of $64 billion, they say, and they are making the offer formal. they say the revise proposal also includes a revised share alternative. interesting how they will structure it. some of the keys are happy. +++ miller will fight it or approve a higher offer. let's get over to tesco.
a key retailer here in the united kingdom. a profit black hole was found last year and it was a torturous time. profit is now coming in at 354 million pounds. first half like for like sales performances down 1.1%, but that is slightly better than had been expected. they are saying the international first half comparative sales were up 1%. we are seeing growth outside the u.k., where volumes are improving. they say they are seeing more transactions but the problem is the price war going on around the u.k. versus the other key grocers. that means overall value is falling but the volume of transaction is rising. they say they are on track to deliver 400 million pounds of annual savings. we want to dig into what they are doing to the suppliers, trying to woo back supplier confidence and customers as well. guy: busy morning. let's bring you more news -- japan posts ipo details, a huge bank is effectively starting to change course. 1100 toe being set 1400 yen per share. you can talk about the whole of the japanese economy, and its actions, and how it will be affected by this idea.
samson is trading on a high. shery ahn is in hong kong with details. shery: good morning. most markets across asia are climbing again. you just mentioned samsung. it is finishing its trading ending at 8/10 of 1% higher. it is the heaviest weighted start in the korean market, searching 8.7%, the biggest gain since 2009. another story a play in markets across asia -- oil gained $49 gaining.l, the asx japanese shares were fluctuating all morning after the central bank said they would add stimulus, ending a tenths of 1% higher. hang seng still has a bit to go, gaining 1.4%. the mainland market is still
closed for the golden week holiday. theree past couple weeks, has been more risk of demand rising among investors. malaysia emerging markets rose, 4/10 of 1%. one stock i want to mention in cologne import is air asia -- in is air asia.kuala lumpur they are taking the carrier private, boosting the stock and gaining the most in more than a month. sticking with malaysia, the ringgit is gaining 2.5% as this demand risk appetite continues. we are seeing the indonesian rupiah lead a four-day rally up 2.5%. that would be the biggest four-day rally in six years. guy: thank you very much. shery ahn in hong kong.
let's stay in asia and talk about this huge ipo. they could be the ipo of the century. japan post has now confirmed its ipo price. -- our tokyor reporter has the details. give us the scale of what we are talking about here. >> yeah, it is the biggest ipo of the year, and could be one of the biggest ones of the century. is what pricehere they will be sending it at. the government owns all the shares -- do they want to set it at a very low price because they expect buying coming from individuals? the government doesn't want to saddle them with a lot of losses. some people are saying that the price is too low. others are saying that the
government has to get a decent return on the shares. for now we finally have it. based on what has been announced, it seems that it is in line with what people were expecting. probably we will see shares possibly go up, that is what a lot of people are saying. but yeah, we won't know for another couple weeks. it's interesting, given with the experience of pricing in the u.k. and how much political grief the government was given as a result. this is a huge institution. it has issues and tens of what i can and can't invest in. it is a big part of the japanese economy. as we see this ipo go through, as we see liberalization of this institution, what is the impact on the economy? said, it is pretty
much in every single town here in the country. it is deeply ingrained in the economy. it is one of the biggest banks, the single biggest post office as well. almost every single person in japan interacts with this organization. are forecasting that their profit will go down from the coming year, and it is a very tricky situation. obviously a company that everybody interacts with, and funny enough, a lot of individual people end up becoming shareholders as well after this ipo. does the government need to price it somewhat attractively, given the financial prospects? and also, the pressure for prices to go up on day one -- as is the case in the u.k.,
prices went up 23% when they went live. that took a lot of heat. in japan a similar situation. we will probably see a lot of discussion. guy: interesting how this feeds back into politics. thank you. yuji nakamura. its store card business out of its five piece shopping basket. it is withdrawing the sale of that. the pricing of this has been fascinating to watch -- we had a whole lot of interesting stuff with their loyalty card system.
it was used effectively at the beginning. it took in-house a while and then looked to sell it, but everyone has walked away, because they are concerned about the pricing, and they are concerned that the contracted has the tesco is up for expiry fairly shortly and it is hard to value the business. oft now looks like it is out the shopping basket and will retain that business. a fairly big piece of news in terms of the tesco announcement this morning. the founder of car macro advisers is still with us. we talked a lot about the disinflation area environment. -- dis-inflationary environment. poing the post office, which is a big part of the economy, trying to stimulate it. my increasing feeling is that the boj doesn't know what to do anymore. they had this massive stimulus
program and has delivered so little. >> i completely agree. if you look at the scorecard for economics, it is hard to re-create a sense of excitement. and alldifferent arrows the rest, and here we are, another quarter of contraction, making two quarters in a row. we have inflation, which has 2% target for the boj to pick up toward that when the yen went down. to, by some measures, falling prices on the core measure of inflation. this really does feel like this kind of car you are pushing uphill, while you push it it moves but as soon as you stop pushing it starts to roll back downward. i think your part about the
privatization of japan post is a good one. here is a government with enormous amounts of debt. but itt isn't so high, seems to always be slightly behind the curve. restructuring the balance sheet, increasing more efficiency into the government sector as a spur to growth. be thisalways seems to feeling that you are always slightly behind the ball. guy: he will stay with us. vw.ext, how do you fix 11 million cars? back onon getting vw the road, next. ♪
guy: 7:16 in london, good morning. big day for vw. let's tell you but the stories you need to know. anheuser-busch has revised a puzzled to acquire sab miller, valued at $104 billion. budweiser rejected two proposals. vw has told a german newspaper that they intend to begin recalling in january, and he hopes all cars affected will be repaired by the end of next year. he faces a deadline today amidst plans were a sex to the german regulator. samsung shares spurred. third-quarter profits beat estimates. chips and displays have become central for reviving the fortune. good sales being boosted by a stronger dollar.
vwme take you back to that story -- it needs to make a submission today to the german regulator. we now know, according to an interview, that they will start recalling vehicles in january. where are they this wednesday morning? hans nichols, over to you. hans: volkswagen is preparing to submit their plan covering 2.8 million cars. we heard yesterday from the ceo, talking about pain being involved. we also heard from the head of the works council indicating that there won't be any job losses, but first workers should not have to pay, they should not have to "foot the bill" by problems made by executives. quote in the ceo saying that "we will review all and i will be completely
clear." this and $86 billion spending plan. this is a company that has a lot -- more been 17 billion dollars on research and development than apple and google combined, then ford and general motors combined. if you look at their number of employees there are close to 600,000 worldwide. --a percent of their overall it is much higher than their peers. they are pretty good in terms of their overall number, but they do want to wring more profitability from their volkswagen brand. 3/4 of their profits came from
porsche and audi, the brands that are really printing money. part of it is a reorganization and part of it is cost cutting not knowing how much this is going to cost. guy: let's take a step back and put this into context. september will be a vw story. industrial production is out for august -- a big mess. hans: huge. they came in that -1.2% and they say part of it has to do with an earlier school holiday. that may have something to do with it but they say consumer confidence is strong, but this is the third day we have had negative numbers out of germany, below analyst expectations. the scary thing is it is all pre-volkswagen. guy: that is worth bearing in mind. thanks very much. hans nichols joining us from berlin.
ryan: i know neither you nor russian standard are directly affected, but obviously they do have an impact on the banking sector and russian standard. what is it? are [indiscernible] ryan: is that a bigger problem than the low oil price? >> i believe it is a direct effect. oil prices often connected to inflation, but cost of funding could just as quickly [indiscernible] as anybody offered to buy russian standard over the last few months, and if they have, what did you say? >> i don't believe banks today are [indiscernible]
ryan: the bank isn't for sale? >> [indiscernible] guy: ryan joins me now -- put this in the context of the broader russian sector. ryan: this is the second biggest issuer of credit cards. he has no corporate lending business, it is a very consumer-based bank. they are having trouble paying debts, and there is not much demand for new loans. i think this tells you a little about what might be to come in terms of russian corporate looking to restructure their bonds with western lenders. in part that is what you have here. maybe the biggest is restructuring from any russian corporate, at least since the onset of the recession. guy: it will be interesting to
see whether others follow. thank you. is part of story what is happening in germany and we will be coming back to it a lot. as part of our most influential summit, hans was downstairs yesterday talking to -- i asked him at the end of our conversation about the growing political discord in the european union. he had this to say. >> we have had peace for very long period of time, and the european union gives us that piece. if it breaks down that peace will go. i am not sure if in 15 years time the european union as we know it will exist, and i pretty sure if it doesn't exist we will have more thawar in europe. as sure as night follows day, we will have war. an incredibly bleak
outlook. but i guess if you look at what is happening -- the european union is struggling to find its mojo. we talked about the european economy and disinflation, but you have a on the fringes causing trouble, you have proxy wars beginning to emerge. when we sit here and think about the economy, do we need to be thinking about what is happening? a, proxy wars, russia, the threat, the breakdown of political consensus? there is so much going on right now. nick: i think it is pretty clear that we are at a point of confluence on a lot of different issues, some of which are geopolitical. arrangement,ing that americans provide europe's defense while you're at the beaches and moans -- while europe bitches and moans about it, that is starting to come to
an end, as america resets its worldview. they will have to take care of things for things like defense -- european countries don't spend very much on defense, and there is definitely that aspect. in terms of the monetary arrangements, the stories and away are very simple. has suitedement everyone up to a point. it has been running for decades. that is quite a long time for any particular monetary arrangement, and they tend to carry on until it suits people less and less and they find some thing else to do. guy: ryan, he predicts a war in europe. does that fit with the russian narrative? ryan: may be. it is certainly one of the issues dividing europe right now. we are going to have the german
guy: 7:30 in london. bev is trying in to acquire sab miller, valuing it at $104billion. they rejected to previous proposals. japan post is set to raise as much as $12 billion in its initial public offering, making it the biggest debut share sale in the country since 1998. proceeds would be used for reconstruction efforts following the 2011 earthquake and tsunami in the northeast of japan. pat -- the new boss
at volkswagen says he hopes all cars inspected will be repaired by the end of next year. he has to submit a 60 german regulators. we are half in our way from the start of european trade and we are firming into it. let me show you the fair value numbers -- the euro stocks are u.s. futures have firming as well. we have a positive prints on how we expect the u.s. to open letter -- a little bit later on. .t is rough for corporate news let's get some details that we need to be watching with caroline hyde. could see sab miller surgeon trading and it is already rallying in south africa.
this is the number two brewer in the world, being offered even more -- we have breaking news that they will be offering some 42 pounds per share. if you look at where it has been performing over the past few months, this is before the news broke that we do in bed will go to plans for september 16. 42 pounds 15 is 40% higher than that. are going to see a surge in the sab miller stock. we have the number one shareholder of sab miller back in this proposal, third time lucky. we have artie had to informal offers, anywhere up to 40 pounds being rejected by sab miller but we understand now there was pressure coming from the number one shareholder, whereas another
shareholder, a pension fund manager in south africa, is slightly more worried about the monopoly that could be being built by joining together those two rumors -- those breweries. like sab miller will surge on the open. let's have a look at tesco because we have found that the chief executive is speaking. now butis is can speak the operating profit beat analyst estimates. he is -- it is a key grocer here in the u k they are down 69%, and that was ahead of estimates. the key issue is the asset sale plan. they are still trying to shore up their asset sheet. be soldt going to anymore -- nine months it was up
for sale but they haven't gotten the prices that they wanted. instead they seem to be selling international assets, but profit is doing slightly better than expected. thank you very much. the first european carrier to add an airbus a350. business class tickets could get you free wi-fi and a woman's only bathroom. the real focus is on the carrier's destination. they will be making quite a few trips to china. let's get more on the expansion plan from the ceo of the business. good morning to you, sir. you were down in toulouse, 50 -- howp the 3 will you be using this aircraft? join ourircraft will long-haul operations and we are
really focusing on connecting europe and asia. you have a plan to turn helsinki into more of a hub airport. how hard is that going to be? how difficult will it be to manage, given the competition that exists? you will be flying over the territory of the gulf carriers. what are your plans in terms of the broader business? yes, we do operate through europe and asia, that is a model that we have developed over the years. we have been one of the first european carriers to open around europe and that is the path that we will continue. competition is out there, but we do have an advantage with the location of helsinki.
we can offer the shortest, fastest, which translates to lower fuel burned compared to many other alternatives out there. we feel that we have a competitive advantage. do you think that it is a level playing field with the gulf carriers? we see the competition with the gulf carriers, but if , ourally look to continue coordination has been in northeast asia. if you compare central or northern europe connecting via areas, we can offer byeral hours shorter travel five or six hours. i think that matters to the passengers. speculation about
where your airline fits into the global picture and whether or not you would be better as part of a bigger company. what are your thoughts on that? pekka: well, there is a lot of speculation but i think for us the most important thing is that we show our model works. the best guarantee -- so far it ares like our customers liking what we are offering and with this new aircraft we will definitely improve our service and make the journey from asia to europe and europe to asia much more comfortable. how well do you know willie walsh? pekka: we are in the same airline and we meet a couple times a year and one world
meeting. in fact, with all the one world deals. have you ever discussed the possibility of unp working closer together? maybe being part of the same company? pekka: no. -- we are not in touch are doing joint business with the atlantic flights for two years already, and just over a year ago, we started a joint business with the flights through japan. those are the areas we are cooperating with british airways. guy: can i ask you one final question? why the 350? what is your view of the 330 n eo? somewhat argue that it is more efficient. i know you can't have it now and you can't have a 350 now, but what do you make of the offering
that i'm sure airbus has put in front of you? feel, that thewe a350 offers a similar advantages over the 330 neo. it is a fully new generation aircraft. out of special materials, lightweight materials,, visit titanium, -- composite titanium, which make it much more fuel-efficient than many of the other aircrafts, including the neo. the neos do have new engines and that provides some fuel iniciency, but the a350 is its own class and therefore we feel it is the right aircraft for our future. guy: one last question which will in the my producer -- what do you make of the china slowdown? when you look at the business in china, what do you see? have had extremely
strong sales in china this year. surprisingly strong. hand, it -- we have seen very strong increase of chinese passengers. at this point we haven't seen any slowdown of sales in china, nor traffic volumes. of course if a situation like this gets extended, it is sure to affect, but we don't see any of it. guy: the ceo of finnair, thank you for your time. as part of bloomberg's markets most influential summit, i caught up with guy hands. he says his concern for the uk's future. >> the european political consensus, which existed in this country, is breaking up.
today.y doesn't exist they will not find it easy to get the u.k. to stay, and i think it will be a tough, hard slog, much harder than he expected. guy: that was guy hands. the conference today is going to see a number of things, surrounding europe. it will be interesting to see whether david cameron will address the subject in manchester. he is going to be delivering his closing keynote speech later. housebuilding is expected to take the heart of the agenda. simon kennedy is here. well, alsoellow as joining us. about --robably talk
give us a sense of where cameron needs to position the speech. in with he has come leadership maneuvers. so what hetting out, wants to do is set out a vision for himself, one that he can to make and self relevant, and he is doing it and according to his speech he set overnight on homebuilding. the government has been a little slower, and he is looking to open up planning, making more incentive. that is certainly the aim of the speech, and the backdrop will be what about europe. it seems that he is not quite ready to commit to a referendum date to outline what he wants from europe. they will have to come at
another time but there is pressure on him to deliver. guy: he has got to know the head. simon k: they were all in the race yesterday and the day before. george osborne laid out a broader vision about economic management and devolution of powers. was trying to get between the both of them. of course they are all very polite. ofyou are seeing a lot jostling for visions in manchester. brexitmon goodfellow, risk, europe and the debate within the conservative party. do you think the markets are fully appreciating the magnitude? simon g: no. whenever i speak to european investors, they are genuinely surprised that there is a remote
chance of britain leaving europe. they just don't really think that it could happen. prediction,not my and the reason is if britain leaves europe, the logic is pretty inexorable. it is very difficult for a conservative and unionist party to go down one route knowing that it will certainly involve the break up of the union. that is the political calculus that hasn't been factored in in the u.k. speaking,, broadly thinking we stay in, but god, it is going to be a loveless marriage. [laughter] guy: it will be interesting to see how the european union develops. thank you for joining us. watching that speech, they ca cameron speech live.
there will also be available on bloomberg.com/lifestream. much in japando -- the question is what happens on the 30th? we are looking for hints. what will he tell us? will we see monetary policy taking a backseat to the fiscal policy? that is what we are debating in japan. we will continue to monitor what he has to say. ♪
added to european equities this morning, according to the fair value calculation. that is where we think we will be in around 11 minutes. one stock to watch as tesco. healthier numbers out, operating profits fell to 66 million pounds. our senior analyst joins us. let's look at the numbers -- walk us through what we learned. points -- u.k.y volumes are up for the third quarter in a row, and that is better than anyone else is doing among the majors. , although itfit was down year on year, did bounce back from the loss in the second half. some positives there. i think it is basically a lot of very little things that have happened, getting some products out, getting new products and, sorting out commercial income, cost-cutting. guy: but they can't sell --
charles: i think they just didn't get the amount of money they wanted. they may have been able to sell it, but maybe it was not worth it. guy: where does that leave the disposal program? -- the dispersal program? charles: that is one of the questions still there. i think it will look better in hindsight. control, but under the big lump is the off-balance-sheet, which is more for theillion, and long-term competitive in the, they need to buy back stores and reduce that liability. guy: simon goodfellow is here with us. simon, a lot of corporate news to deal with. sab miller in the have, -- sab miller in bed, tesco, how hard
is it to invest money properly at the moment given that we don't understand the macro story and we are struggling to understand the moving parts. simon: there is a lot of noise. i will make one very specific comment. it more i look at sab, reminds me of glencore. -- this is the deal at the top of the cycle. my advice is take the premium, but in the year-and-a-half's time, sell it. the failure of re-emerging market demand could live up to expectations -- it is going to scuffle as ab inbev. it will be much harder to sell parts of that business than people think. to everybody -- be careful. winners curse coming on that one. guy: you were all doom and gloom
this morning. simon: this is the bill being run. rung. bell being i will go on and say something interesting, which is that the doom and gloom we have on emerging markets is a little bit overdone at the moment. august, you were looking at currencies under pressure. the biggest threat of competitive devaluation from the chinese. but those risks have gone away. i think emerging markets can bounce from here. i think there may be a fair squeeze developing and emerging-market equities. guy: how much further down to we go? this is the bottom? simon: this is not the bottom forever, but i think there is something that could be a real pain trade, a 10% rally which nobody expects, which was we get to it they will say that was the
bottom, and we will have to see how the macro news is at the end of the year. i think we should be prepared er,t it could get squeezi so you retain the option to sell the rally once it is fully develops rather than getting sucked in. again, it is a change of mindset. be careful if you are short, particularly in southeast asia. i would close that trade now. guy: i am looking at german ip data this morning and it was horrendous. then you getut into the bad news/good news argument and i think that is much more powerful in europe if it gets bad. again, we know that, but i don't think the fed can ease again. guy: the crowded trade is still valid. simon: hedged. that is the point.
guy: the currency it looks quite in a range. simon: it does, but that is the point. if it gets really bad, the currency will break up or breakdown because qe is coming. guy: i haven't given you anything as much time as i would like this morning. the newsletter has destroyed our running order. simon goodfellow. we are minutes away from the start of the european trade. we think we will get just positive. jon ferro will open the markets for us. jonathan: i thought i knew what i was watching and then 7:00 happened and i got headline after headline after headline. ev is back again with an offer for sab miller, this time just over 68 billion pounds, 42 per share.unds
not just higher, but one of the biggest shareholders coming down and saying get on with it. inbev. positive for a bb what would have been the headline -- coming into october, so many people expecting boj action, kuroda holding fire -- will he make a move by the end of the month? guy: ok. jon, a busy our coming up. european stocks or firming, fair value calculation up. he will be back shortly. this is how we think the markets will open. we would take a break. ♪
jonathan: good morning. and welcome to "on the move." i am jonathan ferro. just moments away from the start of european trading. what a busy morning. again, and offer for a b miller, a monster deal. tesco turnaround. the trouble retailer earnings that beat analyst estimates. they refused to rule out a rights issue. kuroda on fire as japan on the brink of recession. the central bank keeps monetary policy unchanged.
ahead of the open, but the open, ftse 100 futures up 17 points. dax futures up a 46 points. it is the morning for stocks. with your stocks is caroline hyde. caroline: in full day of gains. actionot so much stock here to do so much news flooding the screen. openre up to see how we .1%. german data industrial production not looking pretty. down 1.2%. we see how germany opens. we are following asian -- we are following asia. maybe looking at evaluations. we did see the euro a little bit lower at the german production. continuing-- money to grow. b