tv On the Move Bloomberg October 14, 2015 3:00am-4:01am EDT
by 45 points. almost 60 points after a big run of gains. is it another morning of losses? caroline: we have lost 100 billion euros worth of market capitals on stoxx 600. a third day of declines is being spelled out by the futures market. prettytata not looking -- factory data not looking pretty. does it spelled more stimulus? you will get that from asia next. asia equities were down. we go lower. but you 100 up by .6% -- ftse 100 up by .6%. risk aversion when it comes to equity markets here in europe. let's take a look at what it is doing to the commodities.
copper lower. the second biggest economy in the world, up by .3% as we speak. the havens are invoked. we get money moving into gold. lower inflation, even deflation that we are seeing in china. doesn't that further the federal reserve from raising rates? that further the federal reserve from raising rates? think continues. supplies on the increase. the iea is spending out. down 4% on the week. let's look at some of the stocks we have on the move. i'm going to be focusing in on m&a as well as individual earnings. diageo up. it is getting out of the wine
market. australianto an buyer. -- pledgingto wait 5% or more. it makes equipment that makes chips. it is seeing its forecast not living up to expectations in the fourth quarter. until yesterday saying it was worried about optimism from its consumers. dutcher is waiting for its german stock to open. back to you. jonathan: two minutes and 20 seconds into the session. bear losses. the ftse 100 down by .7%. : 81 points. over in asia, another set of week data out of china. morning yvonne.
yvonne: week percentage data for sure. we mentioned the softer read on that china inflation number earlier this morning. that putting a damper in the region. consumer prices slowed. the biggest story is the factory gate deflation. 43 straight months we're talking about. falling. more room for the pboc to act. marketske a look in the here in the asia-pacific. already except for thailand and new zealand. japan worth noting. ending 2% down. the worse and about three weeks. the shanghai composite closing 1% down. the hang seng down .7%. japanese equities, a succession of seven stocks. by iron andouds led
steel produces. investors look for havens. australia down by .1%. let's talk about singapore. they did avoid every session. easingtral bank policy for a second time this year. some economists say this is a subtle move. we are seeing the shares back down again after a little bounce early in the session. let's talk about the australia gold miners. your line of meant as caroline mentioned -- caroline mentioned every month high. this is what the industrial profits look like in china as well. we are talking about inflation data. that is owing to have a bad reflection on this profit. , all down today. jonathan: yvonne, great work. that is what is happening in
today show. -- what if emperor the emperor has no close? we look at what could be ghost demand. forget volatility, wall street might have bigger problems. hillary clinton and bernie sanders. ♪ prices are notr reflecting the fundamentals. that is the message i heard from rio tinto's ceo this week. that sentiment was echoed in a interview with the chairman of the world's biggest copper producer. >> if you do an analysis of the price, it is obvious copper have become more volatile. it is clear that they have acquired a life of their own. away from fundamentals.
that's just the reality of the markets today. jonathan: joining us, a friend of the show. ewen cameron watt. i'm pleased to say he is in london. it is great to have you with us. can, the emperor might not have any close. talk me through it. ken: you cannot bring money in and out of china legally. i cannot go in get 40% from china. how do you take advantage of that? you carry copper from the west into china. eufinance it in singapore or hong kong. you transferred into you want and then invested in local banks. interest rates stay high there.
this is the perfect trait. -- perfect trade. how much is happening in commodities. it can be very large. what is fascinating is we don't know the copper demand in china and what it is used for. we don't know what they are consuming it for and how much they are consuming. it could be 35%. that 10% gap is huge. how the work that out. ewen: i don't think you can. we are focusing on the copper price for a chinese demand point of view is slightly missing the is thehich is supply-side response that matters. the process you are describing where copper is used as a means of borrowing dollars and reinvesting in china is a number of routes.
we have been around this copper being used as a collateral in china. the other thing to say is chinese banking system has been reducing its dependence on dollar funding over the last several months. you can see that system. it isulnerability, backward looking. yet mention the supply dynamic and all of this. if you don't know at the demand really is, you don't know what the supply should be. when i speak to these guys at rio tinto, they tell me every thing is good. is everything really ok? kenneth: no one can really understand china. that is the problem. this is a widespread phenomenon. you don't know how much has been stored up. and what comes back in. the nickel price is something that is showing us what the carry trade can do.
galvanizingorld -- steel demand. price has come collapsing down. that is what is been going on. jonathan: everyone wants to measure the tension in the economy. someone would point to the headline number in china as it being ok. the gross is what we should be looking at. is grosslyumber understated. betweens at anywhere five and 10%. true mpl's in terms of bank loans that are not going to be serviced. assets -- that means you're looking at a bad debt, gdp ratio of over 10%.
jonathan: it was a booming equity market because you could increase equity as sure as you could have an ipo. that has gone away. specifically on the ipo side of things. there is huge pipeline waiting to come in. does the pressure go back to the credit markets? side,h: on the fiscal after you say they were hoping to use the equity markets with local government financing local debt. that is gone away. that range reduces recapitalization of the banks overtime. it is not an overnight emergency. it is coming. jonathan: financing of commodities. there was a problem last year and it seems to smoothen out has become a problem again. kenneth: if the yuan weekends,
jonathan: 14 minutes past the hour. here are the top stories. wall street could set the stage first democratic debate. hillary clinton and bernie sanders clashed on who would be tougher on the financial industry. >> greed and recklessness of wall street where fraud is a helped to destroy this economy and the lives of millions of people. >> when i think about capitalism, i think about all of the small businesses that was started because we have the opportunity and freedom in our country for people to do that and to make a good living for themselves and family. i don't think we should confuse what we have to do every so often in america, which is save capitalism from itself. jonathan: consumer prices in china came in weaker than expected for september, leaving the pboc room to ease monetary policy. month, down from
2% in august. the factory gate crisis fell for the 46 straight month. narrowly avoided a technical recession. singapore will slightly reduce the depreciation in its currency. 15 minutes into the session and equities here in london are up by 20%. the dax lower. switch of the boards. i want to hit the fx market. sterling at a high. fueled by a weaker pound. report. a labor market look out for that. bring up the italian 10 year yield. 1.47% in the yield. april.htest since
the periphery, the yields starting to come in once again. the anticipation of an increased round of qe. the bond market in focus once again. it is earnings season on wall street. it is not starting well. jpmorgan missed analyst estimates last night. caroline hyde has the details. caroline: it is going to be a bumpy right. jpmorgan got the ball rolling. it was a mixed picture, when you're trending down into sales. also by 6.4%. trading is slumping. be --rgins is going to the federal reserve got rates at rock-bottom. that is going to be a problem plaguing the industry. jpmorgan managed to raise theirs. they rebalance their assets slightly.
strip that away, underlying the business, you're seeing trading slump, you're seeing sales fall. you're seeing revenues down. everything unit, not just corporate banking. commercial, all four units for fret -- all four units of revenue falling. the cfo telling us that october, the start of a new quarter is pretty quiet. estimates for the full year and fourth quarter, she says are appearing too high. start to reign in your estimates for where banks are going to pass in the fourth quarter. what is being signaled is the fact it is tougher to make money. let's see where the winners in the week -- loses were. the losers outnumbered. factor in the businesses that they sold. andto make money in credit -- torn down half.
40% is a we saw crumble. on a few to focus in bright spots. gains in equity trainings. investment -- equity trading. fixed income underwriting fueled by some of those deals. that is helping. thenegatives outweighed positives. let's get into the the rest of the industry group. concern. they call it a bad omen. federate doesow the low fed rate -- the low fed rate. goldman sachs tomorrow. all of this will be a reoccurring theme. the estimates are already a head of this. they are expecting these woes. a drop in profit is expected.
those bears are out. we are seeing short bet against banks. particularly the etf. the exchange rate has fallen. we are seeing those bets against the banking etf's double. back to you. jonathan: caroline hyde, thank you very much. let's bring in ewen cameron watt. these two words. the bad omen. in a quarter like the last, you could a jpmorgan that did badly and a goldman sachs that did fantastically. can we really have a read? ewen: it is been a tough quarter. you have to look at the volumes. yet look at the direction. the fact that investing grades are widening. volumes were down. you know it has been a tough quarter. some may have one and some may have lost. jonathan: when i speak to investment bankers, i spoke to
the head of ubs, the uncertainty over what will happen with the federal reserve and what that means with their clients. you want your clients to be active. the advisory business would suffer. at one of the biggest m&a deals so far. is there a read across their? forcing -- ewen: the m&a is flourishing. seen have a have heavy cash component. assets iny hurts risk july and august was when the investment market went on a buyers strike. that fed straight through. right now the investment grade deals are getting done pretty well covered.
there is more demand than supply. they are strengthening slightly. that is the traffic ahead. jonathan: a big headline of that coming through. will the demand -- a big pipeline of debt coming through. will the demand be there? ewen: you can see the curve shifting up a little bit. i think there's still plenty of demand for good quality. at what price? and what terms. ? jonathan: democratic presidential candidates lit up. the biggest target, wall street. ♪ >> greed and recklessness and illegal behavior of wall street, where fraud is a business model helped to destroy this economy and the lives of millions of people. ♪
jonathan: democrats faced off in their first presidential candidate debate last night and las vegas. front-runner hillary clinton and her closest challenger, vermont senator bernie sanders stole the show. both taking aim at wall street. andt is agreed -- the greed recklessness of wall street, where fraud is a business model
helped to destroy this economy and the lives of millions of people. >> when i think about capitalism, i think about all of the small businesses that were started, because we have the opportunity and freedom for people to do that and make a good living for themselves and families. i don't think we should confuse what we have to do every so often, which is save capitalism from itself. some for more, let's bring in a recovering white house correspondents, hans nichols. both talking tough. is this going to be on the agenda? how a lot ofk at the rhetoric can be translated into policy. maybe tax and carried interest. you can see that potentially happening. debate losers in this were the republicans. they wanted hillary clinton to come up a little bloody.
at one point, instead of attacking her, bernie sanders came to her defense. >> the american people are sick and tired of hearing about your dam e-mails. >> thank you. [laughter] enough about the e-mails. let's talk about the real issues. republicanu are a and looking forward to bernie sanders to attack hillary clinton, that was your best line. hillary clinton came out as aggressive and not wounded. beating up the financial sector, i find it fascinating when politicians talk about capitalism. it is not the capitalism that i was looking at in a textbook. why this capitalism have a bad name? ewen: these people are not politicians in the way that they are not in the office now. they appeal to the electorate.
in office, i suspect there will be a tendency to behave in a slightly different fashion. hans: you see a similar dynamic play out with china. talk candidate talks about desk talks tough on china. it immediately after they get into office, they dial back. hillary clinton has a lot of friends on wall street. she understands the concerns. is will she be pulled so far to the left that she cannot escape her own position. an artfuloved to be escape artist in the past. i would not be overly concerned. jonathan: i look at what is happening in the u.k., and it is similar to what is happening in the u.s.. here and bernie sanders over there. for the markets it has not mattered.
with the exception of an isolated case in greece. i was told it was a big risk. it hasn't been. over what question time period it developed. , hillary clinton a year away from it -- away from an electorate. i think this mood music is important. it develops over time. toht now, it is to listen rather than act on. hans: you're suggesting that future candidates could be further away from where you think the mainstream and could threaten the current structure. ewen: that is a possibility. on the other side, population is are getting older. older people are likely to vote for younger. they vote for stability. jonathan: that is a good point.
when does joe biden step into the race? hans: i come back when buying jumps in the race. there is a self-made on any can get in. hit november 1, and he is not in, it is difficult for him. it is difficult either way to find a path for him. it gets more difficult as time goes on. by deliberating, he makes a decision. tom: hans nichols flies in to talk about this debate. oz nichols, thank you very much. about 30 minutes into the show. here's what to come. the you u.k.--the u.k. labor report. we hear from the russian central bank governor. -- we awaitther eta another data. ♪
minutes into the session. let's get an update on the equity markets. day ofg up for another losses. the stoxx 600 down by .9%. the decks off by .14%. cable climbs to a session high. not the story yesterday. euro sterling that flat. it is a weaker pound over the last few weeks. it is driven the story. yesterday a weaker confession read. -- a weaker inflation read. for now, i want to get to our top stock stories with caroline hyde. caroline: some of the biggest followers. up by 6%.m is skanska -- skanska down by 6%. was an added growth for them. the cornerstone of how it was going to as a for -- diversify outside of europe.
productivitypected weighing on the numbers. $777 million weighing on the stocks. equipment that makes the chips they sell to samsung, to until. down 6.8%. there forecast not looking so peachy. it is going to be slower than it was in the third quarter. it misses forecasts. we've heard concerns about clients coming from its own client, until. those -- ringing those bells. let's end on a high spot. hargreaves lansdown up more than 5%. a record quarter. phenomenal.
record net new business. they've got 1.4 billion pounds. growhave st. nick revenue 11% -- they have seen net revenue grow 11%. the added 24,000 clients. back to you. jonathan: caroline hyde, thank you. that is today's moves then. we will get an update on the state of u.k. labor market. today's numbers will be the final snapshot for the bank of england's inflation report. richard jones joins us now. -- ewen cameron watt joins us. desk get obsessed with the u.s. jobs number. how important is it? the key it is one of pieces of the puzzle. we had a pretty important when yesterday. was notg to deflation
-- ewen: it is looking at the corporate earnings stream. relatively low growth. corporate profit. jonathan: a problem for the bank of england, politically, because you got a mandate at targeted 2%. you can't move. you can get away. the longer it stays there, the bigger problem it becomes. how did they manage it. before get to the federal reserve, is there a division developing on the --? has beenthe division there. the newest member of mbc came out in the dark on the dovish side. i think he is an ally of the chief economist, mr. harvey.
on the hawkish side, you got welland mccafferty. we got mccafferty returning to that posture. he may join them. he has been pretty consistent in saying given where inflation is, has an ally. reserve is always in the spotlight for the strategy, what do you make of the communication from the bank of england. ewen: i think the bank of england has flopped around. problem the bank has is the same the fed has. unemployment is rising. that is generating -- the economy is growing. the inflation is not taking off. the dialogue has changed a little bit.
i think what we will see in the inflation report is moving away inflationg we have because of commodity prices therefore it is temporary. see is what we will positive thing, some signs that 's productivity is starting to recover. but that the governor that's put that together, there is not such an urgent need to raise the rates. if productivity is increasing, that helps the fiscal side. i'm looking more closely at what they have to say about productivity. narrativechanged the of the inflation outlook. jonathan: i want your the on that and how the narrative changes. when you look at the one-off , if you look in your sterling, when does that argument start to lose
credibility? richard: that is the thing, it has been a lot more sticky than anyone imagined it would be. markets have been quite out front. we have not seen near term rate rises in the u.s. for quite some time. the market has been looking at the inflation numbers and saying this is not something that is as transitory as we are being told. up until now, that is been proven to be the case. , youhan: final question are an asset manager who takes a view of the world. the mpc, when does it finally move? ewen: governor carly was at pains give the day that he is harney --governor governor carney was at pains the other day saying that he was when to wait on the u.s. to call.
and illegal behavior of wall street where fraud is a business model helped to destroy this economy and the lives of millions of people. >> when i think about capitalism , i think about all of the small this is us was started because we have the opportunity and freedom in our country for people to do that. and to make a good living for themselves and family. i don't think we should confuse what we have to do every so often in america, we should save -- which is save capitalism from itself. jonathan: jpmorgan says revenue fell 6.4%. fell inf jpmorgan extended trading. shareshares this until -- intel shares fell. inres fell more than 2.5%
after-hours trade. welcome back to bluebird tv. 42 minutes into the trading session. this give you a quick update on where stocks are trading. the stoxx 600 down by 1%. the dax by that's the dax down by 100 points. if you take next week and last week in turn it upside down. it is what you've got today. the miners were a big performer last week. underperforming this week. glencore down by 2%. another concern, fueled by weak data out of china. a quick check on the fx market. euro sterling, the headline a high.y, when data out of china and u.k.. the cpi number, negative labor market reports. look out for that. euro-dollar up by .4%. europe.now are in
i would talk about that in just a moment. i want to get over to russia good god bless the central bank of russia. putin in front of an audience of investors, he made the comment after the banks -- as well as speaking to the russian president, she sat down with ryan chilcote pc told him genetically cutting rates before inflation fails would be unwise. >> you have to think about the risks of someone pumping cheap money into the economy with artificially low rates which are far from expectations. that will lead to a financial bubble. more inflation, capital outflows and all of the other negative consequences. >> when you get to the 4.1 inflation target, is 4% what you think russian should have -- russia should have for rates?
>> it is difficult to talk about the difference between rates and inflation. it will be somewhere close to that, but it will depend on the economy. jonathan: ryan chilcote joins us from moscow. talk to me about the inflation target. putin smiles. rigo look, -- right: -- ryan: her target's 4% for 2017. andalked to nine economists they thought by -- she said she can. she said some of the reason for the double-digit inflation is the devaluation that took place at the end of last year. he said consumer demand is helpful. it is falling and the russians go to buy goods, they are not prepared to pay any price.
the price setters cannot raise prices. she is pretty confident and she thinks in the meantime, if she hits 7% inflation by this time next year, she will be on the course. that would allow her to cut rates as she goes. jonathan: the commodity shock means different things to defend bank governors. when you see oil down come in trading $30 a barrel, what does it mean for thinking? ryan:all when i'm at -- she says she checks the royal -- if oil price several times a day. she think'swhat about this idea from goldman sachs that the commodity slump that we are in could last for as long as 15 years. she had a pretty interesting answer. possible. considering that scenario is to learn how to live with oil
prices that are low here it there is a model for economic growth. that model is possible in our country and necessary. >> is that your worst nightmare? oil -- low oil prices? a reality that we are already prepared for. the balance of payment has already adjusted. our financial sector is adjusting. >> what could be scarier than $50 oil for pressure -- for russia? >> what worries me mow is the pace of reforms we need to stimulate investment from the private sector. we need a whole set of reforms to make russia more attractive. ryan: i don't talk about private investment in the russian economy very often. we put together a graft -- a graph that shows you private
investment over the last 20 months. every single month, it has fallen. that is a problem. russians are not putting their money into the economy. either they don't have the money or they are not certain enough about the situation. because of the ruble and everything else. forget the oil, sanctions, the real issue is long before crimea , and the huge followed oil prices, this was already an issue. it remains one. this is where growth would come from in russia. right now, it is not happening. chocolate that is a key point here it -- jonathan: that is a key point ryan. i am interested in the interconnectedness between the two. maybe i think of turkey. another one i would think of is russia. as you reflect on yesterday and that rise smile from resident putin -- from president putin, .alk to me about the politics
is there tension there between the head of state and the head of central banks? ryan: if it is, it is not publicly displayed. is 4% to 6%e smiled is a good target. -- the fact that he cannot index there pensions is a big problem for them. he smiled because she is saying 4% and he is saying go forward. the reality is what she has done is part of the narrative. what they want russians to think is sure things were bad with ukraine but things are getting better. and the world is
paying attention to what we are doing. we are a player on the world stage. when you got the central banker out there going inflation is going to be at 4% and rates could be around 4% in 2017, things are going to be pretty normal. that suits them just fine. back to you. jonathan: thank you very much for joining us. up, we give you a preview of the day ahead, including big banks on wall street. will they follow suit? ♪
jonathan: welcome back to on the move. i'm jonathan ferro, live from the city of london. here is your day ahead. we'll get a read on the u.k. labor market when the unemployment rate come out and a little more than a half hour time. fed,00 a.m. u.k. time, the an indicator of economic conditions. earning season in full swing on wall street. let's today, bank of america and wells fargo. those earnings in focus. .pmorgan missed estimates democrats took aim at wall street in last night debate. >> greed and recklessness and illegal behavior of wall street, where fraud is a this is model helped to destroy this economy and the lives of millions of people.
more on what to watch, i have two mins sitting next to me. hans nichols is the other. manus cranny is one. hans nichols, talk to me about the banks earnings. i wonder if this is a bad omen for the rest of wall street. jpmorgan to be an indicator. that is the concern when you look at where this office was. last season it didn't seem like everyone fell into line. commodity was down across the board. there was not a consistent story beside that. i won't read too much into this. manus knows more about banks than i do. manus: maybe i should -- i think hans has summed it up. the changing number and dynamics -- what is bads
and one bank is not bad and the other. the dominantl player at the top. they're all grasping for share. what you are seeing in the treasury market is a different business model. the commodity price bolstered on the equity side. you'll see a revolving door on the treasury business. the politics -- jonathan: the politics of wall street. talk to me about the politics of wall street. at that we were over this. hans: this is the problem with hillary clinton. she gets to -- she gets pulled too far to left. is not able to stake out centrist positions in the election and this is a challenge for her.
here is my take on this debate. debate is all about expectations. everyone knows that hillary was going to get bloody. hillary cannot having landed more close desk landing more blows -- landed more blows then received. i think hillary came out beating expectations. manus: did that bolster her case? hans: the one issue that she left to bernie sanders and he took complicated votes. a center has to talk about why he did or didn't vote for a certain amendment, he is already lost the argument. the board of governors is meant to have a majority of the moment. they have five. they should have seven. the five seems to be a split. can janet yellen get them back
on side? had all of the was coming out. yellen herself says she wants to get off zero bind. whether that is right or wrong, we will be the arbiters of that. many people have said they missed the opportunity and the long goodbye. jonathan: we have to leave it there. manus cranny, hans nichols. francine lacqua will have to pair with them throughout the morning on bloomberg. you want to talk, i am on twitter. stock down across europe. a beautiful day in the city of london. best of luck for the rest of yours. ♪
francine: a deflation fear. another slow down and chinese factory gate figures. growing speculation that the pboc will act soon to ease monetary policy. manus: jpmorgan mrs. ann says trading pain is not over yet. bank earning season begins. francine: clinton goes on the offensive as the first democratic debate white house race. ♪ welcome to the polls. live from bloomberg's