tv On the Move Bloomberg October 23, 2015 3:00am-4:01am EDT
the market opening. up 120 points. let's get straight to the european market open. equityr: yesterday's rally was the biggest in any ecb meeting. bigger than january even. draghi really gave a crowdpleasing performance. that really reassured investors that the ecb is ready to step up. what we saw was the rally yesterday. we are still waiting for the move today. futures were pointing higher. we are waiting for the equity markets to open to see if we have a second day of gains. i can tell you these stoxx 600 is rising for a third week,
putting it on track for the biggest monthly advance since february. it hit a two month high yesterday. we saw the euro dropped to a two month low. it started dropping as drug be ghi wasaking -- as dra speaking. you considered, -- you can see it, it is flat today. investors pick up on the trade being unwound. one of the reasons we weren't seeing euro strength in the past few weeks. the euro. a drop in conversely, we have seen a push-up in many emergent market currencies. on sentiments there that we can get more stimulus from the ecb. if we look at options, the premiums increased after draghi spoke.
jonathan: some move in the bond market yesterday. versusead, italy germany. it dropped below 100 basis points in the news conference yesterday. the interesting part for me is not just an germany with the yield there at an interesting low. the italian two year yield is negative for the first time ever. take lives in the bond market and the fx market. let's find out what is happening in asia. good morning to you. we had a positive today across the asian pacific. a nice rally underway. check out what you can the on the map of the region. it is green across the screen. a 1.3% gain here. the hang seng is up by a similar amount in australia. 2% nikkei is rising by there.
we saw consumer related goods and electronics moving. big industriale stocks. they did very well today. they are in japan with a 5% gain. with those tech earnings in the united states, we saw technology as a key theme around the region. telecommunications docs did well and electronic shares also advanced. up 3% in hong kong. the latest data that came out today from china confirms that the government stimulus there, the interest rate cuts, are feeding into the market. inside china, and the inner parts of china, the expensive land the country occupies, they are seeing prices advancing. 39 out of 70 cities in september's up prices go up, as compared to 35 in august. that tells us housing recovery appears to be underway. i want to bring your attention to the airlines.
we saw some speculation that the chinese major airlines, air china, china eastern, and china southern may consolidate. this is as china moves to consolidate state-owned businesses. they were down today in hong kong. there is speculation these three carriers will come together and make a make a carrier to rival the world's biggest american airlines. they have more than 1000 jets and a lot of cargo and passenger market in china. zeb.han: great work, enjoy your weekend in asia. fromve data coming in prawns. manufacturing pmi. a 52 pointtter in three. the survey, 51.7. these are preliminary readings.
an improvement on the previous month as well. germany is up in about 30 minutes time. we will bring you that data, live. here is what is going to happen in the program today. the currency falls against the dollar. the most since the qb has been announced. and then, the tech sector. and steel gets touch. we speak to the ceo as prices meet their new level. the european central bank left monetary policy unchanged. as anyone looking for a hint to whether more stimulus was in the pipeline, draghi did not disappoint. >> domestic demand remains
resilient. concerns over growth prospects emerging markets and possible repercussions and possible repercussions in the economy from developments in financial and commodity markets continue to signal downside risks to the outlook for growth and inflation. monetary policy accommodation will need to be re-examined at our december monetary policy meeting, when the new euro system projections will be available. the governing council is willing and able to act by using all of the instruments available within its mandate, further lowering was indeed discussed. it is one of the instruments of monetary policy that i refer to
what i said, all instruments have been discussed. there were a few members of the governing council which hinted at the possibility of acting today. it was not a prevalent theme of our discussion today. jonathan: the big question from the meeting is, is december a done deal? let's bring in the senior investment strategist. great to have you with us this morning. i look at thee newsc conference and theb -- i look at the news conference and the ecb takeaway. is december a done deal now for you? guest: it does look like that will be the day. there is one thing quite good about that. what has been lacking a lot with monetary policy in the u.s. is uncertainty. and we a day to focus on
need to get a day to focus on. expect haitians are even higher. i wonder what comes in december, as far as you are concerned and what would be considered a disappointment? dan: they can lower the deposit rate further, extend the amount of time that they will pursue qe, and move into other asset classes. all three oft want them because that will bring in the sense that, if they do that, there is nothing left. i think one or two of those is what we will see in december. not all three. jonathan: i think of anything came out of yesterday, it is the ecb reemphasizing the fx channel. is that what you took away from yesterday? the fx channel is becoming even more important for the ecb? dan: that is definitely
something they are focusing on. to help in weak euro terms of eurozone growth. is oneey because that of the few areas that can happen affect on the underlying economy. thean argue about how much lowering of interest rates is doing. a clearly helps in exporting economies. jonathan: the investors watching this program, the biggest meeting since 2013. forget the qb meeting. it was big for equities. many are asking, are we in 2015?r q1 for to be, like weg had in the first part of the year. it will happen more quickly this time and there is the risk it will be euphoria. eventually, we start to sit back and ask what is happening with the underlying economy? are we worried about china again and will we get a bit back? jonathan: as they get tighter
and narrower, the front end of yield a two year negative on the italians. what does that tell you? dan: we will be in this environment for quite a while. the bitter irony, is it is pushing people further and further out. togo into treasuries to go high-yield. that is good for a while. when we start worrying about growth, people see they have too much risk exposure and it all on winds. -- it all unwinds. jonathan: do you want to play the momentum trade right now? dan: you have to be smart about playing when it is going to end. where are the parts of the market that you find value? what is important is at an aggregate level, you have more
dispersion in terms of the returns across countries and across different asset classes. you have to ignore which ones are going to work out. jonathan: i go straight to the euro-yen pair. a much weaker euro against the yen. what does this mean for the governor? what we want to see for japan is weaker yen versus the dollar. that is what is driving the rally there. jonathan: great to have you with us this morning. up next, we take it to tech. in $90 billion silver lining. microsoft, and google surge. ♪
levels the lowest growth since 2009. the banking group will take charge. the u.k. government prepares to sell shares to individuals. the lender is scheduled to report earnings next wednesday. 15 minutes into the session. a quick check in the equities market. uge, the biggest equity market move post a ecb press conference since 2013. the rally continues this morning. is this speculation? it looks like a done deal. denominated markets. percentageup one
point. big moves in tech as well. everyone is looking at the tech sector with google, amazon, microsoft all facing estimates. we have more on the good news. reporter: a big beat for big tech. let me start with amazon. what we saw here with third-quarter sales beat estimates. a surprise profit for this company was driven by fast-growing cloud computing. he also had a boost from their prime day emotion. they kept a watchful eye on spending. the shares rallied in after-hours trading, making him the third richest man in america. moving onto google, or should i say alphabet. the is the last time company will report as it did yesterday. as of next quarter, it will be a holding company, alphabet. the earnings will be broken up
between the main google business, and the businesses within the alphabet holding group. profits beat estimates. up 23%.hat total clicks was up andtraffic they were able to keep costs under control. those techewarded companies. for the first time ever, google also announced a $5.1 billion share buyback. precise number is the square root of 26. why? there are 26 letters in the alphabet. finally, moving on to microsoft. the fiscal first-quarter profit beat the estimate. largely to alod growth in cloud services. julyob cuts announced in also took part of this.
7800 cuts took part in july. jonathan: we will be talking to the former ceo of microsoft. that is at 1:00 p.m. u.k. time. do not miss that. dan morris is still with me. the cloud business, microsoft, amazon. what is driving the performance in cloud? where is it coming specifically? in mind,ave to keep margins are high and they are looking for every opportunity they can. they probably do not have a lot of opportunity in terms of labor and payroll. anything they can find to help increase margins and cut costs will be an appeal. something like tech software is a big appeal. that is what you can see the boost in cloud. jonathan: it is phenomenal and expended training. amazon, microsoft,
alphabet-google, they are all up. those three stocks have really searched and added a significant amount to the s&p 500. i asked about it before the break and the other segment. the want to play the momentum in trade, or do you want to differentiate a little more as far as tech is concerned? dan: text covers a whole range of industries. we lump it altogether but you have on one extreme, social media, cloud services, and hardware techs like ibm. about, we need to think what are the exposures to china? if you look at the u.s., at tech sectors has the highest revenue exposure to china. for those companies that are looking for that as a source for revenue gains, they will be more exposed. others will focus more domestically on the u.s.. jonathan: the other question i will ask, and they always ask
this, when you look at the s&p 500, the two best performers were netflix and amazon. it has long been a certain habit of the consumer. dan: i think what we are all trying to do is understand how the consumer mentality has changed after the financial crisis. everybody is waiting for a big boost in spending because of the fall in petrol rices. maybe we see some of that here. we also have to take the savings rate into account. people are scared and will increase their savings rate. money theyextreme oa have in their pockets. it is being saved instead of being spent. that will change slowly. then, you have what the consumer is doing. the question i would ask you is, if a wanted to play one, rather than the other, what is your
preference? be: the business focus will on cutting costs. that is a huge opportunity to increase productivity. jonathan: dan morris will stay with us. up next, we will bring you the stocks to watch this morning. it has been a busy day for earnings and the market as well. another big move this morning with the dax up by 162. we will be back. ♪
jonathan: good morning. we are 24 minutes into the market session. let's bring you the scores. another 155p points. is moves in a bond market phenomenal. let's check out fx and the bond market. since january.e let's look at the bond market. let's go to the periphery. .06%.talian yield is - that is not a misprint. big moves. reporter: it has been a big day for earnings.
i am talking about the world's second-biggest truck maker. third-quarter operating profits were boosted. orders actually dropped 15%. earnings rose 75%. we know it is restructuring to become more profitable. ericsson went down 4.87%. maerskally, ap muller said its profit outlook would be weaker. it cut the profit outlook and cited a weaker global container shipping market. this is the worst performer on the stock 600.
it is not just the concern for the company. the question is, what does this tell us about global growth? jonathan: that it is not that good. thank you for breaking that down for us. here is your day ahead. germany is coming up in a few minutes. at 9:00, we will get numbers for the entire eurozone. before the u.s. session starts, we will get earnings from american airlines and proctor and gamble. numbers atatest pmi 2:45 u.k. time. this short after break with the german pmi. ♪
jonathan: 30 minutes into your trading day. with thestraight to it german manufacturing pmi. it comes in at 51.6. the direction of travel is also a concern. it is below the previous month. came in at a solid 55.2. that is better than the survey of 53.9. the composite comes in at 54.5. it is bigger than the previous number of 54.1. it is mixed you look at manufacturing, but when you look at composite, because of the it iserformance
positive. let's go to hans nichols. what is the story? hans: the composite number holds. last month it was down. it is a good number and still below the august number of 55. anything north of 50 signals expansion and less signals contraction. ons is a pretty good number the composite side. services are really surprised me upside. i would be more concerned about the manufacturing number coming in less than expected. what everyone is concerned about scandalny is how the vw will affect the broader economy. our we starting to see the beginnings of a slowdown? two weeks ago we had factory orders that disappointed. we had industrial production that disappointed. on the german side, services are blooming, but there is a
slowdown in manufacturing and that could be a potential concern. jonathan: you and i have gone back and forth about this. a chineseis there story buried in this as well. hans: potentially. the one thing about emi'is they pmi's is they are immediate. we will get the flash rooting for october in a couple days. we had numbers other friends this morning. they all were on the upside. in the past, we have seen french numbers go down while germany has gone up. germany is moving up on the composite. on the composite in france, they are surprising us as well. we a couple numbers in the 52 range. the story with france really is yes, negative or flat growth in the last quarter when we had gdp figures is this is the eighth consecutive month we have seen expansion in france. here's a copy up for you.
the are barely expanding. they are in the 51, 52 range. the are manufacturing at 51.7. france is a along just north of 50. they're not into the high 54 number we are getting from germany. in some ways, the divergent story still holds. in some ways, there is a little bit of convergence because france is doing better than expected. jonathan: great work and more from the later on in the program. let's turn to the data coming out from china. you can see the chinese story in germany. prices were rising last month. we also got numbers from the sector that has been impacted by chinese growth. for more on both of those stories let's bring in the bloomberg team. andrew roberts joins us now. let's talk about the housing/
property data. does this change the outlook as far as you are concerned? >> the issue here is that we have had some much bad data in previous months. they push to the upside on housing data is good news. you have to remember that property and housing real estate comprise about 15% of the chinese economy. it is a real bellwether for over a economic health. there are still some warning signs. there is a huge overhang in availability. there are tons of apartments and homes on the market that have not been sold. that is a problem. but certainly, it does suggest that the government has been doing, those stimulus efforts, have been working. the question is whether they will take their foot off the accelerator, or keep going? jonathan: you have a question, nick? there are marginal tweaks around
the housing and property sector, regulations to help support the market. do you anticipate the government is about to announce further stimulus measures? and if so, will they be these marginal tweaks? the general expectation we are hearing is that they will bring out the big guns and it will be fairly soon. there is so much money locked up in the economy. the reservek at ratio requirements and the amount of money banks are required to hold and reserve, interest rates are up more than 4%. you compare that to the u.s.. there is a lot they can be doing. signs hearing disturbing of the government is growing more concerned. it may not hit the 7% target for the end of the year. a bloomberg internal gp tracker put the number at six .6%. another thing to keep in mind is that they have in the past, acted every couple months. we are now on the outside of that range. there is now high and
anticipation that we will see a cut to the ratio in the coming days. jonathan: thank you very much for joining us. i would like to bring an enter roberts now. -- andrew roberts now. what did we learn on that front? andrew: china is still a problem for the luxury goods making industry. also pointed to weakness in north america. what is interesting from the numbers here is we are seeing some of the self-help edgers take place in puma. they have been struggling to turn that around for a decade. also with gucci. the numbers with gucci were down for this quarter. the new collections that are hitting stores as we speak from the new designer seem to be getting a good response from consumers. handbag sales are up into the
double digits. with whatbig contrast has been going on with the brand in recent quarters. market is optimistic that there will be signs of life emerging. quickly, we have seen this regional split. all categories are doing ok. what are they doing that others cannot? andrew: fendi is a little bit like the other luxury goods maker. they actually have the best 27% organict growth. fendi is growing in all regions and what these plants have been common is, essentially, the scale. they are both billions of euro brands. for areas like hong kong, which
have been hit hard by a shift of the spending by chinese consumers to other areas in asia, notably japan, they are issues on the mainland as well. there is come down in extravagance. this has hindered some of the attempts by luxury france to capitalize on demand. i think there is enough traveling consumption by chinese consumers. both are doing something in particular. they are targeting a younger consumer. they're coming up with interesting products, designs, and compelling reasons to buy into the brand. when you marry that with their scale, they have more opportunity to grow in some of these slowing markets. some of these markets are already saturated with their bigger peers. jonathan: it is great to have you with us. let's get final thoughts from dan. china seems to be shaping
everything on the terminal right now. set to consider the outlook for inflation. we know 1/5 of exports go from japan to china. 6.9%.hinese gdp is ok at dan: it is a bit in the middle. people will say, it is the same story. it will pump up the property market and it will still collapse someday. we think it is still at that time, not as rosy. we have more capacity in steel. it will take time for that to be worked through. speaking in the next segment and we will be talking about steel. what do you see around china. i will put you on the spot about the boj. there is a meeting next week and the expectation has been rising that they will pull the trigger. teasing they will and why?
dan: if they are going to do so it will be concerns about whether or not they will meet their inflation target. there are disinflation re: ary pressures. wil i think they will want to do something to boost those. jonathan: it is great to have you back on the program. up next, steel gets tough. isple ask how the industry coping with the lowest prices and more than a decade. ♪
jonathan: the owner of the world's biggest shipping line has cut his profit down, citing a weaker global shipping market. it now has an overlying profit of about $3.4 billion. it is compared to a previous profit of $4 billion. a boost from these weaker swedish companies. the company said adjusted earnings for 5.1 billion kroner or $6.4 million. the ecb standby ready with stimulus. exclusivenin a
interview we were told why he is cautious at holding shares and bonds at certain levels. for safety or by default. lagrange was discussing levels. ase's what no one discussed being in a bubble, steel. third-quarter revenues were down 7.94%. these were the lowest steel prices in over a decade. they can no longer rely on a weaker drupal for protection. great to have you with us this morning. still has become so politicized in this country. pulpoliticians call it a steel
prices. how painful is it for you guys right now? obviously, steel pricing is a challenge for the industry today. we are not the exception. this is why i think we are doing strong. your job to is manage the cost side. it is your responsibility on the strategy side. here though, everybody seems to be blaming china. well? take that line as is it your concern, what is happening in china? >> it is a very simple story. it is the biggest steel producer. and then, you have oversupply.
jonathan: howdy manage the impact? -- how do you manage the impact? >> we will keep our program. jonathan: the weaker rupal has upset much. the russian steel industry was doing fantastically because of the rupal impact. it was offsetting the pain. if things get worse for the shuttingwith things down, what else can you do to protect yourself? >> the key thing is to continue to stay competitive globally.
the third quarter was a 32% margin. jonathan: the margins are good. i have been speaking to other russian companies. you are the second one i have spoken to this week. dmk told me they are working to boost the rupal denominated debt. fantastic. is dollar denominated. what is the strategy around the debt at your company. >> we prefer to keep dollar debts. flow.are affects cash all dollar-based. jonathan: you consider it risky to play the fx market? >> there is always a risk there. the final question, you are here to do an interview.
you have to do this 50 different times, 50 different ways. what is the question you have continued to be asked? >> the question you asked. how are we doing with the steel market. think they give you that answer. jonathan: thank you for joining us this morning. next, the wrap up another busy week for markets. .raghi, dragh draghi, draghi stay with us, we will trap up the markets. 130.ax is up ♪
jonathan: while the area of domestic demand remains resilient, concerns over growth prospects in emerging markets and possible repercussions or the economy from developments in financial and commodity markets continue to signal downside risks to the outlook for growth and inflation. the degree of monetary policy accommodations will need to be re-examined at our december monetary policy meeting, when system gireuro
economic projections will be available. the governg council is willing and able available to act using all the instruments in its mandate. further loweringas indeed discussed. it is one of the instruments that i refer to when i said all of the instruments were discussed. of theere a few members governing council that hinted at the possibility today. i would not say it was the prevailing theme of the discussion today. jonathan: welcome back to bloomberg tv, 52 minutes into the trading session. let's get you up to speed in the equity session. the stoxx 600 is up. the dax is up another 160 points. a gain of 3.6%. the biggest equity market rally
sincen ecb conference july 2013. announcement. have a look at the bond market. a german yields that is negative. i am looking at an italian two year that has just crept back into positive territory. that was negative moments ago. negative yield at the front at the italian -- at the front and of the italian curve. uneventful few days for the market -- an eventful three days for the market. what a week for the german lender. the bank replaced senior managers in the biggest management reshuffle in a decade. the headlines are not over yet. we will get a strategy update next thursday. this week will be remembered for one ipo.
these shares went from 0 to 60. $62 a share. the company is worth more than $10 billion. the big market mover of the week was draghi. president said options include a further reduction in the deposit rate. biggest event of the qe was announced. very phenomenal movement he has managed to extract into these markets. now, we will discuss the ecb's role in the bond markets. i love it. what a turn around.
what are used to these negative rates. nobody knows how or where this unwinds. this is really stepping more into the unknown than we have. what about the bank of japan? a question for you. we sat here 24 hours ago and we were discussing draghi. december, and now, it thereberstamped, more qe, may be a deposit rate cut. you wonder what he will do. manus: he will pull more than one punch out of the bag. he has absolutely blown the expectations out of the water if the day, in terms of what he did. this is what we have seen with super mario in terms of moving the dialogue.
it is the greek market. i love it. index has aank surge of 63%. the want to talk about getting past the hurdle and the memories of europe falling apart, the banks are up 63% and the stocks are up 23%. jonathan: more from manus cranny is coming up after the break with francine lacqua in "the pulse." that is it for me. we are 56 minutes into another big session in europe. 101dax is just coming up by points. big moves by draghi. a weaker euro. bond yields go south. the belly continues. the best of luck for the rest of your day.
francine: draghi delivers. stocks rally. hints at more stimulus before the end of the year. manus: negative yields, and the euro falls. with the euro area p.m.i. back his case for more q.e.? titanse: and tech triumph. amazon, microsoft, and google shares surge after hours after adding $100 billion in market value. welcome to "the pulse" live here in london.