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tv   Countdown  Bloomberg  October 27, 2015 2:00am-4:01am EDT

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>> stalling ahead of the feds. chinese stocks drag asian markets down. a two-day meeting tomorrow. can bp beat the price plunge? lossesors reports as after the lowest close in two months. close for carney as a bank of england policymakers wrestle with the debate. u.k. growth sees slowing. the first reading of the third quarter gdp do this morning. ♪
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a very good day to you and welcome to countdown. i am manus cranny. let's get out to caroline. third-quarter sales looks as if it is below estimates. caroline: coming in at 17.4 billion euros. among 18.3 billion euros. many analysts show growth, expecting there could be some weakness. china slowdown. automotive slowdown and weakness there. agricultural issues in bzil. they're cutting their forecast for the whole of 2015. something we have already heard from them. this is anissue for them going forward amid global headwinds. as we break into the statement, they are saying that is decline in this difficult environment. special items coming in 1.6
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billion euros. that is down 10%, manus. activities,d by they are still in the positive. look at this outlook for 2015. subdued economy, oil price decline and asset swap at the gasp. these are all burden sales. you're going to be digging into this with our international correspondent. manus: thank you for laying out those headlines. on the base bit more f story, let's get to hans nichols. were going to cut the guidance and the burden from the economy and oil. this is what they are saying is going to hit them. on's: it iss a desk a great barometer -- hans: it is
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a great barometer. it is a pretty good currency play. a big miss on the revenue side coming in some 600 million less. on the other side of the story, they look like they beat estimates from 10 million. these numbers are crossing. outlook change for 2015, they have hinted at that before. remember they abandoned their 2020 gold. , a greatthis company german chemical country -- chemical company. a barometer of what is happening globally. take a look at some of the facts and figures. don't just think about chemicals. 113,000 employees globally. we are seeing the numbers. it willst said there eb be about the same as 2014.
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1865 is when the company is founded. they are investing in their headquarters. they have been talking about that. we will dig into these numbers throughout the morning. they are good sales numbers but they may have been helped by the currency crunch. we will dig into this in see what it really means. let's talk about novartis. breaking news in terms of poor earnings. the spring and caroline. it's like it is a miss. $1.27. swiss drugmaker being struck by headwinds. this is a company with a lot of exposure to emerging markets. some weakness is good to filter in. they have had composition, generics coming in. new drugs that have been using patents.
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there out the unit seeing competition. you see sales toppling. the estimate had been for 12.6 billion. .oor earnings per share the market wanted more. the market wanted 1.3. products didth continue to drive the third-quarter performance. this is a company unveiling new jugs, trying to ensure they keep andd with the pipeline managed to drive through the area of generic competition. their launch is off to a strong start in the united states. and oneug for them they're having to plow money into in terms of marketing. overall, operating income coming into line. appears to be meeting.
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manus: as you say, some differences, but both of them kicking off this countdown reporting day. , let's put opinion the asian markets in context. yvonne, it looks like asia is putting back ahead of the fed. money going back. a little bit of a risk off. yvonne: a little bit of profit taking. we are seeing across the board. he much a down day in the asia-pacific. we are slipping away from that two-month high. these big pivotal events coming out of the central banks this week. you mention the fed, the bank of japan. we have sweden and new zealand meeting this week. investors weighing in on what is going to happen out of the u.s. and japan. some economists say if we see the bit -- if we see the fed pushing rates back to 2016 and
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the boj stepping up stimulus, that could be positive for equities. today looking like a red day. renewed selling of shares after that raise cut that sent a euphoria. it looks like that is fading right now. that is a big improvement from what we have saw desk from what we saw in august. -- from what we saw in august. earnings down 1.10%. that has dragged down on asian stocks and u.s. futures lower. i do want to mention casino stocks. of a resort in macau today. leonardo dicaprio, martin scorsese, going to be there. even possibly brad pitt. all stocks falling today, especially
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not go crown. galaxy entertainment all falling china and macau. they also talk about as jm holdings. government not doing enough and fast enough to support this turnaround that they want to have. the 16 month casino downturn that we have seen. they are hoping for better infrastructure and transport in the city. let's look about the boj meeting today. speculation that there could be a need for further easing. we've seen the yen strengthening. isnomists say this decision more of a coin toss. economists expecting the boj will add stimulus this friday. the boj willng
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have to adjust its inflation outlook. the boj would have to revise its deadline. again, less appetite for risk riskier. you're going to have to get were shot across their to do a little more batting. thank you so much. a couple of other lines that are coming across, from the afs this basf. , this makes for an interesting reading, they say the economic environment is clouded over in china. these are referring to maximum ok city. pacity.mum ok
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they say the average price of oil, double nickel. $55 this year. trimming back oil levels. let's focus in on china. the economy has grabbed the attention of the world's policymakers. we are expecting a new growth target from beijing. the current official third-quarter gdp figure, 6.9%. that is at odds with many of the models in terms of the estimates. they range from 2.8%. let's more, let's head over to where malcom scott is standby. this is a great article that you guys have put together. in terms of the brett of estimates. run me through the reasons for the discrepancy.
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it is a changing economy. many of these proxy measures are tied to some of the growth of china's economy. see freight, some use electricity. they all cap into manufacturing exports. let's exposed his services. that is the area of china's economy that is been holding up well. for many in china, the slowdown doesn't feel like a slowdown. their wages are getting better. those elements are holding up so far throughout this slowdown and what we are seeing in the real gdp rates. that is a part of the discrepancy. even there is a whole bunch of these various proxies all suggesting growth may be lower than the headline rate. there is some speculation of our blueberry until it just bloomberg intelligence --
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bloomberg intelligence may be bias. manus: nobody ever died from a little bit of bias here and thank you very much. for more in terms of what you want to watch. we kicked it off already. what else is in store for us yet go caroline: there's going to be plenty of technology to be digesting and oil. happenedbit of what yesterday in terms of united states trading. s&p 500 actually did slip yesterday only .2%. it was down from 89 week high. --are on course desk from a from a nine week high. 11% from the august low. we are 3% from the all-time high. a little bit of calls for paul's
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-- a little bit of cause for pause. only 3% thought we were lucky for a rate hike it -- we were likely for a rate hike. notably, it was technology falling. check this out, apple dropping 3%. this is on the back of its suppliers faring poorly. .lc trading over here sales and outlook missed. it is a concern when darling semiconductors says it is failing to miss expectations. this is what dragged the share prices 3% lower today. checking the s&p 500 down. we are going to keep a close eye because apple comes out later today after the u.s. close. million expected to be sold.
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ipads some 10 million. mac, some 5.7 million. we are expecting's that's we are expecting an uptick in sales. -- we are expecting an uptick in sales. twitter is going to be giving out results. alibaba, at revenues could rise 27%. where shares down -- keep it on oil majors. we got bp outlook today in the united kingdom. it is good to be painful when is $50 arice average barrel -- $50 a barrel. mental caroline, thank you very much. we'll bring you those numbers from bp. stay with countdown. we've got exclusives.
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it reported a strong third-quarter. the market closed yesterday evening. bp will report today. amidst those low oil prices. sincest by rating february. could things could desk could things be looking up? that is all coming up next. ♪
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manus: it is 6:18 in london. 7:18 in frankfurt. these are the stories need to know. basf third-quarter sales and profits have missed estimates. sales came in at 20 -- sales came in. the company says due to the economy, the oil price decline are likely to burden sales and earnings going into the fourth quarter. u.s. navy warship sailed within
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12 miles of the man-made island in the south china sea. the u.s. is showing it doesn't recognize that the island qualifies for the 12 not quote mile zone on the international -- -- 12 not a cold miles jinping by obama and xi next month. they reached a tentative deal to avoid a default tuesday. they will extend the government's borrowing authority. it will include a two-year deal on spending the agreement would not eliminate the chance of a government shutdown if lawmakers cannot resolve disputes i december 11 -- disputes by december 11. bp jets off during a brutal
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time. it is been a 16 month dive. more than $40 billion of this 600 oil0--this stoxx index. let's bring in will kennedy. not that i'm going to get you to make a call, or we near the bottom echo -- near the bottom? will: today's results will be brutal. and crisis.he crash what we hope to see his signs that the brutal cost-cutting will start feeding through to cash flow and this will be a bottom. manus: they have said $1.8 billion. --you think they need to do
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looking for more cuts? i think it is an ongoing process. aim year will see more toward the dividend. manus: that dividend is critical. there are a couple of gray lines. dividender risk of the didn't shell -- dividend. will: if oil prices stay at its level. it will be a different story. manus: in terms of write-downs, as we look at the global write-downs, bp sets the tenor. where going to expect more. will: this is something will keep track of. manus: my favorite graphic. we could've hit the bottom. these are the ratings on some of
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the major stocks. gotgot to a towel -- you total. therting a buy rating is highest this year. well: -- will: when you got these stocks yielding 7% and the ceo says we will not cut the dividend at a zero interest rate. manus: [indiscernible] will kennedy, thank you very much. you want to stay with bloomberg because we are going to look at all of the oil majors. we are to look behind those headline numbers when we get the bp results. that will be at 7:00 london time. it :00 a.m. in frankfurt. 8:00ng the tone and --
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a.m. and frank for it. setting the tone and tenor. -- friday, it is over to exxon. u.k., let us refocus. economic growth probably slowed in the third quarter. the pace of expansion should still be sufficient to see the margin of slack continue to narrow. strategy,f u.k. rate john wraith. welcome to the show. i hear people cry why are they focused on the retrospective number. construction under pressure. the yen and the yang are not going to read. i'm spending. construction is slowed here manufacturing is slowed. there is a lot of economic data conflicting. isk at the u.s., what number
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very strong. the next and comes along and tells you something different. explains why policymakers in the best-performing economies is still struggling with whether the fund may be approaching or they can start to type monetary policy. mental the consistency of the data is going to be critical. -- manus: the consistency of the data is going to be critical here it -- critical. what is the wage data telling you? are we at that point? john: we are. because inflation is very low, nominal earnings are healthy enough therefore real earnings look very strong. ofare about to see a specter disinflation fadeaway. manus: you think that is going to drop out? john: it looks like it. go through the fourth
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quarter of this year in terms of data, you should start to see it unwind. isinflation picks up, that what we expect to see. the big question is whether wages go with it. think we willen i have a different conversation within six months time. it could start to seek rate hikes come into focus. we need inflation to pick up and see wages go with it. echo we need to get the -- manus: we need to market perspective. i've prepared a very special graphic. have a look at this. it is the hawk and the dub spirit. what does it take to move the doves.-- and the what does it take to move the rates echo let's -- the rates? let's take a look at the graphic. flip-flop. he gives mark carney a good reputation. he is the most hawkish.
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ian mccafferty is the dove to end all dumps. move the it take to pendulum of the doves and hawks. john: we have seen the dovish members have gone into the center ground. they're done so because inflation has been week on the headline number. are a lotause there of uncertainties about what is going on, whether it is in the eurozone or china. what it is going to take is evidence that inflation has turned the corner and started to pick up. if earnings go with it and therefore there is a real picture of the uk's labor significantly -- tying significantly. if you get into that position, some of those committee members that are setting of the fence are going to start talking and
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more straightforward terms. the debate is clearly down the middle. manus: john wraith, head of rates at ubs. we will talk novartis after the break. ♪
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manus: a very good morning to you. 6:30 in london. here are the stories you need to know. slumped in oil prices. the earnings and sales are not likely to be lower than last year. that came as basf reported a third-quarter that missed analysts expectations. boy in northern island has been arrested in connection with the hack attack. the british internet advisor -- provider was hit last week.
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said banking information information -- banking information may have been stolen. roy says he is the best candidate to win the candidate 45% in previous general elections. ok, let's get across to eve on man for a check in on asian markets -- across to yvonne man n. we've got the bank of japan at the end of the week as well. yvonne: a lot of the central bank policy going to be weighing on investors. i've got to talk about china in the last 30 minutes. we have seen a recovery here. we are seeing shares down .5%. , nearly 2.8%ring
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earlier after the lunch break. we see the shanghai composite above 3004 to 23 right now. -- 3004 to 23. it is interesting, because we heard from mark mobius, talking about these technology companies . this push to tech, consumer. that is going to be producing a more sustainable expansion into the economy. sure that iss not going to work in the equity markets. many of the stock by the way since for some of bite companies, a little too expensive. you look at the china index which is seen as a proxy, the times more incentive than what
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we see in the shanghai composite. 41 times rejected earnings. -- 41 times projected earnings. valuations are surging again. day, .9% down. overall, we continue to see a sea of red. traders keeping ahead. sweden and new zealand meeting later on this week. new zealand, one of the few green markets here. up on 5%. they are close to a record here at -- to a record. alibaba, mention because earnings are going to be coming out later in the u.s. today. analysts seemed to be more optimistic about the company, saying things look to be turning around. maybe a bounce back from this
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bottom. 33% since september 29. they saw the price plunged 60% below the ipo price. they are expecting revenue could be 27% growth. for mobileis push monetization. people are moving toward smartphones for shopping. that could be helping. as well as the expansion into rural areas. spend their office in london as well. opening officers in france and germany. manus, back to you. manus: yvonne, inc. you very much. -- thank you very much. breaking news about a be. caroline: this is been on the cards for a little while. a nationalized lender, a dutch lender here it it upgraded its
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financial targets. bigger than expected. 10 to 13%. that is the measure of its overall capital rebuffed minutes. set to go back to the public hands. we understand the ipo is going to be held in amsterdam. in thed be started fourth quarter. they have been talking about the fact this deal was lined up for the fourth quarter. he himself, financial leader for the dutch. -- really is an area that could be a success story. the biggest ipo in years. since 2008 even. we understand according to reports that in september, they were out free marketing this
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particular deal. we could see more share sales coming our way in europe. manus: caroline, thank you very much. still with us, and of u.k. rates strategy at ubs is john wraith. we have not finish the discussion around the u.k. and rates. markets have moved aggressively as to the first quarter of 2017. we have trimmed that back. still, let's have a look at this. this is the view of where we are on rates -- potential rate hikes. in market still not pricing a full rate hike by december of next year. is .65.oint it is still not there. i know we have is game every year. policymakers take a
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little bit longer to move their forecasts. this is a real-time market as he goes with the data. this is gone a bit too far. domestic eta is holding up pretty well. we get gdp today. a little bit softer than the second quarter. still perfectly strong. the labor markets getting stronger. i rate hike should not be more than a year away frankly. there are these external issues. the market has made its mind up. circumstances will dictate whether it is become to defensive or not. medical how do you look at the u.k. rate market because you got u.k. rates trading over germany. is there more momentum? john: there could be. when talking about the 10 year spread. one of the drivers is what is
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going on in the eurozone. after the ecb meeting recently, it seems clear they are likely to expand on the back end of this year. ellis thinks take a significant turn for the better. that raises expectation of heavy essential bank buying of european government bonds. that is what makes them underperform. the prospects of the u.k. are seemingly very detached from the eurozone. in the medium-term, the u.k. is exposed to what is going on. this spreads over the next year. it is going to narrow. we hope that it is because of european regeneration. clearly there are risks that the eurozone stays in trouble and that drags the u.k. down with it. ms. marcussen: you said -- manus: you say this comes with resets.
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we've got a title on our bloomberg story that the bank of japan decision seems like a flip of a coin. let's take a look at the graphic. that is six analysts -- 36 analysts -- they got a lot of debt maturing. john: they are in a similar position as other central banks. we operate in a global environment of very low inflation. with u.s., u.k., that is offset by economic strength. when you look at some of these other countries, japan being another. andgot weak inflation questionable economic growth. that gets central banks very concerned. we've got to keep adding stimulus. we hope to see inflation turned a bit of a corner. they are fighting to try and simulate momentum. inus: i like the way you put
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your report, a minor response from the bank of japan. , butll evoke one response it is the grandiose gestures that could move the market more substantially. have seen this before when the bank of japan has had to inject stimulus upon another. it's time they expand, the market tends to shrug it off. no sense of immunity that the market has seen it all before. when they have launched real big new programs and radical changes to the stimulus, you see the market respond. we seem to be getting toward the point where they need to do something more of a grand fashion.n a piecemeal manus: the other issue is ownership of the bond markets. you've got a colossal amount of the bond market in 2017. are you worried? there is an article. -- you'vech a banks
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got central banks. these are highly distorted markets, aren't they? john: they don't know quite what we are going to be heading into is -- going into if rates are going up. find in hindsight they are going to early, they have run out of road. there started to raise rates, the recovery has slowed down and they do not have any ammunition to fight. on the side erring of caution. expectations whether you are looking at the markets or indications from consumers. expectations are very benign. there is no pressure on them to start raising rates. in the weaker economy, there is more pressure for them to get things off the ground. manus: you believe china is less responsible for
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this disinflation. it has been part of the story. there are other issues. in our technological advances, free movement of labor, there is demographics. there is a range of issues. they are bearing down on inflation. think short-term, we do cpi are likely to take a swing higher. that might make things different from a policymaker perspective. there is a lot of disinflation. john, your good stay with me. draghi, stepping up stimulus. what does that rlly mean for the bond market? political issues in portugal. political dynamics in spain. negative bond yields. perspective from ubs. ♪
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manus: it is 6:45 in london. these are the stories you need to know to set you up for the day. u.s. navy warships sailed within 12 miles of a man-made island built by china. the u.s. iso close, showing it doesn't recognize the island qualified for the 12 -- mile under international law. it could strain relations with the --nder just before just before the meeting schedule to be attended by obama and presidentxi jinping. the agreement would not eliminate the chance the government shutdown if lawmakers
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cannot resolve settling disputes by december 11. uk's unelected vice lords voted to block the cuts the payments for low-wage families. they voted to delay by three years reductions in tax credits paid to working people. the outcome raises a constitutional issue that must be dealt with. conversation. our by e upton.d and john wraith. great to have you with us. as i was looking at data, it is trading near a two-month low. .ou got the supply side
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you got opec billowing out the stuff. we need some action from opec, don't tweet? we will see what they decide to do later this year. there is pressure now, building from algeria and ports of venezuela. states that's the gulf -- the gulf remains adamant that this is an opportunity for them to undertake. you have a range of views now across the region from out jerry is saying we must do something. -- from algeria saying we must do something. imf says there are substantial issues in terms of society, buffering. this is a geopolitical issue.
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this is sparking a geopolitical buildup. florence: not necessarily. manus: society beginning to tax land. society doing things i never thought imaginable. saudice: let's remember has more money coming into its coffers than it knows what to do. of sensationt around these things. ack in 2007, you cannot find hotel room in the gulf. people stampeded into the wrong stocks and bonds. now, it is the exact reverse. the fact of the matter is saudi arabia continues to have a debt to gdp ratio. this year, it will still be
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under 7%. incumbent upon the imf to make the projections they make. would say they do not have a great record our projections. florence: the imf did the right -- meaning ifning nothing changes. au and i know in five years lot can change. figure five years ago. i am not as worried as some people are. the gulf state can live for several years on the source of revenue they're getting now. the prices might have bottomed out. who knows? manus: you would concur with that, john. from a global inflation point of
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view is that oil will drop out. last year, we were hitting the bond market. where are we in the debate? john: it was in fourth quarter of 2014, that is what we are seeing come through in the headline. there are winners and losers in all of this. for all that is putting down the pressure on inflation. for all, it is changing the dynamics of foreign exchange reserves and the money within oil-producing economies in central banks. it is giving a boost to consumers. it is reducing the cost of transport and so on. we will see where we go from here. it is important from a bond market point of view as we -- point of view that we get stability. it is better for the bond market policymakers if the oil price
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and all of these other inputs -- ilize and allow us manus: there are a few less banks -- maybe you will see some continuity. i want to move the agenda onto syria. you are based in the middle east. ont is the perspective bashir al-assad's meeting with putin? we still -- we spoke to the italian minister yesterday. he says you got to accept that russia is not part of discussing the whole settlement of a side. d. settlement of assa florence: the russians have been consistent on their perspective of syria from the beginning. recents changed is the
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air intervention. oft has the potential spiraling into dangerous ground, because it decreases the number of players in this conflict. for carefulthe need possibilitynd the of near misses as one can imagine. the way thisof conflict is holding, there is no surprise. we have seen countries like this before. it escalated and practically involved everybody under the sun, including the u.s., into lebanon. the israeli invasion, financing from the states of various parties. these escalate before they start to the escalate. i think things are moving. hasrefugee crisis in europe
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caused thinks to start to move. the manner in which the russians are escalating their intervention are causing things to move. let's hope they will move in the right direction. it is hard to say, but i think it is better for thanks to move. manus: florence, thank you very much. john, you're going to stay with us. a little bit of breaking news. let's get out to caroline. all t's. --altis. ofoline: this is the owner cable assets in europe. it is buying up cablevision. owner stretches his cord into the united states and buying cablevision. they are looking to sell 30% to $1of cablevision
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billion to other buyers. finding other ways to finance this megadeal overall. piab which is cp a hedging plan investment. the u.s. cable arm of out these altice.e arm of it is close to be closed for the first half of 2016. manus: caroline hyde, thank you very much. let's finish up with john wraith. as we touched on a lot of central-bank policies. reading your notes, the ecb, the next move could be quite aggressive. give us your take on what is needed to deliver draghi. john: the markets responded
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quite forcefully after this month's meeting. it seems clear they will the -- they will be delivering some stimulus in december. ofy will make some sort acknowledgment that the kiwi is likely to go on beyond that by three to six months. manus: the next wave of qe comes at a very difficult moment in time. are you worried about the availability? john: not yet. what is interesting is the ecb is very fixed on its cpi mandate to keep it close to 2%. it is a long way. it is not going to get back up there in the next year or two. the underlying economic data is picking up quite materially.
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it is better than it was six months or year ago. they are all signs of momentum in the eurozone. next, it is the bp results. ♪
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jonathan: asian markets are driven down and the yen is boosted. back to the market. lenderionalized dutch plans the ipo as soon as the fourth quarter of the year. a very form welcome.
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bp quarterlyg the results across the bloomberg terminal. if you are a shareholder at $.10 a share, let's get to caroline. the market expected to little. is it because of the average price of oil at just $50 for the third quarter. is that my expectations were so low? the third quarter adjusted profit was well ahead the estimate of 1.26 billion dollars. love a quarterly dividend of some $10 at the moment. shy ofoks a little estimates. overall production, 2.2 4 million barrels per day. that too seems to be shy up
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expect haitians. the quarterly dividend is $.10. across the board it does seem as though the adjusted profit for the third quarter is eating the estimates. they say they are restructuring. this is a company that has to re-diversify its self. restructuring charges are $2.5 billion by the end of 2016. if you are looking at a profit basis, bp pulls it out of the bag. manus: caroline, thank you. i want to bring you some breaking news on the trucks business within vw.
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they say third-quarter sales came in at 3.26 billion dollars. this is a decline from last year from $3.52 billion. the third-quarter numbers fall by 9%. net income is a little better. euros, versus 22 million euros. there is every session in brazil . that is what they are having issues with. there is considerable deterioration within the brazilian market. however, they do see positive development in the european commercial market. a balancing market between the emerging markets story and the court of europe. those are the two breaking
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numbers we have had. with the asian markets. terms ofad a pause in those markets. is waitingverybody for the fed meeting and the bank of japan meeting. day 1/10 of 1%he up. we saw at fall through the morning and after the lunch we saw them regained the losses of the day. technology and defense companies have rallied. out ahead of the fomc meeting. china faces a
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severe problem from its adjustment. the economy is at a risk of falling into a recession. you have peter cooper saying they are shipping their economy away from investment and it has the resources to sustain growth. our economist is looking at some of the intel proxies as well, saying that yes, we look at the growth in 2016. the sixeen lower than .9% reported by the national bureau of statistics. 9% reported by the national bureau of statistics. economists still remain pretty split. the apex 200 is pretty much flat. 2/10 of seng is down
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1%. even in japan, we saw volumes down. we are expecting a rush of company earnings as well. i want to end on some currencies. growth,lk about china's one big proxy is the australian dollar. we continue to see pressure through the morning. we can see the new zealand dollar and the aussi dollar down today. if you look at the series of rate cuts we see in china, we have already had six cents november. it really has not done much to the aussi dollar. they say the reality here is that the slowing chinese economy continues. still a lot of questions about that. it is not just the boj and the fed. we see policymakers meeting here this week in sweden and new zealand. back to you.
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thank you. let's get you up to speed in terms of the european opening. we have had a variety of reports. london, paris, and frankfurt all indicated that little bit lowered. missed in terms of the sailing's and the earnings numbers. they talked about a global growth being particularly difficult. december at 30 points. numbernings per share was $1.27. mark was looking for $1.30. bp, however, did actually beat
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the headline numbers. there is a variety of things to take into account. bp did be to the analyst's predictions. we will go behind the headlines at bp. in the meantime, we are here with the head of u.k. rates. when we look at the bond markets, we see they are grappling with deflation, disinflation, and negative rights. we have got the spain election on the way and portugal. i would call that a constitutional crisis. where do you look in the
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european space? the data has been picking up in europe. it has been missed by investors. has been a lot of eurozone concern. the ecb is worried about missing their inflation target. they engaged in a lot of stimulus and will likely announce more. that is the backdrop for us. we think that the likes of portugal for example, will see their bonds outperform against the core market. this is money coming in from central bank stimulus. is a: as you said, that ways off qe. when you look at some of the spread markets, you got u.s. treasuries, we touched on that a little bit earlier.
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boyso you look at the big of the bond market? >> the recoveries in the u.s. and the u.k. are fairly mature. the central bank is starting to tighten policy very carefully over the next 6-12 months in both the u.s. and u.k.. by and large, the recovery is on track. , whatg question is happens against the eurozone? can push bond yields down ofause of the speculation an the purchases, but it can push prices up cousin boosts anticipation -- prices up because it boosts anticipation. the court yields in the market steadyto rise with a
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amount. ares: you think there divisions within the federal reserve that will become more magnified? there really are burgeoning divisions. >> the market is not expecting a hike. clearly, some of them want to get on with it and others are still reticent for a whole range of reasons. is that they will not act. they need to be together on this. thank you be sur they need to be sure they are doing the right thing. if and when inflation picks up, as we expected to where the start of next year, that will
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strengthen their hand and they will feel more confident. then, they could start to raise rates. divisions are clear. we hope both growth and inflation will pick up. manus: thank you, john. bp, as we have been telling you about, despite reporting a 40% drop in the third quarter. let's break down the numbers. ♪
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manus: it is 7:15 in london. the u.s. navy warship sailed close to china, showing it does
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not recognize that the island is qualified for the 12 mile zone under international law. the meeting will be attended by month.obama next a tentative deal was reached today. said aom both parties two year deal on spending will be included. if lawmakers cannot dissolve the spending dispute, the u.k. elected voted to block osborne's cut to low-wage families. osborne says this raises
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constitutional issues. of world's largest maker glasses has recalleecorded their results. malan.joined now from they good morning to you and welcome. i read your results and positive trends for organic growth for 2016. you are confirming your growth for the next 12 years. is there nothing that can stop you? is there nothing you are worried about? >> it is hard work. we are definitely in a good moment. the stock is rallying. the short term is pretty robust because we have a portfolio across the world and we are very integrated.
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on the longer term it is up to wear andke great eye captured the new users coming into the market. the demographic trend is in our favor. we need to be sure that as more people come into the markets that we are ready for them. manus: you mentioned the demographics that you are ready for. you are doing double digit growth. is that sustainable? to sustain that double-digit performance, what does that do to pricing? these are record levels of growth. i think to declare them as the be correct.t what is driving our business might now is not only great but ourcollections, ability to work with customers on their business models.
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we are able to work with entrepreneurs. mentioned areyou some of the first that have adopted this sales program. it is driving the business. it is pricing independent. manus: even got one billion euros and counting. you said you don't need to do your growth targets. that leads me to a straightforward presumption. you're going to do a shareholder by back. these guys should be doing a share buyback. is that what you are going to do? we don't need to do mma because to reach our goal of the next 10 years, we need to grow another 7%.
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at our track record, we are more or less at that record right now. i believe we can get to their without the need for an acquisition. of course, it gets harder and harder as you get bigger. euros inne billion cash and our dead position is very good. from the outside we look ready to pounce on the acquisition front. we can afford to do that judiciously. it is not really a prep for a buyback. we are looking at options. we don't have a gun at our head for acquisitions. if we had good deals and good options, we would take them. ands: where the good deals options? are they in china? there must be a bit of value there. >> all the time in emergent markets we make moves that don't make the headlines because we
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are working wholesale and retail. , may beat acquisitions a small change that could give presence a real estate or that could allow us to pave the way for some of our small businesses. for the rest, you will have to wait. manus: i will be patient. but what i am getting impatient for is google glasses. please give me an update on google glass. have already transformed my life. i have your products. how are you going to transform my life? will it be in the first quarter of 2016 with google glass? we are working more than one project.
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i'm a big believer in wearable. i have seen various prototypes. i know what you can do with a device, when it can interact with sound and a vision. i think of wearables are going to be a big thing. portable going to arable going toerabl be about sound and music? >> it is definitely going to have sound. and we arebrands, working with intel. reveal that in january. we are racing to get it out before the olympics. that is probably the first truly functional wearable from us
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that you will see. i have seen some products that are very exciting. we might just send you one when we have it ready. manus: i don't want you to just send me one. i want to exclusive first look tech comingearable from luxottica. i am going to hold you to that. what is your favorite pair of glasses? >> i am wearing oakley's at the moment. they are a great fit. manus: i concur with you on that. it will give the marketing director a quick call. i am an oakley fan as well. it is great to have you this morning. sunglasses to oil, it is a bit of a transition. could crude oil hit $20 a barrel?
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the scenario has been outlined and it is possible, yes. >> to understand the scenario when we come up with $20 a barrel, it is based upon the idea of operational stress. that is very unique to energy markets. what do i mean by that? is cannot happen in metals. when you produce aluminum, you can store it outside the smelter easily. of the aluminum is one easiest things in the world. all you need is a parking lot, chain link fence, a guard dog. you are good. you never breached storage capacity. in contrast, think about a barrel of oil. cannotce the oil, but put it outside the well. it has to go inside the pipeline, to the storage facility. if you breach the storage tank, you have anothe no other option but to reduce the price.
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you would have to get down to $20 a barrel to create a type of correction. manus: you heard it from goldman sachs first. bp was one of those. big beat,saw a despite a drop in the third quarter. joined i our headmanned for commodities. to the refining business. gasoline and diesel seem to have done very well. we expect to see one point $3 billion. they came up at $1.8 billion. manus: when you look at what else they said. worldhard to live in a with $60 oil.
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>> absolutely. how do we make the business work in 2017 and how do we keep paying dividends? that is what all of the ceo majors of oil companies are saying. let's focus in on this part. this is what we call bq. that is where we take all of the majors and we do some analytics. you have bp doing 6%. ofn't we at the trough here what is driving that disparity. >> shell has the big issue of the big merger with bg. they have really suffered. bp is somewhere in the middle. he will see a sharp rebound at the open today. manus: thank you very much.
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our man in charge of the energy and commodities. the third-quarter profits today. we will get into those numbers after the break. ♪
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manus: it is 7:30 in london. these are the stories that will set you up for the day. a 40% drop in earnings in the third quarter. crude oil prices dropped the lowest since 2009. we have inventory changes. that beats the average estimate of $1.26 million. this is 70 years after that.
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the government says it plans to sell 30% of abn. worth $70ay be million. a boy has been arrested. this was a 15-year-old arrested for the talktalk hack attack. in on the asian and european markets ahead of the ed's two day meeting. caroline: we'll got a shut sinking. if you look at the japanese stocks, we have some of the worst performances. the federal reserve meeting kicks off today. .hat is cause for some concern
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we don't know if we will get outline or indications of the trajectory of u.s. interest rates. nearfeel we will see rates 0%. we have another central bank in the mix, the bank of japan. they meet this week as well. there is some speculation that we will not see any adding to stimulus from them. at the moment, we have 16 out of 36 analysts thinking that we will see the bank of japan boost stimulus. many want to see more stimulus to get us through this slowing of global growth. yen is rising. the dollar yen is falling. just want to reach out for slightly safer assets this morning. that theme will carry to europe.
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are off by 3/10 of 1%. that there is a slight pause in the rally. the s&p 500 was at a nine week high. it slipped down from that yesterday. oil companies started to deteriorate ahead of some have the earnings. crude is off this morning. remain above to $50 at the moment. managed to beat analyst estimates. everyone was so negative about where the oil prices have been, averaging about $50. many of the oil majors will see about a 40% drop in their profit, as ep did.
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all gearing up for some of the big tech giants later. aswill see how they perform well. back to you. up for au are gearing slightly lower opening. one of the larger culprits is the asf. it does not expect things to get better anytime soon. isn't that the message coming through here, hans? they are talking about a murky outlook from china. theirre slashing euro-dollar target. iss: the word they are using slight. they expect a slight decrease in earnings and overall revenues. they blamed the slowdown in china and brazil, as well as the decline in oil prices. you just take a look at the
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decline in oil prices and what that has done to their pricing. that is down the percent for the year. -- that is down 8% for the year. eurose in at 17.4 billion or the quarter, almost a 5% decrease. mess there. your is what the ceo had to say in a statement. >> we experienced a pronounced summer lull. inor markets like brazil are recession. they face lower growth rates, such as china. felt 1.6%.item manus, it is not necessarily going to get better. in part because of that asset's swap. they got rid of some oil transfer services.
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revenues from that will be lower because of the price of oil. they say in the fourth quarter, things are not necessarily going to get better. earlier last week the company did pledge or whatnot the redundancies at their headquarters in west germany. this is a massive company. it gives you a great take on overall what the outlook is. there will not be job cuts there. they do have 113,000 global employees. they have 380 production sites worldwide. in some ways, they are continuing to invest in germany, but they do expect lower revenues and earnings. manus: thank you very much for wrapping up everything with the basf. here to break down the numbers for the third-quarter profit is
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sam. let's make it simple. sam: most of the pressure was from hong kong. each of suffering in those. q2 was zero and this quarter is down 2%. it was meant to be a good few years. a good is people are getting older and the population is aging, generally. i know for a fact that i need glasses to read. demographics are behind it, but the business is tough.
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asia and emerging markets have a serious pressure on them. the $390 million they are going to pay for the u.s. kick back case. what are the details? >> at the moment they are sensitive to the phrase specialized pharmaceuticals. may or may not have accounting issues. this is a long-standing issue. they have been getting kids kickbacks and the have settled it. this will hopefully be behind them. manus: always great to get an update from you.
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we will welcome the president and portfolio manager at edge asset manager. it is great to have you with us. how do you look at pharma? >> we do have exposure to big pharma. in have to be very cautious this space and investors have to do their homework and look at the fundamentals. a lot of these big multinationals have been impacted by the slowing global growth. finding the companies that can maneuver through that environment is critical for investors. articlehere is a great that only a ninja would make money. i think that is an apt way to put it.
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we have seen quite a bit of volatility in moves. byn stocks drop, they drop 10%. >> absolutely, there is more volatility. it has been a wild ride since entering that period. more volatility moving forward as the world economies are slowing down and oil prices are under pressure. the fed is also contemplating their first move in interest rates. go in and find the companies that can maneuver through this environment. pullbacks are actually a buying opportunity for those companies that can rebound. manus: last week we saw a
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phenomenal turnaround. microsoft added $9 billion. added $90 billion to the value of equities. how do you look at tech between the new and the old? who has the proposition correct? >> microsoft is our neighbor in seattle. maneuver and move with fundamentals with these companies. are onour emphasises based on dividends. a couple years ago apple instigated their new dividends. are characteristics of what we believe to be a strong company.
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if they can have a strong dividend and go after shareholders over time. we have an article that states payouts in u.s. equities will rise by 5%. this will be the smallest payout we have seen since 2010. are we building up the ability to really maintain these dividend payouts when we see such concern about growth? that is the balancing act. >> it is still not every company. you have to do your homework and the fundamentals. for edge, finding these companies and the small to midsize portfolio, many of the companies have raised their dividend over the past 12 months. yes, there is pressure, especially in the large multinationals because of the small growth environment, that there are a lot of small and
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midsize companies that can still pay and grow their dividend and business. those are the companies we are focused on and in the u.s. there is still a mountain of cash sitting on balance sheets. we do believe that is coming back to shareholders, but not across the board. we see some huge deals going on. will it be a shareholder return? >> there will definitely be mma activity. in the small to mid for folio, where we focus on these quality companies, we see acquisitions there. there are normally one or two a year. the big companies want to buy. that is an opportunity as well in these types of strategies. manus: stay with me. we have more to get through. jill, the president at edge
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asset management. minutes to go before the start of the european trading. we will go through everything you need to know to set you up for your trading day. ♪
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manus: it is 7:47 in london and we are minutes away from the start of the trading day. sailingnavy warships miles within man-made islands. the u.s. is showing the islands qualify for the 12 miles, under
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international law. this could put a strain on u.s. relations with china. the white house and top lawmakers from both the u.s. parties reached a punitive deal. said the both parties accord will extend to both parties. it to include a two year deal on spending. eliminate the chance for a government shutdown. ministersh prime called for a general election for december 20. despite unrest within his party, best said he is the candidate for the job. ago, the start of
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european trading began. this is what we see at the moment in terms of equity markets. we are signaling a down day. plenty of bp to be looking at. the dax is down by 3/10 of 1%. i will show you one german stock that will be tugging fed lower this morning. is currently gone down about 2%. why? we see they cut their four year target. environment has clouded over emerging markets. especially in china.
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sales are down 5% and earnings are down 10%. prices fall, getting into the fact that many of their clients want to see lower prices for chemicals. this is a nice segue into what i am talking about next. just outperform the market. this is important because it is the first of the five majors we will hear from for the rest of the week. excon will follow. bp beat its forecast. 40%, but many thought it would be worse. they are about 600 million pounds better than what was expected in terms of overall profitability. is doingtream area particularly well. that is the refining area and
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the trading area. lastly, i want to show you one stock that is set to move. contractor, this is a company struggling. lenders are trying not to break the rules on any of their debt so they don't go into default. they have a potential delay in one of their key contracts. manus: thank you. it will be a busy trading day. managementdge asset is still with us. the toss up, at
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how would you look at oil in the portfolios? income and a reasonable dividend and growing dividend are critical for edge and what we look for and the quality of the companies we are investing and. in the oil space it is interesting because you look at the height dividends and not all of those are sustainable. we want to see the commitment and capacity for companies to pay the dividend. up and rvave pulled function. the relative value function. it gives you a lot of information. cap, it go market through percentage changes and revenues. on the right-hand side you can see dividend. do to protect the
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dividend of 7%? you have your own major reporting at the end of the week. jill: there are other ways to play this space other than these big oil companies. talked about the refining business doing well. in that the u.s. there are small to medium-sized refiners that are not as impacted by th. they can still make money in this space. there are still opportunities for refiners that can have again, the capacity to pay a good dividend over time. manus: are you worried about the dollar? is that a concern? : absolutely, it is
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impacting big full a national companies. we do look at the big companies in our portfolios as well, but that small to medium sized space center dot as exposed to overseas growth, there are opportunities there. manus: it is great to get your perspective in pursuit of the income. jill, president and portfolio manager of edge asset management. let's check in with jon ferro. "on the move" is up in a couple minutes. jon: it is. biggest company apple, reports earnings today. in the here and now, bp is beating dismal expectations. profit is down 40%. dowaverage royal price is
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price is down oil the lowest since 2009. then, the u.k. global stress test. can the u.k. global economy would stand growing risks abroad? that is a question that i will put to my guests in the next hour. and the london property market. the party is most over. we will be speaking to the deutsche bank later on. i have not got a clue what to are talking about, manus cranny. manus: up next in a couple minutes. trading with jon ferro. ♪
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jonathan: good morning and welcome to "on the move." right herean ferro in the city of london. moments away from the start of european training. bp beats dismal expectations. earnings dropped 40% in the third quarter after average oil prices dropped to the lowest since 2009. basf crude reality the world's biggest chemical maker cuts targets, blaming china. the u.k. global stress test. can the global economy withstand. we look ahead. all of that and more throughout the next hour. 20 seconds away from the market
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open here in europe. 12 ftse 100 down about points. the dax down 39 points. a lot to digest in the u.k. and germany. let's hit the market opened with caroline hyde. caroline: a lot of earnings. central banks turn center stage. a little bit of profit taking in caution as the federal reserve meets low expectations. just 6% probability that we will see a rate rise at this meeting. not until next year that we see the probability build above a percent. what will the bank of japan do as well? this is what investors are trying to negotiate at the moment. maybe a little bit of money coming off the table. .1%.up


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