tv On the Move Bloomberg October 27, 2015 4:00am-5:01am EDT
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
the s&p 500 dipped a little bit yesterday off a nine week high. toward gdp heading figures out of the u.k.. 9:30 a.m. u.k. time. we are expecting growth. poundile, the british basically flat. $1.5356/ we cannot get above that $50 mark when it comes to crude. it is continuing to affect national gas. up by 2.2%. we are so close to the two dollar mark. that would mean we are pushing lower and getting really toward a low that we have not seen for years when it comes to natural
gas. it is all about a glut in natural gas. look at some of the stocks to watch. we have had some big numbers coming out of the likes of bp. 1.5%. why? the analysts have been too negative. refining becoming more profitable with oil prices dipping lower. refining at 50% in terms of earnings. profit as a whole, just 40%. it did be analysts expectations. makers fallsal 4.6% just on cue as they are having to revise their target lower. there are the economic environment clouded over, particularly in china. the ammunitions provider is
likely one of their contracts is going to delay revenue. they need to negotiate on their debt. jonathan: caroline hyde, thank you very much. that is what is happening in markets. here's what is to happen in today's program. crude reality. bp and the you -- and the basf. we look ahead to this morning's gdp number. but with a champagne, is the party over for london prime real estate? ♪ jonathan: call it crude reality, bp earnings eat expectations. tracked down by the lower oil prices. earnings jumped 40% on the quarter. basf, the world's largest chemical maker, cut targets due to the lower oil price.
hans nichols has more on the story from berlin. will kennedy is also with us. wilco -- will: super crude logic to make more modules. trading did well in. they have a big trading operation. they tend to do well in all types of markets. jonathan: that is bp covered by for basf, it is as much about the guidance for the rest of the year as it is for this morning's number. why are they cutting the outlook? china, lowerand oil prices. this is not a difficult formula. the question is by how much? the only guidance we have from them is the expect a slight decrease from 2014 profits. this gives you a sense of where they are going. -- that slumping oil led
to lower prices for basf, that led to a 5% decrease in revenue. they came in well south of 18 billion euros. the estimate was 18.3. he came in at 17.4. that is a 5% decrease on sales. here is what the ceo had to say. he is expanding this in terms of the macro picture. here's what he said. "we experienced a pronounced summer low and no volume momentum in september. major markets like brazil are in recession are facing lower rates. -- they came in at 1.6 billion. jonathan, and so many ways, this is about a company that is trying to figure out what is going to be next. however, they have pledged to their headquarters.
they will not have any job loss there in the next five years as the global company gives you a sense of what is happening in the commodities industry. what it means for profits for these producers. jonathan? jonathan:'s nichols berlin. the oil story front and center. will kennedy is good to stay with us. .et's bring in antonin jullier i didn't, great to have you with us. bp proved that expectations matter. i was wondering about expectation coming into this. given the huge month that we have had for energy. where are we in terms of this week? antonin: they came in and especially so in the last three weeks. it is not unusual. usually we lower expectations down. it is happening again. the u.s. has gotten 43%.
beatinghe company is basf. about 20%.de, is expectations come down so much [indiscernible] providing and underpin to the market. company that has been resilient despite the reality of $40 to $50 crude. wilco some of the other stuff that bp -- will: some of the that isat bp said -- across the whole industry. people like this people expected to go much further. capital spending will start to show through and it will become more confident to defend the dividend. you look of these yields. word, take the lead as
then it looks like a pretty goodbye. jonathan: you take him on his word. you can bp and shell. dividend gets cut or they are oversold. which one is it? cut the major oil to dividend. a lot of assets they can restructure. therefore they can defend the dividend. the general positioning whether it is based on the hedge fund side, the oil majors in particular which are simpler to our providing you with a very good yield. our research analyst has been pushing them. from a trading point of view, we would agree.
jonathan: i wonder how the balance sheets are position now. assumptionsetty big where crude will be trading, are the balance sheets position for it? will: it is clear that they're getting on with at work today. he is retelling the company to work at oil prices of $60. that is a huge uptick from where we were a year ago. that has weighed on share price this year. it will be interesting to see. jonathan: that is a story for later. will kennedy, thank you for joining us. antonin jullier a will be staying with us. will the slowdown in china way on the british economy? we look ahead to the gdp number. ♪
they did beat estimates this morning. that was down by putting percent. of 1.66 --s estimate 1.26. -- cablevision, the deal was ce says the -- alti agreement means the takeover of cablevision is now fully funded. a 15 year old boy has been arrested in connection with the tall talk.k on the company was hit last week. some banking information may been stolen. let's call it the u.k. stress test. will get the first estimate of
the gdp in the third quarter. antonin jullier still with us. says thels stress test u.k. economy is resilient. do you expect to see it in the gdp figure? >> i am looking for .5. either way i think it is good to be softer. manufacturing is week. manufacturing is weak because the global cycle is week. the point is to keep them in perspective. by now, manufacturing has not had a good quarter. it might attract about 10 points. it is likely to be the difference between expansion and recession. looks fine. we are going to have a softer
patch because of manufacturing. jonathan: we always have this situation where the equity markets are divorced from what is happening. the u.k. economy might be resilient, but you want to stay with from the ftse 100 if you worried about what is happening in china. feel miners and oils -- the ftse could become interesting. the u.k. market in general is the cleanest rate you can think of. andk of ftse as oil, miners dollars. it is a big the mystic recovery happening in europe. ecb is more helpful to the market, given the estimates made by draghi. jonathan: rob, we're talking about mining, energy.
, what is behind that -- it is services -- what is behind that? robert: it looks like an outline to me. never say never. there are a bunch of other indicators that the service sector has not weakened nearly as much. sectors not the industrial ones. consumer confidence is another one. car sales. it can list a bunch of stuff that doesn't match. it is a reason for caution. this is a big number. we need a bounce back for the story to find out next week. let's hold on until next week. it does make me a little bit nervous. expensive much time talking about janet yellen's
dashboard. i wonder what mark carney's dashboard looks like. as long as it doesn't get really bad, as long as china doesn't have a hard landing, i think the u.k. will be fine. what is really different about the u.k. is we are seeing wage inflation. beating through to wages which is quite different than the u.s.. if you're governor carney, it doesn't mean you have to hike rates tomorrow. it is something you're looking at in thinking this is a bit different. closer to a rate hike than others. it is not a tricky balancing act. act, if: that balancing i was looking at wall street and equity markets, the s&p 500, we would be talking about the dollar and what it means for anticipating the next rate hike. here in the u.k., is it very
different? do you pay much attention -- d pay much attention? antonin: elect the best opportunities and yield. if chinast question is is so bad that it can record late the world into recession, the question is is that something that is very likely? given the amount of central banks responses, all of that should be supported of -- supported enough of equity markets. it is not good to be ok, but it is not going to be as bad as a globally synchronized recession. jonathan: the gdp number comes the injust over an hour, pc is talking about raising rates. the market is nowhere near positioned for that.
why not? the -- when does the fed move? up, thesterling goes inflation forecast is toast. there is a bit of uncertainty about the fed. there is a question, china hard landing may not be a probable event. wonder if it is a question, what about a brexit referendum? are they going to hike around that sort of timing. the second half timing becomes difficult. maybe there is that reason. there is a degree of uncertainty. eta wobbled atic little bit. should we wait a few weeks data turnsee how the
jonathan: good morning and welcome back to bloomberg tv. i'm jonathan ferro live from the city of london. the ftse 100 down a look at lower by .4%. an outperformance by bp. 40%. that is how much profit dropped in the third quarter. stocks up by 120%. the other performance coming from minors. glencore really bringing down the index. let's dig into these markets a little bit later. the world's biggest public company reporting live today. increaseks to post an in sales and profits but at a much lower rate. it's look at numbers, is caroline hyde. analysts huge as they
should be. up 27%. i want to dig into this number. $51 billion and one quarter for apple. that means apple is pulling in more than half $1 billion per day. pere pulling in $23 million hour. they will have finished $385,000. that is how much their pulling and permanent. they are likely to sell 48 million iphones. that means everyone and frank for could've bought -- in frankfurt -- everyone in london could have five iphones. ipads though not quite as many. this is go to show you how important the iphone is to them. this is going to show you how
important the iphone is to them. estimates for the holiday season, the next quarter, slow. slow in terms of growth. look at what we are expecting in terms of whether those cheers for holiday our fears for the holiday. the growth is estimated to be the percent. compare that to where the christmas holiday was back in 2014. ready percent growth. really putting brakes on growth. , the six s plus. it is so important to them as a product. 100 billion brought in last year. that is why we are seeing how fast they fly off the shelves. they did have record sales during the first week in september. is one of the most researched companies in the united states. everybody is looking for a read. they're looking to the results
for some of the suppliers. what is the read across when you look at the suppliers? caroline: that is why we saw shares fall yesterday. you've seen the shares down 12%. everyone trying to read the tea leaves as to what the numbers are going to be like for apple. this today, its biggest client is apple, and they did not live up to forecast for the holiday season. if the suppliers to apple are not doing well, maybe that means apple is not doing so well. are disappointing in terms of forecasted that create nerves it -- that creates nervousness. how chinese demand currently is faring. metrics, how quickly is that being adopted. even though 4 million sold, they have to make it the all-important roddick. jonathan: -- important product.
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jonathan: good morning and welcome back to "on the move." i am jonathan ferro. 30 minutes into your trading day. on in the session, stoxx 600 down 0.5%. ftse 100 is up 0.3 first sign. on the downside is bp. what a month it has been. stoxx 600 heading for the best month since july 2009. the miners and a bit energy bounceback. switch of the board quickly. the fx market. euro buys 1.10.
euro gdp third quarter, the estimate is 0.6% per dollar-again, 1.25. a flatter yen. ofe of the market's moves this morning. up to speed on the top stock stories with caroline hyde for caroline: dramatic news and the united kingdom. armed forces and a profit warning. stockiolation down 39% -- down 39%. related to one project. a 40 millimeter ammunition project. bethey say revenue will delayed. having to go to the lenders to renegotiate some of the debt. make sure they do not actually have to halt as of the revenue is later.
a profit warning and raising a new capital to buy them shares. -- buy shares. where looking at -- we are down almost 5%, the biggest chemical maker in the world. they want raw materials to be less costly. havingying that they are a difficult time around the world. economic environment is clouded is particularly clouded in the emerging markets and particularly clouded in china. really a signal we will hear across the results period from international companies. concerns about brazil, china come emerging markets. talkthave to cancel stock -- about the habitat. ta -- hack attack. up because a 15 euro
boy is arrested for allegedly being behind the habitat that happened last week -- 15 year old boy is arrested for allegedly being behind the hack attack last week. and believe it was not perhaps a big ring and financial data that could of been compromised. not so at risk. jonathan: caroline hyde, thank you. a headline. our next guest season and to the rise -- sees an end to the rise of property and london because of political risk. cannot riserice further, the more is a wise, the greater the chance of a political backlash. let's welcome in sahil. great to have you with us. you made waves with this and you draw comparisons between london and hong kong. sahil mahtani: one of the points
is that prices depend on expectations in addition to financing. just a very extreme case of below property bubble that fell down by 40% within 12 months because people changed their view of what the market would do. told weres pupil similar, supply constraints and political constraints and coming back from overseas. china was nearby. that did not stop the prices from falling when people's expectations changed. jonathan: for a lot of people along the property market, as they say forget about it, i've heard the argument so many times. we sit here and pray that sahil mahtani is right and at the turn of the year, the market does not to tour. the pushback, what has it been in your response? sahil mahtani: people have asked, people have said -- all
of the people said so many times before, why now? i would haveponse is it miss a previous predictions wrong and not this one. the second group -- response is very limited upside to the bank 0.5%which is now at compared to 2007 when it was in the five's. that tell went from falling, falling interest cost is gone. housing has become a political is -- issue perhaps the in the past few decades. the early 2000 and has fallen every year since in the face of the servant government. i would expect that even if prices did rise, if owners -- if homeownership failed, a political dynamic that would
create the conditions for further intervention. and macro prudential policies kicking golf. -- kicking off. a former governor was not a fan and current governor carney is. the risks of financial instability and preserving low cost of credit in the market. all of those three things suggest to me limited outside and significant. jonathan: you mention the london property market and governor carney who voiced concerns of the weekend on a mortgage specifically. if i expected more macro prudential policy, what form do they take? sahil mahtani: the previous macro policy was home occupied where they limited risk made by banks. a significant concern both in fiscal policy intervention and the budget.
and perhaps later this year and next year. macro prudential policy has a long way to go. if you look at singapore and hong kong which has been practicing since the 1990's, they have a differentiated and thirdfor second homes. differentiated treatment for nonresident buyers. these are the degrees you can imagine macro prudential policy taking in the u.k. as it ramps up. jonathan:bank is -- is an arrest for the rest of the economy? -- is it a risk for the rest of the economy? for governorreport carney saying he does not set policy for inside of the circle line. sahil mahtani: consumption is 2/3 of the economy. is one point $3 trillion of mortgage debt in the u.k. and half of which is variable and
effectively veritable. a two-year fix. sure, if you had a change in inancing or expectation, think it would affect consumption. jonathan: the last thing i want to talk about is this feedback loop coming from abroad. we have not mentioned of foreign buyers. that has been the big demand in the london property markets over the past five years. people will say they are cash buys area what is the big driver for them and what does it mean for london? sahil mahtani: i think it's a complicated question. there are many reasons why outsiders by them homes in london and why that could change. is it depends on different factors in a different countries. i would end with something that takemist used to say is a a lot longer to happen is that
jonathan: good morning and welcome back to bloomberg tv. i am jonathan ferro. 42 minutes into the session. pull back on the major indices. the dax is off by the report 5%. let me break it up on my terminal. in italy, trading lower. down by the report 1%. trading this morning and that at $3.5stock celebrates billion. some of the storms in the market. other top stories. blocking chancellor george osborne's cut for payment for low income families. george osborne hinted he may [indiscernible] the world's largest eyewear maker shown in, head of
estimates yesterday. said workingeo with customers will continue to drive growth. >> these are record levels of growth. declare them as the norm would be over bullish. what's driving our business now even in established regions like europe is not only great eyewear collection but working with customers on their business models. has cut target of this year out a slump in oil prices. the world's largest chemical maker said to be slightly lower than last year. the company recorded third-quarter figures that expectations.s' two pharma now the first major step not to push back against charges of accounting and ethical irregularities after
losing 25% of its value since short sell accused the company often in run like strategy of recording fake sales by using phony customers. andrew is signaling out on a conference call yesterday. asked and thet is sec to look into the actions. beenw said he has not contacted by the agency and not the one to blame for the stock plunge. off --the one who laid am i the one who laid off the balance the research and development and raise heart medicine? their reasons why his stock is here and not because of me. let's bringr more in general armstrong was part of the interview. story, foru, this people in europe, kind of like some hedge fund guy, sure seller
going at each other. if it does not really matter. does it matter? >> what you saw happen here was the short seller put out a report and his claims are not necessarily seem to be honest. many things he claimed about false customers and inflated have refutedt them. they have raised questions about valeant and how they have relation was some of these pharmacies. why had they not disclosed some financial interest they had? and how aggressive in their practices are? are they pushing too hard to inflate or distort the actual demand for their medicine in the u.s. market? a lot of questions on exactly how these forms is operate and valeant is using them. jonathan: valeant is almost the poster child for m&a in pharma, does it challenge the model that
they were creating for the rest of the industry? elegant arend special cases -- allegant are special cases because all of it is built on acquisition. there are companies that have .sed similar models there used to be a slogan, search and development, not a research and development. find the drugs. the rest of pharma does not necessarily follow that pattern. look for m&a deals and products in development still or give access to people for research and development. i do think necessarily impacted that trend. jonathan: took a $400 million charge. you both have thoughts. what is the story there for you? drew armstrong: relate it to as best we can, the valeant thing.
fromtis took the charge the u.s. department of justice and said to them you are illegally pushing your medicine in the u.s. and building government by giving rebates the customers and using drugs that there are a cheaper alternative for. different at valeant and more scrutiny essentially on this special pharma model where pharmacy is closely tied to the drugmaker and out of being slightly distorted incentives. my guess is what we see scrutiny, increasing in the united states by government authorities, health insurance, and by someone though pharmacy management companies like express scripts. and the use and ties of these pharmacies and drugmakers make a short not pushed illegally. jonathan: will talk about the london housing market and the politicization. we know the industry that you cover day in and day out will
politicize in the u.s. where does novartis stand in that argument and situation? sam fazeli: novartis is not the only country in the past 10-15 years accused of that, pfizer had a big deal, glaxo. we talked about it a year-and-a-half ago with glaxo taking kickbacks in china. a lot of loopholes and some people do things that are not completely ethical and correct. the politicization, we go into pharmacy and we pay for a drug. i pay for the drug. noi go to hospital, i have idea who paid and when. it is much easier to politicize drug prices and costs than what the majority of health care is spent on which is hospitals and clinics. let's not forget tomorrow we have the republican debate. we factor a week ago or so and talked about what the democrats would say.
marco rubio has talked about this. taking place at a time where he might come back and talk about this. jonathan: i want your arguments on this. hereazeli and i have sit before we have heard this before. one man that could really change in its president obama a he did not. why -- how could hillary clinton do something he did not? drew armstrong: drugmakers were very much in focus during the debate leading up to the health care law. they did lobbying and managed to get themselves exempted for some the things that were most scare but gave up a lot of money. tens of billions of dollars in terms of discount and fees painted to the u.s. prices which drug sound brings up something consumers can easily get their arms around, something easier to target. people are looking at specialty pharmacist as loopholes and
congress loves the word "loophole." something that can understand and close and make the industry will find another. easy enough to get your arms around as a lawmaker or policymaker for that lends itself to solution. assuming all the usual caveats. jonathan: great to have you with us. drew armstrong and sam fazeli. the bloomberg team. we give you a preview of what to watch the rest of the day. speakdex is up and will to robber himself next this morning. ♪
jonathan: good morning and welcome back to "on the move." i am jonathan ferro. sun is not a verizon on wall street. a huge week after the euro got a battered post mario draghi and ecb conference. last week, up by 3%. the dollar is up by 2.7%. data out of the u.s. later. gdp out in 30 minutes. later, all about the u.s. the shiller index and a read on releasedhen it is stateside. almost it for me.
"surveillance" is up next and were joined by tom keene. agenda, athing on the meeting at the fomc. fed.is all said -- the andad a couple of articles it is real simple all about the iphone and ratios and percentages of growth you will see in iphones. they always seem to surprise. that will be the focus of this afternoon. david kirkpatrick will join us in the second hour of surveillance and will look forward to talking to not only about our moore and facebook but the jon ferro world. the last few days, the decline in oil is front and center to west texas is $43.49. really for me, front and center. spreads, proverbial mario draghi, the federal
reserve over the last couple weeks the debate over a fundamental economic concept. talk to me about how the debate is developed. it too early the morning to talk about the salutes curve? -- the phillips curve? economic models are tested. one of those is the phillips curve and where we are at the zero bound. we are exhausted. qe1, 2, 3, we are there right now. a real doubt about how that will effect monitor -- modern economics and the phillips curve. jonathan: tom keene, never too early to talk about phillips curve. i would join them on "bloomberg surveillance" on the next break. ftse 100 moving to the downside. miners waiting on a. b.p. out with earnings.
down but insignificant b -- but a significant beat. 35 points.r up by switch of the board. the currency. big week for euro-dollar. down 3%. a stronger dollar and a weaker euro. cable is trading data flat. 153. the estimate for the quarter is 0.6%. i look to the dollar-yen trading a little bit weaker. the report 6% lower. dollar-yen and 120. bloomberg surveillance is up next. if you want to talk markets i am @ferrotv. from all of our team, good luck for the rest your day. ♪
♪ jonathan: bp beat expectations. average oil price dropped the lowest since 2009. taking a bite out of apple. iphone maker releases the outlook for the holiday season. a record 2014. the u.k.'s global stress test. can it withstand downtown risk abroad? gdp numbers out in 30 minutes. good morning, this is "bloomberg surveillance." i am jonathan ferro.