tv On the Move Bloomberg November 2, 2015 3:00am-4:01am EST
european markets moments from opening. futures markets little bit lower. but the futures test ftse futures down. caroline: almost 10 seconds and and we are going to be saying how the market opens after $5 trillion worth of market violation was added to global stocks in october. it looks like risk appetite not quite so hot as we enter into november. ftse 100 just and the negative as we are opening up. we are expecting a downward day across european equities. what helped to boost equities in october, the fact that the ecb was hinting at stimulus. china perched on the pedal when it came to stimulus. maybe now raining that back in thee wait for payrolls at end of this week. u.s. data on unemployment. how much will that add fuel to the fire? we could see a rate hike s&s december. 50% probability.
that is pulling off a bit of risk appetite. off -- thein france dollar weakening. that is an interesting move ahead of a potential rate hike. .3% getting a boost, up by this morning. check out one fx area. all about the turkish lira. this is the dollar weakening. the turkish lira siphoning as a get an easing in the short-term. being formedority after those elections over the course of the weekend. the ak party sweeping into party. 49% of the vote, it would seem. -- and becomeat the president and leaving the
government? fx turkish lira is to strengthening and so are turkish stocks. let's have a look at european stocks. there is some interesting earnings. the banks and focus. -- --ff by 20% as we get off by .8% as we get -- the business delete -- the business raining back in production. a reduction in fines to the tune of $1.4 billion. that is how much they manage to rein in those costs. managed to rein in those costs. ryanair up 2%. yet to ask yourselves why? a record summer, 58 million passengers flew.
see the we are going to top end of our range when it comes to profits. meanwhile, electrolyte, up 6%. u.s. in a lot in the terms of american depositary receipts. american department of justice sewing electrolux. -- department of justice suing electrolux. jonathan: caroline, thank you very much. off by .5%. the turkish lira shining bright. much more throughout this program. that is what is happening. here is what is happening in today's program. always getting better. boostr reporting a 41% worthy of its new slogan, then a win for turkish markets.
winning -- sending the lira soaring. saudi arabia pays the price. s&p downgrades opec's oil producer -- opec's biggest oil producer. morning, china's u.n. retreat is to its lowest level to itsa's yuan retreats lowest level. marking a third consecutive month of contractions. let's bring in bloombergs intelligence, tom hornick in beijing. the pmi stilling contraction territory. a sense of to be optimism that the worst is over. to read too much into small movements. it is a relatively small some.
it does get a lot of attention from the markets. positive uppretty from september. ahead of expectations as well. , but below the 50 mark pointing to deterioration at a slower pace. perhaps the bottoming out of the economy, some saying we can hope for stability. those two things together and you wonder what this means for policymakers. can we look forward to more rate cuts from the pboc? china's government has injected a huge amount of stimulus. we've had six rate cuts in the last 12 months. -- policymakers are already giving in to demand. if you do the credit data,
starting in june or july, we are seeing those rate cuts passed through it to stabilization. even a moderate re-examination of loan growth. with signst together of slight improvement in the factory sector that we are saying -- that we are seeing in today's pmi data. factory sector could start to save a lot. they can be enough to keep the pbc -- the pboc on hold. jonathan: tom orlik joining us from beijing. let's bring in alberto got the. old engines to new growth engines, that is owners. industrial overcapacity, shadow banking, that continues to grow.
when do we get a real credit crunch in china? alberto: the authorities are try to manage a slow-motion crunch. we note that is low. rabid that has stumbled -- private debt has stumbled. china continued to borrow. lower public state, the government. what they are trying to do is let some sectors the fault overtime. overtime. the fault the problem is there. it is how they manage it. it is going to take a long time. jonathan: the crack's are starting to appear. you look at nonperforming loans. rising rapidly. the transmission mechanism from china has been through the commodity market. through the next year, that
changes and happens through the credit market. the first type is currencies and commodities. the first that is credit. you have a lot of companies with dollar debt. the government can intervene but not for all companies, because again that is two times in gdp. aboutample, if you think the chinese banks. they have been lending money to companies that have borrowed in dollars. currently appeals are one for 4%. -- r 1.4%. they are worse than two dozen eight. into the snake, they were 7%. -- in 2008, they were 7%. the region is that of an hurt the most are the two to that's
tierhe tier two -- are the two, three, four. jonathan: after the break, were going to talk about banks. tom: there are two international banks. hsbc arechartered and vulnerable. the head of rbs, stays with us. europe's largest bank makes more than two thirds of its profits in asia. hsbc this morning. ♪
jonathan: good morning. welcome back to "on the move." good morning from the city of london. good morning to turkey. a huge move and the turkish lira this morning. dollar try down -- the biggest move since 2008. it's a straight to your bloomberg top story. in a surprise when, turkey's ak party has swept back into office. took 49% of the vote. it will regain the parliamentary majority in lost five months ago. data and china shows manufacturing is still a decline in the world's second-largest
economy. in october, that missed estimates with a rating of 50. it marked a third straight month of contraction. sayia aviation officials the plane that crashed over the weekend -- the airbus crashed after leaving for st. petersburg . egypt and that russia has indicated technical problems were to blame. session.s into today's stocks moving lower. the ftse off by .5%. stories outp stock there. let's get to them with caroline hyde. caroline: the biggest quarter so far. electrolux. the surprise -- perhaps no surprise. electrolux regarding its acquisition of ge.
they are blocking this particular deal, claiming competition is under threat, filling the assets of electrolux were willing to selloff do not rectify the situation. on friday, we thought he department of justice rejecting the proposal to resolve this lawsuit. down goes electrolux's shares. that deal sends the pushing more often table. ryanair down by .1%. a bit of surprise good numbers from ryanair profit up. bracket number of the summer bookings. , the profit will be at the top end of the range. there is a copy yet. hot -- thea, the company showing the forecasting range is a concern. the outlook for ryanair is a concern. softer than has
been reported in current figures. expecting fourth-quarter the average fares to becoming down by 4%. that is at the bottom end of the previous range. clearly a concern that you're getting less money in from each ticket you are selling. 2%.erzbank up leading the charge last time i looked. the bank beat proctors in terms of estimates. -- the bank beat profiteers in terms of estimates. turnaround is right on track. hyde, thankroline you very much. it delivering a better than expected 32% rise in third-quarter profits. bankingeak to our u.k. -- stephen, it is a topline versus online scene. the market seems to be focusing on the top line. stephen: we have
cost performance outweighing a drop in revenue. people who have taken a negative view will be worried about the future growth prospect of china. they will be worried about misconduct. loan impairments coming down the line. jonathan: back in april, the domicile question reappeared again. we thought we would have an answer. ?here are we stephen: we're expecting more data. he thought the decision could slip into next year. he said they would provide another update by the end of the year, but really they're leaving us in limbo on where this bank will be located in 10 years time. [no audio]
-- emerging-market countries have acute related that, sometime with subsidies like brazil. they are going through a slowdown in china. china is the first one to slow down. countries with commodity exports like brazil. sometime, hsbc, standard chartered, and the australian weightthese are under from the ripple effects from china. isathan: revenue from hsbc based in u.k., but really it is a bank that is dominated with exposure.
stephen: there was a much better performance in europe. it does appear to be entirely through lack of litigation charges. thing to note in asia is in the loan quality did not fall as much is expected. extended charter which is reporting -- standard chartered --ch is reporting tomorrow that was a bright spot and hsbc. jonathan: so much work has been done. [no audio] >> in europe, bank debt -- contingent capital. you have to be careful about the business model that you're looking at.
you need a diversified commercial bank. you're looking at investment banks that are restructuring. there are business models that meet -- that need a lot of recession. there are banks that are exposed to areas that are not going through a credit crunch yet. in brazil, banks are still living at 10% to 30% year on year. this is a huge forbearance. upn the stops mpl's will go -- when this stops mpl's will go up. two -- jonathan: how much of a head when has that bend this has that been? -- how much of a head wind has that been? what we have had in the
last few months is a construction. we have had lending volumes in january and february. another months -- another months we had a contraction. smes basically. the banks are constraining lending again. it is a demand a problem. companies do not want to borrow anymore to invest. dr. as jockey since there -- jonathan: as draghi since there -- is that another reason for him to hit the stimulus button again? banks are not transmitting stimulus. it takes a very long time. you need to find alternative channels. stimulus gets into spanish bonds. it doesn't go through the real
prices down, passengers up. that was the message from michael o'leary when we spoke to him on the back of bracket bring -- record-breaking results. good news for consumers and bad news for the competition. i hope we get there. cost theoing to decline in fares -- we are growing strongly at the moment. for the next year, extraneous events, your can see strong performance in the summer months , because there is not net growth capacity in europe. we are now up grounding nothing other than what we need for maintenance. we are expanding rapidly in winter. adding 120 routs -- 120 new routes.
flyomers now want to ryanair. jonathan: this is kerry line for an. i look at the earnings -- this is kerry lundgren. the numbers are decent. breakdown from it. at researchlooking notes. ryanair is the fastest-growing airline in the world this winter. that income nation with lower prices which also means there is going to be more capacity in the market. that is what is driving down markets -- driving down prices. markets are worried about that. jonathan: it is not great for everyone, isn't it? benefited.ir has they want to take their holiday abroad and that very much considered it to the second quarter. jonathan: for the aviation
industry, a tragedy. you wonder what the impact will be after the crash in the cyanide -- in the sinai? what will be the impact for them? kari: we'll have to wait and see. will -- it is a very specific situation. it will be interesting to see what happened. lundgren --rry terry lundgren, great to have you with us. and butts -- a much bigger move. the lira soaring this morning. next. ♪
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jonathan: good morning and welcome back to "on the move." in the european headquarters right here in the city of london. let's see how the markets are shaping up. kicking off november on a little bit of a low. the footsie 100 -- the ftse 100 by dennis the biggest month of gains since july 2009. switch up the boards. one currency standing out proud. , the biggest move lower. the turkish lira jumping on the hope that the -- on the hope of
the ak party sweeping back into power. mackenzie whotom is in istanbul. they're not dead in and u.k., they are dead elsewhere. tom: i can't count how many elections have covered. if they got it very badly wrong here in turkey. they were shockingly surprised across the board last night when the results started come through when -- showing the ak party was winning. they were forced into coalition talks which broke down. it was seen as a gamble. it was a gamble that paid off. increased their votes share
by about 4.5 million votes. they changed the constitution and a push for a referendum. they might try an engineer that. there are big challenges facing the current government on the economic and securities front. we have seen five months of tensions in turkey. interest breakdown between kurdish militants, isis forming's and you've got the question of the economy. on those questions, i am glad i am joined by hacking pasha. markets inng the turkey rally on the back of this election result. is this indicating a positive sentiment? is this a short-lived relief rally? >> weep think this is a short-lived rally. turkey has a couple of points they need to overcome, one of them is a deficit which they
need to finance did their starting to finance with short-term assets. the next point is simply there is a vicious circle between the current see right now and inflation rates. isryone else in the world fighting with deflation. turkey is struggling with inflation. the depreciation is feeding into further deflation. to break out of that takes a lot of concerted effort to achieve. we don't think a single party is going to be of to achieve that, especially when our minds, the election mode is not over yet. the first thing on the agenda is going to be installing a and that is turkey good to take up the next five to six months. tom cole and the political risks are still there for turkey.
when a gust and london saying the majority is very positive. that? not so sure about >> we're not to sure about that. there are a number of threats still in play. hasral bank independence been a consistent theme throughout this party's role. thehe same time, presidential agenda has been put forward. we don't think that is disappearing from the table. loomshe fed's decision large over turkey and the rest of the global economy. >> short-term financing and a large debt that corporations have what state financed by dollars means as soon as dollar liquidity is reduced, we see a shake in turkey. that is occurring again. it will occur, because we think the fed is going to hike rakes
-- hike rates in december. that is going to shake the economy. the lack of competitiveness is going to feed into that. if china depreciates much further, the 4% was just a test here it they're going to depreciate even further next year. tom: what other kind of reforms will you be looking for to make and we your appetite look at the turkish picture? >> in turkey, there are certain companies that are looking quite good on file you. on the macro picture, it is blurry. the digger -- the deregulation that is to take place has to do with the regulating parts of energy sector and reforming tax structures. now, turkey is having a depreciation. tourism is down. even though it is a large oil important -- large oil importer,
the benefits are not getting through. help? any sign that consumer sentiment might be picking up? >> consumer sentiment has been jetting down since 2014. -- has been drifting down since auntie 14. the consumer has done this by a credit bench. credit has expanded by 300%. it is now slowing down. that slowdown is felt in conception, retail sales are down to 3%. the entire economy is slowing. can see aowdown, we real catalyst to bring that back. tom cole and other sectors of businesses that you are looking at as potential investment options? >> yes we are. a government is in a good position in terms of debt ratio.
we see that more fiscal expansion will have to take place. the companies we are looking at are more in the infrastructure side of things. that is what fiscal capital will be deployed. thank you very much. the silver lining at the end of that. a lot of economic reforms the need to be done, at least according to this investor a lot of challenges for the government. guys, back to you. john: that's seem to be the take away on turkey. socgen saying this is a temporary rally rather than lasting change. some of the moves when it's talk about in the mining sector, breaking news. caroline hyde has the details. caroline: the third biggest platinum miner is taking a record impairment charge, up to $2.5 billion. here's the headline coming out today.
therefore your sales. the from -- the profile of 700,000 -- the impairment charge billion dollars is good to be a record impairment charge. this company's market valuation is 142 million pounds. this impairment dwarfs the size of this company. this is a company that is been going through difficult times. october 21, we understand that is going to go through a rescue. it was selling more shares. this is the company trying to fend off the poor commodities outlook. platinum prices coming down to this is a company that is been set by strikes. remember those tragic strike
actions over in south africa. overall they are saying they have a four-year capital expenditure. it for your sales profile of 700,000 plus. they're giving us an update on fourth quarter sales. this seems to be an area of restructuring. they are seeing cuts to their workforce of 2623 people. that is out of a total of 35,000 workers. they are trying to reduce costs, cut jobs. it is a record. back to you. jonathan: it has been a tough sector to be in, the mining sector. greek banks to meet specific spirit in athens, we get the market open. the moves in penny stocks. raise 14.4have to
billion dollars in fresh capital. bank, euro bank, health a trading -- -- all over 9 billion euros. vassilis, we're looking at the numbers. the numbers not as bad as some people expected. what is the take away in athens? results: the a q art are in line with market expectations. it brings good news at the end. now the greek banks under the baseline scenario need to raise -- it ision euros the good news because the banks think they can easily have private shareholders participate. covered by0 will be
jonathan: good morning and welcome back to bloomberg tv. the ftse 100 moving lower. blanketing right across much of europe. a slump in oil prices. that continues. it has rabbits saudi's profits -- it is a ravaged saudi's profits. it is stopped ordinary saudi's spending like there is no tomorrow. what is going on? this is a controversial call to downgrade
saudi arabia. the debt is extremely low. but the two things together for me. -- put the two things together for me. country that derives 80% of its revenue from oil. the oil prices have whacked saudi arabia's finances. you had these bountiful budget .urpluses, averaging 7% of gdp this year, those surpluses are expected to swing quite violently into deficit. 60% is what standard & poor's reckons. -- 16% is what standard & poor's reckons. -- the imfth reckons reckons -- ordinary seminary this if you check out any shopping center -- if you check out any luxury restaurants, you
will see them eating. business is better than ever. retail sales are 10% higher this year than they were last year. what is going on is the government which is a social people, weth the will make sure some of his oil wealth trickle down's -- trickles down toward you. family would rather rack of these budget deficits and incur the wrath of standard & poor's been rather shake this social contract that consists -- that exist between them and the ordinary saudi's. a lot of resilience and push back by the saudi government wants the decision came through. question would be to they continue with their current strategy and ignore the warnings
? >> i expect both. we should note the saudi rulers are not completely deaf to what is going on. they have cut back on some projects. they are delaying payments to contractors. what they had not done is take the night -- take the knife to ordinary saudi's. 8% of gdp. if they keep spending at the current rate, the imf reckons, saudi arabia will eat through its reserves within five years. they can keep borrowing and spending after that. aat you're likely to see cutting away of some subsidies. energy subsidies. you will see baby steps toward that to rein in the deficit. for the most part, he will be praying the oil prices will
start to hans backe where they were so they can continue to spend without record deficits. jonathan: thank you for bringing that down. for a bigger picture, look at the oil market. let's bring in will kennedy. look at the noise coming from saudi arabia it at the push back against this call from s&p. call.look at the s&p a lot of people are looking at it saying it doesn't make much sense. doesn't make much sense to you? will: not really. i think this is going to be key to saudi policymaking going forward. whether their policy is working there oil market. oil remains at a very low price. we are starting to see signs that american production is falling back. are going tothings lessen production going forward.
jonathan: when you look at what , theppening domestically people of saudi arabia are not feeling this yet. it takes the pressure off the government. they question as we going to the opec meeting, does anything really change? will: i think it is extremely unlikely. there can to stay the course. -- they are going to stay the course. iran is threatening to put a lot of oil back into the market next year. is the chinese slowdown. the demand soct far. jonathan: will kennedy, great to have you with us. thank you for joining us. next up, manufacturing on the minds. we get german pmi numbers. a look at what you need to be watching in the trading week ahead. ♪
jonathan: good morning and welcome back to "on the move." city ofepressing london. the city says good morning. we can barely see. the ftse 100 down by .4%. this is nearly it for this program. stay with bloomberg tv for the week ahead. toet yellen gives testimony a committee. that to be dominated by questions on the banking sector.
not so much about monetary policy. look out for that. look out for bank of england rate decision. governor carney faces the podium. he is on the hot seat. on friday, the biggest payrolls number ever since the last one, before the next one. you know the story. that is almost at for this hour of bloomberg tv. the pulse is coming up next. francinenny and lacqua. manus, what have you got? strongwe've got pentagon . -- we've got patrick armstrong. draghi -- mario draghi said it is an open question. vigilant,e from being
calling for action. now he says it is an open question. he is backtracking moderately. jonathan: a baby step backward. -- manus: they want to keep us on our toes. the dominant theme is banking. the dividend, patrick is going to talk about that. you got that china data. what you make of it? it is bubbling along the bottom. jonathan: we are going to get a final reading of german manufacturing in a moment. shining brightly will be the turkish lira. manus: it is roaring away. is that sustainable? that will come down to what are the policies that are enacted in turkey. his got a couple of guests coming up over the next couple
of hours. what happens next from the central banks within turkey which will dominate what's will happen in the fx. go ryanair. they're getting ready to crank up the price. that is good news going into the christmas season. jonathan: 55 minutes into the session here in europe. the german pmi comes in at 52.1. that is previous than the previous reading. manus cranny, you look at those numbers. they are not stellar numbers. mets against the china's -- matched against china's pmi, is not bad. figureslowest export coming from germany. that is tied back to the china story. the financial conditions in europe are improving. tenant thatverall people want to look at.
much more qe has got to be done. how long will it last? morgan stanley lowered the forecast on the currency. this is on the euro. parity by theee end of next year. the fourth quarter of 2016. the euro-dollar will still get parity. jonathan: manus parry -- manus cranny, great to have you with us. a lot more data coming this morning. pmi data in five minutes time. u.k. at 9:30. if you want to talk market, you know where i am. i am on twitter. we bid farewell to october. we kickoff november in the red here in europe. best of luck from me and the bloomberg team. ♪
francine: a deadlock ends in turkey. ,he party space back into power sending the lira and stocks forward. manus: hsbc reports a bigger than expected that he to percent jump in profit. decision on moving its headquarters may not come until 2016. francine: china's contraction. .mi data says a slowdown ♪ francine: welcome to "the pulse."