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tv   Countdown  Bloomberg  November 9, 2015 1:00am-3:01am EST

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>> great expectations. investors see a 70% chance of a rate hike in december. damage control. brazil, to dan's burst. shares continue to evolve. live tons a strikes again -- live tons a l strikes again --ufthansa strikes again. welcome to countdown it.
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fed.ed to focus on the we have a 70% chance that the said wilhite grates in december according to market probability numbers. a 70% chance. that number has gone up sharply the last few days. friday's payroll data was a huge part of the puzzle. how is it affecting markets? that story continues. be byrried of the fed dennis? this is the reaction they would expect that will be concerned about. the dollar index continuing to climb. how of other markets taken it? next, how the asian market is taking it. good morning. if you look at the expectations, investors and increasing that
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expectation that the fed will take action to raise rates. what we are seeing is a next picture because the asia-pacific index has been swinging between gains and losses. still in the red, barely above the trend line. the hang seng index, modest advances. these are the movers in the sydney market. evolution mining. the big story as they -- has been in china, the shanghai composite. 2% gain. authorities have said they will which werenese ipos, delayed back in the summer when that $5 trillion -- swept china. security regulators says they will bring back the ipo market by the end of the year.
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that is a vote of confidence in the market. +++ piling money into mainland equities. they have been pulling it out among concerns that they have -- overall, asia-pacific up 1/10 of 1%. guy: thank you. let's bring in our guest host, bob parker. 70% -- is that the right number? do we think it is that strong? >> i think the answer is yes. this conversation one week to 10 days ago, the futures market were discounting a 40%. you correctly said there has been a major swing and expectations. on the basis of unemployment at 5%, plus the slow uptake into wages growth which i think is very welcome, i think is
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absolutely inevitable that the fed move into december. an interesting question which we can debate is what it hurt said credibility if they did not take action? we have had this, this debate about the effectiveness of said communication and the swing and expectations about when they will want raise interest weights. i would argue that they are in a position where there is no choice. is ifteresting question they move to 50 basis points in december, what happens? >> when is the next hike? how does it work? >> it is going to be a slow process. if you look at the u.s. economy, we have a two track economy. we have strong consumption data which will continue, boosted by low unemployment. this is why the investment
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conclusion is that i like the u.s. consumer vector. one cannot ignore the negatives. the problem with the slowdown in the energy sector. cut back in spending in the energy sector. the public sector will have a negative impact on growth. we end up with a growth figure close to 2.5%. means is that this time next year, i would be surprised if the rate is above 1%. my forecast will be 1.25%. >> you bring up the issue of the dollar. how do they manage that communication? impact.l have an the u.s. economy is relatively
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closed but it will have an impact. in 2009, export growth was running 30%. today, they are contracting by 7%. the dollar and the global economy. i would argue that 70% of that strong due to the dollar. it is not just the dollar against the euro. the dollar has been struggling against all currencies. are theexception currencies pegged against it. a technical point is, do not do not havethe fed responsibility for the dollar on the foreign exchange market, that is the responsibility of the u.s. treasury. the fed is looking at, what is on exports and
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inflation? both what are different them to move slowly after the rate rise. >> if i am an investor, do i need to say, i need to be in u.s. assets? >> it is more complicated than that. u.s.ant to be in the consumer sector because all indicators there are strong. secondly, you don't want to be invested in sectors or companies which are exposed it to the strength of the u.s. dollar. you want to be invested in the sectors and companies in europe and japan which are benefiting from week currencies. is one of theen most undervalued currencies in the world. that is supporting japanese export. the focus on sectors benefiting
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from currency devaluation. >> i will talk with bob throughout the morning. their cash flow guidance. the reason for that is a strong european sector despite what is .appening with vw the debate dominating the u.k., showed the u.k. remain as part of a european union? that will be just about every conversation. today.ference kicks off the majority of businesses say they want to stay in the eu. anna edwards is at the event today. reporter: thank you. it is going to be at the top of the agenda for many businesses and representatives who gathered here this week for the confederation of british industry conference. we are joined by their new
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president, paul drexler. thank you for coming to talk to us. thatus reports have said the cbi is an organization that , eager to water down its conversation about europe. is that a true reflection? >> we believe that the advantages outweigh the disadvantages. vast majority of members are in favor of being in a reformed europe. we will do everything we can to get the reforms that we need. reporter: do you think it was too early to reach conclusions? theve spoken to others
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weather too early to reach conclusions about staying? this is probably the most important decision for the next generation of this country. analysis. lot of we looked at that two years ago in the conclusion from that analysis was that the benefits exceeded those coming out. the long in clearly a reformed eu. that is exactly where we are today. reporter: critics question whether you speak for all of british business. is thriving with many different types of dizziness. we represent so many organizations, 7 million employees. as a diverse business employee. what we know from extensive
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discussion including discussions i have had in the past months that the vast majority of people would refer to the in a reformed europe that is successful on a global basis doing fantastic deals for the u.k. reporter: the prime minister is right into donald trump this week. what do you want to be in a letter? we have already had our expectations managed to suggest that this is going to be published broadly. thehen you look at complexity of europe, it is going to be a broad set of demands. what we want to see most of all is faster progress toward trade deals. we want to see the market for digital services opened up for better opportunity. we would like to see less regulation for lifestyle and less for things that don't actually matter. you been talking
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to business is about contingency planning? majority of british businesses are contending with challenges on a global basis. our agenda includes education, skills, focus on productivity, business management. the whole european debate is an important long-term strategic issue but it is not a live agenda until the private industry comes back with a reform package. reporter: is there a risk for business in speaking out on this matter? is there a chance that the in ae starts to be held language that does not resonate with the average voter? if it is seen as big business, could that backfire on what they want to achieve? >> that is an important point to . first of all, we should be proud of the fact that we are leading
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successful businesses in the you cases the recession. in this referendum, we are dealing with a complex issue. i asked my cap driver about europe and he said, some of the people wanted to be in europe, some people wanted to be out. it is a complex issue. he would like it to be explained in simpler terms. would say ist i that the important thing from a business point of view is growth and jobs and on the analysis that we are doing are going to make sure that every business leader is able to explain to their employees and their communities and customers what this means for jobs, growth, and prosperity in this country? it will dominate the conversation but there are other things on the agenda. everybody wants to talk about heathrow. if we get a final decision, is that quick enough? never be quick
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enough when it comes to productivity and competition by the sooner we get the runway don't think it ourselves in a position to compete with faster fantasticuntries with airports, the easier it is to get back at the table and the top of the league of global transport. reporter: are there other matters you are talking about? the living wage is something that has been revamped in the spring. is that putting a lot of pressure on your members? is it something you are having conversations about? >> there on many issues. we are going to look at employment and skills and infrastructure in there are always challenges for business. we have to deal with challenges. we like to be able to see into the longer term with a degree of consistency and clarity so when surprises present challenges, the national living wage for some parts of society is a big challenge, some parts of society really matter -- we need people
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to run our care homes, hospital services, people and in to adjust. reporter: have businesses been lobbying you to put pressure on the government to not go ahead with these increases? >> a big part of my job is listening to members. i am always open to listening to members on any issue. some of them are very concerned about these issues. and set outussed it concerns and perhaps the most important thing is we want everybody in the country to enjoy prosperity and lived well but we need to earn our way together. reporter: thank you for joining us. handlers fromarly the cbi conference in london. telling us that the cbi is not watering down views on your. back to you. guy: thank you very much. .e will be back later on
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fact that they have jumped the gun and become too positive to really, how does the debate shape up now? we will hear from the prime minister over the next 24 hours. point is, the future of europe is clear, we have a core eurozone and would be surprised if additional countries for joint. joined. around that, we have an outer circle of the eu countries -- the u.k., central europe, denmark, sweden. the question which has to be the focus of the referendum is what is the relationship between the core in the outer circle? it is inevitable that the u.k. stays in the outer circle. reporter: that seems pivotal. >> absolutely. at the moment, we have an
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certainty the u.k. government has not been clear in what it is demanding. secondly, it is unclear as to what its demands will actually be. i am assuming that there is intense pressure on the german government to do everything to try to keep the u.k. in the european union. internally. and herangela merkel government recognize that if the u.k. left, that would be bad news for the eu and germany. it would change the political .alance in the eu it is not in germany's interest. it comes down to two factors, what is the u.k. government and ending yeah, i think everybody is frustrated because they are not clear as to what they are.
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secondly, what is the success in them achieving satisfactory negotiations? one investment conclusion i would argue very strongly that the uncertainty over the timing and the result of the referendum is not discounted in the volatility. i would argue that the sterling is too stable giving the uncertainty of the referendum. that potential volatility has us skewed down. one conclusion is to be very cautious on long-term positions. guy: we will be back with you later. bhp has tontdown, brazil as they seek to suspend damssing there after two burst. bloomberg, we have a new show for you, kicking off later today, hosted by betty liu.
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that is a 4:30 u.k. time. i am sure you are looking ♪.ward to it countdown continues in a moment. ♪ guy: 6:22 in london, here are
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the mornings stories. odds on the fed hiking rates in december have climbed to 70%. that is after stronger-than-expected payroll data on friday signaling that the u.s. market is on solid footing. volkswagen says the admission inconsistencies disclosed were the result of employees informing superiors. the news comes as their device three board meets later this morning to discuss the scandal.
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bhp's executive is heading to brazil to suspend licenses at its iron ore ventures. this after two dams burst causing deadly mudslides. cleanup costs could etc. $1 billion. showers -- cleanup costs could exceed $1 billion. >> a second day of losses for .heir shares, down in australia more than at any point in the last month. that is saying a lot because it has been a lot of carnage for them. two parts to this story. one, the human tragedy, at least 13 people are missing. among workers, one to. -- one dead. when you think about this, the
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accident happened on thursday put on a lot of the details are becoming clear. you had a wall of water about 20 meters high. this is not regular water, this is waste water moving down a valley. in one town, there were only 25 minutes to evacuate. the water wiped out almost all homes there. you were talking about deutsche bank saying that the cleanup could cost bhp as much as $1 billion. there are also reports that they could see a loss of output from that iron ore mine until 2019 because prosecutors say they want licenses pulled for that mind. they produce about 30 million tons of iron ore there every year. that is a fraction of the nearly quarter billion production that
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they have overall. , itop of everything else gets people concerned about the company's ability to maintain dividend policy. guy: thank you. we'll talk more about the hp later in the program. let's talk about lufthansa canceling 1000 flights today. we are in berlin with more. where do we stand with this story? >> we have an airline willing to negotiate. we have a union insisting that they want to drive a hard bargain. this is a union guy that is flexing their muscles. munich, frankfurt, and
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duesseldorf, the three biggest airports, their saturday action 54 canceled flights. today, 923 canceled flights. a total of 13,000 passengers will be affected. this is just lift anza flagship flights,nsa flagship not germanwings. today, about 70% of flights will be offered. the airline has offered a modified plan. they are willing to negotiate. there is a new pension program to. the union has agreed there is still a disagreement about the size of the payments. it is going to be a difficult day in germany.
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guy: thank you. we're going to take a break. after that, more on the commodity story. we will see you in a moment. ♪
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guy: here are the stories you need to know this morning. the federal reserve hiking rates in december, odds climbed to 70% . that is after stronger-than-expected payroll data. portugal's socialist party approves a plan to join forces with other left wing parties to oust the prime minister. the administration is just two weeks old.
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we are talking about an anti-austerity coalition. apache worth more than $18 billion has solicited a takeover approach. the houston-based company is said to have rejected the offer, working with goldman sachs. we don't know who was behind the offer. today haszil prosecutors seek to suspend licenses for the iron ore venture in compensation for the .ictims after two dams burst deutsche bank says cleanup costs could exceed $1 billion. bhp shares down. let's talk about china. dropped to the lowest level in almost three weeks after exports fell.
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it exceeded estimates of all 31 economists. let's speak to our beijing bureau chief. yet: what this data is the thomas? signsre are a couple of that are cause for concern. the figure you mentioned, everybody thought exports and imports would be better. that's just that the government is consistently overestimating how well the chinese economy is doing. it causes concern that there are underlying factors. it will be harder for the government to reach that target. export numbers worse than expected. even gloomier there. the one good sign is that
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exports fell. to forex reserves. they will be able to put that to use. conclusion? the >> it is going to add pressure. able pressure the government to give in to market demands. it government has said maintains stability. is only other outlet stimulus and they have a lot of options. 4.25%.nterest is there is room to maneuver. we are anticipating targeted stimulus in the next couple of months. thank you.
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the world's third-largest platinum producer could become the biggest casualty of the commodities slumped. the south african miner announced details of a recap plan which included a share sale. andre, what are people saying about whether or not this will work? whether theyon is will find somebody to underwrite that issue. the question is, what they find somebody to underwrite it? we know the investment ownedation in the state
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-- we know that they will underwrite some parts. whether any other investors will come remains to be seen. guy: let's assume they don't. what happens? what is the story going forward? lawton has until next year to find an otter the solution. they have debt with state bankers. some of them expire in may and june. they wanted to decide on whether they will further downscale the operations. maybe find an alternative plan. they may find an appetite among investors or go back to bankers and plead for radiant terms.
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they have six months otherwise it gets pulled back in the company has no further access to cash. thank you. the commodity story continues. bob parker is still with us. china sits at the center of this story. slowdown indicate the in that economy and we don't understand how paid their stockpiles are. why would i invest yet: i would i put money into an area where i have little visibility to understand iago >> the answer is please don't. i agree with you. if you devise commodities into four subcategories, the energy sector, we have news that saudi
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arabia plant sicu production close to 10 billion bales. we see distress and consolidation in the industry and perhaps the news on apache is part of that. there is support for the prices close to current levels. the minimus. we will trade between a 40 and 60. we are stuck in that range. second category, industrial metal. related commodities like iron or, we need industries to be wound down. copper, we have broken down and i$5,000 a ton again think there is again support for copper close to 4600. is copper going to go back to where we were?
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is slow.bility of that if you look at precious metals, i can't see any reason for actually buying gold. the news on the thing that we were discussing earlier certainly means there is a higher probability of a break. to put anyt want money into this? >> i think it is too early. i know a number of analysts who have come up with recommendations. i told disagree for commodity prices are in the process of forming a base bid in a coma. the probability of commodity prices increasing over release the next two years is very low therefore the only way earnings are going to be improved is because of cost cutting or because of the problems with
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lonmin downsizing. >> can i extrapolate into emerging markets yet co. is at the same story yet coke >> you have to make a distinction between emerging markets which dependent, russia, the middle east, brazil, and markets that benefit from lower commodity prices. the impact on china is fairly neutral. china is the worlds largest consumer of commodity so these chinese economy are supporting. another winner is india. i can see low commodity prices supporting growth. like turkey are big winners from low energy prices. >> but a big loser from the fed raising rates. specific-- turkey has problems like the exposure to
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dollar liquidity. you then have to look at which countries and companies and sectors and losers in that an obviously one theme is to companies which are overleveraged in u.s. dollars are suffering very badly. let's build an investment case to understand why somebody could be bidding for apache. yet, manye a case businesses's this to apache covenants coming up all kinds of things in this space that makes life very difficult if you are private equity firms sitting on a lot of try powder -- >> which the industry is which well acquainted is where is the hunting -- is that -- is it a hunting ground for these guys and are we going to see consolidation trade-off coming through our week in a start seeing equity offers coming through because and lazily are getting close to the bottom and we can now start to understand the story around -- >> his way to really -- >> right --
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>> if you look specifically at, the theme in the energy sector in 2016 is going to pay cost cutting and capacity and consolidation. there will bet bids for undervalued companies and their going to be investors who think that there is going to be a bounce in oil prices. those investors like myself who don't think there will be a bounce you have to be very careful as to what you buy. ideally, a bounce would result in higher earnings. oil prices stay where they are he have to say lawyer to increase coming from. the earnings increases will come from cost-cutting. if you are confident that you can buy it stressed assets, can achievedent you
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cost cuts from merging with other businesses, that has a proposition. selective. brought going to be back into the energy sector. money go? >> i think it doesn't companies and sectors which bunny cash improvement in consumption in the united states we're also seeing some pick in consumption in europe. notably in germany. one has to highlight the mediocre news on your. clinton's consumption is picking up a demand for oil is not going to -- >> for structural reasons in the isst reason is that opec still producing [indiscernible] at high levels of -- >> [indiscernible] demand sideo on the
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his long-term structural reduction in oil demand and if you actually look at oil demand in the developed world since the late 1990's demand has been completely flat. demand has only come from emerging markets and from china. we are being much more can fish and in consumption in the moment and if you buy for example a new car today and i you know volkswagen has very specific to the cult problems but energy efficiency in the industry is improving dramatically and there is a trend toward i think except the reading trend toward hybrids and of a trick cards, that means that the equation remains weak. >> plenty more still to talk about. bob parker. comes as investigators efforts to determine whether a bomb brought down a russian passenger jet in egypt last month. we spoke to qatar airways in got
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his thoughts. >> let me be clear on the matter of security and safety. in qatar, we take it extremely seriously. we are very stringent and how we process security and baggage identification and imaging. we have equipment. our half is concerned, we take precautions. airlines flight to other countries. we can insist with authorities to make sure that their security regime is robust straight >> and you have that confidence? >> we would not be flying if we were not confident because we will never put our passengers in harms way. we are an airline.
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we value passengers. they are my most expensive asset and i cannot put them in the smallest way in harms way. >> qatar airways ceo talking about the story surrounding the balm or no bomb -- a very big story at the dubai air show. we are going to germany live for the latest on the emissions scandals. stay tuned later today, bloomberg has a new program for europe. it will be hosted by betty liu and it starts right here in 4:30. ♪ guy: gzip the stories you need
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to know about. the odds on the federal reserve hiking rates in december have afterd to 70% stronger-than-expected payroll data on friday suggested that the u.s. is on solid footing. the you -- the portugal socialist party is forming a coalition with three other left-wing parties, raising prospects of a faster reversal in spending cuts. lufthansa has canceled almost 1000 flights today as striking .rew expands more than 100,000 passengers are affected.
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70% of operations are unaffected. volkswagen says emissions inconsistencies were the result of employees informing superiors . the advisory board meets later this morning. we are in berlin. what is the latest clan? what doing a? yesterday, it was reported that the scandal was brought to light by volkswagen employees. the company confirmed the report, putting out a statement that a came from an internal process from the ground up. that is what they are emphasizing. internal investigations, employees admit that there are irregularities of feel consumption values.
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this has to do with the additional 800,000 vehicles that they disclosed had co2 if regularities. all kinds of shenanigans were taking place. tires inflated more than normal .evels to achieve these levels diesel mixed with motor oil to get these results. you also had -- himself to therm chancellor merkel of latest revelation, the additional vehicles. it is being sort of reported in inmany has a new era volkswagen where you have the encouraging subordinates to speak out. a lot of blame cast on martin winterkorn, the old ceo. in particular, he called he said at the geneva auto show that
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they would have 30% reductions in co2 by 2015. instead of challenging the ceo, .ngineers tried to make it work we have a board meeting later today. they will be discussing ways to go forward. forward? is the way reporter: the most tension we will have his from baron osterloh. he has been critical of pet steps they are taking. it seems that the worker's was early inught on more not have unilateral decisions like when they announced the increased. there could be tension between head ofs council in the that and the other members on the board. guy: thank you.
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let's stay in berlin. bob, i have angela merkel struggling with the migrant crisis, the vw scandal, china slowing down. how do i put that together to get a macro picture of what is happening? guest: clearly, there are headwinds for the german economy . previously, i thought germany would accelerate in the first half of 2016. one has to downgrade that forecast. we have more muted growth of 1.8% annualized if one looks at 2016 compared of with the second half of 2015. that has implications for ecb policy. that there isely
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frustration about the pace of recovery. europe is recovering through stimulus. it is fair to say there is frustration that the recovery is as mediocre hazardous. i think that will prompt manager he policy. should the message be, should merkel be sitting there limit,the hell with this we need to spend our way out of the story? for 2016e of my themes evil cn see an easing of monetary policy. number two, i think you will see
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a change in fiscal policy. the period we have had if extreme fiscal austerity has i think 2016 until 2018 will be one of modest fiscal expansion. question, i think the german government will lead an initiative saying we need to reboot the economy. i think the fiscal limits will be relaxed. right whereugal is they end up in a situation where they've replace the government that is more significantly pro-spending a lot of money. guest: i think it is inevitable
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of who is intive charge of portugal, you will see negotiations to reduce austerity. guy: will he yields go higher? guest: i think the trend is higher. when i say slowly higher, who is ?he biggest buyer of bonds the answer is the ecb. that will continue. if they expand to 70 billion puts -- across the whole eurozone. i would thought aggressively play european bond markets. i think the u.s. yields go higher. i think this spreads between
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u.s. yields in european yields is more upside. guy: thank you. in the next hour, we will talk about the german economy. see you in a moment. ♪
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guy: great expectations. 70% said ratey a hike in december. strong payroll figures. damage control. prosecutors are seeking to suspend the company's licenses after continuing support. and the fans of strikes again. passengers go000 nowhere today. good morning and welcome to "countdown." allowing this story friday,
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very strong payroll number and the revision, we now have a situation where we are seeing the dollar continuing to strengthen, and a 70% chance we now think of a hike in december. that is of the numbers here on the bloomberg terminal are telling us. we have gone up aggressively over the last 10 days in terms of what we have seen. that is the dollar index, the fed very much in focus at the moment how do they control the rise that will be one of the challenges working forward from here. in terms of how we are set up this morning and equities, let me give you a quick look at the fair value calculation. it is an interesting number, kind of. what i think is interesting u.s. this is that friday, safety markets shrugged off the better than expected data in didn't do much. the dollar is clearly reacting
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to the fed, an expectation built into the market in terms of an implied fed rate hike. equities are not really doing very much. more problems surrounding what is happening in germany. data out. let's break down the numbers and get you what we know. than expected data -- let me take you through the numbers for september. germany's trade surplus has come in, beating expectations. if you look at export in september, the rose 2.6%. -- they rose 2.6%. the augustrast to data where we saw the biggest drop in exports since 2009 and the trade surplus shrink. this time we are getting a positive surprise after that negative surprise earlier last week in industrial production and in factory orders,
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unexpected drops. a lot of questions of whether germany is becoming the canary hashe coal mine, whether it been affected by the slowdown in china and emerging markets. china is its biggest trade partner outside europe, but today's numbers came in better than expected. trade surplus at 22.9 billion euros. guy: thanks very much. more news for the mining sector -- bhp is putting out details about problems, the loss of life associated with it. ryan chilcote hazard monitoring it. ryan: bhp shares are in the frame because we had australia trading, shares down the most in more than a month. two components to the story -- the human tragedy of the accident in brazil, 13 workers atbhp missing, one dead,
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least the same number of people unaccounted for amongst local residents. an extraordinary story. two dams burst, where the t atewater from the mine sen wall of water 20 meters high down the valley. the residents of one village have 25 minutes to fully. posted by their houses were destroyed. the financial part of the story -- deutsche bank saying that the cleanup alone could cost bhp $1 billion. then there is compensation for loss of life, for loss of home. the larger issue is losarger output, well into 2019. putting things in perspective, production is about one quarter billion tons of iron ore. this particular mine was churning out 30 million tons per
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year. it is not a huge part of the bhp earnings story, just 3% of pretax earnings. but all it does is heightens concerns about his company and its ability to manage cash flow, and increasingly its ability to maintain its dividend. guy: where do they go from here? it is very hard to get our arms around whether or not licenses will be suspended. how does this work? ryan: this is a financial story, or at least a negligible worker bhp. there is a reputation to be maintained. the ceo flew into brazil today. he will meet with their government and partners. he will be with the prosecutors, the ones who said they want all the licenses for this mine pulled until we have been able to assess the actual damage that
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was caused, and the viability of a third dam under threat. in the same be done way that bp needed to after the spill in the gulf of mexico. they need to be seen as doing the right thing. the ceo is flying in, and in general may need to keep investor confidence on their side, that this is a tragedy, but in terms of its financial scope, hopefully limited. guy: it has hurt in australia. the futureing to see of that 106-year-old business. we will continue to watch what happens as it receives an unsolicited offer for the business. let's change gears and talk about what is happening in the u.k.. whether or not britain should stay in the european union will be a key issue.
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the majority of businesses say they want to stay in the eu, or do they? version. a reformed already expressed a profound concern about a possible brexit. anna edwards is in central london. anna. anna: thanks, guy. they have turned the lights on so they must be getting ready for the meat of the debate in london. we are trying to establish what business thinks about this subject. you mentioned the majority and that comes from some previous cbi reporting saying that the majority of british businesses want the u.k. to stay in europe. other voices are questioning the cbi, and they find themselves having to defend its methodology and conclusions. this week we are going to hear
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from david cameron about what he wants from europe, the first time we have had committed to paper with the u.k. government wants to see. it might codify some relations between euro into non-euro countries, talk about how the u.k. is not so keen on this ever closing union. it might talk about completing this angle market services. all that could be in the mix. the u.k. will be talking about whether next year might be on the referendum. what does this mean to business, and what does it mean for european business that operates here? i am pleased to say that the ceo of -- joins us now. thank you for joining us. -- have 14,000 people here you must want the government to get on with it. and there is talk of the referendum taking place in the summer. is sooner better for you? >> well, at the end of the day,
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what is always good a certainty. having uncertainty around briggs exit is not a good thing. having said that, we need our government to take time and make sure it is done properly. once we know the outcome, we will be able to have the referendum, and the sooner all of that can happen, the better it is. anna: help us get inside the board rooms of britain and europe, if you would. what is at the crux of this for you? what is it that could decide whether siemens commits more money to britain or less? >> let me talk a little bit about the european agenda on this. i spend a lot of time across europe talking to business leaders, and i am based here in the u k u.k. there are two different sides the argument. in europe, it is quite calm.
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i think there is a huge amount of cooperation, a lot of will for people to want to work with britain to get a more competitive europe. in other words, there is violent agreement that there is reform needed around such areas as regulation, whereas on the side we seem to be kicking up a bit of a hysteria, and the debate is running out of control. what i would like to see is just a little bit more calm, a little bit more rational debate, because this is a huge decision, a massive decision, and i think in the calm, our prime minister and our government will negotiate a good reform deal that will be good for europe and good for britain. anna: that said, is this something that will dictate whether siemens puts more money into the u.k. in the future? >> obviously, being part of an eu means that we can trade freely with the european continent.
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it means that we can carry out joint r&d programs much easier. anything that is going to make things like that more difficult will make my job more difficult in terms of being able to invest more in the u.k. i don't want to leave you with the impression that leaving europe would mean siemens exits the u.k. -- that is not true at all. this is an important market for us and we will continue to serve this market. but it would make it more difficult outside the eu. anna: how do you think we will keep the arguments positive? voices that are very pro-eu could be tempted to warn about the threats that could arise if britain leaves the european union. you clearly believe that the debate needs to remain positive, so how is that achieved? >> let me give you an example of that, which is reform in terms of regulation. i think regulation is a very
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misunderstood area. in the u.k. we seem to have picked up a lot of hysteria about all of this regulation being terrible and shocking, and it all makes things difficult. don't misunderstand, i'm not a lover of regulation. nobody really likes it. ingrown auth is, business, you just need to regulate things. therefore i think the positive look, should be about, regulation is required in a mature and advanced economy. we need to be able to make sure our products are are mentally friendly, safe for people to use, and the near or the argument -- into the mere thought that we could do without regulation is not a credible argument. it is high in the sky. let's be more positive about accepting that regulation is part of growing the business. let's make sure that's a competitiveness rather than detract from it. anna: on the broader question,
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your expectations of the government -- we will no doubt hear from government a lot this week -- this government has made a lot about how it wants to rejuvenate manufacturing in the u.k.. is that just talk? have you seen evidence? >> i have seen evidence, and the key area we have seen evidence is we are focusing in the u.k. more on innovation, on r&d. we have built out of the u.k. a number of new innovations centers, which allows manufacturers large and small to work and be more competitive and create products which are globally more competitive, and to be able to export more. anna: thank you very much for joining us. .he ceo of siemens i'm sure you got the gist of what he is saying. guy: anna, thanks very much. anna is down at the cbi day.
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i want to bring you a bit of breaking news. -- it relates to the issue that is coming out. an underwritten rights issue value that $407 million. it is underwritten. hsbc, jpmorgan, and standard bank are giving indications that south africa, the public investment corporation down there, is going to take a full entitlements. i want to figure out how much of this business they own -- they have 7.65% of the business, and they are going to pick up their full entitlement. it looks like it will be standing behind it. will others, i guess? let's find out how asian markets are trading this monday morning. zeb eckert is standing by. zeb: hi, guy. as we look at the markets, you talked earlier about the focus
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on central-bank policy and action, and certainly increasing expectations that the federal reserve will move to hike rates. whetherat balance, investors believe it will happen or whether they think stimulus will continue to december into 2016 is impacting market. msci asia-pacific as these the swinging between gains and losses. that is reflective of what you have across the region. markets are generally in the red, australia down 2% today, some minors moving in the session. you see the divergence between shanghai and hong kong, hang seng down by 1/5 of 1%. why is that? that is because the regulator in china today announced they will resume ipo's. that is seen as a plus, a signal of confidence, and that led to the gains today in shanghai, 1.6%.
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it is the brokerages and banks that are doing well. one had a nice 10% move. cicc, a foreign investment bank in china, doing well in hong kong today, the shares rallying. his financials have done really well. hsbc among the financials doing well. standard chartered remains under pressure. telecom is not doing so well. a real estate investment trust is down 2.5%. and a major property developer is down 3%. back to you. guy: thanks for the update. , grounded. lufthansa cancels almost 1000 lights today as a cabin crew strike spreads.
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we will go to berlin for the latest on this. ♪
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guy: it is 7:19 down in london. here are the stories you need to know. the odds on the federal reserve hiking benchmark rates next meeting in december has now climbed to 70%. that always sounds like a done deal. that is after stronger-than-expected payroll data signaling that they are on solid footing. africa's biggest mobilephone company chief executive resigned of dollars ins fines. suisse may drop as much as 60% due to a right down,
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according to how made by a swiss newspaper. wants tohat the ceo ,ubstantially write-down assets and that could lead to an annual loss of around $2.7 billion, which may have a knock on effect. is front and center on everybody's mind. it comes as investigators continue their efforts to determine whether a bomb brought down a russian passenger jet in egypt. bloomberg spoke to -- >> let me be very clear on the aster of security and safety we take this extremely seriously. we are very stringent on how we process security and baggage.
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we have sophisticated equipment. as that we take all the precaution. it is an airline. it flies and other countries and we can only rely on those countries to make sure that the security remains robust. >> and you have that confidence and most of them? >> we would not be flying if we were not confident. we would never put our passengers and harm's way. we are an airline. passengers, and they are our best asset. we cannot put them in any way, even in the smallest way, in harm's way. guy: meanwhile, germany's flagship airline canceled 1000 flights today as cabin crew action next hands to munich -- action expands.
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let's get more on that in what is happening with vw with hans nichols in berlin. where did talks go next between the management in the unions? hans: they say they are willing to talk but the union's and they want to come back to the negotiating table. they said november 13 is the day through which the strikes will go for. saturday they striked, 520 flights. today it will be at almost 1000, and they are affecting three of germany's biggest airport, frankfurt, dusseldorf, and munich. it affects some 929 flights, almost 113,000 passengers. their subsidiary airlines, they will not be affected. short flights on those airlines will not be effected. you look at their previous strikes, the 2012 airline strike
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by the flight attendants and cabin crews union cost about 33 million euros. the pilots have strikes 13 times already, and they still have a conclusion and that has already cost them 350 million euros. as all the media here in germany is focused on, there is a passenger hit as well, where they are concerned about what this will do to the brand lift lufthansa.ns guy: they have apparently been -- these regulations. what will come out of this board meeting? what is management doing their? -- doing htere? there? there could be some tension. he said that the workers councils were included. look for some tension there and then what volkswagen has to say.
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guy: hans, thanks very much indeed. hans nichols, over in berlin. let's go a bit further down the supply chain to one of the big providers of equipment that goes into vw and all kinds of cars in germany. the parts maker is seeing a boost in its home market and in the united states. nejra is here the details -- what do we make the numbers? nejra: we are talking about consonan continentale. it was a beat in terms of third-quarter profits, rising 11% to hit 1.0 8 billion euros. was the beat, as margin.
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they also raise their profitability target or second time this year. what has been helping this company is partly lower commodity prices, cutting costs, and a weaker euro. bill would also it benefited but it also benefited from the u.s. that helped make up the slowing demand for vehicles in china. 25thmber marks the consecutive month of increases for car sales in europe, and that has helped continentale. igger also helping its bage rival, which has been benefiting from lower commodity prices. guy: thanks very much. trying to get a sense of what happened with it, it is a story of the supply chain. this tells you that 11% of revenue is dependent on daimler, 9% on ford, volkswagen 8%, you get an idea of the spread.
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we will talk to the cfo later on. don't miss that conversation. we will also go back to germany and talk about the trade data we are getting. plenty on that when we come back. ♪ the only way to get better is to challenge yourself,
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and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20.
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it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. guy: seven: 30 in london, a: 30 in frankfurt and paris. let me tell you about the stories you need to know. the federal reserve hiking benchmark rates in december, chance no klein to 70%. -- chance now climbing to 70%. that is after better-than-expected payroll data. miner announced plans to raise millions this year. they will sell billions of shares at a penny each. they lost half their value after it was hit by the commodities
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crush. lufthansa announces plans to expand flights out of dusseldorf. the airline serves more than 100,000 passengers, although 70% of its operation should be unaffected. it could just be the flag carrier. we are less than half an hour until the european equity market open. moved onrything else the payroll data, equities really didn't. we only got a tiny change on the dow and s&p friday, and it looks like we are replicating that here in europe this running. -- this morning. we are up by 2/10 of 1% on the euro stocks, a very sluggish start. i want to show you this as well, what is happening with portugal. we could get a new government,
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and as you can see we are giving a little bit of a spike in yields now, just beginning to emerge in pushing us further on. there we go. that is the wider story. that is where we were and we are all the way down here now. the ecb is certainly keeping a lid on that. stephen cohen, at blackrock, good morning. monday morning, post the payrolls, not much. a 70% chance we'll see if that hike in the summer. talk to me about how you see the world and its relative position. the ecb is in a very difficult position -- what does it do next ? the fed, the opposite problem. stephen: it is interesting because we are coming through on a roller coaster, building up toward september and then going
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incredibly dovish. meanwhile, the ecb has gone in the complete opposite direction. and now within 10 days we could have central-bank divergence with one central bank easing and the other hiking. we are now at the point where the currencies remain the main mechanism for all this, and that is the one move you did see on friday. where is the pressure for a rising currency? it is clearly the u.s. dollar, back to this rising trend over the last 24, 48 hours. the euro and the yen has been week and that has been supporting the move in equities. sterling is kind of in the middle. i think this is arguably what was predicted by the bank of england. you could argue that they were very dovish, pointing toward sterling versus the euro rather than versus the dollar.
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and are coming off a high arguably going down to multiyear lows. it is sitting in the middle because the central bank isn't doing any. guy: hold that thought. the chinese yuan is dropping to the lowest level in three weeks after their exports fell. 31 economists we surveyed and nobody expected this number. tom, just how bad are these data, and what does it mean in terms of growth targets? tom: clearly, another month of only exports is not good news for china. it was around a 3% drop if you looked to the yuan numbers, and it fell over the course of august and september and flattens the yuan data. if you look at the dollar export
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numbers it was more like a 6% year on year drop. clearly that is troubling for china, still relying on overseas demand as a central driver of growth. what is more troubling to chinese leaders is that now we have weakness at home with the real estate sector in construction still very lackluster, and weakness abroad with x boards contracting. -- with exports contracting. we will expect the government to continue ramping up stimulus efforts. guy: we have been talking about divergence in policy, ecb versus the fed. what about stimulus when it comes to the chinese economy? tom: yeah. i think the real question is not whether they will stimulate, but rather what channel they are going to use. there ar ete two main options. they can do more at home with cuts in interest rates, the property sector or key sectors
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like automobiles, or they can do more on the yuan. you mentioned that we saw the yuan drop in response to the export data, and it is possible that the central bank will succumb to market pressure and allow the you want to drop to boost exports. horizon,t-term time that you want drop is pretty unlikely to happen. that will really focus attention on the possibility of more easing at home, more cuts in interest rates, for targeted support for key sectors. guy: tom, thanks for the update. tom orlick out of asia. let's bring it slightly closer to home. the nation posted better-than-expected current account data this morning, with septembers trade surplus data coming in ahead of forecast. hans, why are they better than forecast? hans: well, exports came in at
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2.6%, and the analyst estimate was 2%. last month we saw a trade balance, a surplus of 15 billion euros, which had everyone shocked, because it came in north 20. .9, the number, 22 estimate was for 20. this gives us a good indication that german exports are growing, doing better than expected. it is against the last two bits of economic data, factory orders and industrial production. there were those disappointed last week. last month, we had three negative numbers. factory orders, industrial production, trade accounts showing that it was slowing. this month we have a slightly different tale. this last number is better than expected. 'german looks like -- germany looks like they will dig in where?but
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it looks like exports are holding up. guy: hans, thanks very much. that's what's happening on the macro front. german data is a little bit better but we still need to figure out what is knowins goin. let's get back to have central banks reacted. stephen cohen is still with us, from blackrock. german data is all over the place but it has generally not been great. people have been downgrading their expectations for growth out of germany. how does that fit into the ecb inking it needs a growth driver -- ecb thinking it needs a growth driver? what does it do? stephen: the german data is quite reflective of what we are seeing, a model through feel, pretty -- a muddle-through feel. we are seeing is stabilizing a little bit, can be ecb decided they were going to be dovish,
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and they needed to follow through. they have an interesting situation whereby the fed is being pushed to be more hawkish. does that push the ecb -- does the ecb the developer? their credibility is always at stake in what you have seen so they do their forward guidance, they deliver. the one benefit they do have now is the euro, weakening quite significantly. who are nervous about the euro being too strong, impeding this recovery. i think they will want to follow through and make sure it will lead to some sort of rate cut. guy: equity markets bounce back in september, following a strong move. how much of that was down to central-bank policy, and how much can we extrapolate from here, with the ecb going the
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other way? what does that mean for asset class level? stephen: a lot of it is central-bank expectations. this spark was the week payroll data in october, that friday afternoon where they sold off very aggressively and then rebounded. it has been a one-way road since then. that was really builds on the basis on -- the data is looking bad. the fed can go this year. then the ecb followed up with the dovish october statement. so i think that has been the fuel that has driven this pretty significant rally we have had. i think the interesting thing now is as you move into december, obviously the key will be how the markets reacted to the increased volatility, and so far it has been fairly calm. the second thing -- we continue to see markets respond to where using is going to happen. -- where easing is going to happen.
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japan was strong overnight on the weaker currency, purely based on said expectations. -- on fed expectations. it is very much central-bank driven. guy: how does the market due in december? december going to see there aame time -- is danger of mistake there, or does it not matter anymore, with such a passive world we live in? does it not matter that the hedge funds shut their books up? stephen: it is a good question, because liquidity in december is typically poor. with the last few years impacting the banks, it has impacted year-end liquidity, ad these two major events -- couple years ago we had that taper in december. the market rally didn't end --
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guy: let's hope it turns out this way this time around. you never now. stephen will stay with us. up next on "countdown," continental driving forward as it raises its profitability goals for a second time this year. we will see you in a moment. ♪
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london, 8:45 in paris, here are the stories you need to know. the tens of has can't -- lufthansa has canceled thousands of flights amid strikes. the airline says more than 100,000 passengers face it, but says that other operations should be unaffected. inconsistenciessays
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were the result of employees failing to inform their i superiors of what was going on. the ceo has resigned from africa's against mobilephone company, facing a fine of $5.2 billion by nigerian regulators, saying they deal to comply with an order to disconnect users. a little bit of action in the portuguese bond market, unsurprising given the shockwaves rippling through the country. we are seeing yields spiking. points, and ecb is likely to continue to keep the lid on this one. it may step up its bond buying program and it may not feel a full effect. people are nervous surrounding the bigger picture story. a very left wing government could potentially come in, and you could see potential problems
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out of brussels as they try and reverse some of the austerity. a lot of the heavy lifting is done but there is still more to do. what stocks are refocusing on? let's find out with nejra. nejra: starting with continental, europe's second-biggest tire maker. it raised its profitability goal for a second time this year. 11%,-quarter profit rose beating estimates. they have been benefiting from lower commodity prices, lowering cost, and a weaker euro. they say that the car market in europe and the u.s., the gains their, madre, made up for slowig demand in china. got to talk about lonman. it has already climbed 14% in johannesburg, the biggest intraday gain since october 21. this is after it announced a
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$407 million issue. the question is will investors think it is enough. some have said it might not be because it is trying to survive . slump it could be forced out of business and is warned about thousands of job cuts. some analysts predicted 20% higher. finally, staying on commodities. keeping an ion bhp. will we see third day of losses in the stock? the ceo has departed for brazil today. prosecutors there are looking for the suspension of licenses at its venture, as well as compensation for victims after two dams first, causing deadly mudslides. guy: thank you very much. some stocks we will be watching ahead of the opening 12 minutes. stephen cohen is still with us. fixed income at
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$500 billion for the worst time. -- given a week what we have been talking about, what will it look like one year from now? stephen: i think there are two things going on. this year we have benefited very much from a structural shift toward etf. i think that will continue into next year. also, we have seen with fixed income times when credit has been popular. broadly within the fixed income category, irrespective of the seenof year, we have outflows of credit in the summer but they were rarely muted in the etf world. i i look forward in the year, think that structural shift will continue. we will continue to see net inflows. guy: how does that change the dynamic of the market in terms
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of what we will see? stephen: i think it is changing in a couple ways. we are seeing a lot of bond managers using -- in the same way you might use futures. it is another vehicle to think about how you manage your risk. separately we are seeing some managers and investors saying, i want to be more passive and this is how i am reading about using these tools. you want to be careful with that world because when you break it down these are all just exposures. ultimately, asset allocation can be delivered through different asked voters in slightly different ways. i think the structural growth story is very much in place. the liquidity is something we continue to monitor. --hink that is something fixed income as an industry is evolving, given what happened with banks. etf is playing a role in where do we end up as an industry. guy: what is your expectation for where global yields go from here?
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the fed is the dog, and you wonder what its tail will be looking like. tail.g is wagging the as draghi sits and looks of that conundrum, how does he manage what is likely to be an incremental push higher on bond yields at a time when he doesn't want that? he is being pushed around by what the fed will do. stephen: it's interesting -- the idea that these bond yields can diverge is very challenging. when you look at the paper, the correlation is high. clearly he is going to be very concerned about that, if bond yields due back up as a result of what the fed may or may not do in december. interestingly, you look at treasuries now, 2.35% with most people expecting a fed hike, it is hard to see huge pressure. there is some pretty significant structural forces that i think will cap year-end bond
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yields. the rest of the world is still using, the fact that you had this huge bid for collateral. all this changes the need for high-quality assets and that is not going away anytime soon. guy: is peripheral europe going to become -- we dealt with greece, portugal has a new government, moving away from austerity. draghi sitting there, potentially buying more -- he has to keep a lid on it. stephen: i think it matters less than the bond market in the short-term, because the ecb qe program is there, that effectively keep the lid on contagion. portugal is a fantastic example. the portuguese bond market, two years ago -- i think the more interesting stories what happens over the next two years and the political situation. you have a left-leaning government in portugal, agree
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story that will come back, some pretty big elections that are 18 months away in france and germany. polls point interesting results. we were talking earlier about the change of fortune with merkel. there is a lot to happen over the next 18 months. guy: germany has a little bit of room to maneuver here. -- they want to go out and spend more money. if you were to start to see that coming through, lower prices, more fiscal spending, more qe, that is quite a combination. stephen: it is. and there has been a big push in the last year or two to say that germany should be spending more. there are a lot of infrastructure needs and germany. -- needs in germany. for the last couple years the european fiscal pulse has been negative. it has been moving toward neutral. if you get a positive pulse, and we are seeing a positive pulse
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be prettyt could interesting as a going to 2016. guy: thank you very much. minutes away from the european equity market open. manus cranny. what you have? manus: a couple different aspects to take on board -- it exit storyf the brigg has trumped the euphoria but we will talk about the yen and yang -- the yin and yang. the majority vote is at 36%, doubled in three months. the better what way you cut it up, we are awake to that risk. lonman, the stock is roaring. i like the way we have written the headline -- ripe for survival. would you actually commit to that rights issue, and goldman
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sachs is doubling down on parity for christmas. never mind christmas, they are going for parity at goldman sachs. guy: cool. thanks very much. much to look forward to for the rest of day. we have a new show for you, a closing show. the european market closing show, betty liu and mark barton. 4:30 u.k. time, telling you what you need to know. an interesting monday morning -- they will have lots talk about later on. it's not raining. i guess that is something we should take to the bank. ♪
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jonathan: good morning and welcome to "on the move." i am manus cranny and for jonathan ferro. moments away from the start of the european trading day and the week. your morning brief. right to survival, the troubled minor after making a $470 million cash call. airline hits the almost 1000 flights. affecting over 1000 -- 100,000 passengers. brexit risk arising. british prime minister will
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address as he puts the finishing touches to his letters of the u.k.'s demands for the european union. ok that's what we are watching this morning. let's get across to the touchscreen with your market open. we have weak trade data out of china area that are than expected trade data out a german. let me quickly check in with the copper price down almost 0.3% and just though worst performing on the london exchange. likely reacting to that data out of china. mixed picture in asian stocks overnight. a look at europe. german trade data better than expected. exports up 2.6%, beating estimates, better than august. a lot better than people expected. ftse 100 pretty much


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