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tv   The Pulse  Bloomberg  November 19, 2015 4:00am-5:01am EST

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francine: the hawks are in. the fed rate hike looks likely for next month. the jobs report on december 4. could crunch. oil trades around $40 a barrel. does the low price mean more qe for the ecb? the french do not know if the ringleader behind friday's attacks are -- friday's attacks is dead. ♪ francine: welcome to the polls. live -- welcome to "the pulse." i am francine lacqua. a rate hike in
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december looks likely. most members are on board. market expectation show investors look to move next month. speaking yesterday, york that president said he is looking forward to the day the fed raises rates. >> begin to raise interest rates. that is a good thing. that is a sign that the economy is returning to health. the federal reserve is getting closer to achieving our mandate. francine: for more, let's bring moretti. and let's bring in simon kennedy. thank you for joining us. simon, let's start off with you. expectation for a rate hike hasn't increased for two days. when we heard was a hawkish fed -- what we heard yesterday was a hawkish fed.
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samco -- simon: they responded in the markets. the jobs market -- the jobs number you saw. francine: we had inflation. december, the in feds meet the cymer 16th. the reason it is not 100%, people wonder if the fed is going to do the right thing. now they are talking about how a rate hike would still be a mistake. they also look back a few months blink backaw the fed in september. the fed doesn't really want to go until it does. thingsu look at the fed, -- 2016 rate increases will be very gradual. simon: it is about
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the pace of the subsequent move. they now need to backup in december if they do hike. how slowly are they going to raise that rate. themberg news reporting jobs are ending minority -- are in the minority. francine: it seems a lot of investors were saying we have not gotten their communication. do you feel you're in good hands, that janet yellen is clear in the message? on our side, the as an end strategy -- market to our companies. what happened in the last two or three weeks is everybody was unemploymentcause going at 5%. ago,e same time, two weeks
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one of the best retailers in the u.s. comes alex -- comes out cutting expectation. i think from our side, having an increase in interest rate now is good. it is good because at some point there is a fear of apple. if people start gearing if apple fearing that apple is mounting again. francine: the central bank divergence is something that simon talks to us they in and day out. the fed looking to hike rates. possible more qe from the ecb. it is all about currency and things which benefit at the end of the day europe. mauro: from a central bank perspective, the company's field reassured because of the
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determination that the ecb and draghi show a positive element. at the same time, what we can see in the banks. and our banks use the look -- use the liquidity. we don't see overleveraged structure that we saw in 2007. the ecb is putting into the market is used in the right way. to an extent, another positive element that we invest in midmarket companies. we see it as an lt element. francine: simon, when you look at the fed, -- i am not sure how much of this is priced in. december is a volatile month. it is a month of the holidays. simon: the holidays are there.
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it is the end of year. books square and. the markets are liquid. there are problems along the road. you move in december, and then there is a bad jobs report in february. how they have to go in the view of some. get that hike done with and see where you go from there. francine: morrow made a very mauro made a very good point. the fed haso say been itching hike to mature there were no asset bubbles? simon: china devalued. china suddenly slowed. other flashpoints in the fed it recognized that and put a pause on the shift. hard, shifting into a
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hard notwhere it is increasing. is there anything that will make janet yellen move? how worried are you about asset bubbles? a lot of these negative rates were unthinkable 18 months ago. and now they are part of our daily lives. site, we try to learn from investments. we say tore and more our investor, we try to be absolute. we try to mitigate and normalize the external effectors. one of the risks is in the furloughquity is to overleveraged structures.
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the willingness to say let's go for another investment. investor, teaming up with oxford doors, we try to bring discipline -- teaming up with entrepreneurs, we try to bring discipline. iseurope today what we see consolidation. extra liquidity to increase market share. turn extent, one of the reasons why a lot of people is looking at the ecb is inflation. what is going to happen? is inflationor us is not spiking because we see that most of the market leaders in the market we back is using this moment to increase market share. usually that is not done until price increases.
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[indiscernible] the ecb saying we need to be careful. power -- weect the want to protect the power. as of today, it is achieved. the balance between 1% and 2% maybe. qencine: is look at possible from ecb, has it filter through tackle -- filtered through? the debate that we have been having, what has it helped tackl?-- helped i think it is help at a consumer level. pan-european. think the fundamental ecb hasnce that the
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sent. cycles are becoming so short. in two dozen five, you had three or 45 years. now basically at -- you had 3, 4, 5 years. year.cycle lasts a thinkmpany point level, i as well, it has worked. francine: morrow, simon, thank you so much. here's is a look at what else is on our radar here rescued is say information found at the scene of his today's raid suggest the gang who struck last week was preparing another attack. at least two people were killed and eight more arrested as police fired 5000 rounds of an operation in paris. the suggested ringleader is not
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those detained. police say they do not know yet if he is one of the dead. the central bank says the record easing measures are having the intended effects and the japanese economy continues to recover moderately. earlier, japan hosted first trading press conference in months. talks -- an advanced pfizer is in advanced talks to purchase allergan. ceo,xt, we speak to the francesco so much a. that conversation is up next. ♪
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francine: "the pulse." will come back to -- welcome back to "the pulse." interviewg you an with italy's biggest company, told investors that impairment in russia had hit profits. how does one of europe's largest companies -- let's speak to francesco starace. good to have you on the program.
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we will be talking about geopolitics and a second. you have a great barometer for understanding europe's economy. what you see as the biggest risk? see some recovery in most of the countries which were lagging behind. the issue we face in many existeds that it between gdp growth and power consumption is weakening. francine: y? francine: why? francesco: technology is finding its way into the homes everywhere. everything we buy is more efficient. we consume less. this link is weakening. it is a fact of life. it is not everywhere.
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we see and observe that. growth in the gdp not enough or not the same growth that we have seen before. francine: how are you adapting? impact onve an companies. francesco: utilities are power producers but also power distributors. they need to focus on both and not just the number one preoccupation. the idea is let's keep the lights on and improve the service. let's digitize the networks. let's do more with the distribution network we have which is he coming more important. the debate will not be like before. it should be 50-50. francine: the european commission has said that europe needs to diversify.
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gas.from have you see that relationship changing? has gas become more eu friendly? are they going after market share? francesco: it has become a big caster in europe. francine: it has been used as a political -- francesco: to some extent, yes. if you look around europe, what other supplies of gas do we have? who is the friendlier of them all echo i think it is an issue that we have to address. we can depend on just one source. we should have more lng. perhaps it is more costly but it would make a big difference. we should multiply the excesses of gas into your.
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-- just stop at a technician stop at a calculation. we know this does not work. we need more, more diversification. francine: the terrorist attacks. a think there's going to be rapprochement of russia with the west. depends on the west than russia. i think yes there will be. i hope there will be. i think it will happen. that we have ase tense situation between russia in europe -- russia and europe in general. i think right now it is more a detriment to europe than russia.
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francine: why is it so difficult? why is it so difficult for these companies these renewable energy companies? francesco: i don't think it is difficult actually. i think it becomes at a certain point a limiting factor. ist pushed us to do this over the time in the five years, enelo power -- five years, power has generated more investment opportunities. it can operate them. much more than its own objectivity can afford. we have two choices, limited backing. royal that is the main logic behind this. francine: that would mean it would be more difficult for the company to do funding. is that in the people's minds?
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francesco: it would have to go to the market and ask shareholders to increase its capital. liveuld ourselves have to with the contradiction of putting more than 50% of our -- putting these things together, because we are betting so much on or no energy, we are becoming a renewable energy producer at large. the second observation was green power had the luxury of eating made from scratch. -- luxury of being made from scratch. ideas that cannot have elsewhere. now we have the opportunity to change from within. francine: i was good to talk to you about that.
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how do you want the company to be seen? company? or do you want to be seen as a renewable energy company five years without? thecesco: i believe that is second point. a renewable energy company which today does not exist. you inbreed plants. putting one plant into another and then another plant comes up. this is the case. work when oil prices are at $40? -- will it work when oil prices are at $40? francesco: we have not seen an impact on renewable energy growth because of low it -- low oil prices. this basically leaving off crazy up and down of commodities
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. francine: because it is stable. francesco: it is very stable. it is getting more competitive along the way. it is a great moment. it is a nice expectation for renewable energy. the pariswe have talks in a couple of weeks. thank you for joining us. joining us for that exclusive interview. up next, oil briefly dropping below $40 a barrel for the first time since august. why? we discussed that with our chief responded. coming up next. ♪
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francine: welcome back to "the pulse." we are live on bloomberg tv. we are getting some headlines out of germany. the chancellor speak to reporters in berlin. she is saying to significant facts as heads of state look at their security situation in individual country. angela merkel saying the current eu system is not functioning. one of her main messages is we should not link the terror attacks to refugees. -- she says these attacks that happened in paris were aimed at all of us.
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she is making a distinction come forhe seekers who economic reasons and the ones who come for political refugees. keep an eye on angle merkel. merkelan eye on angle of -- on angela merkel. this get back to oil. oil falling to the lowest level in three months. -- let's get back to oil. oil falling to the lowest level in three months. uas energy minister said that opec is confident that the market will stabilize itself. oils bring in our bloomberg corresponded, javier blas. pains explaining this will stabilize. much offigured out how
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a supply glut there is? how much that is having an impact on oil prices? how much is it linked to the lack of demand? javier: the demand has been quite good. demand is growing at eight million barrels a day. side is good. china is not great. italy is fantastic. europe is doing well. the u.s. is doing very well. the main problem is supply. it has been talking that this is going to work. probably it is starting to work. the problem is the pain has been seeing the oil price in the u.s. , dropping below $40 a barrel. the fed is not helping. francine: you have a map. we talk about stockpiles. to really visualize it. it shows the number of oil
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tankers that we would need to fill the stockpiles. this is what? hot." -- is about -- put theif we were to stockpile into supertankers and put one supertanker after the other, the line of supertankers go from theld bloomberg headquarters to the out scales of edinburgh or glasgow. it is a huge stockpile. we would need all the tankers. if you are a small, medium company, your sink this is great for me because it means my oil is going down which means my energy and cost of production is going down.
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>> it is a good environment. -- the expectation on the supply side is not going to be -- everybody is saying ercapacity. you concerned? this is one when we started seeing the growth figures. are you concerned that the price of oil has helped the european economy so much that if they spike up, we are in jeopardy? or: two and extent -- -- >> the focus has been efficiency.
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working much more on the profit line. to an extent, that is healthy. it is structural and a more short economy. increasingback and producingther way of energy more profitable. it is always there now. francine: javier, i know we don't have a crystal ball. $50 futures, is there a technical support? javier: i think we are approaching the bottom. prices continue going down, we noe seen some signs that opec supply is responding to low oil prices. i can bring one example.
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for 11 years, production has been growing every month, year on year. september, we saw the first drop in production year on year in 11 years. ist is a sign that shale oil in a spot to lower oil prices. the other problem for opec is when supply and demand balance we still have those lines of supertankers waiting to be consumed. that means for 2016, the rice recovery seems very unlikely. francine: that line the comes from number headquarters to edinburgh. -- from bloomberg headquarters to edinburgh. here are some of our other top headlines. most participants agreed that conditions for a rate hike have either been met or likely to be by december.
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that is after a strong jobs number in october. -- he spoke to bloomberg about european markets and an exclusive interview. >> european markets have been soft. year, you're my continue to be strong. we must take a long view of your. think about japan coverage. there will be more coverage. in europeation of 4g is less than 15%. [indiscernible] more coverage, more capacity. pfizer is in talks to buy allergan for $380 per
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share. what would be the drug industry's largest ever deal. president hollande has stepped up his campaign against terror in france. apartment of -- intensify the bombardment of i.s.. let's head to hans nichols who is in france. what exactly did they say? hans: the french foreign minister is indicating that one of the bodies -- and they don't know how many, three -- was so shut up and bloody, it is difficult to make a positive identification. was -- mostot it -- he iswe heard from
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warning of a potential weapon attack. that is why he is making his case. that is a part of his advocacy for police powers. at the same time, the ap is reporting that in belgium, there are six raids taking place associated with some of the associates of the suicide bomber that attack here in paris on friday night. , having, i have to say come in and out of paris and brussels, today seems like a return to heightened security. it is a very jumpy city. it seems like men and police officers with submachine guns patrolling back-and-forth did this is a city that is on alert but is trying to get back to commerce. summit laterhange
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is going to be taking place in a couple of weeks will go on. he has commitments from 137 liters that they will be attending. some public the restrictions public curtailed -- some demonstrations will be curtailed. hollande has said he plans to accept another 30,000. he will continue and accept them. we heard from president obama saying that the 10,000 that they plan to accept will still come in. we have a bloomberg poll that says more than 50% of americans are opposed to be settling syrian refugees in the states because of these attacks. sense at howa dicey and how sensitive the politics. -- western european countries are continuing to try
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and disassociate the link between the refugees -- we heard from merkel just a moment ago on this. francine? francine: hans nichols, our correspondent in paris. the finance behind the islamic group is the cover story in the latest edition of business week. he is cam simpson. you are looking at not only the finances of i.s. but how organized they are. what is the most striking thing? and howtalk about oil isis gets money. they have resources so far beyond oil that it is staggering. on taxes they collect everything. francine: how?
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the they collected from millions of people in their territory. can't stop them from generating money on their own territory that they controlled. they control upwards of 8 million people. it is almost impossible keeping them from collecting funds. policymakerslt for to really make a series stands in the money machine of the islamic state. the one thing everyone focused on, the oil, where we could of made a better difference, we have seen since the paris attacks that the obama administration miscalculated the damage that we did a year ago during the initial airstrikes against their oil infrastructure by forged million dollars. said we did au.s. lot more damage than we did.
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cam: they were telling us a year ago that we bombed isis is oil infrastructure down to $100 million operation. may, a rare in ground assault against isis when they were deep into enemy territory, they got all of his records and they figured out they were dramatically wrong. productiond isis oil -- not only was isis oil production so much higher. now they are saying quietly after the paris terrorist attack, that isis is making $500 million a year. that is a forged million dollar mistranslation in favor -- that is a $400 million muscat chelation in favor of isis -- miscalculation in favor of isis. the headline maybe could've been why are there 116 acre trucks
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lined up to buy oil from isis? we have done so little damage even in areas where it is possible because it is so hard. francine: what is the next step? the coalition forces want to take this matter in their hands. d look at money through banks? do you know where the money is cast? how transparent is it? how difficult is it to find out? cam: it is almost impossible. they so this as a war on isis's finances. -- they saw this as a war on isis's finance is. they don't need the international banking system. they have at least 90 banks just in iraq. they got the cash out of the banks when they took them over. , they aretimates
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running a surplus right now. they have no expenses. virtually. they have to pay their fighters and the primary thing they care about. they are not building infrastructure. you're talking about people who think they are ushering in the apocalypse. you don't need long-term infrastructure for the apocalypse. i don't mean to make light of it. we have to stop looking at it through our eyes and look at it through their eyes. they are so well-funded. it is like asking why haven't we stopped the drugs trade in the united states and europe? that is territory we control. when there is so much money at many, so many players, so different noses in the system, it is difficult to make a dent in, let alone choke it off. francine: cam simpson, thank you so much.
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i suggest everyone go online and read it now. we go back to talking about the fed. we go back to talking about political concerns. we will talk about effects. coming up in just a couple of minutes. ♪
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>> beginning to raise interest rates, that is a good thing you did that is a sign that the economy is returning to help.
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the federal reserve is getting closer to achieving mandate objectives. i've also said i really am looking forward to that day when we begin to normalize monetary policy as a good thing. >> i expect the trajectory of policy rate rises to be dictated by the evolution of the economy and the balance of risks as you would expect. there won't be a predetermined path and my expectation. >> this is the well advertised discussion. of -- when we to begin, i don't think it is going to be a huge surprise. i am not looking for a big reaction. francine: that was bill dudley and dennis lockhart talking yesterday. let's talk about the market.
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market, give me something. -- mark, give me something you'd marco -- give me something. mark: emerging-market investors today seem to be taking that view. also liking the gradualist approach. the fed seems to be telephoning that when the rates to rise, they will rise at a shallow pace. mci -- it is up by 1.4%. swing been the mercy of u.s. rate expectations. it has risen from its low in august from 8% through today. it is down by 20% in the first eight months of the year. the other big central-bank came from the boj. no surprises. the monetary stimulus unchanged. how all to see this
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currency. rising against the dollar among the japanese yen. up by .3%. after the boj kept rates unchanged. it was not a surprise. all economists predicted it. there isn't any inflation in japan. it has been falling. the economy is in a recession. confident that inflation will pick up. the boj will increase stimulus. won'ts think the boj reach its new timeframe of reaching its goal through march 2017. very quickly, i wanted to look at the price of crude oil. hovering above $40. this is a six-month chart. $40 fory we fell below
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the first time since august 27. we had some data from the eia 252,000 barrel increase in inventory. more than 100 million barrels above the five-year seasonal average. the next key level for us is the close on august 24. $38. that was the lowest in six years. it would be interesting to see where it hits next. oil is down by 45% in the first 12 months. the gradualist approach is being embraced by global investors. there.e: mark barton we will be watching the potential allergan deal. buy allerganng to
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for as much as $380 per share. this would be the drug industry's largest takeover. narrow, great to have you on the program. nejra, great to have your the program. nejra: the companies could reach an agreement i monday. by monday.t if it goes through, this would be the drug industry's biggest deal ever. it would also be the biggest deal in and it -- in any industry this year. pharma deals this year, it has been a bumpy year. it could help it kind of strength and its branding drug business. also the issue of the tax inversion. thereompanies move
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domiciled abroad. francine: this is something they want to do. will the u.s. crackdown on it? treasury saw the u.s. crackdown last year. we had a lesson from the treasury with a set they're reviewo review ways to acquisitions. this could be a concern because although the treasury had no right to block a tax inversion. it could make it less economically beneficial. there is the question of whether pfizer would want to offer as much for allergan or whether the deal could fall through. we saw it happen already last year. at the time, it said it was down to the treasury rolls which came into effect -- treasury rules which came into effect. francine: nejra cehic with the
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very latest on this deal. the ecb meeting later. what else you should be watching this thursday. ♪
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francine: welcome back to "the pulse." live on bloomberg tv and radio. ofe are some more bloomberg's top headlines. france plus get his say information found at the scene of yesterday's rate suggest the terrorist gang that struck in
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paris leslie was preparing another attack. at least two people were killed and eight more arrested as police fired 5000 rounds. is notpected ringleader among those detained. police say they do not know if he was one of those killed. two american companies -- square -- with shares at nine dollars each. it was a similar story for match group. the owner of dating sites, tender and okcupid priced at the lower end of the range. the two companies make their debut in new york later today. andhas repeated its sorrow apologies for the death of 11 people in the mudslide in brazil. andrew mckenzie told shareholders that bhp will commission and external
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investigation. ahead. your day at 12:30, we'll get the accounts of the ecb's latest meeting. there is no such thing as too much fed speak. dennis lockhart will talk about the u.s. economy and fed share -- fed vice chair will take the stage and san francisco later tonight. in san francisco later tonight. richard, great to have you on the program. it seems we are on a trajectory now. a hike is looking more likely. people are on the same page. we talk about that's be, is there a danger that we lose that one united voice? richard: there is always the danger. if you look at the nuances and the robustness of the debates that we saw in october and then this becomes everyday in
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handfuls. isis difficult because there nuanced arguments there. it is a robust debate. they are trying to come to terms with the timing of lift off and what that trajectory is going to be. you throw in market expectations, it yet the fed funds futures not moving. you have the dollar weakening. the reason is we go from thinking that december is starting to become really priced in but at the same time there is that robust debate among fed members. it does make it tricky to actually digest all of that fed speak. francine: at the same time, we're looking at a rate hike. unless we have a terrible jobs report december 4, we will get a hike in december? richard: that has to be the only thing that derails it. they seem very intent on getting it done.
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interesting thing becomes what the market trajectory is afterwards. that will become clear in january. get the hike in december, and i think the last week or two of december becomes a consolidation of moves that we have artie seen. in january, it could get very interesting. at anne: what he looking inflation? richard: it is 100% priced in. what it's interesting to me is whether that robust debate is existing in the ecb as well. francine: richard, great to have you on the program. jones. jones -- richard next.llance is up i am in london. tom keene is in new york. we will be talking about the
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terrorist attack in paris. we have a great debate on oil. we will be joined by john studzinski from a black star. coming up next. ♪
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♪ francine: the hawks are in a fed rate hike. next up, the jobs report. trading around $40 a barrel. does that mean more qe for the ecb? are live in the french capital. good morning, this is bloomberg "surveillance." i am francine lacqua in london with tom keene


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