tv On the Move Bloomberg November 26, 2015 3:00am-4:01am EST
let's get straight to the market open with caroline hyde. caroline: cautious trading ahead of the giving thanks. the big central-bank meeting lined up for next week. all eyes on the ecb. what can they do? can mario draghi lowered the rate even further? we are trading pretty flat in the ftse 100. tentative, cautious on the equity markets today after the significant bets on ecb moves continuing to drive incomes lower. check out this low of negative yields. money being given to the government to hold their two-year bonds. spanish and as on ,ontinuing negative yield
-.04%. one dollar north six. are mario draghi can add to that stimulus we heard exclusively from the vice president of the ecb. inflation is very low. what can they do to drive prices higher? we were talking about metals. big story in asia. withat what is happening copper. we are driving higher at the moment. we are driving higher up, more than 2% of copper. check out nickel as well. the chinese agency could investigate shortselling, but also buying metals. how driving prices higher at the request of the group. let's have a look at some of the miners reaction. glencore higher.
human investigation saying they did not do enough in that mining disaster. in finian much higher. jonathan: caroline hyde, thank you very much. the teacher asian market wrap with eve on man. yvonne: we are seeing a rebound in the asia-pacific. head into the thanksgiving holiday but that impact from that russia-turkey standoff seems to have died. yellen and the ecb meeting all meeting next week. the aussie dollar took a dive in response to that record pullback in business investment. 225 up about .5%. 90900 and 44 points.
-- 19,944 points. the shanghai composite celebrates its 25th anniversary. .33%. a probe of it shortselling in domestic metals. take a look at some movers in the commodities front. bhp, that is one big one. only falling to a 10 year low. that is after the u.s. experts came out with a critique of the dhp and the brazilian government on how they handle that dam breach. go, bhp falling 3.7%. apple suppliers. the company is looking into organic led screens for the iphone.
falling the most in a three months. down .5%. snapping that recent rally. led display in korea up. today as they plan for expansion in these new feature generation screens. junk of that is what is happening in markets. here's what is happening today in today's program. to act or not to act? the euro lingers at a seven-month low. to moscow, france president a ng -- french president hollande meets with president putin. ♪ the december debate, to act or
not to act ahead of next week's ecb meeting here at all options on the table. ecb policymakers are submitting a difficult debate about first stimulus. >> the recovery is ongoing. the risks are lopsided. that is one of the elements. emerging markets will materialize. for more, let's get out to hans nichols over in berlin. outonathan: more, let's get to hans nichols over in berlin. hans: at the ecb, they are concerned about what can happen in the emerging markets. of what isivative happening at the fed. if the fed normalizes, it seems they are not too concerned about that, especially a direct affect on the eurozone. if the fed normalizes and has multiple interest rates that -- whatfect the market
they're worried about at the bundesbank, they're worried about the low inflation. what that does to bank balance sheet. the smaller and medium size bank ability to turn a profit in different world when you go from the ecb to the on this bank -- to the bundesbank. jonathan: let's bring in the guest, valentin marinov. he met ecb officials yesterday. also joining us is this got momma rush -- is this got thushka maharaj. what did they tell you? valentin: it compares to what hans just mentioned. inflation is a worry. ofdivision -- in terms market focus and what the
discussion was, mainly how the market took the signal from the ecb. marketst in that the have responded. the euro did selloff quite a bit. it is a question now of going into the meeting next week. they will be able to exceed those already established market expectations. view,n ethics point of the question of whether we should be adding to the euro short from here or time to take profit. jonathan: based on the conversation you had yesterday, ecb staffers, what are they looking at specifically? what are they tried to gauge for market participants at the moment? valentin: the focus is on inflation and the outlook. to the extent that euro is playing a role there. euro has done its part already.
it is where the ecb wants to be. not in those exact words. if you look at the september macro projections, the ecb is rates to bechange down by 10% this year. if you want to describe this as their comfort zone, we are very close to that comfort zone. the concern is that other factors like the uncertainty around the fed, global economy, will continue to weigh on outlook. regards to the response in the fx market, we have done quite a bit. jonathan: euro-dollar, we are down there a seven-month low. the forecast kept coming down on the single currency. andou look at positioning you look at the balance of risk, what is the upside of being a shorter euro? usshka: the ecb-ish showing
that the ecb has shown us a willingness. they take the shorts. divergence still has to play out. question for us is in the equity markets. while euro fx positioning is quite high, equity positioning can increase around these to meeting. junk of yesterday there was a report about a deposit rate. the conversation you had, did you discuss that? valentin: not really. it was quite telling about the -- reactionis that is that investors are still looking for reasons to sell. it is similar to what they have in switzerland. a proposal that the imac released three years ago.
-- that the imf released three years ago. is if youhere penalize those banks too much, that may lead to negative retail deposit rates. it could destabilize financial systems. the idea is to strike a balance between maintaining an adjustability and keeping the pressure on the euro. the irony is however, to the extent that euro was sold by the depositary's, fearing lower deposit rates, the irony is if those new measures world shielding such banks at the banks, thewholesale point being investors , theyoking the details are looking at a reason to sell the euro. euroghlights how bearish
the reports also said the steps taken by the companies to prevent -- were not sufficient. the spanish were noble energy company is facing tough choices. they have to decide whether to chances one their settlement. on the edge of coming spain's biggest corporate bankruptcy case. the french finance ministers says it is possible the paris terror attacks that affect the company's economic growth. he says the budget rules will not affect priority. french president that's all heads-- francois hollande to moscow today. a task made complicated by turkey downing a russian jet.
ryan chilcote is in moscow. great to have you with us. changes -- things have changed a lot. take us through the agenda. ryan: it is going to be a competition agenda for a long -- four hollande. the firing line of russia's economic retaliation for the downing of the jet. they appear to be food imports but banning car imports did a lot of this coming from the russian newspaper. you have to see that on the back of tour operators canceling the trips. russia's relationship with turkey is going to be a big issue when it comes to how he deals with hollande. jonathan: ryan chilcote in moscow. let's welcome back in valentin
marinov. and thushka maharaj. geopolitics is it always so difficult? what was your take away? thushka: the market has to get used to get desk to having this perennial -- to having this the existence of a significant short base. stresseresting point is in terms of geopolitics, it shows up in the market and a quick reaction. we are getting desensitized in a way. the length and the prolonged nature of the escalation in russia will have an impact. from a perspective, this breakdown between inflation
expectation in europe and the u.s. and food prices. that is partly a reflection of the valuations and the low levels of crude prices. ther the ecb meeting and increased rhetoric from draghi, we start to see expectations rebounding in europe. jonathan: valentin, the geopolitical story has been insulated by what is happening with the ecb and elsewhere as well. when you look at the market, we were just getting to the point where people come in on this program were being a lot more constructive on russia. the autumn up story. the top-down story, is that still the driving story? valentin: the dollar is expensive across the board. according to our measures, the dollar is the most expensive currency out there.
it is expensive against emerging-market currencies. the question is is it time to buy? the answer is still no, given that investors still worry what is going to happen with the fed. how that is going to impact the market. it doesn't help. the base has been widening significantly. part of that is liquidity and banks selling that dollar liquidity is going to get -- dollar assets becoming more expensive. about funding becoming more expensive. people do worry. valuations are attractive. timing is key. and i think timing is just not right. havensn: the traditional when things hit the fan and geopolitical terms and everyone russia's towards them. -- everyone rushes towards them. the tensions between russia and turkey as they develop?
thushka: the dollar is the beneficiary. we have done some analysis on the dollar. we have seen a significant move already. looking at history can stay expensive for a long time. certaina of being short emc currencies. thushka maharaj, great to have you with us this morning. next we take a closer look at what is behind today's surge in industrial metals. ♪
jonathan: good morning. i am jonathan ferro joining you live of the city of london. the ftse 100 getting a bounce this morning. -- let's geting more on the top stock story with caroline hyde. caroline: keeping on german stocks this morning. china slowdown? what china slowdown? -- infineon, the outlook is healthy. therefore upgrading. yearll, the next fiscal will be up around 13%. this is in the face of slow in china.
impact this maker of chips. they are remaining strong and m&a seems to be faring them well. positive guidance of plenty. glencore getting a lift off what you were talking, the metals stock up almost 4%. copper searching up 2% across the board. this is the news that speculation in china. we could see asian stocks by metals. intould see investigation shortselling. meanwhile though, keep an eye on the downside. billiton down .29%.
back to you. jonathan: let's bring you up to those metal prices. nickel, zinc, copper getting a big pop overnight. rowling after that report over in asia. let's bring a man that knows something about the markets. stewart wallace. days.ly is that report going to translate into a probe? metals is more about these meetings we are seeing among chinese producers. that is going to ring off supplies. zinc guys meeting last week. we have got the nickel people tomorrow. andy copper people meeting on saturday. that may lead to some supply cuts. this idea that risk increasing pressure on stockpiling metals.
long-term, that does not solve the problem. you have this huge overhang in the market. we saw it in thailand with rice. we are seeing it in china. in each case, it is not worked out well. ronan: those does -- jonathan: those discussions, -- do they translate into big enough cuts for you? stuart: we had a glencore cut and then we lost it. same with zinc. these are incredibly bearish markets. yes, in the short-term, you could see a move higher. timeframe, and bit more iffy. jonathan: let's go back to the shortselling story. the shorts are everywhere. this is a probe into shortselling and local exchange in china. -- it develops into something
real in china. arert: these markets increasingly -- the trading volumes in china have taken off. it is starting to become really important part of the market in a way that it wasn't five years ago. the short answer is yes. . think the real effect here in an environment where everyone is incredibly short, it has a genetic effects of the price. we are starting to see that today. jonathan: stewart wallace, great to have you with us. coming up, up next, george osborne and tax credits grabbed the headline yesterday. what else should we be taking away? is it lose the fiscal policy? fx next. ♪
jonathan: good morning to you all. i am jonathan ferro, joining you live. 30 minutes into the session. equity markets on a high. ftse 100 also high this morning by 24 points. the dax in frankfurt up by .7%. the euro stepped away seven months slow. the front end of the european bond is remarkable. -0.4%.ld the two year yield minus 0.40%. , big applications for
the fx market. the industrial metal story quite remarkable. big bounce. copper up. that is leading the miners higher on the ftse this morning. yesterday, about politics. george osborne performed a huge -- thatfter he scrapped grabbed most of the headlines. there were plenty of other announcements. >> none has grown faster than .he -- then britain three times faster than japan. twice as fast as france. and at the same rate as the united states. that growth has not been fueled by an irresponsible banking boom. business investment has grown twice as fast as consumption. exports has grown faster than imports. the north has grown faster than the south. because i have been able to announce today and improvement
in the public finance, this senseless thing to do is not to phase these changes in but to avoid them altogether. they are being phased out anyway. there being introduced to universal credit. what that means is that the tax credit threshold remains unchanged. the rate of housing benefits and the social sector will be capped . in other words, the same rate paid for those in the private printing sector received the same benefits. this will apply to new tenants only. will also stop paying housing benefit to people who have left the country for more than a month. the welfare system should be fair to those who need it and fair to those who hate for it. i have been asked to help in the transition as britain moves to the higher wage society as the country wants to be. just for more, we are joined by
dan hansen. -- jonathan: for more, we are joined by dan hansen. times has al picture of osborne shaking a money tree. the takeaway was the osborne giveaways. or d.c.ee giveaways cuts? >> what actually happens looking beneath the numbers is osborne was handed a huge windfall. they came on the back of tax receipts but also that interest payments -- but also that interest payments. he smoothed the past that's the path of department of spending. over the forecast. lower.ng a cumulatively he may have told the parliament
that i am giving away all of his money but they handed him a huge windfall. before taking account of any policy, he was 27 billion pounds cumulatively better off. jonathan: do the projections turn out to be reality? we have seen borrowing tick higher. what may she think that is good to happen next year? dan: there has been weakness this year. they expect a little bit of a rebound this year. earnings are lower on the backend of the forecast. income tax is down. where the money's come from is modeling changes by the kobe are -- obr.e kobe are it is a bit of luck. jonathan: a bit of luck.
marinov, this is a got -- keep yourarinov shorts on. sterling rates are going to stay low. does that story change better than what you heard yesterday? valentin: it is a case that could demand fiscal austerity. the policy on the horizon for the boe may be less than expected. response -- it is a most stronger. the case could be made for a faster removal of stimulus. the boe only hiking rates in the third quarter of next year. have to wait for the reports in february to see if the statement has changed.
from the boe's point of view, inflation is playing an important role. assume that we may have low rates in the u.k. jonathan: these forecasts, not too many people are good at it. we look at these forecasts, however have -- however they banked into the eurozone. are we going to see any tweaks for the bank of england? -- dan coke the bank of england -- dan: the bank of england is looking over the horizon. it is slightly less. that is because of the tax credit change. with that, the change affects people on low income. he gives them or income in their pockets. most people tend to go out and spend that money. the bank of england could assume
there is a slightly bigger boost not introducing the tax credits -- the tax credit cuts. really, the broad picture is still a huge amount of physical consolidation. -- amount of fiscal consolidation. remainh of rates will gradual. it is one of the headwinds. jonathan: we are going to get to the other stories in the markets. to wrap things up, balentine, i am looking at the gilt market. high-yieldlooking for the rest of europe. what that means for the gilt market in 2016? versus what is happening in europe that draghi, carney spread. >> the risks will remain on the
downside is the case that the eurozone boss will continue to outperform. to hike rates.oe we expect the ecb to do more next week. intof that should play widening spread. said, it is a case that the markets up. they tend to price in developments that are taking place. our valuations are suggesting that the euro has moved quite a bit. they pound is not as extensive as the dollar but the euro sterling may dip more or lower. price we havehe seen is taking place in anticipation of things to come. delivers, the boe
pound will remain strong. , it isot about growth about the inflation or lack of it. the boe may remain quite cautious. some further downside for your sterling. jonathan: for the americans in the city, that are going to thanksgiving dennis, make them smarter -- thanks giving dinners, make them smarter with bloomberg intelligence. they discussed the property markets. osborne gives with one hand and takes away with another. the housing market once the berkeley holding up by 5%. what is the story? plus? or a net negative? >> it was a big emphasis on the supply side. homebuilding. in fairness, the measures are pretty small.
there is a huge housing shortage in the u.k. in order to deal with that, it would take a much bigger structural reform to ensure the house prices remain. maybe house prices run ahead of earnings. that signifies demand running ahead of supply. jonathan: just. dan hansen. great to have you with us. next, to scandal hit companies face their own many crises of their very own. the deadly mine spill. biggest bankruptcy ever. ♪
jonathan: good morning to all of you in the city of london. this is on the move. 43 minutes into the session. the ftse up by .33%. let's get straight to bloomberg's top stories. the french finance minister says it is possible the paris terror attacks could affect the country's economic growth. he said the budget rules will not affect the priority. u.k. prime minister david cameron will urge parliament to back his plans which will send british bombing attacks into syria. it will split votes in the conservative party.
isisrday he said that dddted kingdom. they are having to decide whether to dump their holdings are take chances on an eventual settlement. kidding on the edge of becoming spain's biggest corporate bankruptcy. for more, roderigo joins us from madrid. that i been go is in sounds pretty serious. --p it all up for us here at force. the company for itself. it is big for the banks. it is huge for investors. it has one of the most traders and michael are european corporate bonds. they are going to try to
start proceedings. ronan: we have the political element in the mix as well. the is the possibility that spanish government lent support to salvage them? the election of yesteryear competent thinks? this is a company with a long political standing and big mainhe two parties. they have a lot of political connections. however, the election is next month and it seems likely the , wernment that is in power would have to see what would happen with the next government. and how keen they are to step in for a huge multinational.
jonathan: great to have you with us, joining us with that's joining us from the madrid bureau. after a probene from the u.s., they found a deadly mine spill in brazil was toxic. steps taken by the company to prevent harm were not sufficient. --h us, jesse rice strut great to have you with us. the yuan reports, break down what they said you'd never you -- these reports, jesse: it contradicts some of the statements that they have set. they called on the government of brazil to take immediate action to protect the environment. it is not acceptable that it has for theree weeks
details of the mining disaster to surface. in theion tons of waste river. this contradicts what some are go is saying. they came out today and said that it is comprised of silt. jonathan: jesse this is messy for the two companies. at the same time, the question will be asked, anyone who looks this looks ate the scandal. is this too early to talk about if this is their bp moment? jesse: this is one of the in -- whatndals happened with bp will be at the forefront of the minds of a
myriad of advisors. it is different in that their partner in this venture is a brazilian company which is different than what is petroleum and the u.s. government. jonathan: thank you for joining us. up next, draghi. can the ecb president play rabbit out of the hat next week. the euro trading at a seven-month low. 1.0606. ♪
jonathan: good morning. welcome back to "on the move." we are about 51 minutes into the session. stoxx 600 up by .4%. ftse 100 up by .33%. the miners leading the game. switch up to the second board. i will show you the base metals. .opper driving higher stories in asia about custom capacity. story of potential of china opening of growth into shortselling. that is putting the pressure on some of those tentative shorts. the front end of the european bond curve always remarkable. -0.41%. periphery not missing out on the party. -- single currency
at a seven-month low. joining us now, richard jones from bloomberg's first word. richard, great to have you with us. wrapping up the markets and the first hour of trading. , thisbate at the ecb two-tier deposit rate cut. if joe the markets. the fx markets. testified,nce draghi we had a solid 10 basis points for december. as the details emerged yesterday, pricing -- odds of a 15 or 20 basis cuts has risen considerably. it looks like 10 is done.
15 very likely. 20 is increasingly possible. is the rabbit out of the hat. at the moment, they have done the work on the fx. 1.06.own now they have to think about the potential for a bounce in the month if they do not deliver. his expectation playing with a conscience at the moment? which: it is relative to where you are. they are clearly a lot more atpy at 1.06 then we were 1.14. 1.09 get a bounce to between now and the beginning of next year, i think you're going to have a lot of investors looking at that rate and saying this is great. i finally got my opportunity. i don't think it is a highly populated trade. you'll get a lot of selling into
any potential euro strength. that should cap the euro. what we could see next week from the ecb is we could see an aggressive move where they keep some powder dry for the meeting in january. i that time, they will see what the fed has done. they will see what the market reaction is to that. they can always tweak what they've done. if they feel the euro needs another shot downwards. jonathan: another interesting story. yesterday, we got the report from the ecb. front load some qe. we get that. jpmorgan at is something else, saying their experience with frontloading qe has given them an idea of what it would look like if they wanted to increase the qe program. are they still dabbling try to find out how much they can buy? i am looking at the front end, , you can'tbond curve
buy the stuff even if you wanted to. even if he cut the deposit rate down. they got to push further along the curve. are they still trying to find out how much they can buy? richard: with the details emerging yesterday about their thoughts on the deposit rate, that seems to be quite advanced. i think you are right. they are trying to come to terms with exactly how they're going to shift the bond purchasing program. will they extend? will they expand? things are probably things that play themselves out over the next few meetings. jonathan: richard jones, it feels like the start of the weekend because americans are taking a big break for the holiday weekend. the biggest event, opec, ecb, payrolls. richard: you ask some tough
questions. jonathan: i know it is tough. possibly the payrolls numbers may trump everything. i think we have seen this before. the ecb is a huge event. opec another massive events. -- another massive event. this is about fed. if we get some number, that is going to affect what people expect for the 16th of december. jonathan: that is it for me. coming up, francine lacqua with bloomberg tv on the pulse. i am on twitter here it just me and the bloomberg team in the city of london. best of luck for the rest of your day. ♪
anna: hollande heads to moscow. this as russia starts trade retaliation against turkey. metals bounce. copper, nickel, and zinc climb. and, rabbits out of the hat. what can the european central bank do to prevent the euro bounce? we will hear from the ecb vice president. welcome to the program. welcome to "the pulse." i'm anna edw