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tv   Countdown  Bloomberg  December 10, 2015 1:00am-3:01am EST

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anna: new zealand cuts to a record low, central banks take center stage as we approach next .eek's said debri glencore shares have been suspended ahead of a business time. and an hour's manus: a record low, as the finance minister gets fired. welcome to countdown. anna: welcome to the program, everybody.
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it is six blocks here in london. the slight tangentially to that, we have had news overnight on australian jobs. the biggest monthly back to back jobs gain we have seen almost 28 years. you have to go back to 1988 to find a period as strong for the australian economy. that pushed the australian dollar a bit higher overnight. some people questioning the data, of course. 71,400 jobs were created, economists forecast a drop of just 10,000. manus: this is the dollar rand trading, if you're on holiday or getting on the plane, you will have a river. it is at a record low, certainly not for good reason. he fired his finance minister. story says it
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takes the country one step closer to junk. the rand, at one juncture and training, in a spokesman that back. easy the biggest declin since theince 2011, and forecast is is the slowest rates in 2000 hundred the dollar-rand, one of the conversations we have here today. anna: we are getting investor updates from glencore. this is one of the mining companies so under pressure in 2015. they are estimating that the net $18 target is between billion in $19 billion by the end of 2016. they're talking about remaining free of cash flow, and lower price levels, giving us an update on the 2015 cap fx. they have been cutting back on capital spending once again.
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there seem further reductions in capital expenditures. cash: one of the issues is flow. they will remain comfortably free, cash flow positive. the original target was a $10 billion reduction, in terms of the debt. ryan chilcote is here to join us on the story. they had around $30 billion in the headline, i believe. they are guarding that moore, a small amount. anna: before they scrapped the dividend, sales are still the big deal -- talking about the agricultural unit. but the more on the story, more on that as because the morning with ryan. let us get the first world news with nejra. nejra: it is the central banks first cut this year, it should be enough to return inflation to its 2% target. the dollar surged on the news. meanwhile, the aussie dollar
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surged after smashing expectations once again. show more than 71,000 people found work in december. economists had expected a drop of 10,000. that brings an down to 5.8%. the south african rand plunged after the minister fired his finance minister. it hit a record low. clashedoing minister with some government colleagues over pay increases for workers, proposals to build a nuclear power industry, and plans to expand the state airline. and bloomberg politics survey shows two thirds of likely voters favor donald trump's call to temporarily banned muslims from entering the u.s. more than one third say make the more likely to vote for him. that news came after 37 is really lawmakers demand that prime minister benjamin netanyahu cancel of meeting with donald trump read the financial
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services industry fell about one third in december, amid broader economic uncertainty. that is according to an reporting from rid banks from to jpmorgan are cutting to shore up capital. for more on these stories and others, head to the bloomberg terminal. manus: let's get a roundup on the markets in asia, emerging markets very much in focus. heidi is standing by for us. looking a bit better than yesterday, not saying a lot -- given the week that we have really had here in asia. some interesting moves in the last 20 minutes or so. red ini falling into the the last hour of that session. they are managing to finish up 2/10 of 1%, after really struggling on the flat line. the bank of korea holding unchanged, staying at 1.5% -- as
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predicted. surging toad the yen the strong as level in three months, we really saw that way across exporters. tech stocks and consumers bearing the brunt of the selloff. interestingly, the mega jobs number is not helping sentiment when it comes to debate. essentially, huge numbers coming the reserve bank of australia will be holding off on any stimulus. it is interesting, though, because we had a few gains. it has been in that basic minus space. we see the names really badly thought of today, on the relief rally. 11%, these names have been so badly hit. rio tinto staging a bit of a recovery. we are seeing profit-taking, it
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has been sold off. that has been concerned to be overdone. i just want to show you that leg up when it comes to the aussie dollar. that is where he had that jobs number drop, sitting at 72.83. central banks are taking center states today, as we just heard, the new zealand bank is cutting rates. the swiss national bank and ounces a day, followed by the bank of england and new. manus: more on those with richard jones and just a moment. but first, let us head down to sydney for the latest on what the kiwis. was this a hawkish cut, so to speak? let us get it all in perspective now. we have ian macdonald with us. ian: yes, good morning. we obviously had a 25 basis
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point interest rate cut. it was what was expected. what was not expected was graham wheeler saying with that cut in place, he now believes that inflation would return to the midpoint of his target. and traders took that as an indication that the cycle is over. and they probably brought the kiwi, something the central bank of new zealand does not want. anna: do you think graham wheeler is overconfident about his expectations, inflation is going to get back to the target range -- the midpoint of 2%? central banks around the world grappling with this problem, of course. ian: you are exactly right. we know global inflation pressures are almost nowhere to be seen. interestingly enough, the graham wheeler forecast midpoint will not be reached until the end of 2017. that is two years away, and he seems quite confident that will
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happen. quite a few banks do not believe that the current interest rate setting will happen, but quite a few commercial banks in new zealand are forecasting further rate cuts, despite what mr. wheeler says. manus: ian, thank you very much. giving us the lowdown from new zealand's central bank. anna: the bank of england also in the frame today, with a decision -- not going to change the interest rates, but the minutes will be interesting. what can we expect a day? theus continue conversation, what are you expecting from the boe? what is the broader picture, what we look for? >> i think the message from the bank of england this month will be similar to the message we got last month from them. they voiced concerns about the strength of sterling last time. and i think it will be happy with the fact that the eurozone exchange rate has gone up. and i think they will not want to be too hawkish to reverse
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that trend. i don't think they want the pound of strengthening from your. ideally, they probably would like great expectations to be a bit more hawkish than they are now. nice sequence a in terms of what is happening with the rate expectation here in the u k in certainly, it is -- back september that there was a 25 basis point hike, will he in and what hundred percent back in september. sohas changed from the ecb, it is moving. the bank of england will be happy with that sequencing. a novemberodds of 2015 rate rise were considerably lower than they are now, it is not ideal. they probably would still like a high price by the end of next you. but it is all about trade-offs. thei think there will be sterling exchange rate versus where the euro is now. anna: sarah hewin joins us, you
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think the bank of england is a bit more happy now, where the pound is trading? does that make their prospect of inflation a little bit more realizable? i think so. it is certainly something they raised at the time of their last meeting and report. they see that wages are accelerating. i think some of that will be offset by strong productivity gains. but they definitely made quite a lot of noise about the strength of sterling, the impact of strong sterling on imported inflation, and the downward pressure that could bring, in terms of making it more difficult for them to push inflation back to the 2% target over the medium-term. manus: there was another central bank meeting today, much smaller cohort. it is the swiss. i think what is fascinating your, you have a look at the 08.34.wiss -- trading at 1
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richard, they were expected to do more. in the market was presuming the swiss would have to go for another lump off the deposit rate, another 25 basis points. but they have been saved. richard: have they, though? if you ask any central banker whether the swiss is overvalued, you get a very quick and sharp answer. it is massively overvalued. i just think, you know, at 120 they were not happy. they will not be happy at 108. they think the frank is too strong. the market is priced out any move, the ecb did a bit of a favor last week. but this did not ease policy. look at the risk-reward, there will be some traders that senate might go today. anna: sarah, what you make of this today? i know that your bank has been suggesting that some of the damage that could be seen as a result of the big appreciation we saw on the swiss franc did
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not come to pass in the economy, it was more resilient than maybe it could have been. sarah: i think that has been the surprise up until recently. what we are seeing now is there are signs that the domestic economy is starting to come under some strain. we have seen some of the survey easing of retail sales, somewhat weaker. gdp relatively subdued. i think that there are some concerns now that, as well as relatively weak selloff sectors, activity domestically -- anna: this is a domestic problem. sarah: we have deep deflation of the moment, and part of that has to do with oil prices -- with the strength of the currency. manus: what is the point of central banks still continuing to target inflation? there was a lovely article yesterday on the terminal. -- new zealand was the
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first back in the 90's to target inflation. the reality of it is monday are all promising that we're going to get back to trend. they have had to step back from these targets many, many times. what is realistic about getting to 2%? did anybody get there, who will it be, and when will they do it? ; some central banks will get there pretty quickly. at the headline level, all it takes is a slight pickup in energy prices, base effects will kick in. that is not what we are seeing at the moment. but the main problem for central banks is what is happening to core inflation? you have certainly got some countries that are still ll struggling with very low price increases. nks getntral bak worried about people changing their behavior. i don't think we are seeing that in many countries yet, or any countries indeed.
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what they feel they need to have that inflation target so that, eventually, they do get back up. manus: i am curious as to who will run that last long first. 2%?: getting to i think the united states and the united kingdom will get there sooner than the rest. hewin stays with us longer. thank you to richard. manus: let us tell you what is on the agenda, we get the rate decision from the swiss national bank. we will also be speaking to the board of governors like this morning. anna: then the extended volkswagen press conference, the first since the emissions trading scandal. after the shares are at an all-time low, what can we expect from glencore?
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we will have some of the details. ryan chilcote has more. ♪
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anna: welcome back, coming up to 19 minutes past the hour. here is nejra; . glencore or cut debt by the end of toys 16, that is from a previous goal in the low 20's. the troubled miner has been hit hard, losing 72% of its value so far this year. by the swisseed to hotel brands for about $2.9 billion in shares and cash. it is the biggest hotel operator in europe, buying the company from a group that includes billionaires. as sub has raised -- visa raise money to finance the $23 billion takeover. it is the fourth largest
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corporate debt offering this year. ceo will hold his first news conference since the emissions scandal broke. he will brief reporters on the status of the investigation into cheating. for more on these stories and others, check the bloomberg terminal and manus: let us get a bit more, i can get the words of read i got so excited that ryan has the details on glencore. runs through the top line, how far along are they? what are the top lines? ryan: three important points. in terms of debt reduction, we have learned they wanted to cut $10 million. they announced this morning in the statement they have artie 8.7.d in a while they were seeking to reduce the debt load to the load $21 billion, from $30 billion --
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the biggest debt load in the entire industry -- now they say but he can employ 16 they should be able to cut it somewhere to $19 billion. they are being a bit more aggressive. finally, they said that this year, while they had forecasted could shavethey more off of that, as will read in a nutshell, they say in terms of the balance sheet and cash flow, they expect that today's stock prices should have at least $2 billion in cash flow. this is really a dance with the funding cost. whether they get cut from investment grade to john, how much that means in terms of how much they will have to pay to service the debt, you look at the statement today. it is a bit more aggressive than what people would have been anticipating, coming into this morning. anna: you wonder what that then does to the share price, any of the short position around the shares? glencore, the short position on
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those continue to rise, perhaps suggesting that could be misery ahead. ryan: it is interesting. you're exactly right. were talking to mark elliott, an analyst at invest tech. he was saying do not be so quick to sort of count out ivan. remember, this is the analyst -- manus: they have the torch paper. yet, he was saying i would not be shorting glencore going into today. the reason why people short stocks like this is pretty straightforward, they go right to the debt and say, huge debt load? i was short that. it is the same reason why if you look at cds for both anglo and glencore, yes, exactly. in both cases, people are very concerned about the debt load. maybe this be a surprise on the upside, in the sense that maybe
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ivan will be delivering more than people thought. there are a couple of unknowns. we do not hear about asset sales specifically. there is a lot of talk about selling their agricultural unit, for there's nothing in the statement about that. i would not say that the statement itself removes all the questions. we will have a conference call with investors at 8:30. we will look for more information. but it is so hard to shortness company to begin with. the biggest shareholders are actually directors, they do not want to let the share the short. manus: you get your directors of the board that actually have major financial interest in terms of your stock. anna: it is not look good. ryan, thank you. ryan: nor does it help your share price. senioreter is a independent nonexecutive and glencore. we should say that. manus: sarah is still with us.
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you hear stories about this, in terms of the commodity crunch. and here is the actual impact, in terms of the companies. and in termsrowth, of the outlook for 2016, has for metals,e nadir miners? sarah: looking ahead to next year, we are not expecting to see a big boom in activity. if anything, global growth will be about the same next year as this. having said that, of course, on the commodity cycle we have seen supplies increasingly becoming constrained, as you get mines closing on the non-opec production side. we've seen a big drop-off in energy, oil and gas. at the same time, demand is still there. we are seeing import growth,
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even in china people are building. now, probably in our view towards the end of the year, we will see this demand-supply balance in a better place, underpinning a pickup in prices. but we are not expecting anything anytime soon. anna: all of this could move around with the fed, as well. i know some of the recent notes around commodities, one of your colleagues was talking about being disappointed about the size and timing, meaning that the complex is quite vulnerable to a selloff around what the fed does. what do you expect from the fed? it is interesting to me you're expecting them to height, as many are. chance, then you expect to cut next year. explain that to us? sarah: if we are looking at cycles for the u.s. economy, we are a long way into an upswing. the recovery started in june of
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2009. we are already beyond this. exactly, there is a very strong signal for the economy. of course, that is why the fed, we think, will raise rates next week. but there are signs of a maturing economy, as will read on the labor market side, on the investment market side, on the consumption side, all of these factors shoring up activity. at the moment, we think this time next year, a lot of that will fade. and we could be vulnerable to a negative quarter for u.s. activity. and so we think the fed will raise rates next week. in march, then we will pause and see inflation coming back. it will not be a threat anytime soon. but a cut is highly likely. done, and then a cup. manus: sarah hewin. and thanks to ryan chilcote.
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anna: the south african currencies suffered its worst day in years, after they fire the finance minister. we will be in south africa for update during the program. stay with us. ♪ 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. manus: it is 6:30 in london. let us get the bloomberg first word. nejra: glencore says it plans to cut net debt between $18 billion in $19 billion. that is after the previous goal in the low 20's. they have been hit hard by the commodities crunch, losing 72% of its value so far this year. the bank of new zealand has cut the official cash rate to a record low of 2.5%. it is the fourth cut this year. governor graham wheeler thinks it should be enough to return to the 2% target. the kiwi dollar surged on the news. meanwhile, the aussie dollar surged after it smashed expectations again.
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more than 71,000 people found work in december. economists had expected a drop of 10,008 and brings the unemployment rate down to 5.8%. it is official. greek stocks are the world's worst. index yesterday closed at its lowest level in more than three years. having lost a total of 32% in 2015, it is the worst performer among global indexes tracked by bloomberg. a politics survey shows almost two thirds of likely republican primary voters favor donald trump's halted temporarily banned muslims mentoring the u.s. and more than one third say and makes the more likely to vote for him read that news came as 37 lawmakers insist that benjamin netanyahu cancel a meeting with trump. curbs hiring. that is according to morgan
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mckinley. bankt suisse and deutsche arc cutting, trying to shore up capital. anna, manus? anna: let us get a look at the markets. caroline, you have an watching this morning. we had a bit of a negative holdover from the u.s. caroline: good morning. we are seeing a downward trend in asian. come have a look. we are down by 1.3% read this is the third day for decline, the third day for decline in asian stocks in general. the exporters are really feeling the patriin. the yen weighing on the exporters, down against the dollar. all eyes on volatility about the u.s. dollar ahead of the federal reserve meeting next week. fx wheny, big moves in it comes to the australian
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dollar jumping, after government data shows they almost added seven times the forecast. 71,400 jobs added. the estimate have been just 1000 10,000.n up goes the aussie dollar. we're going to be looking at commodities. interesting to see oil post inches higher, after closing the lowest in six years. trying to digest what that number means for the united states/ . we saw the first decline in 11 weeks yesterday. but we saw a spike hire and oil, but it's so close on the downside today. gathering momentum -- up 8/10 of 1%. glencore even talking about the miner, smashed by the route. it was down 70% over the course
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of the year. we know they will be promising more to investors, cutting capital expenditures, cutting the debt forecast. look at that in terms of the share price move come on the back of the decline in commodities. in the last one for you, we'll be talking about ma. $2.9 billioncast, is what they will be spending for the high-end hotels. i am sure that manus has been stayinh. g there. these are the thoughts of the hotels. why? off the fend competition -- which is the digital competition. manus: caroline, you honestly have a different travel budget than the one anna and myself are doing. i certainly would not have the budget. let us refocus our money. seb parker from credit suise
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is here. the ye is rallyingn. the market is the most keen on bonds, the most it has been since 2013. are we hunkering down ahead of the fed? bob: i think it is actually more relevant, the large positions and markets over the last 2-3 months. i would argue that the long u.s. dollar position has been one of the most crowded trades around read we are seeing clearly profit-taking, some panic exiting from the long u.s. dollar position. and that is both against the euro and against the yen. i think it was obviously propelled obviously by what the ecb did, relative to what investors were expecting great use of a big move in the euro, which is now extended further to around 1.1%.
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we may go to 1.12%. likewise, long dollar on the yen is being closed off. and we see some risk reduction. and you mentioned the fact we have low bond yields. i was a we have stable bond yields, 10 year u.s. treasury's just over 2.2%. 10 year bullion is backed up 60 basis points. we actually have brought stability in the bond market read but i think the overall theme is risk reduction. anna: work into that what we see in the central banks, giving us news today potentially, we are ready had the news from the new w zeeland central bank. bob: they are probably much more comfortable today about the swiss franc the may have been at any time this year. 108 the swiss franc up against the euro, there was no significant pressure. i think ideally, given
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deflationary pressure on the swiss, they would prefer the swiss franc perhaps between 1 10-115 against the euro. i think you will have a further cut in official interest rates. so that negative interest rate environment probably will be extended. that is really the only action the ecb took. and i think if one looks at the forecast for the swiss franc against the euro, early next aar, i think we do move into new range of 1/10 of 1%. anna: that negative deposit rate will get more negative? bob: absolutely. manus: this is a great debate. you sit back and wait on the federal reserve. you see what the ecb did last week read that could do more. andhe better policy to try be front-footed on the ecb? should the swiss be more gung ho? bob: really three questions there.
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will the ecb do in the first quarter of next year? i think they are frustrated with the fact that inflation stays well below their target. i think they're also frustrated by the fact that growth, data out of certain economies like spain is very good, but we have had disappointing data out of germany. very poor data out of france. so the prospect of this growth pick up in 2016 in the euro zone economy is painfully slow. so my view is, yes, they will extend quantitative easing in the first quarter by increasing the monthly amount. whether it is 70 billion or 80 billion, i am not sure. but i think further action will be taken. the question is then what will the swedes do? i think they will continue with as negative interest rate regime.
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and in the casas was run, they will probably extend the negativity even further. and in the third question is what then happens with the fed? i think the interesting question is will the credibility of the fed be impaired if they do not take action next week? and my argument is they actually have themselves in the corner, where by if they do not increase rates, they have a big credibility problem. anna: bob parker stays with us. manus: let's talk europe's biggest hotel operator. more than 100 high-end hotels, it is toronto-based. for more on the deal, let's chat with carolyn. hotelne: europe's biggest corporation is beefing up. we also know it owns a high-end chain, and the more median chain, ibis. on a slightly more expensive and of the list, it is good to be
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bought for $2.9 billion in cash and shares, coming in at $840 million. the rest is in shares. they will get a mix. plaza, 40 hotels underdevelopment. a new array on the market. interestingly, we are seeing this theme throughout the hotel sector. we saw the arrival of accor, beefing up last month, buying $12.2ord hotels for billion. that was the biggest deal since 2007. ad hotels are up 37%, up by third. why? because of the disruption happening at airbnb. they're trying to consolidate and become more efficient. anna: more news out of the ledger industry, more clues perhaps to how the fears around the global terror threat, how
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that is playing on the mind of travelers/ . andline: breaking news, just 20 minutes time, the biggest operator of cruise ships, hotels, you name it, they own it. sales are expected to climb amid the headwinds and the shooting in tunisia that cost them a lot of euros. a big presence in egypt, which might be under threat -- given the paris attacks. and indeed, amid the political turmoil that prevents maybe will traveling to greece as well. se are nevertheles expecting some 5%, better than what the host company itself had targeted -- at 2.4% growth. and also, we are expanding them to deliver a very healthy 12.5% to 50% growth.
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both companies underperforming in the market, about 5% of these for the past year today. while the rest of the market is up 15%. travel and leisure is the fifth best sector this year. caroline hyde, thank you very much for wrapping up the agenda. that is coming up at the top of the hour. iron ore is up, but it will get worse for the saturated market rea. find out why, coming up. ♪
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anna: welcome back, 6:45 in london. let us get the bloomberg business flash. nejra: glencore says it plans to cut net debt to between 18-19,000,000,000 dollars at the end of 2016. that is from a previous goal of $20 billion. they have been hit hard, losing 72% of value so far this year. the world's against clothing
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retailer has reported a 20% rise in nine-month rocket. 2 billion just over euros, boosted by recovery in spanish consumption. finance$16 billion to the $23 billion takeover of the site europe. it is the fourth-largest corporate debt takeover. and volkswagen well briefed reporters and investigators. that is your bloomberg business flash. for more on these and others, head to the bloomberg terminal and the south african rand has dropped the most since 2011. excuse me, record lows against the dollars. all of this around the president firing the nations finance minister. he is a bit of a history with that. we are joined by a reporter.
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take us to the market volatility, a new meaning for the rand? >> definitely, this was really unexpected. president jacob zimmer said he will be removing the finance minister. this was less than two years after he got the job. the rand plummeted, hitting record lows on the u.s. dollar. this indicating that the international investors were not expecting this kind of move, especially at this time of year. a this coming up is more of political move, rather than an economically motivated one. especially at a time when the country is growing at about 1.4%, the lowest ends the credit crisis in 2008. so definitely a move that was not expected by the market. is even though the market still trying to digest the news, we are still hovering today. decision by the
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president into context. what was it all about, and how is it been received? i see very negative reaction to the firing. definitely very negative reaction to this news, anna. the man was newly appointed as finance minister, he has been working in parliament's subcommittee on finance. some people and the treasury have said they have had interactions with him. that is what people want to hear, what investors want to hear. that he is not completely new, even though he has not been in there a long time. some people will be working under him, and they have had some interaction with it. the markets has the economists saying this is the worst fiscal space, not necessarily at its best. and another thing we are seeing, he has worked for many years in the treasury. bringing onertainty
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quite a lot of pressure on the rand, pressure that is not needed -- especially ahead of the fed rate decision next week, when a lot of commodity-based corporations will not know how their currency will act once they raise rates next week. manus: bob parker is still with us. give us the context of this vicious move. during the break, you were saying there is something interesting going on. this is one of the worst performing currencies. this is how we look at those emerging-market currencies. the south african rand down 23% on the year, record lows. would you say it is the outlier? bob: the table you have there is year today. but if you look at the last 2-3 months, really since september, we have seen a very interesting pattern amongst emerging currencies. which is you see a number of the currencies which have been hit very hard indeed, like the
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brazilian currency, the worst performer year to date, but as you can see there, it has been the best performer sense the end of september. manus: and the rand is at the bottom. bob: that is my point. so far in december, most emerging currencies which have been hit very hard over the last not just year but 2-3 years, they are now stabilizing. the brazilian currency is stabilizing around 3.8 against the u.s. dollar. the turkish lira stabilizing about 2.9. stabilizing,esian the outlier is the south african rand. that shows a vulnerability to commodity price movements, plus capital flows. the south african government bond market has been dominated too much by limited numbers of foreign fund management bondholders.
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and they are very horrible the capital flows. anna: what would you make about the decision made by the government in south africa? is it the timing, the extent of the vulnerability to capital flows? perhaps this is a slightly more unknown person coming into this very important job in the south african economy, what worries you? south africa is firmly now on the path to junk status because they keep putting politics ahead of reform. the credit rating is at risk of further downgrade. investors do not like clinical uncertainty. africaew contrast south -- if you contrast south africa with brazil and another latin american economy, you have very upside.sks on the if you do get a change in president in brazil, for example, if you do get impeachment, i think the markets would react very positively. in the case of south africa, you have a situation where markets
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are not expecting the change. do not fully understand it. there is uncertainty, therefore, triggers further risk. manus: bob parker from credit suisse. producers the fight for survival. anna: and an already saturated market has more to deal with, as the mine owned by the world's richest woman. l: four years ago, the iron ore in australia was fetching more than $190 a ton, fueling an unprecedented resources boom. today, and the grip of a global commodities crunch, those good times are long on. graph, thisat this is the price of iron ore over the past year. and here is the past metals, australia's biggest and lowest cost sinking along with agreed.
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the question is, how low can ago? the headwinds that pushed it down to under $40, it is still very much in play. and that is we are still saying not a cascade of new supply coming on, but the window of supply coming on from projects that were started some years ago. paul: among those is a new low-cost producer, backed by australia's richest woman, gina rinehart. she will realize a long family dream when the first or ships out. it is australia's sanest iron ore mine, capable of exporting millions of connie. david: over the next two years and that volume, certainly will not be welcomed by the current participants. and it is the reason why we say there could be a possibility of a $30 iron ore price.
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and certainly, it will keep the price from rallying to any great extent. began inn construction 2012, the price was $120 per ton. gina rinehart admitted that no one was thrilled with the price. and she conceded it was beyond anyone's control. anna: let's bring bob parker back into the conversation, senior adviser at credit suisse. we see the us trillion jobs number out this morning, that currency hinged to the commodity story. thing, when you talk about australia, one to talk about china -- and to some extent the u.s. where there is this switch in economic activity from the manufacturing sector, from the commodity sector. and that is exactly what is happening in australia, in terms of the mining sector. i think the theme over the next
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year, if not longer, is to be companies deleveragin. and that fits with glencore earlier today, secondly consolidation and cutbacks. job losses in the mining sector, and i think a major cutback incapacity. and that is good to be that cutback incapacity, doesn't matter whether it is energy or mining, it is the only way you're going to see support for prices. manus: we have a story on the bloomberg terminal today. i want to pick up some of the themes of 2016. 500 of the biggest companies by sales, 20 are expected to be the highest dividend yield over the next 12 months. 17 of those 20 our natural resources companies. tinto -- that is not going to happen. rbbob: if you make that
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statement to describe a historical pattern of the last five years, what you have said is absolutely right. those companies have historically been the highest dividend payouts. now, is that going to be the pattern for the next 2-3 years? absolutely not. i think the theme in the mining sector, particularly iron ore is going to be financial consolidation, deleveraging, strengthening balance sheets. and one aspect of that is dividend cuts. inevitably, it has to be great if you look at the oil companies, apart from the fact that we have got an oil price significantly under pressure. and let us just remind ourselves that in may of 2014 brent was trading at $115 a barrel. $40 plusw trading at or minus a barrel. anna: thank you very much, bob parker stays with us. manus: up next, glencore's big
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day. we had the big details about the big reduction. what is the agenda for ivan? join anna and myself the next part of countdown. ♪
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manus: new zealand cuts to a record low ahead of positions from the fsb and the central banks. central banks take center stage. ceo prepares for an extended news conference. mining misery. glencore announces plans to accelerate that reduction as it fights to share the title of visit -- of the biggest loser. anna: the south african rand hits a low as the south african president fires his finance minister. welcome to count down.
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i am manus cranny. anna: i am anna edwards. it is 7:00. let's take a look at the markets. manus: markets set to open lower. the ftse 100 down by .5%. we will talk to ryan in a minute. yen is rising. the japanese exporters could u.s. stocks were weak on the technology front. commodities seem to be the concern. we are getting news out of the travel industry. business copede with terrorism. 10%.: qe earnings rise this is the full-year profit for tui. point.imate was for 19
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the underlying earnings by 23%. $1.7 billion -- 1.7 billion pounds. there could see a 10% growth in earnings and a turnover growth of about 3% dividend. higher than the bloomberg dividend estimate. how does this play in? caroline i know you have been looking at the estimates. you've got the bulletin. caroline: manus, thank you. glencore plans to cut debt by the end of 2016. from a previous goal in the low 20's. it has been hit hard by the commodities crunch. the reserve bank of new zealand has cut the cash rate to a record low of 2.5%. it is the banks forth cut this year. the governor thinks it should be enough to turn inflation. the kiwi dollar surged on the news.
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-- smashed expectations again. officials -- official figures show more than 71,000 people found work in november. it brings the unemployment rate down. the south african rand plunged after south african president fired his finance minister yesterday. hit a record low. the outgoing minister clashed with colleagues over the pay increases for workers. and plans to expand the state airline. a bloomberg politics survey shows only two thirds of primary voters favor donald trump's temporary ban for muslims entering the u.s. that is destined that news came as automakers demanded that benjamin netanyahu cancel a planned meeting with donald trump. hyde with the
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latest news. let's see how all of the market action has played out. talking about japanese exporters. go -- heidi: japan was a major drag. we had the gains coming through from shanghai. bynghai ending the day down -- central-bank action out of new zealand, equities over there. we saw a decline of 2/10 of a percent -- of 2%. australia, -- it did nothing to lift the sentiment on the asa -- asx.ce -- a is ask
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area, up by 11%. php -- bhp a bit of a rally. gains have been sold off in particular. these are the biggest lowers test biggest losers on the japanese market on the nikkei. the brunt of that selloff on the back of the currency strength. a major component of the nikkei. that was down by 2.5%. olympus sacking by 2.6%. we did see the yen surging towards that. spot.sitting at a 1.21 this falls into the story of oflysts saying that downside the yen is looking unlikely.
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this is the bank of japan standing its ground on further easing. guise? manus: thank you very much. glencore has announced new financial targets. it is only a part of their business update today. to $19cut their debt billion. headline.roke the you had an hour to look through. what is the takeaway? their previous guidance had been a 20's. right now, let's not forget they have $30 billion worth of debt. the other thing they did is update us on where they are in their debt reduction plan. a statement they came out at secaucus morning saying we have thatd in a .7 billion of -- locked in 8.7 billion of that
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debt. anna: is this what you want to see for a business like juncker? -- like glencore? bob: those companies that have highly levels of leverage, they have to strengthen their balance sheets to accept the reality. should companies like glencore assume the commodity prices have , stay at these levels for the next year. my answer is yes. the mining sector and the energy sector as well. we have not talked about the soft commodity sector. at least for the next two years, current commodity prices stay where we are. i would be surprised if we get more downside. in that environment, the pressure on commodity companies will continue. the only way to survive that is by deleveraging your balance sheet. that is what glencore is doing. manus: is this a huge risk for
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2016? there is a huge amount of asset sales globally. if it is not financial engineer product, it is the debt instruments within the commodity companies. it doesn't bond well for 2016. bob: a few caveats. first is the process of bank deleveraging is nearly complete. if we had this conversation in close to2007, we were 28, 30 times. now we are down in the low teens. further bank deleveraging is probably unlikely. if you look at the american baking system, potentially some will increase in leverage is likely. the second caveat is look at my industry. we are seeing significant capital inflows from investors. you are seeing that transfer of
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activity. some call it shadow banking. the call it working based finance. -- they call it market based finance. amoco back in the commodity anna: akin the commodity space, ryan. how are they trying to tease? sell their trying to agricultural unit. we will be looking for more information on that. but a big part of this is cutting capex. spend $5ention was to billion. they're cutting that back by 1.2. they're good to shave off of capex. do you think investors are going to think that the court has gone
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far enough in terms of destined that glencore has gone far --ugh in terms of cutting? that glencore has gone far enough in terms of cutting? anna: it was fairly well flagged. bob: if you look at the prospect of dividend cuts, capex reduction and asset sales. that will be the theme for the first half of 2016. isn't that an environment which is going to excite investors to go back into the sector? i say no. we're only going to see profit protection from consolidation. we are not seeing topline sales. we are not seeing topline revenue growth. you are looking at a sector which is under pressure and which will remain under pressure. isn't that an environment which make he want to go out and buy their sector echo frankly, no. manus: this is a key market point. n aggressives in a
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position. bob: i am not a fan of the mining sector for reasons we have discussed, i would be very leery about shorting a sector where the share prices have collected already. for the shorts, i would be wanting to exit. manus: it paid off on anglo. bob: it paid off very well. but i would be careful. anna: win is that debt consolidation happening? everybody sent to sell. bob: consolidation of commodity prices, which i think is close to where we are at the moment. i can see copper consolidating on oil prices. oil prices consolidating just below $40. from the looks of rent, probably likewise $40 a barrel for brent is probably the low.
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painful structuring, the reengineering of commodity , we arebalance sheets only in the beginning of that. manus: bob, thank you very much. ryan chilcote with the latest on glencore. anna: a look at what is ahead. we'll get a rate decision from the swiss central bank. john -- weaking to will be speaking to jon ferro. manus: extended express -- expended press conference. the emissions scandal. at noon, we get the rate decision from the bank of england. anna: will bring you the central bank decisions -- we will bring you the central bank decisions. 12 minutes past 7:00 in london. see you. ♪
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anna: welcome back. you're watching countdown. the two bloombergs is a splash. caroline: glencore says it plans to cut net debt i 2016. the troubled miner has been hit hard by the commodity crunch. losing 72% of its value this year. it was biggest clothing retailer has reported a 27% rise. the income rose to 2 billion euros in lines with forecast. to buy the agreed luxury and swiss hotel brands. -- accor is buying from vw ceo will have an extended news conference.
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he is due to brief reporters on the status of investigations into cheating. that is your bloomberg business flash. manus: caroline, thank you very much. will decides smb whether to maintain its record low. jon ferro is on the road. n, the smb, ito was assumed that we were locked in for 25 basis point cut. was he thinking now jackal oh -- now?- now back the economy stagnating in the last quarter. at thisle relief meeting, the draghi disappointing -- draghi disappointment.
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faceottom line, they still a trend that is against the ecb -- these be cut rates into negative territory. the options are limited. anna: rates are negative already. -0.75% on the next year's deposit rate. what would be talking about today? any such a bank has to make the soft policy to cut rates. you say you're going to do more. they have limited hard policy options. cut a little bit deeper but they have very little left. the soft policy, we heard the guidance from them before. that is the big issue for the central bank good if mario it was seriously overvalued, the market would move.
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one thing it does have one is mine, he could cut rates. that is the whole point, the element of surprise. they have the element of surprise on their site. some would argue if you're going to make a move, today's the perfect day. manus: you will back a surprise for us. thank you for joining us. john is going to be sticking to the swiss central desk the swiss .ational bank -- the swiss national bank. we bring you the interview later this morning. anna: the bank of england releases minutes later today. bob parker from credit suisse is still with us. which, good to see you. what are we going to see from governor carney? the strength of the pound and what he has been doing to keep inflation low. richard: will get a message that us similar to -- message that is similar to what we got on super thursday. i think they will not want to be
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too hawkish for fear they will's send the pound shooting hot -- they will send the pound shooting higher. fairly similar to what we had last month. manus: bob, one of the things that came out in november from the bank of england was the concern about emerging markets. we touch on this briefly. reprieve that is the scene and the emerging markets. not a huge amount of change in the economics. china has slowed down a little bit. they are concerned about more vulnerable sharper slowdown. do you think they will be outward looking? or domestic looking? bob: let's look at the domestic picture. your comment about sterling is right. there is a concern that sterling is still overvalued against the euro and other currencies than the u.s. dollar. minus 1.50lus or against the u.s. dollar.
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he is having a negative impact on u.k. export performance. the deficit in the u.k. is close to 4% to that of gdp. the economy, if one looks at projections for 2016, some moderation in the u.k. economy, 2.3% growth. the key point for the bank is what is happening to the inflation rates. that inflation is picking up. numbersline inflation stay very close to zero for the future. anna: what is the expectation around interest rates? how much urgency is there going to be for the bank of england to move on policy toward the latter end of the year? richard: if you look at market pricing, it is pushed out to the end of 2017. the reason that those
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expectations are what the art is i find it very difficult for the bank of england to talk about raising rates when the chancellor is -- when the governor is writing letters to the chancellor saying the rate is too far below target. market participant a looking at that and sing the optics don't make sense. you have to have spot inflation to show traction before you can bob:orked up or dispense. is it consistent? george carney wrote -- mark carney wrote a letter to george osborne. anna: unless you have given up. not going to happen. anna: we were having income session about the new zealand central bank and how they target inflation back in the 90's and now they are having second thoughts. bob: will central banks move away from inflation targeting? or will they amend inflation
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targeting to look at core inflation versus headline inflation and other measures of inflation? or will central banks move to the fed approach which is to have a number of targets? that will be a big debate for 2016. manus: bob, thank you for being with us. bob parker, credit suisse. and our very own richard jones. anna: the terror attacks. the travel industry seems to be holding up. qe beat expectations. airline has details. ." a significant beat coming from europe's biggest tour operator hosting a 23% jump in underlining -- underlying earnings. up some 8%. therefore they are cashing in to the investor dividend. they are promising growth for the next year as well. there underlining earnings -- underlying earnings will grow 10% next year as well.
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outperforming what seems to be significant despite the headwinds that have been hitting this sector. terrorism immediately comes to mind. the paris attacks, what does that mean to desk mean for travel to egypt, turkey? they have had a very successful economic performance despite the geopolitical challenges and crises, in particular they saw growth in the united kingdom and ireland. in their crews area, they have cruise ships, they saw eightfold growth in earnings. there are some areas that are weak. they are highlighting france as a weak point. there is concern about traveling to north african destinations amid terror concerns. germany is suffering from competition. have a look at what is brought up on the bloomberg stream.
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underperformed. -- outperforming the green line. we will see if tui shares can play a little bit of catch-up as they beat analyst expectations. anna: caroline, thank you very much. past -- caroline, think you very much. with the latest on the travel sector. we have on the move coming up next. stocks building on the back of technology trading. they are the ones that have risen. manus: ran hitting a record low. said. what jon
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there is hard policy and soft policy. a lower open as you can see there. i wonder how glencore will trade? and coke we will leave you with the on the move team.
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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. >> welcome to on the move. 8:30 in frankfurt. we are counting you down to the european cash i am guy johnson. what are we watching echo glencore's new target. the commodities trader will cut that to $18 billion by the end of next year. new zealand has cut rates for a fourth time this year. are very much up next. vw takes center stage. firsts set to hold his news conference since the emissions rigging scandal broke. .ight 7:30 in london. cash open. before
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here's caroline hyde. caroline: the reserve bank of new zealand has cut the cash rate to a record low at 2.5%. still bank says it's fourth class rate should be enough. the kiwi dollar jumped at the news. the aussie dollar surged after jobs data beat expectations. officials say more than 71,000 people found work in november. economists say they expected a drop of 10,000. rand plungedican after the south african president fired the finance minister yesterday. the outgoing minister clashed with government colleagues as the pay increase for workers and a proposal to build the nuclear power industry. the london financial industry fell about one third in november. that is according to a survey.
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banks from credit suisse are cutting themselves in london. guy? guy: thank you very much indeed, caroline hyde. us --s fair value tell what does their value tell us? all of the things you need to put in place to understand where we think cash is going to open. this is the pei. we are going to get a softer open. your stocks down .5%. it was quite a negative close yesterday. interesting is glencore is trading firm or in johannesburg. it is suspended out in hong kong. we don't have trade here in london get. that could be positive news coming into the minus sector which did ok yesterday. let's look at some of the overnight news. crude up 1.1%.
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that is. the rand getting decimated last night. who is going to be the next boss? the big move which is carried on in the dollar the dollar index shedding a bit of ground overnight it picked up a little bit. negativityn some into the dollar index. maybe continuing on what is ecb.ning vis-a-vis the let's welcome daniel mark. good morning. it is been quite a week bus far. the commodity story has dominated as we work our way to the end of it, do you think we are close to stability? have we had a cathartic moment. demand,if you look and you had an excellent supply.
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.t is a fairly significant gap that suggests we are not quite there in terms of equilibrium price for oil. i don't think we can sit back and think it is over. guy: through the holidays. good news if you're driving. one factor we have to think about is delicious commodities and central banks. we have seen the ecb. the qe sent the night delivering another rate cut. you begin to wonder whether or not we should be pushing that further. smb down later today. ecbting clemency by the last week. tell me where inflation is. daniel: it is a valid spirit in the short-term if you think about falling oil prices, you are going to get a pat through in terms of lower inflation. central banks can hold back a bit. and longer-term, they should be thinking about the underlying core drivers of inflation.
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in the same way we have had the rollover of the price decline in oil from $100 to $40 now. that eventually stops and you think about the core drivers. on one hand, yes it would cause them to step back. it should be stimulative for the economy. for the longer-term inflation drivers. in the end, they are probably more cautious but not that much more. guy: are the crack's beginning to widen in the market? you begin to think about what is happening in credit, you see what is happening in the energy sector. we've had a bunch of that. glencore having to take aggressive action to make sure its credit rating is secure. where are the crack's? daniel: you're sing nervousness which is nothing really new. we are going into the year not with the enthusiasm. ever lingering concerns about what is happening in china. the only thing we are certainly
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about that's the only thing we are certain about is the fed is going to hike rates. that is what we are seeing. looking for certainty. guy: stability, certainty. what on earth is going to happen. it would be nice. i have to dig into some of these issues. the big trade, equities. daniel: that explains the violence of the reaction we had last week. everyone -- everyone is uncomfortable that this is one of the uncomfortable -- one of the most trades. after you evaluate what ecb has done, it you come back and realize it is the right place to be. if you look at earnings growth potential, valuations, economic recovery, the u.s. and emerging markets, europe still looks pretty good. guy: what would it take to get people interested in u.s. markets? daniel: if you see the fed step
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back. ands dependent on the fed interest rates. guy: when i look at the middle of u.s. corporate balance sheets of the p&l. i look for where i will see improvements in that area. is there any room for improvement? daniel: what is the leverage they have? interest rates. terms of energy. oil prices going down. there's going to be a balance there, depending on the structure of the business. it comes down to productivity. that is going to be the key to french eater next year when we see interest rates going up. -- you can see a nice,
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nation -- a nice combination. increase productivity so corporate profits will stay stable. guy: people are searching for a reason. what else the you own? daniel: there are not so many obvious opportunities. that is one of the anomalies of the situation we are in, compared to 2009. it was relatively simple and that equities were attractively valued. guy: what do you think looks good right now? daniel: it is a question of where do you want to be at some point in 2016. if you think emerging markets -- the timing is really the question. if you look at how much currency has fallen it what happened with valuations equity markets. there is opportunity out there but it is keeping it is keeping a bit of your powder dry.
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guy: will come back and talk about that a little bit more. i think that is an interesting -- we will come back and talk about that a little bit more. i think that is an interesting call. coming up, we'll talk glencore. enough to keep the miner/trader on track. that story next. you are looking at a live shot of london. ♪
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guy: 7:42 in london. it.can see it is not shanghai. will show you the beijing shots later on it let's get you up to date. here's caroline hyde. caroline: inc. you. ask for -- thank you, guy. to -- they ared buying the company from a group
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that includes prinz albert -- prince albert. his newsll hold conference. healing is due to brief reporters on the investigation into cheating. -- the takeover of bz europe. the deal is the fourth largest that offering this year. guy? guy: thank you very much. miners have not hit rock bottom, that is according to the short positions we have an encore and anglo american. -- had at glencore and anglo american. the stoxx higher in johannesburg. ryan chilcote has the details. they are out of the gate pretty quickly. what is mr. gleason burke saying? >> they got the statement at six
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clock as opposed to 7:00 and we got a presentation. it is all about cutting debt. the previous target for the next year is to get the debt down to the low 20's. right now it is at the low 30's, the biggest debt burden in the industry. the new target is aching billion to $19 billion. to $19et's $18 billion billion. they have secured $8.7 billion of that. there planning on cutting -- they are planning on cutting capex. you get another $1.5 billion there. for assetus target sales was $2 billion. is $4 billion. you have $3.5 billion in
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additional savings that they are hoping to generate. that is the news. guy: incredible action this week. the anglo coming up and saying are going to take more aggressive action. these guys are worried. investors are taking a beating. if you have fresh cash to put the work, is it still too early? daniel: one of the sectors you want to have in particular if you have european equities, what are the sectors i like? the challenge you face is a lot of the sectors reflect that in terms of price and demand valuations are high. you can argue there is more value opportunities in energy and mining. day? a pound the table it is a place where you want to increase your allocation. guy: ryan, the market is still
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nervous. anglo.eople shorted they really one out on that. 5% of the shares are outstanding. against glencore. you think they're going to get burned? -- get burned? daniel: what is going to be the timing, the reactions from the companies in terms of how they are managing their debt and supply. is the the other side demand question of when do we really feel confident in the outlook for china? it goes back to the data we had. we don't feel that comfortable with. we have to accept it. if we seal a real estate -- if we see a stabilization, i think that would be the time we see more stability. instead of the remedial
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action that is being taken by the miners. daniel: we are seeing an imbalance that has to be addressed. you can cut supply, but it to you know what the longer-term demand projections are going to be, you never know if you have done enough. guy: glencore has said they are prepared to cut that if necessary. -- cutting production of copper. they're ready to cut. is he going to be enough to make a difference? -- is it going to be enough to make a difference? guy: tried to understand what is happening in the supply and demand story, we don't know how much of this stuff china has got. it.son burke admits china is a black box.
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i know -- i have no idea what is happening. even these guys are struggling to generate some sort of transparency. is even if you get stability in china, what is the forecast over the next five years? this transition from investment to consumption. it still means more services. it is not buying more things. guy: what should you watch? chinese data? or the dollar? theel: it seems to be dollar. it is one you can see every day. over the longer term, the bank is fed based. it is going to be driven by the fed. what is the rate? what is the pace? how aggressive and what that
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means for the dollar? guy: the dollar index turning it on the seven. we have weekend -- we have .eekend the we will come back and talk about that. peter is a senior independent and nonexecutive director at glencore. he just needs to make that clear. is could stay with us. we are minutes away from the start of european equity trading. potential corporate movers including glencore and volkswagen. to face the press. we'll have that story when we return. ♪
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guy: eight minutes until the start of the hour. with the features negative. fell value -- fair value negative. let's get to caroline hyde.
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caroline: a little bit of m&a speculation in the air. i want to keep an i want to keep an eye on the swiss stock, syngenta. it could rise after a volatile 12 months. monsanto was eyeing up syngenta. now we understand there are reports that china could be eyeing up this company. the endless coming out saying it would be a good owner. this is a company that makes crop protection chemicals. likely viewould this deal positively. kim china is eyeing up syngenta. keep an eye on julie--keep an we are seeing significant growth in the united kingdom. this is in spite of the headwinds we are saying and just seeing with terror attacks --
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seeing with terror attacks. let's have a look at accor. splashing the cash. -- we are likely to see this stock move. the reason we're seeing hotel deals aplenty. try to fend off the new digital attacks that come from the likes of airbnb. what's up for these cash and share deals. vw, will get an update, 11:00 a.m.. matthew moeller will be talking to the press, updating about where the scandalized. guy: caroline hyde with the stocks we need to watch. -- fair value cancellation we have a think of open here in europe after a decent down day yesterday. we're going to continue that trend here. it has to be interesting to see
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how the miners perform. it has to be interesting to see how the oil stocks perform as well. daniel morris is still with us. when do they switch to being long? daniel: elect the underperformance we have had -- if you look at the underperformance we have had, if you look at relative buffet -- relative profitability, it has underperformed. is the way it supposed to work. it is when we see that turnaround in relative profitability, that will be the signal. it is not there yet. i don't know we have the mentality and a lot of emerging markets, corporate's have to -- ascture and focus on we have in the u.s.. guy: we're going cap -- we're going to carry on the
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conversation. he is going to be staying with us. we are minutes away from the start of cash trading on equities here in london. big focusnd vw, the this morning. we are going to take a break. we'll be back in a couple of minutes. ♪
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guy: good morning and welcome to "on the move. is out focusing on european trading. glencore's new target. to $18 cut the next debt billion by the next year. we are on central-bank watch, new zealand. vw takes center stage. the first extended news conference sense the emissions scandal. this is what we are watching.
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it will be a busy day. let's go to the touch screen with caroline hyde. caroline: it was still a negative day in europe. and likely to be another negative day. this is how we closed yesterday. 4 of 1%. up by 3/ are likely to see a little bit of negative risk appetite going into a flurry of central bank nonaction. we will be hearing from the s&p head. as believed into those central-bank decisions, the 5100 is up by 2/10 of 1%. americanly saw anglo and glencore start to gain as copper managed to turn around yesterday and today.


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