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tv   Countdown  Bloomberg  January 13, 2016 1:00am-2:31am EST

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anna: signs of stability, chinese exports beat estimates. beginning to normalize. dropping low after $30 a barrel, oil is there for the first time since 2003. anna: a pessimistic outlook for the year ahead, he warns what really uglyquote " first-quarter." manus: welcome to countdown.
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anna: welcome to the program. asian markets getting a boost, better-than-expected export data out of china. let us talk about the oil. the big story the last 24 hours, briefly dipping below $30 a barrel. we have a great story on the terminal, talking about how 11 months ago, we were talking about $20. the not look as crazy. beus: i thought we would cheeky and sneaky today. jeffrey gundlach says oil below $40 is causing frightening political paper. we might make it to $45. anna: let us talk about the foreign exchange markets. tradeng to the chinese data, that is reflected in the market. the aussie dollar and the rand getting a boost, because of the
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stable fixture on the yuan, reflected in the japanese currency. knus: we have the japanese uroda's former deputy, they're more comfortable with u.s. futures trading higher. we will have more throughout the program. this goes back to yesterday grade goldman said it might be time to buy. gundlach, and jeffrey says they will likely struggle before a buying opportunity later in the year. anna: he is a lot to be gloomy about. let us get the bloomberg first word news. nejra: good morning. widened,rade service as the world's second-largest economy trade balance increased to $60 billion, taking the four-year tally to $4.5 billion. the weakening yuan has rocked global markets.
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up for the first time in 12 years, as the supply of crude means that they have not staved off a further decline. a gauge on the return of raw materials has dropped to the lowest level since 1991. barack obama has used his final state of the union address to call for a more noble politics. he also hit back at claims that the u.s. economy is in decline. president obama: the united states of america, right now, has the strongest, most durable economy in the world. anyone claiming that america's economy is in decline is peddling fiction. bears one of the biggest says there is more bad news ahead. ndlanch said that ack hiu really ugly situation would be more likely if the fed keeps
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hiking interest rates. downside, high yields are very unlikely to rally. the redemption cycle -- we could be looking at a real ugly situation during the first quarter of 2016. and it is particularly more likely to happen if the fed keeps banging this drum of raising interest rates. nejra: and that is your bloomberg first word news. anna? manus: thank you very much. the chinese government has yet to stabilize the yuan. the trade data this morning shows a rebound in december, and the surplus had widened. anna: we will break down the numbers in a moment. let's head over to hong kong, where david is standing by with the market reaction. david, this has been taken quite well by equity markets in general i'm even if that does
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not necessarily apply to china. david: absolutely. it is very important when you look at the economy, and you guys will talk about the numbers in a moment. what happens in the stock market in china is very rarely reflected what is actually happening on the ground. that being said, though, very encouraging numbers out of china trade helping the sentiment, which was already quite good. we started out today, the overall since right now in asia -- up 2% in the trading, -- is that these of vicious moves over the last seven days were a bit overdone. whether that was dollar-yen levels, a oversold .5% or 9% on the regional benchmark. there was a bit more of a trickle of good news today. getting more risk-averse, i guess you in today's trade. back to the yuan fixing,
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relatively unchanged to the dollar. arguably, you look at the spread between the onshore and the offshore. checked, the offshore was lower than the onshore rate. the spread is quite narrow. ratehe yuan interbank spiked last night raid last i checked, just over eight percent. like it or not, the bank did manage to impart some discipline in the markets. which is contributing to the risk appetite today. the developing story, as we all gains in taking these any shape or form they,. anna: david, thank you very much. manus: let us get to shanghai. balance --rade
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recovery on the way? or is this a one-off, will we see the trend continue? greg: good morning. well, it looks like the depreciation that started back in august, when the central bank 2.6%he value of the yen by and again in november december when we had a steady depreciation, and looks like that is now kicking in, reflecting in the trade data. so it looks like probably favorable trade data going forward, at least in terms of exports. on the import side, we also saw improvement today. where the decline was not as severe as that 11% from last month. it only declined by 7.6% this month. that also points to possible improvement in the economy. anna: and what are the areas that shows the biggest gains among the biggest improvement in
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the data? well, if you look on the commodity side, there were some of thets for raw materials, like iron ore. on the export side, steel and refined oil products were huge. this was more or less expected, possibly more than expected on the steel side. but one of the interesting things to note is exports to hong kong surged for the month, which brings us back kind of a reminder of some of the fake data incident that played the reliability trade data early last year. us: thank you very much, our bureau chief in shanghai making ense of the data.
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anna: he expects chinese volatility to continue. during is now is the head of global fx strategy. let us talk a bit about the chinese currency. i am amazed to see the yuan offshore is set for a record five-day increase. intervention of some kind or another in the offshore chinese currency, it seems. weakeningture u c in both measures is likely? >> the fundamental picture is one where we will see a continued structural slowdown in china. i do not expect it will be a hard landing. having said that, with the fed hiking rates on the one hand, and the continuing slowdown in china, you will see pressures for outflows continue. i think that the chinese or authorities are moving towards a place where they would like,
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ideally, to start seeing some more market trading forces. which means, when you get capital outflows, the system depreciates on the exchange rate. manus: one thing we touched on with other guests, the offshore and the on shore. that gap widened to a record last week. it came back together again, with a call for a bigger depreciation in the yuan. what will happen in terms of the differential, onshore versus offshore? >> i think it is very difficult to know on a daily basis. thematically, i think what we will be heading towards is an environment where we will see a contraction in the spread. anna: the imf doesn't like it to be one. >> definitely one of the more decisive factors. if you look at how the chinese have actually played the last year, it seems to me that they warned the increases of the yuan
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being included grade they managed to get back, playing somewhere along the lines of the imf. manus: if we talk about the contagion, anna and i talked yuan off on aean five-year low. if we look at your positioning, you're talking about buy the yen versus the yuan. is this a direct consequence of the move> >> i think to a certain extent, it is. first of all, the issue itself is south korea. the trade that we have is going along with the yen, versus the south korean currency. south korea's won needs to come under some weaker pressure because of the competitive pressure it is getting from the other currency. i have been bearish on japan for a lot of time.
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i do not think that the elements are therefore sustained recovery. but having said all that, when i read all of the statements coming out from the japanese authorities, both from the board as well as the government, it seems to me that these guys have convinced themselves that they have managed to get rid of deflation. which tells me that i do not think they will keep on stepping on the pedal. anna: does that mean the end? >> yes, that is what i am leaning towards. if you look back at 2015, the dollar-yen trade was the most boring trade out there. i think it is virtually nothing. low in that respect, people are really getting bored about this notion of a portion of the yen - see -- at least over the next 3-4 months, i do not see the coast for dollar-yen. manus: our story this
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da, it isuotes kuro the strongest since october 2014. this is wipeout, kuroda-time. >> first off, let me say one thing. as far as dollar-yen, let us not lose sight of the big picture. it has come off massively over the last two years. a depreciation of approximately 30%. i think, or at least i hope, that these people have started to realize that monetary policy probably has reached its limit. and, ideally, they would like to get coordination from the fiscal, where this will get japan out of trouble. anna: thank you. he stayed with is longer on the program. manus: we will hear from several voices within the fed. first up, boston president gives
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his economic outlook. anna: then we hear from chicago fed present charles evans, and we get the central bank fed b eige book. manus: and you do not want to miss the interview with robert, coming up at 1 p.m. london time. bounces, and, oil crude recovers after a brief fly below $30 in late trade yesterday. that was the first time we've seen that, of course, since 2000 03. how many times will be asked that question this year -- will we ask that question this year? we will talk about that in a moment. ♪
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anna: welcome back. 17 minutes past 6:00 in london. let us get the bloomberg business flash. nejra: volkswagen has been dealt a blow, and it attempts to overcome the emissions cheating
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scandal. california rejected the proposed engine fixed, putting more pressure on the ceo, who will discuss ways of the crisis later today. affiliated with the group anonymous, hackers have claimed responsible of the for taking down this website overnight. it is the latest japanese coming to be hit over protests over japanese whale hunting. they said they have no connection. computer shipments dropped 13%. that means 2015 saw fewer than 300 million units shipped for the first time since 2000 and eight. 8. there were more than 360 million in 2011. that is your bloomberg business flash. manus: thank you very much. oil prices dipped below $30, as
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we were telling you. nextis rebounded, the milestone be $20? that is the question. elliott is standing by. there is a moment of reprieve in the overnight session for oil, isn't there? elliott: there was, manus. but who knows how long that will go on. belowst time they dipped $20, you were in your 30's. they didn't rebound, as you say. but it is hard to find reasons to be optimistic in the oil market. you still have this oversupply. in the absence of any major change in that supply or any pickup in growth from china, it is hard to see how much support there is for those oil prices. and of course, the pain that has been experienced by producers, investors, countries -- it may just be a taste of things to come. if they do go that much lower, manus.
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anna: now that we have touched below $30, it even fleetingly, how likely is it to drop below $20? there is really been interesting commentary overnight on that subject. elliott: it has. i'm glad i have to answer it myself. but that is more from citigroup, from a year ago, who said that prices could be heading below $20. we are now confronting $20 oil. he says that number is some and you have to talk about. the likelihood is fairly great. clearly, oil markets cannot maintain a price at or below the $30 level for very long. the question is, for how much longer? he is joined now by goldman sachs, who reckons there is a 50% chance it could hit $20 per barrel. this is causing immense pain in the gulf economies, and other producers as well. malaysia is using $68 million in the decline in the barrel of oil.
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you have conoco phillips losing almost $2 billion. and we saw yesterday petr obras lopping off $5 million, somewhere around the region of a quarter. there is some kind of optimistic note to leave you on, guys, it is this. china imported a record amount of crude, taking advantage of the low prices simply. up, win prizes start to go china will start using its stockpile and stockpiling the oil. that would therefore reduce demand on the other side of the equation, allowing prices to fall back again. i kind of semi-optimistic note to leave you on. for how much longer, wait and see. anna: elliott, thank you. this is proving difficult for many governments. we will talk to munich later on about that subject.
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manus: let us keep the subject on oil trade for today's undlach, jeffrey g said it may have found a bottom. jeffrey: it could be easily consistent with the pattern from recent weeks and months, the oil might go up. i am not saying it is going to some huge number. from theght go up 50% short-term bottom, if i am right. it might go up to $45. even that number is not enough to save the energy market from some of the trouble it is having. isa: vasileios gkionakis still with us. amazing to think that a 50% price, that is how far we have come down. maybe we are seeing a bottom in the oil price? vasileios gkionakis: it has become a futile exercise to find
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the bottom. i think what really makes it , on thet is because whole, you have supply-side problems. at the same extent, you have some demand-side problems. it all depends on whether you think the market is at equilibrium at every time. personally, i do not think that $30 is equilibrium. from a fundamental perspective, we should see higher levels in oil. having said all of that, when bad, theylly get could escalate even further. manus: it is the contagion effect, as well. it is not just that break down in the oil complex, it is the bloomberg commodity index -- the lowest since 1991. we touched on it yesterday, whether we can even contemplate capitulation or the markets moving that you see, it is an uncomfortable base to sort of coin the countdown phrase at
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all. what do they say? vasileios gkionakis: our view is that basically we will see a gradual cap in 2015 and commodity prices. it will be very gradual, because the market will remain very conscious. let us not forget that we had a big bounce last year, between the first and the second order, only to see a further slimp going into year end. at the same time, we are seeing the demand perspective, the world is not as bad as people actually think. and in that respect, i would say that, first of all, we have the u.s. you do get the occasional fluctuation in the data. yes, you may have solved the slowdown. but at the same time, the euro -- a lot of people have said that it is in really bad shape. last year, i do not think it was a bad year for euro growth. on that perspective, i am cautiously optimistic.
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weak oil price is not game over, far from it. that is talk about how this currency.mmodity you recently published research suggesting the aussie against the canadian dollar, because of trade deterioration is not fully reflected in the trade. vasileios gkionakis: absolutely. let me first say this is a canadian dollar trade, as opposed to what we tried to do -- which is get some of the dollar out of the equation. a lot of people have started having doubts about the dollar strength from going from pso, there seems to be a lot of uncertainty. we look at the relative terms of trade with canada, we are seeing a massive deterioration -- probably about 21%. canada, over 3-4
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years. we have seen that being reflected in the exchange rate. aussie is moving lower. year, the end of last where he saw a sharp rallying. we do not think it is justified by the fundamentals. inus: one the top four canada is causing dollar-canada next week, and another round of rate hikes for canada. any others? vasileios gkionakis: i do not think the picture is that clear-cut going forward for interest rates cut. as a matter of fact, i think that in canada, we have got a pretty robust canadian employment report last week. thats also not forget canada is very much linked into what the u.s. is doing. in that respect, it is doing well. .nna: vasileios gkionakis
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manus: the outgoing president leaves and optimistic message for the world's biggest economy. ♪
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sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. manus: 6:30 in london. let us get the bloomberg first word news. nejra: china's trade service widened, and exports recurred last month. it increased to $60 billion, taking the tally the $594.5 billion. that supports the weakening yuan that has rocked the market. oil is back, after tumbling below $30 for the first time in 12 years. the oversupply of crude means prices have not staved off the threat of further decline. the gauge of return on raw materials, that tumbled to the lowest level since 1991. one of the markets biggest bears
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says more bad news is ahead in the first three months of the year he jeffrey gundlach warns that a potentially ugly situation would be more likely if the fed keeps to the path of hiking interest rates. if it does start to show a downside, then high yields are very unlikely to rally. the redemption cycle could be looking at a real ugly situation during the first quarter of 2016. and it is particularly more likely to happen if the fed keeps banging this drum of raising interest rates. nejra: democratic presidential hopeful hillary clinton has called for increasing the estate tax and closing loopholes used by hedge funds and the wealthy. she also wants to reduce the threshold to $3.5 million for individuals, $7 million for married couples. that is your first word news. manus: thank you very much.
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anna: we were. when these commodities started touching levels since 1991, it begs the question of what you were doing? we will not address that on air. president obama set the tone for he election in 2016, highlighted his economic achievements in his beat. president obama: the united states of america, right now, has the strongest, most durable economy in the world. anyone claiming that america's economy is in decline is peddling fiction. manus: our international correspondent, and international correspondent for the white house, hans nichols is here. give us your take. you have heard a lot of state of the union. and impassioned defense of obama? hans: maybe a victory lap.
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the major difference we had it was not a laundry list of policy proposals he was going to send to congress. in the past, he threatened to do it by executive action. it was backwards looking. the glass is always half-full glasses. this optimism was bubbling over. you heard the optimism on the economy, the auto industry, the unemployment rate. he did mention the rising income inequality, a big topic in the 2016 race. he talked about threats at home and abroad. it was almost an apology, not quite, that is a little strong. but he expressed regret at what he was not able to do to sort of he'll a partisan divisions which are really grown during his presidency. one of the smarter comments out there analyzing came from a former speechwriter of obama, jon favreau. he was saying the contrast between what economists were saying.
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rningid tonight was his mo in america, to the malaise speech that the republican candidates have been delivering for the last year grade depicting the country in the campaign, it is really quite negative. here, from the other site, you have the optimism from president obama. that whoever replaces them on the democratic side, whoever the nominee is, will have to balance that -- the optimism from president obama. but it is clearly pessimistic undercurrents that folks like donald trump are tapping into. anna: some of the hopefuls want to talk about the economy in those terms. it also want to criticize his record on foreign policy. in some extent, it was taking u.s. by iran navy soldiers hostage. bring us up-to-date on that. hans: 10 soldiers have been detained. obama did not alter his speech,
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he did not directly comment. in some ways, this will likely to find the echo chamber. after the state of a union, the president hits the road -- trying to get some bumps and local media markets. orng to north carolina oklahoma. i suspect this conversation about iran really plays into the republicans, that we have a weak president being laughed at abroad. yes, the official counter speech by the republican governor of south carolina, nikki haley, for this to be more important. one more quick note. when you look at the audiences, obama will probably get somewhere north of 30 million americans watching the speech grade his first address? 50 million. audiences decline, and it will be hard for the white house to decline the narrative with this after the events in iran. manus: we are touching 50 million everyday on countdown.
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hans nichols, thank you very much, giving us everything that went on in obama's last state of the union. obama sounded strong. the dollar is on the rise. this is what it has done. you're the put it in context, over the past six months, it is all of the major currencies. they are all challenged by the strength of the dollar, aren't they? vasileios gkionakis: i will make two observations on the table. at the bottom, concentrated commodity currencies -- largely not necessarily reflecting widespread dollar strength, but widespread commodity price weakness. the second thing i would say, as a matter of fact, a lot of these moves have happened in the past 10 days or so. for example, the australian dollar is down 3.5% year to date. i think my bottom line, we have
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seen the dollar trend. months, west 3-6 have seen a drop in the dollar trend. jeffrey whord from was suggesting the dollar rally has already happened. vasileios gkionakis: i think it has treated as a matter of fact, i think it is done so much, it has from a fundamental perspective, the case for a dollar weakness will be gradual. but the fundamental case is definitely there. manus: where does that permeate first and foremost? commodity currencies have been ravaged. for example, we have a note that standard chartered is still talking about $10 oil. the beginningat, of the erosion dollar rally come? vasileios gkionakis: it is already being shown in the euro-dollar trade. you can see that in the last six months, the euro was down 1.i percent. it barely moved.
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over the last 3-4 months, the low in october and november. it has rallied substantially. the commodity is interesting, from the perspective of fundamentals, some currencies are heavily undervalued. until we see these bottoms being confirmed in commodity prices, i would not touch commodity currencies against the dollar. anna: here is a challenge to your view, the dollar rally has already happened. the former bank of england saying trust the fed's, not the market. how many rate hikes we get from the u.s. do you think it will be two like the market, or four? vasileios gkionakis: how many rate hikes the dollar has priced in? when i look at the trade with the dollar, and the real differential, i see a massive wedge between the dollar and the
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real rate differential in the u.s. and the rest of the world. which tells me that unless we see a really, really aggressive hiking cycle by the fed, and that is more than four rate hikes, i struggle to see the case for further upside in the dollar. motion of markets, the psychology of markets, the heard mentality. that is china. fed, madehe richmond the point that the china and the u.s. economy -- china is recovering rapidly. economy ischina still growing rapidly going to stop extremely rapidly. the turmoil has not affected his outlook for the u.s. growth. direct trade on china is a minimum. vasileios gkionakis: all of the economists tend to do that, to
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look at the percent of experts going to china -- total exports and all of that. something is not there. my only worry is the following -- if we get a severe sentiment, and we see the shanghai composite collapsing, this is going to cause correlation trade. it is going to take down the s&p 500, as well. in that case, where a lot of the u.s. households are already exposed in the stock market, you may actually see some curbing of demand in the u.s. my point is that you have a direct link. but the most important thing to forget is sentiment. anna: sentiment is interesting grade we have lots of experience watching something happen in shanghai. it ripples around the world, has significant applications for sentiment. people scratch their heads, have we ever done this? do you think the collapsed with the big move in shanghai good take the u.s. recovery off of its footing?
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that is what many others talk about the strength of the u.s. economy. vasileios gkionakis: my scenario is for that not to happen. i don't think the fundamental case is there. but the risk of sentiment getting and moving too far towards the pessimistic side is there. manus: markets like to overreach. when the markets crash -- anna: i have never seen that. manus: the grinch of bloomberg. anna: i have never heard it described that way. vasileios gkionakis joining us. thank you. we will talk about spain. onus: the election was december 20, it ended a four-year majority for the prime minister. and it left the country in deadlock, as to who would form the next government. anna: maria, good to see you read we talked about the latest political developments, running up all the way to christmas,
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holidays. talk us through what is happening today, because we seem to be in a period of limbo in spain. maria: today is a big day for spain. we get parliament, and we get a housekeeper. just to make it very clear. it is not -- that will come later. what today does is trigger the process by which he could become prime minister. there is no hard deadline for that. what we do know is that he will have to win a confidence vote. there are two ways, an overall majority vote, which looks unlikely. if he fails, that would be failed by a simple majority vote that takes place 48 hours later. in that case, he just needs more people voting in favor than against. so abstentions will be crucial. today, parliament just gets started. the majority vote will come later down the road.
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manus: given the situation you have just outlined, can he istically become prime minister? is it just pragmatism of politics? here inanus, the sense madrid is that it is getting currently hard for him to get a government because he has no allies in parliamentary. the numbers just do not add up. for him to become prime minister, he really needs a socialist to jump on board. four weeks, he has been flagging this idea of a three-way coalition. joining forces to protest spain's unity. of course, that sounds great. at the same time, by doing this, he piles on the pressure on the socialists that we have to go back to the election. because we did try to make this work. the question is will the socialist break under pressure.
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right now, it looks like it will not happen. they made a very clear they want to form their own majority. get to some sort of agreement, get them to drop some of their more radical proposals. and somehow get these to ship. all of this is very much up in the air. the word from strain is really uncertain -- the word from spain is really uncertainty. anna: korea, thank you. joining us from a dream. we will talk credit. warns that it 500 is the worst since 2008. we will have that discussion. ♪
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anna: welcome back. 6:47 in london. that is to the is this flash. volkswagen attempts to
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overcome the cheating scandal, as the california air resources board rejects the fix. putting more pressure on the ceo, who is scheduled to meet u.s. regulators to discuss ways out of the crisis later today. the ceo of glaxosmithkline said he is willing to consider in suggestions on breaking up the company. some investors have advocated them's with up, as the stock has stagnated. playornia has agreed to $2.4 billion for the spanish football rights, including the european championship league read that is your bloomberg business flash. anna: thank you grade we will bring you up-to-date on the chinese market. very topical, since the start of this year. broadly speaking, asia is bouncing today -- not really the case for equities in china, down more than 2.3%.
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the shenzhen moves little more, down by 3.5%. manus: those are beginning to come back unchanged on the day. having a look at the u.s. equity futures, u.k. has yet to open. u.s. up some of the s&p up 2.5%. what you will see is a negative will impact so far on those u.s. equity futures. here are the u.k. futures, up nearly 1% rate we will keep an i, check them out before the end of the hour. anna: that is according to a report this week from s&p, as credit concerns grab investor attention. manus: let's bring in a man who knows things about sovereign credit. james is global head of sovereign ratings. welcome to countdown. james: thank you. manus: some big themes in the
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ghts,, the commodity ri defaults, what worries you most in terms of sovereign risk in 2016? james: you said it right there. commodities are the number one drivers in 2015. as possible for more downgrades than anything else. that will continue in 2016, even if oil rebounds today, we will to see downward pressure on sovereign ratings on a major exporters. it takes time for the numbers to feed through to the fiscal numbers. if you look at the most negative african region -- most exposed to the commodity price. the other element is a stronger dollar. there is a strong correlation between the dollar and lower emerging markets sovereign ratings. it introduces additional external stresses. aboutwe have been talking
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the defaults and trading in portugal. what is right and wrong about that relationship right now? james: there is no saudi or government debt. it was not much of a market where saudi is. clearly, with a fiscal deficit that they had last year, which was 15% of gdp -- so in a fiscal deficit. that is going to be introduced this year. we are looking at a lower deficit dish this year. that was put on negative last august. there is definitely pressure, brought in to focus because there is no debt. manus: one of the big themes last year was shocked and currency and f x reserve. they abandoned, russia stopped intervening, and of course the chinese cap on supporting the yuan, burning through reserves at a negative rate for the first
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time in history. of those kind of sovereign names, who should i be worried about? russia, switzerland, china -- where do the big fx related sovereign plays fall? james: that is an emerging market story, as well. they don't have for exchange reserves. they do not defend currencies necessarily. it is a little bit different because they are going in the other direction -- defending it from appreciation not deep appreciation. don't burn through reserves come you accumulate in that scenario. think about downward pressure on the foreign exchange reserve, there is downward pressure on currencies, and we are seeing that in china, russia, a number of emerging markets. it does go through the external finances of the sovereign, and it can potentially lead to negative rating actions. he took russia down for that, for a number of other reasons, as well. anna: looking at your dashboard, does anything flash red for you?
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we talked about high-yield credit, and we happen to notice the corporate credit globally, looking at its weakest since 2009. you are a sovereign guy, of course. but do they flash red on your dashboard, do they were you? james: the same issues. it is a negative sovereign outlook, we have more countries on negative than positive. the ones on positive 10 to be idiosyncratic countries, specific countries recovering from the crisis and such. but the overriding factor is a strong dollar, what we do not think is going to go away. low commodities, which is not going to go away. anna: is that rare, to have more negative than positive? james: it is a cycle. we are in a bit of a downward cycle in terms of the sovereign. not rare, but it does happen when there is commodity price pressure. europe.hat is focus on
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pitch, the euro was about to throw them out with the bathwater in early summer. but we haven't a virgin story, something the first word team brought up, germany and france -- showing signs of being under pressure. when you look at europe from the sovereign perspective, how do i look at this divergent story? what is it that i should look at europe, in the context? james: it is an interesting year in europe. we were sitting here year ago talking about europe, and that was in focus, as you recall. you're talking about public finance, the fiscal stresses. eurobly greece exiting the zone. a year later, not talking about the same issues, more political issues -- migration, some of the stresses that is introducing. it brings up a number of those
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issues, as general issues in terms of european integration, the forces bringing together or pulling apart? a year ago, it was economic issues pulling them apart. now, it is political. not calling for a breakup, but a difference. political more than economic. anna: interesting, thank you for joining us. head of sovereign ratings. manus: land rover has come out top of the annual survey of the uk's best employee. 15,000 employees report. caroline hyde breaks it down. do you think i would be any good? caroline: welcome to you sometimes mention you like the luxury five. interesting, when you look at the numbers, 15,000 employees looked at by the study by bloomberg. in the top 50, it looks as though we are a patriotic bunch.
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top incoming out on the terms of employees, they are british. astrazeneca coming out second, harrods'coming out number three. gold, silver, bronze going to british bernese. roverg at autos, land coming on topic you also have rolls-royce. what really struck me is how well manufacturing is doing. the u.k. has been struggling of late it looking at the economic data. manufacturing, maintaining retail and wholesale trade also picking up a few rivalries, as well. had 114, well below its rival. nike at 11. it seems parents has come second. anna: caroline, thank you very
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much. we are joined by paul venable, his first interview after the committee reported earnings. company reported earnings. ♪ 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. it's our promise to you.
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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. exports just exports -- chinese exports beatin expectations. anna: oil bounces. wti rises after dropping below $30 a barrel for the first time since 2003. manus: jeffrey got lacked paints a pessimistic outlook for the year ahead. he warns of what could be a really ugly first quarter. welcome. it is "countdown."
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i am manus cranny. anna: good morning. i am an edwards. let's talk about where the markets are. asia-pacific equities as a whole, joining in the global rally. the chinese picture looks a bit weaker. we've got the futures that. -- up. manus: it looks like europe is playing ball. we've got london up a tense of 1% -- 8/10 of 1%. the dax is up 1.23%. we will hear more sound from jeffrey gundlach. he says stocks could struggle before there is a buying opportunity. that is slightly in line with what goldman said. talking about how it could be an ugly first quarter. let's see how all of this is playing out in currency markets as a result of the better trade data. stocks, bounce in asian
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and that is putting upward movement behind some of the commodity-related currencies, the aussie and south american land. let's recap oil. undersneaky cheeky peak $30 a barrel. manus: $10 oil is a possibility. we were left out of town when we said it would be $20 a barrel. atfrey gundlach says even $45, it's not enough to save the energy market. anna: let's get caroline hyde. caroline: thank you. china's trade surplus widened and exports recovered. the world's second-largest economy's trade balance increased to $60 billion, taking the full year tally to $595 billion. that has weakened the yuan. barack obama has used his final state of the union to call for a more noble politics, expressing regret at america's deepening
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division. he hit back at claims that the u.s. economy is in decline. president obama: the united states of america right now has the strongest, most durable economy in the world. anyone claiming that america's economy is in decline is peddling fiction. caroline: hours before that address, reports said 10 u.s. sailors have been detained by iran. senior administration officials moved to quell concerns over the incident, saying they had assurances from the iranian government that the sailors were being treated well and would be released soon. one of the market's biggest bears says there is more bad news ahead in the first three months. jeffrey gundlach, cofounder of doubling capital, warns that a potential "really ugly situation" will be more likely if the fed keeps on hiking interest rates. >> if the treasury market starts to accelerate on the downside,
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high yields are unlikely to rally, and the redemption cycle, we could be looking at an ugly situation during the first quarter of 2016. it is particularly more likely to happen if the fed keeps banging this drum of raising interest rates. caroline: for more on those stories, terminal customers can head to -- [indiscernible] manus: let's kick it off with a quarter for sainsbury's. the retail sales number comes in at 8/10 of 1%. that was in line with estimates on the headline, but if you strip out petrol, excluding petrol, a drop of 4/10 of 1%. the estimate was for a rise of 8/10 of 1%. over 30 million customer transactions in the seven days mince pies and your puddings. wellgupta said, we traded
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in a highly competitive market, and we've seen that. we are beginning to get a feel of what we did at christmas. total retail sales for the third quarter, paying in line with estimates. strip out the petrol, and it's a miss, and it's quite a significant miss for the uk's third-quarter numbers. anna: interesting that perhaps before christmas on winter coats, we didn't need them. we could have spent them on more food. let's talk about the numbers. the recruitment business giving us a 7% move in there like for like growth in terms of net fees. good overall growth of 7%. excellent growth, they described it as, 16% in continental europe, including a 14% increase in germany. we will have further analysis when we speak to hays in a few minutes time.
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manus: let's get into these markets. we have run you through the mood in crude and some of the matching nations in asia -- machinations in asia. david inglis, when we last checked in, we saw we were down on the shanghai. david: we do have two stories on the market. shanghai, that is doing its own thing. that dances to its own tune anyway. the rest of asia, on its way up. the overall sense i get is there is more risk appetite. a lot of these vicious moves in the past seven days have pushed some of these valuations to attractive levels, but not everyone is convinced that the moment. volumes are fairly flat. you had a few things come in. fairly good trade numbers out of china. the key take away is that trade activity picked up. exports increased on a yuan basis, and a weak currency was helping things along, which was confirmed by the customs bureau.
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the second thing was a fairly stable or unchanged fixing for dollar-yuan. let me show you the spread between the onshore and offshore rates, very narrow again. whether you like it or not, the pboc, through intervention, managing to impose some sort of discipline in the market, and what that has done is it has allowed these big fund managers to focus on something else. what is that something else? a 9% drop since the start of the year has created a lot of value in asia, and we are starting to see those stocks pick up. back to you guys. anna: thank you. that's the picture on the asian markets. meanwhile, china's trade surplus widened and exports unexpectedly recovered last month. for more, robert angrily joins us from hong kong. robin, good to see you. do you expect the trade recovery or export recovery to continue?
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is it a one-off or something sustainable? >> there are a couple problems with these figures. one has to be careful about being too optimistic. first of all, these figures are for december. december is a festive season. a lot of people consume christmas gifts, etc. exports may have risen in december, but whether that is going to be sustained is difficult to tell. on the other hand, if you look at what china has done with its foreign exchange rate, it has weakened the yuan by 5% since august 11. that is coming into play now, making chinese exports more competitive with the rest of asia. whether this will be sustained for a long time, that's the big .uestion
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december is kind of an off month as far as i'm concerned. anna: robin, thank you very much. anna:-- manus: robin, thank you very much. we have had the hayes numbers. . december is kind of an offit loo cut the debt. we have the cfo in the studio with us. caroline: let's get to him now, paul venable. he joins us for his first interview of the day. it's very early. let's talk about these results. tell us about them. you have had some tough comparisons in previous years to go up against. that is showing in the results. paul: there are two main stories in this. the first thing is, we've grown by 7%, and that is in line with market estimates. that's not a bad start. it's our 11th consecutive quarter of growth, significant growth across the whole of europe. we are up 16% in that market. a slowdown in growth in the u.k., 1%. focus we are going to
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around the world, but i want to go to one of your big markets, australia, your second-biggest market. growth of 1%. is that trend a worrying thing? this is one of your big generators. it's our third-largest bill -- business. it's positive. we have been sequentially stable for nine months. if you take west australia out of australia's results, we are at 8% overall. we have seen a strong comeback in construction property in sydney and melbourne. western australia, mining across the patch, impact on all activities. 38%. zero in a tough economy is not a bad position. it's positive. we have been sequentiallywe area business will turn to growth in the next six months, but it is going to be modest. anna: you describe that growth in continental europe as excellent, saying it's up 16%,
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acceleration of 14% in germany. we were talking to fitch on the credit side about the divergence we are seeing in different parts of europe, germany on the one hand -- richard jones is talking about this a lot -- the slowness of france on the other. what variation do you see across europe? paul: uniformly strong growth. we have had stability in the economy after a very difficult path, not just the global slowdown but also the euro crisis. we are the largest white-collar recruiter across europe. our growth accelerated to 14% in germany. engineering, automotive increase. i would not have expected that 6-9 months ago. the other positive is france. we are up 16%. the big trends are companies coming to us and saying, we don't necessarily want to take more permanent people. we've seen a big uplift in that
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contracting-type business. that's the flexibility of skilled labor. manus: let's talk about the u.k.. we got some dire numbers out of the manufacturing, production. numbers were disappointing yesterday and the u.k. george osborne warns that in 2017 -- 2016, there's a dangerous cocktail of new threats. what is the confidence level of recruiters in the u.k.? paul: let me give you a couple parts. it has been coming through since july. we see this before any other business. we talked about a start of slowdown in growth in the u.k. we've seen much more caution from clients. what is great for george osborne path,k about, the toxic
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this government has caused parts of that. if you look at the increased costs in the u.k. over the next four years, it is more than $15 billion worth of costs. manus: is there a recession on the way? paul: no sign at all. public debt, much more cautious. there are some cuts to do. growing by sector, 3% across the whole of the u.k., that there is greater uncertainty. program, andr surprise, surprise, coming into the start of this year, they are being more cautious. some anna: of the increase in costs is coming from staffing. you might be removed from the minimum wage story, but is that what you are referring to? paul: i do more than 50 breakfast seminars on year. i go around u.k., promoting my business. i was in manchester a few weeks ago. every one could say the
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incremental increase in cost of their business over the next to rethink weh can increase prices? no. sterling is moving against us. the real question for those businesses in two or three months time, will it start to pick up? if it does, growth will accelerate. if it doesn't, we are in for slower growth this year. manus: talk to us about wages. the great productivity conundrum, whatever it is -- wages are going to be important. you say, give me more fixed term contracts. where is that playing out in terms of wages? 2.3%. give us the feed-through from employers. where are the squeezes? are there wage pressures in the u.k.? paul: there are always specific areas of wage pressures, and the two main ones are anything construction or property-related.
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you are this beautiful time for high school employees. -- high skilled employees. i have to tell you though, outside of construction property and other things like a to and compliance, the wage prices --pressures of started to reduce. why? there is no inflation. employees have got to move or push to get a rise. that's my earlier point. companies are going to face an increased cost. a year ago, i was talking about an increase of 3% underlying wage inflation in the u.k. i think it's going to be 2% at best. we anna: talked about various parts of the world. anna:let's talk about china, both the specifics of the and how much it is
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weighing on the markets. is this affecting your recruitment business, and indeed sentiment-wise, is it affecting those parts? paul: and the u.k., we've got more than 200 consultants. in china, we have 100. we have exposure into the manufacturing sector. we grew by 13% in this quarter. across asia, there's a little bit more caution, mainly in the banking area at the moment. we are seeing good opportunities for growth. there is not the froth on the market that there was a year or so ago. it is still good for us today. i'm not sure the western recruitment companies are big enough to be a good insight. the intelligence we get is that our clients have skill shortages . there is still opportunity. i don't see a slowdown. i think there are other parts of the world that are more difficult. manus: we are going to bring you back to her day job, which is about managing the risk within the business. australia is a big business.
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you are in 33 countries. currencies are really weighing in terms of a lot of people's performance. is it going to weigh on hays' numbers? paul: i couldn't care less about currency. our shareholders know the numbers. we disclosed every single quarter -- disclose every single quarter with the impact of currency is. manus: it will affect your numbers. paul: of course, it will. we benefited several years ago. we are getting hit now. who cares? all the investors will compare how we invest against our competition. are we growing the underlying business? if we are doing that, they will be happy with us. if not, i will be removed. anna: paul, thank you. paul venables, finance director at hays. manus: let's get your day ahead. you're going to hear from several fed voices within the
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next 24 hours. governor edd boston rosengren gives his economic outlook. anna: then we hear from charles evans. anna:we will get the central book's beige book at 7:00 in the evening. manus: you don't want to miss this, bloomberg's interview with dallas fed president kaplan. his views on the economy at 1:00 london time. anna: oil bounces, crude recovers after a slide. have we hit near bottom on the oil prices? we ask those questions again when we come back. ♪
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anna: 7:21 in london. let's get to caroline. sainsbury's reported third-quarter sales that slightly beat estimates and said it second half performance will improve on the first half. fuel.fell 0.4%, excluding
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air resources board rejected volkswagens proposed engine fix. the news will put more pressure on ceo matthes muller who is scheduled to meet with u.s. regulators to discuss ways out of the crisis. telefonica has agreed to pay 2.4 billion euros for spanish football rights. the deal includes the spanish first division and the european champion. for more on those stories, terminal customers can go to top go. manus: thank you very much. caroline is going to stay with us. you're watching the market did below $30 -- the oil market dip below $30. let's hear what jeffrey gundlach told investors yesterday. perspective,hnical maybe a short-term bottom in oil, and when i was watching financial broadcasting today, it had the feel of a reversal kind of moment. anna: good to know that jeff is
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watching. caroline, you have been watching the latest on the oil sector. caroline: an interesting perception coming from the company. it's not a pretty picture. we are seeing sales down 26% for the year. $1.6 billion in revenue. cash, $1erating billion. how many more in the industry are being helped by significant hedge programs? , forf their 2016 oil sales this year coming, are hedged at barrel, more5 per than double where oil is currently trading. the hedges are coming to the rescue. they are about $70 for 2017. tullow is managing to protect itself, managing to have a $1 billion cash flow, but they are having to cut capital expenditures. they say they are going to cut it $1.1 billion.
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it's going to come down even more if they can. is $6 million less than last year. write-downs, $400 million. post-tax impairment charge, $300 million. onerous rig contract charge, $200 million. pain, pain, pain for these oil companies. manus: caroline, thank you very much. let's get into some of the breaking corporate news. sainsbury's has slightly better numbers. shame on me. i was trying to get it -- through it too quickly. andrea feltz it joins us. she is our columnist on retail. andrea: slightly better than expected. well overs does christmas. no exception today. anna: it seems to be one of the trends we see around this christmas period. andrea: we have sainsbury's
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always doing well over christmas. a lot of that was coming from alcohol. one trend we've seen over the last couple years is people haven't moved away from the discounts at christmas. they have introduced premium food, lobster, and we have all bought them. lord, do i know that we bought them. anna: i was responsible for the booze. manus: i've had a few minced pies and sweet food. disinflation, pricing is still hard. andrea: yes, indeed. we have this vicious price war. manus: is more to come in 2016? andrea: we could see more to come. andrea:there are forecasts of deflation falling, which should less.d, but i can't see
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anna: there is some m&a in the future and the crystal ball for sainsbury's? andrea: right now, they have approached home has been rejected. other people thought there might be another bid today. anna: they have until february 2, don't they? then the u.k. takes over to announce whether it's going to make an offer for home retail. would it make sense? .ndrea: it will help them they get a lot of high street stores. that is one bit that doesn't make sense. you can do what they are doing without buying home retail. anna: i remember when it used to be sainsbury's home base. manus: oil made it below $30. $20 was left that from city analysts. standard chartered, talking about $15 oil.
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equities opening a few quarters of one thing percent higher in london. anna: we will leave you with the "on the move" team. see you tomorrow. ♪ we live in a pick and choose world.
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guy: welcome to "on the move." we are counting you don't the european equity open. i am guy johnson. here is your morning brief. oil bounces. wti starts to rise after having one touch under $30 a barrel overnight. surplus come exports jump, in a burst for the yuan. shanghai has now sold off. bearish bets. jeffrey gundlach paints a pessimistic outlook for the year. he warns of what could be a "really ugly" first quarter.


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