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tv   Countdown  Bloomberg  January 14, 2016 1:00am-2:31am EST

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anna: stocks plunge, as the asian equities follow the u.s. market. and the u.s. small caps enter a bear market. the first time in more than a decade, oil trading at its widest discount in a year. anna: in a bloomberg exclusive, the barclays chairman says a brexit would leave the city of london significantly worse off. manus: good morning. this is countdown.
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anna: welcome to the program. 6:00 here in london. let us get to the markets right now, investors are nervous, we are now have these explosions taking place in jakarta, at least four killed, and we see the indonesian leadership gathering to consider what is happening. the biggest attacks since 2000 and nine. investors were nervous already. the s&p 500 falling to the lowest in three months, down 10% compared to the november the third peak. asian stocks hitting a three-year low. manus: the moves in the china stocks, right at one trade day, let's talk about how you actually trade these markets fared there is intervention in the yian. you cannot sell it because you have the pco be against it. the aussie dollar had the were starts in 2009. we saw the reserves in china
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dropped by $100 billion. this is the most liquid proxy, % chance the aussie dollar will drop. and look at the hong kong dollars on the bottom of your screen. the currency sinking to a 10 month low. speculation that there will be de-peggin. this could be the scene for 2016. they're a bit volatile this morning. s,na: breaking new third-quarter sales ahead of last year -- 1.6 one billion euros. they're saying the outlook is unchanged. watches, you think iwc this is the house of hard luxury. they say that third-quarter sales actually come in at $2.93 euros. this would be a drop, the first drop since 2008.
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and in terms of the world, the asia-pacific falls by 9%. we will break the numbers later on. anna: that is get the bloomberg news. nejra: russia's finance minister has explained how the oil price means he has to impose tough austerity measures on his country. speaking exquisitely to ryan chilcote, he said the measure totaling $20 billion was needed to avoid a shortfall of more than 6% of gross domestic product this year. >> the state finances have not adjusted to the new conditions we find ourselves in, and we can expect the devaluation of our currency. this was the case in 1998, 1999, if we do not take the right decisions on the basis of our financial prospects. anna: we will also speak exclusively to the bank of russia's deputy governor at 9:40 london time.
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the chairman of barclays has warned that the impact on the city of the u.k. vote to leave the euro. the deputy chairman of the financial services body spoke in an exclusive interview with bloomberg. >> the question is, will it be much better or much worse? our opinion, it would be significantly worse. nejra: crude is trading around $30 a barrel, as the route moves closer to exacerbating a global glut. london slipped below the $30 mark since before april 2004. that was amid sanctions on iran may be lifted on monday. at least four people have been killed in explosions and gunfire in the indonesian capital of jakarta. continuing to battle gunman in the biggest attack in the city since 2009. at least one explosion occurred
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near the united nations office. at least three others were felt near the u.s. embassy and the central bank. that is your bloomberg first word news. anna? manus: let us get into a little bit of news. major sizable energy deal of 2016, norway's company is buying 4.6 billion stake in london. this is a minority stake. but is the first major deal we saw come through. anna: that is 11.93% stake. a lot of people talking about whether the weakness in the oil price was going to allow the deal to happen. shale in the last year or so, we have more of it in 2016. manus: we consider it a long-term shareholding. more on this story, good morning/ . breakingesting the
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news in the asian markets, juliet is standing by. bring us up-to-date. juliet: absolutely, and a menace. good morning. i want to show you the indonesian currency, this is the last couple of hours or so just before mid-day hong kong time -- so two hours ago. we started the year reports of the explosions in jakarta. you see the falling quite significantly by the dollar, down by 1%. expected to hold the rate policy meeting today. as far as we know, that is still going ahead. there was already fluctuation in the currency, but certainly these explosions rocking the currency market. the indonesian market, the jakarta composite, with down by 1.7% on the lunch break. dropping from where it was holding before we heard reports of these attacks. it will come back on line for the afternoon session at the bottom of the hour. elsewhere, though, it has been a big day of selling in japan.
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down 2.7% on the close. of course yesterday, japanese forks had their first win 2016. that rally looking short-lived come on the back of what we saw on wall street. and of course that falling oil price. the weaker price also falling into the australian market. i want to show you the shanghai composite in china. again, suspected intervention coming through into these markets. in the afternoon session, it is now up by one points x percent. this morning, we saw the shanghai composite desk thinking it was going back into bear market territory. down 22% from the highs we saw and it were, trading at the lowest closing levels i should say since the august 26 equity rout. a lot of suspicion and that market here in hong kong, losses also paring back in the last half hour or so of trade. we had only one or two stocks on the hang seng index in the black
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aeate now we are seeing a turnaround in the airlines. late trade down by one half of 1%. it has certainly been a very busy day, to say the least, here in asia. asian equities dragged lower by about 4. thewe will be watching indonesian market when it comes back online, following these reports of explosions and the capital. back to you. manus: thank you very much. volatility in the psychology of markets is in play for juliet. let us talk about the world in 2016, i caught up with sergio yesterday who says none are spared. sergio: all of our supplies are going through a huge amount of volatility i don't see any asset classes be immune from volatility. anna: we are joined this morning by michael rake, chairman of the group, amongst other positions
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that you hold. mike, great to see you on the set this morning. sergio talking about how no asset class is being spared. you said on a number of boards across the globe, very much the detail of the volatile markets. a have been volatile since the start of the year. is this making waves in the boardroom? michael: there is volatility, economic and geopolitical. to be honest, businesses have to live with a lot of volatility for the last decade. i think this is a twisting to what we have to do. on the board rooms i sit in, we are looking very much to the future. we are looking at investment plans, not being put off of course by these issues. clearly, there are implications in the oil price. but i think those are things that are actually important. and we should remember, too, that the american economy is growing. there is recovery in the eurozone, which is helpful. it is not all negative. china i believe is in a
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transition which will cause some pain and uncertainty. i do not think it is -- we are going to have to think little bit medium-term on this. manus: it is interesting. george osborne warning us we are facing a cocktail of risk. that encompasses a broad church. the odds of donald trump winning the nomination in the united grade comes up at 34% when you think of 2016, i mean, what are your biggest debt when you finish the former board meeting, you look at statistics like this, what are you worried about? michael: clearly, there are geopolitical issues that worry us. we really would like to see as businesspeople, there has to be some solution to the situation in the middle east. when we look at what is happening in libya, syria, we look at the immigration debate problem, critical issues arising from that. these things are very disruptive politically. we are very concerned when we see moving to the left and the right, when we the a movement
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that when we move for a period of time, it there is much more consensus. we see that separating a bit from a to the left and right. it creates instability or inconsistency of policy. business does not like that. anna: some of that driven by china, arguably because of the actions, rightly or wrongly, being taken by authorities and regulators. when you sit on boards, do you look at how the chinese are managing their economy? the transition they are trying to bring about, are you worried about how that is going, or does it give you hope for the medium term? michael: there are schools of thought about china, something there argued problems that will come on. others say hold on a minute. in the last nine months, the chinese economy has grown nearly 7%. from production to consumption, they need to adjust to a full market economy. they need perhaps to learn to let their markets operate without sometimes intervention,
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it can cause you more problems than just letting it go. and i do not get -- i think i saw your figures this morning. the chinese markets are still up, even down 12 months ago. they may be got too hot, as there is a period of adjustment. learning to deal with that in a way that does not cause a loss of confidence is part of the challenge. manus: that confidence is the critical word here. the psychological view, i read a great line yesterday from jeffrey gundlach. capital preservation is what the markets will be about, not about making money. does that transfer of the tree into the boardroom for you? michael: the companies i am involved in, we are very clear. in my personal view, when you look at what happened in 2008, sometimes you forget that too quickly. a strong balance sheet is very important. in uncertain times like that, you have the lines of credit, the balance sheet, the ability
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to withstand shocks you are not expecting. let us take oil. no one foresaw this collapse. why not? it was quite obvious some areas were slowing down, some more efficient use of oil and fuel. more green energy coming through, we knew the americans were producing shale. it was a shock. and actually, that has negative reproductions. similarly on foresaw this very long period a very low deflation with low interest rates. we have to learn to live in this environment. and we will have to learn to be able to come in the way to the banks are being required to strengthen their balance sheet, withstanding the shock. being corporate with stocks globally, the need to assess the risk to make sure they can absorb the shocks, given whatever their particular business are. anna: mike stays with us. manus: the balance sheet.
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let us get your day ahead for you. time, germany publishes a report on economic growth for 2016. anna: we get a bank rate decision from england. and that 12:30, the ecb will publish an account of its december meeting. the deep tales there. brexi.the next on t. bloombergland tells why he considers staying in the european union. ♪
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anna: welcome back. it is 6:17 in london. let us get the bloomberg business flash. nejra: norway has bought a 4.6 billion stake in the rival in london grade and accounts for almost 12% of london's stock.
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it increases the in direct exposure to core assets on the continental shelf. goldman sachs is considering cutting more than 5% of salesman. according to persons with knowledge of the matter, it could come later this quarter, as it contends with an industrywide revenue slump. the new york-based investment bank will make a decision after evaluating client activity. australian conglomerate has inered to buy a home company the retail group. it would give them 265 improvement stores. it comes as they are considering making a formal offer, which will cost around 1.2 billion pounds based on the current market value. the barclays chairman believes a brexit would damage the finance sector. john mcfarland says london would be in a, i would toss back here to you guys.
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manus: thank you very much. the barclays chairman believe that brexit would damage the finance sector. john mcfarland, who is also the chair of decision u.k., says london would be in a significant league worst position if they leave. anna: he told our colleague that they need to hold a referendum sooner rather than later. john: the one thing businesses cannot handle is uncertainty. and, of course, this has brought a significant amount of certainty about what happens. in timing, we don't know what the timing is. do not know what the effect of negotiations is going to bring. we do not know what the outcomes are going to be. and in the event that there ever was a vote against, there is a two-year period where uncertainty has to excite yourself from the situation. and so, in particular, financial
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services was such a dominic sector in europe, it provides a lot of uncertainty. and you know the truth of the matter is the rest of the world actually wants britain to remain in the eu. the u.s. in particular, but also the far east. >> what are their concerns? we had a report out yesterday arguing the city financial services would thrive outside the u.k., it would thrive outside the eu. is there a case for that? john: i think the city of london will thrive. financial services in the u.k. will thrive because there is such a large segment. the question is will it be much better or much worse? and our opinion is it would be significantly worse. >> why? risk,because we run the we have this free trade that we get this benefit from. i mean, for my own company, which i am not really talking
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about today, but we do not have large businesses in europe. but we have very large activities relating to europe in the city of london. and that is true of many of the organizations. the foreign organizations in london use london as the main access to europe. and of course, we do not know what the impact of withdrawal would be on that. anna: that was of course the chairman of barclays, john mcfarland, speaking on the brexit. mike is still with us in the studio. mike, when you listen to the comments there, which i am sure you welcome because you have talking about the u.k. staying to martin we spoke gilbert about asset management earlier on this week. he says it would not be that damaging for our business. brussels needs to stop when
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all of this extra regulation. michael: part of it is timing. decide tok, if we leave the eu, nothing would happen immediately. there is no immediate close down or loss of jobs. what would happen, as john said, was a minimum of two years of significant uncertainty, what trade would exist. or is no easy option to an alternative to the european union. we had options in 1975 when we first came in. today, there are very much less options. all of them come with costs. if you want to have this market of 500 million, which we can the 60 oddether with treaties with the rest of the world, and you want to leave and be in norway, switzerland, or turkey that's to be part of that market you have to comply with the rules, including migration, all of the regulatory requirements. you have to contribute to the cost and the norwegian case. and you do not have a say. so i think it is fundamentally flawed to think there is an easy
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option to this, or that politically, the rest of the eu would be seeking to do us a favor that they have not done for any other country. manus: we had richard here on monday. he is anti-eu. idea, heought up the said do not be deluded into thinking that the traits get negotiated quickly, easily and to the bearer advantage. the reality of negotiations -- clear, thet me be business would like to see reform. we support the prime minister. by the way, i can tell you that aroundthe cbis, 28 europe on a want reform. he need to be competitive. we need the eurozone to be competitive. it is a market we can access. , toe is a huge alignment complete the single market, open services up more effectively, get the digital market working,
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reduce the regulation that irritates people read and by the way, is also unnecessary and unhelpful. it creates flexibility. those are huge. and i think we need, with whatever reforms the prime minister can gain, to get behind that. and to engage constructively within the european union and its institutions, which is a pragmatic country to do things over a period to improve this 500 million people market. and to get more trade treaties done, like with the united states, which is hugely beneficial to the united kingdom. anna: john mcfarland was arguing we need referendum sooner than later. is that the case? is the timing a matter? we will see a reduction of investments in the u k, particularly in scotland because of the brexit and the referendum. michael pollan to be honest, let us be clear. we had significant investment in
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this country during uncertainty. people are convinced that common sense will prevail and we will stay. but there is artie been some loss of investment. not huge, but there will be more if they start to get into where it looks seriously we might lead. period ofs uncertainty coach john rightly said, should be minimized. the prime minister said there is another issue that has be dealt with. but i very much hope that he can come at you know, gain an agreement in february on some of the key issues that would help. absolutely, it is a political decision. it is not a business -- they would prefer to get this out of the way. manus: he is losing the battle with the british public in terms of the media over this whole stumbling block. you know, benefits for migrants, it is just trouncing everything. how would you advise them? michael: first of all, i am very sympathetic to that view.
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in business, we believe migration isfor this country. studies show that. immigration is what we need, high end. we are not getting enough. and we conflate all of that with the refugee problem, which is caused by instability in the middle east. all that does great a real political problem, which we absolutely expect. but we could not in our country, with the demographics that we have, london would not run. tourism would not run. the national health service would not run without the migration that we have. but we have to find methods of dealing with a real concerns about early benefits. anna: thank you. mike stays with us. we will update you on what is going on in jakarta. manus: we give you news from jakarta, police continue to battle gunmen after at least four people have been killed in explosions and gunfire. we will get more from the indonesian capital in the next couple of minutes. anna: up next, eurozone
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stimulus. details fromleases the december meeting, look at how it is impacting the economy of the region. that is next. ♪
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manus: it is 6:30 in london. time for your bloomberg first word news. people haveast four been killed in explosions and gunfire in the center of the indonesian capital of jakarta. police are continuing to battle gunman in the biggest attack on the city since 2009. at least one explosion occurred near the united nations office. local media say three other explosions were felt in an area near embassies and the central bank read crude trading around $30, as iran is exacerbating a global glut. london oil slipped below $30 of first time since april 2004.
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that was amid sanctions on iran may be lifted by monday. russia's finance minister has explained how the oil price means he has to impose tough austerity measures on his country. speaking exclusively to bloomberg's ryan chilcote, he said the measures totaling $20 billion are needed to avoid a shortfall of more than 6% of gdp this year. finances are not adjusted to the new conditions we find ourselves in. we expect big deficits, inflation, and the devaluation of our currency. that was the case in 1998, 1999. if we do not make the right decisions regarding our financial needs. nejra: later in the morning, we speak exquisitely to the bank of russia's deputy governor at 9:40 london time. the chairman of barclays has warned the impact the city will face if they vote to leave the yoeu.
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that was an exclusive interview with bloomberg france. john: the question is will it be much better or much worse? in our opinion, it would be significantly worse. nejra: and that is your bloomberg first word news. for more on those stories, terminal customers can head to top go. anna: at least four people have been killed in jakarta. let us go straight to the indonesian capital for the latest. chris is there. this is an ongoing developing situation. what can you tell us? chris: well, i think it may be coming down a bit -- about two hours ago, at least three explosions occurred outside a shopping mall. a resizable, but not massive. people were killed
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rate we do not know their identities yet. really in the central shopping district, just outside in close to a mcdonald's, starbucks, the u.n. office. there have been no claims of responsibility. but i suspect that initial speculation will focus on islamist militants. indonesia has a long history of attacks by islamic militants. if this is the case, it would be the most serious in the capital since 2009. manus: you said this is the biggest attack since 2009. give us a sense of the response so far from the government and from the authorities. is is outl, president of the city today. he is about four hours away by train. he is coming back rate people that a statement condemning the attacks, saying he was stunned by whoever the perpetrators were. police have announced an alert for they are aggressively patrolling the area around where this took place. there were early reports that a gunman or more may be holed up
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in a building overlooking the attack site. those are still unconfirmed. falsewas quite a lot of reports floating around in the immediate aftermath of the attack. there was talk of a paris-style swarm attack around the city. that does not seem to have happen. it was in one area. police have mentioned there was perhaps a grenade attack on a motorbike, hurling these devices as he drove through the central thoroughfare. a serious incident here in jakarta. anna: chris, thank you for the update. manus: let's turn back to central banking. the ecb releases the december meeting later today. last month, the announced fresh stimulus packages which failed to excite investors. that would be an understatement. anna: perhaps so. market turmoil spreading from china, spreading for the ecb to take further actions.
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hans nichols joins us from berlin. what are investors looking for in the report that the ecb will put out later today? hans: well, clarity. we will get the minutes from that the december 3 meeting, where mario draghi disappointed. investors may found out just how much mario draghi was constrained by that faction of hawks. we think from our own reporting, it was about five members that prevented him from doing more. maybe on the negative deposit rate of olivia down from 0.3 to 0.4. need to look at the data out there, i want to talk about five-year forward swaps, a good indication for inflation expectation in five years time. when you look at that, it is the lowest since october. that is spurring some speculation that the ecb will do more in their march meeting. adding to all of this conversation, we had an op-ed, he is talking that i will give you the basic just -- saying that low-inflation growth in
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that outlook is clouding longer-term outlook. or is no move away from that 2% goal for price stability. here is my favorite quote of the morning. it comes from david bloom, a friend of the show. here is what he has to say about currency going forward. over-egged fed has the putting. others have raised rates and failed. when that is been recognized, they have fallen like a stone. we can talk currencies, we can talk bond yields. i think most important question, theanna ever over-egged pudding. anna: you are not doubting my culinary expertise. good with does very savory. anna: that really hurts. let us move on. i think we should. our audience might be more interested in german gdp. the expectation is for
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1.7%. whatll get an update on they think the fourth quarter has been like. remember, this figure is not going to include the month of november. where my theory is that the christmas shopping went mad, and that will not be reflected. that is speculation on my part with like i speculate that manus has never actually made a pudding. manus: i don't know what the correct response is to that. anna: sounds like a shopping allegation. hans, thank you, i think read breaking news -- the french retailing business talking about seeing a clear margin improvement in 2016. it is interesting because this is a business under attack from activist investors from the u.s. we are joined this morning by the chairman, mike rake. not commenting directly on casinos, the role of activist investors in the board room, compared how active they are in the u.s. with europe.
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in europe, he says investors are not demanding enough. they do not ask tough enough questions. michael: clearly, the activists are very much more in the u.s. in the traditional sense to me are in the u.k. but i do think here, when you have the right engagement with the shareholders, it is probably done more quietly and privately by direct engagement discussing strategy. i do think that activists are a part of the process of challenging thinking, your shareholders are there to do that. and i think it is wrong to sort of rebuff an automatic reaction their views. they are very interesting, worth considering. manus: let's bring it closer to home. ahead, this is what everybody in the city in the marketplace is asking themselves. engage?cal should they does it need to turn itself, go
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back from fixed income? actually, i'mnk, speaking from berkeley. i think barclays is and ask an organization, important to the u.k. it suffered all the problems the industry has come and its own problems. it has been eight years. i really hope and believe it is coming to a point where we are getting through that. it has a very clear strategy, i think, of being an important bank read with operations, retail card operations. with investment banking activity of a london and new york, which is much more about advisory exit you shouldn't, not in the consumer banking come it has been cutting back in the european union. in thein the u.k. and u.s. them with access to tokyo in the far east. i think the strategy there is beginning to become very clear. we still need -- i should not say that. barclays still needs work to do on a balance sheet. i think that is an outstanding
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g appointment. we continue to reduce the size of a balance sheet, as reduce the activities. but having a valuable and valid investment in ability, as well as a very strong retail and corporate card. anna: when you look at this business, what it does and where it doesn't come you talk about where the restructuring will take place. as a still work to have an asset business attached the barclays? michael: that is certainly something for barclays to answer. i think it is the board that will judge the future of africa. clearly, if you take a long-term view, africa could be very, very important. five of the fastest-growing economies, barclays has a very good position there. it is suffering in south africa economically. but i think the question becomes around priority, capital, those
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issues. it is a good business. and i think the board will continue to keep under review its africa position, and how to handle it. manus: let us talk about remuneration. it is that season in the city. suisse,ceo at credit the business is structurally quite profitable. provided they can go up and down. but they do not accept referring to bankers in the securities unit. where are we in this? is it a battleground for running banking businesses? do we need a business model that is more flexible, in terms of reiteration? all, just as aof preface, i think the remuneration structures we have are far too complex, which we can debate at another time. in relation to the bankers, there is absolutely no doubt that the view to oversimplify the situation -- this
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combination of policy failures, regulatory failures, and remuneration policies that the toks take advantage of expand. it is clear that the structures, frankly speaking, led to some pretty bad behavior. particularly trading at upper levels, and that clearly has to be dealt with. and it is, and there is a significant sort of reduction occurring. having said all that, it is very clear that you have to pay for the global skills that you need running these organizations. and you undermined you're a self if you do not have the right skills and you have the right jobs in london, the tax revenues we like. but it went too far in terms of the position. the: when you look at amount of regulation surrounding the banking sector, looking at the sector as a whole not barclays, do things change? do you think the arrival of the majority consensus, there is been a lot of talk in the press about whether the conservatives are changing their attitudes towards the banking sector. in the second half of this year, is that a vibe that you
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recognized? michael: i don't want to get into the debate of leave the bankers alone. i think you'd reforms have taken place in the banking sector. capital has been hugely increased. there have been massive cultural changes to try to adjust to the remuneration behavior, get out of proprietary trading. unfortunately, there are some very significant legacy issues that continue to go. some of them are very mplex and there is a very complex environment in the u.s., whether litigation and the department of justice. here in the united kingdom, these legacy things come to the news. i think it is a bit unfortunate because we need to move forward more the banks are seen to be doing what they ought to be doing -- corporate accounts, private accounts, investment banking, advisory. i am afraid that, most people privately, they would just like to see the thing go quiet. banks get on doing their job properly for all of their customers, treating them fairly.
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we continue to get this news that creates the heat, i am afraid. manus: one final one in terms of china. very briefly questioned should that be a core part of barclays expansion into asia? michael: listen, again, i can't really -- from a business perspective, looking at the markets and my knowledge of the, i think the focus would be at the moment on london, new york, tokyo, perhaps hong kong. shanghai you know. but really finding global climates at the state using capital into expansion in china would be by purely personal view. anna: mike thank you very much. he stays with us on the program. manus: up next, russia and oil rights that our exclusive interview with the finance minister. we are live in moscow. ♪
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anna: welcome back. 6:47 in london.
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we want to update you on jakarta. the police say that the four attackers have been killed, after explosions and gunfire in the indonesian capital. it is the biggest attack since 2009. nejra: goldman sachs is said to be considering cutting more than 5% of its fixed income traders. according to a person with knowledge of the matter, it could come later this quarter, as it contends with industrywide revenue slumps. the new york-based investment bank will make a decision after environmen evaluating clients. is just over 37 million shares, accounting for more than 12% of london stock. the deal increases the indirect exposure to core assets on the new region continental shelf. gopro tumbled after the company released luminary 2015 sales that fell short of projections.
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it is cutting 7% of the workforce. shares slumped by more than 70% last year. that is your bloomberg business flash trade or more on the stories, terminal customers can head to top go. manus: as the government take stock of the public finance, a new decline in oil prices. 30% from last by year. ryan chilcote spoke a susan li to russia's finance minister. why they aresking facing a crisis like the one they saw in 1998, if it does not cut spending now by 10%. >> in the state's finances are not adjusted to the new conditions we find ourselves" we can expect big deficits, inflation, and the devaluation of the currency. that was the case in 1998, 1999.
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if we do not make the right decisions regarding our financial needs on the basis of our financial capacity. in 1998, the budget revenue parameters were cut by 10 percentage points relative to gdp. that occurred because in real terms, the budget happened all on its own -- out of our control due to deflationary devaluation, and the salaries and the infrastructure spending. we should not make the same mistakes. we must revise the budget to meet the new conditions. ryan: there are an awful lot of the parts of the budgets and cannot become. from the military, the social sphere -- would it make sense to change the rules? cut in those areas, as well? >> for now, we have decided not to cut defense spending. we will see how the situation develops further. what i want to say is that, in 2016, we have a chance to make
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it through the year grade but we have to think beyond that. you're going to have to to think about 2017 and 2018. we have enough reserves for the year, this year, we need to make the decisions that will allow us to balance the public finances in 2019 and beyond. manus: let's bring in ryan chilcote, in moscow today. you just did that exclusive interview. well done, ryan. rumination, 1998, that was a the ugly year. that was default, inflation the got way out of control. ryan: yeah, that is right. i think that the finance minister sees his job is sort of warning both the kremlin and the russian people that the budget is based on $50 a barrel. we are at $30. if we do not cut, we will have huge problems for maybe even as large as the problems we saw in 1998.
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remember, the kicked off with black monday, they defaulted on their debt. greatere fell threefold or was huge inflation, and are never those pictures of the people standing in line, fighting with one another as they waited to try to get their money out of the banks? the banks had collapsed. he was trying to say we have to do this in an organized way. it is a bitter pill, we have to take it. otherwise, bad things will happen. he was talking about the deficit in which they want to come in at about 3%. if they don't do what we need to do, it will definitely be double that. anna: on that subject, is cutting spending by 10% enough to rescue the budget? ryan: no, and he said that. he said that cutting spending by 10% would only go about one third of the way, a little over half a trillion rubles, if they are lucky. they need at least 1.5 to hit that 3% target. so they need asset sales, they want to sell away 20% takes in
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the largest oil company. bp as 20% stake in it. i think some people may not think that is realistic read it will have to use the reserves. at the rate they are using now, they will burn to the main reserve fund by the end of the year. going forward, they will scrape through this year. but even tougher decisions are to come, the have to be made this year if they want to save their bacon and 2017, 2018 and beyond. back to you. manus: saving your bacon. there is a whole new concept. great interview, ryan. keep the coat on. anna: brian speaks to the bank of russia's deputy governor 8:40 london time. is still in the studio with us. tell us about your priorities, the strategic priorities for the business. lots of talk about. you have done some already, but more to come? michael: the number one issue is
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pretty the acquisition, which we hope to do in the next few days. there will be a conditional clearance because we will create a strong, converged mobile business will be good for the u.k. and investment. we will support this very important role that we are doing, to accelerate -- which is something everybody wants today. hires feeds, and that is critically important that we complete that in the next two years. those are very important to us. arenext question, we waiting on that review, we will see the outcome sometime in february. the 10 year agreement we had on the functional separation data that is obvious the something we have and working hard on. manus: on a scale of worry, 0-10? say is a bitmight like the european union, i believe that common sense will prevail. and that functional separation will be hugely beneficial for the united kingdom, in terms of
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one of the highest average beads. the demand is greater than anticipated. but if we have not done it in 2008, no one would have. k, how the e and the u aggressive? what is the risk here? michael: which deal, sorry? manus: the 302. michael: i mean, look, i am not involved in the deal in any detail. but it is very clear that the brussels commission is looking very clearly and what constitutes competition. you need three for competition. that is a general position. some saying you need four. it is very clear that the brussels commission and the new commissioner are looking very closely at all mergers, re-challenging that sort of assumption. anna: there is lots of talk
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about weather channel 4 might be privatized great you have been dipping your tell into that, you like tv. michael: we are very pleased with what we have done in television. we think we greeted a lot more competition and choice, it has helped our retail sector grow. vent is pretty strong great we will look at the marketplace, look to further strengthen our content offering and our television offering. we will need to work on the triple play, people are increasingly looking towards that. anna: thank you very much for joining us. us: up next, the jakarta attacks. all of the latest news on the explosion at the center of the city. we are live to the indonesian capital. anna we leave you of a live shot: of london. it is still dark outside, of course. 6:56 in london.
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and we open up on these markets, we will get an update for you on the asian section, all of the stresses and strains. and we will take a look at where the pound is trading. ♪
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manus: stocks plunge. asian equities follow the u.s. market. the nikkei has its worst day since september. u.s. enters a bear market. anna: brent unravels. dipping below $30 for the first time in a decade. manus: better off together. in a bloomberg exclusive, the barclays chairman john mcfarlane says brexit could leave the city of london significantly worse off. anna: and jakarta explosions. seven killed including for terrorists on the worst attack in the indonesian capital since 2009.
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manus: a warm welcome to the show. london,'s 7:00 here in which means we are getting breaking news, including from tesco. their international comparative sales growth was at 4.1%. the comparative sales growth came in at 2.1% for the six weeks to january the ninth. they are also saying customer transactions are up 3.4%, volumes of 3.5%. u.k. comparative sales growth of 1.3% in the christmas period, christmas group comparative sales went up 2.1%. we are waiting -- we have the christmas numbers and third-quarter numbers coming in as well. breaking news on burberry. manus: yes, news on burberry. sales unchanged. the estimate was for a drop of 2%, so that is beating analyst estimates.
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603 million pounds on the retail. the estimate was for 606 million pounds. the critical thing is we were looking for a drop of 2%. that is very important. they are scaling back store openings and cutting bonuses. if you think about china's slowdown in the traveling tourists of burberry, that is the challenge. anna: third-quarter numbers are more backward looking, but the third quarter numbers at least investors had expected it down by 1.5% in the third quarter. the estimate was down 2.5%. let's get the first word news. here's caroline. caroline: thank you. police in jakarta say seven people, including for attackers, has been killed in the city. at least one explosion occurred close to the united nations office. local media reports that three
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other explosions were also felt in the area near a number of embassies. the attack is the biggest in the capital since at least 2009. brent crude is trading around $30 a barrel as iran moves closer to boosting exports, exacerbating a global glut. london traded oil slipped below $30 for the first time since 2004, amid speculations sanctions on iran may be lifted on monday. russia's finance minister has explained how the oil price rout means he has to impose tough austerity measures on the country. speaking exclusively to ryan chilcote, he says that measures totaling $20 billion are needed to avoid a shortfall of more than 6% of global domestic product this year. if the state finances are adjusted to the new conditions we find ourselves in, we can expect big deficits and the devaluation of our currency. that was the case in 1998, 1999. if we don't make the right
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decisions, there is financial catastrophe. caroline: the chairman of barclays has warned of the impact on the city if they choose to leave the eu. in an exclusive interview with francine lacqua. >> the question is, will it be much better or much worse? our opinion is that it would be significantly worse. caroline: for more on those stories, had to manus: thank you very much. let's give you a quick snapshot of the trading day. some major stats for the u.s. session as well. europe is opening lower, down over 1% in london. off, down over 1.25%. caroline: so there is the
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expectation of weakness in new york, after the s&p fell to its lowest in three months from the november 3 peak. asia hit a three year low in brussels was in bear market territory. the rally didn't last all that long. shall we talk about retail? manus: let's just do the whole thing for retail. was 18-week sales like for like up 5%, the estimate being for 4%. soft sales dropped by over 2.2%. anna: and it would be the home-based that farmers are going after. the picture around retail. plenty of christmas music here as well. joining us now for a closer look is andrea and the london and c
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io. welcome to both of you. andrea, let's get your first reaction. costco looks better. >> it does. there was hope that it would be estimates, and it seems to have done so, which is very good news. -- it gives around credibility to the strategy, making no changes to the trading forecast? trading in line with profit. is the outlook statement coming from them -- they have been closing stores and cutting prices. >> that's right. what he said is that any benefit they get from a better trading, that benefit won't be allowed to hit into profit. he'll leave estimates unchanged and deal with discounters. manus: let's get your reaction.
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welcome to the show. the firsta raft -- sales drop in richemont, burberry did better, challenges all around. this is all about earnings. this is what is going to drive sentiment on a torrent start. >> yes, indeed. a year ago we would have been talking about macro politics, today it is all about show me the money. can you deliver the expectations which have already been discounted,? inevitably from a top-down perspective, they will have a tough time. this is an environment where you are facing a situation where real wages are beginning to correct, and that is perhaps one of the very few good news about this. but ultimately, for tesco, you are competing with people across enjoyingdi, who are much more substantial tailwind
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from the monetary side, from an fx side. the under pressure for sure. manus: that is a line that comes up from the burberry statement. if you think about the international exposures of the exposure inurberry, china and expanding in japan, burberry is saying in october they saw no fx benefit to retail and wholesale profitability. it just depends where you are. >> it does make a massive difference. , differences in growth rates, and the highest volatility in fx that we will have seems as financial crisis. no question, 2016 is the year of a roller coaster. anna: let's take a moment to think about m&a in the retail sector. we have had so much news around that, and we had this bid is.night from the home base
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that is the bit that sainsbury's wouldn't want. >> that's right. they could make it easier for sainsbury's to buy what it wants, because there is a buyer ready. but investors really don't seem convinced by the sainsbury's approach to home retail. they want more details on the that is the bit that sainsbury's wouldn't want. >> that's right. they could make it easier for saving, or details on what they are going to pay. there's a lot of details that sainsbury's hasn't given yet. there were some hopes they might get a bid today, but i think they will lateswait for the trading to settle them. manus: andrea, thank you very much. anna: explosions that had central jakarta, the worst attack since 2009. let's get more on this developing story. juliette saly joins us from hong kong. juliette? juliette: good morning. a terrible story coming out of
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the capital of indonesia. at least seven people have died. the police twitter account has confirmed that there have been casualties, although they haven't come through with the number. these explosions happened near a shopping center, a very popular shopping center in downtown jakarta, close to the united nations office. it appears that at least one target was a police host, according to these images. they have been called a senseless act of violence. initially, we saw quite a reaction on the jakarta market, down by 8/10 of 1% following the selloff we had seen the region. but it isll by 1.7%, now trimming those losses in the afternoon session. it is currently down by 4/10 of 1%. there had been a bit of the reaction from indonesia and islands like bali, a tourism
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hotspot for the region. we saw that tourism is very much impacted following the bombings in 2009 and the bali bombings in 2002 and 2005. also today, the bank of indonesia's going to be meeting anyway. they have cut their reference 7.5%.o 7.25% from only 10 of 23 economist surveyed had expected it. a busy day already in terms of economic data and moves in the indonesian economy, but certainly we are still getting these reports coming through, several casualties following this violence. malaysia is conveying its condolences, and we had australia officials explain their condolences as well. australia and malaysia are also advising caution for those traveling to indonesia. anna: juliette, thank you.
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with all of that in mind, let's sum up where the european session looks. manus: european futures are indicated lower. we will get this lower session for the european indices. that itu made the point is very much about europe playing that catch up game in terms of repricing. let me readjust my board, just a put it in perspective. this is catching up with the u.s. session. anna: we saw a really weak session in the u.s., and in the latter half, we saw a continuation of those losses. but when we go into -- this is where we closed, the real weakness we saw, the picture looks different. the u.s. futures were early in the day, but they are suggesting we see something a little more positive in the futures in the u.s.
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that's the latest indication. we will have more on where the markets are heading, next. let's take a short break. barclays on brexit. why the ceo is for the u.k. staying in the eu. ♪
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anna: welcome back. 60 minutes past 7:00 in london. let's get the bloomberg business flash with caroline. caroline: thank you. tesco has reported a surprise gain in christmas sales. througw sales rise january 9h. they have been fighting to resist falling food prices. goldman sachs is said to be it coulding cutting -- come later this quarter, but contends an industrywide revenue slump.
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the investment bank will make a decision after evaluating activity during the period. australian conglomerate wells farmers has offered to buy home base of the u.k. for 340 million pounds. the cash purchase would give farmers 265 home-improvement stores. it comes as sainsbury's is considering making a formal offer for home retail, which would cost around 1.2 billion pounds based on its current market values. for more on those stories, head to manus: thank you. london finance sector would be significantly worse if u.k. votes in favor of a brexit. anna: in a bloomberg exclusive, john mcfarlane told francine lacqua the capital could lose business and talent to its rivals. >> i think it would take quite a while for continental financial
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services centers to emerge, and so that would be a process over a very long period of time. i doubt there would be immediate erosion. of course, new york is a competitor. competition, but new york would in some way try to take advantage and probably be marginally successful. i think part of the problem is that talent goes where the money is, in other words the real economy. not just talent, but business goes where the opportunities are. we just had several years of emerging markets being the dominant growth engine in the world as a whole, with the developed world relatively subdued. all of that has just changed with a big china and weakness in
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the emerging markets. we are in a very different world now. some time ago, had that maintained itself, the real threats to london or singapore or hong kong -- i'm not so sure anymore. anna: let's check in on the markets. caroline hyde is here to wrap things up. caroline: tom mcfarlane not sure about asian, and asia is not sure about asia. risk aversion is hitting the screen when it comes to market trading. the shanghai composite is currently hitting your august lows. november that huge rout we saw in the selloff of the first had the yuan depreciation? we are once again hitting those lows in terms of shanghai stock market valuations. clearly, oil is falling, china's slowdown is in focus, and a very sad news of explosions and gunfire, attacks in indonesia, in jakarta. we're seeing the lowest in three years for asian stocks at the msci asia-pacific.
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the nikkei is having its worst case in september, japanese stocks falling lower. interestingly, we are seeing a real move into the havens. t have a look at what is happening to japanese 10 year debt. yield is falling to the lowest on record. it is creeping up just for basis points this morning. come into my screen after you have digested these numbers, coming to where we are seeing japanese bond markets, .19%, a record low. record lows for south korean bonds as well. borrowing costs are coming down, the prices are going up, money is moving into the havens. u.s. futures are pointing higher, so the selloff did start in the united states yesterday. manus: talk to me about oil. we are back up above $30 for wti and brent, but there was a great story this morning -- oil
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delayed $380 billion worth of development, 60 a major oil projects have been postponed. this is a critical moment in oil. caroline: it is, but fascinating, isn't it? some players are making the most of the lower prices for oil assets. you are seeing people tuning in and buying up rivals and assets, lundin petroleum taking a 12% million,st over $500 increasing their exposure to the norwegian continental shelf. it's interesting that they seem to be wanting to expand their assets. this is at a time when we have oil ar 12 year lows, wti, movingand brent slightly above $30 per barrel. what is really pushing the market down is the tale of oil wagging. there is this key concern about iran at the moment. could they really start to unlock their supply, adding to the global glut that the market
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is already going under? we had the likes of iran moving closer to exporting, and there are stockpiles in the u.s.. there is no end to the supply side of the equation and clearly with china concerned, demand doesn't seem to be playing well either. you. caroline,. than thank m&a you see some of this taking place in the oil space, we thought there would be lots. he thought it would be in shell, and now we are seeing some more, with petro taking a stake. is this going to be a scen them? >> i think it is the nature that propels people to do change. two years ago we would have thought that m&a would have had to take advantage of opportunities. a year ago would have been just to make sure that the rating of these companies, which affects
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the cost of capital, would have been protected. now it is just about people trying to find very deep value opportunities, desperate players for cash that have no other option. it has changed. i don't think it is going to be the beginning of a fundamental spread in terms of m&a activity. it's just that those that have the cash, the opportunities are there. but we have to talk about oil, so let's not kid ourselves. any short-term balance is not going to be the beginning of a significant spike. manus: but it certainly is driving markets. the other thing is -- i caught up with sergio matthew, and he said there would be no asset class spurred. we had some conversation. i saw james devon last night. this is the opportunity to buy good value. i caught up with someone on radio -- you're overly perplexed by china.
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buying opportunities in these markets. for the brave? >> for the brave, or for the young? those who have a long-term horizon? there are opportunities. there have to be when you have sentiment indicators telling you, when a lot of people are saying,, get me out i don't want get me out, ing, don't want to see equities ever again. some don't have to worry about debt to equity ratios because you are seeing the high cost of capital in the corporate bond market. that's going to be a problem. they're taking advantage of the only source of revenue in the u.s., which is the u.s. consumer. in europe, if you catch the falling of the euro, you should be defensive. anna: yesterday we saw consumer stocks in the u.s. on that back.
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are you worried about what stocks go higher? i read a good story yesterday on the terminal that talked about how some of the more defensive plays were in the u.s. >> there is the sentiment of the time when you have sold makers and toothpaste manufacturers doing very well. it's a sign of the times. it's a sign that rotation with inequities has already happened. it means people are rotating into those stocks. ande are good safe havens, if you can find opportunities in those sectors that are not overly priced, then you should be ok. manus: let's get you into valuations. this is from one of our bloomberg stories, where things might get worse before there's a buying opportunity. on the white line, you have the stoxx 600 price-earnings metric, and the s&p above that. the value is the stoxx 600,
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worst week in four years, where we were. valuations of 14.2x earning. is this a rerun of a rerun of last year, with that rally in europe? have is that ii don't think valuations are what we should be looking at. i think that valuations can stay expensive for a long time, and they have been expensive for the last five years. in a way, changes in relative valuations don't tell us much. this stock does show that europe is a little bit cheaper. my view is that once you adjust for quality, stable earnings zigzags.e a lot of's exam anna: thank you so much for joining us. manus: let's get you your day ahead. first, germany publishes a report on economic growth. anna: than the rate decision
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from the bank of england at noon. then the ecb publishes its accounts from the december meeting. manus: 20 minutes ago before the start of trading, equities are set to open lower. this is a shot of the city of london. ♪
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manusjonathan: good morning, ths "on the move." i'm guy johnson. here is your morning brief. stocks plunge on wall street. the s&p has fallen more than 10% since november. european equities are following the u.s. and asia into the red. brent unravels. the contracted dips below $30 per barrel for the first time in more than a decade. we will hear from the finance minister on what it means for that country. >> if we consider today's oil pricing, the ruble exchange rate, then don't take any measures, the deficit would more than double. we can't afford that. guy:


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