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tv   On the Move  Bloomberg  February 4, 2016 2:30am-4:01am EST

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to "on the move" we are counting down. this been a crazy 24 hours. swings itthe intraday has been mayhem. but i'm really interested in today with credit sweeps and the backdrop -- the bank stocks on the 600 the worst performance in 20 alone. we have to talk about that. guy: stocks continue to tumble. oil definitely front and center. coming up, looking at the impact it has had.
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we have shall numbers of this morning. we are seeing the impact it is happening -- having. crude exactly trading a little bit higher. 38 was will became an on the year. we will talk a lot more about that. jonathan: talk about price action and the mayhem. the biggest move in just two weeks. the oil stock looking like a penny stock the moment. we'll talk about that. so talk about super thursday -- can you call it super thursday? is there anything super about it bank of england meeting at the moment? is: depends on if there someone voting for a cut, then things get a little bit interesting. we will talk about that for the program. yous get you all the news need to know this morning with caroline hyde. the bank of japan's negative interest rate could fall as low as -1%. that is according to an ally of governor corona.
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there is no 44 negative rates. that stimulus could still be expanded if needed. the bank of japan has signaled that it has many options in its armory. it could lower rates further. that would achieve a 2% inflation. i am sure the current policy will not leave japan out of the equation. caroline: meanwhile, the end is already undone all of its drop from last friday. that was when the boj maybe negative right decision. the currency is still far from expensive. commonwealth bank of australia is welcoming its client into the yen strength betting. goldman sachs and pimco say and that traders are underestimating how far the federal reserve will raise interest rates. chief economist recommend benchmark yield on 10 years will rise to about 3% by the
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year-end. up from current members of 1.9%. pimco things global economic growth will make the fed raise rates more than traders expect. to wherent to take you we think the european equity markets will open in 27 minutes time. the turbulence of yesterday is something you need to pay attention to. this morning, it looks like equities are going to get a sharp out. nearly 2% we think of a terminal this morning. up 1.4.o 1.4, dax european markets will start the day after the turbulent of the last 24 hours. jonathan: the turbulence continues, switch up the board. if you'reuroda, watching this program, cover your eyes. the dollar yen losing all of the gains. been ajapanese yen has
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big call from bank of america and merrill lynch. we will break that down charlie. brent crude at 3562. a little bit higher today, up by two basis points. 10 year treasury yields by 1.89% of the 10 year. 3% by the year-end. the particular, somebody has a very optimistic views on what will happen with inflation and what is going to happen with crude. you saw the little goldman and pimco as well. jonathan: we have steve here for robin, and-- a round a guide to moderate it all come with the director of black rock investment is to do joint is now. great to have you with us. the price action of the last 4, 5, 6 weeks, what do you make of these take intraday swings? word tol is the easiest
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use. it is impossible from an investment point to pick off a particular moment. youhave to stay with what believe in. you should believe we're in a very slow economic outcome. one where central banks remain are supportive and profits coming under pressure. when you go to that point you can try to see the goldman thread running through all of this. that is that is a low return world. you get deep value for buying at the right moment. the s&p index with first of generate about now it is down 8-10%. the take out the five worst days you are up 8%. making the points about the being careful but entry points. jonathan: if you look at prices at the moment, the prices are almost no hikes for the rest of the year. the federal reserve has to figure four hikes they back down
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from that in march maybe. given where the balance of risk is right now, goldman sachs called it a 3% in the u.s. 10 year. : one or half of one in three of another. i think that the reality we are seeing the fair trade driving the 10 year down a long way. whether it goes to three or could be rising in this occasion, i really don't know. i think of the oil price recovers very slightly, and some inflation security which has completely begin off, they've been pretty beaten up. guy: critical to all this is what happened with oil -- where do you see oil? around 30-40,d be i don't think it will get 50 plus. manufacturingal looking like it is in a recession. citiest is a tale of two
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list of global manufacturing is in recession and will remain that way. china is going to get worse. the me of services and consumption ok -- we have services and consumption ok. do with the employment component of the i.s. m and the thought that services might be running over a little bit. that i think is where focus will come over the next few weeks. the employmentw component in the manufacturing numbers also pretty weak. ewen: the manufacturing five years a very small portion. it hasn't added any jobs come all of the growth has been in service. forget manufacturing, but the 21-sided focus on the rate of change. jonathan: do services follow? that is the analysis with done here at bloomberg. there are nice charts legitimately isn manufacturing down and you're seeing that on the services side. i have seen stuff and it
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is hurricane vicky. if 10% of the unemployment is in the capuring, which is and which is the tale? we will talk more manufacturing and crew to next. embattledhell amidst the crude collapse. futures higher in london, much higher up 106 points. ♪
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jonathan: welcome back, hello to you all. 90 minutes away -- ftse futures 90 minutes away. i'm a good the caroline hyde the business flash.
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caroline: a net loss the fourth as they cover the billions of dollars in goodwill aside for litigation and put a multibillion dollar loss on its main trading unit. the bank also said it would accelerate plans and cut bonuses. >> we will also cut the bonuses. it is a tough pill to swallow. by 11%. for divisions that underperform more than 30%. after seneca has reported fourth-quarter earnings that met analysts estimates. profit somerating costs rose to $1.56 billion. the rate of sales growth will slow down this year. the maker of mercedes-benz also predicted only slight gains in
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revenue and earnings following a record year. that is an operating profit from an ongoing issue. that is the business flash. guy: i will pick it up, let's talk about the valdez. .4 hours, fairly brutal crude oil prices collapse, hitting the majors that is generated and earnings miss. 44% drop in fourth-quarter at shell. -- weg us now is ryan know the numbers are going to be grim. it is a question of the relative value compared to what we're seeing. that point, i-44 percent drop in profit for the fourth quarter actually outperformed.
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perhaps even a 91% drop in earnings. line with expectations, ofter at managing that sort decline in oil prices when it comes to the profit. that is one of the takeaways from the earnings. no real big surprises be on it other than the fact that they also reveal that they failed to replace their reserves last year. i think there are two things to say -- one is that is the legacy and you'reyour cap spending. that also happens to be one of their arguments for acquiring bg because help them do that through acquisition. take awaythe other from the earnings has been that these guys are willing to load up on the debt to pay out of the dividend. i want your view on that as a management strategy for to load up on debt and they had in whats when we are
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many would consider a crisis for anyone producing energy right now. it depends on which set of stakeholders you are setting out to please. you are borrowing the money to do that. you can take a view that you are in a temporary decline in cash flow and should swing this out over the cycle. that is the forward view. i think bp is forecasting and or $60 as part as its underlying forecast was that if they're wrong, they will have to stop borrowing money depend on cinema dividend on a cash flow basis. : the other argument is at their borrowing it at 2%. even if they see the credit rating it cut it only -- ewen: this is what a big oil company can do. it is -- bp is self-insured.
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the credit rating is higher than the insurer. it costs them less the end of the day. you have to respect the power of a large balance sheet like that. it is a question of how long. then it becomes more troubling. now with thethe mining finance businesses first of their beginning to accept that their over to should bidding on dividends. whether the come to the oil companies now it could take a bit longer because the cash flow has slowed down a bit less. this is the investment challenge. if your expectations that prices go up a bit but not much, you have the shall guy capping a price at whatever it is. significantly less than what we were at. when you look at the duration risk attached to the oil business and how it will of all from viacom what is the duration of how long this can carry on for? ewen: it is a question of the decline rate and the outlook
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from what they could be affected by. four shall guys, within 18 fracking couldal decline. it is almost inevitable. if you're cutting back on drilling new wells, eventually the water is attempting out of the bath faster than it is coming in. i think we will see that in u.s. output. it takes longer for more conventional wealth -- i think in the conventional world you can turn up a little bit. that is what i think is the potential capital. jonathan: just your take away on reduction. it is up the direction that cap is low low low, but the magnitude of the cuts is different. even though it is a much bigger company, that interest is a
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different strategy for each automaker. and what they're doing with cap x and you wonder what the consequence is. exxon is cutting spending basically back to where they were seven years ago. their drilling budget for the way decade ago. that will have concert went to down the road. bp announced he will not cut cap, but he pointed out that a result of the gulf spill long before everybody else. he is down to the bone. if they cut anymore they really sacrifice the future. ewen: it is also the underlying economic of your production. the real oil price is entering an area from a decade ago.
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thethere is the work of enormous investment boom still to go through. jonathan: cameron ward is going to stay ahead of us. futures higher here in london. up.feeders we talked with intracorporate movers and oil makers. ♪
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seven minutes the open here in europe. let's get to caroline hyde now with stocks to watch. caroline: difficult was on the will slump on the open. stupendous loss being posted for its fourth quarter. continue on the dow merger treachery when the the shares. this is after they went to 1 billion and goodwill and that paying 3.5 billion swiss franc
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loss on its main trading unit. all this after they reorganize themselves. , seeing slowerer growth. they had a record year, their sales have been stellar. profit, but the sales growth is going to slow down. will that start to slow, and lower unit sales next to after exceptional dynamism they just can't get the growth going. calls of up to 5% higher after they came in with a profit down 62%. there is a collapse in crude prices, but they're protecting -- projecting dividends to the base. jonathan: what 6.5 minutes away from the open. have two.s up, i
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what the banks. the stoxx 600 22% decline year to date for european banks. guy: you would've thought it would've been the energy stocks that that the big hit. given what we've seen, even sent i went to speak to deutsche last week the stock has been continually falling and falling. there were some big name seeing big drops. jonathan: deutsche bank losing a third of its value in under a month. we used to talk about volatility being good for banks. but that is challenging market conditions. less favorable market conditions for pretty much every single division. this is the kind of volatility they want, is it? i think the fault of the market was described as brutal. ita capital market business, is sure for asset managers as well, there's a high operational gearing to the value of the asset in the marketplace.
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just as there is will companies. challengesundamental for investment banks. the newish management and deutsche it's acknowledging that. and they are squaring up to that in the sense. jonathan: is a quick enough? the benefit of hindsight, how fast can you go and which businesses with you think will be sustainable in the near future? how can management square this pinafore managers to be on board? the share prices getting actually absolute frightening now. they're trading well below book. how can you keep investors on board with you during this journey? ton: yiu are trying effectively freeze the freefall and are tryingws to sustain the many low-level.
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in the core business proportion to the cash flow will rise. you will stay with us ahead of the open. ♪ we live in a pick and choose world.
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move." moments away from another trading session here in europe. guy johnson has your morning brief. guy: the sector is the worst performer on the stoxx 600 in 2016. you might have thought it was crude, but it is not. will talk about that more throughout the show. mark carney is set to present the latest economic projections. will we get any clarity about the future rate pass? up by 90 points,
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dax futures up by 120 points. at $35 a barrel. let's get your market open with caroline hyde. caroline: we have seen tumultuous training on the back of oil. we are seeing such volatility injected. so far this year, stoxx 600 down by 10%. we have seen 950 billion euros wiped off the market value so far this year. today is the day the ftse 100 opens up. today the cac 40 is also opening up as we build back some of those losses. yesterday the banks were feeling the most pain down some 3%. we're seeing today volatility on the backs of those earnings. riddick's are not taking a pretty picture. at 53 when it comes to
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brent. clearly we are seeing such moves in the back of the asset classes as oil continues on its topsy-turvy ride. we are seeing a bit of selling off in the pounds. will you get changes to the inflation outlook or the growth getook? we are unlikely to any change. all 40 when economists not sing a change to the u.k. in terms of interest rates. better than expected yesterday down a quarter of a percentage point. meanwhile, the euro is losing some of its gain from yesterday. the dollar selling off is what is driving oil higher today. let's have a look at some of the stocks that we want to watch. look at how credits we's is currently faring -- look at how eredits we's -- credit suiss is currently faring.
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bonusese to slash their and their main trading unit sing a phenomenal loss. we saw profit continuing to be eroded by the low oil price. not all banks being tarnished at the moment. as their profit beats estimates and they show a dividend right of 10%. out about howd asia went. >> the resurgence in crude oil fueling gains in the pacific stock market on thursday. chinese markets fared well with the shanghai composite gaining on the order of 1.5%. it was the commodity producers
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and the oil companies in particular that saw a nice advance. they were rising on the day. 225 under pressure because of some movement in the yen after the selloff in the dollar. the real winner in the day is sharp up 17%. chemical related shares also rising. mitsubishi chemical up 7% on the day. in australia we saw gains for santos among commodity producers rising in sydney. up day for asia-pacific shares. the first gain in three days. jon: that's what happening in asian markets. $1.11.o dollar, 12 this morning. mario draghi speaking over in
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frankfurt. they're not exactly hawkish comments. he says global disinflation or he forces can be changed. they do not justify an and long-term inflation expectations remain below price stability. >> it sound like a man that wants to do more. despite him suggesting that they could do more in march, it has been a stronger euro. guy: the dollar -- the fact that the market is effectively priced out all of the hikes for this year. and listening to deadly yesterday was quite interesting. it seems that maybe a policy mistake has happened. we can get the shot of draghi up now. he is talking but i think it is the fed conversation having a much bigger impact on the market. jon: monetary policy cannot be
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relaxed about a series of supply shocks. the ecb will not surrender to low inflation. look at the german curve at the moment. negative 50 basis points yesterday. meeting into that march you just wonder what we are pricing in. and whether this feels a little bit like december. the bond market thinks that they can. >> know because the bond market expectations are being driven by hurting into it. the problem that the other central banks have is if they want to ease they have to have something to ease against. if the fed is not using anymore in the currency move and you have a struggle. >> is the market right to price in a rate cut from the bank of england?
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--i don't think so all stop so. jon: the headline this morning? adopting a wait and see attitude would carry risk. the ecb would not surrender to low inflation. here's what is happening today's program. credit suisse posting a net loss in the fourth quarter. we are live in zurich. daimler hits it speedbump. the carmaker's's growth will be slight in 2016. do you call it super thursday? >> investors look at sharper relief a rate hike they expect to stay flat from most two years. we here from the governor later today. guy: credit suisse posted a
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fourth-quarter loss of $5.8 billion. these are the first results following an overhaul in which the chief executive adopted a similar model to ebs shrieking the trading unit and increasing the focus on wealth management. he spoke to our editor at large about what he sees for the year ahead. a tough cocktail. caroline: by how much? 11%.e total is by about caroline: talk to me about volatilities. you are expecting a tough 2016? >> yes. francine: what our markets concerned about? discussion with our chief economist yesterday and i completely agree with him.
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disconnect.ve a lower oil price is good for the consumer. most of the gdp is consumption. if you put more money into the pockets of the consumer am a he feels good. he feels he is worth much more. is he isot happening not yet spending. they need a bit of confidence in the future. emphasis -- ifr you look at the price of oil over decades, we have had a few years of abnormal levels around $100 and $35 is the historic average so increasing the return to the historic average. --
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francine: you think the correlation between the price of oil and the markets is wrong? >> we also feel strongly that the price of oil is not because of oversupply. the market is reading a lack of demand and a slowing down of world economies. clearly oversupply was a strategy. inventory and it ran coming, new suppliers coming so we don't see that as an early indicator of a world crisis. -- $4 banks will have trillion of capital in additional capital. you have no threat of a global financial system because the balance sheets are strong. it always be crazy here and -- you seen think
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the pmi for consumers in europe at a historic high. countries like china and india, lower oil is very good for them. capital expenditures have been cut in the oil sector which is having a good effect. >> let's cross over to francine lacqua. statement and written all over it challenging market conditions favorable market conditions, is the ceo expecting more volatility in 2016? you asked the question, should he have cut the investment bank that'sre russian mark >> one of the most fair questions that we put to him. he responded by saying -- he rationalized that he needs the investment bank because he wants to attract wealth in asia.
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he think they are linked. the ostrander is also the that link to the investment arm but we know this is the division not geared toward market volatility that we have seen in the last four to five months. he also told me something that i thought was quite significant timetop he said, at the when we spoke to him three months ago, he did not want to give any indication of profits for that division. he said because things are uncertain he wants to keep flexible. ,esterday we all had that rumor up by 5% that they were selling large parts of the investment bank. i try to push him on that and said what exactly will the investment bank look like when they finish the overhaul number? he says he is not looking at selling anything at the moment and told me he helped -- hoped the rumor would stop. versusen you look at cs
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how faryou think about apart they are and the differences in some people's mines, what is his views on wealth management? how do you compare and contrast the businesses? francine: it is very clear in our interview that he agreed he said it is a turtle the loss. yes, it will continue to be painful but he does think they will get out of this struggle. i tried to challenge them saying, was he not being too optimistic. i asked him about ubs and whether he felt he was playing catch-up. he pointed to the rosy spots in his statement saying international wealth management up 21%4%, asia-pacific so he was telling me that he was getting market share. they say ubs are outflows. they are also not exactly targeting the same manager.
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the not targeting the same wealthy individuals in asia. another credit cease -- credit suisse was hoping the fact that they did not see outflows like ubs did on tuesday. >> guy:. thank you very much indeed. i have credit suisse stock at a 1992 low this morning. that is the story of 2016 so far. forget energy mining and oil. it's very important but it's the bank taking the pain. i want your input on the story will stop >> first of all it's not all bank stock. s e b is not a particularly large presence in the capital markets. the epicenter of the pain is capital market activities where if you're going to be in the
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game you have to be in it with a very big steak and if you're not you can let it go by and the asset management company i worked for was once part of an investment bank and that we are a pure fiduciary business. think i want to be deeply sympathetic to the challenges that they face because the exam question is, do you want to be in investment banking? the next question is do you want to be in the volumes of down another 25%. those are two very difficult questions to answer. >> can i take you to a third level which is europe needs these banks because we are pushing toward a world where we don't relight in europe on the banking channel and coming back to draghi, this is something he would like to see. yet at the same time, we have banks that are walking away from
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core parts of what europe is ultimately going to need. >> how do regulators, how have regulators put angst in the positions they are in and that is a legitimate question and what happens next in terms of how europe reduces its dependence on the straightforward banking channel and sticks to relying more on the capital market? >> the second half is easier than the first half. the question what will europe come more capital market orientated than today is absolutely yes. that is where capital markets union. whether or not the regulators are coming in after the game looking forward, i don't think that is really a fair question. >> the reason i think it's a fair question is it really is driven at the end of the day, that determination by market volumes. in five to 10 years time, when i am retired and you are still
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deutsche bank -- leave him out of it. will still be there, credit suisse will still be there. ubs will still be there providing services to their customers. we need to stop worrying about the immediate news. what is the long-term future of the organization? guy: we are fighting the wrong war. we are regular and the banks and need to get growth going. you wonder whether or not a strong push to getting credit flowing to the system is the war that we should be fighting. >> i agree with that. capital markets union undoubtedly has flaws that is a huge step in the right direction. unequivocally so. guy: we are looking at these banks getting battered on a daily basis. jon: do i thank him for joining us today?
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[laughter] we have lost a friend at blackrock. let's go to germany. daimler posted a rise in fourth-quarter profit. mercedes-benz pritikin only slight gains in earnings this year. only slight gains in earnings this year. hans:we have on the bad side, cs 33% growth in 2015 which compares with the rest of the world. how gives an indication of -- when daimler looks forward to 2016, they are not quite as confident they will have the same growth. here is what he had to say in a statement renouncing their earnings. he said, it we know from experience that getting at the top is hard but staying at the top is even harder. they are neither right now. they are not the world's leading
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auto manufacturer. , $40.4 look at sales billion. a clear win on the revenue side. the one place they did not meet was on the dividend. that is where the expectation was 330 euros and they came in at 325. you also have to look at the commercial vehicle story. they may have a more disappointing news in 2016 because they rely on china. also those emerging markets. we have seen truck orders dropped off in the month of january. unclear whether that is a one-off number. when you look at the whole suite of vehicles under offers, trucks not be the best. the new e class could drive a lot of growth and to translate this for you guys, the e class is the mercedes version of the the m w five series. -- bmw five series.
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i know you are a bmw guy. guy: that's the big long one? later on weekly talking to the daimler chairman, just after 11:00 london time. next, less than zero but not enough. the yen shows the limits of negative rates bite wiping out the boj drop in days.
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jon: welcome back to on the move. credit suisse stock this morning. i want to talk about this stock. a loss this morning. a 1992 low for the equity. if you're following the top live earnings,redit suisse a spokesman from morgan stanley said he is surprised they did not preannounce given the scale of the loss. guy: how more earnings seasons are he going to look like -- go through that look like this. how many more are we going through? this is a core report we have going through here. we are seven years into this and these banks are still struggling to figure a way to reorient their businesses. it read gates the financial crisis. g.m. done a good
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enough job? , but inalk about cuts terms of direction, strategy, and change, is he doing a good enough job? guy: compare and contrast it with the deutsche bank where he had a five-year plan. does he have that plan in place. is this asian miracle really represented in some of the statements? >> i was watching the interview with francine lacqua, asia is the bright spot. guy: that caught my eye as well. you listen to what people are going to say and what people are saying about the ripple effect. draghi is still talking at the moment in frankfurt. the euro has moved positively on this, trading higher. draghi is quite
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dovish and i am curious to know what it is that is causing this. that may create different challenges than it does in other areas but those challenges can be mitigated by talking about the differences of opinion. that is a big move yesterday. jon: king dollar, bottom line. pmi with the slowest pace since 2014. the bank of japan governor -- when he looks at dollar yen erasing all the boj gains on friday? let's bring in caroline hyde. that move a stronger japanese yen despite the drive by the boj. caroline: you cannot fundamentally change your currency with monetary policy. medicine that draghi and corona
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uroda is having to swallow. how much did the yen move in response the negative interest rate? it moved a lot. it is weakening. now back up by 2.6% erasing all of those initial weaknesses. when we saw the intervention at the end of last week. the initial move could spec up to 2% but we are even stronger than prior to that announcement. undervaluation. it looks that this is an undervalued currency. you cannot go out buying internationally until currency is generally going in the longer term. jon: in april they come out and initiate this qe program. the following year, big surprise but ultimately they just move things on the margin.
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when you look at what they actually did on friday, the magnitude of the move is a reflection of what they actually initiated in terms of monetary policy. >> the take away from all of this is, wherever -- what ever you guys think you can do, you talk about corona and covering his eyes, it doesn't matter. it is all about what the fed does next and it is fascinating to see. this bank of america merrill lynch call saying to boj can hold an emergency policy meeting. -- theyy meetings cannot hold this one. they are really struggling. they will have to have more and more. caroline: it is interesting that analysts overall think there will be more weakening will stop why? what will happen? is it that we see a limiting to the volatility question? jon: it is not an emergency
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meeting. they call it super thursday. we will look at how you kate rate hikes are fading. ♪
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minutescome back, 30 into the session here in europe. the ftse 100 this morning is up by 1.29%. the dax is also higher this morning by 90 points. 0.7%.600 up by roundabout we whip to the other asset classes. brent crude at $35 per barrel. the biggest move in two weeks. 117.76.ar-yen net the story there erasing all of the post boj gains on friday. 30 basis points on the german 10
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year, up this morning by roundabout 10 basis points. we will talk about that call and goldman sachs's call for the year and. -- year end. let's get to some of the soft movers. caroline: i will go into a technical issue. they have a share placing this morning and are trading at their lowest since 2009. 37 million shares injected into the market. this is a combination of lafarge and whoholsim. we have seen the banks bashed over the past few weeks. some of them outperform on their earnings. it seems that ing is doing just that. posting better than expected and overall trading in their main banking business but notably
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their losses are reduced as well as the netherlands start to see a return to growth all stop a pickup in their home domestic economy. meanwhile, credit suisse shows why some of the pain is being felt in the banking industry. this is a 1992 low for credit suisse because of the phenomenal offers they are having to post. we are seeing 520 billion swiss francs. the overall loss. that is a miss. they are scaling back from that. their focus is on wealth management. at the moment, the numbers are not pretty to investor's ears. jon: 1992 low for credit suisse. surprised they did not preannounced, from morgan stanley, given the magnitude of the loss. the market is very surprised. down by 9.2%? that is a big move. guy: you wonder how you recover
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from that. there is a credibility that seems to get very quickly eroded. we talked about this and how long he will have. you look at what is happening again new management they are making changes with huge share price drops. this communication issue will be front and center. theou want to get through level of magnitude of the changes you need to take investors with you. did a fantastic job and clearly was communicating. he learned lessons early on. you wonder whether or not he is coming in. you make mistakes early on. jon: moving it around is like a supertanker. when it came across from
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prudential, the conversation we were having his here is a guy who knows asia and how to build a business in asia. i think we put the credit suisse numbers together with that ubs numbers ubs net outflows, .ifficulty with markets their limited with challenging market conditions. do.wonder what they can this is what he had to say about the market moves over the last couple of months. disconnect. have a prices with the consumer most of the gdp is consumption. because itmore money feels good. it's worth much more money from the lower oil price and you're
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people at spending so need to get a bit of confidence. that's for the markets come into play. >> should not expect the same outflows and international wealth management is here. here's a question, i keep hearing ceos talk about how the economics in the market are completely detached. so kerry goldman did the same thing. exactly the same thing at credit suisse, they bring up the issue to cruise and say the market is misinterpreting what is happening with crude. it's not demand issue. i have not met a single person that thinks it is a demand issue. we all know it is a supply shock. that's what the route is all about. guy: they need to look at their books. would also be interesting is how
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much has been extended and where exactly the risks fly within the portfolio. bankers are trying to look backwards and should be looking forward trying to think about what will happen next. my point is, we are not done with these swings yet. if goldman sachs is right and we are going 3%, we are not yet. if that is the case you wonder what the fallout will be. he says the markets are detached from the economics. if you follow the markets its deflation rates. you look at what's happening with commodities that's dis-inflationary. if you believe what he says about the economy tick the goldman sachs you of the world. the fact that there's upside inflation given how tight the that 3%rket is now stop
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call for u.s. 10 year treasury, but what if the market isn't detached from the economics. that's the debate right now. oils when to be appear. we will work our way through this. we wonder how the geopolitics is going to fit into this as well. eroding amidits the collapse, but where is the new resistance point for brent? ♪
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i've had people come on this program over and over. talk me through what you are seeing at the moment. >> it's quite an interesting time.
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the chart i brought with me showed the 21 day moving average. what was her mark will yesterday 's ever since he broke above saw resistance run 36. that's were the december lows by . run $36. we some momentum fizzle a bit but all eyes were back in the 21 day ema average roundabout 32. that's what makes it quite bullish from a sentiment and price perspective. we bounced back and are seeing some followthrough today. you talked with the different kind of techniques they are using, what is proving to be more accurate? >> it can constantly change.
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i am monitoring the 21 day closely. as you can see, since early november, the 21 day has done a really good job in capping strength. they time we saw an uptick, 21 day there was being well defended. insince we broke that late , -- that level was -- guy: what is the next upside? >> 36 is the resistance to watch. we tried to test it. we failed to breach it. so far that is the level but given that we have support of the 21 day, i think that level can be breached and that the the level is $39 which is
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high we found in january. jon: what turns the charts bearish in your point of view? >> it was reduced in. in the sense of that eia data we oil and brent still managed to post something close to 0.9%. think itbreach that, i can go back to 2710. that was the multiyear low we saw earlier in the year. jon: great to have you. brent at 35 .17. let's cross over to nejra cehic. nejra: credit suisse chairs
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effortssharply lower onto a $520 billion net loss in the fourth quarter. provisions for litigation and booked a multibillion dollar loss in the main trading unit. they said they would accelerate plans to share 4000 jobs and cut bonuses. >> by how much for bonuses? 11% foral of re-division more than 30%. said fourth-quarter profits fell 44% after the route deepened. for one-timeed items and inventory shrink to $1.3 billion. that comes as the company is betting the $50 billion acquisition at the bg group hoping it will maintain oil and gas production at a time when
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cash flow is shrieking. >> oil has deepened cuts in investments to maintain dividend as a collapse in crude prices erodes profit. norway print plans to reduce capital expenditures by $13 billion this year as fourth-quarter net income fell to $187 million will below analyst estimates. astrazeneca has reported fourth-quarter warnings that prevent estimates. the core operating profit which excludes some cost rose to $1.56 billion a year earlier. guy: it is sort of a super thursday for the bank of england. we'll get a rate decision with the inflation reports at 2:00 p.m. u.k. time. year, simon wells joins us
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now to talk about the boe. we need to factor in the risk of a brexit. good morning, simon? if you take a look at what the base rate in the u.k. has done they have done nothing for a very long time, do think the market could be surprised by the possibility? >> i don't think so. the bank of england will play it cautious. let's not do anything for any surprises. brexit. is wrapped up in fever. >> a very different approach to the federal reserve given that on face value is very new watched. its pre-much the same data here in the u.k.. >> it is a very different approach. lester will roll expecting the bingaman went to follow suit. getting stronger case for a rate rise in the u.k. will stop --
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u.k. an open economy. think he is playing it extremely cautious. while unemployment is low and growth is holding up he can get away with any strategy that he wants. guy: white isn't the market pricing in? >> partly because there has been a fall in rates. he intends to bring a global rate. it's a referendum. uncertainties rise with confidence collapsing. you have 100 basis points that you can cut. >> the negative call is a brexit call. >> i cannot see what things are going to to get bad enough. unless you have that big shock. going into not
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substantial detail talking about persistent strength of sterling all stop is he happy with euro sterling? is that gone? >> if you look at trade rates on it's down since last forecast. that would normally mean the inflation will be a lot higher further out. when you have a 40% fall in the oil price, you are still down 40% in sterling. jon: how do you think it will be the forecast? the buyer seems to think it will cut the inflation forecast. >> in the near term, definitely cut. down to 1% for the key floor of this year. that is the key. they were overshooting by 0.2%. what is happened is a much flatter market curve with lower sterling, unemployment that has fallen further. it is not all dovish.
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send?ngle signal do they they are basically saying market curve, rubberstamped, no rate rises until late 2017. guy: the u.k. relies on the service sector. if you look at the comps with the u.s. data, the service sector is beginning to follow manufacturing data. do we see another trend here? >> it was not bad. in the preliminary q4, it could've been worse. with the bank of england will be worried about, when you look at the future business component, that expectation component which tends to give you a lead on gdp a quarter ahead, that is not looking good. that is a worry. but overall, the activity level is holding up pretty well in the u.k.. jon: back into this year, november, 2016 for the hike,
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what is the worst? has inrisk reward as we the market push things that a long way. 11 months away is still a long time. .e can get through brexit we can find they spent their oil rice fall once again with consumption doing well fiscal policy less tight. investment may be affected by the referendum but i don't think it's all bad. data.k at the fundamental we could still be on for a rate rise this year. >> hsbc, great to have you on the program this morning. 15 minutes into the session, the runaboutup to 1.2%, by 0.5%, collett 0.7% on the screen. so many moving parts in so many earnings to break down. we will look at that and more .fter this short break
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jon: a compact on the move. joining us now is richard jones, the fx strategist and simon bellard, credit strategist.
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guy: typhus about credit at the moment. yesterday was quite a pivotal day. >> what you have is i tricks levels that are up volatile. in market is generally still defensive mode. you saw the spread nudging back in. i think people are continuing to look at decreasing exposure in the credit space. and basically we continue to be set in defensive mode. to a certain level of risk on oil. now that we have gone back inside 400, on the psychological level, the big question is, do we buy more protection or is that more of a risk on for the time being? market, the fed with a dovish ecb president from
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mario draghi, we will not surrender to low-inflation. what do you make of that? >> that has to be a big worry for the ecb. they were able to take a little bit of the air out of it. it require them to cut rates in the lead up to the december position and now we are getting to 112. that is not a million miles away from where they were shooting last year. the onus is on them to deliver something. guy: but with draghi, it is all about the fed. i read it a few times. he was much more dovish. the inference being, we might have made a mistake here. >> that is the difficulty that anyone facing the u.s. dollar faces. if this is a discernible shift by the federal reserve, it will
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be difficult for mr. draghi and uroda affect the change they want. jon: glencore of a by 7%, rio up by 6%. you talk about the beating that 2015, itrs took in t looks like the banks are the miners of 2016. guy: you get stocked out so quickly -- it is another factor that will reduce liquidity. they are still standing positive. jon: the results are terrible. this puts pressure
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on the new ceo. lots to discuss and "the pulse" is coming up on bloomberg tv. he will be joining francine lacqua from zurich. 7%, good luck on the rest of your day. ♪
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drops to at suisse 1992 as it reports a loss. bloomberg will speak to this man, the ceo. shrink among the rout in oil prices. mark carney is set to present the boe's latest economic projections. so, while compared you are watching "the pulse live here in

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