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tv   On the Move  Bloomberg  February 5, 2016 2:30am-4:01am EST

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guy: welcome to "on the move." london.0 in 8:30 in frankfurt. i am guy johnson alongside jonathan arrow. -- jonathan ferro. the employment components of manufacturing and service, we are looking for an edge down from the blowout figure. the dollar this week. that has had a massive impact a look at the rallies we have seen for some of these mining stocks. it is absolutely down to the dollar. you can see that from some of the oil stocks as well.
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it has been a big week in terms of central-bank policy. we will talk much more about that. no incidents that the dollar had its worst week since 2009 and the miners had a two-day pop. credit squeeze earnings, and unforgiving market punished the stock. bnp paribas, you wonder what is going to happen at the open. we will talk about that much more. i am curious to know how the communication strategy is working right now. ,hy the analysts are so off particularly with the banking sector. why are they being caught by surprise? who is communicating well and who is not? central banks, we need to bring into the conversation as well. let's get you up to his. here is caroline hyde. caroline: the u.s. dollar heading for its worst week since 2009 as traders bet the federal
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reserve will hold interest rates unchanged this year because of a weaker global economy the the demand for government debt has sent japan 10-year bond yields to a record low. oil has slumped towards its first weekly decline since january 15. president obama is planning to propose a $10 per barrel tax on oil. the money will be earmarked for green energy initiatives. the proposed levy could be phased in over five years but has drawn swift objections from the oil industry. it would also require approval from the republican-controlled congress. china's foreign exchange reserves, already at a three-year low, are poised to post a second consecutive record monthly drop as policymakers intervened to support the glut. the central bank will say on sunday that a currency board fell by $118 billion in january. back to you. guy: thanks very much indeed.
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, looks like we could have a fairly quiet open in europe. let me show you what is happening on the bloomberg terminal. the fair value calculation that it spits out is fairly mixed at the moment. you can see how the miners have fallen this morning. germany down on the back of industrial data as well. jonathan: let's get a quick look at the other asset classes. brent crude trending lower by .8%. 34.19 a barrel on the bloomberg this morning. euro-sterling. 77 pence was the print yesterday. the weaker pound going into yesterday as the vote shifts from 8-1 to 9-0. dollar-yen. kuroda mustrroded -- be doing this everyone. to: a japanese 10-year about
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go negative. i think he is not looking at the numbers this morning. jonathan: first friday of the month and you know what that means. u.s. payrolls david are first gauge on the strength of the market in 2016 with the near-term outlook growing increasingly uncertain. the january jobs report is bound to be closely watched. cleveland fed president said it would not surprise her if the pace of job creation slowed. >> i continue to expect that growth this year will be sufficient to generate further improvement in labor markets. i would not be surprised if the pace slowed somewhat, but the gains should be strong enough to put additional downward pressure on the on rate. -- the unemployment rate. let's bring in a guess, who helps manage over one billion pounds of assets. it has been quite a week. it has been a week dominated by the dollar and this pricing out of the fed making any
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significant move this week. event orust a single something that will ripple through the rest of the year? >> it could be a combination of different factors. it could be the fact that the rate outlook is changing in the u k and the u.s. that investors are starting to pay attention to the issue of the brexit. in terms of the u.s. employment report, not pretty at all. it has led a lot of people to cut their forecast. where do you see payrolls coming in today? haig: the expectation is they will come in slightly weaker. that is what we are expecting. the key thing in the u.s. is what happens to wage growth, which leads to inflation.
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we have a lot of variability on the jobs data on each print. they are sometimes recast retrospectively. the key thing is wage growth in the u.s. the federal reserve had a threshold for forward guidance. it was 6.5%. the bank of england had a threshold and it was 7%. they were not numbers plucked air.thinner -- from thin there was an expectation that wage growth would start to accelerate. we are down to 5% and it still has not happened the way they thought it would be what is happening? haig: we are seeing underemployment and a lot more people pursuing part-time work. we know because the banks have effectively been bailed out, but we have not seen that natural cleansing of the system, where aarly in the u k, number of underperforming companies would go into liquidation and people would be redeployed. ultimately, the unemployment
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picture remains must more robust than what we would expect. again, we see that continuing into the future. guy: the rest of the world is trying to figure out what happened to the phillips curve. let's talk about what happened in asset markets and how this is going to work. we have been staggered by the moves that we have seen in some of the mining stocks over the past 24-48 hours. and it is dollar driven. it is not fundamentally-driven. but in terms of a tradable, investable asset class, can you do anything with this? haig: the short-term volatility has been driven by a lack of liquidity as well. it is what is happening with the dollar having an impact in emerging markets as well. a lot of the emerging markets are highly geared into the mining sector. guy: but those are intraday
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moves. 20% on a massive money stock -- mining stock. where wee, in a world are trying to figure out how we invest our money, -- haig: it is kind of crazy as well. the majority of people we are investing for have a 20 or 30-year time frame. this is unsettling for people to see. in these markets, you have the trend-following ones that are trying to find the trend and it is reversing and exacerbating the intraday volatility at a time where we know this time of the year is low from a liquidity perspective. jonathan: similar move on the s&p 500 yesterday. some of the best movers were the shorter stocks. a question for you. going forward, from here, let's .uppose the fed backs off what we are going to see from
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here is a much weaker dollar. do you want to be short the miners? haig: we are starting to buy into the miners and select the emerging markets. like brazil, for example. the rationale for investing in brazil today is the same as it was five or six years ago, when the prices were 70% more expensive and they were trying to stop money from flowing into the country. guy: you are basing that on a fundamental analysis of the value that exists in those assets? haig: we knew, in the short term, there was a lot of sensitivity in the yield curve in emerging markets. they tend to selloff because of the repatriation of flows. ultimately, if we can gain local currency yields at 15% plus, then the symmetry is stacked in our favor. guy: thanks very much indeed. we will carry on the
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conversation in just a minute. up next is banking. it is the most unforgiving market. bnp paribas malls deeper cost cuts. we will look at the pain being felt around the banking sector next. ♪
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jonathan: welcome back. this is bloomberg tv. i am jonathan ferro along with guy johnson. futures down marginally lower. let's get you up to speed on the news this morning. here is caroline hyde. caroline: bnp paribas posted a 52% decline in fourth-quarter earnings after writing down an italian unit in -- unit. net profit fell to 665 million dareus -- euros. they will raise another 3
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billion euros of capital. the company said the move is part of a plan to cut net debt. that comes as the steelmaker is facing 30.4 billion euros of bond repayments. forecasts raised its after surging sales. it puts it on track to become the first japanese company to top ¥3 trillion in annual operating profit. that is your bloomberg business flash. guy: after reporting a plunge in earnings, bnp could unveil a revamp. earnings come after a volatile week for european banks. we have been speaking to effect it is all week on bloomberg. >> when you look at the dynamics of the fourth quarter, you can see a trade continuing. there is a high level of risk aversion. people are happy with their asset allocation in general.
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but they are paralyzed by this high volatility. and also the geopolitical and macro economic news they see. disconnect. price, the gdp, consumption. it has put more money into the pockets of the consumer and it is good. >> let's look at intangible equity. that we will be trading at tangible book value per share. a very goods opportunity today to invest in bnp paribas. guy: the cfo of bnp paribas wrapping up the sound from some of the senior figures in european banking. let's bring in haig.
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wrongalysts have got it s., andutsche, with c.f. bnp paribas. what are we seeing in european banking that is making it so much worse than even the most pessimistic views out there. haig: it is a perfect storm for the banking sector at the moment. to alter their capital provisions and ratios to meet the new provisions. the, the trading performance has fallen off. at the same time, you have the wealth management divisions of many of these companies who are not performing particularly well. a number of these clients are impacted by the falling oil price and they are having to redeem at a time when market trading is not as profitable for these banks as it has been in the past. jonathan: i want to talk you about that. the sovereign wealth fund, when
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these redemptions start to accelerate, they are some of the biggest shareholders of these listed banks. is there a story or is that a step too far? haig: if you take saudi arabia as a case in point, the marginal cost of production is around $40 . it needs to be between $70 and $80 a barrel. they have got to fund the shortfall when the oil -- where the oil price is. i do not think it is anything sinister. inevitably, if you are the ceo of a large bank, now is the time to get the bad news out of the way. you can imagine there is a lot of kitchen sinking going on at the moment. guy: i am trying to draw lines and figure out what is going to happen next. you look at the saudi policy of putting boots on the ground in syria, very expensive operation. another drain on an already stressed what it.
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is this something we should get used to? haig: i think it happens as long as the oil price remains subdued. particularly in these countries that need to stave off social unrest. predicated onh where the oil price remains. keeps goingis line round. r.o.k. --s are: -- are ok, the consumer feels good. the oil dividend should help pay for the lower end of the pay scale. they do not feel good. that is why they are getting behind candidates like bernie sanders in the u.s. election. does the consumer feel good? the clients we are looking after are starting to feel pretty unsettled. they obviously watching bloomberg and all the financial news and they are seeing more and more unrest and uncertainty.
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geopolitical risks are rising all the time. spreadsheetly, on a , you can see that the oil car -- oil price reduction is tantamount to a tax reduction. it feeds through two more dollars in the consumer's pocket. ultimately, people are affected by what happens and i would say that is impacting confidence. jonathan: maybe a little detached in zürich from what is happening. we can debate that during the commercial break. you are going to stay with us. we are minutes away from the open. of next, we look at the potential corporate movers. oil and banks in focus again today as bg and bnp paribas report earnings. futures here in london are down marginally, about 1.5 points. by 37.ures off ♪
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guy: welcome back. we are approaching the european open. i think we are going to get a flat open. caroline hyde has your stocks to watch. caroline: it is going to be a huge more on the open and it is going to be arcelor mittal. of course, on the back of its capital raise. $3 billion it is going to be raising to try to pay off some debt. you have seen the open that we have had in the share price. down more than 50% over the course of 12 months. it will continue on the downward trajectory as we see the $3 billion capital raised. they are also selling a unit to make $1 billion. profit down 28%. it is not a picture -- not a pretty picture when china is flooding the market with cheap steel. keep an eye on anglo american. they are all going to fall on the back of that as well. , interestingly,
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going to rise. 1.2% higher. on the clean basis, the net income looks relatively ok. the capital looks stronger as well. remember, they did boost their dividends. despite a slump of 52% in fourth quarter earnings, missing estimates, many analysts are saying it is clean underneath what is the overall goodwill write-down on the likes of the italian unit. look at volvo as well. a slowdown in the u.s. in truck sales. we are going to see volvo fall about 5% as well. guy: thank you very much. froms bring back in haig tcam. why is bnp paribas raising the dividend? dividend, youyour say you are worrying about what is happening. ultimately, there has been a conspiracy of things coming together which have derailed
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earnings season for the banks. i do not think we are back in 2007-2008. it seems sensible to think, although -- guy: people are going to start getting nervous. uncovered dividends can only be uncovered for so long. jonathan: it is not just the banks, but the mining players raising debt to cover dividends. you wonder how much longer they can do that. the other story for me, we talked about companies missing estimates. bnp paribas looks like a pop at the open. it does not subscribe to that story. but you want to maintain confidence. boost the dividend even though you have posted a big miss. guy: the other thing is arcelor mittal. big capital raising. that comes back to the china deflation angle, which we have not touched on for a few days now. it seemed like a long time ago
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we talked about china. going into a new year and that is a story we need to pay attention to. the markets pointing -- futures pointing to a fairly flat story. that is the story. that is the market. you can see, absolutely. we will show you the open in just a moment. ♪
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jonathan: welcome to on the move. i am jonathan ferro good wrapping up a week of trading it guy johnson alongside me. usa, we did the first data of 2016. the odds against the rate hike from the feds. the worst week since 2009. . miss at bnp a decline in profit. we hear from the cfo. a brexit risk. david cameron due to speak shortly in poland. jonathan: 20 seconds away from
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the open. features up a little bit higher in london -- futures up a little bit higher in london did -- higher in london. caroline: we are waiting for the stock market to open. just a minute away. we have to keep an eye across the board. whether we are going to see a flat open. all eyes are on the data. downn data we are seeing .1%. whether we can see some sort of fundamental strength from the u.s. economy. will we see unemployment dropped below 5%? will be see wages increasing? will that instill some sort of confidence in the dollar. the dollar has at its worst week since 2009. traders not factoring in any sort of rate rise for the year.
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less than 50% probability we go for a rate hike this year. since 2009.ek oil the volatility continues. we are seeing the first drop since mid-january. as you open up, we're looking at how these markets are doing overall. in a moment i've got delayed pricing it we can keep that's we biggest an i on -- dealmaker, prices hit by what has been record amount of supply coming out from china. expecting that stock to follow 10% on the open. -- ssa beely to see -- likely to sink back lower as metals on the downside.
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do keep an eye on the banks. pnb parabolic meant to rise this morning. the -- many liking the capital is looking strong. we are waiting for the market to open. my screens do seem to be delayed. you can show how the markets are about to open ahead. jonathan: we had a big move yesterday. of a muchon the back nothing. miners getting squeezed. this morning they come up with a big $3 billion capital raise. that is a choppy sector to be investing in. a 48.ver doing nothing. -- pnb bearolic -- jonathan: i am looking at
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the miners. big move. a big rally for the mining stock. anglo american after yesterday's big rally down 5%. glencore up 3%. will straighten out that open for you. let's tell you what is happening in today's program. first, european banks and focus. after a rough week for banking stock. what challenges does the sector face? a big week for big oil. reported. exxon all
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is brexit risk price and? we'll talk market reaction. ♪ guy: a selloff in european banking stockings -- european banking stocks. managing headwinds from the global market volatility and whether it is justified in trading because of the stock. >> we are indeed back in august, there was turmoil. you have seen our results. our results our client oriented. our clients need the products to hedge themselves or to take opportunity of investments. part of that growth is stemming from market share grabbing. some of our other banks have
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rejected some activities. -- have retracted some activities. an example is rbs. we were the referral bank. >> still according to the bloomberg -- bnp paribas trade at the discount in europe. is that justified? what's if you look at things like -- is that justified? >> if you look at things like trading at tangible book value -- there is good opportunity to invest in bnp paribas. >> does that mean the market is not understanding your operations? >> if you look at the total european market, you will see what is been happening to the overall banking sector, there
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have been ramifications. which are going through the overall banking sector. let's welcome in filippo alloatti. bathgate. great to have you with us. credit risk seems to be back on the table. never mind is happening with equities. people getting very specific about debt and what is happening . d.c. credit risk increasing? -- do you see credit risk increasing? >> i used to joke, new year old war. -- we'reing but china talking about the possibility -- whichnot the case would be terrible for the industry.
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banking they underperformed the equity index a times out of the last 10 years. -- indexed eight times out of the last 10 years. all of these things are coming together. the investor has to assess the risk of the banks. of possible banks in november. the event in portugal with the miskick indication [indiscernible] to a have not contributed fair assessment of the risk and sector. banks to get themselves on a level footing. with years into the -- into this process, how much work has been done? how much work still news filippo:e?
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middle-of-the-road. more capital raise. bankast majority of the suffering under the very low interest rate. it is very asset heavy. interest rates where they are and they will probably remain at the very low level. [indiscernible] jonathan: i want to talk about what is happening in italian banks. numbers are pretty ugly. 1/5 of italian gdp. --s that concern you, hey concern you? when they take these nonperforming loans on, you can say it is a bad thing. you can say it is potentially a good thing. the thing we need to be careful
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that's careful of -- careful of default rates are in view. alternately we are seeing a of credit and some of these oil and gas -- the new capital structures. it is understandable that the markets are volatile. it needs to be taken it to cost tech -- into context. guy: banks have been a core part of their long europe trade. start toast week change your perception of that trade? haig: what we have seen is a correlation between banking stocks. we are starting to see a lot more differentiation between different banks but in europe and the ones who have big exposure to the oil and gas sector. there is a greater degree of
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focus on the kind of exposure that you have. jonathan: filippo, you could paint a story to whatever kind story -- whatever kind of bank you want to pick. you look the italian domestic story, an investor might not want to go there. big exposure to the china story. investors might not want to go there could paint me a nice picture. where should an investor want to go to buy a pick list story? many unknowns are out there. exampleo think for [indiscernible] it is not new news. we have been knowing that. it is a reflection on the economy. the economy has been underperforming since the financial crisis. italy is very reliant on the banks. no financial market as developed.
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some story where they are promising, like for example in in italian bank, they have been good out of traditional -- that is been a success. storyland there is a good . which is very much loved. they have been successful in reducing the non-core assets. they actually do in stride [indiscernible] market is of course punishing them because they see the -- exposed to exposed to asia and the u.s. jonathan: think very much.
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-- thank you very much. oil big week. it is been a big week for oil earnings. we'll wrap it all up next. 20 minutes into the set -- 12 minutes into the session. .acks up by 20 points in europe good morning and good afternoon. ♪
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jonathan: welcome back. good morning to you good 15 minutes into the session pit ftse 100 session up 35 points. dax up by .2%. take week for big oil. -- big week for big oil. volatility they're seeing in markets. -- wehave lots to supply have watched the supply and demand figures carefully. our economics group will make an announcement shortly. this was coming. we have been saying that for some time. lower for longer but it is not lower forever. >> the first half of 2016, we will continue to see volatility in the market until of the oil side and their supply-side will settle. my view in the second half we are going to see improvement. that is due to the impact we see on the underinvestment in the oil industry.
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>> we have a lot of >> ability -- we have a lot of flex ability . to meet a situation where this could be even longer, for longer than we might expect. .here will be a rebound >> i believe 2016 is a low. in -- don'tlow is get into a rush year. you're going to get plenty of opportunity. the market is going to be volatile. pickings -- t boone pickens calling in the oil market. he said he expects the oil price to move up by the end of the year.
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he cast out of his oil holdings. he's waiting to see the inventory numbers come down. they have risen for most of the last four months. only a few weeks being the exception out of that. he wants to see inventories in the united states at a record high start to follow. he did identify a few companies he thinks are very interesting, including pioneer natural resources. he says any of those companies could be targeted for m&a activity by the likes of an exxon. all of those if you look the share price last week or even last year have been getting pummeled in this environment. barclays put out .omething about anadarko's according to t boone pickens,
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they are the right stock for stock pickers once the inventory is coming down. jonathan: the headline overnight, president obama and the proposal for a tax on oil. ryan: it is very unlikely because it would have to get through congress. republican -- congress is by republicans. -- idea is oil companies produce or sell on the market. the energy industry came out very quickly saying they do not like this. that would raise the cost of gasoline in the united states by $.25. it is an interesting idea. let's see how it affects the campaign in the united states. this is the most meaningful place we will see this play out. guy: ryan, thank you very much indeed. let's talk about the miners. jonathan: the biggest two-day drop for the bloomberg index. since 2008.ndex
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a coincidence? i guess not. us.e rose byrne joins short-lived? the rally? of people i concern spoke to yesterday. the rally we saw yesterday was unprecedented. 16% for glencore. that doesn't affect the underlying fundamentals. we are living in a world where there's an oversupply. some of the factors involved in yesterday, dollar weakness and a short cover. being theglencore favorite place over the last few months. guy: an opportunity to be position. you take your money on the short position, you reposition and go
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forward from there. people expect the sector to trend downward. now and thebottom people i speak to, that hasn't happened yet. there is much more noise around they are almost there. it is fueling some optimism in the sector. jonathan: you're heading to a conference in cape town. good to see you. tell me what you're expecting. jesse: the conference is billed there is some optimism starting to emerge. m&a in particular this year will be massive. maybe for the next six months we are good to see some assets start to check out the majors like rio. anglo american who hear from on monday.
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i'm also hearing from sam auction are. on the show? jonathan: next thursday. guy: jesse, i look for to hearing about your weekend. somebody's got to get the tough gigs. up next, the dollar has weakened. where going to get today's charts when we return. that is next. ♪
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jonathan: welcome back. ftse 100 up 12 points. the dax down about 14. all about king dollar. caroline hyde joins us. a chart that matters. caroline: this week we have seen the worst since 2009. the dollar down 2.5%. whether we get some fundamental strength from the u.s. economy. i wanted to show you how high it has gone over the course of several years. i have got a chart that shows you back to february 2012. this is a four-year perspective. check out how much every single currency has lost against the dollar. 31 major currencies if you track them all. the u.s. dollar has outperformed all of them. brazilian real down 58.01%. lostthe swiss franc has
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versus the dollar. suddenly the pressure is on. unhelpful is how some of the analysts are putting it. there is a great piece of today. he is a chief global economists. he is saying the dollar is weak now. it is hurting the economy. it is hurting the exporters. the cheap imports for the u.s. dollar. it is helping other economies. expectingy many are the foot is not coming off the pedal for a hike this year. jump that you take the dollar and you saw it on the chart. -- jonathan: you take the dollar and you saw it on the chart. let's bring it up for the audience. when you're high for a trade weighted euro.
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strong euro, the actual story over the last 12 months, despite -- the ecb federal reserve trade. draghiblem for president . caroline: currency wars. this is a problem for every single central bank. now findingthey are that unhelpful. when to push is the ecb's work that much harder. the japanese governor's work that much harder. this is a zero sum game. guy: i wonder if a lower dollar would encourage the hike. the dollar is effectively tightening politics. jonathan: maybe you could flip it around. cameron is in poland together support for his eu support plan. we are going to assess the risk next. it is an interesting conversation.
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you saw that reflected in the question yesterday at the carney is conference. that is up next, here on the move. ♪
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jonathan: hello. welcome back. let's bring you the picture of the market here at the ftse 100, where are we guy: we are up to 1%. with a little bit softer this morning, down by .33%. switch up the board. euro sterling, back through 77 pence and weaker pound off the back of yesterday's monetary policy decision over the bank of england. mccafferty for the previous six months throws in the towel. rates remain at a record low. dollar yen, governor kuroda, cover your eyes.
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brent crude, 33.98. treasury, .84%. lots of stock stories. here are three of them with caroline hyde. caroline: on the optimistic front. the out -- the carmaker outperforming. sinceay for the stock october of last year. the carmaker pulling it in when it comes to results. better thanost fourth-quarter numbers. they say these numbers are here to stay. notable when you got volvo shining a light from concerns about trucks over in america and the carmaker seems to be doing oh to the well. , despite 52% decline in profit, shrugging it off. investors are liking the fact they are boosting their capital. ratio of 20 basis points.
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there are raising their dividend. this is a company that if you slept away all of the murkiness, -- the italian unit did we did see the consumer area performing better than expected. impressing some investors and of course the overall to keep that capital flush and to keep profits going forward. on the downside, you got to focus in on our slow middle -- our cello middle -- cheap steel coming from china. having to raise $3 billion worth in a capital raise that --
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cook's there is not get a big risk when you built into business around the referendum. we do see any -- in the exchange been somethere has protection if you will around the referendum. in see it in the skews and the options market around sterling. they have moved notably since december, consistent with the existence of a referendum. foron't have a forecast sterling. we don't have a forecast for
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sterling in the event of a political event on which we are conditioning our forecast. guy: to talk more about the risk proposed by the eu referendum, we're joined by jamie murray. there is pulling up on the back of all of these announcements in terms of the deal getting put together. is a negative pole good for cameron? or is a positive pole good for -- cameron? the brexitad for cap. -- brexit camp. poll tends to attract more committed voters. -- it does prove is jonathan: we have this shot.
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this 19% undecided. what is to sway that 19%? john: we don't know what lies behind the question. there has been a lot of talk about the eu. this is not the final plan. this is what the next two weeks is going to be about. it will probably end up being one of those online eu summit marathons. we're not going to know for two weeks but it is. where is thet is referendum will be one and loss. -- one and lost. guy: nothing to do with banks. the market reaction to all of this is very interesting. fact weas despite the do another question or the deal. the market is pricing in.
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regardless of the outcome or the u.k. alternately goes. that theouble is scotland referendum is not a good example. much bigger applications for the u.k. as a whole. we know there will be a market reaction but we do not know how much. what we have done at bloomberg intelligence is a few different shots that are likely to occur if the u.k. leaves and work out the answer from that. we see a big sort of currency shock. we see a credit shock and a confidence shot. jonathan: in terms of the currency shock, governor currents -- governor carney mentioning -- if you look at things, do we have to put cable to one side given to what is happening with expectations and have a closer look to euro sterling?
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jamie: i would focus on euro sterling particularly the scottish performance. , all ofr that period the depreciation against the dollar is affected the bad news generally good -- generally. guy: will foreigners you prepared to fund the u.k. deficits in this? ; definitely. -- jamie: definitely. we see financed by fdi flows. we would not see immediately a massive response. .ou see a gradual ebbing jonathan: just to guide the viewers, you mentioned the eu summits and you referenced greece. guy just through the politics.
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how is this going to play out? >> reporting through the night when that summit comes. our viewers in leaders will not have to stay up. fairly the next week or so will be crucial for cameron. he is in poland this week. it is the biggest eastern european power. you would expect the biggest noise to come out of or saw, romania and hungry. we are at the final stages of a .egotiating round in terms of politics, this will go down to the wire. angela merkel wants to keep britain in the you -- and the eu. ultimately that is the key relationship to watch cameron and marco. guy: jon ferro, thank you very
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much indeed. up next, pro-dividend. warming to the idea of stock buybacks. we'll talk why, next. ♪
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jonathan: hello and welcome back . we are 41 minutes into the session here in europe. a picture of the equity markets. lower in the last couple of
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minutes. .he ftse 100 down about .5% the dax up by .6% this morning. there the art. guy, lots of movers. guy: yesterday was an interesting day for the miners. let's show you some charts. give you an idea of the scale of the moves we are seeing. ocelot is trading negatively today. you got to be aware that this stock was up over .2% yesterday. have a little difficulty getting you that chart. check it out. let's get you up to speed. here's nejra cehic with the business flash. nejra: bnp paribas shares are rising. cutting costs to free up capital. the gains came after the bank posted net income of 665 million euros below analyst estimates. the lower profit was fueled by a
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write-down and its italian unit. -- down in its italian unit. company is also selling a $1 billion stake in spanish as a part of its effort to write out industry slumps. toyota has raised its profit forecast after surging sales of the rav four utility vehicles and lexus luxury models. the first japanese company to top ¥3 billion -- two top y3 trillion. of company forecast revenues $3.6 billion for this year, missing analyst estimates. the professional social network is facing a slowdown in sales of display advertising and marketing tools. focused on agy narrower set of how value -- of high-value, higher initiative
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businesses. our roadmap will be focused on investmentand roi tactics. nejra: that is your bloomberg business flash. guy? guy: every thing in the net states has known that for some time. the global equity routes may be why. sophiarg news reporter cost of joins us. we have understood the impact it has had. why the shift in europe? sophia: think about what investors wanted in the years following the financial crisis. they wanted yields. they went into this dividend play. markets started to shift, when we had that rout last year. those stock decisions did not
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look as attractive did they started dumping them at what you find income? if you think about which companies have a high dividend yield? oil majors, hsbc. it is all about income and safety. buybacks offer that balance. jonathan: in terms of corporate management in europe, are we about to see a change? this is a u.s. phenomenon to boost the buybacks. the european companies trying to maintain the dividend. are we going to see a change? fia: european companies are very cash-rich because there spent the past a kid preparing their balance sheet. the problem in europe is twofold. here we do not have the huge tax incentives that company in -- that companies in the u.s. have. also it is a very cultural hugeem because if you have
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amount of cash in your balance sheet, the government is going to ask you why are you not waging that's why not raising wages for your workers. it is more pretentious than it is in the u.s. is this a message of going at growth. we have all of his money, we are going to buy back our own stock. i invest in a company because i want it to deliver a return. buying backt is stock? ia: if you're a shareholder in this type of environment, you want some kind of return. maybe now is not the time to be investing in growth, and less you are very solid -- unless you are a very solid company. here in europe, it is a very nervous market here it is a need tohat shareholders
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hide in this kind of rout. buybacks are starting to look more attractive for european investors. jonathan: user to wonder whether these companies that you relied theor dividends -- dividend, the highest priority use of our cash. what did he do yesterday echo cut the dividend? looking at those big names that they depended on for a dividend and wondering if that is going to happen. guy: we're seeing these shifts, what does that tell us about what these companies see in the value of equities? the equity is both of the cheap. it had to much cash and they do not want to invest. i am try to figure out what the motivation is. the cash motivation
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story is much more interesting. , thankrg news reporter you very much for joining us. up next, concern over the strength of the u.s. economy sparks a dollar retreat this week. the euro has been pushed to its .ighest level in over a year we talked global currency wars ahead of the payrolls report live today. 48 minutes into the session. equities in london, where are we? that flat. .33%.x down by ♪
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>> i think when you look at the dynamics of the fourth quarter and you look into our -- into how january started, you look at how -- people are happy with your asset allocation in general. they are paralyzed by the high volatility and the geopolitical they see. >> the markets have a disconnect between the real economy. if you look the u.s., the lower oil price -- most of the gdp is consumption. more money into the pockets of the consumer. like if you look at things
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-- >> if you look at things like equity, it is standing at 10%. it would be trading at a tangible value which would be 60 euros per share. there is a good opportunity to invest. jonathan: that wasn't european banking executives talking to bloomberg this week about the volatility have seen in the markets. let's show the stock performance this week. nevermind the volatility. look at the low tilt in their stocks. credit suisse down by 70%. -- credit suisse down by 17%. bnp paribas down on the week. negativity -- any positivity, you're going to get a pickup. out to say the stock, that is what is happening. the board loads up. let me take to this board here.
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you the drop we have seen. that is the drop we are talking about. -- look at the stock. that was a 10% move. the stock still significantly higher. jonathan: let's wrap it up and look ahead to payrolls. the first friday of the month, that means it means jobs day. jobs.anted to 90,000 --t number -- usa, 190 jobs richard jones, he joins us now. you look at those employment components this week. it led a lot of people to bring down those job guesses today. richard: levy because of urschel. jonathan: here we go. trumped by will be
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what yellen says to congress. that is the key thing for investors which will definitely trump payrolls. guy: the market has moved a long way in a very short time. picking up on your point, what does she need to set? say?ed to telling two very different -- guy: they were unscripted and kind of off-the-cuff. maybe you need to take them with that in mind. richard: you will have the chair testifying to congress, taking in all of the news from the committee and putting her own spin on it. she will probably be in the middle of the extremes on her committee. jonathan: to talk about the fx
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market. his catch up at play here? fed some features have been sending this message for a while. because you have this to a trade, the dollar has taken the time to catch up. the way you see things as well this week? richard: absolutely. when we're sitting here this time last week, if one of us would've said in a weeks time, the dollar yen is going to be 1.17, there is no chance any of us would've thought that. we had delly early in the week -- we had dudley earlier this week. the fed trumps everything at the moment. guy: you extrapolate that move? has already indicated he could go significantly further. is that will be get? richard: it would not surprise me that we get some sort of push back from the japanese
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officials. we are not that far away from the next ecb meeting. euro-dollar is comfortably above levels that will make the ecb very uncomfortable. jonathan: that was my question. i am looking for to march, nevermind the fed and janet yellen. march when two-year yields in germany is negative around 60 basis points. -- what iswhat it's currently being priced in any way. the euro-dollar is north of 110 but much of it is week. how much can you push back? guy: it will be interesting to see? has done the other way. board are the germans for negative rates? jonathan: richard jones so much to discuss. thank you for joining us. that was bloomberg tv. the pulse is up next.
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jonathan: the pulse is next. plenty more to discuss on this front right -- on this busy friday morning at a payroll. ♪ ♪ we live in a pick and choose world.
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guy: job state usa. we did the first beta of 2016. the dollar index heading for its worst weekly close since 2009. a miss at bnp europe's second-biggest bank reports a decline in profit. we hear from the cfo. exit risk. a new poll shows the eu camp for david cameron makes a case for reforms over in poland. ♪ guy: welcome to the pulse.


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