tv On the Move Bloomberg February 11, 2016 2:30am-4:01am EST
guy: welcome to "on the move," we're counting it down to the european equity open. -- whatsingly, the fed yellen said yesterday. she will say it again a little bit later today. maybe not four, maybe two, maybe one. they're not canceling hikes, but curtailing them. that is taking center stage. the market is split. the economy is steaming ahead in sweden. we will talk about the currency. later on in the program, sam walsh will be joining us.
it is the first interview on bloomberg and we will talk about that story. let's talk about the story and get news with caroline hyde. caroline: federal reserve chair janet yellen said that while the rate hike may be delayed by the turmoil in market, she will not abandon the program. making the twice silly address, she said recent volatility has tightened financial conditions and could weigh on the economic outlook. levels not seen since before the bank of japan surprise monetary easing back in late 2014. n 8 monthbed two and 8 high. whohedge fund manager successfully bet against mortgages during the subprime crisis. thinks the world's
second-biggest economy may have to print more than 10 trillion yuan. the ceo of france's second-biggest bank thinks markets are overreacting. he told bloomberg that the current climate is nowhere near as bad as 2000 an8's crisis. >> this is that it's too low we has nothing to do with what we saw in 2008. the banking system in the world is much more stronger than it was. the average capital control has doubled for the oil industry. we cannot compare the current situation. global lose 24 hours a day powered by more than 2400 journalists around the world. thank you very much, let's talk a little bit about where we think these markets are going to be opening. it is likely to be a negative story.
bloomberg fair value constellation. the number is pretty negative. euro stocks down by 1.5%, a similar story for the cac and dax as well. click the features box, that gives you that fair value calculation. let me tell you what some of the the hang seng has gone sharply negative on the first day back after the lunar new year. some fairlyeeing big numbers in terms of the stocks out there. they are falling individually by some fairly large metrics. you wantn is something to watch out for as well. at what point will the boj start to react? something to watch out for as well. we watch carefully what the bank does later on. the governor will be joining us here on bloomberg as we work our
way through that decision. we break the news here and will take you to that interview at 11:05, a little bit later on. brent crude is in an interesting tango at the moment. commodities correspondent pointed that out, we bring you that chart later on. i want to take you to gold. let me bring you back to the bloomberg terminal. i think it is quite interesting. you have this channel will be here, look what gold is doing. it is popping out of that channel. where you need to go to find out all of this. very interesting tg. janet yellen acknowledged market volatility may affect rate hikes. she said it would not force her to abandon them. take a listen. janet yellen: economic conditions will evolve in a manner that will more and only
gradual increases in the federal fund rate. in addition, the committee expects the federal funds rate is likely to remain for some time, below the levels expected to prevail in the longer run. financial conditions in the united states have become less , with the of growth declines are broad measures of equity prices, borrowing rates, and a further appreciation of the dollar. these developments, if they prove persistent, could weigh on the outlook for economic activity on the labor market. declines in longer-term interest rates and oil prices provide some offset. fomc is expect that the going to be soon in this situation where it is as azeri to cut rates. -- is necessary to cut rates.
is continuinget to perform well, to improve the. i continue to think many of the factors holding down inflation are transitory. i don't think it is going to be necessary to cut rates. that said, monetary policy is not on a preset course. that it wouldut be necessary, obviously the fomc would do what is needed to achieve the goals the congress has assigned us. guy: let's welcome charles, regional director of investech wealth management. you talk about the fed being in a mess. did janet yellen dig yourself out of the hole? charles: a little bit. we talked last time that the fed back to themselves into a corner on a rate rise early last you. i think that is the case. she is now dramatically pulling
back on for the rate rises. probably dealing with some concerns in the short-term. people are getting quite nervous about for the rate rises, obviously. the facts it down to that the market is repriced this massively? tohave gone from 4, to 2, 1, is that what this is all about? they are signaling comfortable raising rates that puts a floor under the idea that the fed is completely throwing the baby out with the bathwater. thanes: it is much more that, obviously. it is china, geopolitical hich i thinktin -- w is a great concern. but in that altogether means if janet yellen and the fed works to put rates up that would give
the market even more worries. guy: what does this mean for asset prices? up, and risk has gone they were too expensive anyway. become overly negative, i suspect, having meant to positive -- too positive mid last year. now getting towards a more sensible level. market we are in a bear that could last for a while longer. guy: what do you mean by a while longer? les: there markets last typically nine months at least last to between nine months at least. it could go on a bit longer. i can't tell you how long it will go. but we will have a number of very strong bear market rallies
with never would will think it is fine when it is not. guy: any rally you see you would sell? charles: i would reduce exposure in equity portfolio to pc some strong rallies. holding some to cash back later in the year. guy: but it is later this year. you think we bottom of this year on equities? stoxx just go to the 600, if you take a look at the five-year charts, it tells you quite an interesting thing. that is we are in an interesting little channel that has been there for quite some time. we going to go all the way back down there? charles:we could -- we could, that is right possible. it seems to me that the implied to growth and what the market is
saying is now down to 2%. some of the bank valuations are almost implying very diluted earnings for a long period of time for some banks. to overshoottend on the downside. that would be a long way to fall. does lookous chart like a rolling over top pattern we have seen. that is the one-year chart, it could be less than that. that does look like a rolling over pattern. it is difficult to see where we would stop. the dozens into much support until we get back. exactly. guy: thank you very much indeed. next, we will speak to the ceo and asking him what he sees for the year ahead.
44 minutese back, past the hour. caroline: fourth-quarter profits missed estimates. , thee investment bank fell deputy ceo we asked about the potential legal cost. litigation or new new news on specific litigation. zurich insurance reported a fourth-quarter loss after damage claims. the range from the tingen disaster in china to storms in the u.k., and ireland. twitter fell in extended trade
after the social network announced user growth stalled in its last quarter. make thisy wants to site more accessible. but twitter has been unable to attract a wider audience. that is the bloomberg business flash. k-townt me take you to and tell you about what is happening with reo profits, plunging a mud -- amid slowing demand. jesse who is there. what of the communicating by changing it? jesse: really what they are communicating is that these commodity prices are seeing huge cuts in prices. that is where you can hit profitability. they cut into the dividend by as much as half. investors, broadly, will applaud this move. there could be a payout for the previous year. that will put perhaps other
companies under pressure. closely --ing this they are watching this closely. it is a strong signal for the industry. guy: many are watching to see when the big tier one assets gets shaken out. rio has a better balance sheet than some of its competitors. does it mean a getting on the front foot? jesse: that is the way i think a lot of people will read into this. it is about the growth and returns for shareholders. as you say, those big assets that they look to buy, copper assets most like way. companies yet to really feel the distress of the commodity price malaise. there's a view that those top assets could become available later this year. said later today they have a list of assets they are interested in. right now, some of those are up for grabs. guy: thank you very much.
walsh is with us now. good morning, thank you very much for taking the time just because with us. what are you signaling with this change in the dividend? some people think you're just protecting the balance sheet. others say you're getting on the front foot, and getting ready. there are assets out there, and you want them. sam: where coming from a strong position from the earnings in 2015 and returns to shareholders. we have maintained the same dividend since 2014. it is lagging to the world, certainly to our shareholders. looking at 2016, we have seen a fairly rapid drop in commodity prices. it is not just materials come also oil, gas, and a range of agricultural products. front foot and
taking proactive, prudent action to reduce our cost, capital, and revise our dividend policy. this is a sensible step that we're taking it to protect a long-term value to shareholders. it tell us about your m&a thoughts? are you getting ready for this tier one assets to become available? in: we are interested getting the balance right between growth and shareholder returns. as we talked earlier, there are a range of assets and that could 's more natural in rio tinto portfolio than others. at this stage, there is nothing on the market that interest us. holding while we focus on developing our own assets. have activities in northern
queens land. there are operations in australia, and mongolia. it is a good, strong, growth option for the company going forward. guy: what do you think it will take for sellers to become convinced they need to sell? the gap between what you think these are worth and what the sellers are able to let them go for? what will it take to close that gap? coming from a position of strength, as you mentioned. we have a strong balance sheet. are very aggressive in cost reduction, capital reduction, and revise dividend policy. maintain the strength of the balance sheet going forward. that provides us with options. anytime i look at financial forecasts, i think of the impact on our business. i also think about the others.
they must be doing it tough. theirhow they run business. distress notll see only at the junior and mid tier, i think it will flow through to some of the majors. guy: should this stage, or new build be put on hold? we are at the bottom of a cycle. isn't it cheaper to get out there and hunt for assets on the stock market rather than dig them out of the ground? sam: at this stage, the answer is no. there are no attractive asset on the market. there is no point about the buying distressed assets. their distressed for a reason. to doing no point in -- there is no point in continuing to invest in the cycle.
thare seeing the impact on at, for example lower australian and canadian dollars. lower energy costs, far more competitive tension with contractors. developgood time to projects on the ground. if you look at the major projects, silver grass, ot, they are all brownfield projects. that provides the best leverage for business on the ground. guy: can i take you to western australia? you stake your reputational little bit on that. why keep pushing that high-quality asset and ore coming out when the steel producers don't want it? can't pay for it, they won't pay for it? sam: they are paying for it. the pilgrim land is the largest
traded product. it provides the foundation of the burden for the steel mills. it also derives the foundation parts formulation. if you look at what we're doing we generate the greatest alue through taking advantages of more superior iron content products, improved aluminum, phosphorus, silica, so one. the blend allows us to optimize our capital. product,ow-through of stockpiles of capital. more consistent and reliable supplies your customers. valuableextremely initiative that our marketing people have entered into. en some comments on
it. they don't actually really affect the market, or understand the market reality. guy: let's stay in iron ore, and talk about the reality. the moment that seems to be a consensus -- it is the phrase i hear a lot. the pump and dump strategy in the iron ore market, is that sustainable? if china doesn't pick up, cannot carry on? sam: i'm not sure the basis of casetatement -- but in our we are the lowest cost producer in the world. if you look at our second half prices, then formulate them , we looktoday's price at $13.20. it is a very attractive business. costs midre are high
tier that are suffering and making a lot of noise. cyclical industry, it goes through cycles. we are in a very strong position to see us through every aspect of the cycle. the action we are taking in terms of reducing cost, capital, and revising our dividend policy means we continue from a position of strength. do you think 2016 will be the toughest year in this industry for a while? sam: i certainly -- 2016 is looking like it will be a tough year. i said to our employees at the start of the year, i expected it to be tougher than 2015. 2017, it is too early to make a call on that. we are very focused on ensuring the long-term stability, the long-term strength of our business. that is the action we are
taking. this will allow us to retain our strength, retain our options. it will allow us to ensure long-term value to our shareholders. pleasures my great speaking with you, thank you very much for taking the time to speak with bloomberg. tintoas the ceo of rio joining us for us. we're four minutes away from the market open. a tough one for european equity markets. this follows the heels of what was said yesterday by janet yellen. at we're looking at. london will outperform some of its peers. we are looking at a fairly negative story going into the european open. we have seen the front end of the german curve move. an awful lot coming out for the rest of the day. we will be talking about what is going on.
>> good morning and welcome to on the move. i am guy johnson at the european headquarters. moments away from the start of european trading. here is your morning brief. fed fears. janet yellen says the market volatility could see her delay themhikes, but not abandon . profit plunges at rio tinto. it jobs by 51%. we spoke to sam walsh in his first interview of the day. >> we are coming from a strong position. if you look at 2015 and returns to shareholders, we have maintained the same dividend as 2014.
we are coming from a position of strength. in: the riksbank decision is 30 minutes time. economists are split. bloomberg will speak to governor in bed at 11:00 a.m. london time. that is what we are watching this morning. it is going to be a tough cash open. in terms of features, signaling stocks are down. london looks further. dax in the the negative. caroline: even though we saw janet yellen striking a dove stone, saying she is aware of china. they stick to their overall policy, meaning a gradual increase in policy. -- a gradual increase in rates.
we've got the ftse 100 down by one percentage point. we got the likes of rn bp trading. it will be interesting to see what real does after it was down. rising intocks are france. most on the downside. .he braun posted poor earnings we're waiting for the zacks to open. virgin sweeping through the equity markets. brent down by .6%. is likinge tale that the rest of the dog. money moving into the havens. money moving into the gold. thee got money moving into yen. the u.s. dollar down. the yen driving higher. we have not seen at this sort of level. we saw the amount of stimulus unleashed by kuroda. we will look at the number, 112.
clearly concerns. riksbank, we have it moving ahead at 8.9. look at what is happening on our yields. risk aversion driving what is going -- what is on the periphery. the portuguese hanging on yields. we have not seen at this low in year. 1.67%. the risk aversion, a concern for a global recession, is that going to become a reality? let's have a look at some of the stocks. -- that is what happens when you miss your numbers and there is so much volatility in the market. it missed, they have to charge 400 million euros. the difficulty of it meeting this year's target of amid those headwinds. 3%.l down
.10%.-- total down higher gasoline lubricant sales and refining helps them overall, down as the market six the work. a deed manages to outperform the market -- adidas manages to outperform the market. sales are going to be high to the tune of double-digit growth. tyco caroline, thank you. -- guy: caroline, thank you. asia back, hong kong back. >> it is due to multiple concerned that the channel growth story and the global growth story. plunging oiles and prices have a big impact. this has had a followthrough affect. you look at the asia-pacific stock index with the exception
of japan, it is closed. we are seeing most groups trading lower good financials down 1.4%. let's see how markets are trading in respect to currency. risk aversion in the markets. comments from janet yellen have an impact on southeast asian currencies. they are gaining on the expectation that the fed may delay in further rate increases. taking a look at what we have in the markets that are closed. sold today, trading to the lowest level. in new zealand trading lower on the day. australia managing a gain. the miners doing well. these stocks we kept a close watch on in australia. down -- virgin australia expects a full-year profit. however the stock is not reflecting that today.
tinto come on rio out with results. a difficult environment with the miner -- difficult environment for the miner. dropping 51%. the afx, stock exchange group, up 2% on the day. profits beating estimates and narrowing its guidance. it's update for a sex -- update for afx -- for the day. you to the to take imf function on the bloomberg terminal and show you what is happening. this is the breakout and it ranks it for you. financials are the leader loses today. the sector is down by 2% at the moment. huge components of the pie, you can see it these are the financials, and they are really taking a pummeling. one of the reasons, the french
.ender, the missed expectations the story there, shares sinking. caroline connan sat down with the ceo to talk about market turmoil. -- >> it is fair to say in a certain part of the year, the appetite of investors have been lower. it is linked to the instability of the market and environment. caroline: one of the reasons for the anxiety is the oil and commodity sector. tot is the latest exposure oil and commodities? >> if i take the oil and gas industry, we have limited exposure to this industry. this week was a
3% of total exposure. two thirds of this exposure is with investment-grade counterparts. impact on the cost of this year will be manageable and our global cost to restore our global banking will be in the same order of magnitude. ." -- caroline: where do they trade at a discount with some european banks echo is this an industry and -- banks? is this an industry issue? many banks today are trading it a lower -- trading any lower multiple than u.s. banks today. the reason of this lower multiple for european banks is linked to the bank policy which will maintain a very low
interest rate for a long time. it will impact the return of our banking activities in europe. guy: joining us on the back of that conversation with caroline connan. suction -- socgen trades on .41 -- that would be the biggest opportunity a fund manager could dream of. we are back down to some of those levels that we saw in 2007 and 2008. are they a good value guy: -- value? >> objectively, they are. i have one rule in life which have learned having been in this business for a long time, weight for the chart to look accommodating it the share price has been collapsing. price to showhare
a bit of strength against the ,ndex or start going sideways because we may not understand what is going on. markets really saying something. just be careful. guy: what do you think the markets are saying? quest there is clearly some for selling -- >> there is clearly some foresellign. when they the miners have had updates lately, they have been very strong. that is one. sovereign wealth funds, shorts, people looking at them going i don't understand this. maybe i should have a lesson from 2008. come back and look at them later. that javier a chart blas brought out. on the bloomberg and what it does. this is current oil versus a
year out oil and -- oil. in 2000 8, 2009. we are heading back in that direction. where do you think oil is going. again, what do you need to see to convince you that maybe some of these commodity stocks are worth looking into? charles: is a good look at the 30 year charts and recognize that traders between $10 and $30 for a long period of time. oil has fallen back on its gain since 1997. it indicates to me that $20 is where it will go to. until we see something in that range, i don't think people should be thinking about investing in oil again. guy: bp pays its dividend today. for income funds, they are still a big story. charles: they should be careful. business theythe
will be making money from. it will put them in a very difficult position. kissing dividends here for companies with a poor cash flow -- guy: thank you for bringing us your thoughts. charles newsome. up next, the sweetest central-bank -- the swedish central-bank split on whether bank goes next. speak to riksbank governor. so many things for him to deal with right now. that conversation coming up. ♪
guy: 14 minutes past the hour. welcome back. 15 minutes, we're going to get a rate decision from the riksbank. surprises could be in store. as survey shows a split whether the bank will hold, make or break or cut them even further. with get some currency intervention. joining us now, james pomeroy. he is in london. what you think they will end up doing? james: it is a difficult decision. everyone in that consensus knows riksbank is going to have to lower inflation forecast. normally that will mean further easing. if you look at the wider economy . it growth, credit growth, this economy doesn't need an active
interest rate. guy: how do they manage this story of fixed inflation at the same time as managing the story of housing market and an economy that is on the front foot? how the balance those two things? past: you have to look the the currency inflation rate. house prices are up. credit growth is pretty strong. inflation expectation services are started to pick up -- services have started to pick up. if they take all of those things, there is no point of current headline inflation. sweden's economy is doing great. really strong consumption and investment. this lower inflation has not been a big problem. guy: there are some that suggest that maybe the central bank should invest in the currency markets. think that is a way of squaring the circle?
james: if the coin of would strengthen, it has less negative consequences. here.e a strong economy we do not need any looser policy. levels, there's no need to intervene. if the currency was to stiffen quite a lot more, it does become an option that is open to them. maybe it is more appropriate than cutting rates even further. echo if they were to cut rates -- tyco if they were to cut rates, what would be the implications for the economy? james: i don't think it is going to pick up -- there's a lot of global effects. this global absence of demand. i don't think policy leads to
that. it may lead to more borrowing and a further pick up in the housing market. it may at to the stability worries in the economy. it may be a greek -- it may be a great thing. it hasn't led to a pickup inflation that's a pickup in inflation. -- a pickup in inflation. guy: how much further do you think draghi goes and what does that mean for governor in that? james: -- if your neighbors are easing policies as well and that creates the quality. the riksbank has got to acknowledge the path of the economy and not just inflation. the report that came out and lose to that. that.e out alludes to
you are watching "on the move." that is the london skyline. we are heading south on the equity markets. unwinding from the gains we saw yesterday. advertising company reporting fourth-quarter sales growth. thanks to business and digital operations. maurice levy says conditions in europe are a little challenging. -- >> europe has been test with a situation. we have seen germany doing well -- doing less well well. u.k. doing less well than we had hoped. the good news is to see spain is coming back. spain is now in the positive side. france is teaming a difficult situation that is been hurt by the terrorist attack. we have seen cuts in old
13.stments since november that one of the best-performing stocks on the stoxx 600. up 2.22%. one of the other stocks, also french on the downside is socgen good following the numbers this morning. this chart tells a little bit of the story of what we are saying. rumor yesterday? this huge updraft we saw -- remember yesterday? the huge of draft we saw? it does look dramatic on the screen. take itself back 24 hours, maybe the chart does not look so despond it. down by 9.10%. the ftse absolutely i watering. the social network showed no new users in the fourth quarter.
turco why stocks have been so -- caroline: why stocks have been so beaten up. the problem is, you and i have put our efforts and we understand the words and the ways in which you maneuver. you know where you put as tax -- you put #'s. peak point.d a guy: those who can use it, use it. yet to learn a new leg was to get on board. caroline: and it is not that obvious. why you're hearing from jack dorsey, a focus on making it more accessible. have elongate, not just one is 40 characters. not just have 140 characters. -- not just have 140 characters. it is five times smaller than facebook. they are being he meant to buy
rivals. facebook has 65 percent of the online social media advertising market. not only do we see all right figures for the fourth quarter, in terms of lack of profit, they are managing to squeeze in their net loss. the next quarter looks poor come away underestimating but analysts have been indicating. it does cloud the outlook for a company that is nine years old. a lot of people are wondering where the future heads. 320 million is when you include those who are looking at twitter through the non-smartphones. this is a company that is actually not managing to steady the ship. jack dorsey promised as he came
aboard. they sounded so optimistic on the call. them raise a lot of their gains. they say they are promising significant changes. they will potentially move the app structure for replies. authorities displaying more popular tweets. it is less hard for you to wade through hundreds of tweets to find the good ones. they are pivoting to look at what youtube does. you don't -- you and i do not have to log into youtube. you can see a tweet on a google search. that could improve their million.by 500 that could start to quit the appetite. they got to fix the management. they have to study that ship. guy: we love it.
with that use them all. caroline hyde, on twitter. the dollar yen, 112. 111.77 at the moment. we have moved down. the dollar yen breaking down. area you need an to look out for. everyone is alive that we could see the boj taking dramatic action and stepping in and doing something. keep an eye on dolly again, post yellen in advance of riksbank. we are going to stay in the nordic region. virgin air beating estimates. where the to speak to bjoern kjos. his story and his airline. what happens next? he has taken advantage of the low oil prices. what does he do to get on the front foot.
guy: in london. we are waiting for the riksbank decision. we'll get that momentarily. it cuts its key interest rates to -50 basis points. we have seen a repo rate cut bounce off the swedish central bank. many people were split on whether this is going to be something that is going to happen considering the strength of the swiss economy. the housing market, look at what it is doing to the euro versus the swedish krona. -- a big move up on that surprise to some rate decision, cutting rates. tos is a repo rate cut down
-50 basis points. there going to be seeing ecb taking further policy action. you can see, the norwegian krone on the front foot. sharply moving to the upside. going to take you to the bloomberg. i'm to show you something. this is policy rates. this gives you an idea. it can take you around the world and show you what is happening in terms of perspective rate hikes. if you like -- if you click two years out. sweden one of the first banks here to raise rates, certainly well in advance of the ecb which will be cutting rates -- which will not be hiking rates for some time. here is caroline hyde. caroline: societe generale, you are pointing out there seems to
be a raisin those gains. this is the worst day for the stock. since the height of the sovereign debt crisis. this is the lowest price point since 2013 for socgen. do not miss your result estimates. they posted a profit but the prophet was not nearly where analysts had been hoping. they are taking a charge putting away money. we are seeing the investment bank not living up to expectations. the chief executive morning -- warning that it might not meet this year's target because of the headwinds in the current market. they are worried about the low interest rates by sweden. , 7.55%.pside one of the best performers out there. the french advertising company
showing real growth in north america and we sell sales up 44% in the last quarter of last year. we saw europe up. asa pack up 21%. up to 1%.c mega up 17%, why echo it is being offered the biggest premium ever in the pharmaceuticals industry to be bought by mylan. premium forng 92% mega -- meda. not meeting that overall premium. if you dig into the numbers, on a price to earnings ratio, perhaps this is not looking so phenomenal. back to you. guy: thank you very much indeed. let's talk about another company on the move.
let's welcome from oslo, bjoern kjos. good morning. you were very unhedged coming into this week drop that we saw in oil prices. you have taken advantage of that. how are you going to like that in? we had a very good hedging going into 2016. theave also taken all that isthe losses unrealized for 2016. ofare going to hedge level shapeo we are in good compared to our competitors. [indiscernible] going forward very much.
-- i readd n.l. mondo in l mondo ryan has gone be priced in 6%. are you going to as a result going to be able to significantly cut your cost for customers? competing.are always we compete a lot with spain with ryanair. ascompete on the same level our competitors. guy: we are going to see price cuts from you this year guy: -- this year? regions haveof the extremely interested prices. some if you look at the long operation, you'll see our competitors have externally high prices.
we at a great level for going forward. -- we are at a great level for going forward. why we gains, that is also -- strategy we have put a lot of [indiscernible] guy: one final question. you can correct our math here. rising forhave been five consecutive quarters. is that correct? if so, that is not good. bjoern: this is because the decline. it has nothing to do with the underlying business. question.uick are you worried about a brexit? yet a big operation. bjoern: i would like the u.k. to stay in the eu market.
the euro market, they are very good. on the other hand, if they go out the eu, we can live with that. guy: bjoern, thank you for your time. bjoern kjos, the norwegian air shuttle ceo. ceo wants britain to stay in the eu. let's get to our international correspondent, hans nichols for more. what you make of these comments? they're very candid. hans: they are funny. we have to consider the context. he was speaking to the london aviation club. he said he would feel lonely if london -- if the u.k. left the eu.
here is the comment he had. it gets to the labor questions, how do you fight the union? we will only have socialist people around us like the french. you and i could have a lot of fun with that. on-air, we will remain official. he has been battling with the unions. elected to success of the british airways had in fighting the union. they have been more successful. the irony to all of this is innair clearly going to come and try to do a little bit more penetration in the european market. in germany, they want to go from 5% to 20%. operationso have new in berlin. a new facility in hans berg and nuremberg. this is a company that likes to come and play bigger in germany, in part because when a look
around and take a look at what is happening in germany, they isk at lufthansa and -- this the direction lufthansa is to go. -- lufthansa wants to go. he's going to be concerned that you are saying his company is ingles. test his company is english. hans: i caught myself. it is embarrassing. guy: hans nichols bring out the story on what is happening with lufthansa. maybe it was said in jest. i want to take you to news that we are seeing out of the bond market, gilt market. .he gilt yields on the move they have fallen to a record low this is a 10 year at 1.32. relativeretty elevated to where some of the other 10
years are. it just highlights what is happening. i want to join your attention to a fairly aggressive move in the yen. the yen is strengthening. whole bunch of currencies. i also want to take you to the riksbank as well here it it has surprised the market and cut rates once again. the market was fairly split on whether or not this was going to happen here at it doesn't seem that the rate still very on at the moment. up next, drill baby drill. francis largest oil company is going to wrap up production in the face of slumping some -- slumping supplies. we are that down next. -- we are going to break that down next. ♪
guy: welcome back. on to take you through some of the market moves we are seeing. really big moves they can place on the fixed income space. we have got a fairly big currency story we need to bring you. let me show you the full screen. this is what we can show you. these are the main bonds that are on the move. we got a record store it for guilt. this is the u.s. 10 year. this is yellen talking about rate hikes in on the table yesterday in front of the house. ..63 is the u.s. 10 year now but the german 10 year, .17. japan has gone negative. the tenure german is going --
the 10 year german is going down as well. all heading lower on the yield. actually a seismic move we are seeing. that's should you what is happening with the currency moves. 112.r yen trading up people are talking about 110. you can see the greenback is getting background post yellen. it is interesting to see what the boj does. -- me show you dollar again dollar yen. you can see that move. draghi is not going to be happy , 113.26.t the race to the bottom is still on. central banks are still in this game and cutting. that is going to have an impact. that is all the trade we are seeing this morning on oil. wti has been moving.
given what we have just seen, i'm not sure where your. we'll give you that lower at the bottom of your screen. it is an amazing move. ryan chilcote caught up with the what if heed him thought and opec production cut was on the horizon. >> tell me -- saudi arabia cut production. laurent cut production? will brazil cut production? who is going to cut? if they say they will be cutting production? we will elect to see that reflected in our investment plan. if doing 2014, 2015, our friends rock oh, then they will have a loss. i think this issue is quite come located. here it is necessary that
companies do not have a loss. one is to think how do you achieve that in such circumstances? >> in principle are you against it? are you just skeptical? >> i am protecting the interests of rosneft shareholders. we will provide our markets with oil. competitive environment, with those we have just mentioned. guy: from russia. kennedy is with us. how did that happen. will: total has one of the biggest refining businesses. there started up a lot of new projects in their production and their production went up 9%. -- and their production one of my percent.
guy: what happens next with this oil market. a big move in the dollar trade. that will rip in them to -- that will ripple into the oil market. getting to some key levels where we are going to break and storage. this is the big story now. we saw a big move in the difference between the fight for oil now. the spread into $11 last night. that is just the market telling us we are running out of places to put crude oil. what we're going to see based on these prices is people hiring supertankers, filling them and parking them. guy: are we back at the level of supertankers we were a few years back? will: not yet. we are not quite back there. tankers are more expensive than they were. everything is going in that
direction. you pointed to the cushy numbers. people have built an offshore storage. that is why people are talking for i'll possibility -- for oil to spike significantly lower. guy: is this how to traders and just this? do they think we got somewhere to go? we still got somewhere to go before it starts to generate the volatility we were just talking about. will: i think it will very from place to place -- it will vary from place to place. once cushing tanks fill up, we could see that price under a lot of pressure. guy: good to see you.
let me just come back to the markets. we are seeing some fairly interesting moves. the fixed income story. the company is moving. we got the currency markets on the move. let's show you the story in london. down by 2.5%. remember we rallied strongly yesterday echo we are seeing some fairly aggressive swings and a number of asset classes. ♪
guy: 50 minutes past the hour. welcome back. the market news here fairly substantially -- i want to bring you up to speed with everything else you need to know. tell you what is in store it people's european head of business will appear before the house of commons. i think the issue of how much they pay the ceo could become something of a sticking point. u.s. a little bit later we get weekly jobs claims. those figures at 1:30 p.m. london time. then we get janet yellen. she's going to appear before the senate banking committee, testimony that she delivered implying that maybe we are not come to see the full rate hike. sort of a downbeat story that she delivered at the back end of last year. chris jones is here from
bloomberg first word. this morning hasn't been fairly spectacular. the moves seem to come around the riksbank. the decision which severely tight call. they decided to cut the repo rate quite further. richard: there was some uncertainty. thefact that three out of 18 economists surveyed expected them -- the fact that they have gone the more aggressive option is interesting, because it follows on from the theme we have been seeing from central banks that they are not going to they're going to be much more aggressive on the easing side. he story from yelling yesterday is the fed is not going to be hiking rates this year. this is the german curve
did let's bring it up on the bloomberg that he be function. that is where we are now. that is where we were last quarter, the line above it. that shows you it is the back and that is being actually crammed down. richard: the short end is being anchored. you get them at zero, near zero or below zero. there are concerns we might be heading into a recession across a lot of these economies. you're getting that reaction. with stephen was saying earlier is the way the u.s. curve is a mate -- is behaving, it is pointing to recession earlier than many inc. -- many think it will happen. guy: you're going to start to see emergency meetings? i imagine today being a japanese holiday, they will be meeting in an emergency. these are big moves. it is very difficult to say
whether they will seek intervention. there's a lot of speculation. a move that we have seen in yen since they have adopted their policy is got to be something that is very concerning. guy: ridge jones joint -- rich jones joining us. the conversation you want to listen to is what happened at 11:05 u.k. time. we're going to be talking to stephane ingves about his decision to cut rates. about whatsignaling he sees in the world? he feels the necessity to do that good -- to do that. the housing market going for right now. why is he cutting rates as aggressively as he is right now. what does he see out there? make sure you tune in. the market this morning, some fairly big moves.