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tv   On the Move  Bloomberg  February 16, 2016 2:30am-4:01am EST

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guy: good morning, everybody. we are counting it down to the european open. i'm guy johnson. here is what we're watching. the equity rallies on. yesterday, we were really speeding through. the reason for that is because central banks seem to be getting a grip of the situation. plus, oil is very much on the move. brent is surging this morning. wti is surging this morning. i will show you the numbers in a moment. prices up nearly 6% right now. it's because we could have a meeting between the russians and saudis. and staying in the commodities space, the anglo ceos coming up later on. the key questions for him. the market is underwhelmed by
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the strategy update. is he going to have issues? will he have to sell the crown jewels? the market is looking for answers, and we will put those questions to him. let's get you up to speed with caroline hyde. caroline: thank you. brent oil has advanced about $35 per barrel amid speculation that some of the world's biggest crude producers will cooperate to reduce output. bloomberg still says saudi arabia's oil minister plans to be with his russian counterpart later today to discuss the oil market. venezuela may also attend. the era of easy gains the japanese stock market fueled by abenomics is over, according to one management company. it says that as markets become more volatile, people will pull their money. goldman sachs asset management says the worst of the credit market selloff is probably over. it is now waiting for a sign that the situation has stabilized so it can plow cash
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back into u.s. junk bonds. goldman says that once sentiment becomes less negative, the magnetism of yields will draw investors back. guy? guy: thank you. 28 minutes to go until the european cash open. let's show you what is happening. let me take it to the bloomberg terminal and show you where we are. wti kick the future's box -- taht settled us, looking for half a percent gain. the cac up over 3%, dax up. we are adding to those gains. let me show you some of the other assets you need to be aware of and put some numbers on those stories. brent nearly 6% higher, the shanghai composite rallying hard. it is pricing in negativity and surging today. look at where we stand on the u.s. 10 year right now. 178, a key metric, euro-dollar
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111. the draghi effect drag to the euro lower. the only thing about to show you is this chart here, back to bloomberg. this is chinese aggregate financing, credit, absolutely surging right now. that is the story there, driving what is happening in shanghai and on the other metrics over in china. in terms of the credit story in china, it doesn't seem to have that much of a problem. there is a seasonal effect in all of this. let's return to the central banks. yesterday it was mario draghi's turn. the european banks as he will take measures to ensure monetary policy reaches the real economy if bad translation mechanisms appear to stress financial markets. the euro fell following his speech yesterday, anticipation of a widening of the ecb stimulus. here's a recap of what he had to say. >> in recent weeks, we have witnessed increasing concerns
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about the prospects for the global economy. activity and trade data have been weaker than expected. turbulence and financial markets has intensified. commodity prices have declined further. in light of the recent financial turmoil, we will analyze the state of transmission of our monetary policy impulses by the financial system, and in particular, by the banks. factorsr of these two contained downward risk to price stability, we will not hesitate to act. the following bank equity prices was amplified by my perceptions of the banks, which may have to do more to adjust their business models to the lower growth, lower interest rate environment and to the strength and international regulatory framework that has been put in place since the crisis. guy: mario draghi.
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let's welcome the chief investment officer at rathbone. good morning. >> good morning. guy: are they beginning to have an effect on these markets, and if so, how should we be positioning ourselves? >> i think it is fair to say that last thursday we hit panic levels. people were talking about the complete loss of faith in the central bankers. i think the events over the last 48-72 hours have steady nerves, in particular in general banking fraternities. overall, the market was heavily oversold. we had a strong bounce. i suspect we will go a little further, and people will reassess where we are. key data looking ahead will be and i thinkch, people will be watching very closely the pmi coming out this week to see whether or not
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economies are actually bottoming out. we are going to see a bit of an improvement. guy: should we be selling into this rally? or should i be buying into this rally? >> as you know, we have a much longer time scale. guy: this could be one of those -- >> -- and a number of structures have adjusted that this is a technical bounce. i would say to you that i think the whole of 2016 made the same point, that it is going to be very volatile. we will get through periods of strong bounces and selloff bounces, and i could see the market yoyoing around for a while. guy: are there any assets that will take the volatility out of my portfolio? >> obviously, people have been speculating about gold. i, personally, wouldn't go for gold, but other diversified macro hedge funds may be a possibility. i also think that, in this sort
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of volatility, you want to be in high-quality sovereigns and decent corporate's as well. a bit of a spread. guy: the fed is up with the minutes. what does the fed need to communicate? what do we need to learn about the future? >> i think the dot plots are getting pretty will discredited. i think the fed a message will be that they are not going in march, that they will look at the numbers, as they always say, and my inkling is that if things come down, we may see a rate rise sometime across the summer or autumn, but that may be in for the year. guy: i look at the volatility we experienced thus far -- you talk of volatility continuing. is the amplitude of what will see in these financial markets represented by the first couple of months in the year, or do we get into a more calm -- a volatile, but calmer situation? >> i think we will ebb and flow.
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you get to a panic level, you come back, that is human nature. what i would say -- guy: the market is not particularly fundamentally driven right now. >> i don't think so, no. we have had a number of people come out, and people saying that there isn't a liquidity crisis in the european banking. it is all about perception. it is about people's concern about whether the deutsche bank business model is broken or not and how much it will cost to repair that. i think it is more about the fear factor than actual hard facts. guy: there is a sense that central banks are getting to the end of their ability to do anything else. --t may harm the economy their more be more qe, but we don't understand. are we reaching the end of it? >> well, i would coin the old phrase never say never. let's see what draghi has to
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say in march. he is pretty inventive. guy: thanks very much. we are back with him in a few. up next, the aircraft industry. we are live at the air show where we will speak to the ceo of airbus about demands from china. that's coming up next. ♪
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guy: welcome back. i want to take you to singapore airshow, to stephen engle, who is standing by with the ceo of airbus. stephen? stephen: our ongoing coverage continues with the ceo of airbus. thank you. we just also revised numbers for 2015, another 44 added to the tally. where is this coming from, and how are the conditions changing? >> it is very simple. at the beginning of the year, we are audited, and there were some
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contracts with condition precedents which were lifted. we decided to include them in the backlog. i think it is good news. it increases our market share. we enjoy 58% in 2050. simontephen: and how is 2016 looking? >> i think we are firm. it means that we will continue to consolidate the backlog of 6800 aircrafts. stepehen: we are seeing the possibility of more deferrals in low class air carriers. what are you seeing? >> many people talk about it, but boeing doesn't see it. the reality is that we have never had to have customers so profitable. it is true as well that the low-cost is very dynamic. as a result of growth, there is
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a big fight among some competitors. all in all, i can confirm that we see the growth, and for a simple reason -- asia-pacific accounts for now 40% of our oth er books. this is the area of growth, and we will continue -- but this sis up the tradition. stephen i just: came off one of your brand-new a350's. qatar is a bit upset about his a320 neos, that he wants compensation. does that come from you? >> he is right. we will not disclose the commercial discussion, but what 50%ts is that it delivers reduction, and we have delivered those who look under the weeks. it's a slower start at what we expected, but we will catch up in the second half of the week,
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and qatar, like every customer, will be pleased. stepehen: are used stephen: are you seeing any indication -- >> no. it is clear that we have to look at that, but the projections of our customers are not current. barrel, at $50, $60 per i can tell you that these new aircrafts make the difference. so, no, we still see airlines looking for the new generation. stephen: where are you going to find to customers for the a380 ? there have been a few new orders, but aside from singapore airlines, asian customers have go back to the table yet. had aah, but we commitment from iran for 12.
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the market doubles in size of every 15 years, but we will need more and more big aircrafts from big cities like singapore, like hong kong, like london. in london, there are 50 for every eight years. travel --ne e stephen: where or are you going to fill the gap of the a360 and the boeing -- the new 777 9x? >> we are very pleased with the production. 777,places one-for-one the with a small exception. it reduces fuel burned by 29%. it is much more economic. can we have a bigger one? is there a market there? it's not so obvious. stephen: thank you so much for your time.
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ok, guy, back to you. guy: great stuff. stephen engle talking to the airbus operating company ceo. one of the things those guys were just talking about, the oil price. brent advancing above $34 per barrel. saudi arabia is set to be meeting with russia tuesday today. futures have been climbing. we are up very strongly on the price of crude right now. we're now at $35 per barrel on brent. let's welcome back into the conversation the chief o advisor at rathbone. with correlation to brent and wti one-for-one, that is no breaking down. why is the market not looking at oil in the way it did a few weeks back, and what do you think oil is signaling? >> obviously, is important to keep a very close eye on the oil price and what effect that will the wealth funds and
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whether they will be disposing of further assets, to the low end i suspect you could well see more selling. i think the reason it has broken down is that the market has moved on, and it demonstrates the schizophrenic nature of the market, when we are talking about panic and fear, and it is now focusing on the banking sector, and perhaps all along there has been this nagging fear about europe in the banking sector. that is now the epicenter of people's faults and concerns. --: two things correlated you talked about sovereign wealth fund. they are huge holders of european bank stocks, global bank stocks. and if oil prices start to come up, they decide they're going to sell so many assets, less worried about the impact on their own budgets. as a result, they need to start selling socks. these are all intertwined, but walk me through -- >> very much so. we saw that connection with the
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high-yield senior debt and the pressure that came on. sovereign wealth funds were selling high-yield debt, unable to get liquidity in that area. they looked around for what else they could sell. they then reverted to selling financial equities and also japanese equities. they were looking for liquidity that put pressure, and then we have the concerns about profitability for the banking industry. those things were concerns going around the financial system, and it unsettled people generally. guy: it always comes back to oil. we will be back with julian in a few minutes. we will take a break, but we are 10 minutes away from the open. when we come back, the potential moves. --s a dutch tie up with liberty global. ♪
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guy: welcome back. it looks like the market is going to continue to rally. futures over half a percent higher, miners very much in focus. oil is trading up 5% this morning, and we could see integrators and focus as well. here's caroline hyde with the stocks to watch. caroline: we are talking about only traded here in u.k. but in johannesburg -- anglo american. we have been breaking down the numbers coming out of this particular miner. revenue is a bit dull, beating analyst forecasts. this is the share price in johannesburg. we are seeing it gaining overall. we are seeing revenue -- if you look at what the numbers are -- they paint a. sorry picture revenue down 26%, the lost doubling, five points explain dollars for the fourth straight year of losses. but they are promising big. if you really delve into what has happened to the share price,
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and indeed the bets against the share price -- remember this is a stock that has rallied so far year to date. they have come down significantly over the past 12 months. we have seen a bit of a pickup in the last month or so in the u.k. stock price, but you have also seen the bearish bets against anglo american, the we see a bets rising as bc bit of a reprieve at the beginning of this year. we saw them start to pick up. even though we start of thsee it, we see the bets starting to hedge up. anglo american is posting a $5.6 billion loss, that they are raising their target for assets to dispose of and raising the overall savings target. let's have a look at vodafone and liberty global. they're at last doing their deal, a joint venture for the netherlands. vodafone is worth less than
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liberty global, so we could see a little bit of a one billion euro payment going from vodafone to liberty global, but we will likely see the stock up 2% on the open. we're watching that on the back of that joint venture. guy: thank you very much, indeed. european equity markets up nearly 1% this morning, 8/10 of 1% for the footsie. is the mining sector investable at this stage? >> realistically, it's difficult to make a long-term investment case until you see a lot of production shut in, rationalization taking place. consequently, i think those are the only places for long-term investors they need. guy: we've only back in a few minutes. also coming up, the cash open here in europe. we will be speaking to anglo's ceo. looking forward to that conversation. butight, chilly morning,
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european equities look like they will rise. the fairhe ftse on value calculation up by 9/10 of 1%. ♪
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guy: we are moments away from the start of european trading. climbs and brent soars about $35 per barrel. a bloomberg source says that the saudi oil minister plans to meet his russian counterpart today. and the commodity class. anglo american say the $5.6 billion loss of 2013. the stock jumps 7% in johannesburg. i will speak to the ceo in 15 minutes time.
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european stocks closed around 1% higher. oil and mining stocks -- caroline: risk appetite keeps going when it comes to the stock market. we are getting expectations for another rebound. up about 2% yesterday. reason, policymakers to the rescue. we're hearing dovish tones coming from mario draghi to the ecb. to the rescue. we are seeing a significant rebound in russia and saudi arabia. are they likely to talk or likely to cut supply. the ftse 100 up 0.8%. exposed the most beaten up stocks of the past few
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months. by 0.25% as they make that deal with liberty global. we open up generally 0.8% higher across the board. look what is happening to oil. we are up some 5.6%. $35.27. would russia commit to scale back? would they want to? with gold we are seeing the risk aversion play out. down 1%.asuries this number could go all the way down to 1100 in three months time, by the middle of may. they say it is time to get out and go short over all. mainly the biggest thing to fear
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is the fear itself. the presidential quote we are using on president's day. u.s. treasury sell off up some three basis points and meanwhile, money moves into the riskier debt and italy. let's have a look at some of the stocks on the move today. anglo american opens up and they are up in johannesburg. dispose ofking to assets. have four straight years of losses for this particular minor. they are trying to take some brutal medicine to fix it. meanwhile, vodafone just trading flat after we get the news they will be doing a joint venture with liberty global and john malone within the netherlands. one billion euros from vodafone. it will be a joint venture and they are taking on tps and telekom.
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their numbers beat expectations for the third biggest cement maker in the world. thank you indeed, caroline. --s is the bloomberg energy energy stock to lead the charge this morning. you have material stocks strongly as well. very similar picture to what we saw yesterday. the whole wheel and the whole map in green this morning. asia leading the charge let's find out what happened with zeb eckert in hong kong. meeting: a critical that could move the oil markets in china's latest report on credit growth. those twin factors led to gains today across the asia-pacific and the chinese markets powered ahead. nice performance for shares in shanghai. 3% advance your leading the way among markets in the asia-pacific and energy related markets moving particularly well. the nikkei twoof to five in tokyo and in solar the bank of commit -- bank of korea kept rates on hold.
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a look at industry groups and how they moved across the region today. financials as well as oil and energy related shares are clearly the biggest movers here. the oil and greg -- oil and gas subgroup clearly leading the way here and as you look at across the region, 25 advancing and petrodeclining all stop china among the chinese names. all of the chinese oil majors had a bad recession in anticipation of that meeting between saudi arabia and russia set to take place today. guy: that certainly have an impact here in europe as well. aggregateal stocks in having a fairly solid session. anglo has posted a $5.6 billion loss. they've announced a massive overhaul to operations. the credit rating cut to junk yesterday by moody's.
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worth cio atings rathburn. let's talk about why the stock is up. what is it that investors are convinced about? >> for quite a long time, investors have grown tired and have been frustrated with anglo american for having their heads in the sand and this morning as we have they just did it in the last hour it seems like this plan their outlining is quite ambitious. more interestingly is that they are actually talking about a complete exit from both commodities. on thent to focus consumer driven materials expected to benefit from long-term growth trends. it's quite a significant change of strategy to exit: iron ore. the outlook for those two is much worse. >> the market bankers just got their prices straight, 6% higher for anglo.
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fire sales, can we call it that? they are selling a lot of stuff here. brought call it that them should -- british or that he will not call it that when he is on the air. just on the earlier media call with the ceo, they talked about selling a coal mine in columbia. one of the best in the world. they are partners at bhb and glencore. they are looking to exit that. -- they are raise talking that cutting debt by $6 billion in the medium-term. >> let me take you this chart here. what we have seen is the long-term price target coming down unsurprisingly. the price has no crossed that line to the upside. andee a chance like this
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what is going on, does that say to you it's time to buy or time to sell? >> i think that it says to me in all honesty -- let's hear what the ceo has to say. this is a short-term spike. there has been a lot of press coverage saying things could possibly be even worse. they've taken dramatic action. as your correspondent says people have been wanting them to nowomething like this and they are getting on and doing it. let's see how much money they can really raise and whether the buyers are out there in what has been a difficult time for the industry where we go in six months time and what is left and what they have got to do. guy: if they said we want to have a rights issue right now, would you be interested? i think they would have to sell it quite hard to the investor because there is quite a lot of disillusionment out there in london. how likely is such a
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rights issue do you think. how far away is that with the downgrade in terms of the credit. .ow close to the edge is he >> the chief financial officer said this morning and a few minutes ago that it is absolutely not being considered at this moment. this is one designed to stave it off. >> we would rather sell assets then go back to shareholders? >> yes but if commodity prices get materially worse from where they are now than there is the possibility that they would need to do that. >> any sense that they have buyers lined up? that any of these assets are on the block and ready to go out the door. next there is a sense of a have a couple of them lined up. flight thelready sale of the phosphate. we broke the story about south 32 being interested in that. that seems to be quite the advance and they're also talking
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that selling the iron ore division in south africa. >> we heard a few day's back that they said some of this distress is getting into the majors and they will shake out into your one assets. do any of these fit the bill of what he is was talking about? >> at this stage there seems to be a couple of your one assets. it could be another few are one assets that may come up that may be forced out should things get worse. as it stands, perhaps only a couple at this stage. what is the expectation of what will happen to this business. >> complete overhaul. theyargets got worse and very shortly share. about threeed pillars, copper, platinum, and silent -- diamonds. >> thank you very much indeed
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and thanks to julia, the chief investment officer at rathbone. moment be back in just a to talk to the anglo american ceo trying to get answers to the questions we have just raised.
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guy: a bit of breaking news coming out of the boj and its surprise decision to take banks into negative rate territory. $22.3 trillion worth of yen last month. the impact is obviously something that has been working its way to the market, maybe not in the way that the boj would've expected. we did see the yen rallying. more to do with the fed when we get fed minutes wednesday. let's get you all caught up. here is nejra cehic. nejra: brent crude has advanced above 30 days -- 35 dollars per barrel amid speculation that some of the biggest crude producers will who operate to reduce output. that's to discuss the oil market. the era of easy gains in the
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japanese stock market fueled by ava numb x is over according to stacks investment management whose hedge fund has posted a positive return in each of the past 10 years. sachs asset management says the worst of the credit market selloff is probably over and is now waiting for a signed that the situation has cashlized so it can plow back into u.s. junk bonds and other corporate debt. goldman has said that once it becomes less negative it will draw investors back. global news 24 hours a day powered by our 2400 journalists and more than 150 news bureaus around the world. >> anglo american has posted a $5.6 billion loss in its full-year earnings. plus the credit rating was cut yesterday by moody's. we are now in junk territory. the angloed by
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american ceo. you're getting out of bulk and focusing on consumers. is that your description? >> i think it is a matter of stripping us back to the core and rebuilding the base. making sure we are fit to go forward in the most positive way we can. we have been making changes over the past 10 years that have been incremental. we have been working on that strategy over the last couple of years and in this market the opportunities there to reset and start with a very different looking portfolio and making some bold moves. >> how many of the assets you are putting on the block would you describe us here one? >> i think you can say there are at least three assets that are high-quality. also, the nickel business is very good.
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that's a different process that we will go through. >> when did you make the decision? did that come later in the day? >> we've been thinking that through for some time. wen we flagged the assets would focus on in december we were thinking the potential through. it has been a while coming and certainly has been something we have been thinking about as they watched competitors and iron ore flood the market with inr -- iron ore. in the consumer markets we have great assets in diamonds and copper. we think we are very well-positioned and that is where we should focus our efforts because that's where the returns will be. >> are you on a fairly short leash from investors? if rice is don't improve or stabilize are you going to be putting further assets into the field? are you going to do more than this is to mark >> we look at
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all of those issues but with what we have done today i think we've got ahead of that curve, we've gone back to the core businesses and we think we have competitive advantage. we lead both diamonds and platinum. i think we have drawn the line. we've identified those assets and there are good assets for sale that will help us reset the balance sheet and create a very different group for the future. i think we've got ahead of the curve and we have probably needed to do that the last couple of years. we've made significant improvements across the operations 27% improvement in productivity and reduction in cost. we are the right calls and setting the business up for success. >> stocks traded down in the last couple of minutes. it's very volatile us morning. what message would you try to give for people trying to figure
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out what your business is worth this morning? businessa volatile right now? >> i think i would say that the mining industry is a volatile industry. i think if you focus on diamond and the platinum business or the copper business, the quality of -- i think people will see a very good story. can you 100% rule out the right bishop? >> from our point of view we do not believe we need a rights issue. we are generating cash and we have got assets or capital starting to fall flow improvessh
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as we go into 2017. we've identified good assets where people will be willing and have demonstrated a willingness to give real cash for those assets. i think we do not need to go for a rights issue. it is a self-help story and with our liquidity we have time to put those things into place. about having time, do you measure it in weeks, months, years? >> i think the back of the broken on the work we have outlined in 2016. we are generating cash in 2016. we have advanced on selling assets and we expect to see three to $4 billion. be less than $10 billion in 2016. and i think we will be down to around $6 billion off the core portfolio. goodnk that we are in
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shape. a buyers market or a seller's market? >> it is a sellers market for good assets, always is. for those assets that are more difficult it is a buyers market. for us, we have time and a number of assets across commodities so we are not pressed to sell any single asset for the wrong number. at the same time, we have to be pragmatic and practical. sense of thee me a price discovery process. timelinehrough the that you expect and when they will get done. we have been in the market or doing the work, setting up the
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process for the last four months. we have a short list of six bidders. we have the bids coming in as we speak. in the next two weeks we will pin those down in terms of a short list of those that we would like to deal with. the next two to three months i would expect to resolve something there. coal we have had lots of interest. towill take us around two three weeks to set up the data rooms. we already have advice in the process and we will be actively talking to people putting numbers on the table to buy the assets. we also have shortlists on our south african domestic coal assets. 10ould expect at least assets to be done somewhere around the half year. once that is done, do you
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expect your credit rating to material improve? >> we forecast the moody's downgrade so it's not a surprise. in december, a little disappointed they did not take into account we have bids on the table for some of these assets. the fact that we have some of those built by the half year will demonstrate a continuing performance improvement often cost base. guy: but a year from now you see this business as in a much better position. you see the credit rating being materially improved. this is a year-long process .ou're going through >> i don't even think it's a year. we will have material movement by the half-year and our debt will be less than $10 billion by
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the end of 2016. we have not missed a net debt target in 2.5 years despite seeing a 40% reduction. our costs have dropped 27%. up 27%.vity is there are not many people who can talk to those sorts of numbers in the last two years. guy: i talked to sam wilkes a few days back and he said there are a range of assets that could be more of a natural fit in rio's portfolio than others. do you think that any of the assets you are selling fit what he said to me last week? >> i think there is no doubt in the world that we have some of the great mining assets and diamonds and copper. news is that we've got
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them and we are continuing to improve. you have to have good assets and you have to run them well but there is a third element that most people forget. you have to have market discipline and capital discipline. we have not committed to a new project in the last three years in this industry. we've also taken 27% out of our costs without capital. guy: when sam says that the distress is spreading to the majors you don't consider yourself to be distressed? >> we're certainly under pressure. we have too much debt. we are taking the right action to take that debt down. i've been very clear and very open that we are restructuring in dealing with the head we have been dealt. we have been very proactive and we will continue to improve. the actions we've announced today are a major step out and very clear direction for the
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market. guy: can i walk you through your macro view of the world. what do you think the chinese economy will be delivering and where do you see the dollar going? >> if i can quote sam, i think he is right. i think china is changing its economy from and infrastructure dominated economy to one of consumer growth. the u.s. is still the biggest market in the world for consumer products and we are positioning ourselves with a great suite of assets in those commodities advantaged by those trends. i know people would like to have the assets that we have but that is where our shareholders should feel very comfortable that we have great assets and great positions and we're setting up to be successful in the world as it unfolds today.
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guy: thank you for your time today. i do a lot of people watching this are taking note of what you have been saying. mark is mentioning what's been happening in china. the pboc says they will safeguard their bank's credit assets. the central bank is urging people to quit offering zombie lows to zombie companies and it will boost support for disposal. this whole issue of where the credit stands in china is a big focus right now but that story is something we are very carefully and how china will manage that will be instrumental to what happens over the next 12 months. we will be back in a couple of minutes time. it's been more than seven years since the global economy went into meltdown. we will look at why that europe banking nightmare is far from over. ♪ we live in a pick and choose world.
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guy: welcome back, you are watching "on the move." here is the picture for european equities. still very much moving forward on a two day basis. me quickly show you what the iron map shows you. are nudging into negative territory. energy is far and away the lead area at the moment. reason for that is currently at the bottom of your screen and as you can see brent crude is trading up 5% right now.
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let's find out what stocks are on the move. i have one of them leading the pack on the stoxx 600. it's a very volatile one. companyian oil services raging up some 10% at the moment. only flailing to give up to strengthen itself amid this collapse in the oil price but today we see oil gathering pace and all services company rising. all writing on the coattails of brent and wti crude. three days, the longest winning streak since december and eds, even the utilities turning red. generatoriggest power in the whole of europe.
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as sales did beat analyst expectations. they're clearing up nuclear waste over all of the storage costs but they are thinking of selling part of the unit. -- they are extending some of the u.k. reactors. meanwhile, oil copies on the downside. been a bit of risk appetite. we even have goldman sachs saying it is time to short gold. we are seeing an erosion therefore. rand gold is one of your worst performers today. biggest banksthe have announced mass layoffs and
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paid billions and legal penalties and lost hundreds in market values. about what written he calls your up banking nightmare and joins us now. and we are not waking up just yet. >> not just yet, no. we are seeing the banks go through a transformation. while last week felt like a crisis, and this week we see the stoxx picking up and rallying a bit. we are seeing a long transformation that will take two to three years at least and the big test is will the markets give them time to implement the restructuring plans from october and stabilize their institutions. guy: do we not already have the answer to that question? look at the volatility at the start of the year it is clear these guys are on a short leash. >> they are but they have no choice but to push forward and implement these plans. regulators are insisting that they do.
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we talk about this being a crisis. what are the elements of the crisis that we can identify? >> the elements are regulatory. the legacy of the go-go days which are manifested in litigation costs. they are also in new challenges that were not foreseen like fin tech. even as they have been coping with the regulatory restrictions, along comes the techies out of the silicon valley, new york and london and they are reinventing core banking services. lending,eer transferring money over the internet and even using bitcoin a different ways, shapes and forms. all of a sudden the banks are fighting this two-front war. guy: extrapolate some of these trends. what have we got? >> i think that the banks have
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to press ahead making sure they are not outflanked. pesticide which businesses want at decide how to satisfy the risk reward ratio. i think what you saw at credit suisse and deutsche bank was, let's preserve the investment bank. the markets did not like that. saw that go by the boards and never have new ceo's in place who are going to make these deep cuts. the market is looking at, this is restructuring mark to and mark three. guy: can we look to the atlantic and say those guys are the models that we need to use? or if the operating market different? >> they look across the atlantic with envy. john cryan talks about but to be
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fair it is much tidier in the united states because you have one federal government and the states must comply. the rules get implemented, the banks have to cope and they took all their losses early. here you have different countries with different cultures and banking regimes that must be sorted out. that was not until 2012 that the banking union came into to address problems in banks in member countries. it just takes longer because there are different countries. the big debate that is taking place between the u.k. and brussels and france at the moment is what happens to london next. how pivotal is that? a littlek it is quite because it is a mass of uncertainty. when you look at the u.k. banks, what is going to happen to their senses? how do i invest and why do i buy
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stock if i do not know what the ramifications of this political question are going to be. it's like throw it on the pile. it's another variable. >> thank you very much indeed. well it's on the conversation in the monday night trip to paris, david cameron failed to win over the french president francois hollande. for more let's talk to our international correspondent who joins us from berlin. where did these guys not see i to i? >> it mostly has to do with the banking and the carveouts you will have or what french officials say is an unfair advantage for british banks. concreteo real progress of the french officials say there is a desire to get something going inside or ahead of the meeting would her from donald was also in paris. out that theng
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risk of a breakup is very real. these different carveouts are not going to be an easy subject to tackle. ofsome ways this is a replay the 2011 fight when they could not get what they wanted. not wanthe french do that. they are joined in that opposition by the germans. that is just on the banking side and on this migration issue of how quickly can cut off benefits or how long you have to delay there is still an east west split in that fight has not really happen. were talking mostly about the banking fight. of his meetings, mr. cameron will be meeting with martin scholz today he is the even eu parliament president who could be a way to convince the german that his track is the right one. we also heard from mario draghi, he wants compromise from both sides saying they both would have a lot to lose. guy: it makes you wonder what
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mario draghi is talking about this. date yet ande a polling is notoriously unreliable. how seriously should we take it? i think the polls give you an indication of where the in.rs are before the tune what we see is the narrowing. they are winning but there margin is eight points. 49 to 41%. --shows a big divergence convergence from what it was before. it does appear that staying in the crowd is losing momentum. one quick note on this, and maybe dominating the press in london and the u.k.. walk-upgermany all the pieces to the summit in brussels it's all about migration and what you do about refugees.
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is notexit conversation playing that prominently here in the german press. they are much more concerned -- when you talk of existential threats about the refugee story than britain leaving. been interesting how those diagrams overlap. hans nichols is our international correspondent joining us out of berlin. let me show you what the pound is doing as we talk so much about exit debate. is it a short-term hit to sterling and a long-term positive? it's very hard to get a sense of exactly what the trend in cable will be. point moment we are 145 01. up next brent climbing sharply amid speculation we are up nearly 6% and we will talk about that next.
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guy:, welcome back. it's a beautiful morning and if you are watching the market it's a beautiful day. oil stocks leading the charge let's find out what's going on. here is nejra cehic. >> vodafone and liberty global theirgreed to combine broadband businesses in the netherlands. vodafone will make a cash payment to liberty of one billion euros to reflect a
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different valuations of their local unit. disney has announced that the filming has begun on star wars. the sequel follows the force awakens which was the fastest movie ever to taken $1 billion. is the has revealed that been issued el toro and laura dern will join the cast. the royal bank of scotland avoided a billion pounds in taxes by investing in controversial financing deals for film. the transactions were revealed in public factors by collects. raised theerican has target for disposal this year and will cut debt to less than $10 billion. the company is hoping to sell as much as dollars in assets by year end and those earnings beat estimates despite losing $5.6 billion in 2015. the news comes after their credit rating was cut to junk by moody's last night.
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>> thank you very much indeed. >> oil trading at five dollars per barrel is the saudi's and russians percent of the meeting today. that was meant to be a secret meeting but not anymore. let's chat more with our chief energy correspondent. great work and nice reporting. these critical secret meetings. what are they telling us about what's going on behind the scenes? for the first time we are getting an idea of what is going on behind the scenes. we hit it is no potential for a deal. companies are talking. saudi arabia and russia where they are meeting in secret -- secret with the help of qatar. trying to negotiate or see what is the position of each country. russians probably have not been talking to each other for many months and now they are
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beginning to talk. at least they are starting to talk and telling each other what is needed to make up for it. it is qatar. they are close enough to the saudi's and the russians. broker's wehonest understand they are using back channel diplomatic negotiation's to bring together the country's. guy: who is talking to the iranians? >> that is a good question. . that's the part that's missing in this conversation. the only saudi arabia russians, the qatari's, and the venezuelans. it is too soon to say that the deal is imminent. and 1999 we have months and months of secret negotiations.
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we are meeting in places like cancun, miami, the dreaded. the market new nothing about this. we got glimpses that something was going on but we were kept in the dark. it was back channel diplomacy and the result of that was a massive production cut that brought non-opec countries like mexico and norway together. how badly positioned as the oil market? >> it is terribly positioned and that is why we are sing the 6% rally. they are taking precaution and taking bets on the negative side. the market is massively short so traders are trying to position more neutral because now they are realizing that something is moving. guy: great reporting. we will continue to watch the coverage as it emerges. you are seeing oil up very sharply. b.p. up 4%.
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oil market is reacting, oil stocks are reacting to the story that bloomberg has here. up next to get key economic indicators today. index and u.k. inflation. we will look ahead to those numbers next.
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>> i think it's a matter of stripping us back to the core, rebuilding the base and thinking we are meant to go positive in
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the strongest way we can. we've been making changes of the past 10 years that have been incremental. it was time for a bold step out. we have been working on that strategy over the last couple of years and in this market the opportunity is there to reset and start with a different looking portfolio and making some bold moves. that was the ceo of anglo american talking to me earlier. the company stock is currently trading up a touch. we opened really strongly in johannesburg then in london. the market makers decided that was not to wait -- the way to go zeroe are now up only point 2%. what a shame what is happening with the oil majors as well. we are looking at a fairly solid session for the big majors here in europe. -- broke theloat
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story yesterday, the market is not positioned for the successful talks that could emanate from what is a round robin story emerging from opec. looking at we are this morning and that is striving european equities. plenty to discuss already. data. u.k. inflation economic survey out later this afternoon and hit the manufacturing. also david cameron addresses leaders in brussels on the terms of the british eu membership. we also have fed speakers aplenty. we will speak to the federal reserve president of the banks in philadelphia and austin a little bit later on. to notto take you back what is happening with the fed or the data, but the rise in
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oil. we had have the error on -- we had javier on earlier. what are the economic implications with the data we're looking at now? >> my initial reaction is that it is almost in effect a global tax hike on consumers. prices at the pump will go higher in petrol and it really turns the narrative of what we are seeing from central banks on its head because obviously that will have a material impact on inflation and we heard yesterday how mccafferty on the bank of england said that the low-inflation we have seen is actually starting to feed into the settlement which is why he did not feel that the rate rise was justified this month. if we get a really sharp spike in oil, that will turn it upside
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down. guy: with her draghi yesterday voicing -- we heard draghi yesterday voicing a little bit of worry. is well of the problems selling. maybe we do not get quite as much of that or the high yield problems bleeding through into the banking sector. could that stabilize the financial markets? >> it is tough to say because this is not a narrative you look at. it throws up certainly a lot more uncertainty. he said the interesting thing from draghi yesterday as we have euro-dollar trading below 112. we have just below 12 aces points trading into next month and there is expectation that the ecb will act next month. i think we had 12 or 13 basis
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points priced in going into that. that would be interesting to watch. he has had a little bit of feedback into the euro from what he said yesterday. rate expectations are where they are. but the end of the money call is at the market goes higher. it feels so mispriced if that is the case. people are talking about the fed going into negative rates. people are talking about the extreme conversation we're moment.t the the disaster surrounding european rates. all of that is at the left-hand side of the distribution curve. the thin tail is at the other end with oil going $80 per barrel -- that changes everything. >> it ratchets up uncertainty. the narrative we have been dealing with has been the exact
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opposite of that. think, is one of the things that will be difficult for investors to come to terms with. i really have a hard time thinking about what the implications of that are, given the fact that i do not think we have been thinking about it all that much. guy: nice to see you. richard june's -- jones joining us from bloomberg's first word. in "the pulse," francine lacqua will be breaking down that data. you're starting to see a bump in oil praise -- prices and you will see quickly i read into that cpi number. that is the story, that is the narrative. but the narrative in the market this morning is what is happening with the oil marge -- majors. they are charging higher. broken yesterday on the secret meeting between the
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saudi's and the russians having a massive impact on oil prices. there is brent at $35, we are up 5%, there is the ftse 100 up 0.6%. "the polls" is up next. ♪
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francine: european stocks, the longest rebound of the year. central banks supporting growth. investors say mario draghi will deliver action in march. brent crude above $35. a bloomberg report that saudi and russian ministers will meet. angela merkel post a $5.6 billion loss after a classic jump eye moody's. -- classic jump by moody's. ♪ francine: welcome to "the pulse." i am francine

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