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tv   On the Move  Bloomberg  February 24, 2016 2:30am-4:01am EST

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sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. ♪ guy: welcome to "on the move." we're counting down to the european open. we find hans nichols in frankfurt today, we will be with him shortly. how low can sterling go? the pound drops on brexit fears. but the economy could see far steeper slide if britain votes to leave the eu. don't count of the fed out. kansas city fed president morning that a march hike isn't
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of the table despite market expectations. we'll talk central banks in the reason why hans is in frankfurt. jpmorgan trading revenue dropped 20% this year amid the global rout. but the bank is gaining share in europe. is this bad news for deutsche bank? we will talk about that during the next hour and a half. we are a half hour with the european market open. let me show you the fair value tech elation we have this mark. fairly flat, i little bit of civility may creeping back into these assets after some fairly big days. you can see london just a little bit higher. let me take you through some of the other assets you need to know about this morning. pound thatg at a is back above1.40 but has gone below that overnight.
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if you're on the bloomberg, go check it out. it is a great story but where economists see the pound going. dollar yen continues to move. you could see in overextension of the fed doesn't hike. you could to the move all the way to 1.05, what would that do to the japanese economy? a big move earlier on the week doing damage. about what is happening here. we have to tackle at this interview we have done. it was a fascinating interview done on bloomberg radio yesterday. we'll talk about what she has to say about whether or not this march hike can be excluded. let's get you up to speed. jpmorgan investment banks as revenue from sales and trading at tumbled about 20% this year. the news provides an early gauge of the pain that wall street's
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biggest firm by the global market rout. jamie dimon thinks things will improve. jamie: i will not the guest the future. i don't have to worry about that. belief isown personal that this will settle out. the u.s. may just keep chugging along. the federal chair vice-chairman said he remained uncertain about whether the -- or turmoil singles signals global economic growth that gets of the u.s. economy. he thinks it is still too early to judge. but he things policymakers should be prepared to consider raising interest rates in march. she said her outlook for solid growth this year remains intact. we are from extraordinary accommodation in this economy, to something more neutral.
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fomc has said it will do that in a very gradual fashion. when i look at how the economy is performing, and the labor .9%ket, we are at 4 unemployment, and inflation looks to be stable and moving in the direction of meeting the fed to goal. nejra: global most of the for hours of a powered by more than 2400 journalists. that up with esther george talking to bloomberg radio yesterday. left draghi has two weeks to decide at wrap up stimulus it doesn't upset. his colleagues, or investors, hans nichols will be speaking to one of those colleagues. hans, we've heard on negative
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rates, we understood what is happening with the banking sector. what will they make of all of this? iss: yeah, we know he clearly opposed to additional cuts. the concernut that, they're having for small and medium-sized banks. the question really is what is the lesser of two evils? what happened to the bigger rate system.n some tiered i want to get his latest view on deutsche bank. finally, greece back in the headlines this morning. imf saying they want to do more, greece amy want to go further. a lot of pressure on greece. we will see if it creeps back in to this pan-european discussion. guy: the data out of germany aren't looking great right now.
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but the economy is running a surplus. a question that needs to be put to him? has monetary policy reached its limits? what does he think about whether or not we need a big fiscal push now? : that has always been his view. the monetary policy is giving the fiscal architects a little too much leeway. the question on the german stimulus and whether they will all theplus on additional housing, and services, it is a backdoor stimulus. is it a way for the finance ministry to say talk about their maintaining targets of that big zero deficit. what would actually do in terms of spending on the ground? it looks like you have a lot more spending. i am really looking forward to this interview. let's bring in bob parker, a
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senior advisor at credit sweeps. two weeks ago, mario draghi has a lot to think about. s, what answern would you want to hear? what extent is he concerned about the german economy weakening since last november-december? but the example find last number that we had. clearly, the german economy started to slow down at the end of last year. we have seen a downturn in consumption, and exports. seen a downturn in investment spending. before, i was fairly confident. by the second quarter of this year we could see german growth boosted by a weaker euro, boosted by weaker commodity prices. we could have seen improvement to about 2% annualized growth. i think that is now delayed until the end of this year. a sluggish first half of the year to germany.
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to what extent is the bundesbank concerned about that? should the policy response be not just to the german we can -- weaker economic data, but what was an improvement in italy seems to be reversing. likewise, the very strong improvement we saw in spain was slightly weaker. clearly, policy response is required. is that going to be further easing in monetary policy? as you said just a moment ago, germany is some running a fiscal surplus. i think the argument for further fiscal constraints now is very weak. guy: will esther george wright to the rescue? -- ride to the rescue? stanley fischer said he us it to be convinced. the divergence between wall street and main street seems to
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be growing. if the markets got the fed wrong, how are things? market is now saying no interest rate increase this here. i think the market is wrong, i think you'll probably get one or two. but it'll probably be in the second half of the year. yes, as theiralf, is right by focusing on unemployment. george is right by focusing on unemployment. with think she is wrong the recent data out of the state is not that impressive. that strong consumer picture has recently weekend. although the latest industrial production numbers were much better, that is a consent background of for five months of very poor industrial production numbers. should you be raising interest rate in march when you have growth probably close to 2%?
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-- have inflation looking at headline inflation -- and still close to zero? it is way too early to rate interest rate again. no increase in, march. but possibly something in the third quarter. guy: those aren't priced income of those one or two you're talking about are not priced in. where would it go? get expectations of fed rate increases changing. let's say my view in the second half of the year would take us 1.25% on the fed funds rate. it is been consistently my view, let's say with monetary easing by the ecb in two weeks time/ draghi, having said in early december he was going to ease monetary policy then didn't i
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think he is building up a credibility problem. ano think there will be easing in monetary policy for stuff they may mean more negative interest rates and an an expansione, and of the asset classes. all of that translates, i think, into one for the leg down in the euro. i stick to my view that in the second quarter we'll probably see 1.02 dollar euro. be longerat has to dollar, and recent dollar weakness i think was an opportunity to buy the dollar. guy: lousaka what that in a few minutes. bob will stay with us. the next, spain's largest electorate reports earning. we speak with the chairman, and ceo. ♪
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guy: 7:44 in london, the market
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is flat. that is what we are expecting. the focus is on the pound. let's talk to nejra. ejra: airbus boosted profits as it ramped up delivery of the latest model. to four point one 3 billion euros, that compares with analysts forecast. iwith guy.e live even jpmorgan is not immune to the global rout. trading has stumbled. there is no let up in sight. fall inld see revenue the fourth quarter. honda shares have fallen after the company announced a management mixup. the chairman will leave the
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firm. and is also recalling 42,000 civic sedans after reports of an engine fire. noyes plans to lower its offer. that is to placate investors that consider the company adequately capitalized. company, which was the worst-performing stock in the past year announced in november that it aims to raise as much as one billion euros to boast -- boost the capital. bob, we went to some 40 overnight on the downside risk to that? bob: i think there is further significant downside risk. in the second quarter, it could go to 1.02-1.05. if we get opinion polls fairly close on the eu referendum vote,
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we could possibly see sterling euro go to perhaps 85, even 90. that takes sterling significantly weaker. you end up in the second quarter potentially with a rate less than 1.30. states,volatility possibly goes higher. i think the sterling goes down. you have to be short serving at the moment. guy: what does the prophet side to that trade? what am i long? shortne trade is to be sterling. what happens to the ftse? when you look at u.k. global companies with foreign cash flows, a large part of the ftse 100, sterling going down to less positive is extremely for global companies.
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it is not great for domestic companies. exporter, ande an getting out of a foreign cash stream. theftse 100 basically as of -- has nothing to do the u.k. bob: focus on companies which benefit from devalue to currencies. if dollar euro goes to 1.02, that will be great for european exporters. states, i, in the think one sector which you consistently have to avoid is american companies which are driven by u.s. exports. u.s. exports, if you look at the graphics come we're down by about 7% year on year. back to 2009, exports were growing. exports butamerican companies also have over borrowed in dollars.
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frankly, you could be in trouble. guy: back with bob parker very shortly. up next, we talked to a u.k. stream going to a spanish company headquartered in spain. the 15 profit came in. the company said it increased profit this here. live from london, next. ♪
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guy: results reported this morning, 2015 net profit came in at 2.4 billion euros. for more now we are joined by the company's chairman. he is on the line from london. good morning, thank you for your time. political risk seems to be front and center for your business. referendum init the u.k., how will that affect your business?
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as you know, most of our business is regulated. most of the regulation is for net worth. we have regulators -- in the case of the united states river regulator coming together later. areink most of our business not dependent on the markets. these -- not so much of our business. but on the interest of the people. we are not much already affected. ok, but in spain are you worried that the regulatory outlook isn't quite as clear as it could be? you could have a very left-leaning government coming into madrid. certain instability in
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any market is not the best consideration. in our case, all the regulation as we've already done in the recent years in the case of power generation. we have tremendous access. and in the area of net worth, -- after 2019, we are regulated activity. i don't know what can be done more. guy: let's talk about the u.k. the pound is getting pressurize. begin to see the pound down for quite some time. how is that going to affect your numbers for the rest of 2016? ignacio: four 2016, most of our
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rate of exchange has been covered. it would not have much influence in our business. i think we could make our cover rates already. for the time being, we've made that cover. --: what would u.k. leading leaving the eu mean for iberdr ola? hadcio: we have already plans for the next few years in which we will invest in the range 24 billion euros.
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today, it is close to 70% of our total contribution to the company. our aborted markets are the united states and britain come at present. followed by iberia, and mexico. guy: if the u.k. were to leave, with that order change? would you think about investing elsewhere? and britain come our plan of investment is already fixed. at the moment, we would have to invest in the net worth distribution. generation, we already at this moment investing in onshore wind. we're just -- we're offshore wind farming.
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largest and ite will be completed by 2019. it is in the range of 2.6 million pounds. guy: let's move on to some more current the details. what to do you think your stake is worth? ignacio: sorry? i don't catch you. guy: let's move onto another question. ,hat is more important to you at the moment people are looking at a regulated business. they are trying to think about the dividend and what you are doing on fixed investment. which is more important to you? fixed investment, or the dividend? ago we: we try, 15 years
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were seeing we were at the right one. we had the vision of the world needs more clean energy. we were investing in renewables. we were already providing a dividend with the company keeping. that is what we have been doing. where the largest european company for capitalization. and the planned is to continue this trend. butsting as much as we can keeping at the same time the dividend power of our shareholders. we have grown by 4%. our plan is to increase our dividend the same amount as well. we will increase the 4% dividend because of that. we would like to increase dividend in line with increasing result.
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that has been our strategy for the last 15 years. keeping the company solidity. never having a problem with solvency, or the community. we are already making changes. keeping this in the manner p of the neweriod -- of the new period. ignacio: guy: what do you think you'll get for that business? what we and abusing that money for -- what will you and abusing that money for? if we own 20%, it is our main vendor. siemens is a main supplier. that will become our largest supplier. we could become the largest
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customer for them. the largest company worldwide. guy: ignacio, inc. you very much for your time. out with numbers. european markets opening as we speak. let's have -- let's find a what is happening. nejra: a little bit of a volatile week so far. futures trading pretty flat. we might not see much of a change in the way. looking at the cac 40 opening pretty unchanged opening .1%. the ftse 100 as well, pretty much flat. waiting for the dax to open. bigger moves we have been focusing on, crude oil, wti down 2%. says thefter i ran
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proposal by saudi arabia and russia, the producers were ridiculous. iran looking to boost exports after their lifting of sanctions. focusing on the pound, we have seen the pound drop below $1.44 for the first time since 2009. it has been declining all week. all concerns over brexit. the yen has been gaining toward the haven. pretty much unchanged. it is strengthened against all 31 of its major peers so far this month. we want to get to the stocks we are watching today. airbus, beginning with that year. grow, 1.6% last were destined the company is looking for a need to grow in china.
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you are speaking to the cfo later, guy. is -- after cost-cutting and recovering demand. it will start paying a dividend in line with the industry for this year's earnings. the first since 2011. that planned dividend reassigned -- it can sustain its turnaround even amid a slowdown in china. the peugeot is one of the worst performers on the cac 40 this year here at delta lloyd is gaining 10.4% almost at the moment did this is the dutch ensure that plans to lower its offer. in ames to raise as much as one billion. this is the worst performer on the amsterdam stock exchange in the past year. guy? guy: just want to show you with imap looks like. it is a fairly negative.
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energy is losing, material is down as well. shelleights, royal dutch down. bp down 1%. that is where you are seeing the losses. check out the imap. bob parker still with us from credit suisse asset management. bob, in some ways, the energy sector is so beaten up. you see it in the bank earnings, the numbers coming out from the energy majors. close to the bottom, at the bottom? still further to go? bob: if you look the brent, 30 is close to the base for oil prices this year. because of supply cutbacks, because of problems with the economics of alternatives, because of consolidation in the industry. either end of year -- by the end seehis year, we will
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barrels at $40 per barrel. we have seen some rather wild forecast. brent may go down to $20 a barrel. i disagree with that. guy: the dollar goes higher from here. bob: the dollar goes. we've got one final dollar on the -- we've got one final leg on the dollar. toward 1.02 against the euro. the bank of japan is really protesting the strength of the yen at the moment. i think ideally, the bank of japan would like the yen back to 1.15 to 1.20. they probably will not get it. guy: it has had an impact on the banking sector. do you think -- how much damage do we need to price in to the banking sector? bob: very little.
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of the stress points in the commodity sector, default rates have risen in the shale written -- in the shale industry. rates will rise in other commodity sectors. we may as well see some defaults in the south commodity sector. there arely where long soft commodities and they borrow in u.s. dollars. that is causing stress. isn't that discounted in bank share prices? the answer is probably yes. echo -- yes? guy: jamie dimon saying jpmorgan is gaining banking share in europe. question is jamie dimon taking business? both. if you look at what is happened to european investment banking, partly because of revelatory issues, shareholder pressure, we have seen reduction in exploited
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assets. we have seen the illumination of prop trading. we have seen liquidity buffers building up. we have seen capital hoping up. all of the net results of that have been a shift away from mobile activity to domestic activity. we have seen a shift away from the mystic banking -- from domestic banking where we have seen to medic cuts. the american banks have cut back much less. guy: we are good to stick with it? bob: his a strategy is crystal clear good in terms of the capacity in the investment banking industry, there has been a clear cut back from the europeans and back from the americans. guy: if you're trying to make money and you have got to make money in order to get money, you are deutsche bank and you're struggling in every business decision to make money, this is not great news. insert --re cheering
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you are trimming in certain areas. the question has to come where does -- where do you make money? 2010,f you go back to 50%. had underperformed by yes i would argue very strongly that the banking industry is much safer than it was at any time probably over the last 10 or 20 years. the probability of a major bank problem is very low indeed. if you asked the question in that environment of high capital, low risk wage assets, ,utbacks in trading activities where is the return on the? it has to be in other activities with the folks on retail banking. it is interesting here in the u k the performance of a pure retail bank, lloyds bank, compared to other banks that still have other banking
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activities. guy: talking about the barclays generating a huge return. bob: compare lloyds with barclays. a book ofs trading on 1.4. ,ob: that is why the europeans the focus is going to be on retail and consumer banking. short eu banksbe going into the rate decision? bob: the first issue are negative interest rates bad for banking? the answer is yes, because how do banks pass on the negative interest rates? that is one consideration of having said that, if we do get an increase in liquidity leading to an increase in bank lending, i think that may offset the impact of negative interest rates and having said that, there are european banks going to rebound on any ecb monetary
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easing? the answer is no. they go down less. guy: thank you very much indeed. bob parker joining us from credit suisse asset management. next, -- that is next here on the move. ♪
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guy: 8:11 in london.
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two of europe's exchange operators are considering marriage. politicians play divorce in terms of a brexit. in talks about a merger that could create a $28 billion business. this has been going on a wild. those of you who have been extolling the change -- the story in europe, this is not unfamiliar let's bring in hans nichols. look, i have to say i have been here before. we have heard these talks. we have been around the road. is this going to happen? hans: it is different to your referring to the the new york's docs exchange test new york stock exchange that ran afoul. is there isce here not much overlap. that sucked the last deal.
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this is going to get regulatory review. at least on the fact that it does appear different. whether or not there is genuine hostility to tie in mergers and the fact is in material, that is a different question. these look like different cases. they are far advanced in their talks. there appears to be a lot of electronic side of things, also for customers who may have had less collateral did it makes sense from that aspect of. whether regulators are upset echo -- upset? where the city of london and frankfurt could be divorcing, wind-up where these two could be merging. but the politics in the mix for me. hans: you have a great deal of unanimity among the bankers for the u.k. to state in the eu. the idea there are more ties
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taking place on the business level does not seem entirely shocking. the larger question is what extent are deals like this going to influence the british voters when they have to go to the polls in june? guy: instinct comments about taking business away from european banks. the question is is he taking away or is he eating given it? if you're sitting in front for it, and the building behind you is deutsche bank, how are you going to read those comments? hans: darn down the gotland. jamie dimon doesn't get a lot of -- throwing down the gauntlet+++
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slack. at a certain point, the conversation will mature in berlin on what germany needs to do. they need to protect their banks and have different standards, so they can have european investment banks. i want to take a quick look on the chart on all of the shares of the past 10 years. only two global investment banks have been profitable, that is been jpmorgan and goldman sachs. most of the banks have not had a profitable 10 years. the ones that have are looking for more market share. there looking here across europe. guy: hans, thank you. i am fascinated. i cannot wait to hear what he has to say. really looking for to that. hans nichols. from two of the biggest oil producers yesterday. first, i want to show you this chart here. what is happening with bhp this morning. -- bhb, fromctor
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the 22nd to now, that is an 11% move here it ryan chilcote is here. we saw a big move in australia. we see it coming through again in europe. ryan: a decision, the bhp story. they caught our attention this morning. they were down by more than 8%. worst performance since 2008. the question you have to ask yourself is what is to happen at the open? overnight, what do we learn? -- what did we learn? malaise.t a general we got a little bit of news out of brazil. the brazilian police seeking arrest warrants for six executives. some arco is the joint adventure that php has. -- that bhp has it there. than bhp a bit larger continued concerned about the
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commodity sector. specifically about metal producers. possibly sees oil coming back. the picture for metals is much darker. guy: in the center of the u.s. oil industry sticking it to -- what was the message? nutshell.ke it in a if you are experiencing pain, it is because the glut on the market as a result of the low oil price. you've got three options. one to lower your cost, to is to bar -- to is to borrow some cash. do not look to saudi arabia to cut production and effectively subsidize more high-cost producers. he is not just talking to seal produces, he is talking to gulf of mexico reduces. -- golf of mexico producers. if you are thinking any chance
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saudi arabia would join in the supply cut, as opposed to a freeze, forget it. he says there will be no cut. we don't trust other countries enough. we don't trust they will participate in the cut, so we will not do that. you heard the iranian oil minister talking about the supply freeze, saying it is ridiculous that iran would take part in the supply freeze. it is been locked out for the last couple of years. guy: no wonder why the oil price is a little softer this morning. thank you so much. up next, the decision to hold a referendum on eu membership is astonishing. that is the view of the german chancellors of industry. that is next. ♪
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♪ guy: welcome back. you are watching "on the move." a single germany. the country is posted its biggest surplus. joins us now from berlin. good morning. should germany be running a bunch of surplus? that is not necessary. shrink our debt,
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stop the stock of debt. a lot of necessities in order to invest in germany. big necessity in order to integrate the migrants we have. right now we have a surplus which is better than a deficit. guy: at the same time, the german economy is slowing down. can slowly generate growth. monetary policy is not working. where is the growth coming from? volker: at that time, not from abroad. it is not really slowing down. -- slowing down the business cycle. in germany, we have a well functioning labor market you'd we have consumer confidence -- labor market. we have consumer confidence. that means we have a more
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consumption-based development right now in germany. -- arecerns are expect spinning from abroad. guy: i get that. companies are getting worried you'd net trade data we saw out of east barton definitely showing global growth story is a drag on the global economy. pmi, 50 month lows. job creation -- pmi, 15 month lows. job creation slowing down. volker: we have a surplus in housing investment. we have a huge plus in consumption, both of the government and the private households. that means we have the consumption-based development right now, but of course you are right. the investment behavior of the companies had been a bit
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improved throughout the last month. we have problems in order to strengthen our productiveness, and we have a problem in the major concern of the companies is what is about the export figures. e4 is highly based on international audiences. in germany, we are domestic oriented companies. crowding, of course, admittedly. inflation is starting to become in bed it within the system. second round effects that the central bankers talk about, becoming part and parcel of the normal narrative. is he getting into the wage story? -- is it getting into the wage story? volker: i don't think so in germany did we have a well functioning labor market.
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unless the government will not much.te too there are some regulations for the labor market looming. that is a concern. on the wage side, we have a demand from the trade unions, high percentage points in on a to increase the wage costs and labor costs. that means from that side, there is not a threat of inflation, but it is more a concern that we are losing much. there are some regulations for the labor market looming. that is a concern. productivity for our internationally-oriented companies. in a medium-term, the low oil prices will lead to increase for power. this will lead to strengthening of the consumer prices. guy: volcker, are your members worried about a brexit? of course. this would be a disaster, both for europe and for the u.k.
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maybe much for the -- maybe much more for the u.k.. companies invested heavily in the u.k., with the certain expectation that the u.k. is a member of the internal market and deregulation floor. what we have. this will be under threat. there will be a brexit, therefore, there is great ancern and we would lose advocate in europe for free supply-sider reforms in europe, in brussels, if the u.k. will step out. but even major concerns for the u.k. itself, maybe they will be a lucky loser. maybe it could be frankfurt. it would be a shift from london to frank for.
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guy: it has been a great pleasure speaking to you. volker treier, chambers of industry. up next, we'll talk next. ♪
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that go welcome back. back. guy: welcome you are watching "on the move." a picture of negativity good london down by 6%. minas are taking it pretty hard this morning. euro stocks are lagging is well. let's talk about some of the stock stories. here's mary change. nejra: starting with -- here is nejra cehic. nejra: the project in the shetland island basically almost wiped out full-year profits. the net income fell to $9 million in 2015 from $581
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million a year earlier. the oil services company would've been hit by the collapse in crude. it did say today that it is maintaining its dividend of 55.8 cents per share. perhaps why we are seeing the stock move higher today. one of the best performers on the stoxx 600 did as his peugeot just stoxx 600. peugeot. joe -- as is starting to pay a dividend in line with the industry. earning its first since 2011. that is what is heading higher. heading lower? auto trader. the private equity company .hey're selling at 23% stake that stock with the value of $1.2 billion.
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that represents most of a pax's holding. worst performer on the stoxx 600 today. guy: barratt developments continues to enjoy a boom in -- shares up slightly, but how much longer can this last? where the smart money investors can make? good morning. the bulk of the business coming out and saying that is very cover meant -- that is very confident. see at least until june. concerns go a bit further out. continue labor cost inflation. also cuts in moderation. costs go up and prices go down. higher -- on house
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prices is not that they fog. of --rts slow because stretch to us. guy: it is been a stretch to us. start to sense this is jack oh ver charlie: we were worried about valuation back then. rising cost inflation. some of those things haven't happened yet. things paul: from here. guy: one of your competitors saying the market is still structurally undersupplied. it is the fact that the market has so much. charlie: if you look back
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historically, barrett east trading back in november was trading two times. things are clearly different this time. the cyclicality has not gone away. start to peak in 2016, i think valuations are discounting those returns continuing to improve. i concern isn't they are going to peak out this year. guy: are the traits that i can make within the sector? -- are there trades that i can make within the sector? charlie: the bigger players are getting close. a company like gold way, we do a bond recommendation. without to grow volumes incurring much more in the way of bill costs. decent profit growth. growth.different profit offsetting the martyr pressure
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-- the margin pressure. guy: we also need to see some pockets where there is clearly an oversupply. doesn't that ripple? -- does that ripple? statement ofs pressures in the middle of london. as you say, the problem in london is the exit. there is a supply issue as much as a demand issue. the montes rippled out this demand has rippled out. you may not see as pronounced this time. the problem of affordability is getting stretched everywhere. people must get more and more reluctant to take on larger debts. guy: that brings me on to the issue of regulation.
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what regulators are likely to do. what is your current assessment? even that the market is priced out -- given that the market is priced out. charlie: a lot of things that are different -- this time that are helpful. but macro prudential is something new as negative for house builders. loan to income ratios. i think george osborne has done more by putting on these tax -- i think the fpc will walk away and wait to see what happens with that. they're concerned that these high loan to income ratios. it is going to get harder and harder for the bankers to keep putting money into a housing market that continues to rise. guy: could these guys bit more
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?ouses -- build more houses you talk about house is going up . when i talked to them, they talk about inflation rates in the labor and other things that are significantly above we see in the national average numbers. if they were given the land and we come back to the issue of structural supply. charlie: we are sort of the labor -- we are short of the labor that is required to do it. owning up their prefabrication site. one of the people who managed [indiscernible] there are ways around it. we are short of labor. the same thing is true in the u.s.. the problem with the recession
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is lots of people left the industry. it is costing more money to bring them back. they will come back in the end, but it will cost money. guy: this is barratt developments. you're up here in terms of the cell of the stocks. how much more do you think it will sell? this is the price versus the equities? what is your expectation of what prices are going to be? i think i have been right for the wrong reasons. let's of things have been talking about have to play out. i think they might. there is not a huge amount left to downside on my current price targets. 539. what the fpc about might do next time. as opposed the big problem i
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december and january are good months for house building shares. they have not been this time around. they tend to face and go through the rest of the spring and summer with brexit sitting there, and also changes after april. the outlook seems it could be getting worse rather than better. given the opportunity to do nothing, people usually well. juliette: give anyone asked -- charlie: all that will happen is it will slow into the referendum . probably pick up afterwards. it will meet uncertainty and slow sales rate. .uy: charlie campbell joins us we are going to head to south africa where we are joined by patrick o'sullivan, the chairman of gold mitchell.
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that is up here next on bloomberg. ♪
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guy: 42 minutes into the trading session here in europe. d-are taking it hard. bhp, anglo-american, done core as trading down, 4%. acting a drag on the european equity story this morning it they are affecting other drags out there. here is nejra cehic.
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nejra: airbus boosted profit by 1.6% last year as it ramps up the agreement. earnings before interest and tax, rose to 4.1 trillion -- 4.1 billion euros. airbus will be live at 12:00 p.m. u.k. time with guy johnson. that is after he completed a reception program ahead of schedule amid increasing demand. the carmaker also said current trading income climbed to 2.73 billion euros. jpmorgan is not amused -- not immune to global market routes. sales and trading has tumbled 20% this year and there is no let-up insight. underwriting could see revenue fog by 25% this quarter. goldman sachs is concerned the
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executive to that help build its malaysian business left the firm. the --arture comes as because of the high fees the bank has paid. sachs for 18oldman years and was the chairman of the southeast asian operations. the makers of the kung fu and the films beat analyst estimates. the company saw growth as it restructures its operation. that is bloomberg's business flash. guy: pander of the morning. let's talk about south africa. -- they areping hoping to restore confidence with a budget speech this afternoon. south africa reporter joins us now.
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how is he going to manage this idea of being able to raising tackett -- being up to raise taxes? >> exactly. good morning. the economy is currently seeing a lot of strain. growth is near zero not going into recession. it is contending with a slowing economic growth. monti prices that are plunging. that is impacting revenue, as well as the country facing the worst dragon the century. in a century.rag was smack dab in the middle of the global financial crisis. that is definitely a key risk that he is going to have to manage quite well in his budget speech today. in an effort to avert a credit rating downgrade to junk status.
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guy: the bigger issue in south africa still remains, the issue of what he is going to do long-term with the issue of social mobility. the issue of mass unemployment. how is he going to? some of those really pressing socioeconomic issues with some people say could be destabilizing for south africa in a bigger way? >> what we are is government has been consulting with the president after some of the mockups we saw coming out in december. the government is trying to really push to increase self-confidence in the country. that will lead to the socioeconomic problems such being solved in a way that is sustainable. they are trying to focus more on what could be business friendly and undermine some of the social and economic problems that the country had. what is expected by economists is he could in fact increase the value. giveincrease that could
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the budget about 20 billion rand. that would ward off any possible credit rating downgrade which is a huge risk in terms of even those socioeconomic programs the government wants to implement at the moment. guy: think you very much. -- thank you very much. we are going to be back in south africa. we are going to head down to the kate. -- to the cape. we're going to be joined by patrick o'sullivan. ♪
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guy: welcome back. you are watching on the move. let's show you what is happening . we're watching a significant selloff in the energy sector did most of the majors are trading lower this morning. the materials sector is also trading down as well here it a little later on, we're going to have an interview for you. it is going to be done by hans nichols. hans nichols is here. take it away. so much. hans: we are talking about a communication strategy for the european central bank. markets pricing in a 10 point basis cut in terms of going negative. what does this mean for the rest of the market if they do not meet the expectations? out to present on whether or not on do you need to maybe have some
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mitigation? you mentioned right behind me is deutsche bank. they are suffering under this low interest rate environment. yes they have a dual mandate. it is confusing. that is one of the questions we need to press him on. guy: do you think he is a brexit view? hans: i suspect he is fort. most bank as we have talked to are .or the u.k. staying in the eu sorry if that was unclear. we haven't heard officially from central bankers themselves. we have heard from a lot of government officials. , theyerican government want to do what they can to keep the u.k. in the eu. it seems like they try to help midwife that deal in brussels. it is a fair western.
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we will get a vanilla response. guy? , grace -- hans, great stuff. let me take you back to south africa. let's take you to cape town and the capital hands just the capable hands of eric -- the capable hands of eric shafter. eric: i am at the and our growth cape town south africa. i am with the chairman of old mutual. passive, welcome. -- patrick, welcome. will know what is going on and after. is old mutual funding in order to -- to convince investors that have can assets are the place to be? say chinese growth and u.s. interest rates.
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patrice: we take a long-term view of africa. we have been here for 100 70 years -- for 170 years. -- our private equity investors are one of the largest on the continent. where managing to attract overseas funds. that is despite the withdrawal of emerging-market investors. >> you are attracting overseas funds. how does that compare to two inrs ago when you were still a bullish tail end of the commodity cycle. patco it has pulled out as much as it is pulled in. it is still largely international investors. about is note talk only the need for capital.
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the capital to be deployed in a way that is sustainable. that promotes governance. how do you balance the need and in some ways, your obligation to do that with another name which is delivering a return to your shareholders. this is a great story about africa. -- >> this is a great story about africa. when power investment. yesterday at whole field. we're looking at a gross return of over 20%. down 45%re just depreciation. a 5% depreciation. yet to say that is still net after all expenses. a return that is well into double digits. that is the story.
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you have to be a patient capital investor. there is no he can come in and come out. >> south africa is on the cusp of a downgrade. nigeria is trying to get things under control. .as a big, gambia struggling our policymakers across the continent doing enough to make their assets the assets in their countries, attractive enough for somebody like you and old mutual. patrick: as far as our experience goes, yes. ,f you look at south africa this afternoon's budget will adjust some of the key concerns that will hope will stave off that downgrade. >> will get some answers. pepco will -- patrick: we will get some answers. all of these things will be properly addressed this afternoon. >> is south africa one of the country's getting it right? patrick: it has gotten it right historically. the are some political issues.
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there is noise in the background which doesn't help the story. there is recognition that that is something that is not sustainable. if you ligety revelatory regime in the country, the central bank , they are world-class. concern that there is a risk they are going to get it wrong. atco -- patrick: if you look any of them, they are thinking the way the bank of england governor is on issues around the pound. mario draghi is on the euro. forces.tion is external >> passer, we thank you -- patrick, we thank you. guy, i will send it back to you. eric.hank you very much, the pulse is up next. we will be speaking to terra
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firma and. that is coming up later here on bloomberg. ♪
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francine: going down. economists predict and it -- a pound.would draw the thee standoff, iran calls saudi arabia deal ridiculous. a landslide victory for donald trump. the billionaire takes nevada as nominations really insight. we are a week away from super tuesday. ♪ francine: welcome to the pulse.

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