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tv   Countdown  Bloomberg  March 7, 2016 1:00am-2:31am EST

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>> they say that this is the growth for 2020. crude growth hits the highest level in 2016. the refugee crisis heads to brussels with mass migration. a warm welcome to countdown. we have what happens with the
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irket over the weekend and and youw you a chart can see the emerging markets continue to rebound over the reboundeeks and the comes under a little bit of pressure. between the rebound in the theties and what happens on commodity markets, let's put this into a closer spotlight and show you what has been happening is not prices and itst is higher compared to the
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previous close. let's look at the u.s. dollars and it is well over the 140 level. taking the top spied this week, and it take a grilling is the latest move in the markets. good morning. >> good morning. they take out loans to cover down payments and, according to those familiar with the matter, small agencies and peer-to-peer networks will be not allowed to offer pay. home sales plunged. declined and the plans to
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boost housing supplies. after the oileath fund. people whoted other were sentenced to death. to appealalso ordered a quarter of those. hillary clinton and bernie sanders clashed on trade deals. both agreed that they should lead with the water crisis. nancy reagan died at the age of asand is remembered
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alzheimer's disease. global news is powered by 2400 journalists around the world. >> thank you very much. let's revisit the equity stories. we had japan is a bit of a laggard. >> you look at the markets and they are seeing games. the commodities we has the east markets experiencing a fair amount with andmarkets under pressure they actually had a decent run-up with both of these andets up over 10%
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investors are regrouping with a there is nothing groundbreaking this monday. theency is flat with exception of the aussie dollar, which was under pressure. , as far as australia, you anda sense with the charts we get a real sense of what leads to the breakout and oil continues to climb. ander has turned bullish that is driving the equities with people we heard from this
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side of the world. >> it is an odd world and oil and stocks go higher. let's talk about the chinese officials. nationalined priorities and the president announced plans to even the playing field. >> we will relax the restrictions for petroleum, natural gas, and utilities, removing the barriers and encouraging companies to increase investment and purchase a day and reforms of state-owned enterprises. companies will enjoy the same treatments with verification, approval, financing, and tax policies.
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heidi is there. good morning to you. we are looking at what beijing is setting for the next five years. it looks like the expense of de-leveraging the economy. >> it is a concern we are having reforms andat the is the first range and it is andritizing the growth there are other targets and this
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is tough and tracks at 1.5%. is therrying to analysts monetary base that is set higher targetre is a growth that raises the concerns with government debt and risk contingencies, in addition to the details and we expected some and somen with layoffs workers may be laid off with the implementation's and the other cycle and the huge amount of leverage built up with a widening of the debt ceiling
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that creates more problems and hits the growth target. on leave boost to the economy and they are areas withround property. >> that is writes and the treatment in shanghai says the andtment will be overheated thee is some concern with on the loans down au can use and it will be
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and the assessment of risks and this monetary in 2014.cle began >> heidi joins us from beijing to talk about china and the debt profiles. at to the head morgan asset management. great to have you. this prioritizes the fiscal, the monetary, and the stimulus side of the economy, rather than talking about the de-leveraging of the economy. >> what they have to do is slow down.form side
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for ais a potential property bubble and you do not want to insulate both of the things and the real lever is slowing the pace of the reform -- >> i have a chart that shows a level of debt that is around the and it puts together chinese contexts and this is something that moody's is concerned with. we have heard of the monetary stimulus and increasing the supplies. are we risking making things worse?
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the size of the the corporate debt and the real key is the pink line on your truck. that is what you need. so, what happened in the economies was low government debt and the government debt started to go up and it is what we would like to see with some corporate debt shifting on the balance sheet. >> it could go on to the and wete balance sheet have heard a lot about how they do not want to weaken this isinst the dollar and there
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the market of currencies and a feature around. >> it will continue and it could depreciate slowly with corporate debtand you have corporate in dollars and you have the dollar revenues coming in and the other feature that would be entering acurrency special drawing at the end of september and it is likely that the chinese will want stability. >> we have seen some flows from we have talked about that is characterizing outflow.
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and get yourhina thoughts on the commodity markets with brent heading upwards and, at the same time, we have seen a rebound with equity markets. is about stability and it was all about slowing growth in china and it translated to slowing demand for oil. what it is about now is the supply side. the producers are starting to get their act together and control the flow of oil. expect more stability. >> it sounds like good news. thank you very much. let's get a look at what is on the radar. meetingthe emergency and this begins this afternoon in a few minutes.
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tomorrow, we get the gdp data testify onrney will the costs and benefits of eu membership and we get a rate decision from the european boostl bank and they will monthly asset purchases. tens ofget the take and thousands of refugees continue to arrive. we are in brussels next.
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>> welcome back to london and let's get the business. >> working with advisors and ofancing banks on the merits
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-- they have not made a decision there is aoffer and market capitalization of $55 billion after the agreement with our chemicals. was taking of the role on april 30. the second largest bank is known for overhauling the consumer banking units. the chief financial officer resigned last week as he disagreed with the timing of the plan to build new reactors in the united kingdom. there were expressed concerns that the move may have jeopardized the situation. this is according to people familiar with the matter. werestent capital outflows not entirely from investor flight. they were driven more by local
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inpanies paying down debt the anticipation of a stronger greenback. >> a summit on the refugee and let's go to brussels and ryan chilcote covers the event for us. what is the european union looking to accomplish today? >> in a nutshell, they are to the for a solution crisis and it is not an easy task. the key and the operative word maintainhey want to and they want the end
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to a single country in the european union throwing up borders and it is really about what merkel wants. she wants to show this to her people. we can welcome the refugees. we will get help from other countries and germany will not be the only point of destination. point is that the number of refugees begins to fall and we have seen it over the last couple of months. a lot of people worry that it was cold and we will see another of take. does europe want to agree with turkey this time? >> they have been invited and you are looking at cutting the number of refugees to greece and
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also taking some of the refugees that have already come to europe they -- specifically, non-syrians. refugees are making perilous journeys not from syria. looking ton union is provide incentives to turkey to keep them in the country and there is already 3 billion euros promised and they will get into the specifics of how the money should be allocated. turkey will look to advance the they are looking for free travel to get the sides of the argument.
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>> thank you very much, ryan chilcote. struggling. the chief investment officer, what about the crisis that europe faces right now? do you think they have the potential to trigger a further rethinking of how it should be run? or, will this keep away from the financial markets? or otherr it is greece events, i suspect that we should not suspect this. i think there are a few points and that movement around europe is key to the economy and it
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adds a lot. >> to some extent, it has been suspended up to this point. and it wouldrrying damage gdp. ,will be 1.5% and on one level, refugees are good populations with the imbalance and it helps gdp growth. >> migrations of all sorts have been a hot and what do you think on both is with brexit
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sides? some have suggested it would be good and some, bad. some, it is a time horizon. >> it would be good. if it happened, it would be bank of england would ease the rates and you have this scenario when you have more economic uncertainty and the currency could take a strain. >> that is the base case -- best case. what is your assumption about how this goes on the 23rd? andt is a narrow majority they will watch this closely. it feels a long way away. a friendly
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23rd,get closer to the the debate will intensify. >> we have had a rebound since a what isf weeks ago and the range of possibilities that you are looking for around town? they will be stronger weative to the dollar and are pricing a lot of bad news in. this staysassuming in the eu? >> that is status quo. vote, it closer to the andtarting to make a strain that is where the volatility
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was. >> thank you. up next, how low can we go with the market positions for the rate cut? warning of a possible risk with negative rates.
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john: -- anna: welcome back, this is countdown. chinese regulators are said to be imposing new rules that will bar lenders including developers, housing agencies and peer-to-peer networks from offering loans for down payments. hong kong residential home sales launched 70% from a year earlier to a 25 year low.
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possible interest-rate increases and plans by the government to boost housing supplies in the next five years. hillary clinton bernie sanders clashed over their starters from corporate a lot and trade deals. clinton said that the american auto industry would've collapsed if sanders had succeeded in blocking its rescue. the republicant governor should leave office over the flint water crisis. in the quarterly report, the bank for international settlements said the interest rates are working just fine for now. that a pastor of mildly negative rates is similar to positive ones but it is not known how far below zero that would continue to be the case. a right there is grave uncertainty about the behavior of individuals if rates would climb further into negative
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territory. that comes as the ecb is set to announce its latest rate decision on thursday. a cut of 10 basis points is expected by some strategists while some see a cut up to 20 basis points. net, jpmorgan -- nick, jpmorgan is one of the investment banks of things a 20 basis point cut could be possible. it has been in negative territory for a little while, just creeping down. >> to get over that disappointment, that is why 20 basis points shows that the ecb is a lot more assertive. the deposit rate is just one tool in the armory. yes it is that deposit rate and is probably more qe as well. what allh the aim of
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of this is to get banks to lend again. there is a slight tension between reducing the deposit rate and encouraging banks to lend. what the market is looking for our any other measures. measures thather are the interesting part of what the ecb do this week. anna: what other measures might you be looking for? muchng that dictates how they have to buy when they do asset buying. is it something you see them moving away from the capital key, that straitjacket that means they cannot help portugal as much as they want to? >> probably not. when you look at qe, in a way to have done their job. bonds aftercircling the market already. they are just as likely to suck
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more bonds out of the market. the real focus should be on banks. not bank solvency or liquidity, it is about getting banks to lend more. it is meant to encourage that. maybe they are taking loans on bank balance sheets. creating credit that way which could really encourage banks to lend more. anna: howdy get past that tension that exists. the be a yes is just one example. attention with negative rates -- if you do not pass the effect through to households and companies you are missing out on the whole purpose of doing it. on the other hand if you do pass them across people say what that weighs on bank profitability and has these negative impact you did not want it to have. there is this tension right at the heart of the negative interest-rate policy. >> there is an japan really crystallized that and made the whole market aware of unintended consequences to negative rates.
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there are two sides to the story. reducing rates to more negative and that should encourage more credit and growth. but practically you have got to facilitate banks to do that. so maybe that is taking loans off bank balance sheets. >> do you think the ecb will get more creative or more explicit in pointing out what it can go out and buy in the markets? if you're talking about relieving pressure, what are the kind of assets they need to buy that they have not been buying up until now. >> and equip all learned never to doubt the creativity of central banks. whether it's qe negative creativerates hugely things, hugely important things., think what banks , morehave lots of loans
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high-quality loans than others. , the ecb takes some of those off. that frees up more capital for banks to lend to the real economy. anna: we could see some interesting exemptions coming through. nick, thank you. oil is continuing. brent crude is now at its let'st so far this year. bring in our middle east editor elliott gotkine. it had it impact on markets in your part of the world through the weekend, take us to the latest developments. >> it is quite an impact. less than a month ago i was getting these warnings for my bloomberg terminal telling me all prices are below $30 per barrel. we might have to change it to the $40 per barrel mark. there are a few reasons why this is happening. statesillers in the end
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have the least number of active rigs out there in more than six years. u.s. production down at about a 15 month low and in the background you have the possibility of opec members meeting with russia over this deal to freeze out at current levels. speculators lie down in front of this oncoming train and decide to get on board instead. we have seen the bearish bets declining as well. all of this is filtering into the market. it is been banished for now. 39.5 is the highest we have been so far. what impact is all of this having on the middle east? it has been quite a rapid rally. >> it has.
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throughout this year we have been documenting the pain that many of these oil-producing countries in the gulf have been experiencing. what a have to introduce subsidies for energy and even the saudi talking about having an initial public offering. things are turning around a little bit. we are seeing the abu dhabi main index fair in bull market territory. more than 20% higher than it was at its recent low. the qe index would probably be there as well but it was closed sunday for a public holiday. more broadly speaking you would see budget deficits narrowing a little bit compared to where they would have been but i don't think we will see any wholesale changes to some of the polities and initiatives that we have seen undertaken in recent weeks such as the reduction in subsidies for energy and the plans to save costs and sell off
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state assets. inwill no doubt be welcomed oil-producing countries. they prefer to see oil prices going higher still. spring this back into the conversation. on where does this leave you high yields. u.s. debt that area where we have been very focused on worries about how low oil prices were getting. >> it was definitely a supply shock. on the demand side, earlier this year markets were talking a recession in the u.s. which seems very unlikely. you have to look at the job number on friday to see the decent jobs growth there. a recession looks unlikely but that makes things like high yield very attractive. in the u.s. you have yields
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approaching 9% and also in europe. european high-yield bonds are a little bit lower in yield. actually got quite a lot of conversation because i agree that default rates should remain pretty low. >> you have a great comment from moody's showing out liquidity tension -- because of the tension these parts of the high-yield sector europeanu had more to yields at this time? when you look at europe as a place, there is very little energy there. it's a minimalist percentage. the part that exports, they have been acting beneficiary of the weaker -- weak euro or strong dollar and you have growth there
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at 1.5%. it is not super strong but nowhere near recession. concerned but spreads at the periphery, do you see concerns around political instability in spain and portugal being quite contained? how worried are you that we might see elevated spreads for the peripheral european government debt? >> we think it's a steal. we look at those countries whether it is spain or italy, our view is that it will have current levels. let's call it 150 basis points. that could comfortably be at half that level in 12 months time. the key is the ecb and already you have a situation where they
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are buying more bonds that are being created. give a basic supply demand imbalance. >> that would give you confidence read european financials? >> very much so. our view is there attractively priced and that's the debt. all the way down to the junior debt as well. when you look at what is happening with european banks you have deleveraging, you have them raising a fair bit of equity and an economy growing now. when you look at those instruments it's very attractive . >> nick, thank you very much for spending your monday morning with us. be weighing the merits for a counter bid. the german chemical producer has not made the decision yet about proceeding with an offer.
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it's occurring to people with knowledge of the matter. that's get more with our german industrials reporter sheena who joins us from bloomberg. what is your thinking behind this move? a growth china is honestly slowing, europe is in the doldrums and the ceo has been selling business as fast as he's been acquiring them. they are shrinking. so dupont would give them at once an attractive boost growth. it would give them the specialty chemical businesses that they are keen to have. the ones with the higher margins. and an attractive agricultural boost that they would like to have. now? aftern is, why dow chemical and dupont have already agreed to merge, as one analyst put it in a note, he said that the strategic
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dupont tofor bsf and get there is there, but it is too late. anna: how likely is any of this? >> that is the big question that everyone is asking now. they would have to put a lot of money on the table to get dupont away. the question is, can they afford that? they don't have the cash so they would have to do a capital increase. then of course we have to think about what is the thinking of this conservative german company? are they really going to put this much cash on the table now? they would still need to create the argument that they need value for their shareholders. anna: gina matthews joining us in frankfurt. up next, fresh brexit attacks. two heavyweights speak out. ♪
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anna: let's get the bloomberg is flash. >> commerzbank has named the successor to the chief executive. zipcar an insider at the second largest tank is known for overhauling its consumer banking unit. flashthe ebs chief financial or is said to have resigned last week because he disagreed with the timing of the plan to build new nuclear reactors. resignation came after he expressed concern that the move might jeopardize their financial situation according to people familiar with the matter. of the few remaining chinese automakers have said they are in talks to cooperate with volkswagen.
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automobile chairman said they are actively pursuing joint venture tieups with carmakers after they seek to gain more advanced technology but declined to be more specific about the nature of talks with the w -- with vw. outflows inapital china since 2014 were not entirely down to investor flight. wereutflows they say driven more by lower companies paying down that dollar denominated debt. that is your bloomberg business flash. anna: two conservative heavyweights have used weekend media appearances to ratchet up their attacks. justice secretary michael go told the sunday times that the eu had inflicted pain on europe and boris johnson repeated his opposition to the pro eu stance. like the jailer has
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accidentally left the door of the jail open and people can see the sun land beyond and everybody is suddenly wrangling about the terror of the world outside. it would be wonderful and a huge weight lifted from british business. same meanwhile, on that bbc program, wolfgang schaeuble warned that if the u k votes to leave it will still have to pay in if it would like access to the single market. either in the single market or you're not. if you are not in it than you have trade agreements. of course there are countries within europe that are part of the market but they still have to pay into the budget of the community and they have to accept the free movement of people so they have all the disadvantages of the calmer and market and are not involved in the decision-making process. anna: we're joined now in the
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studio by the u.k. grant thornton ceo. onha it is great to have you the show. there is a lot to talk about in the u.k. around the brexit theme but first let's talk about the vibrant economy project. and the amount of value you think could be added to the economy if we were to increase productivity to g7 levels. >> they've quantified what we all thought which is that if we increased it that would be an extra 479 billion in the u.k. economy. anna: how do we tap into that higher productivity? >> what's really interesting is when we looked at the vibrant economy there are three key themes. up.vation is taken we are crating environments were businesses and people can
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thrive. axis to skills and infrastructure. in our research we came to very critical areas in terms of exporting and the aspiration british business and how we can create that positivity and environment. anna: how much aspiration do you sense is out there? you talk to a lot more medium-sized businesses and found some evidence that perhaps they are not ambitious enough. how much they need to be thinking that the rest of the world or the marketplace. >> some fantastic examples of businesses are due exports but we found that overall businesses were not really looking to export markets for their growth. we know that with our growth sitting at 17% behind exports in germany there is a big gap to fill. anna: what are the things that british businesses are calling out for to increase productivity? >> it's interesting. we don't have all the answers
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yet. know that infrastructure is important and broadband across the u.k. is a big barrier and the amount of time people are spending commuting. we know that those are some of the issues and what we are really doing is launching a nationwide inquiry to bring together the public private and sectors. we know that when they collaborate together we start to find new solutions to some of the old problems. anna: they are old problems but have been given a new lease on life because of the conversations around brexit at the moment. do you have a view as far as to beusiness is concerned in or out of the eu? >> we are very much being led by our clients. 25% of employees in the private sector are employed by our clients. is at are getting so far
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the real concern is about international trade and making sure we have trading agreements with think access to critical export markets. those are the early findings. we will be feeding out more as we get more back from our clients. what's difficult to say kind of trading environment would exist if we were to come out of the eu. we say we have no doubt that they would still want to trade with britain but it would not come at any price. it's difficult for businesses to feel informed. >> the key thing is we are getting more information to share that with them. when you look at trade, trade is always a bit of a deal. whenever i got that you want and getting people to take the other bits on the side. that's why sometimes the parma to being part of the larger at the moment means we have more spit on the table when we arrange deals with countries like china. writtenere is a lot
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about the political debate around this and whether businesses really feel free and open to express their views. just over the weekend we saw the director general has left the organization after expressing his personal views. number 10 denies there was any political sway being applied their. is this a healthy debate, is it open enough? is there too much political pressure? >> i think it is really a critically important to bait for the u.k. and the thing that i would love to see more of his more of the hard facts for people to be able to form judgments when it comes to .lacing their exes in the box other key things you mentioned .round broadband
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when you look at some of the data we had a run that gaps between regional growth and that of london, if you had the same levels of connectivity across the region, that alone would generate an extra $84 billion by 2020. we think it is really critical that we are generating that growth around the u.k. anna: thank you for coming onto the program so early this monday morning. it is 6:56 and london. we will take a short break on the program. its addictionsfy to growth? much more news to come from china in the days that follow. we will also get german factory orders at the top of the next hour. we try not to read too much into one month of data.
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we will have a look at what that tells us about the growth it sure in china, the emerging markets and the link between germany and what it tells us about the rest of the eurozone as well. here is an early look at london. ♪
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anna:, china's agenda. the national people's congress is 6% growth of the baseline. rallies to a $40 per barrel hitting its highest level in 2016 and europe's eu crisis. a warm welcome to the program. this is "countdown. let's talk about what is
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happening on the futures this morning at the early part of the trading day. how is that rebound in stocks we have seen likely to continue broadly into europe? it seems the futures are suggesting we will move a little bit lower at the start of the european trading day. stock 50, on the euro the cac 40 and the dax. in the u.s. as well, things are looking flat to negative. let's get some breaking news on the german factory orders front. we have a better than expected number on the month on month picture. that was against the survey estimate of a drop of 0.3%. that number does seem to be better than expected. survey.1% against the picture. as i was saying before the break this is a choppy day.
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how an interesting take on the german economy and its factories are coping with what is going on in china and other areas of weakness in the global economy. we talked in the last hour about the links we have seen between stocks and energy markets. that was true when stocks are falling and stocks have rebounded since the middle of february and as we've seen these oil prices go higher let's check in where we are. we're off our highs earlier on in the session. on we are ist to check in on the pound a great deal of focus as we head -- 1.4197 is where we are on the pound verse the dollar. >> yes, chinese regulators are
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said to be planning to impose new rules to end the practice of taking out loans to cover down payments. small loan companies and peer-to-peer networks. as occurring to people familiar with the matter. >> hong kong residential home sales plunged 70% to 25 year low. property prices have now declined by 10% from their september high. increasesnterest rate planned by the government to boost housing supply in the next five years. this iranian billionaire has been sentenced to death after being found guilty and a fraud case involving an oil fund. the court found enough evidence to convict him and two other people who were also sentenced to death. they were also ordered to repay a quarter of the money that they laundered.
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democrats hillary clinton and bernie sanders clashed over there corporate bailout and trade deals. and last night's debate, clinton said that the american auto industry would've collapsed. both did agree that michigan's republican governor should leave office after the flint water crisis. former first lady lady nancy reagan has died at the age of 94. she is rumored for her devotion to ronald reagan as well as her efforts to battle drug abuse and alzheimer's disease. 5400 journalists. >> let's check in on that. standing by for us in hong kong. weakness coming through in the japanese market today, a lack of catalyst in terms of the trading environment.
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>> good morning from hong kong. good afternoon we just entering the latter part of the trading session we see something like thatyou do get a sense there is the lack of a unified catalyst for markets in the region. storyells you another when it comes to commodities. you get a sense that even though most markets are higher today you get a sense that we might be nearing the limit of this current rally. looking at what happened in japan and singapore. .hese markets are up 10% you look at some of these other currencies like them indonesian rupee -- they're pushing toward technically stretched or overdone levels. there is stuff for risk appetite. overridinge is an sense of caution.
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in reaction to the u.s. job state a. overall it is still quite good and i should mention quickly that australia seems to be commodity price driven. that will be the catalyst as far as the asian equities are concerned. chinese officials take to the podium at the congress again today to outline national priorities. plans to even the playing field between private and state owned companies in some industries. significantly relax the restrictions on markets such as electricity, telecommunications, transport, petroleum, natural gas, and public utilities. we will participate in reforms of state owned. enterprises private companies
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will enjoy the steam -- same treatments regarding fiscal and tax policy and land availability . >> haidi lun is in beijing for us this morning. ahead of the npc, we were looking for clarity on beijing priorities. was it about short-term stimulus or reform and deleveraging the economy. .e got a few answers >> we did get some clarity in terms of what their priorities are and the top priority remains growth and of element, potentially at the expense of longer-term structural reform. targetst you to the first. target.7% gdp growth that's the baseline they will have to defend through to 2020.
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also, very significantly, the fiscal targets or the fiscal deficit is wide. that target set higher as well. the message seems to be that beijing is propping up on shorter-term growth, particularly when it comes to overcapacity across state sectors. we were hoping to get more and terms of a solid game plan in terms of how they plan to address the overcapacity issue. we have very broad generics. when they spoke over the weekend they spoke about potential debt restructuring potential mergers to deal with the steel and cold sectors facing overcapacity but certainly not the details of that. how many layoffs would be required how much money would be required in the issue that economist are saying is that if china may continues
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well hit that target by the end of the year but they will be in the process of digging themselves quite a structural hole. where theerms of regulators go from here, on the one hand we have the story about stimulating short-term growth in the economy, but on the other hand they are taking action and a targeted way to reduce debt levels or deflate bubbles and property. >> i think this really shows how difficult it is to target which part of the economy you want to prop up. since this easing cycle started, we have seen the property market across these big cities -- prices have gone up by over 50%. these markets are overheated as one shanghai officials said today. as a result we are seeing or hearing reports that there are plans to curb these loans for down payment lending from
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peer-to-peer lenders and certain home agency developers that give you a loan so that you can pay for the deposit for a home and that is part of the contributing fear that this is all turning into another asset bubble. we reached out to the pboc for comment but certainly it is part of a larger picture of assessing financial risk particularly when it comes to borrowing for homes which is searched to a record high. >> that is bloomberg's haidi lun joining us from beijing. richard joins us now. great to have you on the program. have china's we stockpile of for an exchange reserves. years and has for been coming down. we also have the yuan for good measure.
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are we going to find out a little bit later today about how much the stockpile has shrunk once again. how key is this to the chinese story for you? >> i think it is very important. when we look at the reserves it is capital flows in and capital flows out kind of story and how much china needs to offset that. it really gives you a gauge of sentiment surrounding the asian region. it's interesting that even though the data is not out we only expect it to be done about 40 billion so it shows you that some of the concern at some of the media pressure on this capital flow story out of asia has really begun to take a larger backseat and markets which very much coincides with the news we got over the weekend which is that the chinese are interested in putting forward this idea of stability. i know on the fiscal side it was below where some reports were in
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terms of fiscal expectations but in terms of exchange rates and the overall growth targets those are better than what the market was expecting. stability seems to be more of the message we were getting. >> of the characterization is how this was about propping up the economy short-term. using fiscal tools and monetary tools to prioritize. it's weaker than last year but it's not falling off the cliff and away. their real renting toward services but doing it slowly. do you recognize that characterization and that is the story around china rather than deleveraging and big reforms which were risking taking the growth weaker. >> i think the global environment just isn't in a scenario where we can have the latter. china recognizes it. to a certain extent, this is an extension of the g-20. they're looking at fiscal
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stimulus and looking at helping out more rather than pushing through larger reforms which will be put off to much later dates. anna: where does your concern around china line? are you concerned about overall debt levels or property markets. we already heard about bubbles and property markets in china this morning from one chinese official. where is your concern when you look at the chinese story? >> that's where the fx markets are concerned about it. mostly we look at china as having such a significant portion of valuation set globally at this stage. whether it is the value of the aussie or emerging+++
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fears. been one of the key investment centers over the past decade. anna: the bs was making their point. they drummed into it in recent weeks. that could still results in having the currency against the dollar. if it strengthening against the basket of currency. it is part of the rebalancing process which they have laid out . that by the end of the year the u.s. dollar against the chinese currency. >> in general, north of 680 by the time we get to the end of the year. there are many paths and the growth of europe depends on how much it weakens. anna: he will stay with us on the program. up next as eu leaders gather for
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an emergency summit. we are live.
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anna: welcome back, this is down down. let's get the bloomberg business flash. the bsf is said to be working with advisers to make a counter bid to dupont. the chemical producer has not made a decision. dupont has market capitalization of $55 million. commerce bank has named their successor to the chief executive martin blessing. for overhauling the consumer banking unit.
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the persistent capital outflows downchina are not entirely going to the bank of international settlement which says it was driven more by companies paying down their dollar denominated debt. that is your bloomberg business flash. anna: eu leaders are in brussels for an emergency summit. invited because they played a critical role in the flow of refugees. tell us how things are shaping .p >> it's interesting. callally, greece's port of before moving onto germany which is the country that many refugees choose to make their final destination. a lot of the conversations will
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have to do with greece. one of the things that the european union is looking for greece to do is to not pass on those refugees to the other countries to provide more shelter and accommodation to the refugees that already exist. that's what if committed 700 billion euros to assist with that. the really interesting part is that greece has their own financial troubles and to what extent they can get leniency. in terms of its own financial aid program. greece has about 26 billion euros and so far, the quartet i said you are not doing enough against the rest. one of the things that are missing the greek premise will be doing is to say we need leniency on this. it looks like the germans are prepared to wiggle a little bit on this issue, provide leniency and go softer on their commands. but the key here is what does
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the eurogroup do this afternoon? if they say the delegation should get act into greece later this year, that would be a positive sign. it's about 11.5%. if you see it weaken -- anna: in terms of how it plays into the brexit conversation, the u.k. has some policies that relate to this refugee situation. how is it likely to fare against the brexit story? >> there is a great story out about how one of the things that the european commission is looking at doing is actually centralizing claims from asylum seekers. the way it works now is the so-called dublin regulation system where the first country you come to is where you apply.
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it's bad news for italy and puts the burden on them. germany got a lot of the refugees after they said we will waive that but what brussels is looking at doing is possibly taking where the asylum claim to go to brussels and possibly brussels would even have the power to distribute refugees at its own whim across eu countries including to a certain extent, britain which would go down very poorly. that would be seen as a raid on british sovereignty that would definitely influence a discussion of the referendum in the u.k.. anna: that is ryan chilcote joining us from brussels. richard, let's talk a little bit about how the euro trades around . we have a bit of an existential crisis if you like going to the eu more broadly and then the eurozone within that.
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in the pound weakens because of concerns around brexit and the odd takes on some fairly trading characteristics in the midst of that conversation. how week do you think the euro get from here? >> there are three main drivers. policy, politics and the refugee crisis. they are all interrelated. probably the refugee crisis shows up and risk premium in the peripheral bonds. that tends to strengthen the euro. we just talked about china that is the weakness comes back the euro also traits as a defensive currency. the ecb policy which is generally going to be cutting rates and expanding qe. it is a different directional picture. in aggregate we see the euro as weakening but the path to it eating lower is quite volatile at times.
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as a baseline view we see it trading below 105 and toward parity by year-end but the path is neither straight or direct. >> the ecb set policy this week do they want to have a weaker euro? is that a conscious choice. with a single will not engage in any kind of devaluation of their currency? if certain criteria are in place then the big impact coming through the currency market. what are they trying to achieve? i don't think the ecb wants to see a stronger currency at the same time. the real effective exchange rate their. if you get a stronger euro it is just going to tighten policy across europe and that does go across the ecb intention.
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i'll think the exchange rate is a target for them but certainly for the euro is better policies they are trying to put in place. >> and they don't went anything to undo what they are doing. just drifting slowly and to further negativity, it's really a disappointment around the meeting in december. what are your expectations? >> the market is cautious going into this meeting. it still tensed overhang sentiment surrounding it. we expect them to do a 10 basis point cut. a large extent, an extension of policy. but with the markets went to hear about is how to the address these twin risks. the risk premium getting priced into european assets.
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it's clear that the policy just going to monetary route cannot purely focus on asset changes. it does have to do something to watch it. anna: do you want to hear talk assets with a reminder of the type of assets that they can buy or should they go around on their bond buying program buying more freely the things they want to buy rather than the things they are straitjacketed into buying? >> it's something we're looking at. we would like to hear that it is clear there is not enough being purchased. the premiums are getting priced in so you need to find ways to address that in the market. spreading toward core does help weaken the euro and the aggregate.
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>> richard, thank you for joining us. anna: that is it for "countdown." "on the move" is next. see you tomorrow. ♪
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move."lcome to "on the we are counting you down to the european open. china is underwhelming. 6.5% growth. how will this affect the ecb decision this week? inflation expectations search in europe. how big a battle does draghi face on the council? we will talk the bond market.


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