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tv   Leaders with Lacqua  Bloomberg  March 12, 2016 11:00am-11:31am EST

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ramy: the stories that shape the business around the world. iron ore businesses go absurd. the ecb reaches into its toolbox for more easing. >> they are targeting has narrow as possible. >> he is not the only one who should be holding the gun. >> we choose the best from a bunch of powerful conversations. ramy: reflections on progress in unfinished business. >> it's getting better, but not quickly enough. >> there are mole and you
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getting opportunities earlier to lead. ramy: wall street mourns the loss of a foundational figure. it's all ahead on "bloomberg best." hello and welcome. this is "bloomberg best." our day by day look at the top headlines begins with a rally in commodities. >> oil is continuing its run of gains with crude at its highest so far this year. that's above $39 per barrel. >> i was getting these warnings, these alerts telling me that oil prices were below $30 a barrel. we have brent crude reaching
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that level there are a few reasons why this is happening. you have u.s. drillers in the united states, they have the least number of rigs out there. they are at a 60 month located you have the possibility of opec meeting with russia over this deal to freeze out the current levels. as prices have gathered momentum, some speculators are lying down in front of the oncoming train and are getting on board instead. this is filtering through into the market. $20 a barrel oil has been banished for now. >> there is another rally going on in commodities.
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iron or is soaring after the signal they are willing to boost economic growth. the market has gone berserk are in will the rally continue? >> we haven't seen any fundamental data to justify the price level. during the month of february, the entire china country goes on holiday. we don't have a lot of data coming out of the country. it's hard to read what's going on. i have yet to see at this that we have a hard turn it. >> they said it would cut overcapacity in steel. you would think that would lead to a curbing of demand in iron or. it jumped by 1860%. what's going on? >> it must be me being here on bloomberg. there has been a disconnect in the market between the
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fundamentals on the ground and the trading on a day-to-day basis. this is not an anomaly. it follows what has been several weeks of strong gains in the metals market. i think it's a lot of trading on rhetoric. reality does not justify the high prices yet. >> we had abysmal data out of china. exports fell to the lowest level since 2009. >> this latest figure out of china, there are seasonal distortions, but significant numbers are down. exports are down 25%. we were expecting 14 5% down. it is significantly worse. january was down 11%. this is the eighth consecutive month we have seen falling exports. >> we have to treat february with caution.
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that applies to the export numbers. part of the issue is it's not just factories shut down for a week. last year, the holiday was at the end of february and there was a rush to get trade done. this year, it came at the start of the month. all of that said, i think there is a feeling the numbers feel downbeat. there is a challenge ahead. it will embolden those were calling for depreciation. this goes to show it will take significant exchange rate devaluation for china to change exports. when you consider the commentary from the authorities, look for more on the stimulus side. look for more from the central bank did look for more in terms
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of bank lending to get the economy going. they are not going to get a shot in the arm from exports. vonnie: it was a big night for bernie sanders. he scored a surprise win in michigan. he is still behind hillary clinton for delegates. on the republican side, donald trump step delegates. ted cruz data within in idaho. let's start with the bernie sanders' win -- it gives him some momentum. how far will that all his campaign? >> what we are going to be looking at is how much he can carry this into ohio which is voting next tuesday. the demographics of michigan and ohio are very similar. he did very well with working-class voters he did well with young voters. that is key for him. he did better with african-americans in michigan.
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if he forms me well with those voters, she has a huge leap could he can even rode her support in ohio, illinois, in the industrial heartland. >> donald trump won in mississippi and michigan. does this stretch the ability of him to win a cross very different areas across different demographics? >> he has won in all areas of the united states. he has a broad coalition of support. he has broader support than people expected. he showed real resilience last night. i think the establishment will be looking at that. >> the ecb has cut all of its interest rates.
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qe has been boosted. they have also increased the assets available to buy to include non-bank corporate debt. >> in the last few months, it's been an ethics game. when he says it's about weakening the currency, this is changing. they are buying corporate's. they are going straight out and trying to help deficits. they are now making money available at zero and maybe negative rates for banks to borrow. this has changed from an external game to a domestic demand lending game. >> this is about the fundamental accounting and getting loans to individuals. >> this is not just the exports. this is what they should have done. i think they did the right thing. they are doing everything they can and it's in a mandate.
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>> the biggest investment bank, deutsche bank, has rising legal expenses that hurt earnings. you have heard them talk about this again and again and again. does this come as surprise? >> it's 11% for the whole company. that actually is not quite a severe as what was expected at the end of last year. they were talking about cutting it by 30%. this is not unexpected. the company will be under pain relative to peers as they work through some legal issues. >> how does he think he's going to keep people in their seats there? >> historically they did have
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the reputation of pain pretty -- paying pretty well. there is going to be a transition there. i think he is trying to hold on and hope for things to bounce back. they also said that trading revenue for the industry is probably going to be down given the rough start to the year. there are not a lot of places right now that are on big hiring sprees. you have risks. you could lose the top people on a desk. there is a lot of competition out there for hiring right now. it's more keeping your job. ramy: coming up, more reaction to mario draghi and his latest monetary moves. we have a roundup of company news from around the world. ♪
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ramy: welcome back. thursday's ecb meeting it was the centerpiece of a dramatic week in european business and politics. from the migrant crisis to draghi's latest policy plans, there was plenty to discuss and analyze on bloomberg television.
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stephanie: mark carney's testifying before lawmakers. he said the boe will avoid telling people how to vote in the referendum. mr. carney: nothing we say should be interpreted as making any recommendation with respect to that decision. stephanie: can the bank of england avoid swaying voters? >> he does not want to be seen as saying brexit would be a disaster. he is trying to fix the situation. he almost lost his patients a couple of minutes ago. he is asking him, you have a selective memory. there is a risk to financial stability. he is talking about brexit. >> is this just political theater?
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>> it's a little bit of political theater. people want to understand the implications of what a brexit would be. tom: what's the dynamic you see in london? >> you see people playing on their frustration of what's happening in individual countries and people play in it. you see what's happening here with the rise of donald trump. the same thing is happening in europe. >> free movement across borders within europe was central to the original eu. let me give you some numbers. 2.4 trillion euros a year moved across borders within europe without interference. 700,000 people a day moved across borders without interference. now just a slowdown that will happen from enforcement doesn't
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just affect refugees or people like that, it affects daily commerce. it's going to take a 10th of a point off eu growth. >> the ecb pushed beyond expectations with its relief. is it fair to say draghi dazzled? he brought up the bazooka. >> he certainly sent every options through the market. he announced all the qe package and the rate decision. one of the key focuses was that comment where he said we don't see the need for any further reduction in interest rates. that signaled the floor being hit. he said things could change. >> i think it's dominated by that signal, that phase of negative interest rates and
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using that as one of the tools that will come to an end. he has given the signal that interest rates as a tool is exhausted. mark: what about the decision to buy noncorporate debt? it wasn't predicted by many. has that taken you aback? >> it came a bit sooner than we thought. it's a logical extension of and closing this chapter on interest rates. it opens a new chapter on creative easing. i would back a little bit on this view that monetary policy is running out of ammunition. there is a lot that can be done and the credit easing space. once you start buying bonds, it's not a far step to go into
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equities. >> is this draghi pushing a panic button? was this a carefully thought-out plan? >> i think it represents not a panic button, but a tailored approach to the problems facing europe. the issue is getting credit to the banking system to borrowers. that gets europe back on track. he has matched the negative deposit rates. to try to promote the flow through credit to the borrowers. that is what is necessary to get europe going again. we all know that he can't do it alone. he needs the fiscal policy. >> this is a quote from one of our columnists. he is firing blanks. you don't believe that's right?
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>> he is not firing blanks. look at the markets. he also isn't the only one who should be holding the gun. >> are we getting closer to the point where these policies become ineffective? >> by looking at the credit channel, it was clear yesterday that he once the market focus on that. can he make that away from the credit channel? it might take a lot more time? >> as the u.s. is finding out, while he is pressing the accelerator, the regulators are also pressing the expected that's why you don't get the impact on credit that you expect. the u.s. is lucky. it has other engines of growth. >> this may be the key question
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for central banks, can they affect demand? mr. el-erian: it's not probable. demand is being held back. we have decoupled the ability to spend from the spender. we are lacking a number of structural reforms and give confidence. the companies are not responding. i look at this and it's another attempt. good for him. good for the ecb. i hope behind closed doors they are making it clear that they are coming to the end of the rope. ♪
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ramy: you are watching "bloomberg best." let's take a look at company news starting with the deal that links mining giants. >> dips in sydney after an agreement with the biggest iron ore miner. what is behind the decision? >> this is a memorandum of understanding that lies at a platform for the companies to work together and explore opportunities to create value. the key one of those is blending
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our ores together for our customers in china and provide a blend suited to minimize the cost of the supply chain. we can buy a stake in market. we are a minority interest. that will be at our discretion. >> tell us about this decision and the benefits of this. >> if we are able to forge a long-term relationship, it provides opportunity for us to lower our costs further. it allows us to better match our products to our customers needs and china. >> dick's sporting goods timed the fitness trend better than most. they are interested in sports authorities real estate.
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>> of the 140 stores they plan to close, 100 overlap of their stores. there are 40 in play. they could take over the lease or acquire the property. >> do you have any ideas? >> we've done a bunch of work. the stores that they closed are -- i think it's going to be 10. they are closing for a reason. they are lousy locations and so on. i think there is more to come with sports authority. if they survive, they are going to close another hundred stores. if they don't figured out, it could go away completely. that's where it could get very interesting for dick's sporting goods. >> they are investigating the of malaysian state investment
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funds. we are talking about one fund. how is goldman involved? >> they were the conduit to help this government-sponsored fund raise money. it was supposed views for investment projects and infrastructure in malaysia. they were the investment bank on this. he was the banker. they raised over $6 billion. the key point is was the money going back into them or embezzled or used for illegal purposes and moved around without permission? >> what does this mean for goldman sachs? is returned to the reputational issues? >> it's something they will be a with. they hired an outside law firm that's looking into it. you see this happen with thanks a lot. sometimes they have issues with
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their clients and that's it. it's not really clear at this point if goldman did anything wrong. >> the largest international airline has a jump in income of 90%. savings on lower fuel costs were partially offset by hedging losses. give me a sense of your position. >> we never hedge 100%. we have some losses, the net fuel cost to us has gone down by $7 billion. that's 18%. the business benefited on the whole with the oil situation. the passenger market and the strong contributions by companies helped the better result.
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>> you are hedging over three years. do you want to have it that makes your modeling easier? is it because the price of oil they go back up? >> we have positions to protect the operation. we protect the earnings stability. we take those positions. we will take hedging gains when the price is high. the business benefited from hedging losses. >> a showdown is underway at united continental. two investors are nominating six directors to the board. among those is the former continental airlines ceo. this is coming as united's current ceo returns from medical leave after undergoing a heart transplant. >> some investors were upset and did not think the company was
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making the things it needed to do to turn around. they thought he could help shake things up. >> what goals do these funds have by bringing him back? >> they have been more talking about the problems that united has had rather than what they want to see going forward. what they said about united in the past is it had a languishing stock price. it hasn't performed as well as delta or american. they want to shake things up. they want some new blood on the board. >> revenue is rising 40% in the first full quarter as a public company. profitability may be the concern. what do you think about sales growth combined with the lack of profitability?
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>> they grew 60% in the order. they are firing on all cylinders. they are expanding to other categories. their capital division is something investors are looking at. they are clearly firing on all soldiers on that front. also expanding into other categories. square capital division is something investors are looking at. they have offered loans to 70,000 merchants in about $400 million of loans in the first year. that is an exciting opportunity to expand the relationships they have. >> how strong is their product pipeline? >> it's amazing for the ecosystem, it will accelerate the use of mobile payments, which the actual places you can use your apple pay or android they are quite limited. to think of them rolling it out to the 2 million merchants they use is a great development overall for consumers. >> bridgwater has hired john rubinstein as co-ceo.


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