Skip to main content

tv   The Pulse  Bloomberg  March 14, 2016 4:00am-5:01am EDT

4:00 am
stage for more austerity. he insists the bank of england governor carney did the heavy lifting. monday, risk on today's market. hans: we're looking at a very green monday morning. let's go to the touchscreen and check out what is happening at the market. caroline hyde, what you have? caroline: we are moving toward more equity. the stamina pulled s&p 500 in the u.s., eradicating all of its losses so far this year. still 7% ago on the stoxx 600. 7% until we hit the peak that we saw the beginning of this year. we are on the way. it seems to be the likes of old mutual on the upside.
4:01 am
dax up 1.1% in germany. we are not seeing one single stock on the downside. be leading the charge. in asia, there were banks leading the charge. money moving in as we see japanese machinery sales rising more than expected. machine yield is up. the chinese seemingly talking of support for the equity markets. the regulators stand by supporting equity markets should it tumble. europe up by .2%. a little bit of dollar strength today. we get that rate decision on wednesday. boj on tuesday. we see oil and equities starting to break down that correlation. this is about iran not wanting to curb its pumping. remember gold fell 1.8% on friday.
4:02 am
let's have a look at some of the equities on the move. so much m&a anticipation today. the french telecoms company going to look into buying b uoygues. home retail up .8%. we did see a bit -- see a bid. will we see argos go even higher. the london stock exchange ramping up to its high for this stock market for this stock price, up .5%. deutsche boards could be announcing its merger. you, to hans: we look at the yuan bears, they are suffering it is seven months after a shocking valuation, the chinese currency is showing surprising resilience. at least five is a $60 million
4:03 am
of that will devalue further -- at least 5 -- least $560 million of that will devalue further. our agent fx editor will be standby. robin, one would at those yuan bears, should they attack us and go home? robin: for the short-term, yes. one must remember that the yuan appreciation pressures -- you want depreciation pressures. the median forecast of economists of 3.8% decline by the end of the year. what this has taught us for the short term do not fight the pboc . they are try to stabilize the markets. don't expect massive depreciation when the pboc a strong to move the market. everything that we , are they the pboc
4:04 am
just no longer going to focus on the piece that i did, depreciation by stealth which is turning our attention away from the dollar you want which they have thrown the kitchen sink at two defend. at the same time, the one against the basket. -- the yuan against the basket. the point. is that is the problem with the pboc, they say one thing and they do another. let's focus on the basket. a bit of deception to a lot of the currency to decline against the dollar. what the previous a balance to do, the currency is getting into the fdr early october. china has to defend a 6.5% economic growth at least over the next five years. that is their plan. to do that, they need a lot of money. they want us to them both -- they want to stimulate the market.
4:05 am
.hat is why we have stability how long will this last, not really sure. hans: robin, thank you very much. giving us information on the current thinking of the pboc. let's bring in julian chillingworth. when you saw the data over the weekend, we're talking about industrial production missing estimates. a moderation, a modest deceleration, are we going into the beginning of a phase in china? government is trying hard to manage the slowdown, yes. supporte the data will their actions in the short-term at the very least. let's see how things pan out by the end of the year. i think we will see another statement of growth going into 2017. where they can do that next
4:06 am
year, let's wait and see. hans: do you think the pboc is being honest? we heard there is a threat they are not being as transparent. you trust them? you feel like you know what they are saying? julian: not completely. i think you can -- you can accuse many central banks. they love to speak in cold to keep the investors on the move. i don't think the pboc is alone in doing that. manus: i want to put up this chart did -- this chart. risk revival. hans has touched on that. global equity markets, they hit a 2.5 year low. we have rallied since then. this is the dividing line since
4:07 am
the start of 2016. oil has rallied by 46%. these are quite shoring and reassuring moves. oil is moving higher, equity is moving higher. are you as bullish as the markets would intimate? have we turned a corner? thought this year was going to be a very choppy year. i changed my mind. i think this is a banks will a to keep the stimulus package going to try and keep the markets on a steady course. whether or not we are going to see markets hit that much higher, i got my doubts. manus: it is amazing how we have gone from absolute doom and gloom -- remember were talking about the implosion of liquidity. we have shifted the mindset. we are elephants. we remember nothing.
4:08 am
with that in mind, the ecb has made it clear they're going to move their balance sheet just after -- just under 50% of gdp in europe. thesting the impact of ecb's move. boj tomorrow, fed on wednesday. julian: the current spread will come in. the whole of europe, that will be very positive. that will particularly be positive, although they are not buying the bank debt. that is going to help both the corporate bond market and the equity market. in thes a slowdown fallback we have seen in the oil price. they are selling and in the short-term, i expect we are in for a bit of a rally. come next month, the month
4:09 am
after, there is going to be a slowdown in growth. it might be in china, across europe. people will worry again. that is how the year will pan hans:r the whole of 2016. let's talk u.s. equity value stocks. starbucks, poised to shine after eight years of underperformance. that is according to a story in barrens. i want to get your views on this. you are here with us, what is your take? you mentioned you thought is one to be choppy everywhere. you see some regions being more choppy than others? you see these value stocks making a comeback? julian: i think there is fishing going on in the value area. you see not total stability but you have seen oil prices rallying from the lows. i and or is trending -- iron ore is trending.
4:10 am
people want to look for value because some of these momentum lays are highly valued and consequently they are looking around for things to buy into the rally. i would not be at all surprised to see them continue to rally, whether or not that is going to be driven in terms of better outlook for growth. i think we can debate. manus: the debate is they come back invoke at offering value. one of the other stories that is on the -- on bloomberg today is about the u.s. ex line -- u.s. buybacks are the one thing that are keeping the s&p alive. 140 $6 billion is set. we're almost at levels that we have not seen since 2007. as you look at the world, you got europe with the ecb and play. you got the fed and that's the fed stepping back in doing a couple of hikes. it is buybacks that is going to
4:11 am
give support to the u.s. julian: i think buybacks will continue. if you are a large corporate, and you borrow in europe, you can effectively borrow for nothing. what do you do that money? ?o you buy back your stocks do you go out and buy a competitor to boost the revenue line? there is a lot of things you can do in short-term to enhance your share price. this is from the story. the bull market -- going back to 2007, we are at the level of $170 billion. that doesn't inspire me. that fills me with more fear than hope. julian: as we talked about, you can for every positive, you can find a negative in the market like this. people will wax and wane between fear and
4:12 am
elation. manus: fear, loathing in relation will drive the market. hans: manus, i can do so much with that but we are on live television. we think julian staying with for us. we have central banks taking center stage. tokyo.up, we'll head to that is next. ♪
4:13 am
4:14 am
4:15 am
manus: this is on the move. i am manus cranny in london. stocks are raising higher. 560 stocks are rising and the dax is up 1.7%. autos, basic resources and technology rise as london wakes up to a foggy monday morning. let's get to bloomberg's first word news. kumutha: german chancellor angle merkel suffered defeat at the ballot box as voters used state elections to reject her open-door refugee policy. the christian democratic union failed -- from the green. came second to the spp. the cdu was on hold. they struggled to form a viable coalition after the
4:16 am
anti-immigration party alternative for germany picked up a quarter of the vote. in the u.s. election, donald changed a planned monday night rally in south florida to ohio the polls show john kasich may be pulling ahead. trump has made a few other sweeps to a schedule that seem designed to tap down emotions after violent protests erupted in chicago on friday night. sparking a cancellation and resulting in several arrests. millions of people have rallied across brazil protesting against corruption and calling for the impeachment of the president. they marched along real copacabana beach. through the center of some -- the center of some paulo. dozens of lawmakers and business executives are embroiled in a corruption investigation. at least 37 people have been killed in an explosion in the
4:17 am
turkish capital of ankara. the health minister says the suicide car bombing close to the prime ministers office has left another 15 people in serious condition. the glass comes less than a month after another suicide bomber killed dozens of soldiers and a car -- and a convoy passing through the city. the turkish lira is trading lower this morning. the first decline in five sessions. global news, 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. you can find more stores on the bloomberg at go. here.i will pick up most analysts didn't expect to change when the boj makes the decision tomorrow. they are expecting the boj to cut the rate further. .et's head to tokyo james, what can we expect from the boj tomorrow?
4:18 am
james: there are very few expectations for tomorrow's meeting. governor kuroda and other officials have been doing their best to play down expeditions for a further rate cut. if they cut rates again, there would be back to back -- they have been out saying they want to see the results of what they did in january before they make any other adjustments or cuts. you are seeing that affect. most economists say they do not see anything happening. stocks future -- futures markets are not pricing in any rate cuts in the next six months. your explict -- you are seeing expected 0.1%. economists arest telling us. they see rate cut happening. they see an expansion of the boj's asset purchases that is not going to happen tomorrow.
4:19 am
that is going to happen at one of the meetings between now and the end of july. manus: it is interesting we talk about this conundrum for central banks did -- banks. in terms of negative rates and what happened with the japanese bond market. the ecb missed a opportunity last week which was not stephen the yield curve. -- not steep and the yield curve. cutting more negative rates but perhaps pulling back on the amount of qe that they are doing. the boj and negative rates, where are we with that the liberation? liberation? the james: it hasn't been in effect in a month, it is pushed 70% of japanese government debt below zero rating. some of the shorter bonds were
4:20 am
at negative yields before the decision did everything after 10 years is negative at auction it's a vacuum borrow -- negative at auction. on bond sales.w that is excited to continue. continue. expected to you're going to start see those rates go negative. it is made a huge difference and not all of the cost of borrowing for the japanese government. yet money market funds which are shutting down because i cannot make any money. you have reasonably getting out of jgb's. held or in how money is moved around the a japanese economy. -- around the japanese economy. hans: we appreciate you joining us from tokyo. benchmark u.s. 10-year note are
4:21 am
moving the most in tandem with german bones. we will track the correlation next. ♪
4:22 am
4:23 am
manus: welcome back to on the move. i'm manus cranny. negative yields good -- negative yields. germany seems to be observing a greater influence over u.s. treasuries. killing hyde is here, charting
4:24 am
desk caroline is here, charting the debate. caroline: we have hot such a hot central-bank week. i would look at u.s. treasuries ahead of this. the correlation that we are seeing at u.s. treasuries with german bonds is the highest since december 2014. basically, nobody is looking at central-bank policies. they're looking at the ecb and the bank of japan. you are seeing correlations at --n you get one, you could there are moving into lockstep. sincere the highest december 2014. why? everyone is looking at what the ecb does and boj does and dictate whether they bite treasuries are not. -- whether they buy treasuries not.ot here it -- or
4:25 am
manus: you just had the big japan report -- sway the japanese yield curve. caroline: we are expecting not this time around, eventually for the u.s. federal reserve to hike rates. when are we going to be putting money into the u.s. treasuries? the desperation out there at the moment. when german bonds go higher, so to do u.s. treasuries go higher. money pushes the yields down on german debt. that is going to have to flow into where you get a better richer -- better return. you are seeing phenomenal volatility in u.s. treasuries. it has risen to all-time highs at the moment. yet trade failures on a former regular basis than we have ever been used to. the demand for the 10 year has soared.
4:26 am
and the moment -- at about manus: there is meat eating bond traders. obstacles, what you reckon? -- hansa meat eater nichols, what you reckon? are you a meat eater? hans: bonds are moving but currency isn't. if we still have the deutsche mark, it would be strong like the dollar. you don't have the deutsche mark, you have a weakening a currency. that is white germany is profiting off of his ecb action. even as they continue to criticize. because: interesting, -- hans: i am not going to give you a chance to answer my statement. i want to thank you for being on-air. we are going to stay here in berlin.
4:27 am
it is a not so super sunday for angela merkel. the anti-immigration party -- her open border policy good we are live in berlin coming up next. ♪
4:28 am
4:29 am
hey how's it going, hotcakes? hotcakes. this place has hotcakes. so why aren't they selling like hotcakes? with comcast business internet and wifi pro, they could be. just add a customized message to your wifi pro splash page and you'll reach your customers where their eyes are already - on their devices. order up. it's more than just wifi, it can help grow your business. you don't see that every day. introducing wifi pro, wifi that helps grow your business. comcast business. built for business. when it comes to the fithings you love,. you want more. love romance? get lost in every embrace. into sports?
4:30 am
follow every pitch, every play and every win. change the way you experience tv with x1 from xfinity. tom: welcome back. this is "on the move." european stocks are trading higher with a reasonable amount of conviction. you've got the stock 600 up over 1% did 600 of the stocks are rising. this is heading towards a two-month hype it these are basic resources -- two-month high. these are basic resources. what you've got here are stocks in europe up 13% from their low point later -- earlier in the year. let's dive in.
4:31 am
what is actually behind that move? you suck copper rally -- saw rally what is going to happen next in china? are you going to have a moderate rally in china? that in mind, we are back to the relief rally and backup play in europe. we will have to wait and see. up $40 ade is trading barrel. that is giving some relief to the ability of the middle east to spend petrol dollars or not lose anymore. let's get up to speed with some of the stocks are in -- stocks. caroline: the key followers today are coming off lows. in london, investors are not liking what they are hearing at the moment. we hear that they see cap's
4:32 am
operating margins flat. 15% will be trending above in 2020. they see adjusted net sales. they see free cash flow. why the concern? they are looking to sell more protection units. they do not see enough synergies in this unit. they are looking at external opportunities and aeronautical equipments for options open for the ceo. the capital market has a flurry of news. overall, they are not pleased with the targets being set overall in terms of cash flow. .et's look at arista this is a swiss company. they have erratic revenue development for the past 18 months. this is a bakery company. organic sales looked
4:33 am
better for this company. they say this is about restoring credibility. the market is selling off in this particular bakery company. the growth momentum will be erratic they say. sales are up 2.7%. it looks as though that lack of transparency is what's rattling investors. check out what's happening in the italian banking market. yes, it still low one euro. we are seeing this hit limit after limit. they are up 11% this morning. that's interesting coming from sayshief executive, renzi we have pressing institutions at a takeover of this particular lender. this is being reported. will we see consolidation? will we see m&a within the italian banking sector? they have more targeting
4:34 am
purchases of banking bonds. merkel has been punished in state elections over her open border refugee policy. they picked up one quarter of the vote. for more analysis on what this mr.s, i am joined by better. thank you for joining us. it sounds like a disastrous night for the cdu. the spd lost more votes to have a worse night? >> they both had a really bad night. it was an antiestablishment election with up to 25% going to the right-wing populist party. none of the parties can be happy about the result. is noterkel said she going to recalibrate or change for policies. do you agree with that? will the spd recalibrate at all? >> the result is alarming for
4:35 am
merkel. she will go down in history as the leader that allowed for a right-wing populist party to establish itself. that will cause a lot of nervousness within her own party. the result vindicates her stance on refugees in a sense. two thirds of germans have supported the merkel government policy on refugees. actually trydates to distance him cells -- themselves from merkel. that did not go down well with voters. it's not clear with this nervousness will mean. she will stay the course of the time being in europe. we are going to have a gathering on march 17 and 18th. had you think the german
4:36 am
populists will look at this negotiation with turkey as a moment where merkel could regain some ground in terms of dealing with the refugee crisis? populists look at this as selling out to turkey and not putting a stop to refugees coming to europe. they look negatively at the negotiations. the german public by and large supports the deal with turkey. they support this european solution. she will push for that and try to make it happen. a plan b will come into effect once that fails. the two candidates that ran against her refugee position in the cdu and that may be a sign that wasn't the right move, i've heard that a lot. it's a dominant theme in the press. what about the others?
4:37 am
the results could have been worse. >> i don't think the results would have been worse. you could not have avoided the rise of the right-wing populist. there were two camps. some supported the general stance of the government and mrs. merkel on this. ,he ones who were against this they voted for the original. that is not some muddled in between position that does not seem honest or sincere. hans: they would have done a little bit better, you would've seen some votes but they would have consolidated. >> they put because they gave an opening for the green party candidate and the spd candidate. they were the ones supporting the general government's position. we are not trying to sell out to the right-wing populists or take some sort of strange middle position. that weekend the candidates. will she be there to
4:38 am
leave the party in 18 months in the general election? >> i think you can say with some certainty they will enter parliament. it's not clear that they will get 15% or 20% of the vote. they have a lot of groundwork to do. there is a lot of interparty discussion between extreme right-wingers who are against muslims and those who want a more moderate right-wing populist position. it's not at all clear how well the party will gel in the lead up to the elections. it's fairly likely they will enter parliament. hans: we haven't heard from angela merkel yet. what do you expect her to say? > >> i don't think i will expect her to say anything different. she will try to stay the course. you know her stance on refugees. she's not taking any refugees
4:39 am
right now. she is sending the signal the refugees don't have a right to choose germany as their country of asylum within the eu. she will push ahead with the turkey deal. she will also try to reduce the numbers coming to germany. hans: she has an incredible challenge ahead of her. this one seems much more serious. europeaner-lasting or and german politics. thank you for your time. we appreciate you being here. we have a big show and a lot more to talk about. merkel is going to address those election results. we will see how specific she is. iran wants to boost oil out. we will look at what that means for the global energy market. that's coming up next. ♪
4:40 am
4:41 am
4:42 am
hans: this is "on the move." egypt central bank has a more flexible exchange rate. that's breaking news. rent dips below $40. you, hans. china is buying property assets for $4.8 billion. they have a 10% stake in the company. china is looking to reform state owned enterprises. they are trying to get value from their land portfolio. they will sell one billion
4:43 am
shares as part of the transaction. the stock has gained in hong kong train overnight -- trade overnight. they will buy strategic hotels and resorts from like stone. that is $6.5 billion. this is a record transaction for a chinese buyer of american real estate area there is a range of 60 luxury resorts and hotels from san diego to manhattan. blackstone completed the transaction three months ago. in china iseloper getting into the railway business. stake in the a metro group. it's part of a restructuring plan that will give $9 billion in assets. they will fund the acquisition by selling new shares to metro as cash to make up for a potential shortfall. this is the most in over a year. that is your business flash
4:44 am
minute. to boost oilans production to 4 million barrels a day before it considers rejoining the freeze. the announcement from the oil minister countered the effects of the u.s. recount on the price. the push in the story here. i have a market story that we will get to. i think it's perfectly reasonable what iran is saying. we need to put a few dollars in the tank right now. let us produce our oil and get a few dollars in. when we are up and running, we will play. --after sanction ended sanctions ended, they wanted to get their place back in the market. the oil minister said please, just leave us alone to do this work. efforts between opec and
4:45 am
non-opec producers will be done without iranian participation. tom: i have one chart i want to bring it to our viewers attention. we rally so significantly. that is a 40% rally. this is the iranian out. we will come back to this. it's not all a pretty picture in iran. hans, join the conversation. hans: the iranians sound like saint augustine. are want to be sure -- you chased, but not quite yet. they want to get to that production level. who else's reading their augustine? who wants to get to a level and do some more sinning before they get to that point? production ramped up hugely in the last few years. they want to bring more oil to
4:46 am
the market as it rejuvenates sales. one of the significant kinds behind that -- things behind that is the pipeline feeding is down several weeks. there was a big nigerian pipeline down as well. there are things driving the rally. the thing that's got people focused is just how shale production is falling in the united states. manus: the momentum is building. these are the net short positions. the short positions are dropping the most sense to thousand six. the market is really beginning to shift gears in its position as well. >> this grand freeze in production hasn't yielded much in actual policy. it has changed sentiment. and you combine a policy makers
4:47 am
trying to change the dynamics of the market with the fact that low oil prices are starting to hit hard on shale production, you do have the background to this change in sentiment. manus: every central banker in the world will be relieved. bomb insuicide car turkey killed at least 37 people and wounded many more. it's the third time it's been hit in five months. we are joined from istanbul. how our markets reacting to this attack? >> it's a mixed financial market here in turkey. 4/10 ofreciating around 1% against the dollar. it's at 2.87. sincehe lowest level february 26. outnbul is trading in and of posted territory. if it protects its gains, it will be up for an 11th
4:48 am
consecutive second. the yield on turkey's tenure bond is down about one basis point above 10%. manus: a very good day to you. you have moved to your home country from london. this is the third time in as many months that turkey has suffered an attack on terrorism. give me a sense on what's being done. as somebody who has lived here and return home, how is the government controlling this? what are the manifestations of tackling terrorism? >> that's right. i am seen the third blast in five months. to 160th toll has gone in all of them. theywill fight terror and will bring terror down to its knees.
4:49 am
turkey is fighting terror on a number of fronts. they are fighting against kurdish militants and the islamic state. we are getting warnings from the u.s. embassy. they gave us a warning a few days ago saying there could be an attack over the next few days. that is exactly what we saw. we are being told to stay away from crowded areas such as shopping malls and metro stations. will, thanks and you very much for joining us. we look ahead to the week of global central bank action with her eyes fixed most on the fed decision of this wednesday. discussion of that is coming up next. ♪
4:50 am
4:51 am
4:52 am
hans: risk off. thisis the message morning. a queen traders have made the decision in london and across the european markets. the markets are rising. the stocks are up 7/10 of 1%. london is driving the market higher. you saw a nice relief rally. everyone is shrugging off more the headhe fact that of the pboc is less than conducive in his desire for margin policy. speculators are raising their bullish that's the most since
4:53 am
september. you can see the australian dollar rise. a hairswhat i call breath away from the tantalizing leather. these are big psychological moments. since every 10th, there is a risk reversal. angela merkel got her hand slapped metaphorically speaking in the election this weekend. the chinese are ready to step into the stock market again. we are on the fed watch. the storm and rally. hans: there are a lot of potential speed bumps here in take a look at some of the things we are -- speed bumps. report which comes as i ran foust to -- foust to continue boosting production. tomorrow, we get a decision on the bank of japan. several states in the u.s. head to the polls for primary vote red on wednesday, we get a rate
4:54 am
decision and a policy decision from the federal reserve. there will be a budget. i think one comes before the other. they are both very important. there will be a rate decision from the bank of england and also south africa. joining us to talk about all of the subject is richard jones. thank you very much for joining us. of all of those events, i know the fed has to be the most important. what is number two? think you were right to highlight the fed as number one. it's really important. we've got a market that is not expecting any near-term rate rises in the fed. if you look at the function on the terminal, if you look at the end of the year, there is a high probability the fed will raise rates. manus: here we are. we looking at three quarters.
4:55 am
this is the one in the middle. this is what we're looking at. this started six weeks ago. fed willaying the never get anything more than a start. they will never get anything more than one move. caroline did a lovely chart. they are rocking. they are up over 66%. -- .66%. richard: i think they will be less cautious than they have been since december. upbeat as become as they are in december, we will see some of those odds shift up. the moving up to 60%. you want to see those odds above 70 for the fed to be comfortable. as we stand now, it looks like a
4:56 am
november/december story. if they are more hawkish on wednesday, that could move closer to now. hans: is the fed looking at what's happening at that correlation and looking at the are theyf prices? welcoming the stronger correlation between treasury bonds? richard: what's going to give them comfort is the fact that the rest markets have recovered. sentiment is not as gloomy as it was a month ago. given that, the volatility is one thing they were worried about. they were concerned about international headways. the chinese are going to step in and support their stock market. that will give the fed some comfort. they have seen positive prices in u.s. assets. manus: thank you so much for joining with us. tom keene is up next. gotss the pond, you've
4:57 am
europe in equity markets rising. u.s. futures indicating a little but a breather. i believe you in the capable surveillance team. ♪
4:58 am
4:59 am
5:00 am
vonnie: the bank of england is up. angle of merkel is punished at the polls. partyti-immigration breaks records in three state elections. pledges to president bring down terrorism after suicide alms killed 34 in turkey. this is bloomberg "surveillance." it's a huge day for geopoliti


info Stream Only

Uploaded by TV Archive on