fortune, thel of tables turning on european stocks as they trailed u.s. equities by the most since 2003. and we get another gauge of the euro area economic health and inflation data this morning. what will those figures reveal about the challenges facing mario draghi? also today, black rock cuts. and u.k.osses, consumer confidence stalls. as the threat of brexit clouse the outlook. -- clouds the outlook. ♪
a very warm welcome to the program. this is live from london. 6:00 in the morning here in london. let us put the first quarter into context. we will continue to do that throughout today's programming of course, as we started the last day of the trading quarter. and with that in mind, here is a countrythe mcsi all coming through here in the white. you see the bounce at the middle of the quarter mark. and this would be circled here, this is the fed statement that two from four previously. that gave the equity market rally a bit of a boost. in the blue, the dollar index. you see the contrast or the way that these two asset classes are moving in the same direction, going up as the same time the dollar is coming down. he talked about this yesterday, after what janet yellen was
saying. and we had another fed official overnight giving us kind of dovish rhetoric, the same kind of signals from charles evans. talking about how the fed will be tolerant of inflation, above target for a brief period. much to come from that, but let's have a quick look at the radar. the risk of radar, how are asset classes performing at this stage of the trading day? in theoned the weakness dollar, we actually have a little bit of a rebound taking place just overnight, up by 1/10 of 1%. of asia-pacific up by 2/10 1%, as the global balance we're seeing an equity markets seems to be continuing. oil down by 1.4%, down for the fifth time in six days. and increasing u.s. stockpiles is the biggest driver here, a global glut in oil of course. let us get the first word news. good morning. >> good morning. fears that britain might vote to
leave the european union has helped keep consumer confidence at a low level. the sentiment state at zero in march, while a gauge of the expectations for the economic wasation over the next year at -12, down 18 points from a year ago. plus am a black rock's plan to what may 400 jobs in be the biggest round of layoffs today at the world's biggest money manager, according to people familiar with the matter. black rockhe cuts, will continue to invest in key areas, expecting to end of the year with a higher headcount according to one person. donald trump has come under fire for saying that there would have to be some form of punishment for women who have abortions. if the procedure were outlawed in the u.s.. that immediately angered pro-abortion supporters, but trump later issued to statements
verifying his, ultimately saying it would be the doctor or anyone else carrying out an abortion who should be held responsible. private workers building a football stadium for the 2022 have been abused by employers. that is according to amnesty international, the london-based human rights group says it found evidence of forced labor, as well as workers being forced to live in squalid conditions. officials say it is getting better. and the reports are out of date. global news 24 hours a day, powered by 2400 journalists and more than 115 use euros -- news bureaus. anna: thank you very much. let us get to haidi lun with a quick check on what is happening in the asian market session. again, saidt once talk of a dovish makers supporting global equities. good morning. haidi: happy last day of the
quarter. all of this read it you are seeing behind me kind of belies the rally we are having, the best. for these emerging market stocks in asia since 2009. having said that, we have just seen that kind of midmorning afternoon session, the tide has turned a little bit. investors are really looking ahead to the end of the week, which is a very big day -- the payrolls out of the u.s.. we see a little bit of skittishness out of that. afterglow of janet yellen's comments, the name of the game going forward in terms of the rate hike trajectory. the strongest coming through from the aussie, up by 3/10 of 1%, brushing off that weakness in crude prices. we saw very strong buying in oil resources in some of the miners as well. shanghai up for tenths of 1%. hong kong has weakness coming
through, they are actually poised to enter a bull market. they are up close to 20% from that february 12th low. and we are seeing strong gains in particular with commodities, stocks in particular, today. india also seeing gains of half percent. taking you through some of the moves, it has been a very good day for corporate news in this part of the world. some of the big movers today, tokyo is up by 6%. but really the bigger story, it is the japanese owner of an israeli company that helped the u.s. governor crack into that iphone that was used in the san bernardino mass shooting. neither company has come out to confirm this. the third party has been mistreated a way to get into that phone. that stock is up more than 40% since march 21 there. we are also seeing a bit of a downside to chinese lenders come as early continue to come out.
the bank out-of-date with earnings, little bit on the upside. one commercial big mover, and the hong kong section, the parent company has announced a plan to take that property private, down more than 50% since about nine months ago. anna: thank you very much. haidi lun updating us from hong kong. mario draghie now, will get another glimpse of the challenges he faces today with the release of inflation readings from spain, italy, and the eurozone as a whole. prices in the regions are excited to fall for a second month in a row, ahead of the latest round of quantitative easing which kicks in tomorrow. that is a very different story across the pond, where charles evans said the u.s. economy will probably be strong enough to justify two interest rate increases this year. as we said at the start of the program, a lot of the talk is about how much the u.s. will tolerate above target inflation, even if we are not there quite
yet. let us bring in edmund shin g, he joins us today in the studio. great to see you. let us talk little bit about this divergent picture, just how divergent is it in fact for europe versus the u.s.? i have a chart here which shows the eurozone picture with regard to inflation. we have euro area inflation, and in blue we have the euro area core inflation. if you are generous, you could say it is trending up ever so slightly, still at only 1%. statistically anomaly, it is flat. president mario draghi try to do by injecting liquidity into the economy by various different routes, we have him buying corporate credit as well as the usual government bonds, despite all of that, it is not moving. right> what does it tell you, we have no inflation in the eurozone. we are not going to have any in the eurozone anytime soon.
because we have a massive output. we have too many unemployed people. that is the bottom line. the u.s. is a complete different story, where they do not have so many unemployed people. recoveryot have a that has been faster since 2009. we have more to catch up. anna: the classic relationship between china labor markets and inflation at play here, not the extent of deflationary forces coming through from china. edmund: exactly. a come back to economics 101, classical economics. economists love that, it still works. lower unemployment eventually picks up because wages pick up. that is what we see in the u.s. what we definitely do not see in the eurozone. anna: something to do about that in the eurozone, as mario draghi need to do more? order european governments need to heed the messages that he himself is giving now. there are many economists that are saying there is a limit to what central bank can do.
abdomen: i would completely agree with that last remark. mario draghi has pulled out all the stops. what else could he do? he is not quite out of ammunition. but there are not many bullets left. it is absolutely true that monetary policy is the same as fiscal policy. you can put on a classical keynesian way. that has not happened so far. it has happened to a limited extent, germany have to spend on immigrants. refugees, they will be spending quite a lot of money. italy has to loosen the purse strings come a spent the money as well. they will limit the amount of government spending, fiscal injection coming this year. is it enough to get it up? not so sure. anna: do you see increased investments in it is f infrastructure? you keep rolling your eyes. edmund: we have no official view on brexit. but i live in france. there you go.
that is my personal opinion. i like france, europe. when we talk about the european union, everything does seem to take forever and a day to happen. the european union is sitting on a lot of money that they could ingest into the infrastructure spending. i have yet to see the money being spent and some sort of actual result. when i see that, i will get excited. anna: what are you expecting mario draghi and the team to do? we have quantitative easing coming in tomorrow, but the corporate bond, is that the extent of it? do we reach further? that we want not to see the effects of all of these measures he is putting in place now. we have to give him some time to see it work, he will probably go again later this year. and inject even more money into the economy to try to lift it up higher. in the meantime, i think the eurozone economy will be ok.
it will be boring, not grow very fast. but it will be fine. the concern is the u.s. economy, or inflation is clearly rising. the fed will tolerate it at least temporarily. but at the same time, the consumer seems to be slowing. that has been the engine up to now great if they are slowing, what is going to hold the u.s. up? anna: you sound like someone quite disparaging. what your view on the global economy is fairly positive right now. edmund: it is fine. i am not a huge china bear. but you pointed out the dollar index. i think it is very important. we are seeing i think a huge shift in the dollar. and my colleagues was certainly be very insistent on that point, llat we had a massive balu market. we have seen a trend change. the dollar is now weakening. and actually, this has a lot of implications in the long-term for the commodity asset class. we have not seen gold and oil
moving. maybe we'll see a bigger move up ahead. anna: we will about that in the next conversation, next part. edmund, thank you. he stayed with us. here are some highlights for your day ahead. we are going to get a slew of inflation data from europe this morning. starting with france at 7:45 u.k. time. gdp 35unemployment, and minutes later. we will round off the inflation data from the complete eurozone at 10:00 this morning. in the afternoon, we get u.s. initial jobless claims ahead of the big run for the week that is tomorrow's payroll. up next, all that glitters is not necessarily gold. we will take a look at the best and worst performers when it comes to commodities, looking back over the last quarter. some contacts, the relationship between commodities and the fx. tdown."th "coun
anna: welcome back. a gloomy looking hong kong this morning, this afternoon i should say. 6:16 in the morning. let us get the bloomberg business flash. >> thank you so much. blackrock is planning to cut about 400 jobs in what may be the biggest round of layoffs today at the world's largest money manager. that is according to people with knowledge of the matter. they are equal to about 3% of 13,000 employees. blackrock will continue to invest and hire in key areas, ending the year with a higher headcount according to one person. the ceo of barclays japan is to resign in june. who broke executive the news to employees in january that the bank will close its cast equity operation in japan
and focus on a riveter's. derivatives. it will leave andrew jones as the sole ceo of the asia-pacific region. mark mobius is stepping down from day-to-day management. stephen dover will become chief investment officer of the group. and take over some of his responsibility on april 15. will remain chairman of the business. >> we have the emerging markets group. then we have a local asset management group. and many of the countries in emerging markets, what we are doing now is combining them. bringing them into one big group so we can use the resources more effectively. and i am sort of moving up to sort of an overseer role, to do more pr, like we are doing now. >> prime minister david cameron is to chair talks later on the prospects of huge job losses in
the industry, as the decision to offload assets after losses and write-downs have left the division i on the zero value. steel prices are the lowest in a decade, meaning they are struggling to find a buyer. >> in the industry, given the oil capacity issue, given how what is happening across waters, there is a kind of an existential crisis. and there are countries with open borders, which are more vulnerable to some of this. and that is your bloomberg business flash. : anna: thank you very much. theme,inue with a metals tumultuous quarter for copper. when testing seen the longest losing streak since january. the price of gold has strengthened. let us bring in kenneth hoffman. very good morning to you.
edmund is still in the studio. ken, to you. contrast the fortunes of copper and gold this morning. that tell us anything insightful? in my lifehave never seen a quarter like this in almost 30 years. you saw daily moves in stocks at 5% become commonplace. the market is very confused about what is going on in china. now gold has been the big star. t in the a lot of tumul world, the fed going from four to maybe two times. some people think they will not raise it all. back-and-forth on goal. china. it all depends on the world came into 2016 to shorting all of the metals. it is the end of the world. and then all of a sudden, you saw a little bit of buying out of china. everything took off. it has been a really, really crazy year. of those quarters where when you look at the overall changes, they hide all
kind of stories that happened within that period of three months. i have a gold price chart here that shows you year to date. this is just after the year, all feeling nervous, stock markets reflecting that. many asset lasses reflected that. we saw safe haven buying in gold. but when equity market starting to recover, people feeling are confident, golden not selloff pretty great. if that were you ? ken: if you were to put up the chinese yuan, it would almost looked the same. the world is really betting on china. if you think that china is going to be week, you will see the currency the week. that is when gold does really well. copper is sort of the converse of gold. and when you see the chinese come out and say, wait a minute, i know we spent $1 trillion defending the currency, we will keep it where it is. all of a sudden, the world is like the yuan, strengthening. and when copper
flatline, gold to call. where will the yuan be year from now? if you think it is when to be seven and a half to the dollar, you will be very long. if you think the chinese are accurate saying the currency will be where it is today a year from now, when you are very bullish on copper. not so bullish on gold. , the bets on china really come the linchpin of peoples expectation around the sector. is right.think that if you are at with that chart in euros, it would not look so exciting. i think this is the mirror image of what we said about the dollar. the dollar has weakened, and gold price goes up. why? dollarsodity price in will benefit from the fact that the dollar is weaker. when you put those commodities and other currencies, suddenly the picture that look quite so rosy. the what i would say is let us just pulled back. yearve been in a 4-5
bear market. goldommodities let us say, is finally turning around. i think that tells you that 100%e do not really believe the current rally. that is what we see from our investors. they don't really believe it. 500, itk at the s&p does not break sustainably above 2100. it is capped. people are thinking the world is not so great. risk assets have rebounded of it. we don't really believe that is durable. and we want to keep the money say somewhere. anna: there is dollar affect but also some nervousness about the outlook. ken: the number one thing you are hearing is that this is the bottom of the market, or is this is a bold move in a long-term bear market? and that is a number one question. but for investor, you see glencore up 70%. the moves within the market have been unbelievable. gold has doubled. but yet you have a stock pickers market where they have not
really move that much. really, a very interesting market. stock pickers, you really want to be in the right stock at the right time. because the divergence between ers has been astronomical. anna: we will talk about some of the strong performance in the mining stocks in the first quarter. we talk first about what the chinese are warehousing, what they're doing with the copper stores. bring us up-to-date on that story. how much is that influencing? we do know that the chinese, because of the close currency system, they have used commodity as a way to take advantage of very high interest rates in china and low outside of china. we actually put together an analysis this week to figure out how much. we call it the copper bank. and we think the bank has 15 million metric tons of copper sitting there, through tens if thousands ofof small or users who are taking advantage of the local banks. that is a yearz supply.
this is not real demand. it is not as if it is being made into pipes and wires. ng in various warehouses in china. the could add to the copper bank if the currency strengthens, they could take it out if we see it weaken. anna: a downgrade on copper prices? ken: where are you on the yuan? it is going to stay where it is, and the government says they will keep it there, they may have 8 million tons this year. which is very bullish. but conversely, it could be very bearish. anna: often in the same conversation we talk about the oil price, do you think we have seen a fall in oil prices? looking ahead to what we see iran coming to the table, joining the conversation. do you see any reason to expect we have found a bottom of oil? edmund: i do. i'm sure the wrong in the short
term. but i could be wrong month. oil could quite possibly ease back for the great it has had quite a run. but the longer-term, yes. towards the end of the year i do expect to go up. the reason is that iran's supply is not rising as quickly as we thought. secondly, russia is cap out. thirdly, pretty much as much as they can already, so where is this extra production going to come from? at the same time, u.s. oil production is really faster than people think. so we may come back to supply and demand balance within the global market before the end of the year. oil: that is what some executives are telling us in the last earnings season. that we would see some kind of balance at the end of this year. we will see if that comes to pass. can often, senior metals and mining specialist with bloomberg. good to see you. up next, reversal of fortunes. why the tables have turned on europe stocks. equityrforming u.s.
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i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. anna: welcome back. 6:30 in london. let us get the first word news. >> thank you. mario draghi will get another glimpse of the challenges that he faces later, as he gets inflation readings from france, spain, italy, and the eurozone as a whole. prices in the region are expected to fall for a second month in a row. it comes ahead of the ecb's latest round of qe tomorrow. the u.s. economy will probably be strong enough to justify two interest rate increases your. that is according to chicago president trawls evans, whose
comments came just a day after janet yellen said uncertainty thenweakness abroad may proceed cautiously. fear that britain might leave the european union has helped keep consumer confidence at the lowest level in more than a year. the index of sentiment data state at zero in march, while a gauge of expectation for the economic situation over the next year was that -12, down 18 points from a year ago. blackrock's plan to cut about 400 jobs in what may be the biggest round of layoffs today at the world's largest money manager. that is according to people with knowledge of the matter. further reductions are equal to about 3% of the 13,000 employees, just like the cuts. they will continue to invest in key areas, hiring with key higher headcount, according to one person. donald trump has come under fire for saying there would have to be some form of punishment for
women who have abortions. it is a procedure that is out -- if the procedure was outlawed in the u.s.. that medially angered supporters. but he issued to statements clarifying his position. ultimately saying it would be the doctor who should be held responsible. migrant workers building a football stadium for the 2022 cup have been abused by employers. that is according to amnesty international. they say they have found evidence of forced labor, as well as workers having passports confiscated, and being forced to live in squalid conditions. qatari officials say that conditions are getting better. and parts of the report are out of date. global news 24 hours a day powered by 2400 journalists in more than 150 euros around the world. you can find more on bloomberg at top . anna: you absolutely can.
thank you. in a world of negative interest rates, gold is seeing its strongest quarterly rally in three decades. context with a chart, good morning. we haven't talking little bit about gold this morning. but another dimension of the story, the amount of money going into gold. because we are in the low, negative interest rate environment? manus: there are $7 trillion worth of sovereign bonds. i got to talk about this in the talk to. i want a picture of a panda. capital saying that if you do not get positive returns out there, it is like pandas returning. they're not going to come often. they will find it hard to reproduce. have a look in this. a shot in the arm, we are dynamic today. this in the white line is the money flowing into gold ore.
ratchetingres are higher in the white there. you can see these are the two biggest gold exchanges. reported at the fastest pace since 2009. if you have not got the point from mario draghi yet, you have negative euro rates. when you have here is a dollar going for the biggest quarterly loss which of talked about, in five years. thing got unwound at yesterday, which slightly sort of hoped it in the eye. we saw hold retrace it in price. it took the market rally off the table. but it is the biggest rally in 25 years. dollars,rates, dying or a declining dollar -- anna did not like the term dribbling. but where does the money go? world in a state of beleaguered lack of growth? anna: the hunt for yield and the
safe haven, all in the same breath i suppose. although it is looking into using create if that were truly working, if i really want hundred percent believed that, silver would be following. and it is not. silver-gold ratio has gone down. which means gold has gone up, silver has not really reacted. people still do not buy the story 100% just yet. anna: edmund and manus, thank you. manus will be right back on the move in an hour. after beating u.s. equities last year by the most in a decade, they are now trailing the most since 2003. narrative it has the details. talk us through the details, how are they performing? nejra: i have this chart showing precisely what you said, which is that last year, european stocks be equities by the most in a decade. what this shows is that this work on the stoxx 600 is since 2003. most
you see the drop there. and that here in 2003. the s&p has erased the decline this morning. but the stoxx 600 on track for a quarterly loss of about 7%. all the three industry groups in the red. i will to you more about those later. but the question is why have european stocks underperformed so much? now the european rebound really hit a wall in the past two weeks. his by the fact that we had increased stimulus from the ecb, confidence in the euro zone economy is in a 13-month low. when analysts were actually protecting corporate profit growth at the year, they are now calling for decline. also u.s. stocks meanwhile, they benefited from a weaker dollar. we are seeing economic data and also from the recovery in oil prices. now the upside of the rout and european stocks, valuations for the stock 600 are still below average for the past year.
this is what this chart shows. times ejected9 earnings. that means a discount of more than 10% for the stoxx 600 to the as mp 500. and if history is any guide as well, the next quarter for european stocks could look a little bit more promising. because actually the stoxx 600 has bounced back from every quarterly drop but one, since the height of the sovereign debt crisis in 2011. looking at european stocks in general, if we look at one index in particular, i wanted to focus on the swiss market index. one of the biggest losers this quarter, even though it had the lowest evaluation in more than a year relative to global equities. that is not tempting investors back to switch the stock. they have been favoring those oflical over defenses stocks, suffering from almost twice as much as a stock 600 this quarter.
and finally we have look at the sectors best-performing. commodity producers and oil and gas. if we look at the worst performing, health care stocks wrapping up their biggest quarterly slide in eight years. that makes the stoxx 600's two biggest worst being the banks. anna: thank you very much. let's pick up the conversation. edmund is still with us. the head of global equities. we have that graphic that you were just using there, we have that here on the bloomberg. we showed you year to date. over the past quarter, there has been only a handful of sectors showing positive moves overall. basically, oil and gas. not necessarily the effect you might have expected. and on the downside, as we pointed out, banks and health care. what does it tell you that the basic resources of oil and gas are the best? edmund: it is not very inspiring because they're not european sectors. ,hat it tells you is that
despite the best efforts of mario draghi, there have been actions to make bank profitability much harder to achieve. in terms of the eurozone retell banks -- anna: stunningly bad, down 19.8%. edmund: because we still have the same story. on the one hand, central bank is helping the economy. but not be banks. in fact what they have done has been bad for banks in terms of negative deposit rates. on the other hand of course, if you think about the regulators in europe, they have not let up on the banks at all. we get player and layer of regulations which is causing more costs and lower profits. people are thinking why do i want to own the banks? my feeling is that if you want to own the banks today you better him credit than the equity. anna: what about the banking sector? looking at another chart that nejra pulled up and we have again for viewers, interesting to see how europe underperforms the u.s. over recent quarters.
last year was pretty good, partly driven by one very strong quarterly but in general, since 2009, nine out of 20 nine has europe outperformed the united states. that is not a great track record. why is that? edmund: it is not. but one of the reasons is we have consistently lower inflation and growth. nominal growth when you add real growth and inflation, it has been consistently lower in europe and the u.s. it is unsurprising that it is better. the other point is that they are very heavy in more innovative sectors like technology in health care, biotech. that has been the real driver of the difference over the last few years. anna: ed stays with us. we talk more about the banking sector. european banks were, by far, the worst performing on the stock 600 this quarter. blamedek, credit suisse the first quarter loss on a risky action taken by traders. he told bloomberg and his be
a cultural change in iceland. they are putting that into action. iceland is the only nation that financial advisors the twoars after thousand nine prices. for more, let's bring in bloomberg magazine's edward robinson. he has written a story on this for the magazine. very good to see you on the program this morning. so why is it that iceland stands out as the only country that has put senior bankers behind bars for what happened during the financial crisis? edward: i think the primary reason is that it is a smaller country. and when the crisis occurred in the fall of 2008, it impacted iceland on a way that was very personal. i mean, every high school felt a -- every household fell 20% overnight. there was in august political pressure. there were protests in front of parliament, throwing eggs and
rocks of the buildings. so there was this desire, this need to address not just the economic recovery and recapitalizing new banks, but to exact justice for the mistakes of the crash. anna: as a result eventually jailed some bankers. you have a fascinating piece that goes into a lot of detail about the conditions, the people being held in them. and you talk about executives, how they were a household name. edward: they were the ceo's and chairman of the three largest banks in iceland. in addition, some of the biggest investors -- the so-called fighting investors in iceland -- who were in the banks buying debt and their stocks. they have also been prosecuted, convicted, and incarcerated. so really what you're talking about is the financial elites of the country, prosecuted, criminal cases made against them. as opposed to just say civil
suit being brought against institutions, which is been the approach in the u.s. anna: this is perhaps a little bit tangential or headline grabbing compared to the day-to-day decision of whether to invest in the banking sector, you mentioned why would you at this point in time? have we not put the il behind uss? what was you off the sector at the moment? edmund: i think the difficulty of making money. is business model of banks under extreme pressure. because of the actions of the european and the action of regulators. so until one of those two things change, and the ecb is not going to change, it has to be the regulators. the economy will start to grow on a big growth spurt. which i do not see. it is difficult to see how banks -- i mean i work in a bank so i should be careful -- but it is difficult to see how they dig themselves out of the short-term. in the longer term, they can do it. they just have to do things like
charge people. like in the u k, there would have to charge people for account. that is the way we are going. anna: a different business model them. and at work, and your story, you paint some very evocative pictures of life for these guys now. some of them are actually tutoring other inmates in some of these prisons. what exactly are they teaching them? edward: mathematics and economics. making sure they understand those concepts. anna: that sounds interesting. every robinson bringing us this story from the magazine. around iceland, we will talk shing aboutdmund investment strategy in a moment. the world's largest money manager is planning its biggest round of layoffs yet. lack rock is planning to -- blackrock's plan to cut 400 jobs. we have more from new york. >> the latest news following blackrock's announcement that they will layoff 400, they say
the cuts will be coming soon. and sometime in the coming weeks. in a memo to employees, they said those affected will be treated fairly. but no details on what that means in terms of compensation or severance. foreign jobs may not say -- 400 jobs may not sound that a lot, but it is the biggest round of layoffs and at the largest money manager. that is according to people familiar with the matter. about 3% of the 13,000 employees. now the question is who will be affected? it is supposed to be broad-based, and they are also supposed to have cross-region and businesses aimed at streamlining blackrock. also spending money in regions that potentially have more growth possibilities. in the past, they would aim to invest in infrastructure and alternatives. one source at blackrock will still hire new people. and they could end up with a higher headcount by the end of this year. now as for what precipitated all
of this, it is really about rising cost and falling earnings. quarter,le, last earnings fell short of estimates because of rising expenses. interestingly, back in january, ceo larry think avis foreboding forecast. he said i actually believe you will start seeing more layoffs and the little part of the first quarter. definitely in the second quarter. and look, it is happening. looking ahead though, analysts in the survey to expect net income to fall 12% from a year earlier. about $725 million. we are looking ahead to next monday now, april 4. when blackrock reports. bloomberg news, new york. anna: the latest from blackrock there. just want to say thank you to edmund shing. statehouse, wee speak to one of the prime minister advisers on tech and infrastructure to get his take on brexit. ♪
anna: welcome back. just coming up to 6:50 in london. very early in the morning in new york. over and you are, a lot of it weaker in the starting tray. it is in the bloomberg business flash. the ceo of barclays japan is to resign in june, edging the tie with the executive who broke the news to employees in january that the bank will close its cash equity operation in japan and a focus on derivatives, brokerage, and electronic trading. his departure will lead andrew jones as the sole ceo for the asia-pacific region. company kong brokerage is in default, due to bonds in 2017. that is according to a notice to
holders from the security trustees seen by bloomberg. sen issue the bonds in hong kong in 2014. for a special purpose vehicle, acting as a guaranteed term for them. it is prime minister david cameron is in talks in downing street later on the prospect of huge draw losses in the steel industry. this follows the decision to offload u.k. assets after losses and write-downs left the division with almost zero value. steel prices have plunged to the lowest in a decade, meaning they will struggle to find a buyer. >> in the global industry, given the oil capacity issue, given how the movements are happening across borders, there is kind of an accidental prices. and there are countries with open borders, which are more vulnerable to some of those. >> and that is your bloomberg
business flash. anna, good morning. anna: thanks very much. as we just mentioned, and a market flooded with cheap chinese steel, europe is struggling for survival. our next guest gained important insight when he joined george osborne on a trade mission to china last year. here with me now to discuss the steel industry is keith theett, vice chancellor at university of sheffield. great to have you on the program keith. the to see you again. to me what your thoughts are we look at the crisis that has befallen the steel industry, really intensifying the last couple of weeks or so. do you think that it is important to have steel as part of the u.k. industrial mix or is that a political choice? keith: it is both. it is necessary to have it as part of the next moment is political choice. and what i hope will happen is that people will not just rule out the possibilities.
say we cannot do anything because of state aid. we cannot nationalize. we need a long-term plan for industry that includes deal in the united kingdom. and it will involve things that the government will have to take action. anna: why do we need a long-term plan for industry for the real free marketeers are just saying do not trade money after -- keyes: china is not in a free market. this is not a free market internationally. we may construct a market economy in europe, but we bloody well not. we are interacting with people with a big national purpose across the world. china is operating for example. but if you look at what choices we have, well, we have some very big choices going forward. i understand somebody that is looking, should my government bail out the steel industry? the only reason they will do it is in a sea of purpose in the longer term. it is only if the united kingdom can say we are doing this because it is part of national purpose, generating jobs, generating long-term national security.
bailouts are a particular industry, and back to the 70's, but it is not. steel is actually a core aspect of what we make and how we make it. we make weapons system. we make guns, bullets, stuff like that. do you want a country with no capability to make anything like that in a crisis of that sort? you always by your systems from elsewhere? no, you need steel. anna: one of your specialties is the energy mix, the infrastructure is very topical. you talk a lot about the low atomic energy. a lot of headlines in the u.k. are dominated by what is happening at hinkley point. the confusion, what kind of investment is going to be made, whether these two reactors are going to be completed. what is your assessment of where that goes? is that really the heart of the energy story in the u.k. at the moment? really bigas been and crucial at the moment. but the thing the government
didn't really importantly with say we need to be part of a nuclear future. so actually the announcement made in the budget about the moderate reactors, smaller and cheaper, not coming on fast but pretty fast, that is a very important part of the nuclear strategy. we do need a nuclear baseline of thinking. we needed to be affordable. and actually, hinckley point and edf have looked a little rough. that is why the government has made a very strong move that they want to see a competition in reactors, more british and cheaper. anna: i know you are somebody who wants us to stay inside the european union. you speak from the educational, scientific establishment. and i suppose external infrastructure investments, is that another recently to stay in the eu? to guarantee that kind of investment, whether it comes from china or the french? keith: it helps. but i do believe that steel is a test for europe. and if you look at it and say, yes, we want investment. but we also want national purpose, if you fetishize
competition, make it the only touchdown inside the community, you stop the british government or french government from acting to do things of national purpose, then the union is in peril. from my point of view as well. anna: steel is going to get caught up in brexit. keith: the only thing europe cares about is the nature of a particular model of competition they think they could do. they will stuff 15,000 people on the pension scheme in the united kingdom. a lot of people would say, what is a circumstance? you have to act on the basis of citizens, not just some theology they put forward in terms of marketization. back in the 1950's. anna: keith, thank you for joining us. joining us there from the university of sheffield, where he is vice chancellor. it is 6:56 here in london. up next, mario draghi's die limit. does he have the tool to defeat deflation? we take a look at economic health, that is coming up next. we will get plenty of
a warm welcome to the program. i am anna edwards. let's have a look at the breaking news for you. we have some data coming out of the german economy. we have a retail sales number that looks very weak. estimates for the month of give or a were 0.4% and we have a negative reading of -0.4%. but the year on year number seems to be better than the survey had estimated. it seems there is quite a lot of noise going on in those numbers, a mixed set of numbers compared to the estimate for the german economy on the retail sale front.
overnight, we have heard more dovish commentary coming from the fed. this time it was charles evans adding to that dovish, tree -- commentary we saw the night before. it seems that one hour away from the start of european equity trading we are expecting to see some moves to the downside. suggesting0 futures they will be a little bit flat. of breaking news coming through for you. that week --ember talks withs been in orange. meet at theto
kept levels of the lowest of the year. it's down 18 points from a year ago. blackrock is planning to cut about 400 jobs in what may be the biggest round of layoffs according to people with knowledge of the matter. the reductions are equal to 3% employees.'s 13,000 despite the cuts they will invest in key areas and expect to and the year at a higher hair count. donald trump has come under fire for saying there would have to be some kind of punishment for women who have abortions. angeredediately pro-abortion supporters but trump later issued two statements clarifying his position saying it would be the doctor or anyone else carrying out the position who should be held responsible. migrant workers are building a football stadium and have been abused by their employer. that is according to amnesty international. the group says they have found evidence of forced labor as well as workers having their passports confiscated and being forced to live in squalid conditions. dayal news, 24 hours a powered by our 2400 journalists
and more than 115 years -- news bureaus around the world. anna: let's check in on that asian market session. we saw theerday dovish commentary of janet yellen boosting equity markets globally. one day later, how do we fare? >> we saw very robust gains from in theecord 2016 highs u.s. session overnight but as you alluded to, the wheels have come off a little bit in terms of this yellen rally that we have seen across emerging-market equities. the nikkei 225 has closed down. by 0.7% for the quarter. that was waiting on a number of
those exporter stocks. we are seeing quite a bit coming through in southeast asia. these are marketed very heavily in terms of energy resource stocks. 0.7% atwas up by over one stage. very strong gains from sydney. compact paired its losses down 15%. not a great start to the year, but we are getting there. that index is very close to a bear market. bull market. that's why we are seeing the jittery nervousness coming
through from investors. we have the china pmi data for tomorrow morning. whereill help determine that trajectory will go and whether yellen comments will retain their rigor. the dollar weakness story has played out in a dramatic way. talking about the yen, the second-best performer for the quarter strengthened by 6.6%. over thoseing an end last couple of days running and end to those losing streak -- losing streaks since october. but look at the best performer in terms of asian currencies. almost 10% of the upside in 43 years. anna: oil helping at least that currency.
will get another glimpse of the challenges he faces later as we get inflation readings for france, italy, and the eurozone as a whole. prices are expected to fall for the second month in a row coming after the ecb's latest round of quantitative easing. paul gordon joins us now from frankfurt. german inflation data out yesterday was stronger than forecast but the numbers are still pretty feeble. what will we learn today? ofthe forecast is for a drop 0.1%. surprise ina has a stagnant prices. oute is still a concern there that people are getting too used to these ultralow numbers. if not, you are not getting the wage rises or the pricing pressure so you're on the edge
of the risk of a deflationary spiral. anna: if this latest round of quantitative easing doesn't work, what is next and by whom? >> good question. the ecb has been pretty clear and individual policymakers clearer that there is very little room left to cut interest rates even further. there is this long-term lending program that they put some stock in where banks can be paid to take central-bank cash. you can always ramp that program up or extend it. very clear that it can be used to buy assets. there are some question marks hanging over that. economists have crunched the -- let's hope that the
stimulus works and we don't have to test what else -- what else .he ecb has in its toolbox anna: paul gordon, the central banks editor joining us and frankfurt. stephen, great to see you on the program this morning. give us your thoughts on the challenges facing mario draghi. it puts inflation very much at the center of things. when you look at core inflation that is still somewhere between half a percent and 1% in the euro area inflation at the headline level which is negative . >> he has two new problems. attack at spillover the end of last year in brussels and that has depressed business activity in the french economy.
problem is a spillover from the week dollar and the euro, which nobody expected but what has happened is that the fed have had to eat their words. if we go back to december not only did they do and advised rate rise but they mapped out a clear program for full rate hikes in 2016 and here we are at the end of the -- first quarter with a different picture and with janet yellen making a substantial mistake. in our appraisal -- opinion, the fed credibility is at stake here. anna: that four became two pretty quickly but going back to the first thing, do you think this heightened level of terror alertness is having a material impact on the underlying performance? >> if you go back to november,
what happened after the paris outrages is that markets rally because there was an wouldtanding that the ecb step in. the ecb has acted and acted again. we're only left with the net effect on business activity taking it squarely on the chin and there has to be a clear effect of tourism, aviation and people spending money. i think that is a problem. here,i have a function this is the stock 600 and the gr are, the global rent returns -- global ranked returns, there is a currency story buried in their. >> we have been saying for some time that we think the dollar is overbought.
rallya crowded trade and have an issue of the central-bank's credibility. we are of the view that once you diversify out looking at other currencies. but on the fundamental level it will be difficult to make money in the next few years. alternativeok like assets in like insurance linked securities. that's how warren buffett restarted his business. berkshire hathaway was an insurer. anna: what is it tell you that the best performing sectors of the only ones in positive territory? commodities were completely bombed out. taking one test quarter for isolation is a little bit leaving. we had a nice rally and oil prices back up to $40 and we now have net positioning at an
all-time high. i am not a real believer in the rally. i think it is a corrective rally. we have bigger problems, can the saudi's maintain their link? an interesting fact, which currency market in 2015 increased it central-bank reserves the most? it was russia. because russia allow their currency to freely from, depreciate in fact, russia came disastere commodity last year relatively well, whereas in the middle east were currencies are fixed they have huge drains on currency reserves. so one of our forecasts is that the saudi real will have to go. anna: there are positives for the countries involved for allowing the currencies to flee from ashley -- free float. up next on the program the
resign in june. the executive broke the news to employees that the bank will close as cash equity operation in japan and focus on derivatives. money management icon mark mobius is stepping down from day-to-day management at templeton. he'll step over day-to-day operations of the group and take over some of mobius's responsibilities. he will remain chairman of the business. >> we had the emergency market group and the local management group. so what we are doing now is combining them and bringing them in to one big group to use their resources more effectively and i am moving up to an overseer role
to do more pr like you are doing now will stop kumutha: -- now. british prime minister david cameron is in talks -- decision to offload the u.k. office after losses and write-downs that left the division with almost zero values. prices have plunged to the lowest in a decade meeting they could struggle to find a buyer. capacity issuel and how the trade movements are thereing across borders, is kind of an existential crisis. there are countries with open borders which are more vulnerable. bloomberghat is your business flash. anna: china's stocks rose today to trim losses but the shanghai
composite is still closing out the quarter as the world's worst-performing index. should investors be bullish or bearish on china? or chinese stocks, rather? stocks had a dreadful january because of the fiasco, before rebounding strongly in march. as some it -- it gives some investors pause as to whether this is sustainable. there are a lot of positive emerging signals. after the china's security finance we started lending to brokerages. 2, 3-day volatility has plunged after soaring to a four month high last month and the number of new investors has jumped to a nine-month high last week.
moreover, industrial profits grew 5% in the first two months of the year. tomorrow, we are going to get data likely to show that manufacturing improved last month. anna: you sound very positive. we have had a warning from the msci, what does that mean? negatives definitely a for that sentiment. precludeng does not them including shares in june but it diminishes the odds. warned that does not want to see any more government meddling. this month we have already seen the government metal during the congress buying up big cap stocks as well as the new securities regulator slowing down some of these reform initiatives. all in all, it does not really bode well for the stock market. isaacs is still
with us. i know that you wanted to talk about fiscal policy, in china we thethe meeting recently, ruling party talking about the levers they have for fiscal policy -- where are you looking for fiscal stimulus closer to home? >> as we come to the end of the monetary policy merry-go-round realizing there is less to be done, it is interesting that fiscal policy is now rearing its head. crisis ine u k, the the steel industry may lead to some nationalization. i'm much of the government can actually face the reality of the u.k. ending their production. guests are suggesting that there is some exceptionalism around the steel industry. in a freeperate market he has said so he has said to just say we cannot support it because they need to be free market about it. >> it is the way that the
politics are changing that 10 years ago or so, it might have been possible to take an ultra-free market point of view. if you look on the continent, because of what happened in the year,ist outrages last the french are already saying to the eu commission they feel they no longer need to be bound by these tight fiscal rules that they have to spend more money on defense so we had a major role there. even across the atlantic to the u.s., all the serious presidential candidates are forecasting a quite different role for government. they all want to see government becoming more involved and closet accepting -- they mean more fiscal support. anna: this could be another big story in 2016. another one is brexit. taking opportunities where you find them were getting out of
the pound, how do you play this? >> it is a good question. we are still in the situation where it is very unlikely. the weight of the establishment is really being put to work quite effectively. i'm not sure investors have taken the view that they need to. i think it would take a new political dimension. terroristme sort of outrage closer to home to really change that fundamental and in the absence of that, most people are reasonably saying when about the brexit. anna: you mentioned the terror threat a few times. seems the markets recovered very quickly over the dreadful events we have seen in europe but you seem to suggest it has less to do with the impact they have in the growth story or the fiscal spending commitment.
>> there is in there is a political dimension. in the discussion of u.s. politics, donald trump's nomination is far more assured for the republican candidate because of the outrage in brussels last week. can he win the presidency? that's a big question there. i don't think he can win the presidency without there being some sort of terrorist outrage on u.s. soil. bid. heaven for bit -- for is or anything you saw in the first quarter that you will not be taken forward? stay away from banks? >> abu -- avoid banks as a matter of course. the first quarter trading revenues for all the major banks are a complete catastrophe. anna: thank you very much for
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the flower power cruise, february 27th, 2017. let your freak flag fly. don't miss the grooviest trip at sea. manus: welcome to "on the move." we are counting down to the european market open and i am manus cranny alongside hans nichols. here's what we're watching today. a reversal of fortune. the tables turned on european stocks in the first quarter. they trailed by the most since 2003. this is get another gauge of the euro area's economic health with inflation data very shortly. what will