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tv   The Pulse  Bloomberg  April 27, 2016 4:00am-5:01am EDT

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francine: big oil beats. they top estimates as cost cuts upset -- trading higher revenue at the barclays. stock rises. trump and clinton score big. they extend their lead to the white house race. decision day for the fed. it is hike still on the table jack oh -- is a hike still on the table? ♪ to "the: welcome pulse." life from european headquarters here in london. let's check on the markets. we have a lot of earnings.
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a lot of exclusive interviews coming your way. we had some mixed earning results. the banks, barclays, a little bit higher. you can see overall that industry is flat. watch.e big ones to i want to shade the pound, because it is all about the brexit. at 1.4595. let's get to nejra cehic. nejra: -- second quarter sales fell. the first revenue drop in more than a decade. they are predicting a further sales slump in china. toght test spain is heading knit -- spain is heading to new elections after the parliament ailed to elect a new prime
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minister -- parliament failed to elect a new prime minister. june 26 is the likely date for the new poll. love tons of is canceling more than just love tons a -- lufthansa is canceling more than 900 flights. affecting 87,000 passengers. the ceo of standard chartered says it britain votes to leave the eu would create tension in europe which would be destroying. he spoke exclusively to francine lacqua. >> should the u.k. choose to vote to exit the eu, the day after nothing will happen. there will be a tremendous conjecture about what might happen. i think even if the u.k. votes to stay in, if it is a close
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call, it will leave some element of sister -- element of uncertainty. if the u.k. leaves, that would be an adverse scenario, there is a risk. nejra: 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 top . upncine: sent oil shares are after they beat estimates. they unexpectedly posted a profit. he told bloomberg that reducing costs have helped offset reduce rises -- reduce prices. >> below commodity prices environment. underlying we see very strong performance.
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operational performance very good. organicallyapacity and also very good progress on the improvement program that we have been working hard on for quite some time now. francine: ryan chilcote now joins us. looking at the earning statement, the big takeaway isn't cutting cost to try and deal. ryan: absolutely. you hit the nail on the head. earlier this year, they said they would spend $19 billion. today they announced they will spend less than that. about, the less they spend now, the less they invest now, if you get an uptick in the oil price and head into the $80 range, the less money you are going to make. the second big takeaway is perhaps what wasn't in the earnings statement.
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what i did not see is total announcing their compared to be free cash flow positive. a lower price per barrel than what they have said in the past. they need a $60 a barrel price in order to pay those dividends. bp step forward and said we could do it at $50 to $55 as opposed to in the past when we said we needed $60 or it just $62. -- $60. ryan: that is refining. although total did not say margins are great. what they did say is their refineries were working at a 90% capacity. that is very strong. you're not selling any big margin, but you are selling a lot of it. yesterday we heard bp say that
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they are seeing strong demand on the back of american drivers taking advantage of low costs at the pump. it looks like demand for crude and crude products is strong. that is something we are likely to see reflected by all big oil companies. francine: ryan, thank you very much. these oil majors reporting figures. the fomcts waiting for announcement which will get at time..m. u.k. investors are looking for crude. as you can see fed fund future markets do not expect an increase until september. i think we have a chart for you. we will bring it up very shortly. europe's policymakers are considering how bad monetary conditions. speaking yesterday to the president of the bundesbank.
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>> in my opinion, the concept belongs back in the academic drawers it came from and not discussion about monetary policy . it will lead to a complete dissolve meant of boundaries between monetary and fiscal policy. it creates expectation that money can keep raining from the sky which in my opinion is not right. francine: with me is rob carnell, chief into next guest chief international -- chief -- you have a feeling that janet yellen has been taken hostage by the world's problems here it -- problems. jen that is the problem for -- for janet.
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previously the balance of risk assessment. i don't think that is the case now. the big thing we need to bear in is the day after a form see, we have the best after fomc, we have the -- after fomc, fromve a further decline fourth quarter -- first quarter two fourth quarter. the domestic side is going to be a big thing that is going to hobble and push forward with policy. francine: if that is the case, we will likely not have a hike before september. rob: the moment the market is getting worked up about will lead -- will we be able to signal june, the question is how are they? francine: 1.7% is not bad. unemployment is going down. rob: you could make the case. francine: now is the time.
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rob: we need to hit that sweet spot where the domestic growth numbers look ok. the financial conditions are all basically saying yes, everything is go. getting that nice combination, the trifecta, is going to be very tough for them. the conditions don't exist for them to say that tonight, but june, yeah, that is where we are going. none of us can really. francine: thank you really. the sweet spot and maybe waiting for it is too late. rob carnell stays with us. much more coming your way. we have a guest of commentators. we will bring you coverage of that party decision right here p.m. u.k. time.
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we have plenty of coming up. the but assertion of standard desk the blunt assertion of standard chartered ceo. donald trump scores five u.s. states. he turns his focus on hillary clinton who also won enough delegates to affirm her path. cease salescompany fall for the first time in 13 years -- the biggest company sees a sales fall for the first time in 13 years. ♪
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francine: let's get straight to the bloomberg business flash. here's nejra cehic. nejra: hotel has -- total has posted -- the french energy producer with $1.46 billion. the beat was surged by resilient refining profits profits were so 37% lower. its testsas raised adidas has raised its -- adidas has raised its -- the previous forecast a 10 to 12% increase. they raised its 2016 sales. twitter took a tumble and extend a trade after missing estimates
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for revenue projections. expecting second quarter sales to be lower than $610 million. twitter also missed its first-quarter revenue estimate signaling it is struggling to add new users. that is the bloomberg business flash, francine. francine: it is running season for banks. standard chartered picked off yesterday. shares surged because there was surprised drop in charges. , a an exclusive interview delicate dance with shareholders. >> it made us trust our shareholders to know we do not watch our share price because it is not influencing what we are doing everyday. what we want to do everyday is tight not the ship. ship.tight end up the understand the competitive environment, respond to it but then get ahead of it.
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where invest -- we are investing for the medium to long-term. we know there are things we have to do right now. we have to be very strong right now. we have to dim straight that we are making progress against each of these things. we will lose the faith of the shareholders even if we believe ourselves. we try to do that in the eight months i have been here. we are going to diagnose and be transparent about the problems. we are going to let you track it. we cannot control the price of oil we cannot control the rate of growth in china. we can be prepared for the downside and capitalize on the upside. we will tell you what we are going to do and we do it. you can watch that interview until later on. .t is a half-hour special it is the first time that bill winters spoke on the record since he became ceo of standard chartered back in june. let's continue the bank earning
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conversation. barclays sales .5% in the first quarter. the option markets is becoming less has a mystic -- less pessimistic. coverageoore leads our . the white line is the banking index. number shows us is the of bearish contracts on the euro stoxx bank has had january. that is a pretty good sign of we we want to have. for a breakdown let's bring in .ur u.k. finance editor michael, great to have you on the program. we are trying to sift through bank earnings. profits dropped significantly. we did not have the terrible news that shareholders,
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investors and analysts were expecting. michael: it is been a big story of not as bad as it could've been. , there has been a bit of a relief rally in terms of even when profits going down, the shares are reacting positively. with barclays today, investment inking went down but not as much as the peers. investors seem to like that. francine: how much is a trend with the future? how much is it cost-cutting for this quarter across the board? we saw a little less volatility in trading. that helped the capital markets. coco it depends on the business. in the -- michael: it depends on the business. investment have -- expectations have been ramped out. that seems to be a bit of a one-off for this quarter. the rest of the year may be tough given the volatility, but
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that seems to be more focused story. the retail side which you are is more of a- long-term story. it is moving digital. it is taking cost out. a lot of those moves are over silver years, rather than focus on one quarter. francine: it was great to speak to the winters. -- two bill winters. he was laser sharp. it was quite sobering with the fact that we cannot cry victory yet. the global environment will probably getting tougher from volatility. is he does ceo doing the best job? to.ael: he certainly had they had this quarter where they had a huge restructuring in charge. the first quarter was much calmer.
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everyone said ok, the fourth quarter was that one time. now we have moved past that. he had to tap the brakes and say listen, we do not know what is going to happen. he expects volatility over the year. he is trying to manage expectations that he has only been on the job eight months, he sees this as a multiyear turnaround. he doesn't want the best years getting ahead. francine: michael moore, great to have you in the studio. we are back with the rob carnell to talk about brexit. trump extends his lead for the white house. we have the latest for you from the u.s. next. ♪
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francine: welcome back. the presidential candidate donald trump and hillary clinton have trounced their rivals in the latest easter state primaries. some says -- eastern state primaries. trump says -- hillary clinton. but only card she has is the woman card. she has nothing else going.
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if hillary clinton were a man, i don't think she would get 5% of the vote. the only thing she has going is the woman's card. the beautiful thing is women do not like her. look how well i did with women tonight. showman. he is a great clinton who won four out of five states hit back. >> mr. trump accused me of playing the "woman card." well if fighting for women's health care and paid family leave and equal pay is playing the woman card then deal me in. francine: let's get to our senior white house correspondent for the latest. margaret, they are having a lot of talk of donald trump softening. we have not seen it yet. margaret: it is not happening anytime soon. one thing that could be said -- he said is he
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had no chance -- has no plans to change his tactics soon. he is still competing for primary nomination spot. is if he is the nominee could he campaign that way in the general election could he switch gears? francine: is trump stoppable? margaret: it is unclear. the big hit will come next week in indiana. ted cruz it stop his momentum there. it really builds on the narrative that there is a tremendous amount of poke support. it makes it much more difficult for the two remaining rivals to replace him or anyone to stop him. francine: maybe we look at the contested convention on the democratic side. margaret: it is a different contest on that side. bernie sanders has been defiant
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up to now. to say he is going to contest this all the way up to the convention. he is turning away from the notion that he can have a path to the nomination and more to the notion that he needs to keep going to make sure his idea is heard and stick with the platform. francine: margaret, thank you so much. rob carnell is still with us. the u.s. is going through a lot. we talk a little bit of the fed and what chair yellen has to deal with politics. presidency, trump how do you model all of this? do presidential elections have an impact on dollar? rob: in terms of modeling, the best to is one of those. you cannot properly model it. you can look for examples at previous presidential incumbents
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and what they have done for the dollar, and i think they give you know information. very interesting. people will publish them in advance of presidential elections. they will have some impact on financial markets generally. in the end, the real driver's fed policy. that's not freak -- let's not forget ecb policy. keeps talking about softening. they are beginning to lose credibility. likely they keep pushing. francine: rob, thank you so much. we will talk brexit. up next, will gdp kill the rally ? coming up, the number expected to be soft. will it take the pound to down? breaking news.l forget gdp, forget pound, we
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don't see much news like this. the sun is out. what does it mean for the referendum? . let'sturn up on the day hope it is sunny june 23. ♪
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welcome back. breaking news. news outtting breaking of u.k. gdp. the first reading has come in, bang in line with expectations. the u.k. economy growing from 0.4% in the first quarter. i guess all of the turmoil or uncertainty surrounding brexit hasn't hit gdp growth yet. we have analysis from the treasury saying it might buy
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this much. a will talk to rob carnell in second. the pound at 1.4560. let's get straight to first word news. slumpedpple shares have in premarket trading after second-quarter sales fell 13% from a year earlier in company's first quarterly drop and a decade. they are predicting a further sales slump in china heading for new elections after parliament failed to select a prime minister for the first time in its history. concluding none of the candidates had enough support. june 26 is the likely date for the new poll. air berlin are canceling 900 flights. public services workers demanding a 6% pay rise well strike today. 60% ofsa will cancel
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flights today, affecting 87,000 passengers. the ceo of standard charter's set should britain vote to leave the e.u. it would create tensions in europe which he said would be destroying. u.k. all know should the choose to vote to exit the e.u., on the day after, nothing will happen. but there will be a tremendous amount of conjecture about what might happen. that's destabilizing. i think, even if the u.k. votes to stay in, if it is a close call, it relieves -- will leave some element of uncertainty in terms of how the conservative party manages this. an adverse leaves, scenario, there is a real risk that it creates tensions in europe that are destroying. news 24 hours a day, powered by our 2400
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journalists in 150 news bureau around the world. you can find more stories at top . francine: markets lower. let's head to the charts with mark barton. .25% the stoxx 600 down by . oil companies are the best-performing as crude and bre nt rise to their highest level since november, gaining for the six-day in seven. most industry groups are falling led by insurers and banks and basic resources and chemicals. all eyes on the fed. the yield on the u.s. 10-year is falling after the longest losing wrong since september 2014. this is the 8 day chart, which has taken the yield on the 10-year to 1.9%. the probability of a hike in june is 20% and july 20 5% in
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september is 50%. one way they could pave the way for a june rate increase is bringing back phrasing that found risk to the outlook were "nearly balanced." policynguage would mean makers equal chances the economy will turn out better. or worse than forecast . after upgrading the assessments to balance in december, officials admitted the so-called balance of risk clause from am ary, for march financiali market turmoil. thatd is something to watch out for later. earnings today from barclays. profit falling 25% in the first quarter. it posted a larger loss in the division that holds the wants.ses it no longer revenue at the investment bank falling less than expected in turbulent markets. barclays had warned the first quarter would feature lower
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revenue from the investment bank amid a weaker performance in march. still, those declines were smaller than drops in u.s. rivals and deals and trading ground to a halt. this is a nice chart showing how barclays has fared in the last 12 months. standard chartered down by 48%. clays down byar 32%. 12%.s a drop of hsbc falling 29%. finishing with total. beating estimates, cost cuts, rising production and resilience refining earnings helped it upset the slump in crude. these are the big players in the world in 2016. total and bp are you connect, rising 8%. shell up by 16.5%.
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francine? francine: thank you so much with the asset check. we had breaking news about five minutes ago. economy moving apace, services slowing, manufacturing shrinking. with economists estimates for the three final months of 2015. it is the weakest pace since the end of 2012. let's get the thoughts of rob carnell from ing. it is important to note that this was the end of last year. so, we're thinking about brexit but not to the extent it would hit gdp now. rob: i think we started off the year and the u.k. on a reasonable footing. it took till around february until the brexit argument started to get a hold. industrial production figures were week heard we have seen some very soft retail figures in february and march. it looks like it is beginning to
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weigh down on more than the industrial sector. spreading through the rest of the economy. this could be the beginning of a trend until we get this referendum out of thie way. francine: what does that mean for the pound? it is at 1.45 something. it was strong earlier. rob: our fx analysts have been looking at the pound trying to work out how much of a risk premium, a brexit premium is priced in. yesterday there was very little priced in. there is actually quite a lot of downside room on the pound now. start toe leave camp gain in the polls or for never reason the economic data starts to look softer. francine: the economic data -- mark carney, you're looking at this referendum june 23. the data till now has been quite strong. what does he do with interest rates? will he have to hike very quickly? rob: if we do not see brexit,
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there is a case. we have to see that pent-up demand coming back. some of that will have been lost. there is a brexit affect in the economy. have we not had a referendum, quite would be motoring nicely. it will come back. with the rate of pent-up demand and the bounceback we get from the post referendum will determine whether he can squeeze something in in the fourth quarter or whether we wait until next year. francine: we have not mentioned boj, coming up tomorrow. does mark carney have a more difficult job? well, none of them are doing well at this point because let's face it, they are in this crazy territory of unorthodox dietary policy which is not really working. -- unorthodox monetary policy which is not really working. when you implement emergency policies which are supposed to
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stimulate investment, it is a tautology. why am i going to invest? this is an emergency. kuroda has got a tough job. francine: coming up next, apple is lower in premarket trading as company seetech sales fall up for the first time in 13 years. we look at how apple can regain his crunch. ♪
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apple's run of 50 one
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quarters of on interrupted sales growth has ended due to waning smart phone sales. 51 quartersun of of un interrupted sales growth has ended. caroline: if you look at the numbers, for the first time in have a quarterly drop in sales. they slumped 13%. sure, they're still pulling and $50 billion but less than expected profit. falling by 22%. the mainn culprit is the iphone sale lagging. falling 16%. and, the likes of taiwan china -- china other second-biggest market starting to see a significant slowdown. tim cook blames the strength of the dollar but how long are these forces going to be around? how long can they blame the
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economy or the dollar, or how long until they start to admit that perhaps their new products are not flying off the shelves? the new iphone is cheaper. is that stopping people from upgrading. there is a slowdown in the smartphone market. it's hurting apple. francine: of course, one of the main things is on the call that tim cook was quite optimistic but investors do not seem to believe him. caroline hyde, thank you so much for that roundup of apple. despite the slowdown in sales growth, the company still made $10.5 billion for the quarter. but for many of today's tech startups, moving into the black is a distant prospect at a former ibm engineer founded a company in 2008. the company says it expects to turn a profit this year. the founder and chairman and
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executive chairman joins us now for an exclusive interview. it is such a great pleasure. you are one of the startups that has seen quite a lot of success. you successfully arrived in the u.k. >> we opened the london market in 2013. been our fastest growing market, faster than new york and san francisco. in the last year alone, we have to put the number of earnings by 200%. and we have doubled the number of clients using the service of the u.k. francine: for viewers who do not have the app, you can ask a handyman to come to your house or ask someone to build ikea. what is the most surprising thing? is it demand, or how rightly people use you? four maine are categories. house cleaning, moving help, handyman services and shopping and deliveries. what we see is both
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sides of the marketplace growing really quickly. both the taskers looking for work, looking for flexible ways of earning income and making money. can makek., taskers 42,000 pounds a year. in the u.s., it is as high as $150,000 a year. on the client-side, these are folks that are just looking for help in the day-to-day and trying to get it all done every single day. francine: i was thinking about the challenges you face. there is regulation, funding, finding the taskers and taskees. what is your top one priority of making sure you get it right this year? leah: this year we are focused on the massive -- milestone for the company which is becoming profitable. 8 years in as the founder, this is an exciting time. so we have always operated with positive economics and focused on efficiency of operation. we have raised over $50 million in venture capital financing. but we are not raising any more
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money. we are just really looking to self fund our growth. francine: do you feel like you are takeover target? leah: we will see. the sharing economy in general is still very early days. there is so much growth we are going to see happen. and so, we are just really focused on home services categories and growing. francine: you are barometer for the growth of the country but you tap into unemployment. is it tougher to get into central europe, germany? i do not know if you have plans for france. leah: it is going to be interesting. we will take a country by country. we are focused on profitability right now but with london being our fastest growing market, we see a lot of opportunity across europe. you will see expansion from us in the future. francine: do you worry about brexit? haven't focused on that that much. so, we'll see.
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as plans continue to materialize, it is a possibility. francine: how difficult is it to find people with real talent? in the u.k., we talk about a shortage of talent or skills compared to some of the developers in the u.s. do you feel that in the way people ask for the talent or the kind of skill sets you need? leah: the great thing about task rabbit is we are focused on the small one-off odd jobs. we are not looking at professional services like contract, carpenters, electricians. we are looking at someone who can come over and do some housecleaning, pick up your dry cleaning. this is a new way of working for a lot of people. that flexibility, the ability for them to set their own hourly rate. except and decline work. it is a really exciting labor market opportunity for a lot of people. francine: it was a pleasure to speak to you, as always.
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founder of task rabbit. winters is notl worried about china. it is fed day in the u.s. ♪
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my biggest concern is that
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the cumulative effect of extraordinary monetary stimulus over time together with an element of fiscal stimulus, obviously, that is different from region to region, cumulatively that is building up and balances. it does feel a little bit like a rubber band that is being stretched. there is a risk of snapping. an adjustment just process that does not feel like a bubble but becomes one with the benefit of hindsight. these things, i think it is the biggest structural risk. it is also very transparent. i do not know whether it is an imf meeting or g-20 meetings. i do not think it is off the radar screen. i think a lot of the pressure on banks to increase their capital position is intended to have the resiliency to see through a bit of an unexpected shock. i think that is the macro theme. francine: a possible recession, freezing up of liquidity in the markets, or even a systemic risk
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coming from a big commodity, for example, trader going under? >> i must worry about the systemic risks. i think the wobble that we saw last year when there was concern that increasing monetary stimulus in europe and japan was having diminishing returns. in the sense that maybe the only tool in the arsenal. did get the market concerned. and it looks like the authorities, who kept tight control on too much market volatility outside of a relatively -- range, might've been losing the real ability to influence things. down one was a doubling that position together with some strong rhetoric around the fact that the tool box is far from empty -- francine: negative rates have not worked. >> there are consequences. we have not played this one out yet. i think we have to be careful
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and aware of that. that is part of the reason i'm comfortable sitting here in a verycapitalized is usually strong liquidity. it is to be resilient. some of the things we are concerned about that do not really know how they will play out. the other risk you mentioned are real. the market became very concerned about the combination of a tightening fed and a china who's objectives were unclear. demonstrated -- we always expected when we spoke five years ago, we said i imagine the fed will indulge a bit of inflation before the take the risk of shocking the market with rate increases. and every behavior since then has suggested that is the case. there is an eye to international markets. francine: janet yellen has -- is dovish. if she becomes more caucus in the next couple weeks or months, what does that do to emerging markets -- if she becomes more hawkish? bill: i think emerging markets
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are much better prepared for a growing interest rate differential relative to what they were a year or two years ago. as we saw last year, and as we saw from the volatility this year, a little bit of jitter, stimulus, creates jitters in the market. i think the fed has got to be very careful. by the same token, we had a rate increase or it i expect we would have two more this year. i think the market can handle that. francine: what to expect commodity prices to do? bill: we still have a supply surplus in oil markets. less so in some other markets. i think we have probably reached a reasonable equilibrium for this supply bracket. but we continue to have growing demand. at the end of the day, whether the 6.8% growth in china is right or whether it is debt fueled, it is still 6.8% growth. there is a demand for oil coming out of china and the united states and europe. it's positive. supply will, has begun to come off as the high producers --
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high cost producers situated. i think we will see a stabilization of commodity prices. francine: are you concerned about brexit? bill: i am. it is one of those unfathomables. it is a confidence thing. should the u.k. choose to vote on the day e.u., after, nothing will happen. but there will be a tremendous amount of conjecture about what might happen. that is destabilizing. i think even if the u.k. votes to stay in, if it's a close will leave some level of uncertainty in terms of how this government manages itself. of course, if the u.k. leaves, back to what would be an adverse scenario, there is real risk that it creates tensions in europe that are destroying. francine: that was standard chartered ceo bill winters. his first on the record interview since he became ceo back in june 2015.
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you can watch that exclusive interview in full. a half-hour special of "leaders with flacqua." we bring you coverage of the u.s. fed policy decision from 7:00 p.m. u.k. time. we have great interviews with larry think and -- larry fink and the former minneapolis fed president. first up is "surveillance." i will be joined by michael mckee. we break down the earnings we have barclays. stocks overall are not doing that much. -- a lotatch a lot of of swings in the pound. this is after the u.k. economy gdp coming in for the first quarter losing a little bit of momentum. services actually saw the weakest growth for a year. industrial production continued to decline. remember, this is a pre-brexit jitters.
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it gives us a glance of what market volatility could be as we get closer to that june 23 referendum. "surveillance." is up next. with at that. we have sunshine in london. ♪
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decision day for the fed at brexit looms. has janet yellen been taken hostage by global concerns? is optimistic. investors are not impressed. trump and clinton score big. the front runners extend their leads in the white house race. this is bloomberg "surveillance." with michael mckee new york. it is another busy day. concerns.exit better having an impact on currency. the fed and tomorrow's boj. mike: the

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