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tv   Countdown  Bloomberg  May 13, 2016 1:00am-2:31am EDT

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anna: it takes it time. the boj calls for patients on negative rates. -- is slowly's boosting inflation. a tough task. brazil's acting president has appointed a central bank auditor as the new finance minister as a country c continues the impeachment process. apple gets a slice of china's ridesharing business. investing $1 billion.
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welcome to countdown. i am anna edwards. it is 6:00 a.m. in london. through what has been happening in the markets. we want to start with the chart we have here. the u.s. equity market, the s&p 500 over the past three weeks. highlighting the roller coaster timeframe we have seen. yesterday, u.s. stocks were little changed. a with salt session. whipsawtouched -- a session. the s&p touched. apple was a big lagarde yesterday. the dollar may be listening to the dollar may -- may be listening to the commentary from the fed coming through this month. general strengthening in the currency. that is not seem to be applied to all of the asset classes.
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hawkish commentary yesterday talking about the risk of asset bubbles. oft was the fed story another. asian stocks are down for their third weekly loss. corporate earnings disappointing. the boj has been speaking in japan. dollar-yen is at 108.8. heading for its second weekly loss against the dollar contrasting central-bank helices in japan and the u.s. says he still has room to ease further. the korean wan is on the move a little bit trading a bit weaker. no trade in rates from the korean central-bank. the majority of economists said they saw that outcome coming but we saw some reaction in currency markets nonetheless. good to see you.
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two regional reserve presidents. similar casesut for an interest rate increase. argued thatity fed the central bank risked stoking an asset double by delaying action to long. >> we are in a world where policy anywhere in the world will influence us. china, or europe if they make a bad decision it will influence our financial markets and our economy. we don't expect them to make a bad decision any more than they would expect us to make decisions. we do have to be aware that as we raise rates, there may be more financial market turbulence. >> moving rates to a more global -- normal level. distortions in our economy that can build over a number of years when rates are held for so long.
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acting brazil president has appointed a former central-bank chief as brazil's new finance minister. he has said he would pull the nation out of the worst recession in that nation's history. a defiant president rousseff spoke to her nation and supporters of yesterday after being suspended from her presidency. >> what is at stake in the impeachment process is not only my mandate. the is also at stake is respect of the sovereign will of the brazilian people and the constitution. the conquest of the last 13 years. the gains of the middle class. the children's protection. access to the technical schools by the youth. raising of the minimum wage. may be coming to an end.
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the greenback is a rallying after its worst quarter since 2010 threatening to drive up costs for businesses. or hedge exposure. dialogue capital markets says as much as $3 trillion was borrowed. including by individuals and foreign companies. traders who used to bank money in agency bond markets. the team run by anna and known internally as the strategic trading desk was shut down as market opportunities began to dry up. citigroup said their resources would be better deployed in businesses that serve clients. potential bid for months and took that has a market value of about 43 alien dollars triggering speculation -- $43 billion triggering speculation
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that a german company may be interested. may bec equities interested in the animal health the acquisition work. representatives for a year and monsanto declined -- four bayer and monsanto declined to comment. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. you can find more stories on the bloomberg at top . anna: let us stick with hong kong. david is in there and he has the details on the asian trading session. markets are looking a little weaker in asia today. david: a little shaky. we are entering the last few hours of trade. chances are we will clock in the third straight week of losses. markets have been in limbo. you're looking at a five month low on the regional benchmark. 70% of bluey be chips.
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losses seem to be concentrated across the big markets in east asia with the exception of shanghai which dances to its own two. -- postelection bliss. a nine-month high following elections which took place last monday. it has been very risk averse here. markets have not been able to shake this. we are not looking at sharp declines but it is consistent. over the last three weeks, asian shares have only closed higher on 30 cases. it is worth mentioning a few things to note. gdp came out of malaysia and our ago better than expected. we heard from a lot of central bankers today. we had a decision out of south korea. the currency is weakening against the dollar by half of 1%. a fairly unanimous decision. on point.
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governor tookrea the conceptab at that help has to come from somewhere else. he said the current rate is not sufficient to support the economy. it is supportive but not enough. we also heard from the bank of japan governor. that they do have scope to ease at the moment. if it time he said. dollar-yen barely budging on that. there he quickly. it is a big weekend in china. a lot of data coming out. credit data most importantly. dollar yuan, 652. weakening trend for the last three weeks. with that in mind, i will bring up the offshore rates. i am not sure how this is but you will see the spread widened. you may want to watch this. as it happens, the intervention
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risk from the pboc may step up. that is asia for you this friday. talk about what is happening in europe on the negative rate story. denmark has lived with negative rates were almost four years, longer than any other country in the world. the effectiveness of his team's monetary policy sing it is creating higher demand and slowly boosting inflation. >> negative interest rates are in fact working almost like very low positive interest rates. we have not seen any large negative consequences of negative interest rates so far. themonetary policy creates higher demand and thereby gradually creating more inflation. once you remember that it is
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through what you would call the demand channel that you create inflation, it is not perceiving the very low interest rates. anna: bank of japan governor kuroda says it takes time for the effects of monetary policy to occur. the central bank governor said overnight that when markets are volatile, it will take even more time for positive changes to appear. he added that there is still and for the boj to act negative rates would filter through to the economy. to discuss this world of negative interest rates, david watson at the london business school joins us as well as richard jones. thank you both for joining us. david, let us come to you first. we have had the comments overnight suggesting that it takes time for negative interest rate policy to deliver the benefits that it's proponents
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suggest it will carry do you go a long with this? are we into diminishing returns? >> as he was saying, the negative interest rates are like low interest rates that still lower. we have had low interest rates for quite a long time. haven't know what it would been like without them. it could have been worse. it all feels a little bit sluggish. there is a limit to how negative you can have your interest rates go. otherwise, i will put the money in a stock. anna: there is a limit. rates are really small that you can get away with. >> what david is saying is very true. it is interesting to hear what the governor was saying. he emphasizes that there is still more they can do. the point we make about diminishing returns, when you get through the zero bound, is
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valid. one of the things that is a concern to japanese policymakers is the strength of the yen. negative rates were meant to combat that. the market is saying that you do not have a lot left in your armory to combat this problem. negative rates is like a desperate move. anna: have central-bank taken us in the right -- have central banks taken us in the right direction? central banks around the world working out how they will try on a domestic basis to try to stoke some inflation which has been driven down? >> you would have expected the lower oil prices would created a loon to the economy. to the economy. it is not clear how much you can do with just monetary policy. we are trying to get people to spend and invest.
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you don't know what it would've been like without this. you need to be careful of the interpretation. is anyone looking forward and are almostosh, we back to making up the ground that we lost post 2008. >> we all grew up with inflation that central banks were concerned about. they know how to deal with that. disinflation is something new for central banks to deal with. anna: they need a new set of tools. governor kuroda says he specs -- he expects companies to invest. one of the goals of this policy. you are skeptical, david. >> i think that is right. clearly interest rates are one of the tools that are likely to make people invest more but i
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would have thought far more thattive is a confidence the economy is going to be growing and there will be jobs for the people. creating more demand for products and services. while that is absent, you have a problem. you have an effect on all sorts of other assumptions that we have made about savings and investments. is thehat is weird malfunctions in the market. >> in the u.k., we used to have a system where you saved for your pension and then you want the pension annuity -- and then you bought a pension annuity. there is not a lot you can do about that when you are 55 because you cannot make up the savings you should have been doing for the last 30 years. you even have a situation where sayinge larry fink.
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he thinks low interest rates are dampening the economy because people in middle age are having tosave so much more in order have a nest egg along with their pension. the policy that was supposed to stimulate the economy is doing exactly the opposite of that. you have all of these funny things going on. anna: one funny thing going on. corporate treasures -- you would think they would welcome what the ecb is doing. it may be great for them to have another buyer in the market. even corporate treasures are worried that the bond buying will put off traditional liars. you have corporate issuing debt. this negative interest rate world has a lot to learn about this still. >> it is still a work in progress and it is still experimental. one problem is that with qb, the
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, it distorts the market and it becomes different to what everyone is used to carry it doesn't surprise me that corporate treasurers are saying this is a challenge. david will stay with us longer on the program. here are some highlights. a whole host of gdp data coming out of europe. we have a snapshot of the german gdp and inflation data due to be released. two hours later, italian gdp. and then economic growth data from the eurozone as a whole. we have u.s. retail sales and ppi numbers. up next, president rousseff is out and result acting president is in. he attempts to pull the country out of its worth -- it's worst -- its worse recession.
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anna: welcome back. this is countdown. 1:19 a.m. in hong kong. we have a weaker session underway in the asia-pacific region. let us get the bloomberg business flash. apple has invested $1 billion in china's ride hailing service, didi. build its help didi data driven ridesharing platform. a completes 11 million rides day. other investors in the business include alibaba. deutsche bank is due to cut 30,000 investment clients. the paper says it is starting
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end ofo do this by the 2019. it has 65,000 clients in global markets. most of them exist only on paper. japan's biggest banks may forecast the lowest profit in four years weighed down by negative interest rates and the commodities slump. others areand expected to fault 6.9% in the year ending in march according to the average estimate of nine analysts surveyed by bloomberg. hiring 175 people for the financial crime appliance team. -- compliance team. the people will be joined by 25 employees reassigned from other offices. he will focus on anti-monitoring -- anti-money laundering.
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getting ceo is personally involved in an investigation into allegations of bias in the way that the company highlights important news on the social network. mark zuckerberg will have discussions with how facebook can of avoid appearing biased. the company found no evidence that the reports were true but it will take steps. that is your bloomberg business flash. presidentil's acting has moved swiftly to form a cabin in his first day on the job. the senate yesterday act the motion to send president recep to -- president rousseff to an impeachment trial. after more than 20 hours of
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session, brazil's senate voted to pursue the impeachment early thursday morning. be president gave what could her last speech as president in the presidential palace. met with her and mentor and predecessor and demonstrators outside supporting her. in the government. she said impeachment is that too -- the coup. she does not recognize the legitimacy of the government coming in behind her and she will continue to fight. there is an acting president. he signed the papers at the same time that president rousseff was still speaking in the presidential palace. he has already announced 22 members of his cabinet including a finance minister who is widely anticipated by the market and is seen as investor friendly i markets. late scheduled to speak
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thursday with his plans on brazil's economy. we will see how he manages to pull brazil out of its deepest recession in more than one century. morning,h us this david is the executive fellow at the london business school. here is a country that seemed to promise so much. that story has turned sour. >> it really feels like it has turned sour and the economy in recession. going to see the glass half full side of it, there may be two things. when i was young, brazil would have had military takeover by now. the democracy seems strong enough to go through all of this which is quite interesting. there are still of course strong economies -- strong companies in
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brazil. this impeachment as i understand it is about someone opening up about cooking the books of the national accounts. it was not that president rousseff was taking money for herself. she was trying to present the economy in a better state than it was. it reminds one of greece. not a million miles different than what some of the banks seemed to have been doing before 2008. it was not an honest account of what their financial decision was. this may be the end of a tunnel for brazil. it may be better. this very topical with corruption conference. more broadly, the emerging markets story -- it seems the emerging market stories are saving the global crisis.
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the growth engine that china -- thatnto producing seems to have crumbled. >> it would also be a worry if we are depending on it to keep the world economy going. now, it is the chinese turn. can you keep your economy going by borrowing? we are now working on a coordinated global basis to think about how we get the flows of capital correct. if we were to do that, the opportunities we have seen in the last generation for development are very high. , ahave had the potential hiccup in the west and a potential for a hiccup globally. anna: thank you, david. up next, his strongest morning get. the carney brings -- rings
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alarm on brexit. we will analyze what he said and see what it means in terms of investment when we returned to "countdown." ♪
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simply by using your voice. the billboard music awards, live sunday may 22nd, 8/5 pacific, only on abc. anna: welcome back. 6:30 a.m. in london. getting some numbers from the french telecom. they have recently been in the news because of the telecom unit. have reported a net loss. q1, net loss coming in at 180 million euros. against a loss. that loss increasing a bit. they have taken a charge in the first quarter. giving us an update on their 2016 net worth charges and how that will affect operating profit. they confirm their full gear outlook.
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full-year charges of 270 million for their network sharing a look at the revenue numbers seem to match estimates. confirming their full-year outlook. this company has been planning to sell its phone unit to orange. that deal fell apart. the french market missing out on that chance to increase the pricing power to the french mobile space. onis now pursuing expansion the broadband side. last month, we got a confirmation from the ceo that their investment plan and also involving the telecom that an ipo was not on the agenda in the short term. it seems they may -- there may seem -- that there may be more to come on that wrench conglomerate. that is get the bloomberg first word news. yvonne: bank of japan governor kuroda has reiterated that there
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is still more easing for the -- that there is still more room for the central bank to ease the policy earth or. -- further. he added that when markets are volatile it will take even longer for positive changes to appear and negative rates would tilt her through to the economy. two regional federal reserve president have made similar but similar cases. they argued that the central bank risks stoking an asset bubble i delink action for too long. -- by delaying action for too long. -- ifh china or europe they make a bad decision, it will influence our financial markets and our economy. we don't expect them to make bad decisions.
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we do have to be aware that as we raise rates, there may be more financial market turbulence. to a more normal level at a gradual pace is necessary to minimize distortion in our economy that can build over a number of years when rates are held for so long. yvonne: acting brazilian president has a pointed the former central bank chief as brazil's new finance minister. he is tasked with pulling the nation out of its worth -- it's recession inworse a century. president rousseff spoke to her supporters after been suspended from her presidency. >> what is at stake in the impeachment process is not only my mandate. what is at stake is the respect for the polls, the sovereign will of the brazilian people and the constitution. the conquest of the last 13
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years. the gains of the poor and the middle class. the children's protection. the raising of the minimum wage. the best cyber chinese totime for chinese companies repay their debt may be coming to an end. threatening drive up costs for businesses to repay u.s. currency borrowing or hedge exposure. markets has said that more than $3 trillion was a arotech including by individuals and foreign companies. a teamup has disbanded of traders who used the banks on money to make that's in asian bond markets. ets in asian bond markets. they were shut down when
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opportunities were drying up. resources would be better deployed in businesses that serve clients. ayer has without a potential bid for monsanto. a german company may need to sell some assets to help fund the deal. according to a chemical analyst, its stake inhed its plastics unit to make the acquisition work. representatives from both companies declined to comment. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. you can find more stories on the bloomberg at top . let us check in on the market action in asia. heading for their third weekly loss. asian stocks down for a second day. set for a third weekly loss. off the back of lackluster corporate earnings not giving
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much cheer to the markets. most industry groups are down on the asia-pacific today. bit ofseeing quite a risk aversion across the markets. crude oil falling from a six-month high, down after gains in the previous three sessions. investors are having to wait out the supply story. supply reductions in the u.s. and nigeria but the return of some output from a canadian producers. says iran is pumping crude at pre-sanction levels. for a weeklyeading gain. if we check on the aussie dollar, the commodity currencies. it is coming under pressure. it has fallen to a two-month low. this is more on speculation that the central bank will cut rates further. those rates are ready at a record low. if we take a look at dollar-yen,
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we are seeing some yen strength today. this seems to be a bit of a did for that safe haven. a one-day move does not make a transfer the yen has been the worst performer among its peers and it is heading for a second straight weekly decline against the dollar. based on policy to virgins. governor says there is room to ease on a terry policy further. two fed policymakers making separate but similar cases for rate rises in the u.s. anna: both sounding fairly hawkish. in his strongest warning yet, mark carney has set a vote to leave the european union could cause a recession. in the brexit camp, they took it with a bucket full of salt. here he is talking about the possible risk. europeane to leave the
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union could have material economic effects on the exchange rate, demand, and on the supply potential. of x that could affect the appropriate setting of monetary policy. an executives fellow at the london business school. mark carney suggesting a brexit could cause a recession. a bold political intervention or is he just stating facts? decision thatery you would be taking about the economy if you decide to pull out of europe. say a big political and economic decision could have a take affect would be the normal thing to say. he gets repeated through the media so it sounds very pro-one political camp. expectationse your
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on what will happen on the 23rd? i was reminded about how the voting was in 1975. vote to stay in at that point. the polls are now suggesting some more elements. moret the left -- some balance. think we could also ask ourselves, let us say that they do that but i'm not a huge margin -- will that resolved the issue or not? i remember the referendum on scotland did not stop the debate. anna: and also in canada. some -- sum it up.
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if that were the case, there would be a political debate and turmoil that would come with that. anna: what about the financial services industry -- we here at various views on both sides. it comes down to whether you want to analyze this through the macro effects that a brexit could have. if you look at the change in the regulatory environment. all of this converges on the decision. >> a vast number of roles -- rules potentially change. -- it is not the view i would take myself. many would say these are all terrible european rules. if you were going to do this, the uncertainty that is associated with the teacup linked europe is pretty profound.
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i don't think -- that is associated with the decoupling from europe is pretty profound. anna: later on this morning, you should be aware that that we will have an exclusive interview with the ireland minister. he is attending an event in dublin. we will be speaking to our team live at a 40 a.m. underlying the links between -- our team live at 8:40 a.m. h -- ne ceo. he spoke to bloomberg in rome. we can have a balance between supply and demand. we can get a balance. i don't know if that would apply
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immediately. any increase in the oil price. i think we are going to go there because supply is going down and development -- drastically. gradually, we can get an internal balance. anna: that was the ceo speaking to bloomberg in rome. david is still with us. oilers environmental and related are interesting to you. looking at how the world has changed, we of the paris climate summit which some people said delivered way more agreements and consensus than a some had hoped. many thought it did not make any
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difference. years toris summit, 23 get an agreement. a big milestone. it is not one that says we will try to solve this problem top down. we give guidelines and every industry needs to respond to that. the finance industry needs to respond to that. logic of finance should mean that we do respond to it. andave discovered more coal oil than we could possibly burned. we should not be spending pensioners money to find more of it. if the environment is not stable. broadly, the challenge is how do we make sure that the finance industry is responding to what customers want rather than what to some other logic or micro logic that drive it today.
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responsiblecus on investing. i have had a number of conversations around this. shifting mindsets to different time horizons is important. >> sometimes, people think responsible investing is rather charitable and noble. i would not say that. what they do with your money. doing ist we should be to try and make sure that when people save and put money aside for their pensions, the finance industry is structured to invest that money sensibly for the long term. cost that is possible. the evidence suggests that we have not been very good at that in finance. it is terribly important that we get there. in the last 130 years, no productivity increased in finance from the outside world
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in taking our money and investing that in companies. it is a depressing statistic. anna: you think that compares badly with other sectors. thank you so much for joining us. joining us from the london business school. up next, a lending industry suffers a setback. amid controversy. lender.from a u.k. pc that is up next. ♪
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anna: welcome back. 6:48 a.m. in london. it looks as if the session in the u.s. may get off to a lackluster start. the futures suggest that. it is a long time until the opening time. let us get the bloomberg's miss flash. invested ale has
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billion dollars in china's ride hailing service, didi. it is the biggest investment the company has received as it rivals uber. a completes 11 million rides day. other investors include alibaba. 30,000e bank has cut investment clients according to a report in germany's paper. said it isas assimilating plans to eliminate clients. deutsche bank has 65,000 clients in global markets. most of them exist only on paper. he is hiring when i 75 people for the financial people for the75
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financial compliance team. the team will be joined by 25 employees reassigned from other offices will focus on anti-money laundering and sanctions compliance. it will be based in edinburg. facebook ceo is getting personally involved in an investigation into allegations of i is in the company highlights important news. willzuckerberg said he host open discussions with politicians about how facebook can avoid appearing highest. the company found no evidence that the report is true but it will take steps to address problems. that is your bloomberg business flash. anna: let us switch years. a potential bid form on santa. the company may need to sell some assets to help fund the deal. we have been looking at the
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details. ahead, this goes would be the german company that invented aspirin acquiring the world's biggest seed maker. bayer has had preliminary discussions about buying monsanto. all we have to go on right now is that monsanto has a market value of about 43 ilya dollars $43 billion. monsanto's offer to buy syngenta last year. monsanto would help reduce its reliance on the agriculture sector. what we are hearing is that it may have to sell some assets to fund the acquisition. perhaps the plastic unit. this is the road it is already going down. anna: it has not been a good week for m&a. nejra: this week, antitrust
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nixedtors globally have more than $20 billion in deals. analysts are saying this potential deal should not come against too many antitrust hurdles. what it could do is intensify global scrutiny of the handful of companies that are already engaged in potential deals across the cross -- crop companies. regulators are already investigating the merger between dow chemical's and dupont. national security officials in the u.s. is looking at cam china's -- chemchina's bid with syngenta. anna: the lending industry has suffered a setback.
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a conflict of interest controversy is to blame. we were short. one of the big ones blew up. we were short lending club. we had problems with the model itself for exactly the reasons. >> that stock has blown up. >> no comment. a us hear from lender on what this means for the industry. us.iam joins no doubt this story is a great interest to the syntax -- symte ch community in london. >> i don't know the details beyond what is in the press.
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i don't think it could happen here because the industry is quite different. it different heritage and much more focused on the retail customer. it is more regulated. the company -- the government steps in much sooner. the platforms themselves are more focused on transparency. it has generally been more coordinated. anna: the funding model is different in the u.k. in the u.s., the banking sector is involved. goldman sachs sang a are not going to buy any of the loans from the lending club for the moment. funded 95% by normal people. platform isof our to give value to those customers. thanks are interested in some of these loans is a reflection of how attractive the assets are. anna: what about the
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attractiveness of the sector? this is in the u.s. -- things may be different here. talking about how the marketplace lenders have fallen from one of the favored sectors to one of the most avoided. in terms of the amount of investment going into this sector from aging investors and others. do you see a lack of interest in the sector? >> the winners are emerging. people are more circumspect. the industry has got to prove itself through the cycle. we are conscious of that. our model seeks to do that through the cycle, to protect investors. time will tell. there is no doubt the fundamentals appear to make lending attractive. that will survive through the cycle.
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regulatorthink the has approached things differently than in the u.s. >> more proactive and encouraging. in the u.s., they have allowed the industry to get too large and then they will regulate it. it is nurtured here. there is an enabling framework. anna: there are a lot of players in the u.k. the line between them is blurring. >> i expect a lot of m&a. there is a lot of talk about lending. regulated -- we are fully regulated. the fixed cost of that regulation will result in some consolidation. much fornk you very
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being with us on the program. up next, we focus on some data. german growth. we of the latest gdp data from europe's largest economy. we will also hear from the oil sector about sales. ♪
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anna: the boj calls for patients on negative rates. central bank governors told bloomberg before your long negative rate policy is slowly boosting inflation. talk.h brazil's acting president has appointed a former central banker as the new finance minister as the country continues to suffer through his worst recession in a century. and apple gets the slight of china's ridesharing business, investing $1 billion and iin uber's rival.
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welcome to the program; this is "countdown." we have breaking news coming through from the german economy over the last few minutes, so let's get to that straightaway. an expectation that german gdp in the first quarter was estimated at 0.6%; in fact it is coming in at 0.7%, so that looks to the ahead of the estimate. on the cpi side of things, that was an estimate that the eu harmonized version would be down by 0.3%, and in fact has come bang in line. in-line or better than expected. just yesterday we got industrial production data that was weaker than have been estimated for the whole of the euro area. quarter, people trying to work out just how sluggish the euro zone economy may be toward the end of the first quarter
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following a disappointing data this week from germany, from france, from italy. we have had a whole host of data, and later on we will get further data on the eurozone as a whole, putting that in a little more context. a strong start to the data coming out of 2016; perhaps that is consolidating just a little bit. let's talk about what's happening in the car industry. vw, european market share declined 25.4% from 26.2% previously. european april car sales jump to 9%, for the 32nd straight monthly gain. they just keep racking up. 32ndp of 9% in april, the straight monthly gain. hare narrowing for an eighth consecutive month after they admitted to writing diesel cars to cheat on emissions tests. buyers are turning to sport-utility vehicles from the likes of bmw and the city spends. vw is accounting for 25.4% of
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the region's car sales in april versus 26% a year earlier. interesting to look at how vw is faring. still above 25%, or less than it had previously been. let's look at the futures. the handover from the asian session has been weak. the earnings picture, disappointing, picking up from a roller coaster in the united states yesterday. looks weaker at the start of trade, down on the euro stocks, maybe some of the worst losses on the german market, down by around 4/10 of 1%. that seems to be the expectation. let's bring up the risk radar and catch you up on a few things happening overnight. the boston fed president, more on that in a moment, but asia stocks are weaker, down for their third weekly loss. corporate earnings have been disappointing, all industry groups down on the msci. a result ofoving as
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the things kuroda has been saying, moving higher in today's session, but heading more generally for its second weekly decrease against the dollar. contrast is very topical right now, and corona said overnight at the central bank of japan has room to ease further. the korean won had a big move overnight, down by around 8/10 of 1%. the majority of economists saw that coming, but it hasn't changed some substantial market reaction. let's get the first word with the yvonne man. yvonne: thanks. the federal reserve president is opposing sides of the policy debate for an interest rate increase. eric rosengren and esther george are delayinghey action. >> we are in a world with policy and state anywhere in the world,
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coinciding with china, europe, making a bad decision -- it is going to influence our financial markets. it will influence our economy. not that we expect them to make bad decisions any more than they would expect estimate by decisions. we have to be aware that as we raise rates, there may be more financial market turbulence. >> moving rates to a more normal level, at a gradual pace, i think is absolutely necessary to minimize distortions within our economy, that can build over a number of years. presidentting brazil has appointed a former central bank chief as the new finance minister. his task was pulling the nation out of its worst recession in a century and winning back investor confidence. dilma rousseff spoke to the nation and her supporters
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yesterday after being suspended from her presidency. >> [speaking portuguese] >> what is at stake in the impeachment process is not only my mandate. what is at stake is the respect for the poor, for the sovereign will of the brazilian people, and for the constitution. what is at stake are the conquest of the last 13 years, the gains of the most poor and middle class, the children's protection, the access to university and technical schools by the youth, the raising of the minimum wage. the best time for chinese companies to repay their u.s. debt may be coming to an end. the greenback is rallying after its worst quarter in 2010, threatening to drive up costs for businesses looking to repay u.s. currency or hedge borrowing. the capital markets as as much as $3 trillion, once borrowed, could fall into a higher yield den. set to use a table of traders to make
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investments in the u.s. treasury markets. according to a person briefed on the move, the team known internally as the strategic trading desk was shut down as opportunities dried up. citigroup said resources would be better deployed businesses that serve clients. a potential bid from monsanto with the market value of $43 billion has triggered speculation of a german company that might need to sell assets to help it. bayerding to colin isaac, could shed its stake in its plastics unit and animal health business to make the acquisition work. representatives from both companies declined to comment. global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the worl. anna: thank you. yvonne man, joining us from hong
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kong. denmark has left with negative rates from was four years; that is longer than any other country in the world. stick exclusively to bloomberg, their central bank governor defended the effectiveness'his teams monetary policy is having, say this creating higher demand and slowly boosting inflation. areegative interest rates working almost like very low positive interest rates. we haven't seen any news of things in straits. e monetary policy creates a higher demand, and thereby gradually creating more inflation. but one should remember that it is through what you would call the demand to channel, you create inflation, it is not a very low interest rate. anna: the bank of japan governor
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kuroda says it takes time for the effects of monetary policy to appear. speaking an event in tokyo, the central bank governor said that when markets are volatile, it will take even more time for positive changes to appear. he added that there is still more room for the boj to act, and negative rates would filter through to the economy. joining us now is the head of european equity strategy at ubs. good to see you. let's talk about this backdrop; this is one of the inputs you have to put into your european equity strategy. and negative interest rates environment, corona says it takes longer for us to see the benefits. we talked the last hour about whether it is the case, or whether we have diminishing returns for this unconventional policy. >> i think we needed something. if you go back to the financial crisis, central banks needed to do something big. seem to be one of these things where the diminished effect, the more and more you
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do. i would suggest that here in europe, when we look at the ecb being at -.4%, there were some concerns when they went to that level -- with a go further? -- would they go further? the banks, this is negative for net interest margins, and clearly in europe, it is critical to get the banks lending to get the economy growing again. negativeays, yes, rates are clearly alongside qb butother policies helping, we are probably getting to the limits on whether the unintended consequences are starting to be a drag. anna: although maybe it depends on how you design these things. in scandinavia, some people point to the banking sector and say it coincided with a period of increased profitability. the japanese have a chart of expectations around japanese banking profitability going out -- they say they are going to be under pressure. so how is this all influencing this low interest rate environment, negative interest
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rate environment, influencing the equity strategy you are putting in place? >> it's a problem for companies, because companies have a topline growth. it's a nominal world. you never hear companies report real earnings growth. it's all nominal. if you look at europe, we think europe is growing at 1.5% this year. the most recent headline inflation numbers are pretty much zero. so for companies, you aren't getting that topline, nominal growth you need, to drive your earnings. i think that has been a big drag for europe in particular, and other countries that have had low inflation. the u.s. has managed to generate more inflation. anna: we just got that inflation number from germany -- -0.3%. so with that in mind, which sectors do you go to? where do you see the ability to generate topline growth? a lot of people have said during this earnings season but they are disappointed by companies,
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who have been on cost-cutting rather than crating topline. >> that's exactly right. you have seen the biggest misses on top line for 10 quarters, but the biggest beats on earnings. but that is a very low-quality beat, because as you say, it is just cost-cutting and it can't be repeated again and again. companies will have to start moving topline growth. we think some of the more cyclical parts of the market in europe, some of the capital goods and industrials, will start to see it coming through as the global economy recovers and as inflation comes back in the second half of the year. we will be more procyclical rather than defensive in general. anna: i was interested to see how many companies are raising debt at the moment. they are not all european. some of the big u.s. names are coming to raise money in europe because they can get good deals. this week seems to be a standout for that. have you been looking at companies that have been benefiting from very low debt payments? the companies you might have stayed away from, but our
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servicing those debts? >> definitely. a part of this is that the cdpbpp, clearly that has driven it tighter and tighter. if you look at the average company in europe, the average bbb company, they have a dividend yield of 3.5% and can borrow between 1% to 1.5%. clearly the financing is much cheaper, to issue a bond that to have it in equity. and yes, some of the good companies people stayed away from will benefit from these lower borrowing costs. anna: in the auto sector at the moment? we had numbers from the european april car sales, jumping 9%, the 32nd straight monthly gain. everybody knows the story around vw in the space. is this a sector that appeals, or is it volatile? >> we are neutral on the sector,
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but we see europe where you are seeing -- if you look at sales numbers, those are quite extended. you'd think china would be better than expectations. the consumer is doing pretty well. europe is probably the most interesting part, because that is where we see a bounce back. the have these month-to-month positive numbers, but if you go back to where he were a couple years ago, 20, 30 year lows. that is where we see opportunity. anna: nick nelson stays with us. apple is investing $1 billion in two uber's china rival, didi. -he right hailing service - ride hailing service has received the biggest offer it has ever gotten. what is the significance of this, from apple's perspective or from didi's? >> this is a huge deal.
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we reported earlier that didi was in talks to raise $2 billion, but apple made this enormous investment, really coming out of left field. this is the single largest investment didi has ever received, and it is unusual for apple to be putting money into a starter. anna: unusual for apple to put money into the start up, but they have done this, typically with smaller businesses, more aligned to spaces they already operate in. what is apple's motivation? are they trying to find new avenues to explore? think to understand why apple is doing this, we have to take a step back and look at the context, the struggles they are facing. they are facing a slowing consumer smartphone growth in china, their second-biggest market. earlier this month, we saw them get hit by regulations from china. ibooks and imovies were shut
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down. didi, they are getting a powerful ally in china and they will understand the chinese market better. anna: and what does this mean for uber? one headline this morning said uber.versus is it is as extreme is that? >> it is a bit of a blow to uber. they are already the underdog in the china market. didi has much more market share, in 400 different cities while uber is only in about 50. uber has been spending very aggressively, raising a lot of money to bolster the growth there. but they have a lot of disadvantages in comparison to didi, which has local backers and understands local regulatory environments and consumers. er,s is a tough blow for ub but they say china may be their biggest market. so they won't be giving up anytime soon. anna: thank you very much for joining us.
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selena wang. up next, his strongest warning yet. mark carney rings the alarm on break that, causing controversy. ♪
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anna: welcome back. this is "countdown." 7:20 this friday morning, 8:20 in frankfurt or paris. day; we will talk about brexit in the moment, but first, let's get the bloomberg business flash with the yvonne man. yvonne: thanks. apple has invested $1 billion in the ride healing service didi. it is the second largest investment they have ever received. apple will help them build their data driven ridesharing
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platform as they serve a 300 million users. other investors include alibaba and tencent. european market share has narrowed for an eight month in a row. the automobile manufacturers association says vw's form of market share was 23.9%, of lowest level since 2011. the german carmaker has been losing ground against rivals since it's emissions test cheating. japan's biggest banks may forecast the lowest profits in years, weighted down by the commodities slumped. is expected to fall 6.9% to $21 billion. that's according to the average estimate of nine analysts surveyed by bloomberg. and that is your bloomberg business flash. anna: thanks. yvonne man in hong kong.
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to let governor mark carney has warned that a vote to leave the u.k eu could cause a recession. here's the boe governor talking about the possible risks. judgment,not making a or forecast, or assessment of the longer-term economic consequences of either decision, nor will we make that determination, but we have a responsibility. it is explicitly in statute to talk about the risks and the trade-offs that monetary policy faces. anna: nick nelson, head of european equity strategy at ubs, is still with us. the market us perspective, how are you -- from the market perspective, how are you finding people zooming in on this? there is a feeling that markets haven't zoned in on it.
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is it all the talk in london? >> there are a mixture of topics. it if you go to the u.s., think it's quite important. , they are looking at what it means to the u.k. and sterling, and for exchange markets have had their eye on this quite a lot. we have seen volatility in sterling around that. equity markets have been more different. if you look at the ftse 100, 75% of revenues come from outside the u.k. if you benefit from a weaker sterling, they aren't focused on the u.k. economy. it's clearly not that negative, although the domestics and real estate stocks, those are more focused. one thing that intrigued me is that investors are interested not just in the u.k., but the eu. where does it leave the rest of europe? anna: because of the fear about
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the domino effect, and other people asking existential questions? >> precisely. and people roll back their views, thinking to the summer of 2012 when the eurozone breakup had that risk. that famous speech in london, i'm thinking back to the spanish italian yield at 7.5%, now is closer to 1.5%. i don't think anyone necessarily believes we will be into that crisis, but they just wonder some other questions, and they are anti-eu and parts of europe. it combines a bunch of political events around the middle of the year. anna: what is the brexit strategy being discussed? you mentioned some of the ways this could play out with regards to the pound and equity markets, and some stocks more related to the u.k. than others. are people really watching the
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pound and assets in the u.k., that could become cheaper if there was a briggs? -- a brexit? or are they watching where the earnings comes from? >> i think it's a bit of both. sadly, the currency is the main focus. the expectation -- you have a high push around that, but people expect the sterling to probably weaken. but then there is more international and domestic trade by the international cuts. then there is a second round effect, maybe a third round effect in switzerland. if you look at previous crises, switzerland has tended to be the stock market and currency safe haven, so maybe there is some upward pressure there. anna: looking ahead to the summer, it seems that june is going to be this next this for if -- this nexus for risks. >> definitely. and a lot of investors are very
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aware of that. then threene 15, days after the u.k. referendum, a second attempt at the spanish general election. e had stronghey'v views which may be negative for market. there is just uncertainty around to those events. i think people want to get past comfortable investing. anna: you talked about a procyclical stance. data, the gdp data in germany, in the eurozone, was reasonable. our european economists upgraded their numbers this year from 1.4 to 1.6. anna: nick, good to have you on the program. nick nelson. that'll do for "countdown." stay tuned because of the put on the move" follows. an exclusive interview with new
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zealand's prime minister lies ahead. and the brexit event in dublin. very topical in the irish capital. london. a shot of have a good weekend. ♪
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guy: welcome to "on the move." 7:30 in london. we are counting down to the european open. today i am alongside caroline hyde. what are we watching? two federal reserve presidents, normally unopposed, make their case for a rate hike. is the market right to ignore the warning? the brexit battle. ireland be a winner or loser if they leave? and apple


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