Skip to main content

tv   Countdown  Bloomberg  May 23, 2016 1:00am-2:31am EDT

1:00 am
anna: the yen strengthens. concerns over the japanese comment -- currency dominate finance minister talks. the fed president john williams talks over the chance of a rate rise saying the central bank will not caved to pressure to hold off during an election year. the diy recession. david cameron george osborne said that they will be plunged into a crisis of its own making if they vote for the brexit.
1:01 am
manus: welcome to countdown. anna: welcome to the program. it has just gone 6:00 here in london. let's get straight to these baking -- raking numbers. the full-year profit at ryanair has missed aphis -- estimates. ryanair full-year net profit has come in at $1.24 billion with investment of $1.28 billion. the revenue number has come in at $6.45 billion. average fares are down by 1% with unit cost excluding fuel down by 2%. their specter to give something of a cautious outlook. some rehab headwinds facing this
1:02 am
particular industry. the full-year 2017 net incentives have been $1.47 billion so it looks like ryanair is guiding the consensus number of little bit low. the company is saying 2% better looked year on year for the peak summer months. we will get a chance to talk about how the summer is looking for ryanair, what the impact has been in paris and brussels. o'leary'sl get mark thoughts on what happened to the egyptair flight. there's a lot to talk to him about. the topline line full-year profit just missing estimates a little bit and guiding the full-year number for 2017 down a little bit. manus: we have breaking news. this is the deal everyone has been talking about. monsanto forto buy
1:03 am
$122 billion per share. that's one of the most quickly important points, it will be a cash only offer. $62 billion.nto at this is the deal that has been hotly contested by shareholders and some of the analysts. monsanto will not come cheap and it may not be the best option for buyer shareholders. that's what they said last week in terms of their response. dollars friday. we cannot see how they will do this deal without a significant equity component. they are bucking the trend in terms of offering an all-out cash offer of $122. >> interesting to see what monsanto
1:04 am
has to say. they said they might reject anything that does not make the $150 share mark. .et's get to the risk radar the big focus around the g7 in a fairly big topic of conversation this week. let's get to rishaad salamat. rishaad: the u.s. economy should be solid enough to merit american interest rate increases this year. to sanl according francisco fed president john williams who told fox news that they've forced a balancing act against largely in current sing it -- encouraging it in the u.s. . they will raise the rate sometime this year.
1:05 am
meeting with no agreement on how much crude to produce. saudi arabia's strategy to disturbing rivals by it record volumes. sending a submarine to search for that egyptair black box flight recorders. also there he is remain open and nothing has yet been proved. cracked ons thursday. the french air accident investigator says they sent automatic messages from the cabin before it lost contact. britain will be plunged into recession of its own making after the country votes for
1:06 am
brexit according to dave karen and george osborne. the controversial treasury analysis will be published today that says house prices would slide or inflation would jump in the event of a brexit. austria's political divisions have been laid-back. the freedom party and green party-backed candidate retired after sunday's runoff. it will now be decided by the count of absentee ballots. after the party candidate failed to secure his first-round advantage. the big screen adaptation of the angry birds game which reveals topped thee so angry north american box office over the weekend. angry birds raked in 39 million dollars taking the top spot from
1:07 am
captain america: civil war. day withws 24 hours a more than 150 news bureaus around the world. you can find more stories -- more stories on the bloomberg. there is your top back to you guys. manus: that is all the answers i need, why the birds are angry. haidi lun does there. we have circuits in japan, nervousness ahead of janet yellen. could be a volatile week. a relatively angry market around this part of the world. having said that we seen simply good gains coming through at this point. as you see it is waiting for signals out of the fed. we will be looking for indicators of whether the market should be repricing these expectations to a june july or
1:08 am
september hike. we are of those session lows with the yen strengthening the little bit with some disappointment that g-20 ministers did not manage to reach any sort of a currency on how to get global growth going forward. we also have a coming from australia weighing on the energy sector there refiners and some of the iron ore as well. it is actually a put a good picture. volatility when it comes to the mainland china stocks. that's drowning some of the gains that we see in shanghai. concerns that the chinese economy is still seen buying out of industrials. tech stocks are also driving these gains were seeing. the biggest gain in eight months. and it's just on one story.
1:09 am
apple. we had a report coming through from a newspaper suggesting that apple is putting in order for 78 million of the new iphones. that's really driving the new gains were seeing. this is all we are watching in the tokyo session. it's weighing on consumer stocks and retail stocks. we had april cigarette sales coming through about 13.5% weighing on that stock as well. misscore also expected to its medium-term targets. >> haidi lun joining us there in hong kong. but stick with the asian story because japan exports fell for the second consecutive month as the yen strengthened. now.e man joins us
1:10 am
all this appears to underscore the growing challenges to prime minister of a's efforts to revive growth in japan. >> more pressure for the prime minister. heidi mentioned the strong yen now on the rise once again, despite the fact that after the g7 we did not see that much love or blessing coming out of the world's largest developed nations on how japan can reactor recover or stoke any kind of growth for the economy. seven months of july -- decline in japanese exports. it is worse than expected. we did see the effect of the earthquake that weighed on exports as well. there were some supply concerns or shipments that were restricted that month. we saw the shipments to the u.s. and china that fell. rose to the eu. it is the strength of the yen
1:11 am
that is the culprit here. it rose 5% in the month of april alone. and the job the trip -- the drop in oil prices that really dampened imports. the biggest drop we seen in seven years. atding that trade surplus 7.5 billion dollars, more than $2.5 billion for what economists were expecting. the biggest surplus we've seen in over six years. as far as policy goes, what happens next? we had to make them easy little bit at the search recently. of that on the handles has easement the pressure for policymakers with some economist thinking here and bloomberg intelligence that they can afford to positive for the moment. also waiting for a potential rate hike come in from the fed which could lessen or stop some of the pressure from the yen strength as well.
1:12 am
but it was worse than expected on many fronts. anna: the strength of the yen was the talk of the meeting of g7 finance ministers over the weekend. it was marked for some of the yearsest dissonance in between the u.s. and japan over exchange rate policy. the japanese finance minister had this to say afterwards. >> i made it clear that stability and exchange rates is important. excess volatility and disorderly movements and currency will have adverse effects on economic and fiscal stability. david stubbs, the global market strategist at j.p. morgan asset management. the none on the same page the, the u.s. and japan over whether what we're seeing in currency markets is anything out of the
1:13 am
ordinary and therefore requires intervention. >> i don't think they are in a place where it's a slamdunk case. it's for what we think is the cold currency war where the central banks do things with rustic securities and allow private sectors to take the money aboard and issue currency down to turn it into a hot corns -- hot currency war. at the moment we are not in a place where the major countries in the world agree that the currency needs to be manipulative formally, but a lot of countries are looking for stability right now. we saw the effect in the u.s. and they know it cannot go much further. the japanese are learning not to lose that much export competitiveness with a high currency. >>. the essence of this g7 was no communique and my take is a rather dysfunctional response.
1:14 am
canada and japan on one side, germany and the u.k. on the other side. there is no consensus in terms of how to move global growth forward. with that in mind, what is next in terms of policy response. is it fiscal you'd expect for the rest of the year? seenthink we have already a big change in the fiscal starts in economies. that's been an important part of europe's better numbers. and this is not an election year. if you look at the federal government to have already started to spend a bit of money. this looming consumption tax hike could possibly be delayed. piercing a bit of balance of policy. job ofd a pretty good
1:15 am
saving the day. it cannot do all the heavy lifting on its own. imploring their elected colleagues in the finance ministries to support growth. wehave seen that we believe believe that global equality will continue to grow. >> interesting to see if they do delay that sales tax increase. when the credit rating agencies said they will be at risk if they don't do something to fill the gap. where do you expect the currency to go. >> what about the cloud? it's asking the question of whether we will see a further bounce in the yen. >> where you see the yen heading. suggesting we could see a bounce. >> if you're approaching it from the bottom, now there's
1:16 am
resistance. something that will prevent arise in the security. toleratehink it will the currency strengthening. don't think that's possible. the tacit agreements perhaps behind closed doors to support them there. just like in the euro against the dollar. you can tolerate that tightening . because that's what it represents. a tightening in the financial conditions. -- with expectations of said policy driving changes and those expectations will build in coming months. most currencies will be under pressure against the u.s. dollar but only gradually because the fed cannot move more than once eric most twice this year.
1:17 am
to david, the global market strategist at j.p. morgan asset management. manus: later today we hear from three federal presidents. from john williams and patrick harker of philly. tomorrow, the bank of england governor faces mps for the last time before the pre-eu referendum. bloomberg customers can follow as a get theine go rate decision from the bank of canada on wednesday. on thursday, the g7 leader summits getting underway in japan and we round off the week with the first flashes of gdp from the united states. >> as you mentioned earlier, of his political divisions laid bare in the latest election. we will bring you the full details.
1:18 am
1:19 am
1:20 am
1:21 am
manus: you looking at a rather dull day in hong kong. we are up one quarter of 1% on the hang seng index. there is a lot to digest this week. g7, yellen speaking. what will they do next? rishaad: a buyer is offering to buy monsanto offering $122 per share. it is an all-cash bid. ryanair forecasting earnings growth to slow this year even as the prophet jumped. if the biggest discount airline
1:22 am
expecting rates to rise 13% this year after a 14% surge through to the end of march. this comes as a lower ticket prices to entice customers, customers who are wary of flying after terror attacks. or going to be talking to the ryanair chief executive, michael o'leary at 7:00 u.k. time. order.3 billion the deal is for 100 aircraft. it was announced that barack obama is currently visiting the southeast asian companies. >> are teaming up with a better of -- the inventor of segue to provide better access to wheelchairs. it uses two sets of powerful wheels to walk up and down stairs which allows disabled .eople to stand face-to-face
1:23 am
that is your bloomberg business flash. >> manus:, let's refocus to europe. lawmakers have approved additional austerity measures required to unlock more emergency loans from the euro area. alexis tsipras says that belt-tightening reforms include cuts to social-- benefits for low income finishers -- pensioners. ministersthe finance meeting tomorrow that will assess the compliance with the bailout program. >> austria's political divisions have been laid bare with the anti-immigration freedom party and the green backed candidate were tied to become the country's next president. it will now be decided by the count of absentee ballots today. after the freedom party candidate failed to press home
1:24 am
his first-round advantage to secure a clear victory. first-roundt the advantage, at the sense that they are tied at the moment, we do not know where the austrian vote will go. whichever way this goes, this has been a really fascinating insight into the rise of the right and european politics because this is a party that has ties to other european parties within europe. to unite in the second stage and keep them out of the presidency. we've seen the right policy across europe. success, this is part of these economic editions that your finds himself in. you've barely controlled depressions in part of the european periphery.
1:25 am
you've weak job growth and gdp growth even in poor countries. extraordinary policies from the policymakers trying to keep the ship together. the currency or economic direction. -- atill lead to the rise the moment we see the right probably in ascendancy. manus: at some of polemic and that we talk about the right and austria and the left in greece. but suppresses got to vote through the parliament. people are saying there needs to be a turnkey moment for greece. do you think we will get debt relief this week? >> i personally doubt that it will come this week. certainly in the form of down to nominal values, what the germans are so against. they believe they are letting greece off the hook.
1:26 am
potentially could see progress toward another right down in net present value terms where you have either the maturity of the debt below the interest rate or payments. it's not sustainable. it is dead money at this point. the political resistance to reduce the headline number is very great in the core creditors of europe. the situation as usual have to get worse before you'll find a resolution that is applicable and acceptable on both sides but eventually be will get there. >> also we will get those pmi numbers from many parts of the eurozone and the eurozone aggregate numbers later today. from j.p. with us morgan asset management this
1:27 am
morning. he is set tor says power.aired one's that's coming up next on countdown. ♪
1:28 am
1:29 am
1:30 am
manus: 6 it is:30 in london and 9:30 in dubai let's get the bloomberg first world news. reporter: this underscores the challenges to abe's efforts to rebound economic growth. drop estimated. leaving $7.53.3%, billion. the american economy should be solid enough to merit an interest rate increase this year. caveentral bank will not
1:31 am
to political pressure and refrain from tightening during a presidential election. williams told fox news that there is encouraging data in the u.s. fed officials will probably raise the interest rate sometime this year. an opportunity in doha last month. opec is forced to go into another meeting without an agreement. say the cartel will not set a target. arabia's strategy is to squeeze out rivals by pumping out record volumes. iran has no plan to freeze the production until the second half of the year, or until the experts return to pre-sanction levels. british company is approaching the vote for the brexit.
1:32 am
meanwhile, a controversial treasury analysis to be published today says gdp price slide, while inflation would jump. this will take place one month from today. wall street's political ambitions have been laid bare. this will now be decided by the count of absentee ballots today after the freedom party candidate failed to secure a clear victory. confirmedsuccessfully it is a challenger in a low-cost rockets. 1/5 scale model that smashed down in the bay. global news 24 hours a day, powered by 2400 journalists in
1:33 am
more than 150 news bureaus around the world. you can find more stories on the bloomberg at top . to you guys. anna: it is that simple. thank you, rishaad. the benchmark index slumped between gains and losses. offsetting gains in chinese and taiwanese shares. nejra joins us now with an market update. asian-pacifice index fell for a fourth week last week. in fact, the fear it has been a pretty wild ride for investors in asian stocks. we have seen swings between gains and losses. you could the losses earlier, but now the index is up .4%. it is a mixed picture because we can see gains in china, but losses in japan on a stronger yen. air an is rising from the
1:34 am
three-week low versus the dollar, gaining against most of its developed market peers. there was a bit of a face-off over the weekend between japan and the u.s. of the question of intervention and yen selling to protect against a stronger yen. the yen is up my percent against the dollar this year -- is up 9% against the dollar this year. japan's trade surplus swelled to its biggest in six years. exports fell for a seventh consecutive month in april. this highlights the challenges of a stronger yen in japan. we can also see a bit of a pullback in the dollar today. it is retreating against most of its major peers. we did get hawkish comments over the weekend about fed policy, but we can see this retreat over a run of three weekly gains. is it just a pause, though, before a further rally?
1:35 am
sticking with currency markets, we are looking at the euro-dollar and we are at $1.12. the euro is holding its gain after yesterday. greek lawmakers of course, approved those additional austerity measures. this is ahead of a meeting of the eurozone finance ministers this week. this trade will be closely watched. anna: thank you very much, nejra. manus, let's come to you with the chart of the hour. manus: i was torn between the fed and global volatility. i tossed a coin and we are going with global volatility. ten day volatility is ratcheting higher and reflecting back to a period of time that we saw back in january. let's take this from a different perspective. this was the angst over china with a 13 year low. this started fueling volatility. volatility is ratcheting higher and is ramped by 42% in barely a
1:36 am
month. equity volatility is trumping fx volatility. these are the major markets. the debate is of course, what happens next with the number of risks. one is the fed, but the biggest tail risk is of course, the brexit. the theme we had this weekend anna, is rosengren speaking to the fed. williams said there is no recession in the united states and a hike is coming. this is 28%. so, but we have got here is a great divide that remains between the market, volatility, and the fed. anna? anna: manus, as you said this, it is strange, the level of correlation we have. i have the work function, ready and poised. manus, thank you. we will return to that in a
1:37 am
moment, but let's get to the corporate news because bayer has offered to purchase monsanto for $62 million, creating the biggest supplier of pharm chemicals and genetically modified seeds. nejra joins us again. this is on the lower end of what analysts have been expecting. nejra: we are talking about the biggest deal globally this year and the biggest takeover ever by a german company. as you say, it is at the lower end of analyst expectations. we are talking about offer of $122 per share, meaning it is a $62 billion deal. the estimates went from $120 per share to $150 per share. they are at the lower end. this is a 20% premium expectations were as much as a 60% premium for monsanto. one of the key things in a steel anna, is that it
1:38 am
is all cash. bayer full of last week they were making an offer and there was a lot of concern about how bayer would finance this deal. it sent the stock plunging for the most in seven years on thursday. some are saying the purchase would be breakeven on an earnings per share basis at $1 08. that does raise questions over financing. although as i say, it is an all cash deal. they are concerned about bayer losing its investment-grade credit rating. it'll be interesting to see how shareholders react to this. anna: a lot of questions on the bayer side. but what about monsanto? we have to agency what they say -- we have to wait and see about the levels on the table right now, don't we? nejra: they are likely to reject any bid less than $150 per share. but they are in an interesting position because they have gone from being a potential acquirer
1:39 am
from when they purchas tried toe syngenta as the target of a takeover. regulators have been looking closely generally at the chemical sector. deal,emchina and syngenta obviously. we have seen a number of deals and other industries stop in their tracks because of competition concerns. they will be regulatory questions, the analysts have said that monsanto really is ripe for a takeover with the share price falling, having to cut the earnings forecast. this deal would allow it to diversify and allow bayer to diversify, but there are many questions over the financing and what it is going to mean for the future of this german company. anna: thank you very much, nejra. manus? manus: let's focus in on turkey. he governing party is elected. the new leader is speaking at the party's congress. the presumptive prime minister
1:40 am
vowed to legalize the de facto rule, all at the expense of his own office. let's get over to the executive producer in turkey. what does this mean for the political landscape in turkey? manus.r: hello, erdogan is set to become the new prime minister. he is a very close ally of president aslon. he vowed yesterday to change turkey's constitution to a presidential system. this is what the president is extremely passionate about. this is why the president fell out with the prime minister as loyalists were saying he was dragging his feet. now, we should find out over the next couple days who is in the new cabinet. investors will be watching closely to see if deputy prime
1:41 am
minister is in or out. if he is out, this could hurt turkish assets further. so far this month, the lira has weakened 6% against the dollar. and this dental is the worst -- 's the worst performing equity market across the globe. investors are very nervous about this political of people that has been taking place this month. manus: talking about angela merkel, with some pictures at the start of the show arriving in turkey. this refugee deal is critical, isn't it? do we expect some kind of rapprochement, or re-stabilization of the agreement? what can we expect? reporter: angela merkel is here to attend the u.n. humanitarian summit. she will also be meeting with the president later today. her main mission is to make sure hat the eu-turkey-refugee
1:42 am
deal does not fall apart. they say turkey is dragging its feet to give visa free travel to turkish citizens. they also want speedy delivery of the 6 billion euros promised. germany, for its part, is concerned about the grip of power. also, turkey lifting the community of kurdish lawmakers. it is going to be important to see what comes out of the meeting later today. manus: executive producer in istanbul, with the latest on merkel merkel's journey to istanbul. anna: the u.s. economy should be strong enough to merit an interest rate increase this year. the central bank is trying to refrain from tightening during the presidential election year. so says san francisco fed president john williams. he told fox news that wile
1:43 am
global threats to growth have a balancing act, fed officials probably will raise the benchmark interest rate sometime this year. david stubbs, global market strategist at jpmorgan as the management is still with us. you said earlier in the program, you think just one this year, is that right? david: yes. anna: one do you think, july? ford: i think the question the meetings will be, is the data going to be in place enough to allow a rate hike? the answer to that could be yes. then, with a just park it to get past any volatility the brexit may cuase iause in global marke. there is still a fairly high bar for the u.s. economy to be, just in that regard. you need real concrete proof that growth has bounced back
1:44 am
sustainably from the weaker first-quarter. we might get some of that on friday with the revision of q1 gdp. you do need a lot to go right. your better business survey for june and july needs to come into focus. this absolutely could happen. like they said, sometimes in the second half of the year seems most likely to me. that is just as john williams said. this keeps december open as an option may be, to get to this year. manus: david, i have grabbed this chart. it puts the political context of how the fed acts. three of the last several presidential's back in 1998, 2000, and 2004. the fed is not frightened to act in political period of time.
1:45 am
i don't know whether trumpism trumps this historical data, but the fed probably wants to show they are above the fray. david: absolutely. i don't think the fed is afraid of acting at all during an election year. the fed covets most of the maintenance of its independence. this has been an extremely harsh presidential campaign so far. it has included a lot the rhetoric against the fed, questioning its policies. and i think they will want to be seen as doing the responsible thing for the economy during this time. i also think it has a mind to avoid major market volatility during the presidential election year itself. i think that would lead to further questions over its management of policy, for example. fed is goinghe to want to react in a cautious as beingd be seen
1:46 am
responsible, as well as emphasizing the extraordinary things they have done. anna: talk a bit more about the medium-term picture for the u.s. economy, david. i have a shichart here, saying y see the economy helping the s&p 3000 or 4000 this year. this chart goes back over recent decades and highlights in red the recession years. what are your expectations about how quickly the u.s. will fall? or how far out, even. david: event with, i think the u.s. is getting past two major drags on its growth. one is the inventory cycle and the other is the collapse of the investment. both of those will be gone by the third quarter. we still have a high dollar in
1:47 am
historical terms and a drag on net trade. if we can get past this, i think we are set for a couple years. the change of financial january hasince been seen. they were very stressed at one point. for most importantly, with where credit spreads were. that has been a big change, right? credit spreads have come a long way with the u.s. high-yield. is clearing the way for a further fed rate hike. with the equity markets, look, we do think it will be higher by a few percentage points this year. i'm not sure they will reach the 2300 target. we are near the reflection point. the drag from the dollar is going away. the question is, how fast will
1:48 am
the economy go? we all think about 2% of gdp. anna: david, thank you. david stubbs stays with us on the program. manus: up next, we are going to break up blues. that is what we are talking about. u.k. treasury warns a year long recession if voters back a brexit. we look at the risks. that is next on "countdown." ♪
1:49 am
1:50 am
1:51 am
anna: a comeback, everybody. this is "countdown." 1 intime in new york is 1:5 the morning. let's get to the bloomberg business flash. bayer has offered to purchase monsanto in all cash bid. the deal would create the world's biggest supplier of pharm chemicals and genetically
1:52 am
modified seeds. forecast earnings growth will slow this year even as profits down. earnings are expected to rise 13% this year after a 33% surge. prices,cut ticket depending on where you are flying after recent terrorist attacks. the 2016 surged to 1.2 billion euros. we will be speaking to michael o'leary in just about 10 minutes time. boeing has won $11.3 million from vietjet, a vietnamese carrier. barack obama is currently visiting the southeast asian country. and that is your bloomberg business flash. sectoback to you. anna: burton will be plunged into a recession of its own making if the country votes for
1:53 am
a brexit. that is according to david cameron and torche george osborne. eus is one month before the referendum. meanwhile, a controversial treasury in alice published today says thousands would lose their jobs, the value of the pound with slumped, and gdp would slump up to 6% in the event of a brexit. manus: and tomorrow, mark carney will once again, face members of the treasury committee. this will be his final public engagement before the pre-eu referendum. this comes after a fiery exchange with a pro-brexit lawmaker. he also accused carney of compromising the independence of the bank of england by making speculative pro-eu statements. let's bring david stubbs back into the conversation. david, in terms of everything that is going on with the brexit debate, one thing that comes
1:54 am
to mind, we see sterling, we will hear from cameron today, talking about the u.k.'s self-induced recession. a heavy warning in the final days. ed, and i think we will see more of this. i don't think we will see the immediate impact after the vote to leave. we know with a great deal of certainty the market will push down heavily. the uncertainty about what the relationship will be about trading partners will cause a drop in investment. that will have a detrimental impact on the economy. now, whether this will cause a recession or not, it goes down to whatever numbers you plug into your model. the actual direction of travel is fairly clear. what is unclear is the medium-term aspect, after we decide on whatever agreement and
1:55 am
whether that is good foor bad for the economy. that is open for the debate. the market is clear on the immediate impact. anna: we have a function on the terminal that tells you everything you need to know about the brexit topic. one of the stories i was reading there is about where the euro and pound go in the month of june. morgan stanley says we could actually see the euro against the pound weakening in june as risk events, including the spanish elections and a ruling on the ecb. perhaps they will focus downward pressure ont h the euro, rather than the brexit debate focusing downward pressure on the pound. chris: sure, the brexit is not the only thing going on in europe. there is a lot a political party. we were talking about austria and spain. there are questions about what the ecb is doing. there is an awful lot as usual,
1:56 am
going on in the political sphere and we have not even talk about greece. absolutely, brexit is not the only show in town, but it is a major piece of the economic and political uncertainty in europe is missing right now. my expectation is it to be fairly stable in the run-up to this. if we did vote to leave, i think the pound would fall more than the euro. this is now going to question the institutional framework of the confident. but absolutely, i think we need to separate two different types of issues. one is the country leaving the eu and changing the political makeup of the continent. the other is the c country leaving the euro. this could create systemic stress. this is in a different league of us leaving the eu. anna: good to get that in perspective.
1:57 am
david, thanks for joining us today. david dubs joining us from j.p. morgan asset management. when we come back, we will be two michael o'leary and talk about ryanair. they give us their numbers. ♪
1:58 am
1:59 am
2:00 am
thes: germany's fire plans seed for monsanto takeover, offering $62 billion in cash. the yen strengthens. tensions over at the japanese currency dominate the g-7 talks. john williams talks about the chances of a rate rise, saying he central bank will not cave in. and a recession, david cameron and george osborne say britain will be plunged into a crisis of its own making if the country
2:01 am
both for a brexit -- votes for a brexit. it is exactly one month until the referendum. will come to "countdown." i'm manus crannyi in dubai. anna: and i'm anna edwards. let's talk about where we are expecting to go. it looks like things are expected to be sluggish with the the stoxx 600 down .3%. because the markets japanese market was sluggish, but elsewhere, china is doing ok. is south korean market is doing ok. we will get a glimpse of how some of the other asset classes are moving around. ourse, a real hot potato at the most recent g-7
2:02 am
meeting. that will continue to be the case with the u.s. and japan divided over the merits of the intervention. and we have got the aussie dollar against the u.s. dollar, showing a boost to the aussie. biggest in the dollar index on the back. people are just reevaluating after they saw the strength in the u.s. dollar last week. they are reevaluating if the thoughts about june, if that has gone a little bit too far. we are seeing the aussie and other risk currencies moving higher today. market'sviously, the focus is going to be on this run-up to opec. iran is making those noises. they are not ready to get on board with this deal at all. a couple headlines across the bloomberg terminal. we are just printing these now. very low inflation in economic slack is a dangerous cocktail.
2:03 am
again, warnings from the ecb measures were instrumental in avoiding deflation. more of these headlines are coming, with very low inflation and economic slack is a dangerous cocktail. lifted over to the bloomberg first world news. purchaseby offering to monsanto by $62 billion, the german company is offering an all cash bit of a 20% premium. this would greatl create the world's biggest company supplying genetically modified seeds. vice-chairmanthe -- we talk with the vice-chairman later on this monday morning. the it was economy -- the u.s. economy should be strong enough to merit a rate hike. williams told fox news that while global threats forced
2:04 am
a balancing act against largely encouraging data in the u.s., that officials will probably raise the benchmark interest rate sometime this year. opec is forced to go to another meeting with no agreement on how much curde to produce. said they willed not set a target when they meet on june 2. this as they speak with saudi arabia to squeeze out rivals by pumping out near record volumes. meanwhile, iran has repeated it has no plans to join the freeze until the second half of the year, or until the exports returned to pre-sanction levels. egypt is defending a simmering to search for the egyptair black box what recorders. it is a game warning against jumping to conclusions. the president said all scenarios remain open and nothing has yet been proven. the flight 804 crashed into the
2:05 am
sea on thursday. the plane sent automatic messages about smoke in the kavanaugh month before they lost contact. britain will be plunged into a recession of its own making if the country votes for a brexit, according to david cameron and george osborne the written an article together. the treasury analysis will be published later. inflation will jump in the event of a brexit. to takeeferendum is set place in exactly one month from today. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. you can find more stories on the bloomberg at top . manus, back to you. manus: a bit of breaking news coming in. a sell in tobacco industry assets worth approximately 1.8
2:06 am
billion euros, 1.6 billion pounds. that is probably somewhere around 180 million shares. this is a confirmation. o pull the ripcord. as we get more, we will bring that to you. anna, you have a very special guest. anna: ryanair has forecast earnings growth will slow this year, even as profit jumped last year. they expect earnings to rise by 13% this year after a 43% surge in the year three to march. airlines have cut ticket prices, depending on where you fly after recent terror attacks. let's talk with michael o'leary, the ceo at ryanair. tell us a little bit more about the year that is to come. michael, you are guiding the market lower, it seems. so, how weak is present going to be as the go through 2017?
2:07 am
michael o'leary: the primary key driver will be lower oil. we were hedged at $90 a barrel. we are already hedged at $62 a barrel this year and oil prices are falling. i think the overall theme will pricing. we expect prices to fall by 7% through september. that is a combination of ryanair 's strong capacity growth across europe. secondly, we have the impact of competitors responding now that they are enjoying the benefit of lower oil prices. thirdly, we have this incessant terrorist activity. we had the events in brussels, the events in harris, the egyptair t incident this w eekend. airthen, add to that, the traffic control strikes. anna: you mentioned up to a 7%
2:08 am
drop in prices in the first half. why are you gloomier about the second half? michael o'leary: well, the second half is winter. we are expecting to grow to 160 million passengers. we will put down pressure on prices because of our own capacity. that we are opening up in the long market, and a lot of primary airports, as well as secondary airports. customers will enjoy remarkable valueg and remarkable from ryanair this year. manus: remarkable pricing and remarkable value, michael. how much could they drop in the second half? could we see double-digit drops, 10% or 15%? could you give us guidance? michael o'leary: yes, i expect it in that area, but we are a long way away from that yet.
2:09 am
we will be growing capacity during that second half. we have already announced seven new basis for next winter. i think what is different in europe this year is because competitors benefiting from lower oil prices now, trying to defend market share. they will be unable to because they cannot be ryanair on price. our own expansion means there will be better deals for customers. in bloombergancants has just booked a price with us. -- andery upset find, i started to cry. anna: you have recovered well, michael, for the conversation. let's talk a little bit about brexit because using to be not winning friends on the brexit campaign. you of course, have been busy repainting some of your aircraft to tell people you want the u.k. to vote to remain. you think that will result in
2:10 am
better airfares. you have run into a bit of a legal challenge as well. the advert, according to the vote leave camp, brakes referendum rules and the bribery act. michael o'leary: we have extended the sales just to annoy the "leave" camp. we ran a big sale for people to fly back to the u.k. on june 22 and june 23. of course, we want them to fly back to vote "remain." of course though, there is nothing to keep them from voting "leave," if they wish. now, they believe that ryanair offering lower fares to u.k. citizens is somehow bad -- is somehow going to endanger democracy as we know it in the u.k. they are flailing around losing the market, but we should be very careful. the more it looks like there will be a "remain" vote, the more we see complacency.
2:11 am
we need a huge vote in favor of "remain." there are many things i despise about the european union, particularly people in brussels, but the market works. they need to help us reform brussels. we need to move more towards a single market, and less away from political integration, which nobody wants. we do have a strong u.k. voice at the table. michael, feel free to send one of those planes here to bring me home to vote. i have no objection to that. but there is a great debate out there whether it is brexit that is causing the u.k. economy to slow down and users to do less and les. is there something malevolent at play? you run a huge airline and you see the consumer front and center. give me your take on the u.k. economy as you have seen it for the last six months. michael o'leary: i think the u.k. economy is struggling somewhat. there is a lack of confidence there.
2:12 am
i think a lot about that is driven by the brexit referendum. it has been overhanging the economy for the last six months. if there is a strong "remain" vote, you take away that uncertainty. we will continue to invest heavily in written, as long as it remains a member of the european union. i think a strong vote on june 23 will help to eliminate that. but there will still be -- the world is an anemic place of the moment. growth is slow in most markets, but the u.k. has a better position than most other large economies. you have a competitive economy.you don't have a cost problem as you have in many other developed nations. and i think the u.k. is poised to grow strongly once the huge uncertainty of the brexit referendum is removed. certainly, we see it from our forward bookings. bookings are running about 2% of where they were this time last year, but at lower prices. we are having to reduce prices, for the u.k. consumer and
2:13 am
visitor are booking their summer holidays. they will travel to spain and the greek islands. they are just traveling with ryanair and nobody else. anna: you mentioned the egyptair flight. the industry must have a series about what happened. -- must have a theory about what happened. what is your working a something? michael o'leary: i think the working assumption is there looks to be some kind of explosion. we don't know what caused the explosion. we need to recover the black box to find out exactly what happened, but it is not good. the fact that we have had the bomber attacks in paris and brussels, it isn't good. i don't think it will alter -- the great thing about terrorism is it always is doomed to fail . the fundamentally are not going to stop people from traveling, but it is going to put downward pressure on airline pricing.
2:14 am
for the remainder of this calendar year, and probably into 2017 as well. that is good for consumers. it has never been cheaper to fly and it has never been cheaper to fly ryanair. manus: the one thing the market will focus on today is your guidance. i am circling back to your numbers. for you, as you look at the business, how do you shift the dial towards the upper end of that guidance? what does it take to shift that dial? is that this terrorism effective to come into your numbers? in other words, people going the ryanair route? what is it that shifts the dial for you? michael o'leary: remember, we take whatever price we get as long as we fill the airplane. the shift for us is upward movement on fares and yields. we have nothing that. nthsof the six to nine mo have had downward movement.
2:15 am
i think it is going to be weaker. i have seen a lot of competitors out there discussing how the second quarter will be stronger. i think it will be strong in terms of traffic, but weak in terms of pricing. we have walked away the field for the next1 12 months. if we get to $1.4 billion, which is about the midpoint, that will still give us a 13% rise i profitsn. i think it will still be a very impressive performance at a time ryanair is rolling out the "getting better" program. we have been nice to the customers now for about two years without compromising the costs. anna: and you can be ever nicer still, i'm sure. michael, thank you for joining us. there is no limit to how nice michael o'leary can be, apparently. let's check on the asian market
2:16 am
session. has been a bit of a mixed today, hasn't it? haidi: yes, anna. we started off softer, but things started to pick up. there is a sense that traders are really waiting to hear from the fed and janet. and really, waiting to get signals as to whether june is a life event. or whether september might be the month to have the rate hike come through this year. having said that, we can see strong gains coming from taiwan. it is surging the most it has in eight months. in particular, apple suppliers are surging 10% in some cases. we had a report from local media suggesting apple put in an order for 70 million new iphones. it is driving these gains. also around the region, shanghai is up. a keep in mind, volatility is
2:17 am
falling to a 15 month low. we are still seeing those concerns over the chinese economy and the slowdown, that we can also say that rotation into new consumer stocks. a little bit of weakness coming out of southeast asia, but again, it is a concern about what will happen to emerging-market aspects should the fed raise next month. the stronger yen is weighin on d emands, as well as disappointment we did not get more out of the g-7 meeting over the weekend. sydney stocks are lower on account of that retreat in oil, which is weighing into energy and mining stocks. these heavily weighted stocks are up by about 3% on account of that stronger yen. disappointing numbers coming from japan. over april was down by 13.5%. as i said, a lot of weakness when it comes to oil names, as
2:18 am
well as some of the iorn ore miners. -- the iron ore miners. manus: thank you very much, haidi. up next on "countdown," more belt tightening for greece. the austerity vote needed to unlock additional loans. we go live to athens. ♪
2:19 am
2:20 am
2:21 am
anna: welcome back. this is "countdown." let's get to the bloomberg business flash. good morning. reporter: hey there, anna. ryanair has forecasted that growth will slow this year, even as profits have jumped. earnings will rise 13% this year after a 33% surge through march. airlines have cut take a prices to entice customers after recent terrorist attacks.
2:22 am
to 1.2 billion euros. axa has said it will stop investing in tobacco and invest assets in the industry. france's largest insurer would sell $200 million worth of stock and tobacco companies. this is valued at 1.6 billion euros. in a statement on the decision, axa says smoking causes the biggest threat to public health in the world today. $11.3eing has won billion jet order. barack obama is currently visiting the southeast asian company. that is your bloomberg business flash. anna? anna: thank you. reek lawmakers approved
2:23 am
additional austerity measures yesterday required to a month more emergency loans form the euro area. social benefits for low income pensioners. we are now joined from athens. will this vote be enough to unlock the next funds that greece desperately wants? reporter: good morning, anna. all the implications are that it will be. this is the second bailout vote in a couple weeks. the review started in october and was supposed to finish last year. now, that is done. the euro will meet on tuesday to sign off. all suggestions are that yes, it will unlock the bailout loans. anna: will we see debt relief? reporter: we will see a start to the conversation on the debt, or this point, we have to see a resolution between the euro
2:24 am
area and the imf. too gi gap is still way big. the best we can help or is some kind of ray mark for what that -- some kind of framework as to what that will look like and how talks will advance. for: marcus, thanks joining us from athens. manus: austria's political divisions have been laid bare. the parties were tied in the run-up yesterday. the outcome will be decided about the kind of absentee ballots today. that is after the freedom party candidate failed to press home his first round advantage and secure a clear victory. on the line from the anna. -- from vienna. why are these parties so close? oris: austria has a 50-50
2:25 am
result. we've a split between the urban and rural vote. we've a split between female voters and male voters, both on opposite sides of the spectrum. it shows us that the electorate is really split on how the question of how to deal with immigrants, had to deal with refugees, and how to relate to the european union. manus: and how has h europe's refugee crisis shape this election? austria has shown the world what it really thinks of refugees. theme that has been one of the campaign, but not the only one. both of the candidates are candidates from opposition parties. with a candidate of the right-wing opposition party and a candidate from the left-wing opposition party. this tells us there is a big
2:26 am
discontent with the government. independent of what the situation is with that the immigrants and refugees. there are many political themes framing this election. but that is not the only point moving voters. manus: very briefly, when do you think we will get the results? what time today? boris: roughly, 5:00 in vienna. so, 4:00 in london. then, we will hopefully know who the winner is. manus: thank you very much, boris groendahl. anna: that will do it for "countdown." a quick look at the features suggests a mixed picture. they put the 100 could be in the green. -- the ftse 100 could be in the green, but elsewhere we are expecting some weakness across equity markets. keep an eye on ryanair, guiding
2:27 am
lower this morning. london, waking up this morning 1.4527.e pound that see you tomorrow, everybody. ♪
2:28 am
2:29 am
2:30 am
guy: welcome to "on the move." 8:30 7:30 in london and in berlin. i'm guy johnson, alongside matt miller. germany's bayer has planted the seed for a monsanto takeover, offering $62 billion in cash. what would it take for shareholders to get behind this deal? presidents talk about the chances for a rate rise. traders wait

830 Views

info Stream Only

Uploaded by TV Archive on