Skip to main content

tv   Countdown  Bloomberg  May 24, 2016 1:00am-2:31am EDT

1:00 am
anna: trouble in china. a top analyst says the country may need a bailout worth trillions of dollars but the morgan stanley ceo says he is up beat. >> the second largest economy in the world and growing at 6.9%. it is certainly growing at a rate demonstrably faster than the rest of the world. preparing for the u.k. referenda before a pre-vote, that as the corporate bond market suggest that don't accept a brexit. one of the world's most showinge hedge funds is
1:01 am
a great\showing backlash. ♪ welcome to countdown. anna: a very warm welcome to the program. it is past 6:00 in the morning. here in london. let's get to a very interesting chat. a reminder of where we have been in the dollar over recent months. fed chat boosting the dollar once again and that has been the story for the past month. we have here in the blue a chart that is showing what is happening in the dollar to dollar index which is sinking. a bit of a boost as investors increasingly factor in june, withas possible meetings the fed getting a boost from the
1:02 am
minutes that came out from the april meeting. williams adding to the constant flow of relatively hawkish commentary we seem to be getting from the fed. you've got for the first time since march more than a 50% chance of an interest rate hike from the fed on june or july. manus: the big question is what the fed is about to do. thsoose possible rate hikes are easing off the issues are the canadians. this could get everybody that bit of breathing space they really need. let's check in on the risk radar because we have stocks and dollar on the move. the dollar is going towards it seven-week low. the dollar index is all about the fed. two to three rate hikes according to the philly fed. it is the flattest and a number of months and goal down one
1:03 am
quarter of 1%. that is day five of a drop in gold. you want to buy the dip in gold as it flows into the gold etf continuing. anna? anna: let's get the bloomberg first news with rishaad from hong kong. rishaad: yes, some of asia's top watcher without the chaos of the devaluation. the pboc has learned its lesson that the market will not fall into panic. china will use global support to avoid investors. were the oldest and most expensive hedge funds is streaming fees -- trimming fees as they have a growing backlash for the lackluster performance. it is run by the billionaire who reduced most fees at 25% of profits, according to a letter sent to him and obtained by
1:04 am
bloomberg. 27%. he does not see britain's eu referendum including the central bank policy meeting which will be held a week before. even if the u.k. decides to leave, the next day nothing happens and the country will enter into negotiations very slowly. importanthis as an strategic route, but it has continuity to it. the probability of a brexit has fallen somewhat recently. because of these factors, it will not influence the decision. rishaad: and, egyptian aviation officials say egyptair flight 804 did not lose altitude before disappearing. this contradiction the greek
1:05 am
defense minister who says the plane made a radical turn and dropped from 10,000 feet before falling off the radar. it went down last thursday morning. it was en route from paris to cairo. all 66 people on board are presumed dead. the highest level since 1994 which indicates the prime n's may have had some success and throwing -- slowing the rate of population. it rose in 2015, which was up by .04% of the previous year. women aged between 30 and 34 was the biggest. global news powered every single day and located in more than 150 news bureaus around the world. you can find more stories on the bloomberg terminal. manus: thank you. let's get to juliette who is standing by with the markets. these markets are finding it
1:06 am
tough. this fed is really shifting gears. juliette: absolutely. we are on fed watch which is why we have seen a lack of conviction across asia markets today. most of them are trading in the red. that is how the strong the yen is weighing on the nikkei 225. it is down 8/10 of 1% in late trading. flat in australia. in shanghai, quite a lot of losses. chinese stocks have fallen for the first time in three days. it is 9/10 of 1% in late trade on the shanghai market as it comes online after lunch. we are seeing commodity and industrial companies really declining. also, very low turnover on that shanghai market. in hong kong, the hang seng up by one third of 1%. similar losses in taiwan. losses in korea. the regional index shows you
1:07 am
investors are not tying into anything today. we are singing oil and gas sector downplayed due to the weakness in crude. also, the lacks of industrials and consumer goods. if you stocks we are keeping an eye on -- toyota has widened his recall of cars affected by the takata airbag scandal. it is down 1.5% with another 1.6 million cars in the u.s. affected. sony with numbers after the close in japan. its outlook was actually delayed due to the earthquake last month. ringgit the malaysian coming under pressure due to the fall we have seen in crude oil. the malaysian ringgit is weaker by about 9/10 of 1% against the dollar. anna: thank you. morgan stanley's chairman and chief executive officer james
1:08 am
gorman says he is bullish on china despite the slowdown. speaking to bloomberg's's stephen engle in beijing, gorman says china will face some bumps as a transitions from domestic demand as its main driver. >> the chinese economy is a $10 trillion economy. it is the second largest economy in the world. it is growing at 6.9% whether it is exactly right or not. it is growing at a rate demonstrably faster than the rest of the world. japan has negative growth. germany at 1%. the largest is the u.s. with 2%. i will take 6% any day. percentagewise, yes, it is slowing. absolute dollars -- japan accounts for 35% of global growth. former analyst with an interview in bloomberg says the debt problem and the bank is far worse than anybody
1:09 am
is reporting. upwards of 22% of outstanding credits in the chinese banking system will be nonperforming by the end of the year, leaving trillions of dollars in bailout. >> big numbers they are throwing out. the npl's are likely to rise. that is obvious from where they are currently. the chinese economy is a complex, enormously complicated set of things going on moving from an export load economy to a domestic demand economy. moving from consumer savings to consumption. all of these changes will not happen without some bumps. the npl's are going up of the four big chinese banks are tremendous earning engines of the same time. stephen: speaking of the challenging environment, you have a 33% growth venture which is the maximum allowed. the brokerage venture. before that you had it five
1:10 am
years ago. givenyou ever consider, the complexity of the market, going it alone if they were to raise the ceiling to allow you to have it or is the joint venture partnership the best way to go? >> you have to live in the world as it is. long-run, we always like to earn a control the businesses we have around the world. in the medium-term, we have often gone into markets in a joint venture type structure. you have the advantage of the local expertise. it has been a great partnership for morgan stanley. stephen: what would be your expansion or headcount plan for asia? where are you looking to grow? >> asia has been on the backboard. with rates rising, you will see further liquidity coming out of the market here. i don't think there is accelerated growth in asia relative to what is going on in the u.s. that said, we are long-term
1:11 am
buyers of china and greater asia. we have a tremendous operation here in china and across hong kong and the rest of the region. morgan stanley is here to stay. anna: morgan stanley ceo there. with us is the ceo of investment management. great to have you. let's start with the conversation about china. we heard from stephen engle, a banking analyst with autonomous research talking about china will need trillions of dollars of bailout. contextualize your concern around china. there is a debt burden. debtthink, look, there is and it is mostly in the regional banks. it will take a lot of money to bail them out. i'm not surprised because we knew about this for some time. when you visit china, it is clear that there are debts.
1:12 am
i'm not so sure that is the biggest story. 6.9% growth, it is still growing a lot more than the rest of the world. it will slow down and some money will be lost. i'm not entirely sure we should listen to mr. gorman. there is a shift from export to domestic, but it takes a long time to happen. morning, skeaker. the currency question that we have here -- volatility is changing. three-month volatility in the blue line. what we got here is yuan dropped 1.2%. the probability of breaking 7%, that is dropping. rebalancing and the currencies, they don't want this currency risk to get out of control. we talked about it a couple of times.
1:13 am
where do you stand at the moment after what you have seen? saker: we don't want the currency risks to go out of control. we talked about this in the past. controls thet economy as much as it can. it will try to control it. the probably have now is it is dependent on other factors which is becoming the case that the only currency the people will end up trusting is the dollar. i'm not sure how it will go. i think they will try to intervene. anna: on the chinese story, you mentioned the transition to the new economy. there is a chart here showing chinese activity. the white is the old china and the blue one is the new china. ok, the new china may still be a smaller part of the economy but it is holding up better in the most recent slowdown in china, partly by design, by the chinese authorities. saker: you should not be surprised by this.
1:14 am
the chart is interesting. that feeds into what you have from mr. gorman saying the chinese economy is stronger than people anticipate. the blue is what they have been planning to do. it's working the way it is meant to work. manus: saker, one of the conversations we were having this morning was about japan. anna, you have something that discusses this. it is about what happens next with japan. we're looking at the chinese, the ringgit on the move, but there is one big currency question and it is all about japan and whether you think or not that intervention comes along the way, or will they be completely dissuaded? saker: it is hard to tell. they are under pressure now a little bit. the economy is not moving. so, they might intervene, but again, one has to wait and see. i will not go one way or the other on this one.
1:15 am
sorry. anna: on the yen, we heard from the finance minister that he is given us more definition of what he thinks is abnormal currency moves. this is very topical given the finances and the continuation of that story in japan this week. he says the five yen moved to the dollar is what he considered to be lopsided in either direction. bloomberg analysis shows that happens once every 84 days or something. we are living in a world where these assets move to that degree a lot more frequently than maybe they used to. saker: this is why i would not assume what is going to happen. what we have seen is a big increase -- sorry about that, manus -- a big increase in volatility in general. it is due to the trading strategies people are employing. it is partly due to the volatility strategies. they make money through this
1:16 am
volatility. i' don't buy the five yen in two days because that happens when a lot. they will wait until a permanent move. anna: thank you very much, saker. he will stay with us. some highlights for your day ahead. mark10:00 a.m. u.k. time, carney faces mp's before his pre--eeu vote. two hours later, a rate decision from turkey central-bank. an hour after that, it is the on gary and national bank -- hungarian national bank. manus: the eu finance ministers are scheduled to discuss the release of another 11 billion euros to greece. 50 minutes later, nigeria central-bank will start a rate decision news conference. what do we? it is about the right path.
1:17 am
the central bank strategy is the right one. sticking to his forecast. two to three hikes. much more to come on countdown. ♪
1:18 am
1:19 am
1:20 am
anna: welcome back to countdown. president obama speaking in hanoi. is speaking at the national convention center, this after the u.s. chief said the decades-old ban on lethal arms sales will be lifted to vietnam which will further relations between the two countries. how will china respond? the other big news is the deal of billion dollars worth for the jet. this is part of his five day asia tour. will be going to japan later this week. it is 6:20 a.m. in london. let's get to bloomberg business
1:21 am
flash. rishaad: right. let's take a look at the developing stories. possiblees probing money-laundering over the troubled malaysian state. bsi bank will shut its operations in the city state. bsi noticed intention to withdraw its status as an emerging bank in singapore. serious reaches of anti-money-laundering requirements and gross misconduct by some of the staff. deutsche bank is the subject of an investigation of whether it inflated the value of securities in its mortgage bond trading business and billions of dollars of losses in 2013. all of that with people with knowledge of the matters. it could've boost the banks earnings for several quarters. the chief executive has another headache with news he is cutting the rating to just two grades
1:22 am
above junk. the agency says it's performance has been weak for several quarters and substantial headwind including low interest rates and macro economic uncertainty. facebook is changing how determined its new stories are trending after recent allegations of political buyers. the company says it will no longer require stories to be from sites to be news leaders as that requirement could lead to buyers. facebook will stop using it's curated rss feed. that's your bloomberg business flash. manus: thank you very much. a little bit more breaking news on the bsi story. the ceo is set to sit down. welllso saying they are capitalized. the ceo is stepping down. ceo coduri is stepping down.
1:23 am
they will boost the risk on their compliance. this is immediate response to the headlines that rishaad just brought us. we get more from the bsi st o tory. let's focus on the federal reserve. the san francisco fed president has stayed true to his forecast. two to three rate hikes in 2016. he said inflation would pick up gradually. >> our basic strategy is the right one. slowly or gradually we are moving over the next few years. and getting our interest rate back to normal. the exact timing of when we have a rate increase depends on the data, depends on how we are doing relative to the goal. hermeshe ceo of
1:24 am
investment management is still with us. a quick look on the bloomberg suggest to me there is a 53.8% chance of a rate hike by the end of june or july. i lump those together because guests are talking about the end of june but there is also july. saker: we have had a very strong one. the u.s. economy has done better than what people anticipate. they have been saying so very clearly. they were held back last year because of the volatility in the world but now they are back on track. whether it is june or july, who knows. you know from the san francisco fed head that they will hike several times more this year. it shows their confidence in it. if volatility returns to the world, that could stop it. so far, they don't see headwinds yet. expect a hike this summer for
1:25 am
sure. manus: great caveat. a bit of a bond curve for you. it is flattest since 2007. call me a cynic, the grinch of bloomberg, but the bond market is indicating inversion. that, sir, is when you have a recession. bond markets sending the fed a big message. saker: the bond market assumes the cycle of recovery in the u.s. finishes and you enter into a recession after that. what could happen is simply a slowdown into growth and that is what the u.s. is hoping for. it is hoping that the economy has been kicked off into a normal cycle. an economy has been off of the normal cycle that through unorthodox means they are trying to resuscitate it. what the fed is saying to us is it is now resuscitated as an
1:26 am
economy. it will have ups and downs. it will slow down but now back to a normal economy. the bond market is saying we don't quite believe this. we think nothing has been resuscitated. this is just a blip and it will go down. i think the fed is right. anna: the money market and currency markets are in slightly different pages. this shows what happens against the dollar. all the major currencies falling against the dollar. this is month to date. through the month of may. the british pound is the best performer. it is down but the best performer against the dollar. saker: just recently recovered. i think there are two things happening. the first one is there is an expectation that the fed will raise interest rates which means the dollar is stronger. the other one is -- we have talked about this many times -- in this period, it looks like there is no other currency but the dollar does the yuan is not noted.
1:27 am
anna: thank you very much, sakier. he will stay with us. when we come back, we will talk about the imf and who they are up against in their conversations around greece. that is coming to you from brussels. ♪
1:28 am
1:29 am
1:30 am
manus: it is 6:30 a.m. in london and 9:30 a.m. in dubai. let's get the first word news. rish? d: china may need a bailout worth trillions of dollars, according to an analyst at autonomous research. china's credit binge -- beijing will have to provide vast sums to tackle their debt. they are yet to be serious about deleveraging and eliminating capacity. some of asia's top china watchers says it is going against the yuan which is down
1:31 am
more than 1% this month. the pboc has learned its lesson and will not let the market follow into panic. china will use of the daily verbal support to avoid spooking investors. one of the oldest and most expensive hedge funds is trimming fees as the highest-paid money managers has been showing backlash from the lackluster performance. reduced andll be 25% of profits. that is according to letters sent to clients obtain by bloomberg. notst. louis fed says it is see the eu referendum affecting the central banks policy meeting the week before the vote. even if they u.k. decides to leave the next day, nothing will happen and the country will enter negotiations which will go very slowly.
1:32 am
>> i see this as a strategic route but it has a certain continuity to it. the probability of a brexit has fallen somewhat recently. because of these factors, it will not influence the pboc. rishaad: egyptian ag asian official says egyptair flight 804 did not lose altitude or swerve suddenly which contradicts of the greek defense minister which it said the aircraft dropped 10,000 feet before falling off the radar. it went out last thursday morning en route from paris to cairo killing all 66 on board. fertility rate has risen as it ties level since 1994. that indicates prime minister abe's may have had some moderate success. the total rate growth is 1.46%
1:33 am
more thanich is .4% the previous year. the big contribution came from women age between 30 and 34. from hundred 50 news bureaus around the world. you can get more online. anna: thank you, rishaad. let's get the latest on what is happening in the asian sessions. asian stocks fell for the first time in three days. speculation has been mounting over a u.s. fed rate hike. good morning. >> yes, as you say asian stocks falling for the first time in three days. falling towards a seven-week low. it is a pretty broad base selloff. all industry groups down on the asia-pacific index with energy stocks actually leading the losses.
1:34 am
we are seeing declines in both china and japan. we are seeing these losses. as you say, part of it being driven by the speculation over the fed because fed fund futures are indicating for the first time since march that there is a better than even chance we did see a rate hike in july. we know that the probability of a hike in june has jumped to 32% from 4% last week. let's take a look at the dollar. we are seeing the bloomberg dollar index rising, hitting a two-month high. gold on the other hand falling for a fifth day in a row. that is its longest losing streak since november. this is the picture ahead of yellen speaking on friday. as we are getting more hawkish comments building up from various fed officials. the question is could we get a repeat of what we saw in markets after the rate hike in december with a strong dollar selloff in stocks? the picture in oil is very different. we are seeing a bit of a drop in wti ahead of u.s. government
1:35 am
data that is forecast to show u.s. crude stockpiles declined whereas the trend really has been upward for much of this year. but, if you look at where oil is $47 enderle.s at 4 a barrel? . anna: saudi arabian stocks has plunged the most since january, compounding its sellof. f . manus has the chart of the hour. manus: it is basically telling you that volumes are gearing up for this quiet period. the drop of over 3%. 166 stocks declined. we have not seen that in five years. i have taken a look at some of the indicators, the relative strength indicators. the price of oil at the bottom of the screen. this is the rsi.
1:36 am
are we oversold? 166 stocks dropping, the most in the single day in five years. the price of oil. ramadan is coming. is opec no longer relevant? that is the debate, one our lead stories. volumes are down 20%. brent down 31%. volume at 16%. the low is the 20 day average. the question you have to ask yourself, are we setting up with this market that is potentially a little bit oversold? anna: let's go back to saker from hberermes investment managers. we have all been awoken to saudi arabia's strategy in regard to oil. it has been about the market share. we have seen the price bouncing a little bit, even if it might have stalled. we are down below $50 a barrel.
1:37 am
what are your expectations in the trends? saker: in must've been about the canadian fires. they are beginning to become off-line. 48 was a bit too high. it is about to come down to the more. saudi arabia is very clearly worried about iran coming back into the picture and taking market share. together, ithat will go down a little bit from here. not necessarily into the 30's but down from here. the drop as we saw is a closed market. amplify each other's moves. we are coming to a very quiet period. so, that is going back. think they are worried that before that happens, they back off a bit. anna: all things to keep in mind. the finance ministers will
1:38 am
convene in brussels to discuss the proposed 11 billion euros in aid and debt relief measures, including increasing loans and decreasing rates. european creditors will also join the ministers to wrangle over the belief for grreceece, urging for the most drastic measures. let's get your thoughts on this story. for the first time in a long time, echoing the words we heard from the dutch finance minister, this is the first time the eurozone finance ministers are going to talk about greek debt "seriously." we are talking about a real change in this conversation. saker: when we were talking brussels greek crisis, was demanding it was too harsh and there was to be some renegotiation. those show they are willing to take it. the great prime minister has done that. at this stage, they have to
1:39 am
realize the get greece out of the hole they have to do something. the conversation is how much and how far do they go? they are changing the conversation. manus: how much and how hard do they go. i have greek government bonds for your. . a six-month low in terms of yield. if there is a lockstep change in terms of the, i suppose, the debt relief. if it is a far-fetched fantasy, would you buy greek asset? even if it is small. saker: if there was change at some stage, yes. on a relative basis, greece has gone through such a massive downshift in its economic size. it has gone through so much pain. the reason you hold back is because it is not clear because
1:40 am
of how long the recovery is. if there is lockstep change in the way it is being handled, that changes the picture and you will start to look at value in greece. anna: what are you expecting to hear from these discussions? you as an investor, what would be a sensible approach in the eurozone finance ministers and the imf as they find common ground, assuming the imf holds sway and we see some renegotiations around the greek debt story. postponing payments, all of that should be on the table? saker: postponing payments is the least likely to happen, i think. imf has wanted longer maturity and reduced interest rates. whether they can do that, we will wait and see. europeansling with and sometimes they say they are reducing it and it is so minimum that it does not make any impact. reducing interest rates so it
1:41 am
allows greece a platform in which to recover. manus: saker, biggest risk on the horizon -- you have brexit, oil and opec. what worries you the most? it is a bit of a bland question but there is a lot out there. term,: in the shirort brexit, this is not about the political argument about if it is good to be in the euro or not. that is irrelevant. the argument is the u.k. is a very important part of the fabric of the financial market. if there is a brexit, it would for the financial markets into instability. that is what people are thinking about. people talk about it being a downside for the u.k. i disagree from an opinion from the st. louis chairman
1:42 am
saying that nothing will happen the next day. i think foreign investors will stop dumping it. that is containable, but does it have a longer fact on europe? once we go through brexit, i think you have to worry about seeing the sustainability of the u.s. economy. i think it is a non-sequester in the sense that trump is beginning to change his rhetoric. the american system is designed that no person in the white house has power. they created gridlock on purpose. anna: you said we would see investors dumping sterling. how long with that go? -- would that go? saker: how it unfolds thereafter. why would the dump start? it is not because the u.k. cannot make it on its own.
1:43 am
we will not discuss the campaign. there is uncertainty. investors do not like uncertainty. foreign investors who put a lot of money in it. if you look at the fdi into the u.k., it is higher than it has been. it is a remarkable achievement. most of it comes from the euro area, some from china. you would expect the euro to reduce its fdi. it eventually goes down. other investors will start thinking whether being in the u.k. is good for investment or if they should shift to the mainland. they could happen more subtly than people realize. precisely because the u.k. is so important actually volatility in the u.k. is affected with the rest of the world market. anna: thank you for joining us, saker, the ceo of hermes investment management. one of the oldest and most expensive hedge funds is trimming fees as the finance ministry's highest-paid many
1:44 am
managers face a growing backlash over the lackluster performance. we have been looking at the details of the story. >> we are talking of an $11.6 billion firm run by paul tudor jones. what has happened is last quarter, tudor suffered $1 billion in withdrawals and also posted losses this year. it is making changes to fees after remaining clients pushed for these lower fees, according to people familiar with the matter. it will cut fees that contains most of its funds. to look at it from 2.75% of cut 25% of.2 .5% and profits to 25%. the thing is tudor's targets are higher than most of its peers. it is one of the oldest and most expensive hedge funds. managers traditionally charge clients 2% of asset and 20% of performance. it is among many macro hedge
1:45 am
funds that have posted lackluster returns since the global financial crisis. we just showed a chart that highlights the underperformance of macro hedge funds versus the broader hedge fund industry. those macro funds lost 1.3% in the first four months of 2016 whereas the broader industry 4.6% this year. it has been rough for hedge fund managers. even warren buffett says you don't want to pay those high fees. why don't you go to an index that tracks the broader market like the s&p 500 instead? manus? manus: thank you. some say it may never happen. mark carney is preparing to face his mp's coming up today in his final public comments before britain's eu referendum. the corporate bond market is telling us something different. don't expect a brexit, according
1:46 am
to the bonds. more to come. ♪
1:47 am
1:48 am
1:49 am
anna: welcome back. 1:48 a.m. in new york. 6:48 a.m. in london this tuesday. 7:48 a.m. in paris or frankfurt. we need to get up to speed with rishaad. rishaad: thank you. has moneycentral bank laundering related to its troubles. it is ordering to shut the operations in the city state. moneyng to serious laundering requirements, poor oversight of the bank's operations and misconduct by some of the bank's decisions. the chief executive is stepping down. deutsche bank is the subject of probe among its bond
1:50 am
trading business and millions of dollars around 2014, according to people with knowledge to the matter. the losses could have helped boost the banks earnings for several quarters. another headache with central-bank ratings going two grades above junk. it has been week for several quarters and it has taken substantial headwinds, including macro economic uncertainty. the bank messaging system swift will say later today that more business may have been hit by hackers. swift will raise security further and help clients with system checks. it is warning after hackers stole information from banks and 12 million from an ecuadorian bank. the attack on the jeff and -- be enemies lender was boiled last year -- vietnam ease lender was foiled last year.
1:51 am
anna: thank you very much. let's talk about brexit. the corporate bond market is signaling u.k. voters will reject leaving the european union. growing confidence that the nation will avoid a brexit and the result of economic uncertainty means investors are excepting narrower premiums to hold in sterling instead of euros. manus: morgan stanley's chairman and chief executive officer james gorman has told bloomberg view thingnks they will stay in the eu. >> my guess is they both are staying. should they not, there is a two-year transition period. it will have some impact on global investment banking businesses. some increased expenses coming up, but it is not that meaningful. i'm more concerned about the markets and frankly for the state of the european union which has been an extraordinary success over 70 years. tinkering with that model at
1:52 am
this point does not seem to make a lot of sense to us. anna: all of this comes as the bank of england governor mark carney faces mp's about brexit later this morning in his last public engagement before a eu vote. joining us now is the cio at royal london asset management. good morning to you. the subject of brexit. mark carney has found himself in political hot water. withg to blows verbally certain members of the campaign. he defended himself saying he is spelling out the risks as he sees them for the bank of england. do you think he has a point, a role to play? >> yes, i think he has to balance it. he has the call it out as he sees it and the potential impact he is hearing from other central bankers and market participants . the consequences could be this. from our perspective, it is a political decision.
1:53 am
position, thate is our formal house view, but we do think on balance that remains. is whatthe reason others have made which is about the uncertainty that exist. the element is on a 10 year view, we would be fine. we will work our way through, we have a great history of a trading nation. joining the euro previously. the problem is we cannot get away in the short-term from the likes of morgan stanley staying. we would have to change our jurisdiction related to the operations in a different location. what that does to investment in the u.k. is significant. think we will see some form of softening. we have seen parts of it this year. we have that air of caution. manus: good morning from dubai. i
1:54 am
curious, the fed has battered away on the potential impact, residual impact from a brexit. my question is very simple. is the fed being utterly naive? said the world would dump sterling. is the fed utterly naive? piers: i have a great deal of respect for the fed. manus: i don't lack respect for the fed. i'm not being facetious when i say it, but there is a certain amount of arrogance. they were not concerned about the globe, the dollar. they got concerned about the globe and the dollar. under assuming risk is my question. piers: that is perfectly fair. for those that were here during the scottish referendum, there is a massive complacency at the time. it was almost guaranteed there was a vote to be remained. living in edinburgh, i thought
1:55 am
it would be a closer decision. i still think we will have a close decision in the u.k. if you think that is complacency, that is fine. our view is that we have to go through probably more investigation, and better understanding of merit. i find it odd i'm in sympathy with nicola sturgeon who made a good case on why scotland should change. making the point that we have to have more emphasis on staying with the u.k. emphasizing the benefits and positives. benefits of operating across borders in europe. benefit ofmassive being part of the european union that disappears if we leave. are you positioning to avoid areas, some of the worst of the market fallout in the short-term? piers: the uncertainty we have
1:56 am
had so far has provided opportunity particularly in the u.k. start market -- stock market. has been told by international investors serious about brexit. it has been serious. thanks so much. that is an opportunity to invest. in the u k bond market, not quite as obvious, but we found that are opportunities to take exposure to the market of preferred credit positions as well. i think the sterling piece was obvious. that is where most international investors have brexit concerns. sterling generally speaking has threatened in the last two months versus. anna: thank you very much, piers. he will stay with us. what is coming up? manus: coming up, we will stay tuned to morgan stanley's message.
1:57 am
more on james morgan on his calls for the equity market on china. we have a very special ceo with us next. what will the swiss watch exports tell us? ♪
1:58 am
1:59 am
2:00 am
manus: trouble in china. top analysts say the company desk say the country may need a bailout worth billions of dollars. the morgan stanley ceo tells us he is upbeat on the nation's prospects. >> it is the second-largest economy. it is growing. it is going at a rate demonstrably faster than the rest of the world. to -- mark carney faced forced to face mps in his last public engagement before a .re-vote the corporate bond market signals investors do not expect a brexit. one of the oldest and most
2:01 am
expensive hedge funds is trimming fees and money managers face a backlash over the lackluster performance. ♪ manus: you are welcome to "countdown." it is just over 7:00. anna: it is anna edwards here in london. breaking news. i think you have some numbers on swiss watches. .anus: i have swiss watch exports fall 11%. this is for april. a total number of working days, it is adjusted to 15%. april imports are down. they are adjusted down 3%. -- these a swiss watch exports are pretty much
2:02 am
going to have an impact across the trading day in switzerland. that is the first double-digit drop in a number of years for the swiss market. do not forget in march we saw 16% drop and 9% in the first quarter. richemont had its sales and they were 16% lower and they were the top six countries for exports. this is a tough set of numbers. anna, you've got breaking data there. -- we've gotsunny sony operating profit outlook, down.ng their outlook the estimate was ¥400 billion. now they are talking ¥300 billion. that is below where the market was looking for that number. the earthquakes that we saw taking place in japan were expected ahead of these numbers to have some bearing on them. the earthquake damage hit the
2:03 am
factory, slowing demand for smartphone components. we are seeing a weighing in on these numbers. manus, you got home turf? manus: we have indeed. an ordinary dividend if you're a shareholder. 12.7 pence. -- ebitda,rofit of the top earnings. this is a growing business. this is in europe across the world. the ambitions of the ceo are well known. what are his next steps? that is a question will be putting to richard harpin. he is the ceo at home serve. we have that conversation. we have the swatch ex -- swatch exports. and little bit of german data. it is a tough day in asia. how is europe for the open?
2:04 am
anna: it looks to be broadly in line with estimates. bring it all together is we are going to be -- the start of the european trading day, down .3% on the cac. down .3% -- .2%. -- .3%. we have a generally weak session come through in the asian market. the oil price is a little bit weak. .6% on the brent price. the index edging up ever so slightly as a result of these conversations that we have been having around when the fed decides to increase these interest rates. chancea more than a 50% that we get a hike from the fed in june or july. we are increasingly talking about those. that is of interest and we'll discuss that in a moment.
2:05 am
.4%.down on that chart by the longest losing streak since november. -- ceo say some of asia's stocks seeing further declines for the yuan. without the chaos that came with january's devaluation, the yuan down. has -- the market fall at the panic. china will use the daily fixing and verbal support to avoid spooking investors. one of the oldest and most expensive hedge funds is trimming fees. the move coming as the finance -- money managers face backlash over their lackluster performance. fees andreviews most 25% of profits, according to a and 27%.
2:06 am
the president saying he does not see the eu referendum including the central banks making meetings. that is held a week before the vote. even if the u.k. decisive leave, the next day nothing happens. the country will enter depression -- departure negotiations. strategichis as a mode. it has cut new desk continuity to it. -- it has continuity to it. factors, i seee [indiscernible] egyptian aviation officials say each jim -- egyptian air flight in a four did not lose altitude. that contradicts the greek sentiment that the plane made
2:07 am
radical turns and dropped 10,000 feet before dropping off the radar. it was on route from paris to cairo. dead. people are presumed japan's fertility rates have risen to the highest rates. rate rose to 1.4 edging up a smidge. the biggest conservation in the change coming from women aged between 30 and 34. we've got 150 bureaus around the world. 2400 journalists. you can find more on the bloomberg itself. go to top go. anna? manus? manus: thank you very much. let's get into the markets. juliette saly standing by to run
2:08 am
up what is happening on the asian market. is it fed focus? preparing for two to three rate hikes. juliette: yes, it seems like we have a long way to go. certainly the likelihood increasing that we could see in june, scaring investors across the region with the exception of the philippines. every market is in the red. japan lower. australia off by .3%. .orea down .9% the asian market having its first loss in three sessions. volumes are quite low on the asian market. consumer related stocks and the commodity and industrial stocks coming under pressure. in hong kong, the hang seng index down point for percent. down .4%. indexed nowhere for investors to hide. we are seeing every sector being
2:09 am
sold off. led by those commodity players and oil and gas picture. as we see crude oil retreat. a look at currencies, the reserve big -- bank governor has been speaking in sydney. he is the outgoing reserve bank governor he says there is no need for us to leave to change its inflation target. that would be a knee-jerk response. you saw the reaction that the market had their. the aussie dollar had a tumble but coming back. 7196. is down .4% at the malaysian ringgit being sold .ff, down .9% we continue to see that crude oil price outweigh -- price way into the commodity linked currency sending the malaysian ringgit. the korean won also coming under pressure. the japanese yen strength and
2:10 am
another reason we are asking the selloff in equities pretty stellate -- pretty steady. not a solid position come through for edging -- for asian equity players. anna: juliette saly in hong kong. now james gorman says he is bullish on china despite the slowdown. speaking to bloomberg, he said china will face what he called some bumps as it transitions to domestic demands as its main driver. >> the chinese economy has had 10 trillion -- economy is a trend -- is a $10 trillion economy. it certainly is growing at a rate demonstrably faster than the rest of the world. japan has negative growth. germany at 1% and the largest is europe with about 2%.
2:11 am
percentagewise, yes it is slowing. china accounts for newly 35% of global growth. >> how about the unvarnished view of china? -- with the interview saying the problem at the banks is far worse than anyone is reporting, upwards of 20 bridge -- 22% of outstanding credit and the chinese banking system will leaving trillions of dollars in bailout. >> that is pretty obvious from where they are currently. the chinese economy is a complex , in normal sleep complicated -- enormously complicated set of things going on to a domestic demand economy. moving from a consumer savings economy to consumption economy. all of these changes are not going to happen with some bumps.
2:12 am
arefour chinese banks earnings engines. >> speaking of the challenging 33% --ment, you have which is the maximum allowed. you had see icc for five is ago. givenyou ever consider the complexities in this market going at it alone if they were to raise the ceiling to allow you to have 100%? or is partnership the best way? longtime. is a over the long run, we have always like to control the businesses we have around the world. in the medium-term, we have gone in the markets in a joint venture type structure. you get the value of the local expertise. it has been a great partnership for morgan stanley. >> what would be your expansion for headcount plans for asia?
2:13 am
where you looking to grow? >> i think asia, as you know, has been on the back burner. with rates rising, you're going to see further liquidity. i am not sure there is accelerated growth in asia relative to what is going on in the u.s. with that said, we are long-term buyers of china. we have a tremendous operation here in china. of course across hong kong. morgan stanley is here to stay. anna: he is still with us in the studio. let's get your global perspective. i have here a chart that shows the index showing the old economy over in china. it comes from a story that we got on the bloomberg that talks about how we are all in search of new ways of beating china and new data from china. a whole enterprise to put
2:14 am
together the whole -- the right indices to watch. piers: there is some interesting points to be made about the transition of the chinese economy. very much recognizing the transition to a more consumer led economy. the exports are still very strong. i think there's a problem in the bank system but it has been known. there is a question that the government will actually step in and deal with the problem through most of the banks which it has a significant stake in. i don't see that causing the engine to stop or sees, but one of the things we have to sees is the economy. reallysumer led demand going to be the key driver going forward. that transition from third world to first word which they have been going through for the last 15 years is very much on track.
2:15 am
it is indicating that we are starting to pick up when we look at our data. our international strategy perspective, the reason we are more positive on equities, the -- we saw chinese data. we start to see interest rate rising. economists came in expecting to see rate rises. after two months, the market went to zero. we still think it is going to be june or more likely july. we broadly speaking, the global economy is on a reasonable footing. we are in a summer doldrums. i think we want to make sure our thesis is right that the economic data are improving. we were talking about kingfisher and what it says about the u.k. economy. we talked about potential weakness because of brexit concerns.
2:16 am
plus for number from kingfisher says something that the u.k. economy is gently humming along and we'll see what happens. manus: i would like to jump in. switzerland exports down left and percent. written down -- down 11%. this is fascinating. exports to china down -- hong kong and china. this is telling me something about the upper end of china which to a certain extent is the driver of rebalancing. piers: you've got to put it into context on the watches. giftingese government significantly in the last two years. we have seen that in watches and cognac's and find spirits.
2:17 am
the drop-off in gifting's. stocksf macau related have been weaker last year. you've got the story on money laundering this morning. there is a move of international bankers wanting to address concerns about bribery and corruption issues. are -- the swiss watches actions are being taken. " thank you for spending time with us this morning. still to come, the bank of england mark carney faces -- before pre-eu votes. that is 10:00 u.k. time. we speak to the ceo of home serve. his views of the referendum. ♪
2:18 am
2:19 am
2:20 am
anna: welcome back.
2:21 am
this is "countdown." entirely unchanged on the pound. watching in many parts of europe. homeserve home emergency repairs business annual results 20 minutes or so ago. we're joined by the ceo, richard harpin. great to have you on the program. talk us through the progress that you are making is a is this. thanks -- as a business. richard: customers are up. profits are up by 9% to 93 million pounds. the big move is they step change in our u.s. growth. we did our largest acquisition, partners, 73ce million -- $75 million meet -- million deal.
2:22 am
400,000 more customers. it is a real step change. manus: a very good morning to you. we know that your man on the acquisition mission just tied the world down. the list is 13 countries. where do you want to go next for your next big deal which is going to be transformational? -- ifd: we're looking at we look back in our history, that we edit real value. we are going to do it via joint ventures with big utilities, big energy companies. their profits are coming under pressure in regulators, gas and electric markets. offering home services years the customer's stickiness. helps with loyalty. doing that with a joint venture with utility, like we did when i found it the business, and a
2:23 am
very successful joint venture we had as a way of getting into -- we've got 13 countries we're looking at. we are open-minded. some across europe. we're looking in the far east and in latin america. what we won't do is jeopardize our growth in the u.s. which is our biggest opportunity. anna: on that subject, if any .nvestors are concerned you have been going fine in the u.k., going on the u.s., you are suddenly becoming more a u.s. business. if any investors are nervous about the pace or the ambition in the u.s., should they be? richard: i think it is great that we are a british success story. we grew our profits by 70% last year.
2:24 am
-- 78% last year. we have 72% more customers than in our u.k. business. i am excited by for the growth. anna: a lot of u.k. companies go to the u.s. and come undone. richard: the secret is having a great american management team. replicating your model for other markets. not to be tempted to change it. thirdly, this is a partnership with utilities over there. we are operating under their name. that is the recipe for success. recipe orhard, that as anna says that balance. we are going to get into brexit. starting under pressure, it could come under more pressure. this is a boost for you. you welcome this drop in sterling, do you? richard: i think we don't worry about currency moves. it is about growing earnings,
2:25 am
growing profit and growing the number of customers, rather than worrying about the movement in the dollar or the euro. manus: you don't do any currency hedging? richard: no, we don't. it will have a 2 million negative effect in our account but we had success numbers regardless. anna: deeded soundings from customers about brexit, utilities -- do you get soundings from customers about brexit, utilities? richard: we are a big player in europe. .e are in spain we have more customers in those markets than we do in parts of u.k. it is important that we get people -- give people the option . i'm a believer in access to a
2:26 am
single market with 500 million people. manus: richard, one of the big questions, everybody uses the recession word. is it a full-blown recovery? how would you describe the uplift that we are seeing in europe? richard: i think one of the things about homeserve is we are a very resilient business. if i look back to win the spanish economy was on its legs if years ago, we managed to grow throughout that recession. we have 1.2 million customers in spain and growing strongly. if you have a good business model, you've got support, you've got great business, then that is all you need to succeed. anna: richard, thank you for joining us. richard harpin from homeserve. that will do it for manus and i
2:27 am
on the move is up next. the asian market has been fairly negative. they are in the red. it looks like we will be in the red at the start on the equity markets. we will see you tomorrow. ♪ okay, ready?
2:28 am
2:29 am
whoa! [ explosion ] nothing should get in the way of the things you love.
2:30 am
♪ get america's fastest internet. only from xfinity. guy: welcome to "on the move." it is a: 30 over in frankfurt and where cap you down -- it is 8:30 over in frankfurt. we are counting you down. once a downgraded. the week revenues -- deutsche downgraded. -- we areevenues going to have the latest from frankfurt. stay tuned for a better return. morgan stanley ceo tells a bloomberg that he sees "a lot of upside

696 Views

info Stream Only

Uploaded by TV Archive on