Skip to main content

tv   On the Move  Bloomberg  May 26, 2016 2:30am-4:01am EDT

2:30 am
♪ guy: welcome to "on the move." we're counting you down to the european open. i am guy johnson i'm alongside matt miller. brent bounces back. crude rises to $50 a barrel for the first time in more than six months as u.s. got piles decline. how will opec react? to conduct -- the company that is responsible for the largest recall in history. trimming the hedge funds. about to lose 25% of its assets.
2:31 am
so, we are now just less than 30 minutes ahead of the european equity market open. matt, it looks like after this rally that we have seen with $50 a barrel achieved on brent. we are headed for a fairly flat story. i am looking at the ftse futures and they are beginning to firm the calculations around .1%. other markets a little softer but nevertheless after such a decent rally, you would expect maybe a little bit of a paul's for breath. -- a little bit of a pause for breath. matt: the nikkei was up yesterday. we're looking at a change in asian markets. to again,csi turning it had been down .5%. rally not unusual in china. brent crude is not what -- is
2:32 am
what you want to be looking at today. you have wti up as well. really crossing through that threshold, that big round number is a big deal for oil. the yen, there was a huge spike overnight. it has come back a little bit. one of 9.76. the yen stronger -- 109.76. the yen stronger. billion: matt, the 2.9 just $2.9 billion hedge fund -- that is according to tony james, blackstone's billionaire president. the industry which is having its worst possible -- worst start of the year since the global financial crisis faces a day of shrinkage that will be pretty painful in a lot of places. alibaba shares have fallen the first -- the most in four months
2:33 am
saying that it is being investigated by the sec over its accounting practices and whether they violate federal laws. they're looking at data reported from the company's single big promotions. their biggest shopping day and how it consolidates results -- comment.ined to hillary clinton's news of a didate e-mails to -- violate state department rules. it will hand the plug-ins an additional line of attacks as election campaign it's underway. .- campaign gets underway businesses have warned of economic damage if protest in france continue. they are set to intensify today after the government refused to back down on a labor law. six of eight refineries on strike and the union has called
2:34 am
for electrical workers to walk off the job today, including at 19 -- the national red rose is entering its eighth week of protests. 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 . matt. matt: haslinda, thank you very much. one of those things, the french .re protesting about his oil brent crude traded above $50 a barrel for the first time in more than six months and u.s. oil stocks -- u.s. oil glut.iles -- trimming the brent has surged 80% since hitting a 12 year low on a sign of global oversupply will ease. guy: let's talk of the market rally. let's talk about the oil market.
2:35 am
morning. equities suddenly on a tear. why do you think that is? you think it is sustainable? >> equity markets are getting their confidence back. i don't think the earnings season has been a disappointing so earnings continue to come through. we've seen him in a pickup again. i think the real driving force is the interest rates remain low. we have seen hawkish talk come out of the fed. -- -duration assets matt: i wonder what you think about the talk we had out of the fed. obviously, mostly nonvoting members talking about an increase soon, but it does look like the u.s. is heading all of its targets. do you expect an increase in june or july?
2:36 am
mark: i would still say no. we have seen the situation were markets were discounted. i think the fed is firing a warning shot to say this is still a possibility. growth in u.s., relative to the developed world continues to look ok. the fed just wants to keep control of the agenda. i don't think there will be a rate rise in june. guy: they must be looking at the markets in saying the markets look pretty relaxed right now and what is the driver? -- right now. what is the driver right now? is it they are looking at oil and saying that is the lead indicator as a result we need to chase it? a difficult go at the markets last year when we thought about race going up.
2:37 am
we saw an unsettled emerging markets. -- about rates going up. we saw an unsettled emerging markets. .ou are right things have calmed down. emerging markets have rebounded. commodities have rebounded. backdrop ons a which the fed can start to introduce the prospect again. guy: mark, you're going to stay with us. up next on the agenda, but not on the guest list, china is said to dominate the g-7 summit in japan. ♪
2:38 am
2:39 am
2:40 am
matt: take a look here at the live shot of the brandenburg eight in berlin. -- date in berlin. on the merkel does not have to deal with is whether because the chancellor is not here she is of course in japan. china's steel glut is going to be the top of the agenda as g-7 leaders begin their two-day summit. you've on man joins us from the site. talk us through -- yvonne man joins us from the site. talk us through what is happening with all of the big leaders. yvonne: started about an hour ago.
2:41 am
we are seeing things ramp up. china seems to be dominating some of the headlines. global growth, the china slowdown and the impact on the global economy, as well as a weaker yen. tensions mounted on the south china sea. we did hear from president obama talking about the urging for some type of peaceful resolution in some of these disputes. he just came off his vietnam cheer. -- vietnam trip. pushing some of the blame there and saying china is well within its power to resolve some of these disputes. saying thisact, topic should not be in discussion here at the g-7. it is about the economy that is going to be dominating the
2:42 am
headlines. chair abe is going to be pushing for this. instead of that meeting last , it did not really amount to much. here is what abe has to say. what he is going to do to push this forward. determined to work closely with the united states in addressing various challenges of the international community based on our robust alliance, namely the alliance of hope between japan and the united states. yvonne: as we talk about this brexit, text evasion, in light of -- tax evasion in light of the panama papers. we are seeing these challenges piling up while leaders are here
2:43 am
in japan. it makes you wonder why they did travel all the way out here. guy: its early does. eva, -- it certainly does. yvonne man. speaking to bloomberg tv, he said there could be an opportunity if beijing follows through with plans to sell the loan as asset-backed securities. >> i am very interested in china , in terms of the distressed loans. the government has announced they are trying to develop a program to securitize the distressed loans and their. if they do that, with transparency and with reasonable pricing, that will be very good and for the chinese banks it will create an opportunity for people like ourselves. wilbur ross getting
2:44 am
interested in china, does that make us worried? >> you have to listen to him. my response is there will be a lot of those loans. there is a lot to choose from. guy: what is your sense of, we're looking at a global economy that looks like it is more stable. the u.s., the fed thinking about raising rates. -- the size and scoped of the debt story is what is worrying people. and scoped of the debt story is what is worrying people. mark: it is going to rumble on it we saw markets get concerned about the chinese slowdown last year. we saw stimulus that took pressure of the markets. we saw a pickup in investors spending, commodity prices rallied.
2:45 am
they cannot keep doing that. some say you've got to adjust that. the manner in which they address oft is going to be typical where markets are going to be volatile. matt: a new bring you back, mark, to europe. at the g-7 meeting, so many leaders that have so much to do they --king time what taking time that they do not have down there. what you think of the rising populism? the ecb cited that is one of the big risks earlier this week. mark: it is critical. the rise of right-wing politics in particular. it is something we all need to be concerned about. the real issue is the inability to get a growth agenda agreed across a political consensus. we have seen the strikes in france is just the latest manifestation.
2:46 am
one of the reasons the ecb has gone so far and its stimulus package is because we can i get an agreement on a growth agenda. -- we cannot get an agreement on a growth agenda. getting the economies back on an even keel. europe against that backdrop means very fragile. matt: we had anomalous story yesterday that a brexit yes vote would push a balanced budget in europe -- and britain. you have tens of billions of dollars in deficit. that is not what david cameron wants, even though it is not what i'm glad merkel wants -- angela merkel wants. what do you think? trudeau and others are obviously spending while cameron and merkel want to continue with austerity. mark: the focus on brexit has been largely what it means to
2:47 am
the u.k. economy. we have overlooked what it means for the european economy. it would be a bad economic outcome for europe in general. a sharp fall in sterling. i think we would need to open up the saving taps again and that would put pressure on the austerity program. it would reduce the government's ability to reduce debt. the debt overhang where is -- is the real issue. guy: where does it manifest itself the most? europe? china? where is it that story most prevalent? mark: each part of the world has its own take. we got lack of productivity in the u.s. we got slowing growth in china as they move toward a consumption led model. with that massive unemployment
2:48 am
problem in europe. .e got deflation in japan -- we have got deflation in japan. that is the reason why interest rates are low. the reason why equity markets unprepared. about we are not in a risk off in the budding market because we can just because we keep hopping from one story to the next. -- because we keep hopping from one story to the next. we have been talking about the u.k. and what is happening in germany and not spending any money. i would disagree, i believe those countries are spending money. you look at what is happening more broadly around the world. are we at an inflection point? easinge are moving from
2:49 am
monetary policy to not easing monetary policy. we invest in the coupon and clearly qe is alive and well in japan and europe. we are still seeing monetary stimulus. you are right. its impact on markets and its ability to get growth coming through on economies is quite tired. it is having less of an impact. it is about what happens next. we seeing some signs of an inflation pickup which is much needed. clearly unemployment continues to fall. unemployment is low in the u.k. that is a positive thing. it looks like we are coming towards an end. guy: white invest in that? the story has been -- why invest in that? the story has been this is monetary policy running out of road. they are being whipped around and all kind of different assets . how do i invest in environment where monetary policy is beginning to hit the buffers?
2:50 am
mark: you have to search long and hard for growth. that is where you make your return. guy: for example? mark: we find growth accompanies that look -- growth companies that look attractive. it is not easy. there are opportunities out there. guy: mark, thank you very much indeed. he is going to stay with us. we are minutes away from the market open. automakers very much in focus. ♪
2:51 am
2:52 am
2:53 am
matt: it is 7:52. on the move. we are minutes away from the open. domestic take a look at stocks to watch. i'm watching to, -- i am watching takata. first nikkei was saying that kkr would take over of to -- of the airbag maker that is in so much trouble. bloomberg news put out a story that says they are putting desperate they are in talks with kkr -- they are in talks with kkr and other companies. looking for a white knight, so to speak. this company because of the airbag problem, they will explode, send out shrapnel to
2:54 am
drivers doing the opposite of the life-saving that they are supposed to be doing. -- diede have died and in to contact airbag incidents in the u.s.. and they've got $40 million to go -- 40 million to go. guy? guy: very tough world for them to live in. see j-roll could be a story as well. watch out what is happening in the energy sector. oil going above $50 a barrel. let's talk about what is happening in bp as well. you could see some news related to cap are. it may be on the move. watch the energy sector as we move through $50. i am not sure it is a
2:55 am
particularly significant move in terms of the actual reality of drilling oil, but nevertheless, it also starts to bring back some of these supplies in the states into the market. mark burgess is to what this. -- is still with us. do you worry that is not sustainable? mark: for the art -- for the large integrated automakers, it is a less challenging price. -- price than $30. we saw a lot of the oversupply taken out. $50 feels like a sweet spot because it is low enough for the consumer to get a benefit. looking back to her the oil prices been, it is high enough that oil produces can cover the cash cost and make a profit. guy: mark is going to stay with us.
2:56 am
we are minutes away from the market open. we have had two days of really decent gains. this morning, it looks like we are going to open up fairly flat in europe. flight to slightly negative. market open, next. ♪
2:57 am
2:58 am
2:59 am
guy: welcome. you are watching "on the move." i'm in london and i am alongside matt miller. matt has your morning brief. matt: thanks, guy. brent rice's and crude rises above $50 a barrel for the first time in six months as u.s. stock piles decline. how will opec react next week? and takata surges. what is next for the company with the biggest recall in auto history? plus, trimming the hedge funds. is the industry about to lose one quarter of its assets.
3:00 am
blackstone thinks the sector is heading for a haircut. guy: let's talk about how the markets are opening this thursday morning. we have oil trading north of $50 a barrel. let's take you into the numbers and see if this rally can be sustained, or even held at this moment. we are expecting european markets to open slightly softer, but really to be honest, around the flat line. yesterday, the 600 was up very strongly and the dax is up by 1.4%. up, and 100 is opening they are flat to mildly negative, as anticipated. let's get some details now and find out what is below these numbers. nejra: it does look as we look at the stoxx 600 and bring up the imap on the bloomberg, that we are seeing a bit more negative than positive. a lot more red with financials
3:01 am
and telecommunications leading the negative. know the price that we can see energy stocks move higher, what with the rally and brent holding above $50 a barrel for the first time since november. but moreover, a bit of a weak start here. i want to take a look at the u.k. 10 year yield. we have got the markets just opening up here. not sure we are seeing much movement at the moment, of course, where we were. 1.46% on the u.k. 10 year yield. it is pretty much unchanged on the 10 year yield, but this is the open for that gilt market. there we are, just up one basis point on the screen. now, onto the top stocks we're watching today. i am focusing on the u.k., given
3:02 am
the earnings we have had. four year revenue did come in at to .3 6 billion euros. the adjusted operating profit though, was a bit of a mess, but the company said it is confident the progress is in the with its plan and 2020 ambition. pretaxat we got here was profit, adjusted pretax profit coming in at a beat adjusted. also, a four year adjusted eps coming in at a beat. the company also said a special dividend to be paid july 8. you are seeing that up 2%. finally, united utilities, what we have had here is four year adjusted operating profit coming in as a beat. substantial investment in assets is to continue and it aims for
3:03 am
dividend growth and at least, rpi inflation. back to you, matt and guy. guy: we have some of the italian banks beginning to fade, above a bit of a standout story. i wonder whether or not this steel stock is rising on the possibility that we might see something when it comes to chinese steel. that could be positive, potentially. beinge family photos taken. let's take you to -- let's not take you to. anyway, we will come back to that later on. let's talk about the middle east, europe, and africa. when you look at what is happening around the world, when you look at what the picture looks like, i'm slightly fascinated that this is rising as much as it is this morning. we spoke a little bit about steel stocks.
3:04 am
when you look at the mining sector and you look at steel, what is going on because they have come back so far and fast? you just take your profit and walk away? do you think there is more to come potentially? what you doing? >> they fell a very long way and bounced off the bottom, but we think the trend is still down. china is going to continue to rebalance its economy. may have stopped doing that any short-term, but the long-term trend has got to be away from that. we think the backdrop for commodity producers is still unattractive. matt: now, even if that is the case, the ftse has had a great run. it has the biggest miners of european indexes. the longest odds we have seen yet, nine to two. we wonder if you have seen the firming up of the "remain" vote
3:05 am
over the last few days and the rally in the equities market, are those definitely connected, mark? mark: the brexit would be a very unpleasant experience for the u.k. economy. there is no question the markets would be quite volatile for a period of time and that would be a real challenge. as you say, although the polls continue to show 50-50, the voters have consistently been that "remain" will win. those odds, as you say, are getting better. that is one of the reasons that the equity market is rallying quite strongly. that certainly is calming u.k. assets. matt: i mean, you have the right wing party in austria almost wedding. -- almost winning. they didn't. in germany, they were getting
3:06 am
some steam. now, less so. the brexit scare seems to almost have blown over now. as a look like europe is narrowly avoiding this big risk? weeks tohave got four go and anything is possible. this is a pretty difficult call to make, i would say. the odds suggest we are not going to get brexit, the who knows what will happen in the next four weeks. guy: i have to see, there seems to be an off a lot of complacency creeping in surrounding this story. the bookies are saying that and you could argue that the bookies have a better track record than the polls. this has been dominated by elderly, white, male tories. you wonder what the turnout is going to look like. there are so many things that are potentially changing here. i keep reading pieces by
3:07 am
academics saying, guys, just be careful. is the market being complacent? >> it is not being complacent, but the odds suggest we are going to remain, but that can change. guy: the market does have a tendency to overshoot. >> it does and i guess, if somebody had to worry about something, it would be the market prices for u.k. assets are being set by people who use the economics a lot. therefore, the risks of them being wrong suggest there could be a big downside. guy: look at the risk with sterling, the market is still buying protection. would you be tempted to take that view with other assets? if sterling falls very sharply, we will get profit cost upgrades. guy: if you are not a u.k. investor, that obviously has the edge taken off of it. >> it does and that would be
3:08 am
something i would be thinking about if i was not a u.k. investor. guy: thank you very much indeed. mark burgess from threadneedle is going to stay with us. matt: up next, the recipe for a great hike. the dallas fed president says the u.s. jobs market and the economic growth are the right ingredients for a move. of course, he is a nonvoter, but still adding to that voice. that is next. ♪
3:09 am
3:10 am
3:11 am
guy: welcome back. let's take a look at where these european equity markets are. we are actually, in many ways, fairly firm. you would expect markets to take a pause for breath after a decent rally and perhaps, that is what we are seeing. do we carry on pushing this rally higher? oil is above $50 a barrel. the markets on the equity front. are waiting and watching. in terms of the mix below the surface, let me take you to the stock level. anglo is up. billiton is up. all trading higher. it is interesting to see the steel stories, both on the front foot this morning. i wonder if that is related to what is happening with the steel story in china. european banks though, all
3:12 am
trading software right now. let's get the bloomberg first world news. the $2.9 trillion hedge fund industry might lose one quarter of its assets in the next year if performance slumps. that is according to blackstone's billionaire president. he says the industry, which is having its worst year since the global financial crisis, faces a day of reckoning and shrinkage that will be pretty painful. alibaba shares have fallen the most in four months after the giant is being investigated over its accounting practices and whether they violate federal laws. the regulator is looking at data reported from the company's single day promotion, alibab's biggest shopping day and how the firm consolidates results from
3:13 am
affiliated companies. alibaba declined to comment about the disclosure in the annual report. hillary clinton's use of a private e-mail system did violate state department role. that is the conclusion of the report by the agency's inspector general. has saidprime minister is 30% of the country's petrol stations are now facing shortages. the comment came as strike that refineries and railroads are set to intensify today. the refineries are on strike and the union has called for electrical workers to walk off the job, including at 19 nuclear plants. meanwhile, the national railroad hth week of its eigtht protests. global news 24 hours a day, powered by 2400 journalists in
3:14 am
more than 150 news bureaus around the world. you can find more stories on the bloomberg at top . matt? matt: thanks very much. dallas fed president robert kaplan says the u.s. economy is moving towards full employment. speaking in houston, the nonvoting member of the fomc push the case for raising rates. >> my own view is we should try to normalize as fast as we can, it these secular forces mean think it is going to be slow and gradual over a period of time. that is what i will be likely advocating. so, that is what i think you will see happen over the next short period of time. matt: now, even as this voice adds to many others on the fed trying to get the market ready for a rate increase, with the demand for treasuries absolutely skyrocketing. especially in retail.
3:15 am
this is u.s. five year participation. in white,u -- you see indirect bidders. see the primary dealer's bidder participation, going down to the lowest level we have seen on this chart. mark, i am sure you have seen this story. there seems to be a shortage of treasuries. everybody wants this paper even when we look at the possibility of a rate increase. why do we think that is? mark: i think it just reflects a general sense of risk aversion. when they look overseas, they see what is going on in europe, china, and japan and they want to invest domestically. guy: this is qe, though. this is central-bank policy out of the ecb and japan. mark: that is true.
3:16 am
bond yields globally are very very low. the attractiveness of the yield is relatively high. guy: so, what happens to the front end of the curve, to you think? treasuries look fairly anchored. the demand is great. but it is hard to see how the tenure portion of the curve is going to move. mark: that is right. we see a bit of a flattening. we don't see interest rates going up aggressively anyway, but there are going to be rate rises. coming through. but that is not going to push bond yields much higher, we don't think. matt: i wonder if this opens the door for more selling. obviously, well, canada is a very small country compared to the u.s. as far as population is concerned, but trudeau is forcing his agenda for more spending on infrastructure. we had that call with the u.s. as well.
3:17 am
obviously, the japanese are spending as much as. they can hardly going to see -- as much as they can. are we going to see more sovereign debt flooding the market,? mark: that is going to be hard to see. i can see why populist policies might call for that, but in the real world, it is not to say they have much spending power. guy: so, what is the read across from that? mark: the read across is, low growth for a very long time. we have got this debt overhang and it is quite deflationary. we have just got to get used to remaining modest for a very long time. guy: will kind of rate of return can i expect on an annual basis? mark : a low one. -- what doest mean
3:18 am
that mean for the savings story? earlier on, you talked about the fact that consumers -- $50 a barrel could help consumers with spending. retail sales are picking up, but not massively. so, the global cash story goes up and up and iuup. u.s. consumer is spending about half of the tax cut he has received. we are seeing savings being built up as a buffer. guy: which is only going to do press yield -- going to depress yields even further, isn't it? mark: absolutely. matt: savers have to do that, but where do investors go for yield? you can't just accept the fact that you are not going to get any yield, right?
3:19 am
you have to try and outperform. mark: we remain predisposed to risk assets. low bond yields mean that credit looks attractive and to some extent, commercial real estate still looks attractive and equity markets still look attractive, for that very reason. mark, when you look around i wanted to ask everybody a question about european banks. dingpean banks, they are tra at such low valuations. where am i going to get a little bit of pop? the population sector? mark: we have low interest rates in europe, which is depressing for bank profitability. low industries are bad for the banking sector, but many bank stocks are trading at significant discounts.
3:20 am
they also have high yields. some of the better capitalized banks could be a place where you will make some money. guy: am i going to get a spread in that sector because there are some banks that are not well capitalized around europe. you wonder, whether or not shareholders are going to have to put their hands in their pockets. is there a spread to make? i am just wondering, do the winners really win, and do the losers really lose? mark: i think, absolutely. that will happen. i think that will be a difficult place to make money. however, i think some of the other banks where we have better capitalist positions, you could see some upsides. guy: retail banks, to they have investment market portfolios? mark: i think those with big investment banking uses will have quite a struggle. guy: mark, thank you very much
3:21 am
indeed were spending so much of your time this morning. rally paves oil the way for big energy gains. ♪
3:22 am
3:23 am
matt: you are taking a look at the live shot of this brandenburg gate here in berlin. that is how you say that in english. now, let's take a look at the
3:24 am
chart i have got here. nothing german. well, actually i do. i have deutsche bank right here in white. in blue, a broader index of european banks, priced to book. you can see the year banks -- the european banks are doing much better. guy, do you know whose price to book ratio this is? guy: i am thinking it might be spanish. lare, it isbanco popo now trading at a ratio of 0.3. the stock is down 26% at the open. so, you can see a real drop in the value of this bank. i just wanted to bring that up. guy was talking about that with mark burgess from a moment ago. nejra, what have you got for us? nejra: matt, my chart shows the
3:25 am
average extra yield the investors demand to hold junk energy bonds, versus u.s. treasuries. if the extra yield is at 10% or more, these bonds are considered distressed. the charts they have fallen below that 10% threshold. so, they have shared that distress label. and for investors who have the stomach to hold these securities, the rallies has actually resulted in gains of 30% since oil bottomed in february. guy: this is pretty good for the banks as well. that is an area where there are huge exposures. we will see what this means for the banking mpl's and the ride down. when you look at the more longer-term historical story, how quickly and how significant is this? you get a sense of hi a spike
3:26 am
ther? you can get an idea of how significant it is. the question is, will the markets normalize? $50 a barrel is kind of the sweet spot. if we stay here, what happens? nejra: it is interesting you mentioned the banks because that we have seen high-yield bonds cover $21.5 billion of market value this year, some bloomberg intelligence research has pointed to the fact that the biggest wall street banks are still quite cautious. there are some that are saying it would not take much to push these risky energy companies off the brink, despite the rebound in oil. that said, that chart showed junk bonds versus the broader high-yield index, investors still demanding the highest premium, versus the broader index since august. the is when we saw that big high-yield debt really
3:27 am
accelerate. guy: thank you very much. up next, the pound was higher against the dollar and the euro ahead of gdp data. we will talk gdp when we come back. ♪
3:28 am
3:29 am
3:30 am
guy: welcome back you're watching "on the move." how things are shaping up. to be honest, we are holding those gains. these have affirmed of the last few minutes. banking stocks under a little bit of pressure minus the steel stocks. let's get some details on which stocks we should be paying attention to. nejra: looking at one of the gainers first, this one moving after both adjusted pretax and even thought -- ebitda gaining. 12.1nce, the estimate was
3:31 am
for the daily mail. 10 pence dividend of per share to be paid on july 8. moving on to daily mail, they are following on lower first-half profits. the interim dividend to coming in at a bit of a miss 6.7%. popular,pular -- banco we are into double-digit stocks down after they said they raised $2.8 billion with a share sale to clear failed real estate assets from the spanish lenders balance sheets down to restore profitability. we are really seeing the stock plunge on that, guy. matt: i'm going to pick it up. euro-area creditors potentially giving a big bright -- break to
3:32 am
greek banks which are mean the bonds may once again be acceptable for collateral to the european central bank. that would be amazing. let's go to our athens bureau chief. ands, what does this mean what are the chances that the ecb could ever end up buying greek debt? os: greek banks hope that they will stop being hostile to political uncertainty for the first time in six years. the money which will be dispersed next month will keep greece afloat through october, so hopefully we will see none of the drama we saw last summer when the country missed the bailout loan repayments and banks remained closed for almost a month. more importantly, the agreement
3:33 am
will allow greek banks to regain access to the ecb normal financing lines -- cheap financing lines -- as early as next week after 15 months on total reliance on super y liquidity. good news at last for greek banks and bankers are saying for the first time after many years they may finish this year for positive online results. wolfgang schaeuble is very happy that they have kept the imf broadly in the mix, but that you are reporting is about to get some reservations about the deal. i guess they are probably looking for some details. yes, the imf has been a very explicit over the past months that euro-area bank greek bailout is too ubiquitous.
3:34 am
they are saying that it is unsustainable and it could not be sustainable unless if the euro-area governments give meaningful debt relief. non-meaningful debt relief was given in this week's agreement. the imf did not walk from the greek program. that would be the nuclear program. he did not join the program either. they said they would examine whether they would rejoin the greek bailout program later this year. ,hat was sort of the compromise and we will have to wait to see what happens later this year. so far, greece did not get that much debt relief but it got enough to stay afloat. the immediate crisis averted. our nico's joining us from athens bureau. let's turn our attention to the u.k. first quarter gdp data due out in about an hour expecting
3:35 am
growth of 0.4%. just one of those economists joining us now. i wish we could get all around us. look at the gdp numbers and everyone is asking themselves at the moment -- what is the br-exit effect? it will be unadjusted almost certainly from the q1 initial x-men -- estimate. mixed picture,a but a drop in data we saw yesterday with receipts the flyingto grow the ointment is the business investment data that we get today because that potentially as the technical recession in business investment and that is
3:36 am
sensitive. it is a good leading indicator on what to expect. guy: this is with the bank of england's been talking about. some of it will come back and some of it won't. simon: one of the interesting things is you look at the pmi and leading indicators, they have been slow since first quarter 25th teen. the referendum just adds to a list of concerns about the long-term growth performance. what you are ultimately the can for, both in this data and the jobs data, is productivity. ultimately having built the unsecured leverage, expansion, and the wealth effect in the series of initiatives to buy houses you wonder where the next growth breakthrough comes in the u.k. it has to be productivity. matt: how'd you get that? how would that be held that by a possible br-exit vote?
3:37 am
probably very little impact on productivity given it is such a long lead time. is on the structural reforms that have been taking place on the corporation tax and some of those things that will drive a long-term change in momentum. it is not unique to the u.k., of course. there is still a lot of damage or destruction of productive potential which we are hoping for signs to kind of restore confidence that there is a next leg up in this growth story. guy: the story the market is focusing on at the moment and pricing in his what's happening with the br-exit. we are in a short game now. it's only a few weeks away. you are wondering what might change the story. in their on both sides
3:38 am
focusing on the migration story. the second piece of data we will migration into the may 2016. if that number is significantly changed, do you think that might have a meaningful impact on the feedback -- on the feedback of sterling? you look at the polling data about the issues concerning , 44u.k. public, migration percent of britain's site that is the single most important issue ahead of the nhs and the wider economy. it will be something in the order of 320,000-340,000 net. a number of tens of thousands and it has increased for the national run rate. and we are now back to levels we saw back in 2004 with the european union. ,n the main side of the debate
3:39 am
it is all about turning it around now. see overwork we will the next 30 days will be trying to ensure those people who think mpli, whichait acco sterling markets are pricing in, we need you to turn out on the 23rd of june otherwise a very surprised though is very plausible. simon, that's how the migration data will impact the vote. let's talk about how the data and facts gdp. two weeks ago, we had the 0.7% growth figure in germany, the biggest we've seen in at least two years. even more conservative papers weld" were crediting the migrants for some of that growth. will you have that kind of effect in the u.k. economy? simon: not only will we have that same effect now, but it is
3:40 am
very clear in the gdp data since 2004 that the big leg up in migration is expansion. you look at the eu migrants working in the u.k., they have an 81% employment rate versus 74% domestic-born. eu migrants come here to work. they come with these big fiscal receipts and we have a lot of economic evidence pointing to them reducing the demographic pressure on finances. there is a strong story to tell but i fear it may get lost in the noise. guy: you say we need a pick up in productivity. it's becoming a reality. does that feed into it? changeshere will be with new migrants coming into the labor force. there is not a fully identified skill base and able to match them to appropriate posts, but
3:41 am
over time we have a lot of pain all data that they acquire both soft and formal skills and have been able to move and drive productivity performance as you see them command higher wages and be more productive workers. guy: simon, thank you for joining us. next, the brent bounces back. we're live in abu dhabi with the latest on that story next. ♪
3:42 am
3:43 am
3:44 am
matt: welcome back to "on the move." i matt miller. guy johnson in london. in france, the prime minister says 30% of the country's petrol stations -- those are gas stations for those of you who speak english -- are now facing shortages. that areht be strikes set to intensify today. to greg in paris. how palpable as this issue? i remember when there were gas shortages in new york a few years ago. verys pretty serious, difficult to drive which kind of put a stop to life. there are a ton of small companies basically saying they cannot work. if you watch any french tv show in the evening, they are interviewing all over the country from small companies to gardeners, everyone is basically
3:45 am
at a standstill right now. it's very serious. it's a total standoff because one of france's two largest wills are insisting they carry this strikethrough to the end. they were on the radio this morning saying that he might accept some modifications to the labor law but is not at all backing down on the central plank of the law which is the cgt protects against to move the company negotiation from branch to company level. there's really no end in sight right now. greg, you've been following these kinds of stories for a long time. the french people say they don't need to reform the economy. who has the chops to see this one out? not sure it's the french people. this bill was badly prepared. when they ask about individual
3:46 am
elements of the law, the public is not necessarily opposed. it's really a battle within the union industry and the unions and france. of the two largest unions, one is actually in favor of the law saying the changes that have been a by the government are so far adequate. is trying to battle for the mantle as being the tough guys who stand up for the french union movement and they're the ones who want to see this through the end of. yes, i've seen these things before. it's kind of a draw. in some cases the government did not back down on raising the retirement age, but they did back down on an earlier law freeing up the labor market back in 2006. it's been kind of a mixed bag as far as who blinks first and i will not make any predictions on this one. guy: let's stick with a similar theme to the one going on with the french story right now --
3:47 am
brent crude above 50 bucks per barrel for the first time in six months. a drop in u.s. stockpiles during the latest rise as well as some domestic disruptions. we are in abu dhabi with the details. we now have oil up $50 per barrel. why could it go higher? from a verying windy abu dhabi. as you point out, oil is getting pr has to back above doe withp the stockpile showing a much higher than expected -- as you point out oil is getting an uplift back up above the stockpile. we have production outages and lingering effects from the wildfires in canada. all combining to give oil a bit of a spur of the moment. you have to wonder how much
3:48 am
further the rally can go ahead of the opec meeting next week. bloomberg is reporting today in the opec meeting, there was no discussion about a possible cut. it seems like from the gulf side we're seeing a continuation of the strategy of retaining market share. matt: i was going to ask about that, tracy. the saudi's nor any of the other big producers want to cut production. i just want major market share gains. are they getting those? are you seeing that as they get kind of lucky with things like wildfires in canada? cy: all of the things that have read oil so far have been a one-off. buoyedthings that have oil have been one offs. shale producers
3:49 am
come back in terms of production. a lot of the oil becomes economical again at $50. is a delicate dance between rice and production and it's very hard to tell which way it will pan out. the we're kind of seeing effects of low oil. we saw a huge bond issuance in the region. you wonder as the stock pushes north of $50, how does it change economics, the desire to continue with this policy? walk us through with the derivatives of this is. the 9 the major news is billion issuance from qatar. obviously they have budget issues due to the lower price of oil, but they are taking advantage of the recent rally tapping into fresh and best or optimism, if you will, over the issue of the future of the petrol state. the other reason why they are
3:50 am
issuing is the federal reserve is potentially raising rates as early as this summer. the holy month of raw madonnas coming up. everyone is going out to market -- the holy month of ramadan is coming up. far onhas been strong so the back of the lift in oil. we will see if it goes up with supply. $9 billion in eurobonds is quite a lot for the market to digest. matt: tracy, great to see you out of to buy. thank you for bracing the gale force wind -- great to see you dhabi.the dobby -- abu how does this plan to the rate hike? we talked to the fed. ♪
3:51 am
3:52 am
3:53 am
matt: welcome back to "on the movematt:." i matt miller live in berlin in front of the brandenburg gate. guy johnson joining me in london. here are some of the highlights we have for your day ahead. in just over half an hour's time, because the first quarter gdp data for the u.k. later this morning, st. louis fed president james bullard on the monetary financial institutions forum in singapore at 10 past 11 p.m. u.k. time time:10 a.m. u.k.
3:54 am
then russia will update us on its gold and foreign exchange reserves. there is a look at your daily calendar today. right now we are joined in london by strategist richard jones. a pmi where do you see pmi figures today? release outhad the of the u.s. yesterday so we had manufacturing at the beginning of the week which was looking a bit shaky. let's see what the services numbers are because, obviously, this is more important and those are very disappointing as well. pmi is below u.k. pmi and below european pmi. we know that br-exit is weighing down on the u.k. and it has been tracking sideways for quite a while. the reason it's a big problem is that it really leaves gdp and gives us a hint towards where
3:55 am
the going. if this trend continues i think it will way down forever. guy: if you had to guess -- matt, go ahead? matt: we are still above 50 and i wonder, richard. the trend is downward. do you expect a contraction? richard: direction of travel looking from where this was in the most recent cycle in the 2014 summer, we might be headed in that direction and that is the worry. and it is getting traction is moving a little bit higher. how is the oil data? richard: a lot of the things people are concerned about is the low oil price and it seems to have been staunched. economies importing look at consumer spending, certainly higher oil -- if it
3:56 am
pushes too high -- becomes a tax on consumers and that has to have effect on consumer spending. right now, if oil stays where it is it is the sweet spot. much higher or lower, and i think we have an issue. guy: the fed? the fed in central banks in general are reasonably happy with where oil is right now, but too high or too low it becomes a problem. richard, i still have a lot more questions to ask you about. maybe i will call in if you join guy johnson on his radio show. can i be a collar? caller? be a guy: there's a desk. come and sit down. matt: we've got to go though. starting this friday, we're
3:57 am
going to have a special br-exit focus digging into the debate for a half hour from 830 until 9 a.m. and wrap you up with the news you might have missed, the polls to a attention to, and the market trades we're watching. ♪ okay, ready?
3:58 am
3:59 am
whoa! [ explosion ] nothing should get in the way of the things you love.
4:00 am
♪ get america's fastest internet. only from xfinity. francine: brent hits the 50's as u.s. inventories slide. the guestry and on list, china topped the agenda in the g-7 summit. the hedge fund hits the $2.9 trillion industry. that's a warning from blackstone. welcome to "the pulse," live her e in london.


info Stream Only

Uploaded by TV Archive on