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

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anna: welcome to "on the move." we are counting you down to the european open. i am caroline hyde alongside matt miller, who is based in germany. here is what we are watching today. decision day for mario draghi. leaderspress european to do more? taxing time. the nikkei plunges as they yen rally gains momentum. one board member says monetary strategy is all wrong. .nd reviving opec
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saudi arabia is said to be considering a surprise deal with fellow members. can the new minister makepeace with his new cartel? so much to discuss. not only the macro maps, but the micro. more news with investment banking cuts coming from goldman sachs. matt: we are hearing goldman managingting dozens of director positions. yesterday, of course, we heard a report that hsbc was firing loads of top investment bankers. of course, we have seen traders lashed all year long. it looks like it is reaching the highest levels of management. very important story for our viewers. the ecb, these negative rates are not helping. of course, deposits being that much more painful.
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let's have a look at what the future markets are set to do this morning. we are looking at an open that is generally flat. the ftse 100 futures just hanging on to its original gains for up to .2%. the cac 40 just lower as is the dax. a bit of risk aversion that we are seeing. absolutely. let's take a look at a couple of the big movers. the nikkei posting its biggest drop in at least a month. those drops are accelerating as we get to the end of the session , now down to .3%. the yen still holding on to some gains. of course, a red number there because we can buy fewer of them for our dollars or pounds. of course, that is the u.s. number. brent crude coming down. this is the fifth day in a row of losses for brent. we did see a losing streak like that at the beginning of may as
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well. more interesting now, of course, as we get into this opec meeting in vienna. i put the shanghai contract in here because it is up three standard deviations from its 30-day me. in london, we are seeing a big gain as there are concerns about the depletion of mines and no new mines opening up let's go to the bloomberg first word news with juliette saly. juliette: new york traded oil has fallen for a fifth day. opec ministers prepared to meet in vienna to discuss production policy and data that showed u.s. industry rose. todi arabia is ready consider a surprise deal with fellow opec members in an attempt to mend divisions. no formal proposals have yet been made. iran's oil minister says it is unlikely a deal will be struck. >> it is our main idea to have a
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country quota. cani don't believe that we reach agreement for this matter. hasette: the yen strengthened further after a bank of japan board member demanded reform, calling the inflation target a medium to long-term goal. he criticized the boj negative rate policy, saying it is having a tightening effect, rather than an easing effect, and could hurt the stability of the system. nymex --w for all the four abenomics a day after the prime minister postponed the sales tax increase until 2019. goldman sachs has cut investment banking jobs in the last few weeks. that is according to people familiar with the matter. they say the jobs were lost in cities including london, new york, and hong kong.
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goldman is on a big cost-cutting drive as it tries to whether its slump in trading and deals. you can find more stories on bloomberg at top . matt: thanks very much. it is ecb debuted a survey of economists down there is no change effected to the central ork allah sees -- policies inflation forecast. mario draghi could step up the rhetoric against euro area governments, asking them for help. alessandro joins us from frankfurt. does the ecb feel it is being undermined by government in action? >> for sure, draghi has been stepping up his demands for reforms from european governments. he has been saying that the ecb is trying to do its job to bring inflation back where it should be, just below 2%.
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that there is not enough to create a sustainable recovery. for this, you need governments to step in and do reforms and improve the way that your economy works. that is what was being spelled out by the oecd. we heard the governments bringing up the fiscal side of the equation. the ecb's latest stimulus package seems to be feeding through some of the numbers and the data coming out. how could that play into the forecast we are expecting today? >> we are expecting new forecast from the ecb. they are expected to remain broadly the same. this is a sign that ecb stimulus will take a long time. just remember that the ecb said inflation will be at 1.6% in 2018. that is still below its target. one would expect that inflation will go faster now that the ecb stimulus is starting to feed
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through. the vice president says he expects this to happen. so far, there has been no sign. may, son was -.1% in still negative after three years. caroline: three years of long waiting. many thanks. .ow let's bring it on you have got to stay tuned. 12:45 u.k. time. followed by mario draghi's news conference 45 minutes later. you can follow all of the live news on bloomberg using top . we can dig into the ecb news a little bit more now. chiefn mark, the global investment officer of wealth management at ubs. wonderful to have you here in london with us. give us a sense of what you are expecting. it looks like there will not be fireworks. many how much will you be digging into the detail of the forecast? mark: we expect no change. we expect the ecb is hoping that
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the fed will do its dirty work for it. caroline: short answer. i wonder if you expect any increase to the forecast. our survey found no increase is expected. we heard the vice president of the ecb saying that he does expect inflation forecast to move closer to 2% in the next couple of years. mark: we think that the inflation forecasts are going to start to rise, if not this time, over the summer. you get the base effects and then oil prices are coming off a low. that debate will heat up. what will be interesting about that is it took very sharp fears .f deflation to get ecb action the action that we have seen. ,f inflation starts to pick up how soon will it be before there are calls for the ecb to rein in some of the stimulus that it has
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put out there. thatine: you are saying they are waiting for the fed to do the heavy lifting for them. we have seen dramatic moves in the dollar the last couple of days. where are you seeing the euro going? are you seeing continued weakness? we have a bit of a mixed message. mark: what i mean is that it is probably preferable for the ecb to see a hike in rates from the united states to move the dollar up rather than them trying to do more in the negative rate territory to try to bring the euro down. euro,sly, the rise in the the dollar is often high. although that helps stimulate the european economy. so i think the euro can fall in little bit versus the dollar around a fed rate hike, which we are expecting sometime in the next six months. ultimately, the zero weakness is going to be cap because the euro economy is strong. there is the trade surplus.
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we do not think the euro is going to fall too much. a lot of these policies are going to start this month. the corporate bond buying program among them, one of the most interesting to investors. is that trade crowded or finished? do you see any more room to make money there? mark: that is one of our key over weights, european high yields. we think that the bond buying that is going on there is significant in size and it is that market.ort so we like to play on the high-yield space. the spread trade is more cushion ed from a global rise in rates, which could happen starting with the federal reserve. matt: very interesting. as far as the government debt, do you think that is a done deal now? even though you got the 60, do youo 80 from
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think there is any room to run there? mark: we do not see the ecb trying to expand what it is doing now as it anticipates the inflation rise and a healthy debate about that. i think they are done for now. they have european growth in place. we will wait and see if, as you are saying at the beginning -- you have got to keep that pressure on the politicians the ecb can create time for change, they cannot create the political change that will be necessary for europe to move ahead at its full potential. caroline: you will be sticking with us for more. the global ceo of wealth management at ubs. up next, the ecb is not the only event taking place in vienna. we are there next with the latest on the opec meeting ♪ .
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matt: let's get the bloomberg business flash. for that, we go to juliette saly. says it take up a $3.5 billion backing from saudi arabia's number 12 fund. it is helping the company delay the need to go public. saudi arabia has been looking for ways to diversify its interests beyond oil. proposedboorse's
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takeover of the london stock exchange may result in hundreds of job cuts. the tw companies expect to lose 700 positions. shareholders wi vote on the deal next month. u.s. regulators may be set to improve the biggest beer merger ever. people familiar with the matter say the doj could clear the $100 billion sab miller and ab inbev deal this month. restrictions may be placed on ownership of distributors to prevent smaller craft brewers from being squeezed out. that is your bloomberg business flash. thanks very much. oil is holding your $49 a barrel this morning as opec ministers convene in vienna. saudi arabia is said to be discussing ideas, including restoring production targets scrapped in december. ryan chilcote spoke with the iranian oil minister on possible proposals. ideas is our main
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country quotas. that, in't believe this meeting, we can reach agreement on this matter. caroline: being bombarded by the media. now let's bombard mark, the global ceo of wealth management at ubs about your take on oil. are we going to stick around this $49 a barrel for the time being? mark: first, let's breathe a sigh of relief that oil has come low,er 80% from its $27 which is good. that move was so fast, there was a lot of disruption. companies that might go bankrupt or something. that has helped. from here, we see that oil could fall a little bit. there have been some short-term supply disruptions e that maynd.
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-- that may end. over a 12-month basis, that is still possible because the demand is still there. caroline: where do you place that in terms of money? do you remain outside of the energy majors? are you steering clear of some of the credit th is related to oil as well? there are particularly high yields in the u.s. european highthis yield better than u.s. high yields. the european high yield is much less exposed to european names. the value play in terms of equity sectors, we do light energy because those names were really hit read we expect that their earnings are going to pick up now that oil is off the bottom. matt: i wonder about the run-up that we have had in the oil producers.
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the run-up in the oil price has been more than 80% since the low in just a couple of months. the oil producers, in some cases, have run up even further. they fell a long way as well. do you think that movies overdone? we tend to swing too far to the downside and then too far to the upside? mark: i think there is some more to go because we have not seen it come through in a quarterly earnings way yet. u.s. earnings were down 6% year-over-year last quarter. most of that due to oil. let's get a quarter or two of those supposedly earnings in the quarterly releases and then i think we will have to reevaluate. caroline: at the beginning of the year, we were so tired to equities. that seems to have faded significantly. if we do turn lower, will that
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drag equities lower? mark: i think a small move in oil will not trigger that kind of correlation. 80% off the lows, there were people at the beginning of this year saying oil is going to trade negative. a lot of the hysteria has come out of that trade now. caroline: we will be keeping you on. we have so much more to dig into . maybe a bit of brexit discussion as well. mark is sticking around. afterng is still reeling a poll released earlier this week. we talk brexit next. ♪
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caroline: welcome back to "on the move. let's talk u.k. jeremy corbyn and david cameron will step up the fight against brexit today. both speaking in favor of remaining in the eu. sterling still reeling from a poll today. it tumbled more than 1.5% against the dollar. let's bring in mark to discuss .he ongoing brexit
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how much is dominating client concerns at the moment? mark: that is a good point. it is not just the referendum in the u.k. it has been such a big deal for our clients because they are trying to make sense of the referendum, of donald trump, what is going on in china. that has made them pull back a little bit. for us, i think we are looking through that. at the end of the day, politics matters for markets when it impacts gdp growth. we are actually looking through and saying this year could still turn out ok, in part because we expect u.s. earnings to rise on the back of oil getting better. we have the base effect of the lower earnings that we saw this quarter. matt: for the viewers, i want to highlight a function of the bloomberg terminal. as i'm sure you are very familiar with already. it shows you so much information on the referendum, including the
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latest polls, the latest headlines. you have a chart. you can click on the full-screen chart button here and blow it up. it is interesting to see that the green is the remaining camp. it has gained so much ground in the last few weeks. the blue is the brexit camp. the gap has really narrowed to basically dead even. 41%. do you get the feeling that the polls are going to be wrong again? do you think the investment community has very little faith in the british polling now? mark: what i think is that this is a me where i feel very fortunate to run a multi-asset, global portfolio. betting on the results of an election is simply not the smartest way to run money, in my view. i would rather diversify. if we are not forced to take it
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bet, we would prefer to focus on things like the u.s. equity market. let this play out and then move on from there. caroline: what assets? mark: absorb what happens. for example, we are there to be to be a leadre vote, we would expect the pound would fall more, which would benefit the larger u.k. companies that have their earnings overseas. go along for the 100 -- long ftse 100. if we look at other political issues -- we have about 30 seconds. i want to dig into japan. mark: japan is in a difficult state. like the ecb, they will wait and see what the federal reserve does and then make the play from there. they have limited arrows left to use.
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they want to use them awidely as possible. mark, thank you very much indeed. the glover ceo of wealth management at ubs sticking with us. coming up, the futures pointing to a market open at a flat start. ♪
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caroline: good morning, and righte to "on the move," here in the city of london. we are just moments away from the start of european trading. for draghi,on day the ecb president ways inflationary governments, will he impress european leaders to do more? bojnikkei plunges, one board member says monetary strategy is all wrong. reviving opec, saudi arabia said to be considering a surprise deal with fellow members.
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can the new minister make peace with the cartel? caroline: so much to play into the equity markets this morning. we are pretty much flat as we open up. everybody seems conscious ahead of these meetings in vienna. 100, check in on the ftse currently up .3%. open, juste on the warming up. 2.7 entire, waiting for the cac 600 to open. there we go, if flat opening for the stoxx 600, benchmark. the otherinto asset classes. nejra: we are seeing quite a mix of color, changing what to green now. energy stocks look like they're leading the gains up almost .3%
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ahead of the opec meeting. rally not seeing a big today. it looks like utilities and it stocks leading the losses. let's take a quick look at what is happening with the u.k. ten year here. we saw the basis point drop 5 basis points lower. stille at 137, we are there. not much of a change of the u.k. 10 year yield. let's take a look at the stocks that are watching today. i'm starting with a coup u.k. stocks here. we just got a report that the may ever passengers are up 22% on the previous year. some analysts were calling a move on this stock at the open. numbers, basically,
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full-year revenue came in at a bi ot of a beat. also, the full-year, pretax coming in at a beat. 2016-2017 to be ahead of 2015-2017. keep an eye on those two stocks. caroline: thank you very much, 600, seeing a flat stoxx digging into the mac or of today, a busy day for the markets with the ecb decision and the press conference a few hours away. a -- let's take into some intoe ramifications -- dig some of the limitations.
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some interesting effects on bank s. how much does this put you off banking stocks? rk: less in europe, then in japan. areus the boj, banks extremely important in europe. if you look at that, it is given by the banks. it could be more bullish, bailey because it is more bullish on the euro. we think some financing in the periphery, when the pr's have been helpful. it still seems fairly small. for now, let's call it a volatile sector. strongoo difficult of a conviction. as you then get the increases, we can start doing better math on what the banks look like. then it will become more interesting. inave been playing with -- europe and northern europe to
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handle the banks. don't want to be overly exposed to the financial industry. spice.pe, you get more need tou mentioned you be bullish on the banks to be bullish on the economies in general. when do you think you can be bullish on these banks? when can you call it bottom, may i ask? everyday we hear, we can you headlines about banks reducing headcount, and everyday day we see italian banks moving limited down. in europe especially, the banking situation looks especially dire. antonin: it has been challenged, for sure. one of the bullish arguments for banks, it is about u.s. rates going higher. therefore, the u.s. bank should be more exposed to that in the european ones are. terms of sentiment. in terms of what is being reflected in the market, lack of positioning, that is priced in.
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befind that there will upside, just less sure about the timing. we will still go up and down a little bit. what the ecb announces today, or in the coming meetings, will be dramatic as well. live expectations for what will come out today. with thinking macro calendar ahead of us in the next six weeks including the u.k. referendum, boj, said in a few weeks all of that will contribute to not a lot of announcements today. draghi is more likely to talk about the credit purchases. we don't expect for the negative rates at this point. matt: one of the benefits to mario draghi and inflation expectations has been the rising price of oil. if you take a look at the group rate ranks on the stoxx 600, or oilmajor index, you see companies, basic resources, oil
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and gas, doing the best so far year to date. run out ofade steam, or does it still have legs? antonin: it is probably running out of legs, to some extent. at the next meeting, that will be a driver, as well. is behind we think it us because of the end of positioning we feel in banks has been normalized, to some extent. look at the commodity, from long to short, or you look at the way the markets are trading with oil, from $45 to $50, the stocks to not follow as much. the market didn't follow as much. that would confirm that is a question of do you want to be properly bullish on this. or was the weight so painful you just normalize? it would be quite likely in the latter camp, then in the former. caroline: staying with us,
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taking in much more into the oil trade and indeed commodities. at the moment, oil trading is flat. meeting, a surprise agreement potentially could be on the equation. capping oil production? that the in store for opec today? ♪
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caroline: welcome back to "on the move," let's check the
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markets. it has been a pretty sluggish start. big macro things in the viewpoint. opec meetings, we are flat on the stoxx 600 minus oil and gas. cac both off. and it's taken to some -- dig into some individual movers. money supermarket off by 6% at this point not doing so well. also of the u.k. companies on the downside to a significant extent. e upside, portuguese banks are in favor. up 3.3%, interesting how much the ecb and negative rates are hurting the banks. two key peripheral banks seem to be in the green this morning.
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much more on a moment, let's get to bloomberg first word news. u.s. economy expanded at a modest pace across sincef the country mid-april. employers continue to add jobs and nudged wages higher. the latest way to put may do little to change the out put outlook of the economy. they use the word moderate 23 times in a summary. p&f for itss in latest rate decision today. have draghiwil will probably little fresh stimulus to provide. updated economic projections will reinforce the perception b is despite easing, the ec still struggling to reach its inflation goals. a bank of japan board member
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demanded reform, calling the 2% inflation target a medium to long-term goal. he criticized the boj's negative rate policy. he says it is a tightening, rather than a loosening effect. for theother blow the primeafter minister halted rate hikes. joining security firms adjusting to a slowdown in activity. that is according to people familiar with the matter. they said the jobs lost included london, new york, and hong kong. day,l news 24 hours a powered by our 2400 journalists more than 150 news bureaus around the board -- world. opec delegates have said oil output could be reintroduced to talks in today's ministerial meeting in vienna.
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brent is trading under $50 a barrel. ryan is in p&f, catching up a some ministers attending the meeting. ryan, is there really, truly, and the possibility that the cartel get back together? ryan: look, there is a possibility. i think a lot of them really want that. can're wondering if they act together as a group, and we understand that the saudi's are prepared to mend fences. one of the ideas it to bring back the production target. that has been the most essential tool that opec has use for the last 35 years to influence prices. they threw it out the window at the last meeting. the objectionst of those producers that need a higher oil cost. now, they are saying we're prepared to bring it back. the iranians, i spoke to them,
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they said maybe. they want is for countries to take individual responsibility for their own production post only that way, they say, can there be accountability. that is something opec is not had for five years. idea, to have a country code. can haveelieve that we this matter. the iranians want quotas, the saudi's, on the other side, want a production target. are they able to reconcile the differences? that is the key question here, in terms of whether they can really have this group therapy session, and all come out of it in a more cohesive way as a
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cartel, as you say, matt. caroline: also, interestingly, we were hearing from the iranian delegate saying that really, they're here to talk about one thing, and one thing only, the new saudi oil minister. lead opec going forward. talk to us about him. isn: well look, he attending his first ever meeting. he was appointed just one month ago. he is a tough act to follow. his predecessor want to more than 70 meeting. forge a name for himself, the most important thing he has to do is bring back the sense of unity, and gst opecs amon members. if he can pull that off, i think saudi arabia and opec will be very well-positioned going forward. if that doesn't happen, you will hear more and more people say it is time to write opec's
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obituary. caroline: thank you very much, our guest now joining us in london. give us a sense of the theatility that we saw at beginning of the year. we now seeing oil having ebbed. that changed the volumes in the equity market, and the way that you strategize? volumes have been muted. you to date, all in. below that was a lot of hesitation. but, the bigger storm was under the surface. in particular, when the dollar was weaker, bonds started rallying. that created a huge rotation in sectors. into miners, and energy, to a large extent, that was very positioning-led. whether it was long, or hedge
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funds, were all position the same way. when priced for that, that is when you really started hurting investors, and were forced to invest in that. as we said in the previous segment, the correlation between oil and oil companies is breaking down. that would tell us that it has been covered, and the position has been normalized. y, as long opec toda as the dollar was going down there is a logic to go higher. seenast few weeks have both moving together. dollar got more expensive in a short period of time. the commodity went up, the stocks have not followed. we are left with something find, on the outside, we overhyped going into the opec. volatility came down, if
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you want to hedge the upside it is not as expensive as what used to be. but vice versa, then the energy names would have more headwinds versus tailwinds. matt: we have volatility also -- we have volatility also very muted. as caroline mentioned, and has come down with a substantially since the beginning of the year. of course, there were fears of a chinese devaluation, and the januaryas tanking in 2016.the beginning of th and thee ecb meeting, jobs number of your about to get, the brexit about, the next fed meeting -- brexit vote, the next fed meeting, doesn't it surprise you that volatility is so low? the top of the index, not really.
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there is a general positioning in the market that they can't collapse, because there aren't enough positions to cut. if some macro answers we need before we can turn more bullish. the market is stuck in these big ranges. been the rotation and the service. if you look at that, it is on t on aw side, especially realized basis for step if you look at energy role, or sector role, these are a lot higher. it is not so much a question of the market moving, but which bits are maintaining, that may end up as flat at the end of the day. we saw that at the factory level, and the stock owners level, it is moving. but under the surface, with a neutral impact on overall assets. matt: i wonder, where do you think is the rotation the most exciting? we have been talking when energy
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coming up, the banks coming down, what is the most exciting rotation here? : trying to avoid having to make too much of a macro call, i'm taking a view on china, hard lending, versus the dollar. europe, it is of about trying to follow what the ecb is doing. they are contracting yields, providing liquidity. compares for a lot of the others, i.e. dividend yield. that generates cash flow that can turn into dividends, and buybacks. be about that will exploiting this with the ecb will be interesting. in terms of sectors, probably more towards pharmaceuticals, banks will be interesting, albeit with a bitter risk, as you mentioned earlier. the second half of the yearly more about the plays we were seeing playing very
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well last year. caroline: let's talk about oil, but if you did want to obsess about oil you can tune into the opec blog live up and running. antonin to staying with us. next, it is not our chart of the hour. what about japan? the country's debt burden is quietly falling. guess why? ♪
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matt: welcome back to "on the move," we want to get your chart of the hour right now. we're going back to greg worked and where -- great britain where nejra is standing by. nejra: take a look at this chart, what has been happening, estimate apan's government debt is not twice the size of the economy, according to some calculations, what has been happening is it has been m oving to the central bank, and this is having a really big impact. debt in private hands will fall to 100% of gdp from 177% in 2012, this is according to a senior economist. what this chart shows, the fed
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what theholding steady bank of japan has been doubling down. some say there are bigger risks to this debt monetization, some calling it a suicide policy. agree,e: do you antonin? thenin: without judging on purchases, what has been disappointing is the impact -- if you look at how japan has been trading, it has been driven by the yen at the moment. you have a euro which is trading 1.05-1.15. to get aboveling 1.10 again, and that is worrying. we have done some analysis correlation from the size of the boj balance sheet to the yen,
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the nikkei.bank to if you look at the size of the assets, that would tell you that the nikkei should get 20,000, it is clearly not. the intricate 125 as well. one of the challenges from japan in general is how do you reestablish the credibility of the central bank? as do you get a weaker yen well, which will not create many headwinds for your economy. caroline: checking the year to is up the most of any other currency. no wonder the pain, this is potentially why fiscal stimulus is being held back. policy, fiscal stimulus, is being held back. antonin: that, and some elections. whatever happened after that, investors if you look at the lots of boj,
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expectations going to everyone of them, then disappointment. risk and every going theme. antonin, thank you very much. ♪ okay, ready?
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get america's fastest internet. only from xfinity. caroline: welcome back to "on intoove," you 30 minutes the trading day, he was how things are shaping up. something decisions indiana, opec on one side, will we see any cap to production and oil? also, the ecb, the stoxx 600 is flat. .3%.ff by thosedifg into individual stock stories. nejra: one of the biggest again the ceo hasine, been speaking this morning saying the company will build a
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new steel mill in austria. we have some mixed numbers, it the full-year revenue. but the company did proposed a sharever a one euro per dividend. we are seeing this stock gaining. money supermarket, this seems to be falling. it is the worst performer on the stoxx 600. ec down, itg investt will place up to 5% of share capital. this is to raise about 145 million pounds. caroline: throughout the equity trading day, we will be bombarded by central bank news. decision day for the ecb, where rates are expected to remain unchanged. also some comments coming within the bank of japan. one board member says policies
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on the wrong path. a lot to discuss with our next to guest, joining us live in the london studio. thank you very much for joining us. give us a sense of where we look on such a day when you have a bombardment of central-bank news. is a good starting point post of the main thing the market will be looking for is the forecast. but really, not much has changed since march. we basically have the passage of time, and slightly higher oil prices and the fact they must incorporate monetary policy measures they took in march. caroline: talking of those, will he get any detail, what sectors, what areas they will be targeting? ralf: there is a hope they will , thatlishing to cover would open the purchases next week. we have to wait and see. most --isn't always the
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nor the most speedy in terms of implementing these policy decisions. that is what we're looking for today. matt: i have world trends up on the bloomberg, it is wt.go for professional users at home or if they're at work this early. trending upward, this is euro trade. also, corporate bonds, it has been a popular trade for hedge funds, as your recent study shows, is it overcrowded now? are: not as yet, what we looking for with the corporate bonds is not only is the ecb purchasing to consider -- planning to consider, but thanks to the ecb the meaningful trade underway, or an opportunity to --e br be finaned, that is
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financed, that is potentially significant of up to 5.6% of net income, and a chance of leveraging trade. over time, we think that could double the size of the european corporate bond market. there is potentially more supply to satisfy all this demand coming our way. caroline: i want to bring us to some breaking news. we can see the oil trade seems to be in vogue. is spiking right now. we had been completely flat when it came to wti and brents today. how much, ralf, do we pay attention to oil correlation, has been a big factor in the beginning of the year? where do you stand in terms of the credit push and pull?
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where are we seeing oil driving markets? pay attention to oil when it goes down, not when it goes up. even, if the market was paying attention, we wouldn't be where we are today. so, that correlation has been lost. part of that is due to the fact that we have other issues to consider. beenof which was what has touched upon, whether inflation expectations will be met, or not. oil volatility has got to increase it in your business. do you see more volatility in rates because of the gyrations in oil? ralf: most of the impetus we will get in rates globally will not come from external factors, but from the rates market
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themselves. ongst the other central banks, the fed to consider. to pushwill be unlikely rates significantly one-way way, or the other. we do have the fed is a risk later on this month, and the boj to consider. caroline: give us a sense of where you are distracted the most. give expect a june hike, a delaying into july? lf: our official call is into september. later, we have another figure to consider. caroline: murky from verizon, of course. ralf: it should be fairly straightforward to read to that. it should be about 40,000 employees that didn't turn up for work in that survey week. we should be able to adjust for that. the bigger issue is to what extent of the fed will be swayed
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by the potential uncertainty coming out of the british referendum which is only a week after the fed must make a decision. perspective, that makes july a more likely date. are showing a we market volatility of -- probability of a fed rate hike. 50%,has been pushed over and every fed speaker over the last couple of weeks has been very hawkish. why do you think the federal patent of september -- waits until september? ralf: manufacturing data has turned somewhat weaker again over recent weeks. domestic that the economy is fundamentally strong, we have a strong labor market. there are signs of weakness
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elsewhere. itself, couldf warrant a delay. i'm looking forward to a speech tomorrow, who is the one who is the most vocal about the global developments which have disappeared from the recent fed rhetoric. it will be interesting to see whether they reiterate those global developments again. caroline: let's talk about those global development to just touched on. the risk, or lack thereof, of brexit. how much does this dictate? the of seen moving on the selloff we saw from the treasury, where does your market place itself? the marketroblem for is that there is no agreement on whether or not they would actually rally, or sell off on the back of brexit. weight extent to you likely rate cuts, and we need
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political -- we have political uncertainty in europe generally and within the u.k. specifically. we would argue all of these things warrant significantly larger risk premier in guilds compared to other markets. lot of as treasuries, a potential in easing we can expect the bank of england is already factored into those expectations. the risk of the market would be that we get more rhetoric along the lines of the one scene from the new members and from carney. it is not obvious the bank of right -- bank of england could cut rates significantly. for thoughtme for for many, i'm sure. thank you very much. that was global head of rates at merrill lynch taking us on a whirlwind trip around the world. of the next, saudi arabia hails uber.
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the kingdoms investment fund hands the company's largest investment to date. ♪
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it was forecast to rain, but it is a gorgeous day here in berlin, the capital of germany. maybe the capital of europe, if you don't count brussels. let's get to the bloomberg business flash. the proposed takeover
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of the london stock exchange may result in hundreds of jobs cut. a filing said they expect to lose 700 positions. shareholders will vote on the deal next month. share toill pay $74 a buy back to billion dollars of its own stock. total ofwill raise a $8.9 billion as it lowers the stake in the e-commerce company to 28% as the telecom giant is ombarking on an asset plan t shore up its finances. finances. its cutting: goldman sachs hundreds of jobs, adjusting to a slowdown in activity. for more, we're joined now today get to this. hsbc, why isf them
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goldman doing this? ingoldman is a top of bank the landscape, we're talking about a bank that is -- has consistently shown great performance of keeping its share of the dealmaking. now, deal volumes are down. you had a bad year for bonds last year. they're down 80% compared to the same time last year. the market fall into down 65%. a bank thatng about has had operating costs go up last year, for a few years, last year they went to $25 billion. where do they recover those things? cutting jobs is one way of doing it. they are joining other banks, as you mentioned, that are having to do this now. matt: i am looking at ma go right now on the terminal, the
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function you spend a lot of time with. if you look at this, you can see evidence of your statement. deal volume has really come down , and the deal count has absolutely tormented -- plummeted. will that stay this way? don't expect that to pick up a , with all the consolidation we are expecting in oil, and health care? h: interestingly, goldman sachs thinks volumes will go up because yesterday the kind of conditions that make m&a happen, those are still there. you will see that go up again. other banks are hoping that happens. until that happens, they need to cut costs. the need to ensure that you have something to fall back on when
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investors are saying why are your operating costs so high? your profit is down about 60% in the first quarter. where are you making up for this? caroline: they could also turn their attention to compensation coming down a little bit. ruth: yes. at the annual meeting, when goldman unveiled its compensation plan, it would've the highest yield on wall street, there was record investor opposition. yes, some au made, re saying maybe we'd shouldn't be getting paid so much. you will probably see that with a lot of banks in the coming months. matt: how does this work? how do you give a big deal, goldman sachs managing director, a pink slip? ruth: goldman has been doing this for a while, it seems like. juniornt to rely on
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level employees. we have seen partner level and managing director level, which are the top ranks, the of decreased about 2%, whereas the -- executive directors, these types -- have gone up by about 17%. and gettingrdering, in more junior staff. matt: i'm sure do a fine job just. ruth, -- jobs elsewhere. ruth, thank you for joining us. let's take it from banks to the auto sector. volkswagen is pouring money into an israeli taxi app. the partnership is the beginning of a larger shift in the company. at present, we're quite happy that the partnership has
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been brought about. we believe this is a first step to change volkswagen, from a classical carmaker to a provider of mobility. plethora of targets, and assignments, we have to deal with. the will take the right steps, and the right direction. we will learn from each other, who will get inspiration from each other. we will develop together. in the year future, and maybe in the long run, he can shape the future. caroline: everyone wants to get into these taxi-hailing apps. uber,competing against which just got a large investment from saudi arabia's wealth fund. uber get more, what is going to do with all this more money? been does feel like it has
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fundraiser after fundraiser. this latest investment in uber, $3.5 billion, is a massive amount. latest rounder's of fund raising at a valuation of $62.5 billion. it is celalear the money is stil pouring in for uber. looking around the table, morgan stanley is an investor, goldman sachs, jeff bexzos. if you look more broadly, the reason for this is these cair hailing companies he to make massive investments. what struck investors was apple's large investment in uber's chinese rival. you mentioned earlier, volkswagen investing in get, visit across industry trend. uber is a market leader.
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this sets a new trend. matt: general motors has invested half $1 billion in lyft, as well. gm marie, when i hear about doing this, why bother, and the western world, with an uber competitor? do any of these other companies get traction compared to to industry giant? a a lot ofet has players much smaller than uber getting a small share of the pie. internationally, local players are investing amount much smaller than anything uber is putting on the table and grabbing bits of the market. spainrope, france and are going after business and enterprise customers to get a little bit of what uber is dominating worldwide. if you look around the world,
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the reason for uber to raise funds is because the need to make a massive international push. they have to get across the message that there is uber only, in these local rivals not up to speed. caroline: now they just need to regulators on their side. marie, great to have you on the show. up next, as mario draghi gerars up for the latest policy announcement, we look at how the euro is faring. ♪
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matt: good morning in europe, good evening in asia, here's a gorgeous shot in hong kong. looking forward to my next assignment there. let me give you some of the highlights for your day ahead. opec start its meeting indiana and a few minutes time. at 12:45, we get the ecb's latest policy decision as well. bloomberg customers can follow all of that either opec, or the just type inve, that for many of the interesting conferences. tlivego, we get initial jobless claims that comes ahead of
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tonight's -- initial job claims today at 8:30, tomorrow we get m payroll, the granddaddy of all economic figures. then the bank of england governor mark carney launches the new five pound note. but will he manage to avoid talking brexit? london byned in richard jones, are you excited about the five pound note? haven't seen it yet, but it must be something worth looking forward to. they're doing it at the palace, that has some important historical precedent. matt: the birthplace of winton churchill -- winston churchill. richard: exactly. caroline: let's talk about the ecb, what are we holding out for today? they want want to
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reverse the trend the as seen with the euro leaking against the dollar. we were at a 1.16 handle before, now we are around 1.12, that will please them. but don't expect anything earth shattering. they'll probably try not to disrupt the trend we have seen. caroline: and holding onto the fed? they hope the u.s. does the heavy lifting? richard: i guess that is part of it. report, the payroll ecb will take that as something that is positive. also, the ecb still has a measures the most recently announced to take into play. you have the corporate bond buying program kicking into focus, a combination of those things could bring hope and could continue to weigh on the euro. caroline: i always wish we had you on for longer. keep an eye for that news on corporate bonds. stay with bloomberg, there live
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in vienna for everything important. the opec and the ecb meetings are underway. the us a much more details, of the next. ♪
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mark: fresh stimulus is expected as the ecb president ways inflation with disinflation mary government. could the new saudi minister broker a deal? jobs for yellen. the latest fed report says the u.s. economy grew at a modest pace, but is that enough for janet yellen to hit the rate hike button? today's numbers give us another glimpse of the data.

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