Skip to main content

tv   On the Move  Bloomberg  June 8, 2016 2:30am-4:01am EDT

2:30 am
welcome to "on the move." we are counting you down for the european open. i am guy johnson. here is what we are watching. draghi's bid for credibility. the central bank kicks off its corporate bond -- but will there be enough to buy? dismal, now incident. the world bank reaches for of
2:31 am
the source as it becomes the latest institution to sound the alarm on global growth. hillary becomes the first woman to run as the presidential candidate for a major u.s. party. but when does bernie sanders get off board? sees like we are going to us sluggish start. a solid session yesterday. let's show you what is going on. the fair value column. one-e going to be down 2/10. looking a little sluggish. a big day for the bond market. bund, an amazing move. 0.05 percent. this will be the kind of thing that draghi and the ecb have
2:32 am
worked hard to do. incredibly low. talking about 1%. across then yields board. that is how they are trying to spur growth. moves, and equity unexciting moves, the nikkei putting up big gains. take a look, the crude price coming down. well over $50 a barrel as well. great psychological barriers, busted through. finally, some strength in the yen. 107. almost 108.y
2:33 am
what he wants to see but that is what he is going to get. to first world news. david: the u.s., barack obama has congratulated hillary clinton. bernie sanders says he will continue to fight into next tuesday's primary. ms. clinton: thanks to you, we have reached a milestone. , first time in our nation's history that a woman will be a major party nominee. british prime
2:34 am
minister and the leader of you can't have argued each side of the brexit issue. david cameron says the u.k. would lose influence. he cost britain too much under what he called a quote ratan deal. cameron: -- cameron: when we want to be strong in front of putin's aggression, we need to work in these organizations. yes, we need to work in that eu. farange: let's say they cut off their nose to strike their face. if they put tariffs on all scum a they will be lower than our financial contribution. no deal is better than the rotten deal we have at the moment. david: the policy chief of the
2:35 am
main opposition party in japan says the central bank should ditch the negative interest rate policy because it is spreading on ease -- unease. we are talking about comments coming ahead of the upper house election. wealthy people with at least $100 million will see their fortunes grow the fastest over the next five years. as stock markets recovered. it says hi net worth investors compoundewarded with annual growth rates of 9.5% as individual and family fortunes $224 trillion. global news, powered by our journalists. you can find more stories. guy: thank you very much. mario draghi, starting on his
2:36 am
corporate bond buying program today. even before the ecb has bought a single bond, the policy has brought levels down. bloomberg corporate finance reporter joins us. and let's welcome our guest, the head of fx strategy at ing. we have already had the move. the market has priced this in. does today change it? sally: investors have already piling on. on -- that has pushed up prices and borrowing costs.
2:37 am
companies have responded with a surge in sales of the debt. on second-highest month record. what investors are concerned about is whether the ecb can buy enough of the bonds to keep these prices supported. if not, there is a risk of a cell off. -- sell of. guest: no, definitely not at this stage. we are talking about 5-10 a month. of eligible bonds, we are talking 600 billion or so. this is not a japanese situation. go?ow much lower can we
2:38 am
we must be at some kind of record. to selle they are going as much as they can. sally: there are concerns about what the companies are going to be using this for. is it shareholder friendly activities? will it be going into the real economy? seen, borrowing costs crashed through the 0% mark. getting back to the levels of 2012. very close to those numbers. you can break it down in terms of what it is doing. that is going to move it up towards these levels.
2:39 am
we saw going down to levels that are unprecedented. you talk about japan, we are not getting there. >> we are not looking for negative yields and the long-term bond market. we think yields will slowly drift up. that raises an issue you address. longer-term expectations about whether the recovery is entrenched or we are going to have double, triple, or drupal drip -- quadruple drop in the economy. >> i wonder if there is a a a bubble.ut t if they are issuing $50 billion
2:40 am
to meet that, i would guess they would continue to issue at the same pace. is there concern about a bubble? sally: there could well be concerned about a bubble. the ecb wants to buy from a popular and illiquid market. it will be difficult for them to hoover up the debt they need. big question everyone is asking is how much will you be able to buy with it? first?ll it buy chris is going to continue with us. up next, brexit stress goals global. more details on that story coming next. ♪
2:41 am
2:42 am
2:43 am
take a look, live shot of the brandenburg gate on another sunny day. lower open.cate a let me give you some breaking news. coming out with earnings. first quarter earnings before interest, tax, depreciation and amortization. estimated -- to an
2:44 am
better than the estimate. just to give you an idea of how much money that is, it is about $4.23 billion. that they earned in the quarter. revenue, 1.05 trillion robles. rubles. better than the street was looking for. we will watch to see how the shares doing. london trading, shares have gained, almost 50%, year to date. up 47%. guy: let's -- >> we are probably both going to toss to david ingles. hasd: let's talk about love.
2:45 am
a billionaire investor is predicting the company will become one of the biggest companies in the world over the next decade or two, growing to a market value of $700 billion. is one of the biggest investors intel is love. his firm has a stake in the company worth about $325 million. toyota is facing more bumps in the road in the u.s. it is working to replace software problems. the company says the issue can also affect radios. have korea's prosecutors raided the offices of shipbuilding and marine engineering. this comes after a committee of the second largest ship elder in the world requested an investigation into former ceos for allegedly
2:46 am
mismanagement. and rupert murdoch's toy for fox has announced a big investment in india. moneyit is going to spend on the project. includes 48 tv channels. guy: thank you very much. brexit interference. let's talk about that. the central banks are leaving policy on pause. janet yellen became the highest profile policymaker to speak out this week, warning of significant repercussions. mark carney has had plenty to say on this matter. looks like policy makers will wait until june 24 to get back to work. what will they do when they figure out what the result is?
2:47 am
joining us for a continuing conversation, our guest. we are waiting for november, the elections. what kind of central-bank action will we see? guest: the markets can expect a 30% chance of a hike in july. if payrolls were to bounce back, that could put tightening back on the agenda. we think 30% is about right. say, uncertainty in terms of world growth, definitely in wems of the bank of england, think of the baseline assumption we both state in. think run and hold through march. easing, --ances of
2:48 am
matt: do you see growth targets as steady? they did not raise their numbers for 2018 which caused people to wonder if the strategy was working at all? guest: i'm sure they are sensitive to the euro strength at the moment. euro-dollar moving higher. i think they are very careful about how they get the message across. they are sensitive to those inflation forecast. matt: we had so many members who said they expected targets. expected better than 1.6% and they did not lift it.
2:49 am
guest: it is regarding communications. if they sound of the all clear, i think the euro is going to move higher than they are comfortable with. guy: you are starting to see problems with corporate profitability. what are the dangers? not three years out but maybe two years. 1.5 years. we start to see a pop coming through. chris: you have to look around at where there is capacity. there is an element of specificity. headline inflation will be .icking up later this year
2:50 am
i think people will be looking at the core as well as the headline. whateverteady about kind of measure you look at. of sparek to the issue if inflation does return, the pressure is to do more. those expectations, reverting for less accommodation. insipid was the word it used. other places have used similar language. familiar, a lot of people talking about this. we have been looking closely and it has been disappointing.
2:51 am
european industrial production and those issues. canerms of where growth surprise, q1 growth wasn't that bad. i was looking at the world bank forecast. it seems a little high for a target. doing reasonably well. this year, one of the biggest themes is how u.s. growth, we will end up with one of .8% or 1.9%. we are getting a bit of convergence. guy: stay with us. stay with bloomberg. we have an interview with tony blair. he is going to speak to her editor about the brexit and the state of british politics. we are minutes away from the european equity markets looking at some of the potential corporate movers.
2:52 am
including the u.k. supermarket. they were down. could have been worse. ♪
2:53 am
2:54 am
guy: 7:54 in londonderry let's talk about some the stocks we are going to be watching.
2:55 am
the ftse, over 70 million pounds a year. lined up.great guests we will talk to shareholder a little later. let's talk about german hearted discounters. matt: no, let's talk about u.k. grocers. sainsbury first why do estimates -- british investors love the grocer stories so much? guy: i give you a napoleon. we are a nation of shopkeepers. hasn't that quote been used over and over again? it has always been a big institution. the reason i brought up the hard discount is, --
2:56 am
matt: those are two places i frequent in berlin. i can give you the whole story on that. quick break, we are back in two bank with more. ♪
2:57 am
2:58 am
2:59 am
guy: good morning. you are watching "on the move." we are moments away from the start of european trading and mr. matt miller has your morning bief. matt: draghi's bid for credibility. the ecb's balance sheet approaches a record. whether be enough supply to buy? and sluggish, dismal, now insipid. the world bank reaches for a thesaurus as it sounds the alarm on global growth. how many ways can you say, it is just too dorarn slow?
3:00 am
hillary becomes the first woman to run as the presidential candidate of a major u.s. party. but when does bernie sanders get on board with her candidacy? probably not until the convention. guy? guy: it is looking like that. it will be interesting to see what the end result of the meeting is with the president later this week. the european open is here. let's show you what is happening. we are getting a slightly negative start. let me bring up the gmm function and get some equity moves in here. we are expecting a fairly slow start for the european day. is down by the netherlands are trading d own. and i'm looking for the ftse 100, down by .2%. so, a weak start to the session.
3:01 am
let's find out the details of the session with caroline hyde. caroline: yesterday we added 100 billion euros to the stoxx 600. today, a little bit of cautious trading. 2.4% toh from 2.9%. neta, is it net negative or positive? we are coming on the imap, showing you the industry of the stoxx 600. this is the benchmark, of course. the worst performance, the i.t. sector. also, the financials are up by some .6%. we will begin to the austrian bank in a moment. united kingdom, we are currently seeing a little bit higher in terms of the yield, up about one
3:02 am
basis point. we can see across the board, german, french, u.k. yields coming off of what would have been record lows. what a search for safety we have seen, guy. i just want to show you what happened to germany yesterday. with all the bond yields at a record low. we came down as much as 1.45 at one point. yields are picking up, but only at a basis point. money is moving into bonds. the united states seems to push back on any very imminent rate hike amid these global growth concerns. let's have a look at the stocks to watch this morning. sainsbury is up almost two percentage points with first quarter sales beating estimates. sales are down, excluding fuel, but much better than what have been expected. they say their market conditions remain challenging.
3:03 am
erste, the austrian bank, a big shareholder. selling shares to the tune of 70.4 million shares. they are going to be making 90 million euros on that. oao, up there .5%. the oil price has declined. there is a higher tax burden. they have managed to erode earnings by 14%, that is of course, helped by the fx. matt: the world bank cutting at that look, citing lukewarm spending. the institution cut its u.s. growth outlook to 1.9% this year from 2.7%. global growth will be "insipid," 2.4%. ings turner, the head of
3:04 am
strategy. what you think of these cuts, they are pretty deep. chris: yes, they are, which is as to be expected. we saw a soft patch over the last three or four months. obviously, you mentioned kind of emerging markets and like brazil, for example. they look for a contraction of about 4% this year. we have seen a pickup in some commodities over the last four weeks, particularly in the energy sector. late perhaps -- guy: what has changed to change the numbers? chris: i think that expectations were that the u.s. would probably be growing in the high "two's" guy: why is that? chris: six to eight weeks ago,
3:05 am
this dollar could have been too strong for too long. eyee the fed took their of the board regarding dollar strength. i thought was interesting the fed put out a chart showing the impact of a strong dollar on u.s. inflation and growth. the impact on inflation was more easily detectable. the effect on the growth is more transportable. -- is more transportable. guy: how much volatility will we see between now and the end of the year? year there time last was a window for parity. the fed could've potentially hike three or four times. the fed a seems to be using more of this financial conditions motto, taking the dollar into
3:06 am
account. it looks like the fed will be very gradual, whether it is one , two, or none. we think they are off sending the dollar through the roof again. so, to cut a long story short, the dollar has probably seen its best levels. as we get to the end of the year, we think the euro-dollar will be pushing up to $1.15. the premium might be quite bearish for the dollar-yen in particular. obviously, trump with his views on that. china, for example. china trade. [laughter] matt: chris, i am going to get away from donald trump for a moment and ask you about the ecb's balance sheet. i have put together a chart one year ago looking at the ecb's balance sheet as a percentage of gdp. th line here in blue.
3:07 am
the fed's balance sheet, although as a percentage of gdp. the ecb is now a clipping the fed as far as its spending. that is going to go much higher because right now we only have done it going into the end of 2015. obviously, they are ramping it up. is that a problem for the economy here? chris: no, i think the ecb is going through this eyes wide open. liquidity thatig is going to depress money market rates. we can see that with rates expected, pretty much kind of stuck on the lows. comfortabletty around -.4%. they probably still want the euro to stay softer. 2014 and ie story in don't think they are off that view just yet. guy: thank you. up next, china's exports have
3:08 am
stabilized. demand? improving we have this story, next. ♪
3:09 am
3:10 am
matt: welcome back to "on the move." you are looking at a live shot in new york city, currently 3:00 in the morning. after a mixed close, very little movement. gains on the dow and the s&p
3:11 am
500. the nasdaq is actually pointing down. we are now looking at the action in european stocks, all red arrows. even the ftse right now. guy: let's put those numbers on the screen. as matt says, negative numbers. i will check to see if there are any dividends. we have seen a rise of 2.5% on the upside. i want to bring you breaking egyptair,ed to eac following the disappearance of the aircraft carrier. they have set a plane has landed there was a bomb thr we watched this story carefully
3:12 am
to see if this was just a threat or if there was some substance. egyptair has confirmed that an aircraft did land. i think it was en route to beijing. we will wait to see and what details we have coming from that. but obviously, the ongoing investigation in the mediterranean is something everybody is paying attention to . let's get some more international news for you now. here is the first world news with david inglis. david: thanks, guy. let's it started in the u.s., where barack obama has congratulated hillary clinton for her victory. he willie sanders says continue to fight into next tuesday's primary. earlier, clinton addressed brooklyn, saying history have been made. clinton: thanks to you, we have reached a milestone. the first time in our nation's
3:13 am
history that a woman will be a major party candidate leader. british prime minister has argued each side of the brexit issue in a tv special. we have david cameron saying the u.k. would lose influence on the global stage if it left the european union. on the other hand, raghuram rajan argues that this would cost to britain in a "rotten deal." >> things that affect our great country, we would have no say over. whether he want to make sure iran does not create a nuclear weapon. when we want to be strong against putin, we need to work in the u.n. and in the eu. --let's say they decide to
3:14 am
if they put tariffs on us, they would be significantly lower than their net financial income. no deal is better than the rotten deal that we have. japan's economy has grown more than initially reported. an annual rate of 1.9%. shinzo abe postponed the sales tax increase. 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: david, thanks. china's exports stabilized in may with a weakening currency providing some support. overseas shipments actually fell 4.1% in dollar terms.
3:15 am
let's go to beijing's bureau chief. what does this mean for china's growth target here/ar? are they sticking to it? >> they are currently sticking to their growth target, but china is running up to the upper limits of its export capacity. i mean, china is the world's number one exporter already. we are seeingy, the effects of global slowdown. as the demand for china's exports wane overseas, use the weakness in the export number. i would not say this is a number causing people to panic. obviously, they are benefiting a bit from a weaker exchange rate, but we can see the limits of just how much more growth there can be in chinese exports. guy: nick, i want to talk a little bit about hong kong.
3:16 am
there is a great chart on the bloomberg this morning. this is the export number into hong kong. and it has gone absolutely parabolic. people are questioning why this is happening. they are questioning, as a result of which how believable some of these numbers are. are they right to do so? nick: well, there is always a concern about the reliability of chinese data. we have often looked to hong kong -- or imports from hong kong as a sign of capital outflows. basically, companies and other entities using alleged imports from hong kong to mask outflows of money. what you are seeing there, that uptick in the graph is quite dramatic. the actual values are still very low, that it does reflect unease about the direction of the chinese currency. it doesn't suggest that there are many people -- it does
3:17 am
suggest that there are many people out there hoping to get their money out of chinese currency. yuan the pboc says the exchange rate is increasingly transparent. is that true? nick: well you know, on a day-to-day basis we do have a fairly good idea of where the currency is going. so, each morning the country sort of fixes it. they set the fixing for the point around which the yuan can trade for that day. we do have a fairly accurate model that protects where the fixing will be set. it is the longer term issue that is the problem there. whether the government will plan to prop up or we can the currency. the currency has devalued about 9% over the last weeks. the chinese government insists it is becoming more transparent and that the currency is more market-oriented.
3:18 am
but longer term, there is deep concern about the direction of the exchange rate and how low the government is willing to let the exchange rate go. guy: nick, great stuff. let's bring back into the conversation chris turner. is the fed going to let beijing off the hook? chris: we have just had the economic strategic dialogue. there were a lot of areas that they agreed on. as your reporter pointed out, what has been happened quietly, currency is 5% weaker. the introduced these new baskets in december to tell the world, stop looking at the dollar. .ook at the basket at the same time, we have a selection year. the chinese authorities are keeping pretty stable. during a u.s. election year,
3:19 am
that is not a big story. but they are not allowing the currency to appreciate as much against the u.s. dollar as the euro is, as the yen is. this makes a lot of sense because over the last two to three years, we had the ecb devalued the euro and the yen be devalued. they need a weaker currency right now and i think they are getting it through the basket as opposed to against the dollar. guy: and post the election, wh s that change? if the chinese are very well aware of global politics and in particular, u.s. politics, do you think post that election, due the chinese decide to play different hand of cards? chris: i think it depends on the election outcome. early this year, we had legislation go through which was
3:20 am
all about trade enforcement. they are definitely turning up the screws in terms of protectionism. i think it makes it a lot more difficult for the chinese to engineer a weaker currency. the best chance is that you might see a weaker dollar. the yen will outperform against china as well. turner, you are going to stay with us. up next, it is time for our chart of the hour and we are taking a look at commodity currencies after we have seen these incredible gains in the prices of oil and gold. how does that affect the countries that produce them? that discussion, coming up next. ♪
3:21 am
3:22 am
3:23 am
matt: welcome back to "on the move." i'm matt miller in berlin. let's get to the chart of the hour. how this affects global growth and how this affects those countries themselves. we are talking about a global growth that is a sluggish. why is it helped by a rise in the price of oil? why aren't the commodity export to countries help by a rise in gold more than they are. here you can see the ruble, the rand, and the aussi against the
3:24 am
dollar. they have all done better against the dollar this year to date. although, the ruble has done the best. this is why it is not helping them quite as much with these big crimes, 40% in oil and 20% in gold. guy, you have some breaking news? guy: i do and we will come back to that. we have been waiting for details on what is going to happen with of the ecb. we are starting to get details now. no specific names now, but the ecb is in the market this morning. it is buying -- it looks like on a sector basis it is buying in the utility space. it is buying ig debt in the utility space. it will be interesting to know as we work our way through the morning, exactly which names are being bought, and whether or not they are migrating out of the utility space. is, the buying strategy
3:25 am
because the market will want to front run that story, matt. that is something to watch throughout the morning, but at the moment, they have dipped their toe in the water and it is in the utility space. you will get more details as the day progresses. guy: we are going to want to know how much they are buying, what is on now and what is up next. let me get back to the currency story now. let me ask you, what is your take on these currencies' performance so far and how it has helped, or not helped as much as the present commodities the export gets higher. >> you have pointed out three currencies there that are backed by different commodities in a way. obviously, russia is very centered around energy. australia is a bit more mixed between the coal and the irone
3:26 am
ore story. the rand is surrounding the metals story. they have skyrocketed and collapsed over the last couple weeks. the ruble has outperformed, which makes sense. it is hard to say whether crude has another $10 from here. fairly priced around here. for the rand and the australian dollar, they are very much driven by the risk environment as well. the figures have encouraged carry trade activity, people chasing the yield. that we would caution about chasing that too far. if in early july you were to somehow get slightly better figures that would put the july fed rate back on the agenda, the currencies could feel those gains. guy: time has beaten me.
3:27 am
question is going to have to wait for another day. chris turner, joining us from ing. up next, we are going to talk brexit. ♪
3:28 am
3:29 am
3:30 am
guy: welcome back. you are watching "on the move." we have been watching the news for exactly where the ecb is buying corporate bonds. bloomberg obviously, reporting this story. we are really chasing it hard. the ecb is apparently, dipping its toe into the market, trying to buy inthe utility space. it will be interesting to see how this is broken down. at the moment, it looks like the bid is in the utility space, which you would have thought would be a fairly safe space to start. but remember, they are only
3:31 am
hitting the igb bid. the question is, can the ecb buy in sufficient size to make a significant impact? thatcannot buy in size puts the credibility on the line. as a result of which, the market -- well, not just this, but other things as well -- is fairly liquid. it will be interesting to see how this works its way through. we are 31 minutes into the trading day. a quick look at how the corporate story has reflected into the equity market. let's show you how we are looking right now. we seem to be stabilizing down around 0.5%. 600 performing down about .6%. let's go to caroline hyde. caroline: the upper forming industry group, not surprisingly, is utilities. ]one outperform or is sainsbury,
3:32 am
up 2.6%. dropped .8%, but that was better than the slump the market had anticipated. the market remains challenging, so says one of the u.k.'s biggest grossers. this is impacting sales. erste, also want to watch out for today, down about 3%. 17.4 million shares. they are earning millions of euros for that. down goes the share price. lastly, your worst performer on the market right now. they are a payment processor.
3:33 am
they are feeling the pain from across the atlantic. the reason? verafone in the u.s. reported -- well, they fell 28% after lowering their four year forecasts. look up for other competitors in the u.s. all of these companies are likely to fall in sympathy. ingenico, the worst performer on the stoxx 600 today. guy: the utility sector is the in positive territory this morning. you can see this very clearly ont h the imap, the only sliver of green. the french corporate bond market is probably the best place for the ecb to go fishing. the french central bank, on behalf of the ecb, according to , reporter on behalf of the ecb it seems like we may also see
3:34 am
some action in the german sector today. this is rippling into the equity markets fairly solidly this morning. let's talk about something else we need to focus on this morning and that is politics. the british prime minister and nigel farage have argued each side of the brexit issue in a tv special last night. >> things that affect our great country, we would have no say over. when we want to try to make sure iran can't get a nuclear weapon, when we want to be strong in front of putin's aggression, we need to work in these organizations. we need to work in nato, the un, and in the eu. sometimes they can drive me mad. it is a bureaucracy and it is frustrating. but honestly believe walking away would reduce our national
3:35 am
influence, would reduce our economy, would reduce our say in the world. >> let's just say they decide to cut off their noses and bite their faces with their biggest export market in the world. us,hey put tariffs on those of the significantly lower than our net contribution. no deal is better than the rotten deal we have at the moment. guy: we are now talking about where we stand. good morning, philip. in my mind, what happened last my was a reiteration of the fact that david cameron does not have an answer on immigration and the "out" campaign does not have an answer on the economy. did this change much in yoru ur view? >> both sides are being negative. they seemed incapable of running anything other than negative
3:36 am
campaigns. they think this will cause people tuesday in the eu. i think this is a compounding effect, making people withdraw to britain. i think the negative approach from both parties is increasing support for brexit. the government >> a positive v -- what the government lacks isa a positive view of the eu. we need a image of british leadership in the eu. i think the government's strategy is backfiring because the eu has been identified in people's minds as of the source of great problem, terrorism, etc. people will retreat when they see fear. both camps are foolishly giving us fear. they will retreat into protectionism. and if the eu is identified as coming with global risks, people will become protectionists.
3:37 am
they possibly need to give a positive view of the european union. britain can lead the eu. especially because the world is in such a dreadful crisis. guy: matt, breaking news. matt: i have been looking at a three-month chart, but it is more interesting to look at a chart of the intraday trade because it is now dropping below .4%. let me get that screen for you. right now we are looking at a yield of 0.39%. it is just an incredible move to watch. this is a record low for german 10 year yield. guy: let's bring the into the conversation we are having. philip, this is an example of a lack of growth in europe. this is an example of what is going wrong with europe, some would argue, and the inability
3:38 am
to get growth going reflected in the german bond market. is it a struggle, do you think, to make a positive case? yes, british leadership is there somees, burderitain has won critical arguments. but nevertheless, the british people don't feel it. philip: well look, europe is not looking good. europe was originally construed to pull germany into something greater for itself. the euro is essentially creating germany in europe again. because of the way the euro favors germany on a structural basis, it is making it impossible for southern europe to grow. france has been weakened dreadfully. france, onlys in 38% of people are in favor of the european union with 62% against. that is higher than the u.k. i think we are on the brink of a
3:39 am
european wide eurozone breakup. and the tragedy is, the euro has created a situation that immense political centralization to solve the problems of the euro. but it is exactly that which is unpopular. i think we are on the brink of something catastrophic in europe. if britain looks for brexit, which looks possible, it could all, part. -- they could all come apart. matt: we are feeling that in the bond market right now. bonds are continuing to fall this morning, yielding 0.35%. let me ask you this morning, is there a solid remain vote, philip? if we get a solid remain vote, does everything go back to normal? will the french and germans feel better about the eu then? philip: if we get a solid "remain" vote, and we will have a tremendous political and
3:40 am
economic opportunity. what we need britain to do this -- and to be fair, britain has not done this -- but if we had british leadership, britain let'scome in and sayk, face the facts. the eurozone is not working. we've got to create a position whereby southern countries connect to the euro. for instance, forget greece. italy has not had a single quarter of gdp growth since it entered the euro. the euro does not work. we have to save the european project by limiting the reach and scope of the common currency. and britain could lean on that because all commentators recognize this is a fundamental problem. if britain can once more seek to stabilize europe, that is what we must all hope for. matt: speaking of politics and of stability, the presidential race in the u.s. is taking a
3:41 am
historic turn. hillary clinton has declared herself the victor in the democratic nomination. she will be the first woman candidate for president from a major party in u.s. history. what do you think about how the election is shaping up? this same sort of populism and unrest that is pushing maybe britain towards ane xi exit from the eu is pushing americans to support people like donald trump and bernie sanders. philip: the globalization of which people of hillary's generation have long advocated for has destroyed the working class in the western world. and now it threatens to destroy the middle class. marx was wrong. it is not the working class that is the revolutionary proletariat. it is the middle class. we will see enormous economic insecurity because of computerization and the
3:42 am
competition from outside the west. they're going to vote for security and trump expresses that. france expresses that. the brexit vote expresses that. we don't have a necn economic model and the west that can offer stability for the middle class. that is a very dangerous mix. that means we could see very revolutionary developments, and that is not good for anybody. guy: we are going to have to leave it there. philip bond, thank you for sharing your thoughts this morning. i have breaking news having an impact on a number of asset classes. market,is in the buying 10 year telefonica bonds, telephoneh utility company. matt: it is a phone operator, right?
3:43 am
phone operators might as well be utilities, is the point here. actually pulled up a chart of their 10 years. you can see right here what we are looking at. this is a price chart. i don't normally look at a price chart ont he a bond. having as definitely ripple effect into the equity market as well, just another piece of breaking news for you as well. egyptair is now saying that the bomb threats that forced an emergency landing seems so far to be a "false alarm." but we will continue to follow that story. up next, we will be talking about wpp. 70 million pounds, what do investors think about that? we find out later today at the agm. before that, we talked to one of the investors and get a take on
3:44 am
what exactly will happen next in the market. ♪
3:45 am
3:46 am
guy: 46 minutes into the equity market session. welcome back. but stock about the breaking news. the ecb got this corporate bond buying program. we are waiting to see where it is buying. we understand it has purchased some french names -- the french bull market is probably the easiest place where the ecb to
3:47 am
buy. we understand as well the spanish central bank is buying telefonica. we are seeing some of the german utilities on the back of this story as well. it looks like the ecb might operate on a sector by sector basis, matt, and pick out individual names. you might have thought the most easy place to start would be in the utility space and that is exactly what seems to be the case, according to our reporting. matt: speaking of getting a bid today, the german bond is pretty incredible to watch. the german 10 year yield is dropping to a record low of 0.34% today and still holding down there, 0.35%. it looks like either investors are running for cover or expecting more ecb action here. this, of course, is the way that the ecb wants to stimulate growth and corporate debt.
3:48 am
here we see how it is working out in the favor of german government debt as well. it is funny. you. a lot of complaints here about all the benefits the germans have given to the greeks, guy, when you are talking to the man on the street in berlin. but they have clearly benefited a little bit as well from this qe program. --: shareholders me toda shareholders meet today. 1/3 of voters might vote against the common station. one of the organizations is pushing for lower pay. is it the number that is annoying people here, or the process by which the number was arrived at? because the process has changed and that will be reflected next year. >> it is the number. it is a huge number. it is far too high. it is a process that started in
3:49 am
2009 when the shoulders approved this plan. guy: that was when you basically put some of your shares in thater a five-year period, number will be significantly escalated. but the have changed it subsequently, haven't they? you think this will have an impact on the way people vote? >> it was too high. so, they changed it. the amounts coming through in the new plan are lower, but they are still far too high. guy: this reflects a shift. we someone shareholder sp ring, and now we are talking about another one. we have seen a number of companies with concerns around executive pay. are the shareholders back on the front foot in this one? >> many managers are voting the same way that they voted
3:50 am
before. i think it is overrated, actually. fund managers to become more active. guy: the issue with all of this as well is that wpp has significantly outperformed. nevertheless, a significant benefit for his shareholders has been delivered. can't to be argued then that it is worth -- can't it be argued then that it is worth the money? >> yes, he can argue that. he is over that period. he has received 170 million pounds. it is about 1.3% of the market capitalization he is receiving. it is a small percentage, but it is a very important percentage for investors because incrementally over the long-term, that takes away from the turns.
3:51 am
are beinge ftse 100's paid too high. guy: next year that number is going to glengo down significantly. >> next year, it will be 30 million pounds or 40 million pounds. guy: still too much? >> yes, still far too high. the year after it will come down even further. guy: we will leave it there. stronglye very the him i that the ceo's are being paid the correct amount. ♪
3:52 am
3:53 am
3:54 am
matt: the edb is said to have started buying. the ecb is also said to have bought generale. we are now joined by sally. the telephone operator, telefonica, we can see the yield dropping. let me just ask first, how are we getting this information? how do we know where they are biting whabuying, what they are buying, etc.
3:55 am
>> the moment, it is coming from traders. the starting gun was fired today earlier this morning with the first purchase in the secondary market. we have seen the ecb buying bo nds in the secondary market. the french market has bought bonds on behalf of the ecb. we've also seen the ecb buying the bonds of telefonica. the utility sector is the most obvious place to start because these are some of the biggest issuers. this is an easier way for the ecb to hoover on, which it needs to do to maintain the credibility of the program. guy: where will it go next? sally: any large issue are. it needs to pick up 5 million euros a month, so investors don't get tempted to sell.
3:56 am
market mightfrench be the clearest place for the ec b to go. sally: some of the biggest utilities are thre. guy: are there going to be any areas they don't go to? sally: it is difficult to say. we will be speaking with traders all day and we will be asking those questions. what they buy first is perhaps the biggest question for us. we will try to find out what other sectors they will go to. insuranceee tmt and being some of those big sectors as well. guy: sally, great stuff. tuned.ay bloomberg has an interview with the former u.k. minister. he will be sitting down with our editor and chief.
3:57 am
the first, a conversation about the state of british politics. withxt, it is "the pulse" francine lacqua. matt miller and myself will be joining you from london and berlin on bloomberg radio. ♪
3:58 am
3:59 am
4:00 am
francine: clinton claims victory . hillary becomes the first woman to run as the presidential candidate of a major u.s. party, but when does bernie sanders bow out? mario draghi's ecb buys corporate bonds as the world bank cuts its growth outlook. the german 10 year yields hit a record low. -- shareholders are expected to protest the package at today's agm. how much of a fight will he put up? ♪ francine: welcome to "the


info Stream Only

Uploaded by TV Archive on