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tv   On the Move  Bloomberg  June 20, 2016 2:30am-4:01am EDT

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guy: welcome to "on the move." 7:30 london, counting you down to the european open. i'm alongside carline hide, and here is what we are watching. remaining reclaims the lead. sterling soars, the futures point to a sharp bounce, britain braces for a most volatile week. --itioning ahead of thursday how does a billionaire trade for brexit? market,n roils the
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stepping down as the rupee plunges. has india given up on the fight against inflation? good morning. we are less than half an hour away from the european equity market open. looks like it is going to be a thumper if you are along these assets. you don't see this very often -- let's dwell on it for a moment. ftse upcks are up 3.1%, dax up byup by 2.9%, 2.8%. a shargh moved to the upside when it comes to european equities later on, and sterling is a big feature. for equities, absolutely on the front foot. caroline: phenomenal news that we saw, the great british pound point biggest move we
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have seen since december, 2008, currently searching up against every single major trading ld currencythe wor ranker. we are seeing the weakness in the indian rupee is the central bank governor steps down. he says he will step down in september when his term ends, managing to shape the indian rupee, as we hear that there is some state buying going on. the yen asg out of well, not going into the havens anymore, falling for the first time in seven days. a clear move into the riskier assets, into equities and the pound. let's get to the first word with juliette saly. juliette: thank you. italy's anti-establishment movement is poised to win elections in rome, threatening to derail matteo renzi's reform
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agenda. italiany would give the house its first majority. putin is considering selling stakes and russia's state oil company to china and india as he struggles to his spending targets ahead of the next election. he needs to raise $11 billion from the sale of 20%, which would not only cover budget shortfalls but strengthen ties with asia at a time when strained relations are o between the euros in europe. the rupee has made it steepest incline since november after the central bank governor said he will be se stepping down. he said he will be leaving the top position when his term expires, and will go back to academia. global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. you can find more stories on the
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bloomberg at top . guy: thank you very much. a bit of breaking news out of south africa. mtn has appointed a new group president and ceo; we will have more on that later. let's talk about what's happening in europe. we have are using the pulse on the open; caroline broadus what's happening with the pound. the remaining can has reclaimed the lead when it comes to the polls, now showing the odds of british accent falling. i want to show you what's happening in terms of the futures. 2.9 on the ftse futures, correlating to the fair value calculation, sterling really ramping up. let's welcome our guest, the head of investment at cross bridge capital.
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india has a 3% gain penciled in for the ftse 100. being market b rational? >> i was wondering if i should be excited or worried. given these is that leave camp only has about two points and it's almost a six-point swing -- by best guesses we will remain by a". -- my best guess is we will .emain by a close guy: what would you expect the ftse 100 -- for example -- to do on that vote? today it had a 3% pop. if we continue to see risk returning to european assets, how much would you expect? mean, the size of the move
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shows you that if we do get a brexit you will see a big selloff. it could be more than 5% -- clearly, the central banks have learned their lesson. they are going to intervene and come up with a coordinated effect. it may not last long, because you are working on something you don't know. the whole thing starts after the brexit vote. you will have a short-term selloff and it will take a while to see what it means. guy: have you been buying protection? how have you insulated your portfolio? >> sure. have not insulated it -- it's more about concerns of the global market.
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my base case is that a lot of these fears will be done through sterling. i believe it's going to be a close remain vote but i still think sterling falls so if you are selling out at 125, you can and i would say if you are so convinced about a brexit aboutot of this will be increased -- that is the major player. in terms of big equity, i'm not a big fan because of various things we're seeing and i still think that the u.s. offers much better growth. that that is the main thing on looking at.
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what about credit? morgan stanley says stay long duration because if we do brexit the selloff will be far beder as safe havens will far bigger. where do you play in terms of credit? we are coming off record low yields. >> sure. but weabsolutely right, don't have to forget that the ecb is a big buyer. portfolio,heading of you would think that if something bad happens then that may not hedge you. marketlly because the i not a biged -- buyer of bond at these levels
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because it's just too low. for me equity offers a much better return. to the point that you see central banks are still , the risk hasrise gone away and that is probably the only one in the u.s. this -- that makes me far more sanguine/ anna: time for equities and riskier assets. ajan.xt, replacing rus the search is on for a replacement after he announces his departure. we assess the impact, next. ♪
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anna: welcome back to "on the move." the central bank governor of india is set to step down after his term ends. inwas appointed governor 2013, and says he will return to academia. the rupee is the worst performing emerging market currency at the moment, down 4/10 of 1% as we speak. joining us as our guest for the hour,. give us a sense of the ramifications of the governor stepping down -- what does this mean for the country in terms of central-bank policy going forward? >> i would say he is a popular and well-known figure, so it's a big loss.
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but i would not see it as a setback to what was presented. india is moving away from governors making all the forsions, so what i am keen is the governor only having a vote in case there's a tie. i would say policymaking will continue to be straightforward and there are some very credible names being pointed out. i am not as much convinced as i am worried about -- he was a big asset it has done a great job, he came in with india was facing the fallout from the tantrum in the u.s. and he did a good job but i doizing things think there are credible successors. anna: so a knee-jerk reaction -- you would be your most credible successor? who would you expect to come to the helm? there is one man out of the i
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whose name is coming up and of course let's not forget the former prime minister, a very well-known economist. there is a good bunch of people and one of them will probably succeed. the things they have set in motion, those policies will continue no matter who the governor is. i think there's a huge amount of credibility and policy that will come out but the loss of the governor is a big thing. guy: the perception is he is leaving early because the government is not committed to him, to inflation fighting, or with the bank cleanup. which one of those is that? >> i was in her has been the fallout between the governor and government because of various remarks he made in public and the way government is working and i didn't go down very well with the party and prime
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minister. in the statement he signed, he said that he would have liked to stay, so clearly he has been asked to leave more than going on his own accord. said, all the targets the government has -- guy: this is a major venue government rather than vice versa. >> the earlier demands he may didn't go down very well and then the government said we have to appoint someone else. guy: stay with us. up next, the ftse 100 expected to surge after the eu remain votes are back in the lead. we look at the potential moves next,. ♪
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>> people are getting through the letterboxes leaflets saying that, basically, turkey will join the eu -- not true. there will be european army with britain in it -- not true. 350 million pounds a week to brussels -- not true. if we want to vote to leave, let's vote to leave it, but not on the basis of three things untrue. completely anna: a passionate u.k. prime minister, david cameron, entering the final week of campaigning ahead of the eu referendum by saying his opponents are trying to deceive people into voting to leave.
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meanwhile, the german finance minister has said european union policymakers have drawn up contingency plans to safeguard the union in case of a brexit. isning us now in brussels daniel gross, the center for european studies policy director -- wonderful to have you want today. after what was a standstill in back,gning, we are coming and remain has just started to edge the front foot. if you are looking at the beginning, are you slightly more at ease? >> of course, people here very much hope that the true will stay. and there is a big wave of populism across the continent. it is not unusual, and the great fear is that this rise in will causein general people to vote for exit. guy: do you think that angle of
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merkel and other european legal -- on the low merkel and other european leaders didn't have a good enough offer? >> it seems that the details of the deal have become completely lost in the campaign. if there are always small changes, it is difficult to sell to a broad public. broadly, it has to accept what we call -- smaller changes here and there don't make a difference for a referendum like this. guy: do you think the u.k. leaves whichever way, we are going to see the british people voting, effectively it has opted out on so many parts of what was for many people core areas of the eu. britain will not be taking part in that. you wonder what kind of a relationship britain will have, whichever way votes. >> the main impact will be political.
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in practical terms they will be very little change in the ashinery stop it will work before hand -- the schengen area, but common passport zone. it's more the general impression that the eu has been weekend, that one of its strongest members has chosen to leave, and that is very difficult to gauge how that will play out. caroline: talk to us about the ripple effects. but we are seeing in italy, in rome, the anti-establishment play, the five-star movement. how are you gauging what happens in the rest of the eurozone? what did the leaders need to do within the european union stop this rise and populism? unfortunately, the leaders can do very little about it. they cannot magically get an economy that is performing. they cannot stop the rise in inequality.
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this general rise of populism is something which confounds most leaders, because they are trying for the best, doing all the economic that they think will allow us to return for growth, and it hasn't worked so far. it is difficult to do anything but to say that we have to acknowledge the sect and perhaps become more cautious about future plans to deepen integration. caroline: this sounds very pessimistic. where do you see five years, ten years from now in the european union? is a broader or smaller? will other countries pull referendums? will we see more exiting? ten years out, it looks better. populism in general when it comes to power,, has to show results, and usually they are not there. after a while the tide turns, and diane convinced even in this case that the tide will turn. years,t take five to ten
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but it might be possible that if there's a smaller european union , it might be possible to forge a deeper union, which has the euro, a passport free area, maybe a common border. all those things will become possible and if the u.k. exits -- not today but in five to 10 years, many things will become possible again. --: are you talking about the projects getting to that point, will that come with growth? if not, you are basically consigning an entire generation of people to the scrap. >> of course, growth is the biggest problem. u.k. iss continent -- not doing much better. basis,look on a capital europe is also not doing so badly. i think growth should come back, because after all, europe has on
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the human capital, all the educated people we need. if we can get through this period of the aftermath of this eurocrisis, then it's very likely that growth in the euro area will come back, and then slowly people will become more and more convinced of the value of this project. great to talk with you. daniel gros. that's a political story -- minutes away from the market open, two things i want to show you. this is the bloomberg ops checker. you can see over here as we go across the different things, the odds of a brexit are falling quite sharply. i want to type this in with what we think futures will do. they have faded a little bit that we are expecting a huge pop and european equities at the get-go trade in five minutes.
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euro stocks called up, but see up, cac up, dax up. we will see a vague, big jump when the european markets open. a quick comment -- would you sell into that rally? >> i wouldn't. i would continue to hold. my base case is that we will get to remain. guy: you think we will see equity gains throughout the week? >> i think we will. and unless you have a major surprise on the last day. guy: will it create nice long short opportunities? ? the main concern will -- >> the main concern will come back to growth, the global growth concerns are the main ones, and if you go for the rally too far in shorts opportunity. guy: it has been great to hear from you. thank you for being with us.
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what have we got coming up next? -- will be joined by wilme ♪
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guy: good morning. you are watching "on the move." johnson, alongside caroline hyde. there is your morning brief. remain is int he lead. ftse futures point slightly higher. we are going to ask wilbur ross on positioning. how does a billionaire face a brexit? the indian central bank governors is stepping down. the repeat plunges in india. have they given up on the fight against inflation? caroline? caroline: money moves into the risky assets.
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u.k.expectation that the will actually remain within the eu and therefore reign back the volatility we have had. if we do see the brexit, that is. xx is falling since friday. we see a disappointing morning on the cac 40. we are going to be digging into which asset classes will be on the move with money coming out out theen, out of gold, havens, and into the equities. let's get straight to matt miller to dig into which industry groups we should be checking out. matt: let's take a look first off at the imap across europe. here is the stoxx 600. we have green all over the screen. it looks like financials and
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telecoms are leading this pack, that we do the every single index group up. what i want to do is switch over here and take a look at just the puftse. it is doing better than the major continental indexes. and here we see the big gainers are anglo american, glencore. so, really the miners. i'm sorry. of course it is miners because i have it set year-to-date. let me take a look at the one day moves. lloyds banking, berkeley group -- all of these financial stocks are doing really well and that has got to be good news for a rally. the only loser here is for rand gold. have been the miners incredibly gear this year as the underlying commodities have returned. want to take a look at gilts. we can say investors coming out of those safe haven assets. seeking thelonger
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safety of the u.k. 10 year. atdid the a record low less than 1.1. right now we are at 1.4. so, we can sing investors get out of those and into riskier assets. i wanted to finally bring up the bund. it went negative and it held there for a few days. is our five they looks, by the way, at the yield. it is currently positive. you are actually getting a yield, guy, if you purchase german tenure debt. -- german 10 year debt. guy: that is going to please a lot of people. the ftse has opened i sharply higher. sterling is suring. the polls point to a "remain" victory this week. wilbur ross, good morning. how are you position for a brexit?
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are you positioned for "reamin main?" how have you protected your portfolio? wilbur: we are very much in favor of "remain." if we were to leave, it would be the most expensive and most complicated divorce proceeding in the world. rather than trying to hedge and the belief that the british public ultimately would remain. guy: so, you have not purchased protection on sterling? wilbur: yes. guy: because he don't think it is going to happen? wilbur: because we believe the people will come to their senses. guy: the kind of market reaction with their be affected not happen? wilbur: it would be terrible, not just for sterling or the put ftse. guy: what kind of scale would this be? wilbur: i am not sure what it
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would be percentagewise. but you can see the impact it would have. guy: have you -- i'm sorry, caroline, jump in. caroline: give us a sense of what will be outperforming. on the stoxx 600, only five stocks are in the red. which stopped the want to be overexposed to if the british public come to their senses or just generally vote to "remain ?" wilbur: the largest single holding is virgin money. we backed richard branson and the original acquisition from the u.k. government. we had fallen down quite a bit, but we still own about 11% of the company. aboutne: but also, what the rest of the eurozone. today when we look at italy, we see the rise of the antiestablishment parties, the
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five-star movement in rome. what about the rest of the eurozone? does and with the u.k. vote on the referendum? wilbur: well, i think the u.k. referendum, just as a few days ago, the swiss referendum was also important. remember, in switzerland there had been his proposal to give a guaranteed minimum income to everyone. and this was very wisely voted that down by a substantial margin. that showed good sense on their part. had they not, i think that disease would have spread throughout europe and perhaps, even to america. i think each of these referendum are very important, not just for itself, but for what it leads tonight. guy: wilbur, can i take you back to that virgin stake, the 11% that you have got. if there were able to leave, would you be looking to sell the asset more quickly? caroline: we would have to see
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how badly it got hurt, but the issue i feel is, if there was a leave," house prices would become very bad here in the u.k. virgin is obviously a big lender on homes, as are many of the other challenger banks. so, that is why it would be bad for them. guy: when you look at the market 11%ts, you would be saying, , we are looking at house prices coming down. blockbuster the process he would go through when looking at that. wilbur: the political process we would go through is, how much has the market already discounted the problem? if it went down a lot, it would not be any reason to sell. because virgin is not going to go bad or go to zero. it is just a question of how good the collateral would be. guy: you with the a -- you would see a knee jerk reaction
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lower. but you would have to see through that. wilblur: exactly. guy: and when you think about the opportunities to invest further, what would that look like as well? would you be looking at other assets in the u.k.? wilbur: if there was a real collapse, the market would go down 10% or 50%, some big amount like that. i'm sure there would be other attractive things that would develop because while i do think it would be bad to leave, it is not the end o fthe earth. zerois not going to go to and unemployment is not going to go to 100%. it is really a question of whether the market would have over discounted or not. the ftse 100 ross, has been resolutely outperforming a lot of the market, despite the volatility and uncertainty regarding the brexit because they benefit by a weaker pound.
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what happens if we do see the pound continuing to resurge, as we are today? obviouslye net export benefits from a weaker pound. that is why the interesting ones to watch would be the ones that do a really domestic business. a number of the challenger banks there in much for into that category because they don't really export their services. their services are consumed essentially on a domestic a abasis. therefore, they are solely pound denominated. guy: rishaad: when you think about what this will mean for the market, you think there will be a liquidity issue? do you think there will be problems the market will face, process?n the mechanical wilbur: that would be a tremendous amount of capital
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withdrawn from the u.k., in terms of foreign investment. each year has had more foreign investment into the u.k. from the eu, even more than the united states. guy: but on a trading day by day basis, many people are already concerned about the amount of liquidity the market has. there is a concern of whether or not the market would be able to function, of whether or not they market could operate on a credible basis where we to see this happen. i am wondering if this is a lehman moment. wilbur: i don't think this is a lehman moment, in that the world is not come to an end, but it would be a severe problem for the u.k. the average home in the u.k. is 250,000 pounds. if you allow for the leverage on it, if the housing prices went down 10%, that would wipe
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out something like half the net worth of the average u.k. older person. so, it is a very serious issue for them and i don't think they really recognize it. i think they also don't recognize what what happened if the "leave" group won. now, the price of petrol would go up. now, price of many important things would go up. and yet, it is the people who are retired who seem to be most in favor of leaving. and that is really strange because in most countries, the older people are more conservative. here, it is the him people who want to stay. and the old people who want to plunge off into the dark. it is quite counterintuitive. guy: we will carry on the conversation and see what else is counterintuitive out there. we will carry on the conversation with wilbur ross. we discussed this, next. ♪
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guy: welcome back. you are watching "on the move." it is very interesting to see the makeup of what is happening now. we are up nearly 3% on the dax. story on the let me show you the ftse 100, because it is interesting. to 6%, trading at 5% higher this morning.
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it is basically the financials and the house builders that are dominating the upside the safe haven flow. that is beginning to run out of the market a little bit as well as the national grid softens up relative to the market, 1.4%. a big pop in sterling and equities as well. here is the bloomberg first world news. reporter: putin is considering selling stakes in russia's state oil company to china and india as he struggles to hit spending targets before the next election. billion to raise $11 from the sale of almost 20% of rosneft. is with cover budget shortfalls, but strengthen ties with asia at eight time with strange relations with the u.s. and
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europe. the deepest decline since november come after the central bank governor says he will be stepping down. he's it on saturday that he would be leaving the top position and he will leave. more than a year of resistance, finally giving in to the pressures that have battered the economy. meanwhile, analysts say pent up demands for dollars my push the naira 20% weaker. 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 . caroline? caroline: thank you very much indeed. ls britain heads to the polsl this week, we await the decision. in oneople have weighed
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the impact of a brexit. >> they have a plan to the purpose. governments have the right and ahead aboutk the future evolution of the european union in scenarios. with, which i hope, or without the u.k. on board. >> the italian economy is subject to brexit risks much in the same way the other members of the union are. there is no specific italian problem from the point of view of the brexit. caroline: wilbur ross is still here with us. you had previously said that the u.k. would be a madhouse if it pulled out of the eu. would it really be the madhouse? would italy? would greece? which is the first domino to fall? wilbur: the first domino would be scotland.
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scotland would undoubtedly reactivate their own exit from the u.k. you have the u.k. having to negotiate on both sides. then, you wonder what would happen with ireland. what -- will that nationalistic streak come up again. those are enormous problems for the u.k. cattleoadly, undoubtedly -- who knows what will happen with the greeks. they have just now gotten the funds release to make their upcoming big bond payment. but it is conceivable that the u.k. pulling would encourage them to pull out as well. i think it would be a nightmarish thing and would set in motion many kinds of that problems. guy: european banks, let's talk about where you see your investment going into the future. you are invested currently into
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the u.k., greece -- and there is another one as well. wilburs: cyprus. guy: where do you see the opportunities coming? will those be affected by what happens this thursday? wilbur: conceivably, we could go into italy. we have been waiting to see if they will change the foreclosure laws and make them more useful. because without an improved foreclosure regime, you can't really deal with the nonperforming loans. the route southern europe, most of the lending had real estate backing, in one way or another. that is quite an important thing there. in germany you still have some of the smaller banks. you still have some assets to be the vested by -- to be divested by deutsche bank and other german banks. and then you have portugal, question to mee
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is, how big a blackhole is angola? all the banks have some exposure in angola. about only know is that it is a bad situation, but it is hard to get your arms around it. guy: you were talking about the legislation we need to change with regards to bad debt. this week we saw the five-star movement getting a major elected -- getting a mayor elected in rome. there is a big election coming up in september. how carefully are you watching that? wilbur: we are watching very carefully because the politics are at a turning point in italy. the regime has put into affect the many changes. but as you know, they have been very controversial. every country in the world now has got some movement towards the extremes. look at france, look at what happened in the primary elections in the u.s., in the
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presidential campaigns. you look at brexit. some ways,xit is in another extreme kind of movement. guy: hold that thought. wilbur ross is going to stay with us. up next, the brexit vote this thursday is not the only big risk investors are watching. of course, there is the u.s. election in november. we talk about what is going on stateside, next. ♪
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guy: 22 minutes past the hour. the brexit is not the only place that has been in the spotlight. donald trump said in an interview with the sunday times that he would be inclined to "leave." he remarked that david cameron would have a great relationship with him if they were elected. wilbur ross, the latter of the t wo is in the studio with us now. wilbur, when you look at what donald trump is doing and you look at how the business community feels about him, you feel the two are seeing eye to eye? you have known him for a long time. d believe other people really understand what he is doing? wilbur: i'm not are they do, but when you think about it, what he accomplished in the primaries is what i would call inadvertent campaign-finance reform, in that is but very little money.
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he very cleverly used social media and made it into news items on the mark and mention a news items on the more conventional media. i don't agree with him on brexit. i think it would be a very bad idea for the u.k. to exit and i don't know why he felt the need to weigh in on it. but you don't have to agree with everything a candidate says were the way he says it in order o in order to support him. caroline: and movement back from the united states on the global stage, on the geopolitical stage, if we thought donald trump come into power. with that become -- would that become a reality? wilbur: i think you really need to react to what donald trump says, not so much in terms of the very specific word, but the direction.
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and the direction he wants to go is very much a traditional republican direction, namely, a strong america, take care of the american economy. we do have a border problem. while, i'm not sure the wall realgets built, is message to the american voter is, i know there is an immigration problem. i will fix it. is the way you need to interpret what he is saying. strategicse great big moves would obviously have to go through the congress anyway. and i think the chances are, whoever is elected will have a divided congress. republicans have a tough time keeping control of the senate because we have six seats up in hotly contested states and we only have a three vote majority. it is very difficult under those odds to keep control of the
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senate. i think the house is relatively safe for the republicans. guy: with the s&p go up or down with a trump presidency? wilbur: i think by the time it comes out, the market will have adjusted to it already. i don't think there would be a surprise by the end of the day, just as you have motives in the market reacting on brexit. guy: if he was ahead in the po lls, do you expect the market to go up or down? wilbur: i think the market would be fine because what investors really want is knowing what is going to happen and uncertainty that they can adjust to it. i think it is uncertainty that creates the problem. that is why you saw volatility over brexit. unless one week he is ahead and one way hillary clinton is ahead, then we would have a very volatile market. guy: wilbur, it has been a pleasure. wilbur ross, joining us on set
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in london. up next, we're going to talk to brexitarty mp and pro campaigner. ♪
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guy: welcome back. you are watching "on the move." how are things shaping up? you can see, the dax is up, over the present. the ftsie ise is up. what you are getting is a view that the polls have turned slightly. they say a week is a long time in politics. thursday is when the u.k. will vote. it will be an interesting few days. let's get the top stock stories with matt miller. matt: this is the stoxx 600 and i have broken down into the groups and their returns so far
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in this short trading day. eanks and insurers ar leading the day here. a report that unicredit might have found a new ceo. also, you can see auto stocks here. it'sis because volkswagen reported to have got not only an agreement with the u.s. government on the $10 billion settlement, but a possible fix. i also want to show you gold. something very interesting that many bloomberg clients have been reading. two stories. one of them is the hedgefunds are holding a contract with gold. is the longest we have seen in two years. they are betting that the precious metal will rally. that is a little bit concerning, that more concerning is this. this is the gold to copper ratio. this shows the that not only
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gold will rise, but copper's price will fall. that is a concern about uncertainty. that is the brexit vote, but also the possibility of a global recession. the ratio has risen to the highest we have seen it since 2009. so, a big concern there. you, matt.hank let's return of course to the all-important eu referendum campaign, which has resumed after it was suspended in the wake of the tragic killing of jo cox. leading pro brexit campaign, michael insisted british businesses would be better off outside a single market. >> we should be outside the single market. we should have access to the single market, but not be governed by the rules that the european court imposes on us, which restricts freedom.
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guy: michael is joining us now. do you think the momentum has changed? >> clearly, the tragic death of jo cox set us back. i hope that the language of the discussion will be robust, but moderate in the sense of the words we use. that is really important. coming back to the point about the language, do you share angela merkel's concerns that the language got to inconsiderate? languagehis is not the we use. there is a debate about immigration, which is about control, it is about planning public services. that is a proper and appropriate one. but if you make it a fear of the other, then that is wrong. caroline: give us a sense of how
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you respond to david cameron's assertions over the weekend. yesterday he said you are deceiving the public when it comes to turkey, when it comes to an army for europe, and when it comes to the $350 million being transferred to the eu. how do you respond to those assertions? in terms of turkey, if you are the prime minister and spending $1.9 billion of british taxpayers money to accelerate this in turkey, if you are the prime nestor that signed with other heads of state only two months ago to accelerate it, the of as he has a special unit to accelerate this, then the words and actions don't add up. facts about the future are not a plenty. to me, and 23rd is about taking control.
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i do not accept that there is a trade-off between commerce and democracy. democracy underpins successful commercial operations. caroline: how can you see the business community, but putting on hold investment? and they do seem to believe that it would be worth it. we just had some prize-winning economists writing saying that on ancountry, economic basis. gisela: miley husband was tony blair's economic advisor. -- my late husband was tony blair's economic advisor. these were the people that did not see the 2008 crash coming. they are not always correct. if you are liberated, commercial
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enterprise will thrive. given this block, call the european union, which was a creature of the last century, is singularly ill equipped to deal with global flows of people, capital, and services -- i think it is a creature of the last century and therefore, we are better off without. guy: according to polling, young people fail the remaining. older generation making a decision for a younger generation, that fo firmly believe it should remain in? the consequences are very different for both demographic groups. gisela: curiously, it is the ineration that voted in, 1975, which they thought was a trading operation. and now, they want out. the common market always was
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about the political union. since the induction of the single currency, you have a european union the has to integrate more deeply to be successful. in greece andt spain is horrendous. guy: but it is the young people who want to stay in. and yet, you have a generation of people over the age of 60, they are largely retired. economically, they are not part of the workforce. they are making a decision on what could be a significant change on the economic structure of the u.k. you are effectively changing the livelihoods of people in their 20's and 30's who want to remain. gisela: that we have not talked about the political structure in the european union. they don't know anything else. that is portrayed to them, europe will be cut off. that is ridiculous. i have two children, they are 30
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and 33. one of them did a 50 minute podcast to me. he said, "mom, explain to me what this is about. "ilooked at me and said, did not know what the brexit does." i think that group does not care about sovereignty. it things, as long as life is ok. i think we have failed to really explain this to them. i accept that. caroline: you were born in germany. do you not worry about what the rest of the ramifications would be? gisela: this makes me uniquely placed to understand why the needs of germany and the needs of the u.k. are very different. once you create a single currency without a political union, it won't function. that is what they have learned. so, in order to address the
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shortcomings of the eurozone so they can deal with the problems, they need to integrate more deeply. for us, it is more outward looking. over the years, the united kingdom and the european union of the market, it is becoming less necessary. i think the future is global. caroline: even if the current account deficit rockets? gisela: if it had not been for the fact that i had heard all the stories before. bmw invests in the united kingdom because the engineering skills allow them to have a manufacturing plant for new product, which are reliable. we trade because we have better products. it is skilled, it is innovation, it is that which drives it, not the trade agreement. caroline: we will have to see if
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we remain with that skill base if we consider leaving the eu. gisela, it is wonderful to have you on the show today. up next, we speak with the ceo of majestic wine about the eu exit. what it would mean for his business. that discussion, coming up next. ♪
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guy: 8:42 in london and 9:42 in
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berlin. what would a "leave" vote mean for a company that imports most of its stock. of, joining us is the ceo majestic wine, rowan gormley. are you ready for whatever happens on thursday? how have you prepared the business, when you look at the potential outcomes? what are you looking at? as a: as far byproduct goes, i just cannot imagine europeans going through with this. guy: i am glad to hear it. rowan: i think the biggest impact would be on currency. i have no idea the extent to which the pound is factored in, or what the risk is, but if there is a sustained fall in sterling, for a company that imports all of its product, there is inevitably some effects. that would apply to all retailers.
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so, it is not competitive issue. but it will affect price. caroline: and how would that affect yoruyour sales? your repeated today you wanted to hit 25 million pounds. rowan: i think you would need the vote. sterling when he to fall materially and sustainably. so, you know, i have absolutely no idea right now and i don't think anybody else does, whether sterling reflects the risk as it stands. i think the key thing is, if there is a sustained fall, all retailers will be in the same boat. it is not like we will be disadvantaged compared to any others. caroline: i want to go back to your entrepreneurial background. founder the of naked wines.
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you got a lot from a big german investor. how much are we at risk on an entrepreneurial basis? would be failed to get the investment outside of the country? rowan: i really doubt it, to be completely honest. i think the fact that they happen to be german and we happen to be in the u.k. -- they could have been american, we could of been australian. they invested in our business because the naked model is the model of the future. the fact that they happen to be in another european country was pelee coincidence. so based on my experience, no i don't think it would have a huge impact. guy: have you purchase protection against sterling? have you done anything with of the currency story? rowan: i think any bet on sterling moving in one direction or another is one for the
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management team. shareholders aren't paying us to play the market. -- you spokeu about the fact it would affect all retailers. that probably is true. termsyou suck it up in of the margin? how would you actually run the pnl? rowan: in the end, it will be reflected in the selling prices. guy: you have pricing power. rowan: we do have pricing power, but if that impacts all retailers, that will impact everybody equally. caroline: where do you think demand will be most hit? you set your sales was what you were most concerned about. regionally, where are you most concerned? rowan: there has been a long term trend in favor of european
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wines. that has nothing to do with politics. that has to do with flavor profile in value of money. i would expect that trend to continue. whether the brexit has an impact or not, i am not in a position to say. to be honest. caroline: rowan gormley, it has been great to have you on. he can't quite hedge himself in terms of the fx. to next, president putin said stake sale billion to china and india. ♪
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caroline: welcome back to "on the move." 49 minutes into the trading day. equities are higher, but let's focus on russia now. the decision to sell the stake comes as the president is struggling to meet commitments for his possible reelection bid in less than two years time. for more on this story, we are joined from moscow. why is russia planning this hefty stake sale, that could be worth $11 million? reporter: hello from moscow. russia is currently in its longest recession since vladimir putin came to power.
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they have a 3% deficit this year. but in actuality, it is visibly higher. china and india are very natural partners for rosneft, because these nations are showing the largest growth across the world. rosneft is currently the largest public oil producing company. caroline: the largest public oil producer. give us a sense of the scale of rosneft. stake this shy of 20% worth $11 billion and what can it bring to china and india? reporter: china and india are showing the largest growth across the world. recently, the international energy agency called india the star performer in the global oil markets. they will share an almost 20% share, this could provide additional info that they need so much.
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caroline: dina, it is great having your opinion from our moscow bureau. such an enormous amount that could be raised by selling anost 20% of rosneft, but interesting move by putin. guy: let's talk about what we have coming up this week, caroline. nigeria's for exchange policy takes an effect on the central bank. they said they will let the naira float. yellen will have monetary policy testimony on tuesday. remember, you can go to top live, for all of that. thursday of course, that is the big day. you could argue friday is the big day, but it depends on your point of view. for the market, friday will be the big day. we will be how the week progresses. this morning, we can see a big
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pop in the value of sterling. on set.joins us richard: i want to say something. [laughter] the market positioning, walk us through the mover this morning. all, fridayst of is the big day because i start at 2:00 a.m. there are a couple of things that are interesting that the price tells us. in terms of the campaign, what a difference a few days make. and we still have a few days left. many investors are coming to the conclusion that because the momentum has shifted so sharply, this is done. i think it is a little bit too soon to jump to that conclusion and the shortness we have seen in risk sentiment, the sharp
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rebound we have had today, is telling us that brexit is a bigger deal than anybody ever imagined. the moves we have seen are a testament to this. guy: let's talk a little bit about the market will run into this one, just in terms of positioning, in terms of set up. how will this one work? richard: i think positioning has been light for a while and will remain so because of liquidity concerns. in terms of what the immediate aftermath of the vote will be, i think if we get a vote to remain, given the downside protection the has been purchased already, we could see a continuation of the sharp moves we have seen today. in terms of, if we have a leave vote, all bets are off. we could say a lot of downside in the pound. caroline: richard, on the flipside, we can say big moves today, moving out of the
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havensw. we are getting out of the yen at the moment. kuroda, was speaking in tokyo saying, they are merely obtaining positive price growth. it is not enough. the cycle of robust economic the activity is needed for inflation. now we have the bank of japan governor speaking at the moment. give us a sense of how we see the flight out of the havens. the aussi dollar is also higher. all the out of policymakers globally who are keeping a very keen eye on the brexit debate, the japanese would be the most relieved if the u.k. votes to remain. given the flows we have seen if the vote went the other way, they will be very pleased. dollar-yen that, the has been quite shallow, quite modest. the challenges that are facing willoj in the future
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perhaps be alleviated somewhat by brexit, but those are deep set concerns. the move from the havens into the higher-yielding currencies are something they will welcome, but let's see if it is sustainable beyond this week. >> i have been told before that we need subtitles. my take away from all of this has been volatility. the jpmorgan index was 2011 high. and this is not a new story this year. in fact, it is a repeat of what we saw in february. will that go away after this week? even if the u.k. votes to remain? i would say no. guy: and you think about the other big event this week, which is, do we see anything from janet yellen? i think all of those things are going to affect this.
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depends on if you believe dudley or not. we will talk about that on the radio. ferro and i will be on bloomberg radio very shortly. up next, "the pulse." ♪
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remain in the pound rally. sterling claims by the most in three months. brexit on to slip, global equity surges. as the rupee is down bank of india governor will step down. what does it mean for the bank's credibility? welcome to "the pulse," live from london. first is first.


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