Skip to main content

tv   Countdown  Bloomberg  June 21, 2016 1:00am-2:31am EDT

1:00 am
anna: brexit in the balance. pound retreats. warnings -- the billionaire and that' investor said it would make investors poor. the hong kong's richest man tells bloomberg why he is still bullish on china. ♪ welcome to countdown. i'm anna edwards in london. manus: i'm manus cranny in dubai. good morning. anna: we have a great start for
1:01 am
you. putting into context the foreign exchange movements have seen in 2016. the story yesterday was around the pound and we will get to that. an pound against the dollar, underperformer in 2016. it hasn't moved all that far from where it started this year. the yen a very different story. it advances this year as the pound falters to the yen. feeling the pressures of the polling data around the brexit data. that seems to move the japanese currency up as well. if we move up to where the assets have been moving overnight, you can take us through that. we heard this from george soros. manus: we talked about this as the show goes on. soros'xit is ion agenda. it really recovered yesterday. one quarter of 1% this morning.
1:02 am
i find it most fastening that -- fascinating is that he said who would think it would take the pound for europe. the dollar-yen is also on the move. the longest rally under abe has just been broken. the longest streak. gold at the bottom of your screen falls for the third time if this is days as an anxiety bubble. an anxiety brexit bubble. this is more than a bubble. we have a lot to concern ourselves with over the next three days and these markets will be volatile. anna: let's try to keep it under control. we have some breaking numbers from a french insurance business. they are setting up new targets for 2020. this is a business we already know is making investments in the u.k.
1:03 am
we heard about the losses that will create. they are giving a full detail on the return of equity targets, the combined ratio that they want to target by 2020. these medium turn targets -- medium-term targets. let's get the first word news with haidi. >> hi, there. george soros says the pound may tumble more than 20% against the dollar if the british voters decide to leave the european union. this would be more disruptive than when he voted against the currency in 1992. tim cook is to host a fundraiser for paul ryan, according to two republican aides. some of the money will go to the national republican committee. it is a sign that cook is looking to boost the fortunes of
1:04 am
establishment republicans. disturbing comments made by donald trump about women, minority groups, refugees and immigrants. minutes from the june meeting of the australian central bank shows it held positive data while reiterating that inflation will be low. pat are content to stand for now as they go towards an and as thext month referendum continues to play out. for the first time in eight days, following the release of the april minutes of the board of japan. asset purchases had already produced it clearly. senate has voted down a series of measures intended to prevent terrorist suspects from buying guns in the wake of the orlando massacre. two of the defeated basel's were defeatedy republic --
1:05 am
proposals were offered by republicans and two were offered by democrats. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on bloomberg. manus: thank you very much, haidi. let's get straight to david england who is standing by. the yen, the march of the yen has been broken. how are the markets in terms of all of these moves? david: absolutely. i will get you a check on them in a moment. we're looking at a third day of solid gains across the asia-pacific. it did not look this way in the start went and was mostly red. those things have basically flipped and we are looking at fairly solid gains across the
1:06 am
asia-pacific. to paint entering its last hour entering itsapan last hour of trade. is essentiallya a bet that the u.k. will stay in the eu. whether that is where the smart money is going, we will find out on friday. gains are going back all the way to last thursday's close. we're looking at extreme levels. promised --yen, as we heard from several analysts, one of which was the head of fx sales of a trust bank. this initial down of dollar- yen pairing back their long dollar position. it has actually weakened a little bit and we are now at 104.17. near session highs at the moment. let me end at the aussie dollar.
1:07 am
we are still seeing risk appetite across the asia-pacific. 74.74. some strong gains here in asia. anna: thank you, david. eutain's referendum on membership is back on the balance with several polls showing leads for both sides. tooll for the times has 44% 32%. a survey by the delhi telegraph -- daily telegraph is it is 43% to 46%. jeremy corbyn told an audience why he is staying in a reformed eu. >> there was also a turning point because if we leave, i don't think there is any way back. if we remain, i believe europe has to change dramatically to
1:08 am
something much more democratic, accountable. anna: brexit campaigner and leader nigel urged voters to quit the eu. >> we must go out there and sell this political class we want our country back and make june 23 our independence day. parker from credit squeeze joins us now -- credit now.redit suisse joins us talk about what the assets will be like coming thursday. u.k.idelity thinks the hopes to the value in terms of some of the chaos. we have seen stocks doing better than the pound was doing. i have a chart that shows the 30 day correlation. it does show the correlation has increased and jumped,
1:09 am
suggesting there is nervousness in the stock market. >> i think that is right. you have to look at the importance of the financial sector. obviously, a vote to leave or stay, the most volatile sector will be the financial sector. clearly, if the vote is to leave, it is a very significant downside in the financial sector. the converse is equally true. you will see a rally in bank stocks if there is a remain vote. soros is suggesting that sterling could go down to 125, perhaps 130 against the pound and that is very plausible outcome if you get the leave vote. i think, again, that is entirely possible. i think if there is a leave vote, it is possible that we will see an immediate shock affect in the markets. that would be logical because
1:10 am
let's not forget one of the fundamental problems of the u.k. economy is the account deficit of 4% gdp. that needs financing and i think investors and traders would exit the pound and the financing would be problematic. a very good morning to you. the other exclusive interview we have on bloomberg, he talks about the falling of brexit. is number 24 on our ritualist -- rich list. 37% of his wealth is in the u.k. do you think there will be a rush by the qatar investment fund, other major property investors in the united kingdom over the medium-term if we brexit? bob: you have seen very clear
1:11 am
report from organizations like the imf, oecd, the bank of england, the u.k. treasury. i think there is consistency in all of those reports. if you actually summarize those reports, i think first of all we have talked about the need to finance the current account deficit. if that finance is not there, you have an immediate result which is sterling downsize. one has to look at the capital account of the u.k. the u.k. over the last two decades has been incredibly successful in attracting long-term foreign investment. the auto industry is one good example. another very good example is foreign investment into infrastructure. whether it be utilities, the trains, etc. one then has to ask the question will that investment continue
1:12 am
into the u.k.? i think inevitably there will be investor concerns. investors do not like uncertainty. because they don't like uncertainty, the flow of foreign investment will slow down. your question is will there be for an disinvestment -- foreign disinvestment. i think this long-term investment will be in stuff that is difficult to sell. one cannot make the statement that there will be dissonance. one can make very confidently that new foreign investment will slow down. anna: you mentioned george soros. it brings back memories of 1992. in your mind, are there anyways of viewing thursday, friday through the prism of 1992. it is an iconic moment in the u.k. bob: one should not forget what david cameron's role was in
1:13 am
1992, he was the assistant to the chancellor at the injection of the pound. what is happening this week is clearly more profound than what has happened in 1992 because in 1992, that was a market rejection of the pound, or ejection of the pound from the exchange rate mechanism as it was structured then. arguably, the exchange rate mechanism then was a very unstable mechanism. now we are talking about something much more profound which is the u.k. leaving the eu rather than just a currency adjustment. manus: bob, you are going to be with us for the next 45 minutes. let's get you up to speed with highlights. we have the ecb president mario draghi speaking at a hearing of a parliament in brussels. janet yellen starts the semiannual testimony to the u.s. congress with the senate and
1:14 am
continuing tomorrow in the house. go.can follow that on tlive 8:00 u.k. time, the eu referendum debate. that is on thursday. up next, the future is bright, says hong kong's richest man. he tells us why he is still bullish on china. ♪
1:15 am
1:16 am
1:17 am
anna: welcome back. this is countdown. 1:17 in the afternoon in hong kong. the hang seng up half a percent at this stage of the trading day. recent economic data shows china's economy is stabilizing amid persistent concerns about rising debt. ofka-shing owns an array assets in china. speaking exclusively to
1:18 am
bloomberg and his first interview with international media in four years, he says he remains full of optimism. >> [speaking chinese]
1:19 am
angie: there are a lot of chinese companies looking overseas to acquire businesses, but they keep getting shut down by regulators, including yourself. what is the impact for chinese companies in the future? how do they fix this? [speaking chinese] angie: is this frustrating? >> [speaking chinese]
1:20 am
manus: that was li ka-shing speaking exclusively to bloomberg's angie lau. staying with asia, japan's prime finance ministers said they would not intervene. the yen weekend today for the first time in eight days. let's bring bob parker back into the conversation. when you look at the big issues,
1:21 am
i want to focus on the chinese market first. the irony that is -- this is the chinese dax. it is one of the major bond markets, 10 major bond markets that has seen yields rise by 13 basis points. the market, in terms of the bonds and the world, is viewing china through a different prism, isn't it? bob: i think the answer is yes, but the point i want to emphasize is the big structural change we are going through in the chinese economy. i would argue very strongly that we have this long-term slowdown in china. growth in the second half of the year will be close to 6.5%. the probability of us going back to 7% is very low indeed. when i talk about structural change in the chinese economy, if we look at the service sector, investment in infrastructure, the consumer sector, we still have got a problematic economy. the problem with the
1:22 am
corporate debt is the old heavy industries. whether it is the steel structure, coal mining. that is where, did you look at the bond market, investors are concerned about rising default rates. if you are focusing on the service, consumer sector, yield infrastructure, transport or energy, i'm relaxed about chinese corporate risk. it is old industries which are over indebted where i see the pressure. anna: you don't see a hard landing for china? bob: no. whichit is a debt story, i will talk about separately. bob: absolutely. if you break down where is the debt in china, we have so got government reserves, exchange reserves under $3.2 trillion. the chinese domestic consumer savings ratio is still very high
1:23 am
and that is despite consumer spending running at over 10% year over year. the debt levels in the service sector, in what i would call new chinese industries, is very low. the problem is these state owned enterprises. i think that is where investors have some concern because the assumption was always the government would guarantee, although it was not explicit, the soe's and their debt levels. one has to question that. manus: what would potential intervention -- this is what we're looking at -- what would that do to the yuan currency? seemed to have eased off on the paranoia that is going on with the yuan. if there was that movement at the g7 to help the japanese, what with the consequences be? bob: an important point is if you look at the situation today in the foreign exchange markets
1:24 am
for the chinese, it is fairly stable. i think where the people's bank of china have a serious problem would be the impact from capital outflows that we saw last august and september and then again this january. i think it is quite interesting that there is a near perfect correlation between chinese capital flows, the short-term volatility and global equity markets. there is quite a clear logic in that correlation. chinese capital outflows are negative for global equity markets. in terms of where we go from pboc wouldnk ideally love to see a weaker one. i have always stuck to the view of a forecast of 670 against the u.s. dollar at the end of a quarter is appropriate. i stick to that forecast. a further slow, controlled devaluation. i think the important word is
1:25 am
controlled. the pboc were very concerned about their ability to manage the currency last january and august and they were worried about the short-term volatility. they want to clamp down on that short-term volatility. anna: this is the story of june until yesterday. the japanese currency in blue. trouble finding home in global equity markets. y face, strengthen their currency of the yen. if there is a brexit on thursday, how strong with the yen get? -- wouldg with that that be? bob: i think the japanese authorities have a very serious problem with the strength of the yen. with this move towards 104 on
1:26 am
dollar-yen, that is reinforcing deflation. that is why i think the japanese economy over the balance of this year will struggle to get more than about 1% growth. deflation is problem number one. problem number two is look at chinese export data. the impact of the yen moving to where we are today close to 104 is clearly having a very negative impact on japanese exports. if you look at the breakdown of the nikkei, you have a very clear view. anna: do you think -- manus: we have to interrupt you. we have breaking news from abe where he says a brexit would have a big impact. this is the japanese prime minister saying brexit would have a big impact. the top priority is to completely exit deflation and
1:27 am
grow the economy. that is the top line on brexit as yen changes its track. that is part of our story. bob will stay with us. we will talk about the aussie dollar. it is up. ♪ okay, ready?
1:28 am
1:29 am
whoa! [ explosion ] nothing should get in the way of the things you love. ♪ get america's fastest internet. only from xfinity. by switching to xfinity x1. rio olympic games show me gymnastics. x1 lets you search by sport, watch nbc's highlights and catch every live event on your tv with nbc sports live extra. i'm getting ready. are you?
1:30 am
x1 will change the way you experience nbcuniversal's coverage of the rio olympic games. call or go online today to switch to x1. anna: welcome back. it is 6:30 a.m. in london. let's get first word news from haidi. aidi: britain's referendum on european union membership remains too close to call two days before the vote. poll.is ahead with one the stay on another poll is ahead. meanwhile, the cofounder of the leave.eu campaign told bloomberg that nobody knows what the outcome will be. leave. strong to
1:31 am
no one really knows. if someone says they know, they are lying. tim cook is to host a fundraiser for u.s. house speaker paul ryan, according to two republican aides. some of the money will go to the nation republican congressional committee which is a sign that he is hoping to boost the fortunes of establishment republicans. the move was made by controversial comments made by donald trump about women, minority groups, refugees and immigrants. the senate has voted down a series of measures intended to prevent terror suspects from buying guns in the wake of your land a massacre. two of the defeated proposals are from republicans and two from democrats the none were able to move forward. some republicans say they will
1:32 am
work on a new effort to break the deadlock on gun legislation. ws powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on bloomberg. manus: thank you. , haidi. the pound has retreated after its biggest jump since 2008. thursday's vote on the european union membership will be close. we have a little bit more on the markets. another day of volatility. >> yeah, two polls, two outcomes. one showing remain ahead and one showing leave ahead. we are seeing the pound retreating after its biggest jump since 2008 yesterday. $1.46 on sterling. it is down against most of its major peers if you look at wcrs. it is not a straightforward
1:33 am
issue of risk aversion today because of you look at currencies against the dollar, the yen is the worst performing out of 16 major currencies. if we move on to see what is happening in asian markets, asian stocks rally for a third day. there is a little bit of risk appetite here even though we have seen losses in sterling after that poll. it is not quite all about brexit today because investors are also looking ahead to janet yellen testifying before lawmakers today and tomorrow as she delivers a semiannual report. the dollar index is down for a third day, its lowest in more than a month. i want to look at the u.s. treasury 10 year yield as well. i started with and will end with brexit because the 10 year yield is actually down today after three days of having higher and the biggest gain in the month yesterday. a lot of the sentiment has been driven by brexit. you can see the yield coming
1:34 am
down. of course, we have the tragic death of joe cox which meant campaigning was suspended. we saw the yield move higher as money moved out of the safe haven and now it is back down as we showed, the polls showing a split in voter intention. a great quote from jpmorgan, it is at the mercy of event risk. anna: thank you. now we will look at some of the effects of the markets. let's go to manus who has a chart. manus: i have indeed. the question is are we breaking trends? the yen has been rising for eight straight days. this is the yen against the dollar. it has been rising for the eighth day in a row. that is the longest winning streak since 2011. the strong as level in yen in years. what does that mean? you are hearing abe say that
1:35 am
brexit is a huge risk. abrupt moves have in foreign exchange and it is important for it to be stable and the government will not intervene. this is a big risk. the other thing i'm looking at is is this the dollar down for the fifth day? you have two sides of the dollar-yen trade. dollar down for five days in a row and that is accelerating the move for the yen on the upside. yes, yen is a haven, but there is a very big posture that the dollar, and people in the white house could take the dollar out by 25%. we will talk about that. they stand ready. that is needed, but they will not intervene lightly. anna: let's move on. we have minutes from australia
1:36 am
central bank. itsrda had positive data in june meeting while i reiterating that it will remain low. we are joined now from sydney by paul. talk us through the minute. any big conclusions? paul: well, australia has a bit of a split personality when it comes to the economy at the moment. we can take a look at the good growth which was above estimates. it is pretty healthy at 3.1% at yields. i also noted strong expansion in the non-mining sector. oil at 5.7%. there is the bad the rba has to deal with which is wage growth at recession levels and levels down as well. the last release of the cpi. in the statement, they were
1:37 am
trying to balance the two things. wasmost consistent sustainable growth in the economy and inflation going back to its target. manus: paul, the rba is not offering any real guidance. there is major issues. are there expectations we get another cut because you have the city housing market on fire. where are we in the debate? is it macro credential over rates? paul: the debate is settled in the minds of the economists for bloomberg. next month, 23 of 24 expect the rba to stay put that in august it flips. all 23 of the 24 expect it to be down 1.5%. we will left had another inflation by then and that caused the rba to move back in may. the australian dollar has crept
1:38 am
up almost back to where it was before the reserve bank cut the rate back in may. the commonwealth bank saying if the u.k. opts for brexit, there could be a further drop. manus: thank you very much, paul allen in sydney. let's bring in bob parker. my question to you is this -- we just heard paul talk us through no change from the rba. wequestion to you is are about to embark on fiscal spending? is that what needs to happen on a global level? is monetary policy spent and would you concur that speculation -- bob: i think that is the most important question at the moment in global markets. andonetary policy exhausted
1:39 am
is there have to be a switch towards fiscal policy? if you look at the growth outlook in the developed world -- we can look at emerging markets separately -- i think the growth outlook is for a modest improvement for what was a mediocre result in the first quarter of .8% annualized growth. it will probably improve to 2% growth. the eurozone first quarter data for april and may, we are seeing a slowdown from more moderate consumption. the eurozone as a whole, 1.7% growth this year. as we mentioned earlier, growth in japan is really struggling with that impact from the yen on exports and the problem of renewed deflation. we have the super easy monetary policies in europe and japan. in the case of japan, one has to ask the question does the policy of negative interest rates work when we have got an elderly population which seems to be
1:40 am
responding to negative interest rates, not by consuming, but by increasing savings? we are not seeing much of a pickup in consumption in europe. savings rates are high and corporate liquidity is high. i think it is a fair question. needs to be done on this on to whether monetary policy is now becoming exhausted. if you do believe monetary policy is becoming exhausted, one has to move towards fiscal measures. anna: while we are on the andect, the deflation relief intensifies as we are seeing commodity prices. it is simple as getting a bounce back up to fix this deflationary winds or do those forces go deeper because of something more? bob: i think they go deeper. on your comments about commodity prices, you have to bring it down to its subcomponents.
1:41 am
on energy prices, it is very interesting. over the last few weeks we have seen accounts and data in the states, it is actually coming back into production. $50 a barrel is actually encouraging the shale industry to increase production again. that is one of the reasons why i think the u.s. economy will improve in the second half. the obvious conclusion is $50 a barrel is probably a cap on the oil prices. if market talks about moving to $60 a barrel, i would totally disagree. if you are looking for inflation to come from higher energy prices, that has happened -- not going to happen in the future. anna: thank you very much. good to see you. bob parker joining us this morning. , george soros says that brexit could make
1:42 am
speculators rich and investors poor. we will get the business to you about the eu referendum next. ♪
1:43 am
1:44 am
1:45 am
manus: $2 billion in the forklift. that gives you a sense of the kind of deal we are talking about. kion agrees to buy dematic for $2.1 billion. the total enterprise value of dematic is $3.25 billion. the deal of the day as we go towards the markets. that is your breaking news on bloomberg. it's just gone 9:45 in dubai, 6:45 in london. let's go back to haidi. good morning. haidi: hi, manus. insurer plansst to increase profitability oneugh 2020 by seeking
1:46 am
billion euros to intensify investments. they want to cut growing demands of policies, savings and health. they are targeting in adjusted return equity of 12% to 14%. questions have arisen over facebook's plan to expand into china. this coming as the social media giant held its annual shareholder meeting. sheryl sandberg elaborated on the strategy. >> we have set our mission is to connect everyone in the world and china is part of everyone's world. we are learning, studying about the chinese market and we will see what happens. a memo saying the company share price is being hurt by unusually high levels of short positions. hedge funds were wrong to assume the bank would have to raise additional capital. it lost half of its market value
1:47 am
since taken over last july. that is your business flash. anna: thank you very much, haidi, with the latest corporate news. george soros is warning the pound may slumped 20% against the dollar if british voters leave the eu this week. he says one brexit scenario would make some speculators very rich and most voters are grossly underestimating the cost. this comes as the chairman of property consultants tells bloomberg that he thinks prices in london will be heavily affected of the u.k. walks away. >> the key thing is we have uncertainty at the moment and the markets hate uncertainty. come friday, we will know. if we stay in, probably more of the same. pent up demand commercially which we expect. if we exit, there is more volatility. if all the pundits are suggesting there will be a run
1:48 am
on the pound, possibly 20% cheaper, that means 20% cheaper property in london. i have no doubt people will be coming in. anna: for the pound european story, let's go to ouryan in brussels. take us through what plans are being made and what officials are doing to prepare for a potential brexit. says the government has made no plans in terms of securing the financial industry. ryan: what we know is they are making plans, but they have been told not to put the plans to paper for fear they could be leaked, or spoke everyone. we heard from the president of the european commission that should brexit happen, it could be the end of western political civilization. pretty dramatic. we have been talking to officials who said they are
1:49 am
preparing, but they are not actually going to put it on paper because of that concern. there is a law that was established in 2009 that lays out the process for a brexit. but we also know from officials we have been talking to is we would almost certainly get a meeting of the eurozone finance ministers almost immediately. an emergency summit. we have seen that before, almost always with greece. that would be what the first couple of days look like as eu officials grapple with what this might mean. manus: over that next week, what happens over the next week after the vote? as you said, nothing has been committed to paper, so to speak. what is the thinking in terms of that next five days? a eurozone finance ministers meeting, you could also get a heads of state meeting, possibly as early as saturday. why saturday?
1:50 am
there is an election in spain on sunday and the remaining eu germany,, france and might want to send out a message to spanish voters as well as the rest of the union that it is still strong. on tuesday, a regularly scheduled eu summit. british prime minister will be invited to that. that is where he will invoke eu article 50 should we see a brexit vote or could invoke that would set this to your long timeline -- two-year long timeline in the motion in which they could negotiate the exit. that could take as the june 2018. what is important is how the politics within the eu itself changes. i think you will have germany, france, commentators talking about how they want to push for further integration to show the union has not been damaged. but then you have those within
1:51 am
the european union who don't use the euro who might feel lonely if britain was to exit. they might say not so fast. like the netherlands, for example. you would effectively end up with a division within the eu even with britain out of it. anna: some of the scandinavian countries are thinking about that. ryan, thank you very much. let's bring in david, an executive fellow at the london business school. good morning. osborneay frank george that they have made no preparations for brexit except for financial stability consequences, if there is to be a vote. that would be the immediate concern. david: if we were to go to brexit, we have that uncertainty that comes with it because osborne is saying i will pass an austerity budget to pass the votes.
1:52 am
nothouse is saying we will pass that budget and we will have a government that is campaigning a prime minister and chancellor to stay in who will be responsible for the negotiations. in the event that there was a brexit vote, that is were the uncertainty starts rather than where it finishes. the odds are still the vote will go the other way in which case we continue forward. if it is a close vote, i'm sure the people voting for brexit will be feeling divided. manus: good morning to you. nobody knows which way this will go. the polls are hard to call. i have a graphic for you which is the foreign holdings of british government bond. they are going higher and higher. nearly 27% of our bond market in the united kingdom is owned by overseas institutions. that is perhaps the biggest risk of all. it is the current economy deficit.
1:53 am
is that a balance to you? david: i guess that is why soros we will have a collapse in the currency as a result of them trying to deal with that balance. it will depend how the financial markets respond to this in the short-term. those risks remain as well. a 20% drop in the currency seems enormous in today's low-inflation markets, but there would need to be adjustments. anna: we will see about the pound. david: he did not become rich on the pound. anna: let's talk about the insurance sector. the way a brexit would affect insurers and maybe the wider financial community in london, is a just market for mile -- turmoil or lost market potential? david: long-term it will happen. the financial services industry
1:54 am
is a jewel for the u.k. economy. it has many problems, but right now it is doing well in the eu. the germans, the french or maybe even the dutch, and britain decided we would leave the eu, they would be saying this is an opportunity for us. bring negotiate -- britain negotiated hard to win privileges for london within the european union. it will be interesting to see if it is a sitting around the table and if they would be leaving one by one. there are some big consequences there. they were probably offered the longer term rather than the immediate first few days. exchange rates and people selling bonds or so. manus: we had a number of 45,000,ations with -- 50,000 jobs could go. investors would
1:55 am
scale down and reduce their position in the u.k. bob diamond, based out of the u.k. how real is that threat or is that propaganda from the remain side? we are trying to understand the ofks here for the reality the financial services and the tax take which is remarkable across the u.k. david: i think that is a really good question because this debate, like many fiscal debates, people are taking the extreme positions. if i were stepping back from this, i will reiterate what i was saying before -- we have managed to negotiate certain terms for the u.k. despite the fact we are not part of the eurozone. itwe are not part of the eu, is difficult to see how you keep those. i don't think there would be a sudden exodus but everyone weather in finance or whatever industries would be
1:56 am
reconsidering what people are doing in europe and the u.k. you would have to believe there is a drip, drip, drip that would be against london being a great financial capital. having said that, london has been a great financial capital for centuries now. i don't think we are looking at the end of the world here. anna: it depends on the extent of the interconnectedness. are you concerned about political collapse? you have been close the politics in the past. are you worried about what happens to the government in the short term if there is a brexit? david: we will have a house of commons which is pro-eu negotiating our exit. we will have the conservative party who are going to be saying this is not legitimate because you lost the referendum, but
1:57 am
then you don't have a group who is saying we know what the government is looking like it anna. anna: david, thank you for joining us. up next, more on brexit. when we return, more on the pound. ♪
1:58 am
1:59 am
2:00 am
manus: brexit in the balance with just two days to vote. separate polls for leave and remain with remain in the lead. the billionaire investor says brexit could make speculators rich, but voters poor. hong kong's richest man tells bloomberg he is still bullish on china. ♪ manus: welcome to "countdown." inm manus cranny into by --
2:01 am
dubai. anna: let's have a look at what is in store. -- remember yesterday was a really strong day and we had a bounce in the pound, almost 2% higher against the u.s. dollar. that really set the tone for risk appetite. that carried over into the u.s. session and asian session. things look mixed at the start of the trading day here. we have had a lot of news around the yen and pound. manus. manus: let's take a look at the risk radar with a little bit of pound and a little bit of dollar yen. top of your screen, you give them back some of that, a little bit of a flurry. george soros talking about brexit saying it could drop 20%. talking about significant damage, that is in front of
2:02 am
daybreak. i really thought long and hard about what soros said. the pound drops to one euro. one euro, one pound. that is how you become a part of the euro as you vote for brexit. under our basely tenure. dollar up, yen down. we will have a break and that. dollar yen is overbought. we have gold out of there at the bottom of the screen, down .5%. -- 1283. how are the bonds looking? we have bonds on the move. take it+++
2:03 am
bit of movement over in the u.s.. let's leave the bond market their. let's get an update on the latest news. let's go to hong kong where we will join haidi lun. >> in the billionaire investor george soros says the pound may sink more than 20% against the dollar if british voters decide to you leave the european union. this would be more disruptive than when he profited by betting against the currency back in 1992. tim cook is set to host a fundraiser for paul ryan. that is according to two republican raids -- two republican aides. boost -- ofng to establishment republicans. -- about women, minority groups, refugees and immigrants. minutes from the june meeting. showsntral bank says --
2:04 am
inflation would remain low. they kept rates unchanged. the country heads toward an election next month and international -- eu referendum. for the firsted time in eight days, following the release of the boj's april meeting. a majority of the board meetings -- board members agreed. the u.s. senate has voted down a series of measures intended to prevent terror suspects from buying guns in the wake of the orlando massacre. two of the proposals offered by republicans and two by democrats. none reached the 60 vote threshold. some republicans say they are working on a new effort. global news, 24 hours a day, powered by 2400 journalists in
2:05 am
more than 150 news bureaus around the world. you can find more stories on the bloomberg at top . manus: a little bit of breaking news on anglo american. they saw profits at least 20% lower. this is a company that has been under tremendous pressure. anglo american talks about the first half probability, at least 20% lower. that is the latest headline coming from anglo american. let's get up to date with some of the markets. europe is up and running. asia ended it -- ended the day with a turnaround. david: this is a kind of session for dollar yen at bill -- anything below 104 puts the dollar against the japanese yen. asian equities third day higher. solid gains. it does look like a part of the
2:06 am
session is mostly red. that has reserved -- that has reversed itself. japan is moving up and australia. japan was down 1% at one point. that is quite a turnaround that we witnessed. china is up for a third straight day which will you believe is the longest streak of gains in three months. it tells you how horrible it has been there for investors. the place seems to be here in asia, the u.k. will remain in the you. whether that is a reflection of smart money or where smart money is flowing to, we will find out on friday. investors seem happy to add more risk asset at the moment. we are at session highs. we have two or three hours left before the last market here closes up shop. dollar yen, as i should you, 104.33.
2:07 am
with that being said, we are coming off seven straight days of gains. yen --line in the dollar the oversold terrain for the dollar yen or to some analysts have flagged this despite the rally we are seeing in the equity space. in risk assets. there is a little bit more money coming back into insurance. can will remain in the euro dish in the u.k. -- eu will -- u.k. will remain in the eu. manus: david, thank you. i said we had anglo american platinum. . need to be clear about that first time profitability being 20% lower. that is a quick correct. anna, back to you. anna: is get back to the birth story. -- let's get back to the brexit story.
2:08 am
vote, a to go until the new poll has the leave the vote ahead at 44% versus 42%. a survey by or a b shows the remain camp ahead on 53%. appearing on sky news, jeremy corbyn told the audience why he is for staying in a reformed eu. >> it is also a turning point, because if we leave, i don't think we're going to have an easy road back. if we remain, i believe europe has got to change quite dramatically. what's more democratic and much more accountable. anna: brexit campaigner, nigel farage asked voters to quit the eu. >> we must go out there and tell the political class we want our country back. we will make history, june 23, independence day. anna: let's bring into the
2:09 am
conversation ashok shah. good to see you. how are you and your colleagues preparing for thursday through friday? ashok: we are borderline the risk is high right now. of course all of the data and numbers that have then produced by both sides are quite alarming . it is going to be much more subdued whatever the outcome is. in case the numbers of jobs to be lost and the loss of the gdp and so on, i think it assumes so many things but everything is going to be uncertain. it is going to take two to five years to negotiate the exit terms. in the meantime, there will be some kind of transition. the world is not going to fall off. there has been a lot of alarming data with that has been put up
2:10 am
there -- alarming data that has been put out there. to an extent, i think people have been de-risking. this has been going on for quite some weeks. getting very late in the stage to try and position the solution. about thee case volatilities and show you where the big action is going to take place. respond. markets will manus: let's come in on that. we can talk about volatility. this is against the euro. this is the british pound performance against the euro, year-to-date. we got down the percent. the dollar down over 4%. george soros says irony is not lost. there is a way of joining the euro.
2:11 am
would you agree with him on that? this is one of those perverted risks -- perverted outcomes i should say if we wake up on friday morning and we have voted to leave? ashok: i believe that is an extremist view. positions is running the position from the back. if you think about the volatility, the main concern is the big current account deficit. that is calming down a little bit. in a world of negative interest rates, there are very few places that the defensive investors can put their cash balances to work. the u.k. still has positive interest rates. that is one of the big attractions for the international community to continue to place money into the u.k., to find an account
2:12 am
deficit. we already have seen the economy situation calming down. they should try and rebalance the = of the equation. the consumer side of the cycle has picked up. there are things in the pipeline deficitdicate account issues should calm down and begin to come back a little. that is the big driver for people who are very pessimistic for the sterling in case we come out. i don't think it is going to get met. anna: a lot of pessimistic voices -- expert voices, the imf, many others talking about the negative u.k. economy. you don't sound all that convinced. ashok: it is important to understand the point of view. their primary objective is to make stability a global level. -- from theirme
2:13 am
point -- from the point of view, the course of action will be if the state's quote is maintained. -- the status quo is maintained. we're still repairing the financial balances on the great 2009., from 2008 and the world growth rate is calming down. downward -- but we are recovering robustly. there is not the capacity for the global system to absorb a large shock. manus: hold that thought because we will get back to that. ashok shah at london capital stays with us. our coverage of the eu referendum. that continues with moritz kramer, 7:30. an hour later, we are good to speak to the secretary state, teresa bill ears -- villiers.
2:14 am
lamont.oined by norman those interviews, your brexit debate continues right here on bloomberg. ♪ yen, thet, stemming finance minister speaks out on surging currency. ♪
2:15 am
2:16 am
2:17 am
anna: 7:17 here in london. blue skies over the cathedral there. the pound is fairly packed against the dollar, 147. a bit of a turnaround from the earlier trade. let's get the business flash. anna at hong kong's
2:18 am
richest man has calls for britain to vote for the -- britain to vote to stay in the eu. he says the brexit would have far-reaching implications. >> i hope they don't leave it if brexit happens, it will be detrimental to the u.k. and it will have a negative impact on the whole of europe. it is not the end of the world either. ♪ >> france's largest insurer plans to increase profit -- profitability. the company wants to tap growing demand for policies protecting savings and health. and it just a return on equity -- over the next four years. credit suisse ceo tidjane thiam says the company's share prices
2:19 am
are being hurt like high levels of short positions. were -- soon funds the bank will have to raise additional capital. it has lost half of its market value since he took over last july. that is your bloomberg business flash. manus: selena, thank you very much. japan's finance ministers has signaled the government will not intervene without due consideration. let's get more from jodi schneider. it is interesting how they clamor from one side about intervention, and here we are, they are not going to do it willy-nilly. what is driving this? right.ou are finance minister said intervention was not something they would consider lightly. the markets in their view have already started to take into
2:20 am
account a possible brexit vote. he mentioned that the g7 and g-20 both has said abrupt changes in the currency are not desirable, and they would take action in accordance with that. he seemed to be stepping back from intervention. anna: is in keeping with recent ?omments by japanese officials the lines about being compliant with g7 and g-20? jodi: on friday, finance minister talked about the g7 --tioning, that the g7 mentioning that the g7 needed to coordinate and japan needs to be a part of that coronation to deter what he called "one-sided, abrupt and speculative" changes in the yen.
2:21 am
bringing up the issue of intervention but not saying what would be done for bringing it up in a vague way. he is making these comments as the yen has strengthened 5% this month against the dollar with the brexit vote looming. anna: jodi schneider, thinking very much. ashok shah is still with us. you have been calling over what the imf has been saying about the japanese economy. he says -- it says they need to reload. it was a damming report. for the obvious sensitivities that one would have to take into account. the core of the problem that is been highlighted really is the confidence in the policymaking jumping, but more importantly the fact is the 2% inflation target seems to be very distant before it can be achieved. there are two underlying
2:22 am
drivers. one is the story yen continues to import lower prices. is there isortant no indication there -- indication that the wages are picking up. the reason for that is the dynamic of the employment population is changing over the last few years. there is more employees which are not fully protected. they are temporary. they don't have the full protection and the companies not giving them the full pay rises. to that extent, it is impossible to get the wages to start rising . it is difficult to see how they can do it because on medium-term, the position is one of the declining working population. long-term growth trajectory is running less than
2:23 am
a half of a percent. that is a big effort to try and get the women working population to be increased, in order to increase the potential growth rate. that seems to be very difficult because it is tied in with the cultural issues. more importantly, one other recommendation in order to increase the long-term growth rate is to encourage more foreign workers to come in. we are seeing the japanese are reluctant to go down that path. manus: i want to reflect back on a chart. the great debate is whether the dollar is all yen strength or whether it is all a weakness. is 1995.a chart which the changes in the white house, chalk or clinton. clinton.f -- trump or regardless who wins, you are going to see a weaker dollar. channeling 1995?
2:24 am
one of the underlying drivers tends to be the real interest rate differentials and what we are seeing is the u.s. soccer -- u.s. cycle is, -- is karma. it brings in lower imported prices. that makes the inflation undershoot. if you're looking at the differentials, the fact that the japanese are going back into it -- into an inflationary environment. driversone of the big for the stronger yen. the large part is to do with the stronger when yen giving -- yen driven. there is a driver in terms of the delayed -- the delay in the u.s. interest rate cycle.
2:25 am
because the foreign consumption has been taken into account by the fed. more importantly, the stopper dollar is correcting mechanism because it brings in lower oil prices -- it brings in lower prices. growth rate will undershoot the target. this is no need to begin crisis -- begin these rises. anna: it shows the correlation has increased. while we did not see these two moving correlations for some time, we notice the brexit reflected in the pound. we have that reflected in the stoxx. that makes the question how do you prepare in the stock market for brexit? ashok: it is a question of making sure the decisions are fairly defensive.
2:26 am
lower exposure to cyclical. lower exposure to leverage companies. they're running a much more conservative exposure. think the levels continue to be very high. ,ig moves in the risk market the equity market and sterling at the moment has been taken is a risk market. it is rotating quite far up and down. if the banking sector is going to be one of the more effective for, more important drive the banking sector in the last few months has been the negative interest rates. the market assumes the margins will remain under pressure. the profitability remains constrained. anna: as shock, thank you for joining us. , thank you for joining us.
2:27 am
manus, that will do it for today. markets. the manus, a little undecided. ♪
2:28 am
2:29 am
2:30 am
guy: welcome to "on the move." it is 7:30 in london. counting you down to the european open. i am guy johnson alongside caroline hyde. billionaire for exit alarm. george soros warns of a black friday sterling if the uk's leaves. an exit would hurt everyone. the polls tighten. othervice contradict each . how will the market deal with the latest details? yellen hits the hill.

582 Views

info Stream Only

Uploaded by TV Archive on