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tv   Countdown  Bloomberg  August 4, 2016 1:00am-2:31am EDT

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exit b boost for mark carney cutting a record locomotive officials signaling stimulus. crew to come back. oil rebounds to $40 after a rally in asian stocks. and no longer moving, tesla's elon musk assures investors sales are intact, despite missing estimates. a very warm welcome to countdown. i am edwards. and i am manus cranny at
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the bank of england. it is almost as you get a 25 basis point rate cut. that is what the market expected eight. it is almost deja vu, anna. but how doom and gloom laden will the prospect before inflation? anna: a lot of focus on the bank of england. let us get to the breaking news from the corporate world, numbers coming in from siemens. we have numbers coming in at 2.1 9 billion euros, ahead of the estimate of 2.09. so far ahead of the estimate, seems they are actually upping guidance once again. we her not long ago from siemens that they will basically be 670, that is the euro range. they had seen it at between 640, upping that guidance. we will talk later on to the ceo joe kaeser.
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we'll talk to him about that upgrade to guidance, just how convinced are they about how they can do in all of the energy-related indices they have been turning attention to. europe's biggest engineering company, in munich. let us get to the pharmaceutical industries. we have merck in germany giving us numbers, raising four-year forecast. some a good start for the german reporting season this morning, from these two large german businesses. in terms of the businesses we have from second-quarter net sales, that is in line with the estimate. items,ber excluding some 1.1 6 billion, that looks to be just a touch ahead of the estimates for the second quarter. when we get down further, net sales talking about 2016 net 14.9-15.1ing in at billion. that looks higher than the estimate previously, back in may
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they told us that 20 was the sale. they are upgrading the forecast, and that allows them to upgrade the four-year forecast. excluding items 155, i touch ahead of the 152 euro estimate. we will also be speaking to the cfo of merck. he will be joining us on on the move later this morning, just after 8:00 u.k. time. lots to talk about m@a, ambitions with pfizer around cancer, what is the dollar doing to their business? it will talk about all of those things in a couple of hours. let us get to the risk radar interview with the markets have been moving to overnight. asian stocks rebounding following the u.s., oil price really the big giant. we have topics in there because even though abe's stimulus plan might have underwhelmed, we are seeing the rebound today. a little bit less on the dollar-yen, we have nymex, the big catalyst the last couple of
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days from the u.s. the asian session a little bit more risk appetite. gains showings of a steep drop in gasoline, some easing of concerns around and oil glut. the aussie dollar up, slightly more risk positive attitude this morning and markets. 29, the pound at 1.33 entirely flat but we put that in because it is bank earnings day. let us get the first word news. here is haidi lun. anna, a woman has been killed and five others injured in a knife attack in central london. police were called to the square just after 10:30 p.m. u.k. time. a 19-year-old man was arrested. mental health was significant factor in the event, although the possibility of terrorism is also being explored. chicago fed president charles evan says one rate hike could be wanted this year, as it gathers
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momentum. he expects growth increase in the second half of 2016, following disappointing gdp readings in the first two quarters. meanwhile, investors are awaiting until july to gauge the fed rate path. the dollar has fallen against f ofyen, after bank of japan officials say helicopter money. the deputy governor said the boj and government is different from helicopter money. and direct finance from the central bank. the government-backed retirement plan is losing everything it has a $350 million fund. that is after it plunged almost 7% the last year. a fresh blow for capital management, which has been plagued by redemptions, as well as federal bribery investigation. investorsreassured
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and can ship roughly 50,000 cars in the second half, and half a million in 2018. that eases the staying over second-quarter losses of $1.06 a average in a share bloomberg survey of 70 analyst. risksrosecutors say more are possible in the long-running investigation of world football. the attorney general says the snared remains, already two companies. he says he expects to file additional charges. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. you can find more on the bloomberg at top . i am haidi lun. this is bloomberg. anna: thank you very much for that. let us stay in hong kong. on how thette sally agent equity session is doing. a little more risk appetite this morning. juliette: yes, that is right.
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yesterday was very much risk off, but as you say a lot of focus on central banks today. we are seeing a rally come through in the asian markets, japan, leading the way by 1%. that is the first game we have seen in japanese stocks in four sessions. importantly, the regional index, which yesterday fell to the lowest level since june, rising quite significantly. june 24 the day after the brexit vote, that was the weakest we have seen asian markets since then. after the lunch break, we are seeing weakness come through in the shanghai market, down by a quarter of 1%. other regional markets are doing well, hong kong up by 7/10 of 1%. you can see hsbc still doing well, releasing results yesterday, and those oil players driving gains in the region, up by 3.4% as we saw crude rebound. the oil price also helping out australia and new zealand,
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having a first rise in three sessions as well. we heard from australian prime minister malcolm turnbull the last hour. checking it on the banks after the australian government said there will be a parliamentary panel, in the wake of the fact that a lot of the big banks have not passed on this week's rate cut in full. we are seeing most of them move hi, national australia up by 6/10 of 1%. and that is certainly big news for the australian banking sector. looking at other stocks we are watching today in the region, noble group in singapore, one of the best performers. this is the new trading, i had of the release next week. down in the face of australia, doing quite well with the forecast of four-year above analyst estimates. and samsung could be copying buying into one of the chrysler's movements.
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much of them very positive, and the japanese yen is pretty steady. in a good boost, holding to the above that 101 handle. anna and manus? anna: juliette, thank you very much. the bank of england will have the first quarter assessment of the u.k. economy, following the brexit vote expected to lower the outlook. and the majority of economists do think we will see a rate cut. manus cranny is at the bank of england. just how brutal can we expect the downgrade to growth to be from the bank of england? manus: i think pretty substantial. the one thing that strikes me is, uncertainty is rising. have a look at the chart we have for you. that is what mark carney and his cohorts are dealing with. hard, theturning into backdrop is pretty cup. the biggest one-month fall in the services of the 20 year history of the reading. a rate cut of this, pretty much
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a shoe in, 25 basis point. but a month ago when i was here, that is what i was saying to you. i think it is about the a la carte, on the menu, will they go ?thequantitative easing lms are split. one of the risks of doing nothing, bill gross had a warning. bill: i think the market expects them to cut, and if they did not cut, they would be near-term chaos. currency markets, so, you know, they move along with the fed, and a move along with the boj. manus: interesting perspective there of course from bill gross in terms of the currency market. in terms of those expectations, the bloomberg survey sees growth falling 6/10 of 1%. gdp could be flat. and the ability to actually see inflation below the 2% target, well, that could burst out about that. a whole range of issues to deal
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today. anna: i really like the line from our colleague, one of her pieces this morning, the bank of england saying this is the most hotly anticipated bank of three weekse, well, ago. let us not forget three weeks ago, we talk about that extensively. the pound has been under pressure. does the market expect that to continue? manus: well, certainly the positions we see, short positions the biggest since 1992. a great deal, this is what you and i have gotten from a number of guests we have spoken to, the pound is off by 9% on a trade weighted basis as we saw brexit. but bear in mind what you saw from the bank of japan and the australians, bank of japan going for a little extra easing, but not what the market wanted. and the aussie, you saw the currency react on the upside. there, have peter right how much of a 25 basis points is
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already baked in? anna: we are going to be of course all over the store today. manus will bring you that boe policy decision live on bloomberg. and governor mark carney is due to speak 12:30 p.m. u.k. time. you can watch that here on bloomberg. manus, let us bring our guest house. peter, head of market strategy. he joins us in our london studio. great to have you on the program. hotly anticipated meeting. i have a chart here that shows three of the headaches perhaps the bank of england is facing. this is the latest data construction, not looking pretty. all the low 50 in her most recent readings. how weak a growth forecast do you expect? peter: i expect quite weak. even though it is early, brexit, looks like it is quite detrimental to growth. inflation on the other side looks like it will be picking up, especially considering we
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have seen about the 12% depreciation in sterling. that to me is the most important thing from today's takeaway. what the boe actually does is less important. i think there is a level of exhaustion when it comes to central banks, especially considering that the banks are whaty going exactly into is possible to fix. these surveys that we are seeing right now represent concerns about trade, concerns about foreign investment, concerns about manufacturing, and sort of access to passports and financial services. none of these are going to be addressed by lower interest ofes and more easing monetary policy. these are structural issues. so, you know, that really needs to be addressed. it is not the bank of england is going to take precedent, and to be more on the fiscal side. manus: peter, the chief economist saying we need to have a sledgehammer really, in terms
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of reacting to the economy. these numbers are dreadful. they are absolutely dreadful. this is about putting a floor in confidence shortly, but this is about sending a message that they are going to put a floor on the downside. peter: well, i mean, i think under normal circumstances, when interest rates globally are sort of normalized, you have this sort of message. but this day and age, of 50 basis point cut, another 200 -- excuse me another $25 billion, $50 billion of quantitative easing really hardly a sledgehammer, considering what we have been through for so long. the fact that most g 10 countries yield curves are underwater for almost 10 years. it is hardly a sledgehammer at this point. more importantly, the market fully understands that these issues -- these solutions are not addressing the primary issue. 75m not sure if we go 50,
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extra on quantitative easing, that will be the sledgehammer that we might have seen maybe five or eight years ago. anna: a lot of debate about the value of cutting interest rates. wait until we get the fiscal reset, that chancellor philip hammond talked about. i will ask about the pound, peter. the currency very much in your dna. i have here this graphic that shows funds at their most bearish on the pound, short positions reaching a record before the bank of england's decision today. do you expect further weakness in the pound as result of this? obviously, when you see this, that is what you get. but will that be long-lived? peter: what we were talking about a second go with manus, we are seeing heavy levels of exhaustion when it comes to central-bank policy. therefore, the driver of prices, which has been monetary policy, has sort of taken a step back. the fact that the market is not expecting sort of already pricing in this policy move,
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means that the short sterling position will probably be pressured and become unwound, we see a less than super dovish boe today. we expect sterling the probably gain on this afternoon's offense. manus: peter, is one more thing it is thet market, best bond market in 2016. it is barnstorming. we will get a little more gilt issuance. do you think the u.k. assets, treasuries will still hold, even if it is above the currency? peter: yet i think so. i still think the meter flip, if they go into negative rates, you will see some pullback. but overall, i think there is still value there. i think the people heading into gilt, there is not much else they can go to. really only two places, so gilt is one of those places. anna: peter, thank you very much. head of market strategy at
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growth stays with us this hour. here are the highlights. and we have been discussing, the big event on the macro calendar, bank of england policy decision and inflation report. that is midday u.k. time. followed by half an hour later by governor mark carney's news conference. limber customers can follow all of the -- bloomberg customers can follow all of the action beard and an hour later, just a day ahead of the payroll friday, it will be ahead to digest u.s. initial jobless claims. over in north america. coming up on the program, figuring out the fed. chicago fed president charles evans says a hike this year is perhaps appropriate. we discussed and preview frida'' jobs number. sand we speak to the ceo of siemens, as a german engineering fund raises the four-your guidance. backlash.rexit we speak to the insurance
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business about earnings and the fallout the eu referendum. this is bloomberg. ♪
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anna: welcome back, everybody. this is countdown. 6:20 in london. a fairly moody's guy in hong kong. hang seng up. let's get the bloomberg business flash. chris haidi lun. haidi: thanks, anna. earnings outlook for the year, higher-than-expected, third-quarter profit. and a jump in large orders for powergenerating equipment. europe's biggest generating company says profits from so-called industrial operations rose 20% to 2.9 billion euros in the three months since june. we will be speaking to the ceo of siemens at 6:40 u.k. time. tesla has reassured investors that can ship roughly 50,000 cars in this year's second half and half a million in 2018.
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that eases the staying of a worth auarter loss of 60% share in a bloomberg survey of 17 analysts. says theyse brewer can save $300 million on the assets they are buying from ab inbev, that is because the yen has strengthened. they are seeing the value of beers at just under $3 billion. that is 10% less than what was originally estimated. nike is to stop selling golf, another blow to a sport hurt by slowing participation. sales in the gulf division fell 8% in the year since may, making it the worst performing category. nike built a golf business around the start of tiger woods, but he is never returned previous dominance, after admission of marital infidelity in 2009. that is your bloomberg business flash. anna: thank you very much.
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kong.lun in hong chicago fed president charles evans says one rate hike could be warranted, as the u.s. economy gathered momentum. he expects growth to increase in the second half of 2016, following disappointing gdp readings. meanwhile, investors are waiting friday's announcement. peter is still with us. had of market strategy. still outside the bank of england as well. continuing to talk about central banks and how they respond to the low interest rate environment. hike,vans saying that one sort of reluctant about it. he does not think he wants to see that. he was still rather wait for more inflation. peter: that is a big target, right? if he still had at least six months in the year, we still think that december is likely. we do not believe that september is on the table. with a global conditions being extremely soft, a rate hike in the u.s. will become a magnet
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for capital globally, and defend the dollar to just a devastating height. and i think that is something they are very aware of. with everybody else in ultra dovish position, it will start attracting capital at an alarming rate. and i think that would derail any type of fragile recovery. the data is good. but it is not great. and there is some weakness we are seeing. things like car sales to what really drove the economic recovery in the u.s. in 2014, 2015 is now coming off significantly. and part of the behavior of buyers moving away from houses into, you know, sort of other luxury goods such as cars are taking a backseat, because there is concern about the outlook for the u.s. economy. i think the data is decent. but still not strong enough to whether a rate hike, considering the effect of pulling capital around globally. peter, there is a great
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article on the terminal today that the greenspan push has gone wild. so, hamstrung by the markets, greenspan typically reacted the bad news. but the fed's keeps holding back and holding back. utterly hamstrung, losing credibility the longer they push out this rate hike. peter: yeah, i think credibility in central banks is a real hard commodity to come by these days. it is not just the fed. overall, it is really not coming to fruition, like it has been promised. but the problem is that if the fed does raise rates, it will again, pretty much destroy the u.s. economy and drive the dollar's admittedly higher. so i think if you have a central bank putting across the world, and that is what are the primary drivers for asset pricing the way we have it now, not just the fact that is hamstrung, but other places including the boe, that we will see this afternoon,
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they have to do something or else they will have a significant backlash transmission through the sterling, and make things more difficult for the u.k. as well. anna: this is the kind of market expectation the fed is striking against, about the possibility of a 2016 rate hike.the market is does not listen. does it? only a 38.5% chance of a rate hike, according to the work function on bloomberg. peter: it is so hard to believe that if you have a slow down everywhere else in the world, you have the economic data looking lagging, pre-soft, all of a sudden you have a bright spot in the u.s. that transition mechanism into the u.s. is completely not going to happen. i think a lot of investors say, individually that weakness is on to come to the u.s.? anna: think you much, peter. had of growth. he stayed with us for the rest of the hour. up next, siemens raises earnings
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outlook after better-than-expected third-quarter profit. europe'sto the ceo of biggest engineering company, next. what is it about the business? what is driving that enthusiasm, that optimism, that ability to upgrade expectations for the full year? we will talk to joe kaeser, when we come back. this is bloomberg. ♪
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anna: welcome back, everybody. you are watching countdown. you are looking at a live shot of tokyo this morning, 101.38 is where we are on dollar-yen. waiting for numbers to come through on adidas. we will bring that from the german ledger business. in the meantime, let us tell you the latest addition of daybreak. it is on your mobile and the function. let us take a look at some of the topics they are covering. the price of oil is a big topic of conversation on daybreak, and we have this graphic here, with the oil rebound, 41.11, where we are on wit.
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but before we get too enthusiastic about that red arrow up, we have seen two days of gains now, data out of the u.s. showing the steep drop in u.s. gasoline supply. that is soothing some of the concerns about whether we will see an extension of this oil glut. so, that is the picture around the oil story. manus is the with us the bank of england of course. one of the topics today is the bank of england, and the negotiations over interest rates. manus: yeah, the deliberations go on. i mean, three weeks and was down here, almost deja vu in terms of ?ill mark carney cut is virtually assured. the question is will he hold back on that? the question remains would be currency chaos? does look at my notes. they will probably cut growth outlook here for the third time
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in 2016. this is a day in which you will get the reality of the soft data, beginning to understand what brexit really means for the u.k. we may -- we had the fastest-growing economy, and is expected to grow at the fastest pace since 2014. that has been annihilated. the currency is down. the risk is bad. inflation on the upside here 12:00 the news briefing here, i am here all day. anna? anna: manus, in daybreak, another story of interest to our viewers perhaps.another blow for capital management, goldman sachs is pulling cash from one funds,most famous hedge liquidating the fund, dropping in annualized 6% in the last year, fixed to about $350 million. that is according to a person familiar with the matter. that is the addition of daybreak, now available on your
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bloomberg. we need to get into some more german corporate news. we have some comments, some numbers. the sportswear maker says second quarter growth marker is waiting for further details. north american sales a real focused on trying to reclaim market share over in the u.s. that is something that has taken them from one of the worst performers on the german arehmark dax index, but we looking for anything they had say on the guidance as well. lastly, we saw them raise the four-year sales profit for the fourth time in 2016. upgrades in guidance at adidas, now seeing four-year sales up in the 10%, fx adjusted. new commentary around the guidance coming through from the management. up theidas, they stepped presence in the american market,
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bolstering product design and marketing. remember, there is a change of ceo coming at this business. handing over the reins from october the first. four-year operating margin rising from 7.5% over at adidas this morning. let us get back to the market action. asian stocks have been rebounding since the worst dayn since the brexit though. jra: the msci asia-pacific index rebounding from the lowest level since june 24, really tracking the rebound we saw the u.s. yesterday. risk sentiment running back to the market. that is being fueled in part by oil extending its rebound, as you were saying earlier, wt crew toi. wanted to show you was the correlation between brent and the dollar. as we saw the crude price fall, this turned positive for the first time in five months. expectations around the fed have been weighing on the dollar, and
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at the same time the ample crude stockpiles, you see green at the end of the chart with a correlation has turned positive. know the risk sentiment coming back to the market, this has not been helping the higher-yielding currency.if you look on the bloomberg, looking at the g 10 currency today, the aussie dollar is the best performer against the greenback, up 3/10 of 1%, followed by the kiwi dollar. prettyseeing the yen much unchanged. sterling pretty much unchanged ahead of the bank of england rate decision. super thursday as we call it. i wanted to show you this chart, because 10-year treasury yield pre-much unchanged, about 1.5%. we did see that yield the back up at the beginning of the week. and globally in fact we haven't seen the record-setting bond rally coming undone. month, jpmorgan says treasury traders do not forget the bank of england, because if we do see the stimulus or more than markets expect, then gilt
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yields could come down. and so could treasury yields. chart is the 10-year spread right now is near the highest since 2000. anna: thank you very much. let us stick with one of the themes you picked up, what is happening with the oil price, extending the rebound. middle eastrkets's anchor yousef gamal el-din been is in. yousef: exactly 24 hours ago, anna, we were talking about what the option market was signaling to us. at least a little bit starting to do that. here is what happened with those numbers we got out of the u.s. we put this on a chart for you. you can put up on the bloomberg. you are looking at the u.s. crude production figures, which have dropped for the first time ending theks, longest stretch of games since
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january. what we have done is added that line in yellow for you, for context. the line in blue is the nymex price. we circled that last bit, the latest developer from that report. but what is also interesting is the the barrels per day in the weeks of july, but also as a result of that, we are seeing a shift in the u.s. crude imports, which of now topped for the first time since january 2014. high levels as well, as a lot of crude reaches the ports in the u.s. so a fascinating set of data, really putting the crude market on its head, for now. anna: yousef gamal el-din, thank you. r it still with us on set. talk about one of these charts, that is the ration chip between oil price and the dollar.
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typically, a stronger greenback reducing the dollar-denominated commodity. but break it down a little bit. two very separate things at the moment. peter: overall, we are seeing a lot of strange movements within markets. and i think that has to do with a sort of disruption we are seeing generally. i would not take too much into the current oil situation. you know, what we are seeing is the unique situation where there is a cap on oil prices. every time we go up to that $50 a barrel we start seeing a massive increase in production, and that drops the price down as well. i think it is picking up some unique dynamic. but it is also playing a sort of canary in the coal mine for global health and demand structure. i think it is picking up some unique characteristics. and the dollar is alongside that. but the correlations are not particularly strong at this point.i would like to see them develop more befor we start saying watch the dollar and oil trade together, or sort
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of with in a relationship. i still think we are sort of off from sort of a traditional pca correlation analysis. correlations, just are not holding up. peter, the emerging market currency index is up nearly 6% so far this year. the emerging-market currencies are getting a reprieve. we talk about the fed and their inability to raise rates. does that momentum carry through an emerging market currency for you in the second half? peter: absolutely. a goes back to what you're talking about earlier in terms of the global hold by central banks. every time that we move away from a fed rate hike, and we start seeing more easing, boeher it is the bogj, this afternoon, we see the vicious risk cycle. if you look at the emerging markets, you see a few things like the turkish come back, you see south africa, brazil,
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countries with extreme social disorder are being grabbed up the most by speculators. and clearly, that is sort of a rabid decision by sort of yield-seeking participants, rather than sort of levelheaded investment. and that is purely a function of what central banks have done in terms of distorting the risk-reward profile in the market. the: peter, i pulled up world currency function, illustrate what you're talking about there, with the brazilian currency. year-to-date against the u.s. dollar, south african rand performing well. do you think this is all about central bank cut policy,. outweighing? peter: hard to imagine we see big buyers in the real, considering what it been going through. the olympics coming into town, putting the spotlight on the inequities that are occurring in brazil.
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and why this would be the highest performer, you know it has to be yields. touched onr, we have this a couple of times, which is turkish lira, brazilian real. you talk about investors returning, a brave set coming back to the turkish lira. we are seeing the bond the flow, funds flowing back to the life of the lira. any of those currencies? peter: we do not see an and to central-bank, ultra-loose, unlimited backing of risk anytime soon. you know, so we could sit around and do a bottom-up look at each individual country and say, well, this is growth and inflation and so on. if theyreality is continue to push liquidity into the system, people will continue to take back on equitable gambles with the currency.
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so on that regard, since we don't see the fed raising in september, we do see the boj moving to things like helicopter money, it means that risk-taking is the way to go forward. so it may not be logical, and maybe risky, but that is the trade that is being put on now. anna: we have, as you mentioned, more risk appetite in the malaysian ringgit. and the korean aaron c moving higher. you have top picks and the emerging markets, peter? peter: we are still sort of taking the idea that looking for yield is the best way to go. the ones with the highest data, the highest kicker are the ones we are looking to continue to appreciate. that story is not going to end. things like brazil, south africa, rubble, that sort of currency that gives you the kicker doubled you to see risk seekers dive into.
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if there is another brexit or decline in global growth, what can happen? we will see more central bank liquidity, and everything will be fine. we will forget all about it. a wonderful situation for risk-taking investor. anna: risk-taking investor a wonderful situation. you think the central bank is really lacking firepower. we see the central banking solution, but you think it sort of underwhelm the delivery. peter: absolutely. i think we are getting close to that reflection point, were people realize it is very artificial. and that is pushing down risk through sort of cheap credit, it is when it come to an end. we don't believe it is going to be an event, more like the realization that, you know, boe the heart of our power. boj is not going to find a resolution to the structural problems of japan. and at that point, we will see a significant correction in the valuations. peter, given everything
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you have said, and i'm just beginning to put this together, when i look at yen, aussie, sterling, euro, are we in for a mighty bounce on some of these currencies? and as the market on the wrong side, because the view of the market is different than the conversation we are having here? peter: yeah, so, if the question is, you know, are we are prepared for that reflection point, i think we are still far away from it that we don't have to start positioning ourselves just yet. but i think we have to come to the realization that we are getting to that zero bound central-bank, where just doing something is not fully anybody. and, you know, the reaction to recently,decisions even the fiscal stimulus, and the fact that the yen got
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stronger clearly shows that we are getting very close to that reflection. point so, i would a start positioning ourselves just yet, in terms of still harvesting yield, but we do have to consider that is going to be the primary driver. anna: peter, thank you very much. markets credit. let us turn to german industrials.ziemann's beatingd, after profits. europe's biggest engineering company has been investing aggressively over the past year. for more, we are joined by the ceo joe kaeser in munich. great is the deal again. another upgrade to your guidance. what is it that is run so much better, than anticipated, that you're are able to deliver this upgrade today? joe: good morning, anna.
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obviously, i'm very proud of my team. because we have been delivering a strong quarter on the back of a strong quarter in q2. we have clearly been back on the growth path. 10%, compared to currency-related changes, revenues are up 9%. we increased our industrial profit by more than 20%. so actually, uci satisfied the server of a great company. the environment has not been exactly great, so we will be to work hard to get the performance in. executing on what we call our vision 2020. we do what we say, and so far, it looks very well. one of the biggest that has been able to raise our guidance for the second time in the year. anna: you raise guidance for a second time. tell us what is coming from. which part of the business come isng or short cycle, which
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doing better than you previously thought? of: it is actually a bunch things. if you look at the power generation market, we have been andorming well in the large midsize turbine environment, especially in the middle east. you see china customers coming back and ordering again. we have always been big and strong and renewable energy, which we actually want to build out with the convergence. so we saw a lot of movement here, and as far as revenue growth is confirm, we have an executing very well structures, which of reached a record size of 116 billion euro. so this is actually pretty well-suited, for the difficult task going forward, despite an environment in the capital growth anna: sector. subject, do you
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anticipate any blockages in the cap doing that deal? any regulatory hurdles? well, i think we did quite a well-suited analysis. we believe this merger is not only showing the way on what consolidation will look like and renewable energy sector going forward, we have quite a huge amount of synergies, which we have been able to locate with global customers, get the cost down. that is the name of the game in renewables. you need to get the cost down. in order to depend on regulatory subsidies, which may change over time and with the government change so now we, need to go step-by-step, one thing at a time, look for things on this new grade and the company in the renewable space. anna: you're also operating in the oil' space.
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what appetite for investment are you seeing amongst your clients in your u.s. oil business? all, thet of acquisition of rand was not necessarily or solely related to the oil and gas sector. it was about getting the capabilities, the competency for this energy. which we believe is going to grow much faster than the big machines for power generation, because there is a combination between renewable energy and the backup of smaller, efficient turbines in both steam and gas. that is what we're going after, to also basically designed the trend from mono sourcing of energy to multi-sourcing of energy to renewable and back of energy. that is actually been our intent. it has been going very, very well in terms of integration it has recently. been raising our targets on
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synergy, compared to the original levels. obviously, the top line is great because of the lack of equipment from the oil and gas sector, but is still like what we have seen on the move forward in that sector, actually performing recently well against the market. actually what counts in the end. anna: any sign that will change, joe, the weakness and all of that? mean, we need to work with our customers. we cannot change the market, but we can help our customers get cost down. that is also been one of our focus areas, working together with our oil and gas companies to bring their cost down, takedown the commodities so they are better in the marketplace. that is what we are focusing on. it is not just about oil and gas. look at the industrial place. oneave been the only
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company really designing the industrial internet in the manufacturing space. our digital division has consistently been outperforming the markets. if you look at the space, look at health care, i mean, time and again growing everywhere in the world. our last announcement, leading the platform for diagnostics. so this has been a very active organism, where we do business. focus on the market, took our customer satisfaction improvements, and that is what we are going to do in the future. anna: joe, can i ask a little bit about brexit? i know you have frozen your new wind power plants in the u.k. you want clarity on the trade relationship between the u.k. and the eu. how much has your investment plan for the u.k. been affected by the brexit vote? joe: well, as you might remember, i have been quite
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outspoken about our view on what we thought would be the better option. beenwould obviously decided by the people in the u.k. two days after the so-called brexit vote, the entire board of siemens has gone to the u.k. to talk about -- talk with the government and we made it very clear we are there with customers, there tuesday. no change in plans. however, having said that, i also urged the house of commons and the representatives we were able to talk to at that time that we need to have clarity. one way or the other, if people are going to go out, here of the terms of condition. fi we will look at itne. we do have clarity one way or the other. and clarity will be ok. we are continuing to serve the markets in the u.k. we have 14,000 people working
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for us and the u.k. we just built a 14 factory. we are very welcome, a very welcome partner and supplier. and it helps us overcome potential issues with trade and currency taxation. anna: ok, joe, thank you for joining us. afterd very well two days the brexit vote to find them or to the government to talk to. congratulations on that. thank you for talking us today. joining us from unit. now, with the bank of england excited to cut by 25 basis points today, and looks as if europe's lower negative rate environment could continue for some time. here is what the ceo at some of the leading banks told us about surviving with low rates. >> it is a very challenging one, but i was in the going forward this will become a big challenge for the rest of the economy, particularly the financial systems and the social systems in europe. >> we are operating in a very
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challenging environment with low interest rates, so the key interest rate we have to take his want to really focus on getting operating stable, and moving up in a difficult environment. >> we have to address to a very, very unfavorable government force, for longer, and we are producing all of these results in a very hostile environment for banks. any change in either direction will definitely be good news. revisited,ust been at the local level, and in the past, negative interest rates have lasted longer we want to work in cooperation with the efforts of the bank of england, to minimize the economic impacts of brexit and be on the side of our customers in great britain. talkingts of voices about the banking sector about the impact of low interest rates. peter is still with us. manus cranny still outside the
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bank of england. low interest rates are a headache for the banking sector. are they becoming a headache for corporations and large? we have to start pressing the value they deliver in terms of growth? peter: i think we see that in japan specifically. the margins being cut, so the hurt.ial sector is there is a very large populous and japan of elderly people that need those savings rates. so i think it is becoming quite difficult for japan to manage these low interest rate environment. i think we are going to start seeing in european banks as well, the recent stress test show that. i think it will be a backlash about cutting rates into negative territory. it is a very strange concept, and one that i think really needs to be rethought about. and as we discussed throughout this hour, my views on current central-bank policy are ones that are probably quite negative. then it needs to take a real look at emphasize which way to
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go. using the bank of japan has not run out of options. there is only one left. money financing debt relief. but with that due to dollar-yen, briefly? peter: you know, i think it will allow the dollar-yen to significantly trade higher. going into that type of financing debt relief, helicopter money would, you know, just basically destroy or debased the value of the yen. and there would not be sort of a, you know, stopping point once you start that. that would give a significant depreciation, and one that probably japan is looking for. so, because the dollar-yen spiral higher on launching something like helicopter money. anna: be careful what you wish for. maybe exactly what they want to see. peter, thank you for your time. head of market strategy, with us this hour.
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up next, we speak to the mining services company, the ceo of the business will be here with us for his first interview of the day. this is bloomberg. ♪
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manus: boe brexit boost. mark carney is expected to cut the benchmark rate to record low with officials of signaling they are ready. a sweep of stimulus. crude come back or a rebound above $41. europe's biggest engineering company raises its earnings outlook after beating third-quarter profits. ♪ manus: -- anna: welcome to "countdown." i am anna edwards.
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cranny pit manus welcome to super thursday at the bank of england. will there be a rate cut? .he market reassured by 100% what else will mark carney do in terms of quantitive easing and doom and gloom with the estimates be for growth? >> looking at third cut the 20 16th -- we are looking at a third cut for 2016? anna: by now we have numbers coming through from toyota, they're cutting from operating outlook ¥1.7 trillion, delving into some of the details. they are cutting their full-year net forecast to 1.55. they are cutting their sales forecast for $26 trillion -- ¥26 trillion. the operating profit outlook, there nothing -- their north american profit -- we are
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getting a raft of forecast coming through from the company. , ¥127.4uarter asia billion. the questions. i'm getting some comparables. operating parables -- the sales number for the first quarter seems to be in line with estimates. we are getting a raft of numbers coming through. sure yen, how much has that damaged the business? how much is the move away from the toyota line in the united states damaged the business? causing some consumers to go more toward the light truck side . that doesn't play to a distress. billion. that is well ahead of the estimate of 520 -- ¥520 billion. let's talk about aveva, we have numbers from the insurance
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company, britain's second-largest insurer. we have commentary saying that they have a commitment to grow their earnings. the dividends 600 and 14 tenths -- we will talk to the ceo of aveva. that is mark wilson. we will be talking to him about solvency. the stress of the balance sheet, the general insurance business. what does brexit mean for aviva investors? the outflows from property in particular and more details coming through from a viva this morning. let's get numbers from rand gold. giving numbers for the second quarter to the market. they are talking about 2016 results being within market guidance. listen to somebody who knows these numbers better than i do. that is the ceo of rand gold. see you,
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you are saying your within the market guidance. register the strong points we need to know about this quarter. mark: the big plus was flagship, that really delivered regarding -- we had a difficult quarter because of a mall failure that took some time to fix. not an operational issue but in engineering issue. it struggled through the last quarters -- last quarter. over an interim basis, net profits flat. half year and half year. anna: some better than expected in some a little more challenged. manus. manus: yeah, mark, a good morning to you. looking at some liberty numbers to the second quarter gold production -- what kind of guidance can you give us the rest of the year? you said we have overcome some
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of our production issues and some of the minds -- in some of the minds. mark: if you look at -- the lower guidance that we put out two weeks ago. the bali is on the track to be that. the gold process is helpful. the back and waited production profile for this year plays into a higher gold process going -- looking forward. anna: tell us about the gold price. looking at a chart and it looks nice for 2016. it looks better than the last few years it how much difference does that make? $100.we declared at looking forward as you talk about the bank of england, i think globally it is going to be
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a bit twitchy, the gold price for the next quarter, because people have got to get their head around what is going to happen to interest rates. in the longer term, it is a very solid outlook for gold good anna: a very solid a look good do you think the nervousness, geopolitically, that is gotten more interesting gold. how sustainable is this higher-priced? mark: the economic uncertainty on a global platform and adds to that the geopolitical issues around the world, it is a good place for gold. not particular good -- we always do better when every one else is struggling. as a ceo, you'll probably takes -- take good news where you can get it. we talked about this often, every time you come in tummy tuck about these low-cost -- high cost producers that are inefficient.
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what is your strategy in the medium-term? are you looking at him in a? m&a?oking at has this rally in the price of caused you to lose some opportunities? mark: we cannot really get it to go to where we wanted to go in the gold was down. there are opportunities we have to keep putting them. the best gasquet only real way to keep -- -- the only real way to keep value is through discovery and development. you will see in today's results, a lot of focus on expiration, project development pipeline. that is where our focus is. we keep a close eye on developments within the market. anna: you must've been tempted, you have been critical of some of your contemporaries in the gold market and the way their run their business. -- in the way they run their
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business. mark: we came close to a few opportunities. anna: which stocks? more go -- mark: we look for 20% return. $1000 return price. .att -- anna: manus manus: i am outside the bank of england today that we've got the federal reserve and play. you talked to a lot of other people. what are people saying to you about brexit, about rate cuts here the u.k. and the prospect of rate hikes in the united states of america? what is business talking about? mark: there is a lot of debate on what exactly what brexit means. brexit hasrsonally, highlighted a lot of other weaknesses within the european community in general. everyone is focused inward on the u.k.
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challenge forger this part of the world. how does -- how do you fix it so that we can unlock business and start growing and building and delivering viable for the investors just delivering valuable for the -- delivering valuable for the investors. there is a push to injuries -- to increase interest rates. the underlying fundamentals are not dry as you see it. there a lot of hesitation to affected that. it is something that has to be done. it really does need more green to be able to help the people make that decision. anna: a lot of people in london are tying to work out to what extent the financial services industry will be heard by brexit. the way you use london, the way your industry loses -- uses london, d.c. any change in that?
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mark: not at all. -- d.c. any change in that? do you seet all -- any change in that? mark: not at all. our gateway into the global economy is through london. there are many foreign issuers position.n the same anna: mark, great to see you. thank you for spending time with us. ceo.bristow, the rand gold let's talk about what we see in futures right now. you can see that we are expected to open a little bit strong. youaps no surprise when consider the asian session was pretty strong. by .6%. asia-pacific up a little more risk appetite. in the oil price bouncing. it is at $31.16 on the vti.
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-- on wti. let's get to bloomberg business flash with haidi lun. >> siemens has raised its earnings for the year. largerter it posted a than expected high. europe's largest engineering company says profits, profits rose in the three months to june. in woman has been killed and five others injured in a knife attack in central london police 10:30alled just after p.m. u.k. time. a man was arrested a few minutes after being tasered. mental health was a significant factor in the event come although the possibility of terrorism is also being explored. chicago fed president says one of rate hike to be -- as the
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economy picks up steam, he expects an increase in the second half of 2016 following disappointing gdp readings in the first quarter. investors are awaiting friday's jobs data. the dollar has fallen against the yen after comments by a bank of japan official dampen speculations of a different test of additional stimulus. -- of additional stimulus. he says the policy is different from helicopter money and direct financing of government spending by the financial bank. the sex retirement plan is going out -- the goldman sachs retirement plan is pulling out -- that is after plunged over 7% over the last year. it is a blow for capital management which has been plagued by redemption as well as a federal bribery investigation. tesla has reassured investors it can ship roughly 50,000 cars in
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this year's second half. that eases the sting of a second quarter loss. global news, 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . i'm haidi lun. this is bloomberg. anna. anna: think you very much. let's check the -- thank you very much. let's check the market action in asia. juliette: a much better day in the region for thursday than what we saw on wednesday. we have a lot of central-bank action and we had the iba decision. there has been these comments is we could still see a fed rate hike. that has put a little bit of positivity in terms of how the global economy is growing. we are seeing a lot more risk on appetite in the region. japan closing higher by 11%.
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you can -- higher by .1%. by the really reflected higher oil prices. energy stocks doing well. hsbc yesterday coming through with the numbers in that share buyback, rising by 2% in the hong kong session. energy stocks in oesterle are looking good. zealand today has its first win in four sessions. there is been a little bit of weakness coming through on the shanghai composite. there has been a pull from the us turning government for australian banks to assist them in terms of a parliamentary panel, this following the rba's cuts to interest rates this week . not all banks have passed on. in the late trade we did see a little bit of weakness coming through from some of those players, cba, australians biggest bank down .4%. anna your anna: juliette, thank you. a wrap up.
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let's get more on the big events on the macro calendar for today. the bank of england rate decision at noon u.k. time. that is why manus is outside the bank of england could ryan chilcote is also on the road. he joins us now. take us through what we are expecting this morning. ryan: without a doubt, investors are expecting a cut. at least the vast majority of them. one of the things the traders are doing here is looking at how the pound did against the dollar in the asian trading session. generally speaking, it kind of trended upward. another thing you can do is look at the brand-new bloomberg pound index. that strips out the noise of just the dollar so you're looking at the pound against a series -- a group of trading partners. the pound is up. the absence the traders here say of any real sterling weakness suggests the view that everyone is expecting a cut as they have been the last couple of days.
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getybody is -- if we don't a cut of at least 25 basis points, it will be interesting to see what happens to the pound. there is a huge expectation of pound moves. if you think about and you look at implied volatility over this year, year to date, this would investors are traders are pricing in the biggest pound move today since the last mpc meeting we got a surprise, and brexit which was the biggest event, if you will, for the pound this year. ryan, of course, i think it was bill gross who said expect currency chaos if they don't do something. what else can we expect from them behind here, in terms of qe . what else is on the a la carte menu? ryan: i think a lot of the
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investors, traders we talked to them, we are expecting much more than just a 25 basis point cut. the are expecting an expansion of qe, qe cannot just focus on deals but also corporate bonds. ofy want to see an expansion the funding for lending programs. if we get anything short of the kitchen sink, it will be interesting to see what happens to the pound, because a lot of that appears to be priced in. you. ryan, thank ryan chilcote joining us from the trading floor at manus has the bank of england staked out. up next, we speak to aviva ceo, mark wilson. he will be joining us as they report numbers to their market of the first half of the year. this is bloomberg. ♪
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anna: welcome back. this is "countdown."
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you're looking at a live shot of london. super thursday, we get inflation report from the uk's interbank. has announced first quarter that's first half operating profit -- first half operating profit. joining us now is mark wilson. manus cranny is over at the bank of england. mark, let's talk about these numbers. talk about the solvency ratio this reported 20 upper end of that 150 180% range. how stable is that number, can you keep it up there you go -- up there? mark: manus, it is nice to be back with you. three key numbers to focused on the first of these is the operating profit. that is up 13%. second one the market seems very focused on is capital generation. that pays dividends. that is up to 1.5 billion from the operating companies.
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flows through to the dividend and the dividend number is up year. 7.42 pence this how stable is at all? period ofin this uncertainty the best antidote is affect. effects have been remarkably stable. -- 174% shows that we just aren't that volatile in these volatile markets. with aviva week's -- we fixed the loophole. and ago quote some of the well-known voices in the u.k. -- anna: quote some of the well-known voices in the u.k. a stable,latility is your been increasing your dividend, how much more potential do you have to increase the dividend? mark: we have quite a way to go.
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a move to a 50% payout ratio. before we do anything over the next year, we can move -- moved to a 15% payout ratio. before we can do anything over the next year, we can move to an 18% payout. to talk about that -- the fact is different companies behave different ways and low-interest rates. it is like saying that all cars be of the same way and the weather. we are a good wet weather car. we made our balance sheet very resilient to these shocks. just don't change our balance sheet that much. don't rely on rates either. we are pretty well-positioned going through this period. manus: i am literally standing outside the bank of england.
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let's pick up on that theme could you got resilience. the world is dealing with low interest rates. what would you be saying to the governor in terms of more quantitative easing, buying corporate bonds and? rate cuts back at what is the best policy makes here -- policy makes here? mark: i and not sure what question a rate cut is trying to answer. -- i am not sure what question a rate cut is trying to answer. companies can already borrow pretty much free money. our debt costs are coming down. what is a rate cut going to achieve? i would much rather see the government did something more meaningful and infrastructure. reduce regulation, because people like us we are growing in the u.k., we are investing in the u.k., we like the u.k. and there is nothing i like better than to invest in the right infrastructure with the right risks did that, the government -- risks.
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that is something the government -- how much talking about a major physical reset? that is something you would welcome. how isbrexit -- how -- brexit going to impact you as a businessman? mark: different sectors get impacted in different ways. us, we got subsidiaries all around the world. thankfully for me it is no harder doing business in singapore than in france. it doesn't impact us operationally at all. perspective, what we are keeping an eye on is what happens economically come what happens around europe, because of brexit pierce so far, the markets have been pretty sanguine on that. that's brexit. so far the markets have been
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pretty sanguine on that. of the big ways, you saw it your business perfected -- business affected. you are the the second -- the suspend.k. fund to anyplace three open that? desperate thatre is natural from retailers shareholders. the key part of that commercial mortgages, week that 16% down from 2%. than 100,000 debt outstanding on a very large portfolio, so almost no the liquids in there at all -- almost no delinquents in there at all. the retail fund is an issue of saying you must treat holders
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fairly. we don't want to give them a price and then change it. anna: mark, thank you very much for cleaning that up. mark wilson, the aviva ceo. that doesn't for countdown. ♪ -- that does it for countdown. ♪ [hip hop beat]
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. 'it'restn i, w c u'e e dry.ynebuss. oding uc pwiwiro fi hthatpsroui >> welcome everybody to "on thea edwards onside caroline hyde in berlin. here is what we're watching. super thursday for the bank of england. mark carney is expected to cut the benchmark rate with official signaling they are ready. sterling volatility spikes. power britain banks. -- new lows power britain banks.


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