tv On the Move Bloomberg August 24, 2016 2:30am-4:01am EDT
anchor: this is "on the move. 8:30 in berlin. we are counting down to the european open. here is what we are watching. in earthquake shakes central italy. at least 10 people are dead following a 6.2 magnitude quake early wednesday morning. glen cove reports a slump in profit that adapts a more aggressive debt reduction target.
thatears on speculation aeig yellen will strike hawkish tone at jackson hole. carolyn: we have had north korea testing a missile. we are seeing downward trends in terms of the futures markets. this is where we look for the open. down. manus: i thought we would start the day wrapping up some of these themes. global volatility. what will janet yellen do? what will janet yellen promise this market or tell them she is intent on doing? this is when she said she would rate increase, 2015. fx volatility.
let's have a look at the risk radar. oilare seeing movement on and copper. let me take you through the risk radar. dollar index, top of the four. traders see a 28% probability or chance of a fed hike. a shift higher in fx volatility. the korean currency in cap slates. what carolyn has been saying to you. injected money into the system. this is trying to stop the overnight buying. oil and copper. , copperot stockpiles trading at its lowest level. stockpiles ratcheting higher, the highest level since january.
down 1.5ttle lower, percent. supply, 4.4 6 million barrels. we wait for more data. the iraqis calling for more production. juliette? juliette: thank you. at least 10 people have reportedly been killed after an earthquake hit the sentiment of italy. the u.s. geological survey says the quake struck 140 kilometers northeast of around. there were a series of aftershocks reported. oil has resumed its drop after stockpiles arose, keeping stockpiles at the highest level in 30 years. this came after speculation there may be support for an opec freeze. hase are reports tehran
sent positive signals about joint action. financeh african minister has received a correspondence from a special police unit and is getting legal advice. that is according to a national treasury spokesperson. the comments came after reports he was to receive a warning statement about possible -- the rand fell to its lowest level against the dollar. global news, 24 hours a day, powered by more than 600 journalists and 20 countries. manus: glencore reported a drop. to $300 million. let's bring in our senior investment advisor. metals european mining team leader. let's start off with you.
we can say, let's look at net income but this is about dividend and debt reduction. those are the numbers that stand out. guest: the surprise is they are talking about reinstating the dividend, possibly next year. the story we were talking about was they had scrapped the dividend. the other big story for today is how much progress they have been able to make cutting debt. you saw the unexpected deal coming out of australia to sell gold assets. that speaks to how much they have been able to sell in an effort to stabilize the balance sheet. give a sense of the -- is there a turnaround from glencore's perspective? big question the
coming forward. the fundamental story of metals, it is pretty bad. it is not a whole lot better. you saw rebounds in smaller metals. the consensus has been lower for longer. you did see some pretty constructive things coming from glencore. highly cashey are generative. they are taking a more constructive tone. i don't think a lot of people are expecting a big leg lower, but there are not a lot of expectations for a big rebound, either. liked the debt story for quite some time. this new debt target, which is better than the market 15.5 toted, targeting 17.5, does that build a bullish story? this is a massive
recovery. inwere 1200 back september. an enormous move. it is starting to get difficult. glencore is not an easy stock. manus: i'm going to show this. of the 2023on bonds. the collapse in yield. has it almost run its course? -- t: caroline: give us a sense of the share price. has it gone too far? guest: it only makes an impact in that it shifts the debt around. we are getting to point where the self-help has taken them as far as we can.
it is always a difficult one for them. getting your head around how this business works. manus: we are literally covering -- our own in-house commentators and editors. he is talking about copper prices. copper is one of the commodities that has not moved. caroline has a chart showing the performance. he talks about china, still in good shape. ist you've got to judge here where he sits in the path of mining. in the middle of the pack. the same story we have seen across the board. it is hard to imagine, that we
were asking whether it is a systematic risk to the market. we are talking about things like that. that sense, they have come a long way. stabilizing things. caroline: i want to bring you to your notes. the fact that perhaps the minors you are seeing the relativity inrn, oil versus the upward trajectory. slow and stable. is oil stabilizing? does that make it a by? -- buy? luke: we might end up in a range of 40-55. that kind of level, a lot of these oil companies have retooled their businesses. they have cut their costs.
you're are still making good money at four dollars -- $40 a barrel. you can pick your timing. look for drops to get your investments in. php is one we like. these kind of companies worked very well. you have to get your timing right. they are correlated to oil but in medium to long-term, they are good businesses. lovelythere is a one-liner. the first impression is, on message. under control. year.t control last this year, the ceo and cfo are doing a good job of highlighting the debt reduction. it is about the science of communication. ason.thomps
caroline: welcome back to "on the move." here's the bloomberg business flash. juliette: at least 10 people him killed after a 6.2 magnitude earthquake hit the center of italy. the u.s. geological survey said quake struck 140 kilometers northeast of rome. china is said to be moving closer to what could be the biggest ipo this year. according to people with knowledge of the matter, the approval for seek the listing tomorrow. i'll hong kong based
spokesperson declined to comment. of -- maybe closer to an ipo. an insurance group has asked for a role in the share offering. two of the people say this may include domestic life insurance operations as many overseas businesses. that is your bloomberg business flash. much.ne: thank you very let's turn our attention to fx. the south african rand hell -- fell to its weakest level against the dollar in weeks. to a national treasury spokesperson, gordon is getting legal advice on the matter. are our guests. give us a sense of the south african rand. i know you have been feeling
there is further to go in terms of the rally. guest: it is an emerging market currency. they tend to have more volatility than developed market currencies. hile the story has turned a little more positive for the rand, there will be pickups along the way. when i think about the rand and i look at this story, the big question i am asking is, are the ratings agencies going to downgrade the sovereign debt later in the year question mark if you really believe that is the case, you are not going to be as bullish on the rand. ultimately, all of the other structural stories have been improving for the rand. it looks pretty cheap at these levels. say, if i would look at some of the best-performing currency so far,
is the brazilian rail. the south african rand. that is driven by politics. a massive selloff over the last three years. those currencies just start to .ook to cheap places like mexico, brazil, south africa. sold off significantly. you look at the underlying story, growth, changes in external balances, changes in fiscal balances, it has been bad in some of these places but not that a bottoming out in the growth story. there is a room for some of these currencies to keep going. caroline: we are seeing volatility shrinking when it comes to the stock market. collapsing asy you see on this chart read what about the debt side of the equation? what are you seeing about the
volatility and desire to get in? >> full toady is down. suppressing volatility around the world. emerging market debt is one area credit investors are running two. away from their home markets where yields and spreads are low. spreads are coming in and emerging-market debts. currency volatility is reduced. it is helping everybody everywhere. it may not be helping the home countries but it is helping, whether you are the brazilian real the mexican peso. you can see some stabilization coming in. that is not a bad place to be. janet yellen,ot she is going to talk the world and markets on friday. how prepared do you think the pricing of these -- these are the major currencies.
what, we get a slightly hawkish janet yellen, i am ready to go. the markets interpret it as hawkish this. is there an initial jolt, drawdown in fx prices? reactionu get a minor for a more hawkish line. ultimately, these currencies look pretty cheap. we look at it investor positioning, whether in the fx basis, the team did a good report. there is a lot of room for people to go into these currencies. the other thing is, if janet yellen is being more hawkish, is lookingowth story more sustainable. if you get a longer sustainable recovery, that is not a bad thing. i would be much more worried if the fed was chasing after inflation.
caroline: does the federal reserve care about the strength of the dollar? : they have talked about carrying almost everything in the world. it is going to be a minor part of what they do. it is about inflation and growth and jobs. makes part ofll their economy externally focused. it will matter for oil, commodities, trading partners. it will be in the mix. he yellen has been talking about the global environment. lower volatility. it does give her a bit of room to think about putting rates up. to the topo back page of your note, rags to riches. low yielding currencies that you think will remain strong.
luke: it is not just the yield play. it is also the environment globally. they are struggling to recycle those flows. currencyhe hungarian is doing well. in asia, you got currencies like korean. and they have consistent inflows. the ability to recycle them is tricky. much. thank you very that is the senior fx strategist at hsbc. he stays with me. minutes away from the start of the trading day. glencore profit tumbles 66%. the dividend is potentially back on the slate. the debt, the target, that improves. how is it going to trade? this is bloomberg. ♪
manus: caroline: we are going to keep an eye on those individual stock opens. luke, you see this cause, this skittishness. work function has moved on jackson hole. are we seeing more liquidity come out of these markets after jackson hole? luke: we have been seen that for a week or so. we have an immediate impact of the bank of england and ecb shift. the quiddity was great on the bedside. that has tapered off. until we get more news, with a program, that is going to be in. manus: we will have to see what their longer term opinions are.
this is "bloomberg markets: middle east -- this is "on the move." i'm manus cranny. alongside me is caroline hyde in berlin. caroline hyde as the morning brief. caroline: manus, an earthquake shakes central italy. at least 12 people are dead from these explain to magnitude quake -- from the six-point magnitude quake -- from the 6.2 magnitude quake. and fed fears. emerging market stocks drop on nothing speculations that yellen will strike a hawkish tone at jackson hole.
as we await the market open, futures have been signaling a down day. oftion is being taken ahead jackson hole. we can see the dax open lower, and the cac and the ftse 100. let's have a little look at how we start the morning's trade. willie indeed track -- will we indeed track lower? this is your imap function. you will start to get a regional breakdown. the u.k., down by .2%. france, up by .6%. germany come up by .25%. it is all about the miners when we look at glencore's numbers today. let's get into those individual moves. nejra: i am starting with the gilt markets, which are opening
up, along with the stock market now. ield overhe gilt fiely two yeras. 54 basis points on this yield. yesterday, the rank of england paid a premium as a part of the new qe program. it is purchasing 1.7 billion week. of bonds each if we take a look at how different sectors are performing on the imap, yesterday, we saw every industry group moving higher. it is a different picture today and you can see red across the board. materials and energy stocks are leading the losses, both down by .8%. health care is just down by .2%, but still declining.
it is very much a down day here in europe. let's take a look at these stocks we are watching out for. we are watching out for glencore at the open. it reported a 66% drop on first with net income calling to $320 million from a year earlier. the average estimate was $318 million. people are focusing on this net debt. glencore is trying to cut that debt, and it is targeting even lower net debt than previously. that is something investors will be focusing on. moving on to wpp, the world's biggest advertising company. it benefited forrom brexit in the first half of th e year. 769 millionto
pounds by june, and revenue rose by 12%. and i wanted to bring up hasazeneca because pfizer agreed to purchase this for $725 million. so, that is how the stock are performing at the open. manus: let's return to our guest, the senior investment manager at aberdeen asset management. before we get deep into that, nenjra did glencore. this is the cds on glencore. dropping. see, it is this is the five year, the cost of insuring glencore debt dropped by 7.6 basis points. the equity is dropping, but the cds continues to fall. >> you can see the fear investors had about this
business actually surviving through late last year into early this year. now, he has managed to persuade them they are getting it under control. they are doing that ie disposals. this feels like a much more robust business. manus: all hail ivan, talk about the come back. mexico, 100 year bonds come on d own. these are the sterling bonds. given everything we have talked about in terms of bond risk, will there be more centennial bonds to buy from the japanese, from the u.k.? will go next? >> this is toward the end of that rainbow. there is a little pot of gold there and it is mexico yields. manus: it has been tumbling,
tumbling, tumbling. you think that will continue further? >> i do. this is going to be attractive to investors. 1.1% you are going to get from equivalent gilt. a stable economy is starting to recover. this is a good bond. caroline: i am going to move away from individual bond moves. we have breaking news from italy, where the tragic earthquake hit. at least 100 people are missing at the moment. we are watching what is unfolding in italy at the moment. as difficult as it is to segue from tragic news from that, we have interesting moves from italian bonds, outperforming post brexit. let's talk about the overall post brexit market. what do you think about the united kingdom posted brexit?
we have seen moves from italy into spanish bonds in particular . this is only back of a weak pound. will discontinue? hiswill t continue? >> these businesses will perform during the early stages of brexit. it is a long way until we really know what is going on with the economy and how safe it is. ask me that question again next year and we might have a better clue. but at the moment, lower sterling will be good for the businesses. manus: we will pick up on that theme when we get back. luke hickmore stays with us. caroline: up next, beware the ground reversal. one pension fund is morning diversification is getting harder and harder. and the dividend is back after record profits. australia's biggest airline pays
.7%.ax, up by let's dig into the individual movers. forestry company, but also a hygiene company and not surprisingly, it wants to split itself in two. check out wpp, we are outperforming come up three percentage points. profit is up 15%. side, watch investec. these are surrounding concerns regarding south africa and the finance minister there. now, let's dig into the bloomberg first word news. reporter: caroline, thank you. at least 12 people have reportedly been killed after a 6.2 magnitude earthquake hit
the center of italy. that atlso reporting inst 100 people are missing the town of pescara del tronto. the quake struck 140 kilometers east of rome. oil has resumed its drop after rose, stockpiles keeping inventory at the highest signal levels in many years. that tehran orts has set positive signals about supporting joint action. south african finance minister pravin gordham has received a correspondence from a special police unit. he is getting legal advice on the matter, according to a national treasury spokesperson. this came after reports that grodham was to receive a warning
statement about possible charges. the rand fell to its lowest level against the dollar in three weeks. global news 24 hours a day, powered by 2600 journalists in more than 120 countries around the world. manus: thank you. let's get straight to nejra. she has the chart of the hour. nejra: i have a couple of charts , manus. this one is showing the msci developed index. and this is developed stocks, not emerging-markets. now, the reason i brought these up is because denmark's biggest pension fund says it is growing increasingly worried about how markets will react when crisis era correlations across asset classes start to reverse. the correlation we are talking about is debt rising in tandem with stocks. denmark says it is very uncomfortable about these tandem
moves reversing. the biggest concern for them is central banks pumping return. they are trying to better reflect the underlying risk. the bank ofbring up america-merrill lynch index. i have taken us back to august 2007. this measures future prices, not just on global equities, but on interest rates and commodities. it is close to the lowest level of 2016, but if you take it back to 2007, you can see how low it is compared to the crisis period. it is also in negative territory, meaning that risks e lower than normalr. hoover you listen to? the pension fund concerned about these tandem moves? how much risk is there any's markets driven by these -- how much risk is there in these
markets? caroline: let's get back to our senior investment manager, luke hickmore. luke, the calm before the storm? >> maybe. we have been talking about the pensions and what you do in this market. we saw a difficult auction yesterday. that is going to go on. there is a lot of demand for you yield and duration. you are not getting it from gilts, but where else do you get that kind of safety. manus: you mentioned gilts. the bank of england bought back the gilts there yesterday in a qe move. let's have a look at the chart. this is either a stress or a strain, or according to ubs, good news that the bank of england is prepared to do whatever it takes to lower
yield. what is your interpretation? >> this is the third week we have seen them struggling. pension funds, we've got a big demand. the bank of england is telling them, get out of gilts. go out and buy something more risky. the lower the gilts go, the more they need. that is the problem we have got, the balance between savers and borrowers, and it is going the wrong way at the moment. manus: a 1% drop in yield raises the liabilities of most pension funds by 10%. post brexit, the deficits in engines have ballooned -- in
deficits have ballooned. it is set to fire further. that, sir, pushes bubble. terms ofg and yang in what they are effectively doing. encouragedoes not investment. if your pension deficit is will youg, wil where put your extra dollar? caroline: i wanted to talk about ying and yang elsewhere in europe. give us a sense of the balancing act the ecb has at the moment. edgely and spain are finding this difficult. where does ecb policy go? >> if you continue to see stabilization all over europe, apparently little effect from brexit, you might see that ecb backing off a little bit from further stimulus.
we will see more stimulus next year, as far as we are concerned. we will be mario talking about confidence improving. the pmi's were ok yesterday. this storyo continue about passing the baton to th ee fiscal side of the equation, and try to get some fiscal stimulus and get the economy really going because growth and inflation are still very low, and bond yields will be suppressed for some while. caroline: we have had francois hollande calling for fiscal stimulus. italy says they could perhaps go outside of where the eu's rules are. could that happen? >> we are coming up to autumn with the referendum in italy about constitutional change. this is an important and
stressful time for them. manus: we do everything here. we talked to the guests, we get them tea and coffee, and we make charts for them. >> this is the increase in political risk. and this shift makes people feel very uncomfortable and nervous. spain has quieted down a little bit recently. but italy, they need to get this referendum done and out of the way. taken look, the ecb has to the ecb.rels let's have a look at the performance on the sovereign bonds. italy has barnstormed ahead post brexit. relativern on bonds to the potential return of the
corporate bond market, where is the bigger exponential? >> if you had asked me one month ago, i would have said corporate bonds, now, it is a harder call. , you are getting .6% -- you are getting .6% to .7% extra yield. and that is where it gets tough. year these mexico 100 bonds, it is a great place to be. manus: in terms of the compression of corporate bond spreads in the united kingdom. the bank of england is going live in september. how much bang for your buck is there in that? >> there is 15% to go. we have seen them widen out a little bit over the past couple of weeks. manus: great. thank you for being with us, luke hickmore. ," ing up on "on the move
you are looking at live pictures of the scene. really, the disruption is quite severe. they are also reporting that at least 100 people are missing in the town of pescara del tronto. the u.s. geological survey says the quake struck 140 kilometers northeast of rome. we will keep you updated on the grave situation hitting italy this morning. now, let's get back to the earnings season. miss, butlighslight qantas is reporting a record profit. joyce says he is optimistic about the future, adding that the company could more than quadrupled its fleet. >> i am more than excited about
the future for the qantas group. we had the delivery of the 787's, the continued expansion in asia, the the growth in china.plans in i have always said, if i'm it and the shareholders and board want to continue, then we will continue. reporter: what is propelling this profit, for this return to record profit? the yield would have helped here. how much support did you get with your joint venture with emirates? >> the biggest factor is our transformation program, which today, delivered $1.66 billion. qantas would not be
producing these record results. what helped our international business is the partnership with emirates, the partnership with china eastern, and the partnership with america. that has allowed us to focus on growth, particularly in asia. we have seen airfares continue to come down. we have seen -- i have said over the last decade, on average, airfares have come down between 30% and 40%. airlines have to find other ways of making sure they deliver the bottom line. our transformation program has been key to that. will continue to be under pressure, no doubt. but somehow, they were cushioned by that fall in fuel. what price are you hedging at at the moment? is this the right time to be
hedging as well, looking at the next couple of years? >> we have been really good at picking the right hedging policies. not all airlines have benefited from the fault in field ris price because of the hedging positions, that was the qantas vceo alan joyce. let's check in on western europe. we have equity markets slightly better off, but oil is down. there is a little bit of skittishness ahead of jackson hole. in terms of the actual market, you have luxembourg, down by .4%. sweden, up by .3%. brent is down by .5%. glencore is down .4% this morning, just over 2%.
caroline: welcome back to "on the move." it is a down day for your wednesday trading. .25%.ust down the miners and the insurance companies are leading the charge. let's get to the top stock stories. i am startinge, with a stock that has risen the most since 1992 today and hit a record high. it is the swedish maker of tissues and toilet paper. it also has a forestry unit. basically, it will seek shareholder approval to split
into two companies. this is something that ceo said before they did not want to do, but they are making the moves now. 85% of salesets from the personal care operations, while the rest comes from the forest care products unit. this proposal to split the two will be taken to a shareholder vote. the transaction will create a new hygiene supplier. speaking of another company that hit a record price today, it is wpp, the world's biggest advertising company. it reported and earnings increased on 15% on contract wins. that was helped by ad buying in europe helped by the run-up to the 2016 soccer tournament, but this is about currency affect and a weaker sterling after the brexit vote. profit was up 10%, showing the effect of the weak pound. wpp did say that bexirexit will
add to economic uncertainty. on the downside, looking at glencore. i will not say much on this because you are about to talk about it. we saw the profit tumbling 66%. it of course, has scrapped it dividend. it is pretty likely it will return to a four year dividend, but net debt is the big focus. manus: let's talk about glencore and bring in our next guest, john mayer. we were just chatting and you -- you were here back in late september when we rallied 168%. what did you make of the news this morning on debt dividends and the news from china? >> we have a mixture of stories here. it is very good performance from the marketing business, start up as they predicted, but still a good performance. good recovery on the metals and
mining side of things. the industrial, the physical mining of what they do. but not so good on oil and gas. there are a couple of other things in here. the debt have gone up. and there is a hit on the hedging activities, which is unexpected, and which we did not see by the end of last year. so, this has dragged the headline numbers back down into a lost, but the underlying business is actually doing well. john, you talk about the cost of servicing the debt, that what about the activity in reducing the debt? are they moving quickly enough? we got news of a new disposal today. >> they are doing really well, in line with what they said they would do. because they did so much in the first half, if they really wanted to accelerate that program, they could in the second half.
but no one glencore the way we do, i suspect they will be pulling back on the debt side, bus to be looking for cheap assets to acquire and new businesses to expand into. let's not forget, they are still growing. manus: the entire point of taking this company public was to create this financial passport to give him the ability to do more deals. will the shareholders tolerate dealmaking while we are still in the eye of the debt storm? >> i think he will gain a lot of the four. he market is getting a lot of confidence in the company. they have been through a rough period, and have shown they can continue to perform very well. i think that is the bit the market always struggles to understand. let's not forget, they did get caught up a little bit in the second half of last year when the chinese had a bear rate on
the market. that would not be tolerated over here, but in china, they seem to tolerate it. i don't think glencore will get caught up a second time so easily. caroline: but what about locking in a profit? we know some of the big investors have been taking down their stakes. is that what is happening in terms of the share price right now? >> remember, harris associates were buying in when nobody else wanted to know the stock. quite rightly, they are locking in on some of the prophet. there is still a great level of confidence there. if i was them, i would carry on running it to a degree. manus: john, let's expand the conversation to a degree. .organ stanley had a top pick we have got zinc at a 15 month high.
this is about the miners ripping supply out of these markets. copper is the real laggard here. where are we in thee dislocation of supply? >> the chinese are actually cutting back on local supply. that these same time, they are still consuming a lot of that material -- but at the same time, they are still consuming a lot of material. i might live soviet union -- unlike the soviet union, which cost a lot of money on under producing, china is being more sensible. they have said, we are cutting back on these businesses. we do not want to pollute so much internally. but also, they are suffering a lack of mines. they need to get this material from elsewhere. glencore, very sensibly, have
held back on any announcements of restarting supply. in fact, they have got low cost zinch production anyway. they stand to make an absolute killing in the second half on other co, copper, and industrial commodities. what held them back in the first half was oil and gas. we know that oil prices are likely to remain much higher through the second half. so, it is not difficult to look for significant recovery through that second half period. manus: great insight, john meyer. let's see where the stock goes from here. peter is the chairman of bloomberg lp. he is a senior independent nonexecutive director over at glencore. caroline? caroline: let's just get a
picture now to update you on the situation in italy. at least 21 people have reportedly been killed after a 6.2 magnitude earthquake hit the center of the country, according to sky tg24. you are looking at pictures of the scene. sky, also reporting that at leas t 100 people are missing in the town of pescara del tronto. the u.s. geological survey said the quake struck 140 kilometers northeast of rome. we will keep you updated. this is bloomberg. ♪
manus: welcome back. this is "on the move." let's get straight to the business flash. reporter: thank you. at least 21 people have reportedly been killed after a 6.2 magnitude earthquake hit the center of italy. that is according to the sky tg24 television channel. sky is also reporting that at least 100 people are missing and the town of pescara del tronto. the u.s. geological survey said the quake struck 140 kilometers northeast of rome. glencore has reported a 66% drop in first half profit. net debt declined to $23.6 billion with the company targeting lower debt by the end of the year.
glencore is very likely to reinstate its dividends next year. last year's collapse in commodities forced the firm to come out with a rescue strategy that included scrapping its dividends and slashing spending. and wpp benefited from the u.k.'s vote to leave the eu. the world's largest advertising company is still learning 15% in the end of june. offsets brexit's drag on the economy. tesla is adding a more powerful theery, making the "s" fastest production car in the world. car, it hasctric a front trunk and a rear
trunk. has all the advantages to be the fastest car in production of any kind. i think this is really going to send a great message to the public. reporter: the chinese owner of historia will be closer to a planned ipo. one bank suggested a deadline by the end of this week. it could include anbang's domestic life insurance operations, as well as many overseas businesses. guys are bloomberg business flash. -- that is your bloomberg business flash. reporter: angela merkel continues her tour across europe. on the agenda today, talks with the estonian prime minister,
followed by talks with 12 other by saturday. for more, we are joined by the president of the european management and economic advisor to the german government. what will merkel be wanting to achieve? is this fact-finding or persuasion? >> i think it is fact-finding. we have seen some year team leaders demand for a more social europe, for a more liberal europe. the first part is to find a common interest and obviously, your how to persuade others of the common interest. caroline: can you give us a geographical breakdown? is it the eastern block of europe that tends to be a little concerned about further integration? is in france, or indeed italy, trying to stave this off? >> their different challenges in
different countries -- there are different challenges in different countries. d with thecharge election next year. in italy, there are huge economic challenges, particularly in the banking sector. in germany, they have an election next year with populists gaining momentum. many governments in eastern europe are not as open to the european idea as they were a couple of years ago. when we think of poland and hungary, most of them are being critical when it comes down to the refugee policy germany has taken. manus: good morning. that refugee policy that merkel adopted last year some say could be a political nemesis. ine us a sense in germany, terms of the attitude toward the united kingdom and this negotiation the is about to happen? merkel, being very vocal about
europe meeting to move forward. but domestically in germany, how is brexit viewed? >> it is really viewed as one of the biggest failures in the history of the european union. in particular, burden was always always seenwas as a close ally to germany. now, the question is but that has the following. on the one hand, it needs to be clear that it is better for any other country to stay in the european union, then to stay outside, which would suggest somebody has to be harsh on britain. at the same time, britain is such an important partner that it is not possible to punish britain. it will be a question of what has to be preserved by all means. is a question of the freedoms we have in europe and the capital of later, but at the same time, not punishing britain. caroline: at the moment, this is
hypothetical because article 50 has not been treate trigger. who suffers most from this? >> the investors just do not know, which is the framework in which they can do investment, and as long as they do not know, they will stay away and play a wait and see game. this could really damage britain's economy. manus: we are running into political high season in europe, domestically in your own country and in france. is there a substantial political movement to the right in france? with that change the negotiating stance of the eu? >> in my view, is certainly would. the view of the far right in
france would certainly not be in favor of closer european integration were following the european idea further. it may in fact, trigger other movements in other countries to think more about separation. therefore, it is very important now to figure out, what are the common ideas that can unite various european countries and governments. one of these, we have to figure out how to make clear again, benefits that citizens in europe enjoy from being in the european union. caroline: francine lacqua beneft citizens had a conversation yesterday. from what she heard, we heard we would not be able to have passport business allowed. is a prevalent in the rest of germany? >> i think that could be one consequence. it is a real consequence there
because on the one hand, if britain is not willing to allow the free movement of people, the free movement of labor, it will also have repercussions on the question of how freely capital can move. this has to do with banks. in the end, it will always center around those freedoms and to what extent those parties are willing to preserve them. we will of course, return to this many times as we get ready for the election in germany, and when indeed, article 50 is trigger. that was joerg rocholl. manus: thank you. with with a magnitude 6.2 earthquake stucruck in italy, you are looking at live shot of the horrific scene. really, this is a significant event in italy. the recovery process is
international, a big exposure to south africa. we have concern about the finance minister once again. he is once again, being questioned by police. we see that affecting the rand. now, here are highlights for the rest of your day. joe biden has arrived in turkey on a visit to strengthen ties between the countries in the aftershock of a failed military coopup. meanwhile, angela merkel continues her tour around europe. time, we get u.k. mortgage applications data out of the u.s. manus: 21 people have reportedly been killed after a 6.2 magnitude earthquake that hit the center of earthquake. that is according to the sky tg24 television channel. missing 100 people are
in the town of pescara del tronto. let's get straight to rome and to bloomberg's kevin costello. kevin, what is the latest? we are looking at pictures of the rubble and rescue efforts underway. kevin: right now, the rescue workers are frantically searching for anybody who might be alive. as you mentioned, the death toll is 21, but that is certain to increase as the day goes on. caroline: kevin, give us a sense of how out of the ordinary this is. how much is italy affected by such an earthquake? kevin: of course, italy has been hit by earthquakes previously. this has come as no shock. the earthquake hit an area about 70 to 80 miles northeast of rome. the earthquake itself was still in the capital.
workingue workers are as hard as they can to find any survivors. sometimes when we put a geographic perspective on this, this is the height of the tourist travel season to italy. geographically, this is right at the heart of italy. to what extent will this impact logistics and travel around the region? villagesll, the themselves are quite small, fairly sparsely populated. however, this is the highest tourist and season. the timehe height of period. kevin costello, reporter from our rome bureau. manus: let's check in on gmm,
global market movers. we can see some of the equity markets beginning to turn slightly, austria, sweden, and denmark. when it comes to the commodity side, it is definitely this. brent, down 1.8%. energy levels have dropped. the dollar is up for the fourth straight day in a row ahead of jackson hole. the dollar is better bid. commodities and oil, slightly better. but fx volatility is that at a one month high. it is all about fx. caroline: it is indeed. you have to stay with us. up next, it is "the pulse." we will be's reading about more of the market -- we will be speaking about more of the market moves. a beautiful day in berlin, but a little bit of risk aversion. media outperforms and miners
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francine: have the debt. glencore beats -- shares trade up twice what it did in 2016 as the reduction lamp pays off. china's cash flow. the pboc injects liquidity into the system. policymakers are not trying to cool a bond rally. a 6.2 magnitude and for -- magnitude earthquake hits italy before dawn. relief estimates -- relief efforts are underway. ♪ francine: looking to "the pulse." live from bloomberg'eu