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tv   On the Move  Bloomberg  September 6, 2016 2:30am-4:01am EDT

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>> welcome to on the move. 7:30 a.m. in london. we are counting you down to the european open. i am guy johnson and i am back alongside caroline hyde in berlin. here is what we are watching. extra sweet. money in itsmore takeover bid for monsanto. will $60 million be unethical seal the deal. asian stocks hit a one-year high. the equity rally on track.
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building on the brexit. we speak to the ceo of a company following the vote to leave the european union. caroline: half an hour until the european open. great to be back with you. sunny skies in germany. looks like the sun is shining slightly on risk assets. oil trade is higher pushing higher the risk appetite. the aussie dollar on the move following the decision by the reserve bank to leave things on hold. it is up around 0.6%. there may be a role in the contract in wti and brent. brent is up around 0.5% and of uti up around 2%. in terms of where the equity
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markets -- they are broadly positive. asian markets hitting one year highs. here is the bloomberg first word news. the bank of japan should wait until after the u.s. federal reserve decides on interest rates before acting up writing to an economic adviser to the prime minister in japan. the boj risks having its efforts overshadowed if it expands monetary stimulus at a policy meeting this month and then the fat hours later decides to keep the interest rate unchanged. bid fors upped its months sent out a second time. it is prepared to offer a 19% premium to monsanto is last -- monsanto's last close in new york.
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in july, it rejected the $55 million bid from bayer saying that it was inadequate. president obama has canceled a meeting for best with the president of the philippines after that president released a warning against the u.s. interfering in its war against .rugs inwas due to meet obama asean. >> i am a president of a sovereign state. we have long ceased to be a colony. any -- i don't report to anyone but the filipino people. you must respect may. -- me. the man responsible for fromiating britain's exit
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the european union says there will be no delay in leaving the block. david davis said the people of the u.k. had given a clear instruction to leave the european union. >> the prime minister has made clear that there will be no attempt to stay in the eu by the back door. no attempt to engineer a second because some people did not like the first answer. christine: global news 24 hours a day powered by our 2600 journalists in more than 120 countries. this is bloomberg. back to the brexit story. little impact from brexit is the top story and uk's housing developer. the group says it will see another year of significant progress. we are joined by the ceo of the business.
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good morning to you. more specifically, can you give me some details on what the post-brexit area looks like? >> good morning. it is great to talk about some record results. your question on post-brexit. the last 10 weeks of trading we are 8% up year on year. me that the brexit vote came and went and people decided to get on with their lives. weaker pound a affect in this? are you seeing interest outside of the u.k.? thatu need to bear in mind a big slice of our business is outside of london. we have a limited exposure in london and little exposure in
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central london. there is no doubt that some of the london sites still -- london sights have interest and the currency rate has helped that. we are pleased because all parts of the country have responded well over the summer. caroline: what about the future? many still warning that in several months we could see a lagging affect in terms of rights it. investment sentiment and consumer sentiment. are you worried about the rest of the u.k. going forward? >> i am not losing any sleep over that at all. i speak to our sales team and our customers and there is a confidence about the market at the moment. , they need to move to move. there is a mobility requirement. people are changing jobs. they have growing families.
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there is a good underlying demand for new homes. guy: going forward, we have cutady had a 25 basis point from the bank of england. are you expecting more? do you think the market needs more? do we need a help to build? what can the institutions do to help you out? market is homes holding up very well at the moment. help to buy is important for the market. it has supported it for some time and it will continue to do so going forward. i don't inc. that the industry needs any added stimulus at the moment other than i do think there are some issues around london because of a time constraint. what about your costs? will there be a round up in terms of the pound week's --pound weakness?
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amounton't import a huge of our materials. steel prices have gone up. but we are not really expecting on ourpact from brexit material prices. in terms of labor, everyone knows there is a labor shortage constructionk. industry and underlying labor and wage inflation is relatively high compared to the rest of the country. can i get you to create a bigger picture. you brought up labor shortages. what can be done to help the sector? there seems to be some constraints -- access to capital and other factors that have affected the next year within
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the building profession. viewyou put your wider spectacles on, what do you see? what needs to happen? >> that is a good point and the over manyas suffered years. this is not a recent problem. it goes back to the 1990's. the berries into entry of housebuilding have increased. we do need to help people into the housebuilding industry. a lot of that goes back to skills as well. traditionally, it was a skilled tradesmen that built a business. this goes down to the roots of -- can we get more skilled people into the industry and can we give them some support so that they can build their own businesses and start off as small house builders? that withry can do
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perhaps support from the government. caroline: do you feel that all of these concerns about brexit are overblown? prudent withways your business and cautious because no one knew exactly what was going to happen. in the lead up to brexit, trading looked fairly robust. we were happy. when the result came out, we got together and said --what do we think will happen? and then you look at your land buying strategy and your sales strategy but none of the gloom and doom have come to fruition. it was all overstated and we are happy with the way things are going now. you for talking with us this morning. sweetened its has bid for monsanto for the second time. caroline: a new move. no move.-
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the rba stance strong. what will the aussie dollar say? lego.ocks to let go -- we are joined by john goodwin. all of that is ahead. this is bloomberg. ♪
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caroline: welcome back.
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a sunny day here in germany. futures higher at the moment. steady as she goes at the rba and the central bank keeping grades at a record low of 1.5%. glenn stevens highlighted inflationary pressures at his last meeting. michael heath joins us. what sort of shape does he leave the economy in for his successor? michael: in interesting contrast. over 10 years he has averaged inflation of 2.5%. an extraordinary achievement. what he hands over to his successor is 1% inflation, close to a record low. -- he has averaged more than 3%. he leaves a record low. in terms of dealing with that,
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-- it doesn't give him a lot of scope to do much with interest rate. an outstanding sense -- set of numbers. in terms of the inheritance, not quite so good. guy: looking at what happens next. walk us through what the market has priced in. what is the expectation? what will he deliver? it is not that different from stevens. these two men think similarly. is a hawkish person. he is a big believer in free enterprise in the sense of bring up the market that he is still a central banker at the end of the day. the market is saying that rum just after october when the next inflation report comes out, that
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meetings then become live. it was about 40% there. and early next year, they get over 50%. the basic theme is the same. very low inflation. once that report comes out, the rba moves to cut. andinflation targeting bank it is most comfortable easing policy. is the federal reserve. the rba has had its fingers crossed that the fed would start typing. their fingers are going through. that would take pressure off of the currency which would be a big eight to his successor. -- a big aid to his successor. the world is waiting for the fed to raise rates but the market as you look at pricing is
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increasingly becoming skeptical that we will see a rate hike in september. december looks possible but no one is entirely convinced. elasticve been on this and of expectation all year with the fed. there has been an opportunity for the fed to raise rates. but it has not happened. the comment around the rba crossing its fingers is mirrored in a number of different central banks around the world where there is a policy implicit or explicit where the weakening of the currencies does not help from an export perspective or consumer confidence perspective. the u.s. from an economic perspective thanks dion and good solid ground. it is not weakening at all. of theative to the rest world, it is still a significant engine of growth.
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from a fed policy perspective, they should feel more confident. some of the issues they have had is the move from domestic issues around non-domestic issues. that has clouded some of the communication from the fed policy perspective. from a messaging perspective we would expect more comments from the domestic perspective and more focus on the ability to move rates going forward. at thee: if i am looking 59% for the december rate hike. do you abide by that? >> i think it is fairly likely. the bank of japan from the previous comments around using a waiting policy -- the last thing the bank of japan wants to do is increase the yen strength in the face of an unresponsive fed. it is responsible for them to
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sit and wait rather than -- informing theem market as to their expectations. guy: we are at an interesting juncture in central banking. that thea realization yield curve is something that maybe we should think more about. can see it clearly here. what we have seen of late, is a big selloff. in terms of the jgb strip. is the spread that has been going up as the curve stevens. the banks following quickly. you solve that in the u.s. as well as the prospect for the rate hike went up, the banking sector went up also.
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we have a banking problem in europe. draghi need to pay attention? a natural monetary -- is keyspective here. the central bank policy around monetary accommodation is first and foremost to protect and maintain economic growth and stability. perspective,ary the impact on bank earnings and the ability for the banks to make money in this environment is important. especially as we have seen in the last new year's a significant increase in regulatory capital needs. banks have not been able to reinvest as much as they would want to earn the return on invested -- an adjustment that they would be expecting. anything we can do to improve --
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guy: let me jump in with another charge. i want to get your take on this. liable. this is the last five years. it is not to the elevated double that we have seen. walk us through how disturbing this is to the market. and what the banks will realize as a result of this. dollar costs are going up right now. is the is important investable. an investor looking at short-term rates, this is good. you are seeing a significant improvement in yields. there is still a short-term investment product. the first thing to note is any
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investable from a return perspective here guy: hold that thought there. caroline? wayne bowers will stay with us but we are minutes away from the market open. we are looking into the potential corporate movers in today's trading. it is all about bayer. out anotherto shell bid for monsanto. this is bloomberg. ♪
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caroline: we are minutes away from the open. two key german stocks to keep an eye on. bayer looking to up its bid for monsanto. paying a 19% premium. company, europe's biggest health care provider. it is looking to offer for a spanish hospital company. calledmpany being higher. they are liking the fact that it is expanding into spain. $6.4 billion. it is a bit of an m&a tuesday. are fourline, we
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minutes away from the market open. european stocks up by 0.4%. that is london. this is bloomberg. the market open is next. ♪
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guy: good morning. i'm guy johnson. we are here in london alongside caroline hyde. she is in berlin. caroline, we are moments away from the start of european trading. what is the morning brief? caroline: a bit of m&a. bear offers -- bayer offers more in his bid from monsanto. brexit. after the ceo of fred joe tells us the predicted gloom was overstated and has not come to fruition
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following a vote to leave the european union. are convinced away from this we are 10 minutes away from european markets. -- we are 10 minutes away from european markets. let's take you to the bloomberg. let's show you where we are. the u.s. was out yesterday. a little bit of selloff into the close. the london market just opening in positive territory, but not by much. the cac opening up in positive territory. let's walk you through what is happening around euro. -- around europe. this is the stoxx 600 breakdown. the equity markets will give you an idea of which markets are outperforming. portugal is up. .7%.gal is up by the gilt market is opening. nejra: thanks guy. i'm looking at the u.k. ten-year
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guilds. this is a today chart you can see. you can see a little bit of a move as we are opening up. pretty much unchanged. 72 basis points on this 10 year yield. this is how they get markets are opening up. i want to dig into the stoxx 600. as in asia, energy stocks were somebody biggest gainers in asia. asia-pacific go near a one-year high. .3%.wed by industrials, up the laggards are the telecoms. pretty much unchanged. positive sentiment with most industry groups in the green. in terms of individual stocks, starting with u.k. homebuilders. these are interesting in terms of impact that has been seen from brexit.
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i've got berkeley group appear. it has reiterated its guidance and says pricing remains resilient though it does this the government policy has a negative effect on capital. i want to bring up red row because they had quite a few comments from brexit. he says there's is a confidence in the market that none of the exit doom and gloom has come to the dish has come to fruition. -- has come to fruition. they have seen all parts of the country responded very well in the summer. up a percent year on year in terms of number -- up 8% year on year in terms of numbers. its takeoveretened bid for monsanto. 2% more than their previous bid. offer.lion
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it is the third attempt to buy monsanto. the offer is still below $135 per share that some people say is needed for monsanto. caroline? caroline: sticking with that theme, bayer, your worst performer on the dax. up .6%. 16%. -- it is whether that bid will prove more -- give us a sense of whether hefty127 is enough as a and you? -- as a hefty premium? the third attempt from bayer, still not an official bid. now.e standing at 127.50 they started in may at $122.
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we knew there was some progress, because monsanto did grant buyer -- did grant bayer. it is not the big bang, hefty offer that some people said must come for monsanto management to say we are cool with it. bayer is being conservative, lifting their offer by just a few dollars. this time, the main thing is the share are not following the offer. that raises some question marks. guy: tell me why that is not happening. what is happening in the merger arbitrage right now? richard: it is a most 20%. the newest officer that make -- the newest offer that may come following the monsanto
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management agrees to this one -- normally that does not happen. the share price of a takeover candidate approaches the offer price. there is always a little bit -- a little bit of a risk that the deal may fail. today, to jump to just about $127, but it has not been doing that so far. one of the reasons is bayer has been so reluctant giving these numbers. is the big risk associated with making an official offer for monsanto. look at the reputational issues monsanto has been having in the past. a very conservative country. you did call it a consist -- a chemical company. chemicald some of its
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to focus on pharma. think dow chemical and what that will mean once they carve out their new pharma chemicals company. the big players and their, the bayer, the monsanto. summary of what seems to be going out. wayne bowers is still with us. looking outside of that industry, is there a particular issues within the consolidation, but is consolidation a way forward in this low-wage growth environment? wayne: in one word, yes. access to capital markets is there. it is a good bid for both corporate that's from central banks as well as underlying
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investors. access to low, long-term funding is more than available for some of these multinational corporate's. cashot the combination of on hand as well as the access to capital markets. you would expect more aggressive m&a activity, especially for new market entry -- new product strategy initiatives. by to gainre for access. the bayer example is want to focus on when you're looking at risks toward him in a. -- towardhim in a m&a. also looking at the cultural integration as well and what you don't want to do is damage your m&a.ny for the sake of the part of the price you are paying is for the reputation, the brand
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of the acquired targets company. the last thing you want to do is to destroy that through the transaction. -- one word stuck out wayne: there is a more than adequate supply around the world with a low demand. we are not seeing any significant improvement or increase in inflation measures, inflation indices, so again you see combination of where we have not seen a significant amount of dollar strength. we have had a stable dollar. commodity markets have not taken to the moon. if they have, there has been appropriate measures put in place. it is reasonably weak out there. there is enough supply of goods and services to meet demand that we don't see that transitioning through to higher levels of inflation. that is a worry for those
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central banks that are explicitly targeting higher inflation. want the equity market? i am a company and they've got other companies making a lots of good desk lots of goods and services, -- lots of goods and services, why do we have equity markets trading in the multiples as they are? seem like a stable situation for equity markets in the medium-term. wayne: everybody wants return. everybody is looking for the extra-base point. you can't just leave your money in the bank earning you a 0% or negative rate. you got the requirement for yield. from an acting market perspective, you are seeing improvements in productivity and technology utilization.
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we cannot ignore the transformational effect across multiple industries which reduces the cost of those goods and services. if you're able to sell or discount your end-user product, it would cost you less to produce it. your improving your cash flow which flows into dividends and yields. the equity market is still attractive from that perspective. guy: i could question you on the earnings not coming through. the e and the pe is not great. wayne is going to stay with us. wayne bowers international cio is staying with us. caroline: up next, instructions from the brexit barred. david davis addresses the parliament. the red line drawn. a lashing. a benchmark putting pressure on
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china's currency. no crack sandy foundation. red road tells bloomberg the doom and gloom has not come to fruition. more on that later. this is bloomberg. ♪
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guy: welcome back. you are watching on the move. up 4.5% desk for sinuous up 4.5%.
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barclays rising quite nicely. , it isend of it interesting to see what is happening with this stock. down 12% on the day. this after a warning in the net states, it is down around 60%. the stock is taking quite a bit of punishment in terms of what it does. creating hardware services across the united states and brazil. it is causing problems. lesetja bloomberg first word news desk let's get your bloomberg first word news. >> german factory orders increased wes and forecasted in july. order suggested for inflation rose 0.2% from june. that as domestic weakness stamped a surge from the euro area
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the report follows a series of data signaling economic momentum in europe's economy has cooled. should waitjapan until after the u.s. federal reserve decides on interest rates before acting. that is according to wiki hamada. he says overshadowed as it expands monetary's stimulus -- monetary stimulus. [indiscernible] 0.6% in the month of june beating forecasts -- beating the economists forecast. the year after suffering an exchange-rate --global news, 24 hours a day, powered by 2600 journalists and analysts in more
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than 120 countries. this is bloomberg. much.ne: thank you very the man responsible for negotiating britain's exit from the european union says there will be no delaying the block. david davis says the people of the u.k. have given a clear instruction to leave the eu. >> the prime minister has made clear there will be no attempt to stay in the eu by the back door, no attempt to delay, frustrate or thwart the will of the people. engineer a second referendum, because some people do not like the first answer. caroline: a looks like the data .s helping brexiteers >> we did expect some bounceback
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post the initial shock of what we were saying through the data post the june vote. it is much stronger than we expected, but also from a market expectation. markets have aligned on this. don't get too excited from a negative or positive side on the numbers. just looking at. economics, look at what happened from an exchange-rate perspective. the u.k. economy is being able to achieve based on a lower pound is significantly important. the confidence that the market has in terms of the bank of england. guy: you have a cheaper pound, access to the single market, happy days. the numbers should bounce back but as you pointed out, further down the road, inflation is going to look more difficult.
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what now needs to happen to maintain momentum? seeing connie go in front of the british collective tomorrow. he is going to be getting a lot of grief since he is already thatabout a 25 basis cut she has already talked about a 25 basis point cut -- that he has already talked about a 25 basis point cut. >> the numbers seem much better than the market expected. there is some insurance -- some assurance that the bank of england has put in place in terms of -- i would not want them to be overly aggressive, but in terms of language or action in coming months, they need to maintain some insurance cover for any deterioration economic performers going into 2017. from our perspective, the beginning of this process, it
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echoed in terms of what happened in the g-20 at the moment with china, as well is japan, clearly laying out their concerns from a u.k. negotiations perspective, and trying to get some clarity and put pressure on the u.k. government to make sure the assurances they are making are quick and fast. caroline: wayne bowers putting it quickly for us. sticking with us. surgeon lashing the u.s. foreign benchmark is having a big effect. in hong kong with details next on bloomberg. ♪
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guy: 8:21 in london. -- also knowndon as three-month dollar libel has climbed to a seven-year high and it is having a big impact around the world. especially in china. the surgeon u.s. borrowing is making it more specific for chinese companies to service $585 billion of debt. encouraging firms to pay back the loans and adding pressure on the yuan to weaken. the details on what is happening. now --ng duly joins us how big it really is. problem.t is a big to put things in perspective, $580 billion is the size of
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mexico's fx reserves. it is fairly important and it could risk financial stability if things go wrong. things are going wrong for the moment with the fed interest rate increase. 59% for december. it sets up a vicious cycle where the dollar rises, the one drops, people want to get out of the yuan it drives the yuan further down. caroline: robin, we can see from movingrt, how we see it in terms of the yuan depreciation and climbing higher in terms of dialogue does dollar liable -- dollar liable. how much worse does this chart get? robin: the impression here is it is going to get a little bit worse, maybe slightly worse before things get better.
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if you remember the yuan is on the verge of entering the imf on october 1, there is speculation that the people's bank of china will offset some depreciation pressure before the yuan get into the spr for the next couple of weeks. the danger of all of this is companies rushing to pay off dollar debt. the competitions that this is causing is that it is not allowing the pboc to free up capital controls. every time over the last month , logically the pboc the yuan should advance as well which it had been doing early in the morning. you see investors stepping in buying greenbacks in the market which drives the yuan. the median estimate is 1.1% and declines later this year. it is going get worse before it gets better.
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guy: you bring up the timing. robin ganguly joining us out of hong kong. wayne bowers still in the city of. -- still in the studio. libor really spiked in the financials and the elevated levels that we're looking at. it doesn't look that significant, however if i put it into a five-year period, you can see what we are saying and that is a big the cup at the right hand side of the chart. how many questions are you being asked by your clients about money market funds that changes the rules that are coming in october? are we experiencing some liquidity crisis that has -- wayne: the first point of the question is around the money market process that is going on in the u.s. it is a huge change for the industry working with a thinktory effective, i
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what that is not showing is there has been a shift of assets that have been very comfortable in money market funds that are now moving out of the money market fund shelter and moving into short strategies by short debt. both from anve asset owners perspective, as well as from a good response point of view which moves -- which smooths out the money market reform. that has some influence. what is interesting is the unintended consequences of something like this. you can be paying a receiving rates based on this indicator. i don't feel that we have seen any fallout. you for sharing your thoughts with us. wayne bowers joining us from northern trust asset management.
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caroline: loving that turn a phrase. overstated doom and gloom. that is what the red rose ceo take is on brexit. this is bloomberg. ♪
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guy: welcome back. you are watching on the move. let me show you a picture of the markets. the ftse 100 a slight lag art. we have services throughout the united states later on. pay attention to that. what stocks are moving these markets? let's find out. nejra: i am starting with fastidious -- it is europe's biggest public we traded health care provider. it is buying a spanish hospital group. acquisitionlargest as the company looks to expand its german network overseas.
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it is a cash and stock field acquiring the company from pdc -- it projects 50 million cert -- 50 million euros from the deal. the worst performer is jenna go -- ingenico group. it cost that's it cut its forecast for this year citing a shift in the new rules in the u.s. the stock has dropped the most since 2002. if we move on to berkeley group, .e're seeing this game a couple of home builders that have reported today reiterating its guidance. it it's a government policy did have a negative effect on policy
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but pricing remained resilient. caroline? caroline: let's get into another stock story. redrow trading higher after the company released its earnings. the company's ceo told us that brexit doom and gloom was overstated. >> in the lead up to brexit, trading looked to be fairly robust. we were really happy people in the result came out, we said what do we think is going to happen here echo you look at your landline strategy, but none of the doom and gloom has come to fruition. it was all overstated. we are pretty happy with the things that with the way things are going. -- with the way things are going. up. barclays is yes, the company is out saying the price remains resilient. that is the view in the market
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this morning. let's get a take on all of this. that number, i think is really interesting good august reservations down 20% from a year earlier. there is much less of a pound effect coming through. >> a few things paying in mind, down 20% in august is roughly in line where they were in the first few months of the year. what were the effects echo a number of tax changes which were helpful. the argument had been that once the referendum have gotten out first way, and after that month of uncertainty, we would start to see how the team would response. you can consumer mary -- has been remarkably resilient after the brexit vote. barclays is selling from fewer sites, i think it doesn't show there has not been that rush that you might've expected.
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caroline: is it time for the government to step in. what are the homebuilders looking for in terms of help from the government? things.ere are a few in barclays case, the big issue has been the increase. we had an increase on all luxury homes and in april this year, a percentage point added on. the top end of the market is really impacted. like every industry group out there at the moment, seeing brexit as an opportunity to make some new policy demands. -- new looking government will be welcomed from that government is another question. there is a lot of housing policy which we had been expecting to make its way through parliament
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this year and next, which is -- because of the referendum votes. it is a bit more up in the air. there are some planning changes which all of the house voters would like to see come into effect, things like making it easy to build out, incentivize and get rid of some of the difficult tech of issues. guy: it you have already answered my question, why it is looking different. a geographical factor. can i come back to the issue of down 20%? expected to see some affects from the weaker pound. that is the line that is been coming out. london -- in central london could -- in central london, berkeley is looking pretty soft. jack: clearly they are connected. the ability to raise rates is
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limited. when you look at the berkeley's savings today, they did say they had an eye on the secondary market. investor health at this stage in the cycle. barclays is a very cycle conscious to the upper. -- conscious developer. to me, that 20% number being down, i think it does show that maybe this rush of overseas money, it might come. it is considering whether or not to buy rather than having to make its decision the day after the vote. guy: jack sidders. ." build -- caroline: building on profit. we are speaking lego now. this is bloomberg. ♪
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guy: 40 minutes past the hour here in london. the equity in markets have been
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opened -- the equity markets have been open for that time. we've got fed speak and data coming up later. in terms of what is the moving the markets, australian dollar. the rba is remaining -- the aussie dollar up by .8%. weaker across the peak this morning. interesting to see what that is doing to some of the commodities. the equity markets are broadly positive, but we will wait to see what happens with the u.s. open later. there got a lot of catching up to do. --oline: they are having they were having a rest yesterday. let's have a look at how the open is faring in europe. we are seeing some big moves when it comes to m&a. scaling -- up 3.9%. the company looking to buying into the spanish hospitals area. flashing their cash.
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looking at the mrr on your bloomberg, barclays group -- the group sing some -- berkeley group seeing some -- signal the brexit issue. ,n the underside, it ingenico the biggest slump for this stock in seven months on the back of woes in brazil. we've got to turn our attention to the bloomberg is his flash -- bloomberg business flash. christine: thank you. bayer has up its data for monsanto a second time. the german chemical giant says it is prepared to offer 130 -- $127.50 per0 -- share. remember in july, monsanto rejected beyers 65 billion dollar bid saying it was inadequate.
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airbus has won about $6.5 billion of orders from carriers in vietnam. they owned vietnam airlines -- to buy wide-body aircraft's. at the same time, its affiliate jets start pacific airline agreed to purchase three. vietnam's only private airline sign a daughter just signed an order for hundred one planes. europe's biggest publicly traded health care provider is to pay $6.42 billion. just private hospital company. quironsalud -- with the rest held by the hospital management. and general motors has settled the final two bellwether cases over admissions -- emissions
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which is scheduled for trial in new york. in terms of settlement, it is confidential. both lawsuits claimed injuries followed by accidents linked to switches that could jostle into the off position. everbright securities is said to be stepping up its expansion in hong kong with several top hires from its competitors. they include the head of investing -- investment banking at singapore's bbs. 10 senioras added executives since may and plans to hire 10 more by the end of the year. that is your bloomberg business flash. good --nk you very much very much. we are going to deal with blocks of a different kind. we are going to speak to the lego see that -- lego cfo. this is bloomberg. ♪
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caroline: welcome back to "on the move." let's look at toys. europe's largest toymaker lego reported a drop in net profit despite a strong sales performance. higher investments eating into the number. let's go to john goodwin.
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talk to us about the investments .hat lego is making china, mexico, how important is the emerging market? john: emerging markets are a key .art of our future roughly 80% of our sales come -- we have athat big opportunity to reach more children by pushing out into those markets where we do not have a strong presence. what we have been looking to do over the six months is build our capabilities and capacities and organizations to deliver on that future promise. guy: how much are you spending in terms of extra money on that process? topline is up, bottom line is down slightly. what is happening in the middle of the p&l?
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john: we operate in profit level. we've got a small growth of 1%. ofare seeing spending ahead the topline growth. base, ouree organization capacity is up 24% versus the equivalent theory a year ago. our investments and equipments and property is up 19% versus the same period last year. we are building our infrastructure out and giving ourselves more capacity and order to embrace the growth that we believe is out there and to reach more children. caroline: we are seeing brilliant pictures and we're looking at the statue of liberty maiden legos. talk to us about the united states. press not seeing the sales
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growth that we saw in europe and asia. you said you need to dial up your efforts there, how? we have been working with our retail partners to make sure that as we go to the holiday period, at the back end of the calendar year is where a vast majority of sales take place, we have really strong plans to ensure that we have a good presence of lego products within store and through the marketing arms to ensure that we have good momentum coming out of this year in that key market. the star warstant franchise is to you? it seems to be a big part of the operation from lego. we've got a series of movies coming out. how tied in our you into that franchise? john: it is a great franchise. partner.en a wonderful
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it is one of the top five product teams we have from a company point of view. it is an important focus for us. it provides a wonderful play experience for the children. movies provide us with the opportunity to inject some new great creativity for children to embrace. caroline: you are a wonderful bellwether in terms of geographical reach. we're looking where we can see growth. where you most worried about consumer sentiment? seeing a pretty brand desire for the lego in all markets. the one we are focused on in regaining momentum is in north america, the u.s., which is the single largest market for us.
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the economic challenges that are in south america means that business has been bumpy at the start of the year. in terms of europe and asia, we are seeing pretty strong growth consistently. guy: less question, brexit, any affect on the key market? global traders are becoming more difficult. are you feeling that as well? john: the free trade is an important ammo for us. free markets and important way for us to ensure that we are getting the consumer the experiences they want. we are monitoring the brexit situation carefully. the u.k. is an important market for us but it is too early for us to assess what the real impacts are of the brexit move. in terms of global trade, as a
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mentions, we continue to be a strong supporter of free trade. what we are doing is ensuring we have some capabilities in every region to ensure we can be responsive within the region we are supplying and avoiding periods where we've got lots of products stuck on ships traveling across oceans to be able for us to be responsible and all marketplaces. much.ohn, thank you so john goodwin coming to us from over in denmark. saudi arabia is on call to join the emerging market index for 2018. reforming the stock market is a part of saudi's plans. yousef, in your exclusive interview, what did he tell you about where these reforms are now? the story here is they
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are going to go much further than the -- than they currently are. they have ambitious plans to open up the market. this is the second time they move on the regulations before .egulators -- before investors saudi arabia has the most liquid market in the middle east. last time around, they made changes, the interest was still fairly muted. we are talking 1% of total shares that are owned by foreign investors. the chairman said he is positive that the latest changes they came into effect on september 4 would help unlock some additional opportunities, bring in some more foreign capital. he did admit that at the loyal -- that the boers oil prices pressures.ditional they're fast tracked those
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reforms and that includes bringing down the minimum threshold from $5 billion to $2 billion. it includes shortselling. .t changed the settlement cycle going into next year, they're looking at developing the debt capital market. some exciting changes for the kingdom. us about thek to desire to be included in the msci market. it is a top priority here. he made that very clear. they are try to bring as much foreign cash and as they can. have a listen to what he had to say about how important it is to be a part of the msci. >> yes. we have been in discussion with msci and other entities. we are in continuous engagement.
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we believe that the amendments that have taken place -- is going to happen early next year. put thed be enough to 2017.markets within the normal is [indiscernible] for the inclusion. yousef: they would be going on a road shows with his saudi -- in london in new york to stroke the kind of opportunities that are in the pipeline when it comes to saudi arabia it of this in anticipation of what is expected to be the ipo of the world's most valuable company. saudi aramco. the local exchanges do not have the depth to be of to absorb the size of that kind of ipo. argue bleak in preparation ahead and lay the groundwork for that. caroline: so much excitement for
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the ipo. indeed.u very much let's check in on some of the highlights for your trading day ahead. with a few minutes time, german finance minister schaeuble has presented a 2017 budget to parliament. it is the eurozone gdp numbers. san francisco's fed president john williams discusses the economic outlook. that will be dictating -- i am sure, guy. guy: it certainly will. u.s. markets will be back in play today. volume is back. we have data out of the united states. where waiting for that. u.k. -- we are waiting for that. interestingly, redrow is doing well. august reservations down 20%, up boy this up by 2.49%. stay with us.
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the pulse is up next. francine lacqua ticking off the conversation with adam pozen. this is bloomberg. ♪
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francine: the austrian central bank to deserve this ammunition of -- ahead of the fed decision later this month. third time lucky for bayer. the german company sweetening its bid for monsanto. where is the brexit plan? britain grapples to answer the question. we speak to former eu commissioner. ♪ francine: welcome to the pulse, live from bloomberg's european headquarts.

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