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tv   Countdown  Bloomberg  September 7, 2016 1:00am-2:31am EDT

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anna: emerging-market assets rally after weak u.s. data quells a rate hike. and john williams insists that is world's largest economy in good shape. preparing to meet senior bankers to set out the government's plan to court the economy and sound out their views for a post-brexit. carneyile, mark forifies before u.k. mp's the first time since the referendum. and in technology, all eyes on apple. the world's most valuable company will present a new line of products tonight, including the iphone 7.
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♪ a very warm welcome to countdown everybody. i am anna edwards. manus: i am manus cranny. volatility, talking about the dollar, talking the biggest slide in five weeks. have a look in this chart for our viewers. the dollar index is the white line. and economic surprises are the blue dots. the trifecta, my word of the day the trifecta of doubt,.talking about services expanding the weakest in six years, manufacturing contract ing, and a lackluster jobs report.that is changing the work function. the probability of the rate hike drops to 24% from 34%. the dollar is under pressure, and volatility, that is spiking higher. what is next? anna: as you say as that data
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increasingly, disappoints, let us bring up the risk radar and show you how the rest of the asset classes have been reacting u.s..t weak data in the theback of that week data, korean wine up as you see. up to the strong as in the year, oil up by half a percent, the road to algeria paved with a lot of talk about a freeze, a lot of chitchat about a freeze.we will follow that. a new forecast saying the u.s. is still dominating growth and supply. manus: keep an eye on the korean currency. the closelybecause monitored currency, ahead of the fed decision. you told me it has to be on the risk radar. anna: of i have a percent
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against the u.s. dollar, a tenths of a percent on the pound. we haven't moving higher on media reports that are casting doubt on the boj's intentions to increase. let us get the first word news. here is rosalind chin. rosalind: the u.k. chancellor philip hammond will meet bankers in london later to set out the government's plan for a post-brexit britain. prime minister theresa may is coming under pressure from some of the world's biggest banks to strike an interim agreement before more exit talks start. they will not get underway for early next year. ubs may have to move as many as 1500 jobs from london to elsewhere in the region in the wake of the brexit vote that is according to the ceo. . he told the japanese newspaper that while london will continue to be a key financial center, it may not be as important as it is
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today. bank of england governor mark carney will testify before the company. attackd to be on the after accusing central banks of august stimulus without sufficient evidence of a slowdown. japan will leave the stimulus program unchanged at its meeting this month, given the economic fundamentals and growing caution about the risk of expansion. that is according to former boj executive director. the official bank meets on september 21, the same day as the fed's policy announcement. and apple will hold a keynote event tonight, where the world's most valuable company is expected to present a of products, including the iphone 7. all evidence points to a modest hardware upgrade, paired with meaning updates to ios10, the latest operating system.
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but they are concerned that will not extend topline growth. u.s. record-setting astronaut and russian colleagues are back on earth after a six-month stay at the international space station. the capsule came down safely in . returned,f williams logging 534 days in space over four missions. williams and two russians circled the globe for more than 2000 times. global news 24 hours a day power by 2600 journalists and analysts in more than 120 countries. i am rosalind chin. . thank you.lind, let us he was going on in the markets japan and asia. , two different stories. shery ahn is your vassilis and.
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shery: the morning are you said it, japan losing ground while other markets are gaining. weak data out of the u.s. proving to be bad for most markets. getting for third day, the highest since july of last year. the shanghai composite gaining 4/10 of 1% with the infrastructure stocks in the big gains as we find authorities now saying they will ease restrictions on spending in the secondary remember, the shanghai composite closing left in 1% last three weeks. and we will see stocks go the last two hours of trading for the hang seng down presents a 1%. but it is not that that given how much of a boost they have gotten in the last couple of months, double-digit gains the last couple of months. jpmorgan saying this could even rise further, given the better-than-expected corporate profits, but as i mentioned earlier the nikkei down 7/10 of
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1%. not surprising, given three days of strong yen. so, that weighing on exporters. but most emerging markets in aia gaining ground, up 10th of 1%. same with taiwan. philippines down more than 1%, cautions giving president jeter ;s controversial comments about president obama. closing higher today, not much movement there, but remember, we had some economic data out of australia showing gdp grew less than expected in the second quarter. 76.74. dollar trading at anna: shery ahn in hong kong with the latest on that divergent performance in the market. let us talk about the weakness in u.s. data them because that is the big trigger for the move we are seeing.
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nonmanufacturing and manufacturing pmi in the u.s./, overall it's of a rate hike. now factoring in a 24% chance of the fed raising interest rates, having falling eight percentage points from the beginning of the month. that is the expectation for the month of september. now, despite the recent underwhelming data, the head of the bank remains upbeat on the u.s. economy. manus: speaking in nevada last night, john williams said he sees an increase "sooner rather than later." owen, chiefs david european economist at jefferies international. everything hangs on the words. differentis no talking upbeat economy,. what we have here, have a look at this, the nonmanufacturing dropping off. it is a trifecta of disappointment. how concerned are you about the slowdown in the united states of america? david: not concerned at this point.
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obviously, the data from august level were seasonally adjusted, but we are talking the u.s. economy will keep on growing and the fed will likely raise interest rates into december.and we know september was unlikely. but we will not. obviously a lot of, talk about the feds raising interest rates, but we get the rate rise coupled with major stimulus from the bank of japan. obviously, raining back on both things. but the interesting thing was williams, he did publish an interesting letter a few weeks ago, highlighting that the real equilibrium rates are low globally. and there was a need to perhaps do something else over and above policy,monetary o in particular may be using fiscal policy as a response. anna: i know you were
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disappointed about the outcome from jackson hole. david, are you suggesting the rate hike is maybe december, rather than september? the probability factor into markets of a hike in december is now down to 52%, up about 60%. so the market reevaluating that expectation a little bit, in the wake of this data? david: markets have to look at the data. everything is data-dependent.if we don't get a reseller ration in the us economy they will not raise rates in the summer at all. eurozone, the issue with the ecb this week is that the rest of the eurozone actually sells in the second quarter. data released yesterday for the first time since 2013, seeing momentum very and inflation on or basis in the eurozone is stuck well below 1%. so, the ecb's problems are more pressing. but the fed cannot raise rates in september, hope to do it in december.
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manus: like to have storage in the tank. stay with us, david owen. we are going to cross now to australia.the economy expanding the fastest annual pace in four years, showing of gdp rise of 0.5%. anna: michael heath joins us live from sydney. good to see you again. central bankers cut rates twice to a new love, nothing decided yesterday of course, despite this expansion. have they got it wrong> the inflation question her? michael in short, know very very strong growth on paper at least. about the 30 year average we have had, on paper but not the level of growth that would impact the labor market as it normally would. a lot of the growth came from resource exports a lot from state governments acquiring land for future projects, so the
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employment in shipping iron ore ore buying up land to build roads on a later date. is to level of the growth not going to have an impact on the labor market, and in terms of the inflation you might normally get the level of growth iss high, so i think rab about right. it is the excess capacity, and this is not do too much. manus: public investment was a significant contributor, in terms of the of trillion government really trying to cut the deficit. what is happening on that front? michael: well, the public investment was very strong, but this is a state level and local government level. at the moment, buying houses that need to be demolished and order to build roads or lay rails, they're not doing that you cared it will generate jobs, but not yet. still at the early stage.
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at the federal level, a lot of economists has suggested they should be using the low global rate to borrow, spend on infrastructure, employ people, boost productivity, but it is so geared to harrowing the deficit they're not engaging on the issue. anna: michael heath, think you are much. joining us from sydney. still with us, david owen from jefferies international. take the central banking conversation as a whole, we were , weeks ago ono jackson hole and what you call missed opportunity. ?why so central bankink should be doing some indifferent, aside from reiterating they think other actors should pull their weight? fair, jackson hole, to be is a u.s. centric gathering. they don't focus on the global issues, so much but the global issue is we have very weak growth, world trade rolling over. we have incredibly low equilibrium interest rates,
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excess savings in certain countries, and perhaps investment more generally, that is why equilibrium interest rates are so low in the system. so, that is a major issue. and if we do not get growth resuming, we will not have interest rates rising. you know, more pressure on the central bank;'s balance sheet. i think really, the academics in particular, i would hope they actually said this is what we really need to kickstart the global economy and get us moving, so it interest rates not just in the eurozone, but also the u.s. can rise and the fed can get interest rates higher, so with the next slowdown come they can cut rates. but we are in this world where central banks just do ever increasing balance sheets, not where it really want to be. manus: using we are seeing the start of a true backlash against negative rates? a lot of internation coming through in the japanese conversation. kuroda, it would appear, has
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about-faced, talking with the risks and rewards. is this the beginning of the backlash to negative rates? david: i think absolutely. negative rates have systemic implications, we know what insurance companies define benefit pensions, and also the issue maybe for the banking sector more generally. we do not know what the tipping point for the eurozone will bounce over, but we know it is somewhere out there in the ecb may get there eventually. you know, at the end of the day we need something else. in the case of japan, helicopter money. manus: we will talk about helicopter money later on. anna: we saw that yesterday, being paid to borrow. it is a strange world. more talk about with david owen from jefferies international. manus: in under two an a half
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hours time, we will get interest rate decision out of sweden. and a midday u.k. time, plenty of brexit talk when theresa may takes prime minister question time. anna: and later, also the hot topic when bank of england mark carney faces mp's. manus: and at 6 p.m. u.k. time, apples big event. a new iphone and watch. coming up? anna: did mark carney overreact with the stimulus package? the bank of england governor due to be questioned by u.k. mps later. we will discuss the state of the u.k. economy. manus: and saudi arabia shrinking, we will take a look at what you can expect from the world's most valuable company. apple set to unveil a new line of products. this is bloomberg. ♪
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anna: welcome back. this is countdown. 6:19 here inkong, london. let us get up to date with the business flash. here is rosalind chin. rosalind: the chinese owner of new york's waldorf astoria is pressing pause on the multibillion-dollar spending ande, and chasing the deal, corporate in the company to be bought. and that is in the u.s., europe, and asia, listing the live insurance company in hong kong. according to those familiar with the matter, they are concerned about whether they have enough value. aedit suites has promoted chief executive officer to the global market unit. in charge of the security business, with losses this year. he was grievously cohead of credit and will join the bank's
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board, for someone who is leaving the company. shares rose an extended trades, buying a 9.9% stake in the company. the hedge fund says it is undervalued and plans to discuss ways to improve the operations and cost structure. barclays has been struggling. shares have fallen around 14% this year. and apple will hold the keynote of it tonight, where the world's most valuable company is expected to present a new line of products, including the iphone 7. all evidence points to a modest hardware update, paired with enhancements to ios10, the latest operating system. the new handset will not do enough to stem declining topline growth. that is your bloomberg business flash. anna: rosalind chin in hong kong. u.k. chancellor philip hammond
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will meet senior bankers in london later to set out the plan to support the economy and sound out their views for a post-brexit britain. ceos: that comes after ubs says he may have to move as many as 1500 jobs from london to elsewhere in the region. this in the wake of the brexit vote. anna: mark carney will testify before mps, for the first time since the referendum. jacob is excited to be on the attack, after accusing the central bank of and leasing its august the minas including a rate cut without significant evidence of a slowdown. manus: still with us is david owen from jefferies international. interesting day, jacob and carney. i can remember the conversation, the tone, into nation of the news conference, what do you expect me to do? he will have to defend this
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position today. david: at the end of the day, we did go with triggering article 50. and i think most people's worst-case scenario, triggering article 50 and the u.k. would drop into recession. triggering article 50, new government formed, we are moving towards deciding on what to do next, but also we have had this policy response from the bank of england. and i think confidence has resumed to some degree. manus: this is the economic surprise, is this the backdrop in court today, which is citigroup's economic surprise ratcheting higher, up to the highest level in almost three years. is it as bad? are you still looking at hallmarks of recession or is it just too early to call that? david: domestic demand in particular with a lot more resilient we expected going into the brexit vote itself, so the u.k. was accelerating the vote, whereas the eurozone domestic demand actually fell in q2.
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and loss of momentum in the u.s. that is some thing people do not expect. leaving, it is more of a 10-year horizon. when people are focusing on where we go from here, u.k. level of gdp is likely to below, otherwise have been the case?the question is whether we skirt recession or drop into recession the next year or so, i think people are coming around to the view that perhaps even a technical recession can be avoided. but we are not looking at strong growth in the second half of the year. it will be very weak. on possibleues future rate cuts from the bank of england? mark carty says he does not like negative rates, but kristin forbes is going to be on the panel. reesly, and so if jacob walks in so declined, to what extent she voted for what she
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absolutely wanted to at the time -- david: obviously, different views, they can go negative. perhaps it will say actually you can go, so we could withdraw all physical cash from the economy. mark carney's view seems to be the law abound is close to above zero, and we see that is something like 10 bits. an they could potentially cut rates in november -- anna: less likely. david: basically the brexit does apply to the u.k., lots of trade links with the company to the eu. ,and it i our response to deal with us. exchange rate will not be enough. i suppose we should be going there now. 50 -- the another bank of england has not stopped buying corporate bonds. that kicks off in september, this month, but i have started
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buying. that is a next program. and, you know, that to them is a new thing entirely. and that to be something which carries on. manus: youth question in your notes, when we did qe in 2009-2010, they bought management.nd debt you might think that will be extended. but this is a premium. the bank of england has not been smooth sailing to do qe this time around. there paying lots of premiums. is that a disruption? david: welcome at the moment no. it will be interesting to see the policy carry-on. buying 60 million when you have debt management offers, should not be a major change itself but the loss of pension funds, they don't want to be willing sellers on gilt. that they have to match liability with asset. anna: david stayed with us.
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the world's biggest oil exporter said to be aiming $20 billion worth of projects, more on the kingdom's potential plan. that is next. this is bloomberg.
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manus: welcome back. you are looking at a beautiful shot there of the imperial palace in tokyo, where dollar-yen is strengthening. dollar down, down all the way around. impacting all the markets. you have a new addition on your it isal, on your mobile, daybreak. let us take a look at the main stories hitting the top addition. brexit never far from the agenda. we have philip hammond meeting senior bankers in london today to set up the government's plan to support the economy and sound out there view on a post brexit britain. what is the other word? mentioned often i love
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that cover, of the break. is president john williams saying the u.s. economy is in good shape and a rate hike is warranted, that is despite recent disappointing data of course on jobs and services that led investors to reduce bets on interest rate increase later this month. manus: from 32%, down. very specific, eight percentage point drop. that dollar drop pervasive across everything. anna: daybreak looks ahead to german industrial data, which we get around half an hour's time. manus:manus: and the same data from the u.k. this morning. r, allng markets, day fou the back of weak u.s. data. nejra digs deeper. nejra: you summed up the reason
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there for the rally we are seeing emerging markets. the probability of the fed rate hike dropping after that service data showed services activity thising to a six-year low, after weaker manufacturing data and a disappointing jobs report. i, we look at the chart here, have tracked the emerging market index against the all country index, and both of these gauges at the highest level in more than a year. so, the emerging market index at the highest since july 2015, and the all caps he world index of the highest since august 2015. so, while we are seeing the rally in the yen, global rally in equities, part of this driven by expectation i guess you could thethat is being good news, expectation of festival is continuing. taking a look at the dollar, seeing a weaker dollar on the back of that, weaker dollar and stronger yen. y also rising after
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reportsen that boj members are struggling to reach a consensus on the confidence of policy renewed. stiglitz this to be left unchanged. and on the weaker dollar you are seeing the stronger yen, and stronger gold. building on the biggest increase since january the we saw yesterday, and trading at the highest in almost three weeks. and finally, this was really interesting to me because it shows hedge funds adding too long positions on the s&p 500, and building up short on the hedge fund position. most bullish in three years on the s&p, basically hedge funds, are betting on stock market gains betting against volatility. this is the average strategists forecast 1% below the closing level, and with historic low volatility, the reason behind this is just a question -- but i thought this painted a very interesting picture.
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nejra, thank you. saudi arabia is intensifying assets to shrink the budget deficit by canceling $20 million. manus: that is according to people familiar with the matter. yousef gamal el-din joins us. the latest batch of cuts, not enough to balance the budget? yousef: manus, from the very beginning it was clear that the report plans that were set in motion earlier in the year were going to be bold, audacious, and this latest information we are getting from our sources basically underscores and emphasizes they're going to push forward with intent. $69 billion covering thousand products under consideration, and up to a third of that may cancel.they are considering slashing ministry budgets as well, and at the moment as it stands, saudi arabia still in the double-digit budget deficit
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area. and it is trying to climb out of the loophole, you are looking at 16% in 2015 budget deficit. that has narrowed a little bit to about 13.6%. you do want to balance the budget by the end of the decade. so, the forecast has dropped to about 7.7%. you see the move in terms of slashing subsidies on fuel, utilities. and they are trying to improve the overall balance of course of the government budget, but in the short-term term though they are going to have to move to instruments, including issuing debt. generating some there are billions of dollars in bonds expected to be issued in the coming weeks, but you also have a foreign reserves that they can access to cover the year'sdeficit 2- next3, until some of the major reforms start generating major revenue. and on the other side, draw less
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often the government coffers. anna: to what extent will the cut hurt the growth story in saudi? yousef: a tricky one. the reality is that saudi arabia is still deeply tied to crude oil. spending, aernment lot of the ancillary business activity in saudi arabia is affected by that. and so, in the short term there will be impact from our understanding of the conversation that we have had, that the last growth gdp number the cayman was 3.4% in 2015. the bloomberg estimate is that that will narrow to 1.5% this year.and the emirates dpi which was giving a different indicator, that showing strength they met the highest reading since august 2015. but you can see the reform program that is underway for investors. again, putting work in saudi arabia on the equity front, that is down 70% the last 12
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months.and once again, really elusive the uphill struggle of the current reform process. right,you absolutely are elucidating the uphill struggle. yousef gamal el-din, thank you. david owen with jefferies international is still with us. begin to understand a little bit why he is keen to keep oil around $50. david: absolutely. manus: he is not breaking even a $50. david: developed markets, not welcome news. if you do not have wage growth and gdp, honestly makes it more difficult to raise interest rates, makes it more difficult for the ecb to exit policy. all of these things, oil price by the good, but for others not such welcome news. anna: are you skeptical that a real meaning freeze will be
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achieved? something we should dedicate a lot of talk to in the run up to algiers? david: we have a look at the oil price everything will day, and obviously that does influence central-bank thinking here in developed markets. but -- manus: it is interesting where we see the demand. a great deal of debate. the dollar is moving, oil gets a boost, and the debate between demand. we have a chart. the asian producers are cutting, china, india, malaysia, the annan. have we just not quite got the plot in terms of what lower for longer means in terms of oil prices? david: perhaps so buried in the weakness of the global economy does influence oil. i think one of the overriding themes has been, you know, how been.dp and trade has
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that does influence quite separately the price of oil. but it is like all of these things. the oil price, if it remains low, actually helps the u.s. and european economies. and the oil price will spike higher, they can actually push some of these back to recession again. anna: and the rise of populist gloomy areow you? some demand in oil and basic materials, the global growth story some around protectionism? david: protectionism has been rising slowly but surely. it is not meaningful. but brexit is another issue. you know, going to bring about less trade around u.k. and europe were generally. so, we are in a world where we have to watch these things. manus: david, you touched on it.
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fiscal, the mindset needed to move. i remember, plumbing the depths of memory, canada is really one of the only nations that really has the ability to physically make a difference, in terms of engaging with fiscal stimulus. and what does that mean for the world? who has the ability to set the roadmap? is in the japanese? brits? david: the u.k., obviously we can do things, things like infrastructure, we can be very targeted about what we do in the u.k. but germany and the netherlands running massive accounts, germany is a most 10% gdp. at the end of the day there is a clear link between the size of the account in the level of bond yield and germany, which are now increasingly negative. anna: with mulder the appetite
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in germany to go out and spend money on infrastructure, when it is not about the eurozone needed? david: i think they recognize it, in terms of the finance minister, but it is quite clear to me that germany's problem, on the monetary side were the bond yield is directly linked to the size of the service account. and you know, in order to access the policies you need the german current account stemless to come down, german investment pick up. anna: maybe we will here lower warnings from pension funds. david owen from jefferies international, manus: we will talk about japan. the bank of japan will leave the stimulus program unchanged. given little deterioration in the economic fundamentals and growing caution about the risk anna: of expansion. we just say that is according to the boj director. we get a decision from the central bank on what it is actually going to do on september the 21st, the same day
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as the fed policy announcement. david owen still with us. what are your thoughts? you suggested earlier on what the boj baidu. are you in the camp they will carry on down the same path? around negative interest rates? or are you in the past that says this reassessment of policy so far they have conducted, it will be the trigger for some sort of reversal policy? david:, i was actually thinking they might move to helicopter money and basically moved to zero and bonds paying using that money to free up and down.more -- doubling but are they going to do that on september 21? perhaps not. but will be interesting is the bank of england a barely does this, whether it is september or later in, people read across europe. not suggesting you will see that in the eurozone the next six
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months. but if the bank of japan does this, people will make that other markets. and it could have a decisive impact on the yield curve in some countries. manus: this is the japanese bond, the white line. the tokyo bank. the end of negative rates. two-year, the widest since march. the worst since 2010. this is the manifestation of the lack of belief and more negative rates that is what that is saying to me. is at the same to you?and is that begin to transfer globally? david: i think we are at that point. and the idea that maybe they will think coming more radically, just carry on buying more equity. you know, they just buy more ets. and end up owning more of the japanese equity market, but in terms of negative rates i think
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they are almost done. ,and ecb for example on thursday, we don't think they're going to take the rate more negative at this point, but what tips the rate actually over and becomes negative overall for the economy? the bank of japan, they are basically done. manus: just a note a row down fromrday, they refrained buying 30-your paper. they may pull back the balance of qe, pulling back on the long end. and 30-year, buck of the yield curve. there we go. david: possibly. know, thatll, you again is unusually global. depends on who they are buying from, actually directly off balance sheets for the bank, very freeing up the ability of the bank's ability to lend more. but that remains to be seen.
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anna: give us your thoughts ahead of the ecb tomorrow. modest action? nothing? david: there would have to do more. basically, the eurozone's stock. you know, core inflation stuck below 175, domestic demand has rolled over. lost momentum,, and the policy is working the problem is is not working quickly enough. and the ecb raising interest rates quickly enough to get the euro down against the dollar. so, and change the program. manus: finance minister of japan on the tape, speaking in tokyo right now. and he is saying it is the manifestation of the policy, providing the economy fiscal consolidation. and just a lack of cohesion between government choice, really. david: an issue more generally, and fiscal agents work in tandem with central banks, so it again
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comes back to jackson hole. central banks cannot do this all by himself. and when we think about the great depression in the u.k., how we escaped it in the 1930's, basically became off gold first. makerere was the program, yield program in the housing market. and that helped the u.k. recovere. brexit, will get new data -- anna: phony brexit so far. manus: you are right. david: i am more optimistic that 2-3hit will not be seen years down the line. but there should be a fiscal response. anna: sounding quite keynesian this morning. david: i am a pragmatist. anna: that is the label. david owen from jefferies international. manus: coming up on countdown,
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is apple branching out? the company expected to unveil a new line of services today. we will have a preview of the keynote of it. anna: australia expanding at the fastest rate in four years. we are live in sydney. manus: and limiting brexit fallout, ubs has said it may move as many as 5000 jobs out of the capital. can the u.k. chancellor convince bankers to stay? this is bloomberg. ♪
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anna: welcome back. 1:50 in the morning if you are watching in new york. let us look at the fairly flat start of the u.s. equity trading, futures maintain decline. let us to the bloomberg business flash. there is rosalind chin. rosalind: the chinese owner of new york's waldorf astoria is expecting a report on the multibillion-dollar spending spree, and insurers are switching to chasing deals to
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incorporating the companies involved.and barclays think of assets and the europe and in hong kong. according to people familiar with the matter, some bankers have concern about whether anban would provide enough details on the ownership structure. has promotede brian chen. they put him in charge of the security business. losses or had this year. chen was previously cohead a credit and was on the executive board. he replaces some leaving the company. and aaa shares rose an extended shares, 49.9%. phil ackermann's hedge fund said they are undervalued and plans to discuss ways to improve the operation and call structure. the fast food chain has been struggling to recover from a series of food safety scandals.
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shares have fallen to around 40% this year. and that is your bloomberg business flash. chin, thank you very much. philip hammond will meet senior bankers in london today. out the plan to support the economy in the wake of the brexit vote. they yesterday, ubs said may have to move as many as 5000 jobs out of the capital as result of the referendum. nejra has the details. bring us up to date with the job picture. nejra: as you were saying, we had sergio saying as many as 5000 jobs might be moved out of london to the rest of europe, into other parts of europe. that is about 20% of the 5000 strong london workforce. and then, you mentioned this meeting the philip hammond is having today. as to give you context of the meeting with banking and insurance executives is actually the first of a series of roundtables over the coming months with a range of industry
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executives from tech to retail ahead of the autumn statement. but the announcement is little timely, with what we heard from sergio yesterday. of course, he is of the first to say that other jobs by be moved out of london to europe. the day before we had lloyds of london chairman saying they had other insurers forced to move part of the business, if single market access is not cap. winningabout brenton special status in brexit negotiation and about passport right. we had a number of u.s. bank executives before the referendum, the likes of jpmorgan, morgan stanley, goldman sachs also say they will move out of u.k. into other cities in europe. manus: and is reminding the everyday i have to get my terminology right. let us talk about the survey, adding to the debate, which cities those jobs might go to. our they signing contracts for commercial properties in
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dublin,, paris frankfurt? nejra: no one has the thinnest t idea. we know the paris, amsterdam, frank for have been pitching a strong alternative to london. came tell you amsterdam for. that was followed in third place by toronto. but the city that has really been focused on here is singapore, because it came in a second-place. the study was done before brexit, but it talked about singapore's superior technology, low taxes, superior transport and infrastructure. showing the growing business clout, driven in part by the expanding insurance agency. making about 13% of the economy, which i believe is more than the u.k. what was really focused on singapore as well was taxes, corporate tax rate of 17%.
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supposedly lower than france and the u.s. for example. singapore definitely going to attract these companies because the city state has been tightening rules for foreign workers, also worth pointing out that in this survey london was still number one. anna: it will be fascinating to find out whether many governments need corporation banks as a way to locate here or not. we will see. irelandsolutely, a had a think o t. products, aing new new apple watch. there is a warning on the analyst. nothing that radical. anna: adam satariano joins us. thanks for coming in. think people looking for a big growth story are going to have to wait a little while. marqueethis is apple's event each year when they unveiled the latest iphone but
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this one is not radically different than the previous model. going to look similar with a lot of the changes more internal with a faster processor, a new software, mother minor changes. this is the personification of the challenge. the white line is the iphone. the ipad picking up. gettingiphone and mac crushed. if they don't come out with something, there is another drink. they lose more shared the samsung. adam: samsung has its own problems with the recall. apple has interesting dynamic because on the one hand this is the top-selling phone on the market. it is a big hit every year. to buyer out in droves it. they said such high expectations for themselves and the market that if they don't hit it, thing sort of lull. under tim cook the past five years, the company has performed financially very well.
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anna: you can follow this on top life. thank you for joining us. adam satariano with the latest from apple. san francisco fed president said the u.s. is in good shape. more on the fed. this is bloomberg. ♪ . .
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manus: emerging-market assets rally after a skew of weak u.s. data. speculation for a fed rate hike. john williams says the world's largest economy is in good shape. set out the government plans to support the economy post-brexit. mark carney is set to deflect the rate cut as he testifies for the first's time since the referendum. and all eyes on apple ii to the world's most labeled company is expected to present a new not -- and of products tonight, including
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the new iphone 7. you are welcome to "countdown." anna: it has just gone 7:00 in london. 8:00 if you are watching in germany. we have industrial production numbers coming out from germany. put it mildly. industrial production month on month falling 1.5%. the expectation was for an increase of .1%. that year on year figure down 1.2%. the estimate was .2%. falling 1.5%. really missing estimates. of 2014.t since august it is typically a very volatile number. it does compare very unfavorably to the estimates.
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the figure joins a slew of recent data released since the u.k. vote to leave the european union. it suggests the outlook for the german economy has weakened. the economy fell to its lowest level since august. country's biggest corporations expressed a slowdown in concerns -- in orders. we have an ecb interest rate decision tomorrow. manus: yes, as to whether they will extend or reduce the interest rate, which they will be buying. let's talk about barons development. i will reduce the statement first. the top line was slightly ahead of what the market anticipated. they have had a strong operational financial almonds in 2016. in terms of the positive start to the financial year, reservations from the first of as of the fourth of
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september. they are up by 4%. they are saying they have had a strong operational financial performance in 2016. progress being made over the last few years. they start this year with a strong balance sheet, good forward spirit. this is all about trying to find any slowdown. the u.k. housing+++
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healthy. the total capital return would be 30.7%. the brexit vote increase the economic, political uncertainty around the market. a lot of people are saying it is too early in terms of really understanding the impact in the demand in the u.k. anna: yesterday, we heard from retro. we are still trying to understand what the weakness and commercial real estate is going to do for the residential effect. with that in mind, let's have a look at where the futures are expected. it looks as if we are going to pick up from what was a policy picture in asia. europe as picture for well. manus: a lot of this manifests in the risk radar. dollar is down. that is boosting some commodity aspects. mobility of a rate cut has dropped from 32% to 24%. nonmanufacturing, and a tepid jobs own it. that seems to be what is pushing the market. markets emerging rallying. we are heading levels we have not seen since july 15. say theygh the koreans wonclosely monitoring
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volatility. upa: the nymex price of wti, by .5%. this long road to algeria. of chitchat about a freeze. total oilg the u.s. supply will recover in 2016. dollar-yen, a bit of movement on the back of expectations around the boj. let's have a quick look at the bond market. we talked about the bond market over in japan at the last -- in the last hour. how it will impact the yield curve in japan. let's go to bloomberg's first word news. : philip hammond will meet senior bankers in london later to support the economy.
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isme minister theresa may coming under pressure from some of the world's biggest banks to strike an interim agreement with the european union for financial companies. that is a process that won't get underway until early next year. ubs may have to move as many as 1500 jobs from london to elsewhere in the region. that is according to ceo sergio ermotti. he said that london will continue to be a key financial center but may not be as important as it is today. bank of england governor mark carney will testify before u.k. mp's later for the first time since the referendum. they are expected to be on the attack after accusing the central bank of unleashing its stimulus without sufficient evidence of a slowdown. the bank of japan will leave its stimulus program unchanged at
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given little deterioration in economic fundamentals. that is according to a former boj executive director. the same day as the fed policy announcement. eventwill hold a keynote where the world's most labeled company is expected to present a of roderick's, including the iphone 7. evidence points to a modest hardware upgrade. the latest edition of the iphone operating system. and a record-setting u.s. astronaut and two russian colleagues are back on earth after a six-month stay at the international space station. their capsule came down safely azakhstan.ent -- k williams is the
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longest to spend in orbit. global news 24 hours a day, powered by more than 2600 journalists and analysts at more than 120 countries. .ore stories on top manus: thank you very much. .et's get it shery ahn she is standing by with the equity markets. you are a bit beyond japan. the yen is on a bit of a move. shery: not surprising that we are seeing it falling for the first time in six days. yen .4% given a stronger for three consecutive sessions. everywhere else looks pretty good right now. the hang seng index was in the red all day. it is recouping some of those losses. jpmorgan saying that the hang
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seng index will climb higher later this year given better-than-expected profits. the shanghai composite up .4%. infrastructure stocks gaining eased somethorities restrictions on spending in that sector. we are seeing emerging markets up right now. thailand up .9%. one of the emerging markets that is not gaining, the philippines, more than 1%. losing ground for a third consecutive day. millions of dollars flowing out of the domestic market there as we see these outbursts by the president hurting investors. new zealand gained .9%. the asx 200 finished .1% higher. we had gdp numbers out of australia showing that the economy grew at the fastest pace in four years.
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the second quarter gdp missed estimates. we saw the aussie dollar plunging. it is now recouping some of those losses. thank you very much. shery ahn joining us with the latest. let's talk about weak u.s. data. manufacturing and nonmanufacturing pmi have slash ed odds of a rate hike in september. manus: despite the recent underwhelming data, the san francisco fed remains of the -- upbeat on the economy. john williams said that september's meeting is alive and he sees an increase sooner rather than later. australia's economy has expanded at the fastest annual pace in four years with gdp rising .5% in the second order. bloomberg's economy reporter joins us live from sydney.
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the central bank in australia have cut rates twice to renew -- to a new record low. yet we see strong growth figures. help us square that circle. the short answer is the rba has not made a mistake, but the main thing is it looks great on paper but less so when it comes to its impact on the labor market. growth is driven by resource exports and public investment. the public investment is mainly acquiring land for future infrastructure projects. there are not a lot of jobs in shipping iron ore requiring land. you are not getting the capacity you would normally get from this level of growth. exit capacity and its impact on low inflation drove the rba to cut in the past four months. manus: thank you very much. michael heath in sydney. let's bring in our guest, peter
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fitzgerald. good to have you with us. a trifecta of disappointment. manufacturing, nonmanufacturing, and tepid jobs. is that enough to assuage the fed from moving in 2016. peter: if you take a step back and look at what the expectation was at the beginning of the year, it was for further rate rises in the u.s. and a strengthening dollar. those expectations have not been met. interest rates in the u.s. have been held at a lower level than the expectations at the beginning of the year. that has helped financial assets in the u.s. and resulted in a weaker dollar. when the dollar is weaker, inflation has got to be weaker against something else. what that does is put upward pressure on the euro and the yen and forces those stock markets into difficult periods. in terms of what the numbers look like, our view is that the
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u.s. recovery is relatively robust. these data points tend to be very volatile. expectatione got an of 52% as far as december. the market is in danger of not banking on a rate hike this year at all. what is your investment strategy looking like? peter: our expectation is that the fed will hike probably wants this year. that is on the low side. interesting is more is the fact that there are so few rate hikes even to the end of next year. our view is that that is complacent in terms of the potential for rate rises to surprise. anna: you are not bothered by some of this data. peter: we are not too bothered. one needs to focus on a two or three-your time.
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-- three-year timeframe. manus: what do you think is next year? fed isour view on the that the direction of travel is for rates to rise. not to the levels of history. people who are weighted to that anchoring of the 1980's and the 2000 are probably mistaken. it is quite plausible that the fed would raise three or four times next year if the economy continues to recover. manus: preparedness for market. you are a very good guest. if you want to have a look at this, this is the u.s. 10-year yield, dipping below the dividend yield on the s&p 500. are we getting ready? bonds have had a stellar run.
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high-yield, 14%. are we beginning to see the beginning of a bond backlash? peter: it is very difficult to pick an exact turning point in a market. you have interest rates that have been suppressed to the levels they have been. what you can expect from bonds and all financial assets is that the future returns are going to be lower. the volatility associated with those returns is going to be higher. when you look at fixed-income, it is difficult to say there is going to be an immediate selloff . i think the ability to time that exactly is very difficult. what we would say is, if you have the investment flexibility to not hold this asset class in your portfolio, that would be a prudent approach. bondswhat about corporate ? some companies are being paid to borrow.
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we saw this yesterday. non-financials issuing debt at yields lower than zero. does that interest you? peter: not at all. if you take a step back from some of those numbers and say, does it make financial sense to give my money to a private company and for me to pay them for that privilege, i think that does not necessarily make sense. unless you are forced by your mandates or some regulatory obligations to do so, that is not a financial investment of interest to us. manus: if you had to make the choice between investing and cash, would you go to cash rather than investing? is most of thee cash for institutional investors is also negative. anna: thank you very much. peter stays with us on the program. manus: up next, brings it backlash. moveays it may have to
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1500 jobs from london in the wake of the eu vote. that is next. this is bloomberg. ♪
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anna: welcome back. lunchtime at london for you this morning. mark carney will go before lawmakers later could let's pick up on this u.k. story. philip hammond will meet senior bankers in london later to set out the government plan to support the economy and sound out their views for a post-brexit britain. manus: that comes after sergio ermotti said yesterday that the move may mean as many as 1500 jobs will go from london. elsewhere in the region, this in the wake of the brave zip code. anna: bank of england governor mark carney will testify before u.k. mps earlier for the first time since the referendum. jacob rees market is expected to be on the attack after accusing
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the central bank of releasing its stimulus without sufficient data. manus: peter fitzgerald is still with us in the studio. the pound has been demolished and the stock market is on a tear. tell me your perspective on the u.k. the debate is to whether we have a recession or not. all, people of regularly refer to the stock market doing very well. what we say is there is an illusion of wealth associated with that. if you look at the returns in dollars, it is not doing as well as people believe. that is the first point. the second point is the brexit has not happened yet. brexit has not had a material impact yet is probably quite true. nobody really knows what the brexit is. so brexit means brexit.
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what does it actually mean? that is a circular argument that children would use when you ask them a question that they do not want to answer. is lots of versions. you have a hard brexit and a soft brings it. nobody really knows where on that spectrum. anna: the daybreak cover was good. talking about nobody being sure of the direction of brexit. .t is very simple you just follow the arrows. you will see in a moment. and thatow the arrows takes you to the answer of what the brexit is. we will see mark carney in front of lawmakers today. what are you expecting from the bank of england next? expectations run more action, more rate cuts, more qe, have diminished since last time around. peter: the expectation is that if grexit had not happened, they
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u.k. would actually start to raise rates. the fact that we are having these discussions or that you have had a rate cut, they are not effectively stable. there has been a significant move in those expectations already on the back of that rep and him. the bank has acted peter our view is that they will continue to do so in light of this uncertainty until we can get a better picture of what grexit actually means. returns rattled off the on some of the bonds. high-yield delivered 14% this year. investment grade, 9.2%. gilts still part of the consideration for you? peter: i think they are part of the consideration for any investor who has to invest into relatively safe securities. are they attractive on a long-term basis? i think that is unlikely when
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you have yields at about 70 basis points for the next 10 years. that tells you your return will be approximately 70 basis points for the next 10 years. that is not particularly attractive. anna: are you looking for something other than stocks? peter: in general, cross the road, we are looking for stocks or equities. manus: the probability of a hike drops to 24%. the dollar is dropping. this is e.m. msci in the white. me to change the duration on this chart. why? peter: we are overweight emerging markets both in equities and local currency debt . it is something we have been overweight for the beginning of the year. i think that rally is interesting. one needs to put it into context of what has happened over the last i've years.
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manus: that is what we have done here. peter: there is scope for that gap to narrow to a large degree. we would say this is the beginning of a turning point for emerging markets relative to development. can i ask about that dropping the bid? peter: i think it is rare when you continue to see markets rallying. you can see a sideways movement in developed markets, which are dominant in the u.s. anna: do you see a pickup in global trade amongst that? the politics of global trade are tricky at the moment. peter: politics are always tricky. they are more difficult to figure out than the economies. we do say that markets have priced in a lot of monetary easing but not any economic recovery at all. the pessimism that one can see
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is palpable. you would need a small pickup in economic activity with some growth. manus: on the equity side, the bonds. a bit of a that flash happening in japan. kickback.eing a you aboutat telling the shift? peter: japan is a particular case in isolation to some extent . this is a market that i would go back and if you do not have to invest in the japanese bond market, it is something some people should avoid. it goes into the view that when you take those rates to zero or negative, it becomes very difficult to work out what the volatility for those returns is going to be. think weoint, we do are reaching some point where negative rates may seize to
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become beneficial to the economy. anna: thank you very much. peter fitzgerald joining us on "countdown." "on the move" is next. manus: a little -- a little bit of a better tone in these markets.
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guy: welcome to "on the move." we are counting you down to the european open. . am guy johnson i am alongside caroline hyde. she is in berlin. john williams of san francisco says the u.s. economy is in good shape. is september dead? did carney save the day or act too soon? he faces a critic in parliament today. and apple unplugged. the world's most medical


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