Skip to main content

tv   The Pulse  Bloomberg  September 12, 2016 4:00am-5:01am EDT

4:00 am
mark: the return of rate risk to european -- the return of rate risk. all eyes turned to fed dove brainard as investors seek clarity on the tightening timeline. hillary clinton stumbles -- will her health scare rattle the market. welcome to the polls. live from bloomberg's european headquarters.
4:01 am
great show lined up for you today. e.oneak to an eon -- shareholder. we speak with simon bell show. joining us for the next 40 minutes, the chief economist at indo suez wealth management. we are looking at asset classes. bloomberg.d across the stoxx 600 is down for a third consecutive day. the biggest three-day drop since july the sixth. the german 10 year yield is cleburne -- is creeping higher. still above zero. we are at the highest level since june the 23rd. we all know what happened then, the day of the brexit referendum. sterling is rising against the dollar. brainard speaks later.
4:02 am
the last fed official to speak before the closed door policy before the fed meeting on the 21st. crude oil, 1.6% lower, extending declines. increasing as the market contends with an overhang of accrued and fuel inventories. let us get the bloomberg first word news. >> hillary clinton has canceled a two day trip to california after disclosing that she is suffering from pneumonia. she abruptly left a 9/11 commemoration and appeared to stumble as she moved towards her official vehicle. her team is still in evaluating the rest of the week's schedule. shares are lower this morning after talks with praxair were terminated. while the strategic rationale
4:03 am
had been moving forward, they could not come to an agreement on the role of munich, and what in thewould play combined company. samsung is falling the most in four gears -- $20 billion in market cap is gone. users are being told to stop charging those batteries. samsung has allowed the recall of all to in a half million shipped so have been far at the cost of a million dollars. amber rudd says worker permits are under consideration. speaking on the bbc's andrew marr's show, she dismissed the idea that boris johnson's support for a group. i find the cabinet is working
4:04 am
pretty united. boris is not the driver. the rest of us are in the car. >> she is very clear that we are all focused in the same direction. we will all deliver what she has asked us to do. global news 24 hours a day powered by our 2600 journalists in more than 120 countries. this is bloomberg. mark: you were talking about samsung. -- it hass future agreed to purchase samsung's printer business betting it can grab share and generate income even in a shrinking global market. -- deal european equities are in the red today after friday saw speculation of the tightening timeline driving the worst selloff in the u.s. market since brexit.
4:05 am
investors are reassessing. brainard whoed to speaks in the last scheduled appearance by an official ahead of the september 21 meeting. what does this mean for the market? marie is here to talk about all these matters. there is a lot of red across the bloomberg. it started thursday, post mario draghi. why are we seeing selloff since thursday? marie: there is a lot of uncertainty coming into the markets this fall. the fed meeting next week and then the upcoming italian referendum and the u.s. election. .hose are all important events that is enough to perturb markets momentarily at least. mark: and bank of austin
4:06 am
governor on friday said the u.s. economy -- bank of boston governor on friday said the u.s. economy could overheat. as to whenare you in the fed should tighten? we are hearing more hawkish rhetoric out of the fed officials in recent months. three: i think the fed really marie: iwo-way -- think the fed really wants a two-way market. statements tog put more uncertainty into the markets. the second, how to read the fed's tea leaves. what they has said in previous meetings is that they needed additional information before they would be comfortable to move. information that could confirm the economy is as strong as they think it is. that additional information has -- thatad of this
4:07 am
information has not come ahead of this meeting. theink they will wait for q3 gdp meeting coming out in october. and the november meeting is close to the election so my that is that they will move in december. /with stan arkets fed rate hike//////////. -- if we look at what happened after the rate hike in december last year, there is a strong suggestion that these are not innocuous moves. the market does pay attention when we think about what happened in january after that rate hike. it is not a zero risk scenario for the market. but i do think the economy is strong enough to warrant another
4:08 am
move. mark: is the u.k. economy we can enough boris -- week of off -- weak enough? carney even admitted last week that the economy was probably doing better than he thought. does that mean more stimulus is not necessary this year? >> the economic data comes out with such a lag that it is hard to know at this stage. there have been at some numbers better than expected but i would expect more visible weakness as we go forward in the u.k. economy. you cannot solve structural problems with monetary policy. this decision to exit the eu is a structural decision. withnnot be solved
4:09 am
monetary policy. i am not saying a rate cut is unwarranted but we cannot solely rely on central banks and governments are not doing enough. mark: which is the message the central banks have been seeing last week. >> the budget in the u.k. will be important and clearly, the u.k. will have to ideally, up with more structural change in the economy to compensate for the drag that will necessarily be inflicted upon the country by the brexit. mark: stay with us. stay with the pulse. plenty coming up including clinton canceling california. the presidential candidate changes her schedule following a diagnosis of pneumonia. can the market take the most risk in its stride? we speak to one of the biggest shareholders and what it means
4:10 am
for his investment in e.on? we bring you an exclusive .nterview with the vw cfo this is bloomberg. ♪
4:11 am
4:12 am
mark: let us get the bloomberg business flash. deutsche bank ceo has said the lenders asset management
4:13 am
business hoping made an allowial -- do not yourself to become distracted by speculation about alleged mergers or sales plans. this is one rumor in particular that i would like to dispel. samsung shares have slumped again. the biggest fall since 2008. u.s. regulators and the company itself warned users to immediately turn off and stop charging them. aviation authorities around the world have also called on passengers to stop using the devices during the flight -- during flights. bridgewater associates, the world's largest hedge fund $22.5r has attracted billion in client money since the start of a new strategy last year. the inflows first reported by the financial times are a rare
4:14 am
exception in a -- in an industry that has been suffering. a spokeswoman declined to comment. bmw is said to be planning a major restructuring of its executive board. the company will combine the marketing and sales operations also. the german newspaper said the carmaker is changing its electric cars strategy to rival tesla with a supervisory board expected to approve new models at a to date meeting at the end of the month. that is the bloomberg business flash. mark: democratic presidential candidate hillary clinton has canceled a two day trip to california after her campaign disclosed she is suffering from pneumonia. she abruptly left a 9/11 commemoration yesterday after feeling overheated and appeared to stumble as she got into her vehicle. her team is still evacuating -- is still evaluating the rest of the week's schedule.
4:15 am
questions regarding her health could give investors more reasons to feel jittery. will markets take her health scare as another reason for geopolitical concern. let us bring back marie. i salt today from the bank of america is that markets are starting to wake up and think about a donald trump victory. her latest health problems may add to concerns. is there a sense of complacency about the results of the u.s. presidential vote do you think in the markets? think we need to not focus so much on the polls but on the estimates of the electoral votes. has a she still commanding lead. i don't know exactly what number to put, but maybe a 25% risk of a donald trump win -- mark: it is significant.
4:16 am
/but/ isit too early to price in///////-- what is it too early to price in? even if you have a low probability scenario, but if it were to occur, the result is so horrible it becomes a high risk scenario nevertheless. that is the case. investors would be well advised to think about some hedging strategies ahead of this event. mark: you have started to look at the impact on the economy. marie: thedonald -- donald trump campaign is still liked on the details but it could add another third to the total u.s. debt in the coming years which is close to a disaster scenario in my thinking. is extremelynism
4:17 am
dangerous, not only for the u.s. economy but for the world economy as a whole. add to theoes that u.s. debt play out when it comes to treasury -- treasuries or the outlook of the fixed income markets? would have two competing forces if we think that the protectionism can lead to a recession. all would mean lower rates other things being equal. on the other hand, you would --e fiscal laxity unprecedented -- and that would push rates higher. mark: let us talk about brexit. we talk about the economic effects of brexit. and the political effects are still being felt. weekslava takes place this where you leaders will meet for the first time without the u.k. isseems as if the u.k.
4:18 am
steadily moving towards knowing what it wants but it is still unclear. will it be -- will there be more rhetoric coming from u.k. leaders saying -- let us invoke article 50 quickly? her spokespeople, theresa may, said that by april next year. that is the message on that score. and clearly, rushing into a negotiation that is this crucially important for the u.k. and europe would be a big mistake. everyone wins from taking their time and trying to keep a cool and level head. and see what we can come up with. mark: may talks about a unique deal. you have to abide by the freedoms in the eu. on one side you hear that we can
4:19 am
cherry pack -- cherry picked and on the other side not? i am obviously of the opinion that the u.k. would have been better off staying in. i am declaring my colors straight away. therefore, i find it difficult to be constructive in what kind of deal the u.k. can get. in my opinion, the best deal for the u.k. would be a deal like norway or switzerland. nevertheless, that is worse than because itk. had removes them from the negotiations. mark: it almost -- >> all of the economic factors in theory could remain the same but the u.k. would no longer be a member so it would no longer have a say on where europe is going. the best case scenario is already worse than what we had
4:20 am
and clearly, if we start to peel away from the -- on the economic side, it just gets worse and worse. mark: stay with us. up next, fossil fuels float. on'sake a look at e. decision to list uniper in frankfurt. this is bloomberg. ♪
4:21 am
4:22 am
mark: let us get to germany
4:23 am
uniper, the gas trade deal today. this is coming in response to germany's unprecedented move to wind and solar energy. he joins us from frankfurt. thomas, thank you for joining us this morning. how do you expect uniper's shares to trade? they are rising. they are at 10.74. what sort of week do you expect? today, it is very difficult to interpret the stock price because management did a good job so far. a lot of index selling pressure
4:24 am
is expected later in the day. it is a funny situation because the european group is down roughly 2%. , it is up tolate percent. it shows that somebody is wrong and at the end of the day, things can change considerably. mark: are you going to hold onto your shares, or not? got one forlders every 10 held. this is probably not everyone's taste. >> that is right. you really have to assess if you want to own that kind of business model and if you believe in the news flow that the management lined out for the next 1-2 years. mark: what do you think of the
4:25 am
write-downs? is estimated at roughly 12 billion at the end of june. some say the market valuation could be a third of that. could we expect more write-downs from e.on? >> we think a further write-down is inevitable and will take place in the fourth quarter. that is expected by the market. at the same time, we do not yet have a real market value for the grid enclosed in the future e.on . it is still up to the market participants to balance the right down -- the right down -- the write-down. tok: how do you expect e.on
4:26 am
fare? aroundbeen bouncing today. as a companyare and stock wise? lookthink the market will at the framework because we for the nuclear later this month and a decision on the nuclear fuel tax. i don't think it will be e.on specifically but the framework that will be investors' inter est. we will see how the news flow is regarding write-downs. mark: thank you for joining us.
4:27 am
good to hear your views. up next, steering through the scandal. we hear exclusively from volkswagen's cfo. this is bloomberg. ♪
4:28 am
4:29 am
4:30 am
mark: welcome to the pulse from london. -- markk barton paired barton carried >> -- mark barton. >> hillary clinton is suffering from pneumonia. she left a commemoration yesterday and appeared to stumble and need help and she moved to her vehicle. her team is evaluating her schedule. talks toe lower after create the world's largest supplier of industrial gases was
4:31 am
terminated. merger hastrategic been principally confirmed, they did not come to a agreement -- an agreement on governance issues. to come to an agreement on responsibilities. samsung is falling the most in four years, $20 billion in market cap is gone as users were asked to turn up their note 7 smartphones immediately. there is a recall of all 2.5 million phones at been shipped so far at a cost of $1 billion. work permits are under consideration as a way to can -- control migration after brexit. indication ofr
4:32 am
changes within the government. the cabinet is working reunited. boris is not the driver. the rest of us are in the car. actually, she is very clear. we are all focused in the same direction and we will deliver what she has asked us to do. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. tom: far from perfect is how they describe the carmakers position. even before the omissions cheating scandal, in and ask elusive interview, there were profitability issues and over investments. guarantee, there is much more about the risk you are exposed to. carefullyessing very all the risks and the related
4:33 am
provisions. we have a pretty good handle on it, but nobody can guarantee. we have ongoing investigations in the u.s. and canada. there are some uncertainties. we are quite confident we are in -- have a good handle on it. mark: they spoke about the return to capital markets. , wehe unsecured debt market have not been tapping for an extending amount of time. that market was closed for us. we still have to planned to come back to the market during this calendar year. luckily we have a strong cash flow and a strong underlying business. we have a group of banks supporting us. we have a lot of customers trusted us with their deposits. fundamentals.
4:34 am
we thought we would come back soon to the capital markets here. it is important for us to have the flexibility and our strategy is paying off to have a source of funding in various jurisdictions. that is paying off. mark: joining us is chris wright. what was the highlight of this interview? chris: i think the highlight was the overall impression he gave of the status of the company. like the intro led into, volkswagen is a company on a nice edge -- nice edge. they are getting their reps on the crisis. they are making significant investments in the future of the automobile. that means electric cars, driverless technology, and things like that here in they have -- like that. they have to put pressure on the unions and getting costs down.
4:35 am
they areomething like moving the mountain and the mountain is moving slowly. it's moving in the right direction and i guess that was the highlight of what he had to say. mark: what's next for vw them? there is still quite a lot ahead of them in terms of getting out of this crisis. they've got those talks with workers, the future pact. those talks are ongoing. they have the report that is going to detail how the crisis came about and how this cheating device get installed in 11 million cars worldwide and how it got covered up years. that will be a significant event during they have a lot of criminal investigations, a lot of lawsuits to work through. it they still have cars to recall and buy back from the united states. there is a road ahead beyond the crisis. mark: thanks a lot.
4:36 am
he is the bloomberg european auto leader. what is on your mind or eat? -- what is on your mind? globally? rates areal growth the greatest problem we have certainly in the mature economies. they have been cut in half pretty much in the mature economies since the 2008 crisis and little has been done to change that scenario. to coming out of solving that problem, the trade picture. that webly dangerous have this protectionist surgeon the world. the way to raise growth rates is to liberalize and to trade more,
4:37 am
not to the opposite. are atwo things together very ominous sign for the future. mark: is there not enough being done there? g-20, opening up the global economy, you're fighting forces that are very powerful. >> there is a scary parallel in history, it's a bit of a long story. we had a time in the 1870's through 1910 where huge technological innovation, the railroads and all this. it created some extraordinary wealth held by a small minority of people. disparity,r income and then there was a backlash in the. -- interwar time. the great depression could not have been severe.
4:38 am
that was a factor in worsening the great depression. mark: is that a warning? >> i think that's a desperate warning. absolutely. mark: what ammunition do central banks have to fight such a potential slowdown? i won't even call it a great depression in a worst-case scenario. what ammunition do the central banks have? >> no offense, i wish we could monetary policy. i think the central banks are doing a great job. they have been instrumental in bringing about the growth we do have today. they cannot change the structure of the economy, for that we need politicians. mark: are they listening? we will hear something on november 23. some governments like germany have leeway and mario draghi referred to this, to provide a
4:39 am
financial boost. are we beginning to see effort made? board, it'se becoming loser. that move is going to bring the markets with them, hopefully. we will have a reduced over focus on central banks and talk about what really matters in this context. mark: why are we seeing markets down? are investors getting it finally? too much focus on the central banks and governments? they have been banging that drum for a long time. >> in my opinion, that is not priced in yet and that is a move the market has to wake up to. it's already under way, this over focus on monetary policy to a greater focus on financial policy. when we see these new policies,
4:40 am
what are they about? fundingng policy for current spending is not a good idea. to actuallyse it change the nature of how the economy works so that it can meaningter, that is they are budget deficits in the short term. mark: the rule makers in the eurozone should not focus on countries that flout the rules. we hear spain and portugal and italy don't abide by the deficit rules of the punitive measures. you think that's the wrong way to go? it's on future spending? we have to have a selective approach as investors and try to understand which country is doing what it -- what. the u.s. is going to have a
4:41 am
larger deficit this year and next. that is not solitary. from spendinging on social security and merrick care -- medicare and medicaid. that is not growth spending. spending in the u.s. is decreasing. that is the spending you want to see, more on education and roads. that is falling. i would say it's bad news. in europe, the jury is still out. we have to see what they are going to do with this extra money. mark: what a great conversation. i should start all of my chats with "what's troubling you? " " online retail and referendum, we are going to speak to a shopping person about brexit.
4:42 am
we will give you an update on the market moves today. we will discuss the latest events in the u.s. presidential race. this is bloomberg. ♪
4:43 am
4:44 am
mark: i am mark barton in london. >> deutsche bank ceo says the asset management business will
4:45 am
be an essential part of the company's model. employees, he said do not allow yourself to become distracted by speculation about a legend mergers and sales plans. this is one rumor i would like to dispel. hp will buy samson's printer for $1.05 billion. it will be able to generate and eight -- income it -- income and eight shrinking global market. they can get their hands on key laser printing technology. the deal will add to earnings in the first fiscal year. banks may find it hard to find suitable office space and other european cities. ,acancy rates in paris frankfurt, and amsterdam are the lowest in a decade. u.k., banks our in the
4:46 am
they are dispersing their employees across a number of european cities. that is the bloomberg business flash. mark: future retail sales have been better than expected. the outlook is dark. ise to tell us what brexit the chief executive of a retail that form. impacted your business? referendum,y of the we've been trading. much in line with the market analysis, it's too early to be complacent. i think we've got to be prepared to demonstrate real value for customers. many will come back from the summer holidays with less money in the pocket. , ier what we saw last week suspect we will start to see
4:47 am
some inflation coming through. as retailers, we've got to be prepared to demonstrate that. there is opportunity to keep the currencies where they are. mark: there is a 10% fall of sterling. a greateates opportunity for export. we use technology to connect creative businesses in the u.k. with customers around the world. we ship products to over 150 countries globally. it's a small part today. as we look to the future, it's an opportunity that we see more four. mark: there is a fear that rising inflation is going to eat into real wages. real wages have been abused to the economy. low inflation wages are around 2.5 percent. as we see an increase in inflation, we will see real wages, the impact.
4:48 am
a problem forat businesses like yourself? >> we are a market faced that form that connects independent businesses. our businesses are able to make a difference for themselves. they have their own destiny in their hands. as we look to the longer-term, one of the chances the government has to -- challenges the government has is inequality. i think marketplaces in the sharing economy and businesses like ours create an opportunity to counteract some of those inflationary effect elsewhere by allowing people to have more control of their destiny by running their own is this. mark: what is your message to philip hammond? a line it to philip hammond, what is your message to him? >> support the rise of entrepreneurialism in this country.
4:49 am
self-employment is at the highest level in 40 years in the u.k. i think the opportunity for people gives people an opportunity to control their destiny. i think they can offer opportunity to reduce income inequality in the country. a lot of our businesses are based regionally. we have fantastic businesses. we just made over one million pounds in wales. all the talk was about steel mills and imports. i was visiting our partners and looking at the opportunity have regionally. my message would be to encourage that and create incentives and opportunities. mark: does it matter? we have heard talk that it's among the measures that might he tweaked -- he tweaked? ,> anything that would help
4:50 am
consumers are going to be squeezed. as a retailer being customer focused working on giving something that is relevant for customers, it allows them to demonstrate a bit more value and who they are. what are you going to use all that money for? >> the opportunity for the business as we look to the next 10 years, we close our 10th year of double-digit growth. it has created a great platform for the future. invest opportunities to in technology and marketing and grow the business here in the u.k. we can tell the stories of our partners. they care were products come from. the round was led by one of the largest media and technology businesses. that can help us tell the stories. as we look out over the next couple of years, we can do more
4:51 am
to support these partners to grow and grow internationally and into new markets. we can build on this small amount of export we do today. mark: are you interested in selling shares one-day? is an ipo the ultimate vision? >> we look at all sources of financing. this financing round gives us security, whatever the world throws at us in the next 24 months, it gives us great investors and great support from existingting -- investors. we can build a business that supports these 5000 businesses across the u.k.. mark: do come back and tell us how you do. next, markets are feeling the fallout from business rate jitters in the u.s. this is bloomberg. ♪
4:52 am
4:53 am
4:54 am
>> it is mark: we have raking news. over 1000oing to cut positions. let's get to the bloomberg and checked on the markets. >> we are seeing a selloff in european stocks today. the stoxx 600 is down at the moment. it's heading for the biggest loss since the aftermath of brexit.
4:55 am
stocks in spain, greece, and italy are leading the declines in europe or we saw the selloff begin on friday. global monetary easing is perhaps coming to an end. it is probably why we see commodity producers as the worst performers on the stoxx 600, down 3.4%. prior to friday, we saw low volatility. that has started to increase as stocks have fallen. european volatility is heading to its biggest drop since january. volatility futures, the gap here is at the highest since 2013. on ators are betting future volatility as well in european stocks. we saw a stock selloff. we saw a bond selloff on friday. that set off a european bond continuing today.
4:56 am
is higher 10 year than friday. we are just about four basis points. the german 10 year bond is falling and yield is rising for a third day. that's pushing yields to the highest level since june 24th. we spoke to investors this morning. this is not an environment where bonds are going to get destroyed. we are not at the start of a larger bear market. this is more of a correction, what you are seeing at the moment. areing to the dollar, we looking ahead to the last fed speaker before they go into the quiet time, hedge funds boosted their bullish bets. septembereek ending 6, they added to net a list future positions by the most since june. the popular view about fed
4:57 am
tightening is actually wrong. mark: stay with us. you are watching bloomberg television. tom keene it will be joined by guy johnson. don't miss it. this is bloomberg. ♪
4:58 am
4:59 am
5:00 am
tom: with dow futures dropping below 18,000 this morning, --kets replace -- reply's the price for inflation. the peso weakens again. usual in business as the election. exhaustedhaustive -- secretary clinton. good morning, everyone. this is global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. gu


info Stream Only

Uploaded by TV Archive on