Skip to main content

tv   Countdown  Bloomberg  September 22, 2016 1:00am-2:31am EDT

1:00 am
. . anna: standing firm. janet yellen rebuffs pressure to hike. there is a sense from three fomc members. the first time this is happened in two years. the dollar weakens following the decision. we will have the latest market news. putting the brakes on rumors that apple is looking to buy a stake in the supercar maker. and why executives in london expect the uk's to lose its hundred $70 billion euro clearing business after briggs it. -- brexit.
1:01 am
welcome to countdown. it has gone 6 a.m. in london. let's talk about the fed and what they did and did not do and with the did two markets. no change in interest-rate from the federal reserve. that was generally expected although there was that risk it would flag. the dollar index fell and it is still weak. the dollar index down by .3 of a percent in the trading session. the fed's inaction has weighed on the greenback this year, that is the subtitle that goes along with this chart showing how the dollar has fallen and is having trouble making any headway of toward the fed's inaction and weighing on the dollar. there was some hawkishness around the short-term trajectory. you'll see expectations of a hike in december have been pushed up to above 61%.
1:02 am
asian markets have responded to the no change decision from the no change decision. up shy of 1%. the fed did cut back on its expectations for hikes in 2017. bringing that down from three to two. that was seen as fairly dovish and equity markets are running from that story. we have a move of one point five, 6% in the korean won. this risk on attitude that investors have taken from the fed statement along the median term is helping to boost market currencies. that is up by another 1%. extending gains on the unexpected u.s. inventories declined that we saw. in case you're getting your hopes up about that meeting and no just be aware only two out of see any oil analyst
1:03 am
agreement to freeze production as being likely. there than in mind as we head toward algeria. >> the governor of north carolina has declared a state of emergency and called in the national guard. fatal police the shooting of a black man descended into chaos and violence. fire tear gas. one protester was shot and critically injured. officials say police did not fire the shot. donald trump has detailed his plan to dramatically reduce black on black crime in america saying he would seek to expand the controversial stop and frisk program. a townme -- came during hall meeting. rba governor has
1:04 am
made his first public statement. he said he expects inflation to remain low for some time but will pick up as the labor market strengthens. he said it is in the public [inaudible] but says he and his colleagues are not "inflation nutters." have not seen our job is trying to keep inflation always within a tight, narrow range. we have not been what some have called inflation nutters. we recognize some variability is both inevitable and appropriate. has beensident obama trading -- promoting trade and investment between the u.s. and africa. progress is also
1:05 am
important to security and prosperity around the world. >> on so many key challenges we face, our security and prosperity, climate change, the struggle for human rights and human dignity. and the reduction of conflict. africa is essential to our progress. the rise is not just important to africa, it is important to the entire world. -- they manage the charitable work of michael bloomberg. the founder and majority owner, the parent company of lumberton is. mark zuckerberg and his wife are pledging more than $2 billion over the next decade to work on curing diseases. they plan to work with scientists, doctors, engineers, and universities to achieve their goal. he said after speaking with experts they believe it is possible to cure, prevent, or manage disease.
1:06 am
you can find more stories on the bloomberg. anna: thank you. let's check out the latest market action. way therested in the markets have responded. they seem to be taking the increased expectation very much in their stride. focusing instead on the more dovish around the median turned. x this is certainly what it does to equity markets. thecan see this across board. we're seeing asian stocks excluding japan which is closed for a public holiday. convictionrong particularly in the energy and mining players. the dollar is lower so we have seen a low by coming through in
1:07 am
a number of physical players but that rally in crude pushing a lot of the energy producers in the region higher. here in hong kong seeing gains of .9 of 1%. pi index on track if it holds onto these gains. the best weekly gain since july. in australia we are seeing gains there. that is helped out by the stronger rally in commodity prices. the new governor saying they're rs aboutg to be nutte reaching that target. we have seen the close of .4 of 1%. they -- we could see that rate cuts coming through. by almost 30% getting a line from some of its lenders including korean air.
1:08 am
very -- very strong in sydney. butthe casino is mixed goldman sachs is foolish about golden week for those casinos. the: let's return to subject of the fed. given room to run. more on the decision from washington, d.c.. >> no change in interest rates by the federal reserve but a strong suggestion that we will see a quarter point increase by the end of this year. those are the big takeaways for the meeting of the federal open market committee. janet yellen was under some pressure to explain why the central bank did not move on and she tackled it in a race conference. ms. yellen: economic growth
1:09 am
appears to have picked up. household spending continues to be the key source of growth. spending has been supported by solid increases in household income as well as by relatively high levels of consumer sentiment and wealth. >> yellen continues to believe that it is less risky to wait too long to tighten monetary policy than two pull the trigger too early and possibly cause a recession. i took the opportunity to ask why the fed expects to raise interest rates by 250 basis points over the next four years after lowering its projection for gdp growth over the same time to know more than 2%. the short answer, productivity but here is janet yellen with more. >> we have written down our estimate of the longer run normal growth rate. and with -- what that reflects is an assessment that productivity growth is likely to remain low for an extended time.
1:10 am
also -- it will pick up from the case pere half percent year that we have seen over the last five years. >> yellen took questions about the fake account scandal at wells fargo saying the fed would closer at that banks can -- compliance and more little oversight. she insisted when asked about john -- donald trump's allegation that the fed is keeping interest rates low for political reasons that the central bank is independent. ms. yellen: i have no concern that the fed is politically motivated and i will assure you that you will not find any signs when thee motivation transcripts are released in five years. anna: joining us now, larry hathaway. the group head of multi-asset portfolio solutions. let's talk about the fed. interesting to see how markets
1:11 am
have reacted to this because we have this move upwards in expectations about a fed hike in december. that seems to be well flagged fed, wellailed -- the signaled. at the same time bringing down expectations. this green line but it could be significant. what was most significant for you? downward adjustment of rate expectations. our more realistic than perhaps they were before. it is important to note that it was the divisions of the fed we have to focus on and they are natural. the economy is ready fully employed. there are some signs, maybe not entirely convincing that acceleration -- inflation is accelerating. you would expect a fuse would become more diversion. are that more uncertain.
1:12 am
there is a short-term relief rally for markets but there is a lot to grapple with. yellen downplaying the nature of that suggesting it is about timing. you can seeat that there is a range of expectations along that longer-term rate from 2.5%. there is a range of expectations the higher we go. >> it is a pretty massive range and there are fundamental differences. there are differences around two things. number and is how long you can maintain the present policy without the risk of inflation. meaningfully and perhaps dangerously overshooting. something we have not discussed. federal -- several of the fed -- they are willing in a
1:13 am
sense to take that risk. others are not create there are some outs about asset prices. the -- it is about the near-term and it will get more accentuated as we go through the next few months. anna: he was one of the dissenters, a bit of a dove turned hot. i pulled up the inflation data. pc inflationine and core pc inflation. do these were you when you look at them, they do not look like they are headed for 2%. lagging behind what we see in cpi which is above 2% and showing some signs of acceleration. .e have seen some acceleration low productivity numbers have been mentioned pushing up labor
1:14 am
costs. those are typically a nice indicator for core prices. it is not so much where -- it is is but it is an indication. -- the could be ofe inflation as a result this current stance. anna: she was adamant that will address politics was not having a bearing on their deliberation. should it, do you think? shouldn't there be some consideration about what the outcome might be? have to make conclusions but things could change before december. >> i can't think of a single episode where politics intruded on the fed's decision-making. we can safely take janet yellen at her word. when fede been times
1:15 am
officials have spoken out about other areas of economic policy. you might have suggested that lyrical influences were in play. even those have been extremely rare in the fed history. i suspect the fed is doing its homework as it has been mandated to do so around its objectives and goals and politics is not playing much of a role. with the fed move in november possibly it is not likely but that is when press conferences were held and the fed has laid a formula where changes in policy will be accompanied by a press conference and that is why everyone kept december over november. anna: it does fall one week for the election area thank you very much. larry hathaway with us here. we continue the weaker central bank name. -- theme. mario draghi makes a keynote
1:16 am
address in frank for. at 6 p.m. mark carney speaks in berlin. we also have policy announcements from south africa and egypt. central banks today. coming up, we have reaction from investors and economists following the rate decision. that is next. at 6:30 a.m. london time, we hear from ceos on their investment outlets. no longer the worst performing martin -- market in the world. weise to the ceo of the athens stock exchange about the greek recovery. this is bloomberg. ♪
1:17 am
1:18 am
1:19 am
anna: welcome back. 1:19 p.m. in hong kong. the hang seng is up by 1%. bloomberg business
1:20 am
news. >> executives at global investment banks in london expect [inaudible] will prevail in the tussle over the clearing of 75 and dollars of euro derivatives and are making plans to do with the fallout according to people at four of the biggest firms. mclaren has denied it has a negotiating with apple. they came in response to people with knowledge of the matter saying the iphone maker was in talks over the british carmaker. they want to buy the start up. and [inaudible] declined to comment. adf has cut the upper end of its profit forecast. it cited [indiscernible] that are keeping its power
1:21 am
plants shut longer than usual. s&p global ratings cut the credit rating to a minus associated with it decisions to build two nuclear reactors in the u k. leon cooperman has told client he tends -- he will fight insider trading charges. on a conference call he said that the facts do not support the government's charges and that he will fight them. he said he was not going to let 50 years of hard work and his legacy be destroyed. that is your bloomberg business flash. anna: fed officials have scaled back their rate hike expectations. sending stocks and bonds higher. here is some reaction to the latest policy decision. >> they are not in much of a rush, let's be clear about that. their behavior has demonstrated that. there must be some angst at the fed or they would not have moved and changed their language so year.t the end of the
1:22 am
they're looking at all the other measures of inflation that have been taking up. this is not the first time ever. there have been three dissents but those are rare. but a three dissent vote is very unusual. >> institute of data dependent they are market dependent. meaning stock market are high and stable. perhaps they will see one. if not perhaps. no guarantees and a lot of confusing rhetoric. >> the markets have been thinking that the pace of tightening was going to be very glacial. it is looking like the markets got it right and the fed was overoptimistic. anna: let's wrap up the fed conversations. inflationabout the concerns that some in the fed may have. you are in the camp of considering the threat of higher inflation in the u.s. so what
1:23 am
are your expectations as to how the curve develops, when we see ?he fed hiking interest rates >> the fed will go in december. that is a clear preference of theirs. much depends on things that could change that outlook. politics would be one in the sense of political uncertainty that impacts on markets or on the economy itself. the absence of those shocks, the fed will go in december and i suspect they will hike again twice in the course of 2017. that would be consistent with what i would say is the evolution of the economy and some uptick in inflation that prompts them to continue to normalize it. it is a gradual rate. anna: what does that do to the global economy, what does that do to global risk sentiment? you see emerging-market currencies, is this the -- are the markets happy with what they heard? >> son things have shifted
1:24 am
around these kinds of expectations. the so-called aunt refugees and the equity market yielding quality stocks and so forth has given up some of their gains. what i would expect in markets is. market back as the reassesses the timing and speed of these rate hikes but also rotation. there is nothing in this story that would suggest the end of the equity market much less the end of the global business expansion. emerging markets appeared to be well placed to perform. fed rate hikes do not seem to be strongent with the dollar. typically bad thing for emerging markets and that path of normalization is one that underscores and reinforces the sense of global growth which means it is cyclical including the em space. less commodity driven, more toward manufacturing and toward cyclicality. doesn't the areas that have to be the winner -- and they seem to be the winners.
1:25 am
>> that is reinforced by the bank of japan's approach which is not weakening the yen. the euro remained stable. i suspect it will continue because we are not that far away from the ecb suddenly shifting its stance away from the strong bias ease that many in the markets anticipate. something that will be a bit more balanced and that means the dollar strength is cap. angie: let's get your thoughts on that. yesterday we were talking about how the boj had been successful for a change this year in weakening the end but that did not last. it was the fifth straight meeting that saw the yen gained by the end of the trading day. what did you make of their attempts to reorient market attention away from the size of the stimulus package they would use more toward what they want to achieve which is a specific pattern in the yield curve? >> i think the key message is
1:26 am
theythe -- the message is declared victory. deflation is over and they recognize the economy is fully employed. jobs to applicants ratio in japan as -- is one indicator of that. the boj was saying don't expect us to do too much. don't expect us to be focused on weakening the end. they also laid out the contingency plan and that is what targeting the long-term interest rate is about. it allows them if necessary to engage in unlimited asset purchases and it is a mechanism that would allow them to finance government deficit spending if it came to that. stepopter money is one closer but it is a contingency plan rather than a reality. boj is having its cake and eating it too. helicopter money a little
1:27 am
bit closer. has, the south african rand been one of the emerging markets shining stars this year. extending gains even further. we explain all this at bloomberg. ♪
1:28 am
1:29 am
1:30 am
anna: welcome back. this is "countdown." the dollar against the yen 100.22 is where we are trading on the japanese currency. a new addition of daybreak is available on your bloomberg and mobile. -- let's getction a closer look at some of the stories that have made it. the cover story is the fed. yellen braves mounting opposition delaying interest rate increase again to give the economy more room to run.
1:31 am
the work auction now suggests 61% chance of a rate hike in december. next year, they brought down the expectations at the fed in terms of rate hikes from three to two. the next story is about central banks. the reserve bank of new zealand says it is set to cut interest rates again even as its economy grows. we get great decisions from norway and turkey later on. no way gave us unemployment data yesterday that ran at a 20 year high, although not high by pan-european standards. they prayed desha daybreak focused on the news -- france and germany will prevail. they are making plans to deal with the fallout. others say if it happens, it will take years. it could cause a disruption and
1:32 am
increased borrowing costs for some companies across europe. wants to protect the financial sector in the u.k. let's get a look at the current market action. asian stocks are rallying for the 66-day test for the sixth day -- for the sixth day. >> you expect that the decision to stay on hold. a bit of a weaker dollar and headed for its biggest annual climb in seven years. japanese markets closed today at we have not seen treasuries trade in japan. gold holding its biggest advance in two weeks. asian stock rallying for a sixth day. index usingnto this see it function, you can is the energy stocks that are the biggest gainers. up 2%.
1:33 am
no surprise given what has happened to the oil price. oil extending its game up more than 1% after weekly government data that shows u.s. inventories dropped to the lowest since february. we are seeing oil rally. we wanted to give you a picture of what is happening in the fx market. headed for thean biggest gain since june, leading among the major peers. gaining, currencies canadian dollar, aussie dollar. dollar yen unchanged. new zealand dollar down on 3%. it did say it intends to cut those rates again, to boost inflation, even though the economy is growing at one of the fastest clips in the developed world. anna: the south african rand continues to look like one of the traits of the year.
1:34 am
we boosted further by the third largest ever corporate takeover. yousef -- yousef gamal el-din joins us now. it is not that often we talk about the big story in the corporate world. you look at what is driving the markets, the fed into boj, this south african rand story is being driven by beer. by the anheuser busch firm starting to buy currency to pay local shareholders for $104 billion to purchase sabmiller. take a look at this chart which shows you the extent and the scale of the appreciation of the south african rand, up beyond 1.7%, even after 2% and plenty of upside. up 9.26% on the month side. we do have the south african
1:35 am
central-bank decision coming up. the rand has outperformed the emerging market currency index which was up .1% along that same timeframe. this deal will produce the world's largest beer maker if it all goes through and according to plan. still some upside there for the rand. anna: other policies can't reach. yousef, thank you very much. let's stick with the africa theme. bob dimon says u.s. equities has withdrawn support for a potential acquisition of the barclays african unit. the former ceo of barclays did not confirm that his company would continue to bid. he said investing in after in the medium to long-term is promising. >> it has been very hard. the team has worked harder than they ever imagined. the opportunities in sub-saharan africa are better than they were
1:36 am
two years ago or three years ago. our medium to long-term view is absolutely rocksolid. ata: we spoke to the co-ceo bloombergs philanthropy forum on business and ask a held in new york about investing in the continent. >> i think we in south africa and on the continent are living in a great environment with sub-saharan african growth mixed in at about 3.5%. in the medium-term we will go back to the normal 5%. an increasing number of people joining the banking system and therefore the prospects remain very attractive. anna: some optimism being expressed about the africa investment story. we are joined by larry hatheway. let's of people talk about the
1:37 am
africa investment story and the rise of the consumer and that being something to tap into and investment in infrastructure. is this a time where africa looms large on your radar? has that hit you? is that still some way off? size, in terms of its market capitalization, it cannot loom that large relative to developed markets. is front tier space -- it now because we have taken the return out of some of the major markets. opportunity beckons. in the africa story, what is -- countries have had some success story. the interesting story is in the is behind -- between the middle class and the financial sector and technology. they are very advanced through the payment system.
1:38 am
there is a potential next generation there as well in terms of financial advisory services, investment services. ,or the well-documented story east and west africa and south africa represent. i think it is more micro than micro -- then macro. anna: do you think there are businesses that are managing to make the most out of that. when we talked about getting exposure to the asian growth story, a lot of fund managers would play that by taking a personal goods company doing well in parts of the world and buying into that rather than taking a risk on domestically listed businesses. would that be something you would look at? companies that look to sell european and u.s. products into that environment? larry: that has been bleeding way for people to play the front -- theythe front tier
1:39 am
thought about it through foreign companies that would profit through china's developed. you see that and ask as well. -- this is is between finance and technology is peculiar and special. in their innovative ways it is playing out and have got is something that smaller firms have tapped into but it is still an illusion in terms of market capitalization. anna: we talked about the broad emerging market space. we were talking about it there. i picked up on this, u.s. capital goods company given an update on their sales just for one month. it is interesting that there asia machine sales on the rise. the first advance since 2012, perhaps signaling regional
1:40 am
demand is stabilizing. is that a comfort? larry: i am not sure that it will reflect something that is an inflection point for china. we are still seeing the levels of investment in infrastructure for which caterpillar would be a beneficiary. we are still seeing adjustments and mostly downward adjustments in areas of presidential property construction which would impact that firm. to some extent, there may be some the voting stories elsewhere in asia. india is the candidate there. the philippines is another where they could be some catch-up phase that is underway. the story in em is reflected in the strength of the korean want -- the korean won. infrastructure, heavy types of stores more toward the consumer, tech, maybe toward other areas. the economy globally begins to
1:41 am
support more traditional manufacturing sectors which korea would be a beneficiary. anna: larry, think you very much. he stays with us. -- larry, thank you very much. he stays with us. the crisis in syria was the focus of a un security council meeting yesterday. john kerry called out russia for its support of syria's regime amid the collapse of a -- he accused moscow of enabling the president of violating the troops. >> how can people go sit at a table with a regime that bonds hospitals? drops chlorine gas again and again? and ask with impunity? acts with -- impunity? documentsneed these to understand you don't drop barrel bombs on children.
1:42 am
anna: emotional scene there. migration clearly one of the big side effects that we have seen in the syria crisis. something that europe is working its way through it we heard from theresa may earlier on that subject -- through. we heard from that teresa -- we heard from theresa may earlier on that subject. it is a trend across the globe that we are having to deal with further migration, from africa and the syrian crisis. this is presenting a political challenge in europe. is this something that has come home to roost in europe? and a destabilizing europe further? -- and destabilizing europe further? larry: this is a political challenge everywhere in the world with the exception of canada which has an open door policy. the big impact in europe is around germany and angela's decision last year to allow
1:43 am
inward immigration coming to germany. the backlash -- including in berlin. that sets the stage for next year's german elections. next year's french elections coming to play in that regard as well. against the back drop of rising populism -- against the backdrop of rising populism. referendum, immigration was an essential issue. we have to be conscious about how we interpret this and what it might mean. havel and her government been the bedrock of stability, not necessarily a widespread agreement and support in the financial community, but stability of expectations of how europe would involve. if that government is called into question around the issue of immigration next year's elections, then it will leave its imprint on capital markets.
1:44 am
anna: do you think markets will be ready to stabilize by angela merkel deciding not to run again? if she is seen as such a lisp and if she were not to be a part of the mix in europe, that could be very destabilizing for european investors. larry: i think it would be because there is not a viable alternative to her style of leadership which is about consensusbuilding, moving gradually around very difficult issues. without sort of an obvious replacement for her, that uncertainty seems would weigh on markets, given some of the changes in other european capitals. 2017 is shaping up to be a very interesting and potentially a risky year around politics. anna: a lot of central bankers have called on governments to do more to stabilize global growth. able look to europe -- people look to europe. the austerity policies that
1:45 am
germany has for europe, he says that benefits only germany. how do you see the fiscal story developing in europe? a lot of those central bank calls out of the flows of refugees. larry: the fiscal policy has engineered a turning point. it did some years ago from extreme austerity from 2012 to 2014 to some tailwinds now. exit spending around the immigration issue europe is benefiting from that. -- immigration issue. europe is benefiting from that. you can growth is intact and running slightly above trend. perspective, europe is not looking for a lot of fiscal stimulus, but what could upset the apple cart at this fragile stage is uncertainty about a host of political issues
1:46 am
of which fiscal policy is one. that is the key point. anna: larry, thank you for spending time with us. larry hatheway, group chief economist spending the last 45 minutes with us. coming up, no longer the worst performing market in the world. we speak to the ceo of the fm stock exchange about the greek recovery. in the next hour, we revisit our top story, the fed. we have reaction of the u.s. central bank's policy decision. plus we will be in the passenger seat with apple. the tech giant is said to be in talks with a motorbike company. this is bloomberg. ♪
1:47 am
1:48 am
1:49 am
anna: welcome back. this is "countdown." we are bringing you live pictures from charlotte in north carolina with the government has called a
1:50 am
state of emergency and called in the national guard. this is a protest -- descendent into chaos. according to reports, the march was peaceful although officers did fire tear gas. one protester was shot and critically injured. city officials say the least did not fire the shot. let's get back to the business news for you now. less go to hong kong where we find rosalyn chen. dash rosalyn: expect france and germany will prevail in a tussle over the clearing of $570 billion of euro derivatives and making plans to deal with the fallout according to people -- they have said the city of london will be split to clear euro denominated -- after britain formally exits. denied it has been negotiating with apple.
1:51 am
talkshone maker was in over a stake in the british luxury carmaker. they said apple wants to buy electric motorbikes startups. the news comes as the tech giant wraps up -- the transportation industry. they declined to comment. edf has cut the upper end of its 2016 profit forecast. the french power company cited safety checks keeping its nuclear power plants shut longer than expected. itsglobal ratings cut credit level on risk associated with this decision to build two nuclear reactors in the u.k. anna: as investors await the europe's group -- your group's -- it is not just the nation's bond market feeling the pressure. greek stock battles have been hit with one of the worst performing major indices in the
1:52 am
last quarter. socrates lazaridis, a warm welcome to the program. you are here because you have a roadshow taking place. what kind of appetite do you see amongst global investors for great excess test for greek assets -- for greek assets? socrates: of course, after five years of exploration of the great market -- of the greek market, they are awaiting the .ssessment in the greekpen banks and how this will proceed. anna: the greek banks are the focus for investors. as they wait for clarity around the greek banks, are they reluctant to invest?
1:53 am
banks theyes, big have a higher philosophy. theough the higher part of greek saving activity. although as you have mentioned, the index is worst-performing due to the performance of the banks. [indiscernible] household goods interception have more than 10% [indiscernible] that a recent report suggested they might propose a shorter trading day in greece because of low trading volumes. is that something you are aware of? have read it i where you have read it. seeneality is we have decrease of the volume which is to what all of the
1:54 am
european markets are facing. after the announcement -- to the fund managers here it on the other hand, the issue is when you want to increase the volumes and the saving activity, we're not decreasing the timing. you are increasing the open hours for the foreign market. all the members that are produced spitting here and are presenting 90% uptake in volume. anna: there is no plan to decrease the trading hours? socrates: of course. anna: do you sense that investors are attuned to the political story in greece? do they want to see political change? socrates: investors are following closely the political
1:55 am
situation in greece. thus, during this event there in bloombergre every year, we are given the opportunity to meet with the minister of economy or development. today we have the meetings. anna: on the roadshow as well and we've got a story that talks about which parts of the european financial world could have to move away from the u.k. if brexit -- when brexit is triggered. what is your expectation for london's ability to hold on to financial services? in particular people talk about euro clearing. you see euro clearing remaining in london? challenge ofs is a the brexit discussion.
1:56 am
view, let's say it is a pity that we have now budget, because this appeal of time -- this deal of time in europe, due to the lethargy where facing in the banking sector, markets are becoming much more important for the european economy. london has [indiscernible] is on comparable to the other. now in thetive that discussion we are not focusing on how capital markets ability to finance companies is not influence in europe. anna: missed opportunity. great to hear from you this morning. the ceo at the athens stock exchange. three's company, a trio of fed members won't see janet yellen
1:57 am
raise rates. is there was them in waiting? she sees reasons to wait. markets have adjusted. we'll have analysis. this is bloomberg. ♪
1:58 am
1:59 am
2:00 am
anna: standing firm yellen revokes pressure to hike given the u.s. economy more room to run. there's dissent from three foc members, the first time that has happened in two years. stocks and bonds rise and the dollar weakens following the decision. will have the latest market moves. mclaren puts the brakes on rumors that apple is looking to buy its stake in the carmaker. why executives at global investment banks in london expect the u.k. to lose its 570 billion euro -- 700 -- 570 billion euro -- following the brexit. ♪
2:01 am
anna: a very warm welcome to this thursday. let's get to the futures and see what is coming up at the start of the european trading day. we had the fed decision last night, no change that clearly flagging some intention to move in december. that is how the market interpreted it it we saw the work function showing an increased probability more than in chance of a rate hike december. that seems to be the lower for longer message that markets have been running with over in the asian session. let's throw out the risk radar and say wendy's asian equity -- and show you where these asian equity markets have been rising up by .75%. u.s. equity markets closed today pretty strongly. we are seeing increased appetite for emerging market assets.
2:02 am
we have seen the korean one up by .1%. we have nymex crude in their, up gains.extending we saw an unexpected decline in u.s. industries. saudi arabia, iran have been meeting indiana -- been meeting in the anna -- meeting in vien na. only to think we are going to see any agreement for free production at that meeting in algeria. let's throw up the bond board with the boj and the fed yesterday, there is a lot of attention on where bond yields go. the 10 year u.s. at 1.651% entirely flat on the bund. that flirt with positive territory did not last long. here's rosalyn chen. the governor of not
2:03 am
killing a has declared a state of emergency and called in the national guard as the second night of protests over the flail that's over the fatal police shooting of a black man descended into chaos. peaceful was initially although officers did launch your guess. say police did not fire the shot. donald trump has detailed his plan to reduce black on black crime in america saying he will -- the comments came during a town hall hosted by fox news in ohio. according to a transcript released by fox, trump said we did it in new york, it worked incredibly well. be a governor has made his first -- new rba governor has made his first -- he expects inflation to remain low but will pick up as the labor market strengthens. he says it is in the public
2:04 am
interest to deliver inflation at 2% or 3%, but he insisted that notnd his colleagues are inflating. >> we have not seen our job as trying to keep inflation within a tight, narrow range. we have not been what some have called "inflation masses." some degree of variability in inflation from year to year, seems an notable and inappropriate. -- and appropriate. rosalyn: president obama has been promoting trade between the u.s. and africa. he says progress and have cut is important to security and prosperity around the world. >> on so many challenges that we prosperity,curity, climate change, the struggle for ,uman rights and human dignity
2:05 am
the reduction of conflict, africa is essential to our progress. africa's rise is not just important africa, it is important to the entire world. rosalyn: the u.s. african business form was hosted by bloomberg philanthropy. the founder and majority owner of bloomberg lp, the parent company of a bloomberg news. zuckerberg arerk floating more than $3 billion over the next decade. they plan to work with scientists, doctors and engineers to achieve their goal. zuckerberg says after speaking with experts, they believe it is possible to secure and management the disease. -- secure and manage the disease. global news, 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top go. i am rosalyn chen. anna. anna: thank you very much.
2:06 am
juliette saly has all of the announcements that we need for the asian markets. markets focusing on what the fed said about 2017 and beyond. lower for longer rate assumption seems to be spewing that's seems to be fueling markets right now. -- seems to be fueling market right now. juliette: we saw -- we thought the fed would be aggressive. this is what cheaper money for longer will do to the equity market. the day they were buying right across the board in the asian session. the result index excluding japan disclosed today actually rising for a sixth consecutive day here in hong kong. we are seeing stocks for the fourth time in five days. a lot of the good movement come through from commodity players. the energy and mining stocks. australia -- up by .8%.
2:07 am
we saw a good game come through from new zealand as well, up .4% . we did hear from governor graham suggesting that could be further rate cuts this is -- cuts. this is as they try to start inflation in the economy. we have seen some great buying come through in southeast asia. .9%cost be supported, up by on track for its best weekly gain since july. having a look at the new zealand dollar, it did fall after the rbn did leave the cash rate on hold. the qb has been one of the best performers -- the kiwi has been one of the best performers to date. that is because the fed has been reluctant to raise rates. a strong kiwi, a strong number come through and a lot of asian equities and currencies. anna: thank you some much. juliette saly in hong kong back to the fed.
2:08 am
janet yellen has delayed a rate hike given the u.s. economy -- giving the u.s. economy room to run. erik schatzker has more on the fed decision from washington dc. >> no change in interest rates by the federal reserve, but a strong suggestion that we will see an increase by the end of this year. that it -- those are the big takeaways here in washington. janet yellen was under some pressure to explain why the central bank did not move now, and she tackle -- and she tackled it head on. >> economic growth which was .ubdued seems to have picked up household spending continues to be the key source of growth. spending has been supported by solid increases in household income, as well as relatively high levels of consumer sentiment and wealth. >> in short, yellen continues to believe that it is less risky to wait too long to tighten
2:09 am
monetary policy than to pull the trigger too early and possibly cause a recession. i took the opportunity to ask yellen by the fed still expects to raise interest rates by 2050 basis points over the next four years after lowering its projection for gdp growth over the same peel of note -- same peel -- same period of 2%. normal growthrun, rate and that reflects an assessment of productivity growth is likely to remain low for an extended time. also, it doesn't buy into the excitation that it will pick up from a miserable half percent pace per year that we have seen over the past -- the last five years. questions about the fake account scandal at wells fargo, saying the fed will look closer at that banks compliance,
2:10 am
control and board level oversight. she insisted when asked about donald trump allegation that the fed is taking interest rate -- interest rates low for political reasons that the central bank is independent. >> i have no concerns that the fed is not politically motivated. you will not find any signs of medical innovation when the transcripts are released -- any signs of political and -- political motivation when the transcripts are released in five years. now. bill street joins us has anything you heard from the fed changed your view? 61% chance now of a rate hike in december. bill: this is not going to happen, it is an easy path for the fed. economic data was soft. yellen's point just then. i think with the political and geopolitical events, there's softening of data, it is a pretty easy path.
2:11 am
all things being equal, -- anna: further out, what are your expectations? obsessing about when we get the next one and talking about the fact it is one to be lower for longer. bill: this is going to be a lower for longer cycle. the rate hiking cycle is going to be very anemic. we're talking on your piece about 250 basis points in four years, that is going to be interesting if we get that. over 2017, one of two hikes is optimistic. anna: the dissent within the fed seems to be drawing attention to do some people marking that as significant. how significant for you when you see rosen brand who was dumbest before now sounding hawkish -- who was dovish before now sounding hawkish? >> -- normalization of policy
2:12 am
means these days. i don't see too much in that. we have a political cycle that is coming to an end or we got an efficient point in november, that is going to be important to the fed to see our markets react to whatever outcome that is it between now -- outcome that is. between now, we are going to have the growth numbers. yellen in a statement also expectation.job we are not seeing any real embedded inflation in the system. i think they can -- they are seeing the risk for asymmetrical as they hike. and ago i pulled up the chart which shows headline pc inflation -- anna: i pulled up the chart which shows headline pc inflation. the fed has a mandate around -- policy asked with a lag --
2:13 am
policy acts with a lag. this anything yesterday that told you anymore about their stance on inflation? bill: if you look back over the last couple of years or even since financial crisis, you see the behavior of the break even. the breakeven rate which is the spread between the nominal and yellenonary on market is and bernanke working on following. and it is anlow indicator of expectation going forward. break evens and inflation rates are going to be split for a significant amount of time. anna: if this is the inflation picture, it is going to be difficult to hike. bill: i think that is the point, one point theyo
2:14 am
can hang on to and say this is why we need to hike. there is a feeling that we need to normalize and get to a rate cycle that feels more normal, but if you look at the macro numbers, the employment part is probably the most positive part we have seen in the fed story. his employment actually coming to the real economy in terms of inflation, inflation expectations? what we're seeing in the market is no. does the fed have to tackle -- ?ave to tackle janet yellen very fiercely defending the fed's independence and saying they don't dabble in politics. they do need to take into account what could be the market moves around the political events. the same way they look at what happened in the exit referendum.
2:15 am
that's the brexit referendum. -- the brexit referendum. a lot to change before december. --l: if you look at the pre-trump coming in. it has been pretty stable. the data points have been pretty consistent. has too much that leading into the fiscal cycle or trump. going beyond that from around the eighth of november and going into the next cycle, it is important, the central banks are mandating the price in the market stability. that could be significant market impact if you have a different political outcome. the fed will be keeping an island that. anna: bill street from state street stays with us. fed up, we have reaction from a host of investors and economists following the foc rate decision. the federal analysis of the fed
2:16 am
and global implications -- global indications of what we heard yesterday. this is bloomberg.
2:17 am
2:18 am
2:19 am
anna: welcome back. it looks gloomy out there could the ftse 100 futures we will be a little bit stronger at the start of the day. i stronger asia and the wake of that. no change for now from the fed. as skit to bloomberg business flash with juliette saly. -- let's get to bloomberg business flash with juliette saly. juliette: france and germany will prevail in its tussle and declaring euro derivatives. the deal was the fallout according to people. the assume the city of london will be stripped of its ability to clear euro denominated swaths after britain formally exits the european union.
2:20 am
companyrence power cited safety checks that is keeping its nuclear power plant shut longer than expected. credit onings cut risk associated with its decision to build two nuclear reactors in the u.k. -- that came in response to people with knowledge. -- automaker was in talks apple wants to buy electric motorbikes startup. the move comes as the tech giant wraps up efforts to disrupt the transportation industry. apple declined to comment. omega advisors found that leon kuba mad has told clients he plans to fight inside a trading charges -- fight insider trading charges. the facts do not support the government's charges and he
2:21 am
will fight them. he says he was not going to let 50 years of hard work and his legacy be destroyed. hanjin rise -- rose and shipping insole. yesterday its largest shareholder korean air agreed to provide emergency funds offering $50 million. however the government estimates they will need 10 times that amount to cover unpaid fuel and cargo handling costs. the receivership court said hanjin may be beyond rescue. anna: a bit of breaking news from samsung. samsung electronics to extend the refund program. in south korea, this comes after the well-known issue of the better issue. global implications came at a applehen the battle with was really developing a pace.
2:22 am
awkward timing. --also comes at a time recovering from the crisis. we will see if this has impact on the underlying business. according to the ceo of ideas, the battery business from this recall is expected to be $1 trillion -- 1,000,000,000,001. that came before this announcement of the back of the extension of the refund program. that you back to our top story around the fed. fed officials have scaled back their 2017 rate expectations sending stocks and bonds higher. here is the reaction. rush.y are not in a their behavior has devastated that. there must be some angst at the fed or they would not have moved or changed the language so much and in the year. they're looking at all of the
2:23 am
other measures of inflation. >> this is not the first time ever there been three dissents, but those are pretty where. a free dissent vote is really unusual. >> instead of data dependent, they are market dependent meaning stock markets are high. then perhaps we'll see. if not, perhaps we will not. no guarantees and a lot of confusing rhetoric. >> the pace of tightening was itng to be very glacial and is looking like the markets got a ride and the fed is overoptimistic. anna: let's get more from bill street. he is still with us. haveange of views that we across the curve. looking at longer-term views. when look the range from 2.5% up to 3.75%, yellen downplays it and suggest it is a question of timing. do you think they have much more
2:24 am
substantial as agreements? -- substantial disagreements? real i think there is a intent by a couple of members to get some sort of list off. my concern is we look after yellen's comments about long-term growth rate big subdued. there are not any inflation expectations or pressures at the moment, and that is reflected by the bond markets. even these. plots are somewhat optimistic. i can imagine we are going to have a very low -- i think one of your guests called it glacial in terms of how these rates rise over the next couple of years it anna: what would the indications -- couple of years. anna: what would the indications be?
2:25 am
bill: it is an interesting discussion at the moment which is a discussion at what point does the utility function run out? we have quantitative easing and a lot of central banks around the world and abnormal interest rates from the fed, at what point does that keep stimulus into this folio rebalancing affect? are we beginning to see the marginal increase or effectiveness of risky assets running out? that is like the utility function of monetary policy. in the sort of medium-term over the next six months as we head into december, what we will see is the css will start performing again. we'll have a bit of a risk off crisis in the last few weeks coming into the fed. you will see investors coming back into the market. anna: i've got a chart that shows how effective in the united states the equity markets
2:26 am
have been moving increasingly in tandem compared to recent history. a way of pointing out the way we see various asset classes moving in tandem as a result of what monetary policy. you suggest that not only might monetary policy moving its in-flight -- once a policy -- monetary policy losing its inflation. bill: how effective it is on the portfolio rebalancing affect, taking money into the risky asset part of the portfolio. that may be running out. the latestto see how movement of monetary policy and quantitative easing have impact. if your chart earlier, what is happening is you got a very flat negative discount curve around the world. you've got investors increasingly hungry for yields and income. you have seen risky assets move in tandem and the correlation function between those coming
2:27 am
much closer to it anna: bill, thank you so much for joining us. that will do it for "countdown. "on the move is up next. this is bloomberg. ♪
2:28 am
2:29 am
2:30 am
>> welcome to "on the move." we are counting down to the european open. i am nejra cehic alongside caroline hyde. guy johnson is in munich. here is what we are watching. a risk revealed. yellen revokes pressure to hike as investors weigh the first triple defense within the foc since 2014. stocks and bonds rise as the dollar drops. we'll bring you the latest moves off the fed. clearing out

129 Views

info Stream Only

Uploaded by TV Archive on