tv On the Move Bloomberg September 23, 2016 2:30am-4:01am EDT
welcome to "on the move." 7:30 in london. we're counting it down to the european open. i'm guy johnson, alongside caroline hyde in berlin. this is what we are watching. german politicians are waking up to concerns about the country's biggest bank. it has lost nearly half its value this year, but will berlin take action? keep on cutting. the turkish president says that turkey's central bank should continue to drive the rates lower.
does the country really have an independent monetary policy? and are we entering a post central-bank world? that the r.j. is already struggling to control the yield curve. -- the boj is already struggling to control the yield curve. caroline: in terms of certain asset prices, we have seen the nasdaq surged to a record high, stocks and bonds and commodities. today, maybe money coming off the table. futures are down just about .2% on the euro stoxx 50, but up 3% in the stock 600. what a surge we saw yesterday on the dax. guy: yeah, the dax really flew yesterday. you can see it quite clearly on gmm. the cac also rising by 2.33%. the clearly on dollar, a little bitf strength. down,own, singapore british pound flirting with that 130 level.
right, let's get everybody caught up. it's christine harvey with the first word news. christine thank you:. yahoo! says the personal details of at least half a billion people were stolen in a 2014 hack. the company says the attacker was "a state-sponsored actor," and stolen information could include names, phone numbers, and passwords. ands are being contacted their accounts are being secured . the revelation comes ahead of verizon's plan for $20 billion acquisition of yahoo!'s web assets. cboe is in talks to acquire -- they say an agreement could be announced within weeks, of no final decision has been made, in the talks could still fall apart. its shares of surged more than 24% in after-hours trading. deutsche bank's finances are
raising concern among german politicians amid low profitability and mounting legal costs. social democrats discussed the woes at a closed session. this comes after the u.s. stock had to settle claims related to the fall of mortgage backed securities. deutsche bank has declined to comment. the european central bank president mario draghi has said central banks need to act when they see systemic risk. speaking at a conference in frankfurt, he also said policymakers must remain vigilant. >> macro prudential policy is still in its formative years, and policy makers are understandably cautious about deploying other instruments. but when we see systemic risks, we should act. greater risk arises from in action. christine: protesters had taken to the streets of charlotte, north carolina for a third
night. although we are told this latest protest has been largely peaceful. police have refused to release video of wildly different accounts of the shooting of a black man last week. police say releasing pictures of the killing could inhibit the official investigation into his death. and an oklahoma police officer has been charged in connection with the fatal shooting of an unarmed black man last week. issa officer betty shelby charged with first-degree manslaughter in the death of terence crutcher, who was standing by his broken down car. shall be claims he didn't obey her command and she fired when you reached into the car, however police footage and shows him walking away with his hands in the air. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. caroline? caroline: thank you very much. turning now to turkey. in the wake of july's attempted
coup, the president faces renewed pressure to stir economic growth. the turkish lira is down 40% since 2013, and our editor in chief sat down with the turkish president in new york to discuss the economy, and asked, if it is happy with all over currency against the dollar? there hasn't been kind of explosion in the currency that people were expecting, even after the coup attempt. our hope is that it should be lower, if not at the level desired. but those who were expecting it to crash, they didn't get the results they wanted. if we preserve the stability, and is the turkish currency gives a little more valuable, i believe in turkey --let me elaborate.
thein ithe first six months, growth rate in turkey is quite satisfactory. than theuch better primary economies of the european union. turkey has grown pretty much 20 nine quarter9 quarters. good indicator because we have fiscal disciplinary policies. there is confidence in the markets to which we have attached great significance. we have protected stability and protected the confidence. we have abided by the rule of fiscal discipline. that is why investors didn't get scared, and although we are not always at the desired level, we are still strong. especially in the aftermath of the coup. turkish markets just opened up, relatively flat on
the start of trading. it's trading just .1% higher. meanwhile, the dollar is stronger against most major currencies today. guy: yeah. it's an interesting relationship the turkish government has put the central bank and it certainly changed over the last few months. joining us now, chairman of the investment committee -- good morning. in many ways, central banks are confusing the world right now. why should we not be grateful that the president is turning around and saying, i'm in control? we don't have a clear message from the fed or understand the ecb. >> the personalization of central banking. at the end of the day, politicians appoint central bankers and shape their mandate, although he is being more blatant than other politicians around the world. if you take the u.s. presidential election, he will
two depending on who wins, very different outcomes. it's not that politics doesn't influence central-banking -- if donald trump is elected, he made it clear who will replace janetit's not that polit yellen will have aank different policy. he believes higher rates are necessary to create destruction and bring up the rate of return. whereas if hillary clinton becomes president, then we will expect more continuation of the current status quote, which is likely that yellen will be reappointed and carry on. their you are; there's politics intruding directly into interest rate policy. caroline: stephen, what, then, for emerging markets, if we do see a bullish major in terms of the u.s. dollar, if we see u.s. rate hikes? i have seen the outperformance of the emerging markets across the board when you are looking at stocks. the white line indexes, currencies outperforming, the
dollar emerging-market outperforming -- is that coming to an end? >> i think it will probably continue for a little it longer. i think that central-bank policy across the developed world is at an inflection point, and this is something called neo-fischerism , that if you put rates lower and lower, deep into negative territory already in europe, you don't achieve anything. if anything, you depressed growth and inflation. we see more and more commentators around the globe questioning whether that makes sense. that theyng overnight need more monetarism -- he was president of the bundesbank and resigned in a big half about this issue. -- a big huff about this issue. we are seeing more and more of a drive toward a realization that monetary policy on its own will not work, and that means when bond yields are in just about every developed market at all-time lows, with trillions of
dollars of bonds in negative territory, they have only got one way to go. your question is where does that leave emerging markets. i would say it leaves them with the difficulty, because one of the attractive -- of: and you have huge swaths the developed world and negative territory right now, yet there was slow data yesterday. it's tiny. people just aren't allocating money. money is getting caught in all kinds of boxes for regulatory reasons, but nevertheless, are you surprised we haven't seen more of a flow? if the world is chasing yield, at least the em is delivering? >> i think they are social shock from the blowup in emerging markets, and it takes investors quite a long time to give their confidence back. if i were looking at emerging markets, i would be more interested in equities. if we see an emphasis on fiscal policy in the west, which i think is coming, whether it is trump or here in the u k with
the relaxation of the austerity after brexit, i think there's a new focus on fiscal policy. i think it will boost growth. i think that will benefit emerging markets. guy: particularly equities. you'll stay with us. caroline: coming up, we are talking more central banks. we discuss the great divergence in central bank policy that just didn't happen this year. plus, downing deutsche. german lawmakers are increasingly concerned about -- is the lender running out of options to steady the ship? we discussed that. plus, labor pains. jeremy corbyn expects to win the leadership contest, the will it mean prominent mp's shunning the bench? we get into that conversation. this is bloomberg. ♪
caroline: welcome back. let's get you up to speed with the bloomberg business/. -- business flash. christine: thanks. the billionaire founder and majority shareholder of sports direct has taken over as the chief executive. the move comes after the previous ceo resigned. the company has come under heavy criticism for the way it treats its workers and questions were raised over corporate governance. yahoo! says the personal details of at least half a billion people were stolen the 2014 hack.
the company says the attacker was "a state-sponsored actor," and the information could include names, phone numbers, dates of birth, passwords, and security questions and answers. users are being contacted and their accounts are being secured. the revelation comes ahead of the planned $4.8 billion acquisition of the yahoo!'s web assets. a chinese millionaire group has sony, to cooperate with investing in productions for sony pictures as part of its open and partnership as the chinese tycoon builds on ambitions in hollywood. facebook says it has been given advertising as an inflated metric for the average timing. the social network, which has more than 1.7 billion users, have seen the popularity of video ads fuel revenue growth. they say the error has been fixed and and is notifying advertisers. shares fell in extended trading. and that is your bloomberg
business flash. guy: thank you. this was meant to be the year of monetary policy divergence; instead, central-bank powers are converging once more. so what's going on? what does it tell us about monetary policy? enda curran is in hong kong. enda, central banks, in some ways, have done what was expected, but some haven't. give us the scorecard. da: if you consider where we were at the start of the year a muche fed expecting steeper run of policy tightening in the u.s., and yet here we are at the end of the year, looking at what rate hike by the u.s. and they scaled back their dot plot for next year. at the same time, you have the other central banks in europe, japan continuing to ease. instead of this great divergence we were told about in the past,
with the fed tightening, and the other central bankers easing, there's much more of a common ground coming into play, where people are accepting that interest rates will be lower for longer everywhere and that the central banks will remain one of the key drivers of growth if governments don't embrace the structural reforms and fiscal policy some people are hoping for. gross says go long-duration. is that how investors settle in? enda: well, this is one of the great problems. what we have seen over the last few years since the global crisis is that the central banks all this qe, butice kiwi the and result has been an inflated bond market and how to central banks extricate themselves from that? and if we ever do get to that point, it poses a significant
marker, which is one of the key concerns for investors and policymakers. the take japan this week acknowledged they are concerned about the side effects and that is why they are tried to target the yield curve. how the central banks pull out of this is a major cause of concern. guy: you. w-- yeah. thank you. enda curran out of hong kong. late breaking news out of france. this is gdp data, the final number at -0.1. the survey was for flat zero. that gives us an annualized rate of 1.3, down from 1.4. grinding at the recovery. still with us, steven isaacson. lower for longer, yeah? >> i'm not sure, actually. i think we are seeing some early
stages of a major turnaround in the bond market. if you look back six months ago, there was some talk that what was needed was much more shock and awe, that somehow monetary policy, although it staved off the worst, hadn't really galvanized the market. even in europe where you have negative rates, depositors are not feeling it. so there was some fear, and what you needed to do was get rates down, america at -5%. that was the only way to really galvanize, get us out of the liquidity trap. it has not happened. it has not happened he could the effects on the financial sector has been disastrous. market capnk has a of 15 billion euros, a balance sheet in 2 trillion. that tells you straight away that there's a lot of problems. in italy, where the rescue plans for monti capacity is failing -- monti de paschi is
failing -- i think there is more and more of a realization that central-bank activity will actually change. the politics will speed that when out -- guy: to what? >> to a new policy, new faces. if trump wins, and i believe he will, we will get the world's largest economy -- guy: let's put him to one side. what is policy going to look like? >> even if he doesn't win, and we don't know what's going to happen, the fed will definitely raise rates in december. they have backed themselves into a deliberate corner and i think they will want to be seen to follow through on its rhetoric. even the fed, and there is quite active debate, three dissenters is pretty unusual. there's a real caucus at the fed which says that we need to see higher rates, irrespective of the economy.
caroline: but stephen -- screen, ies on my have what happened to the sovereign bond index. eight green fan or growth? long-duration, or is the time we see yields spike 5% higher? >> i'm with greenspan on this one. remember, when we started -- if we were at some sort of normalized bond yield, we would be more difficult to judge, but we are at record lows. we have intentionally dollars or $11 trillion of negative rates. the only buyer of negative yields -- the central banks turn around and say, no, we will not buy these any longer, or at least questioned the policy, who will buy the assets? they have to find some sort of real value, and that could be considerably higher yield. there's a case where the german anstitutional court -- from
german lawmaker, that case was rejected initially. that was on the basis that the bundesbank was exceeding its constitutional authority in terms of buying qe. that was rejected on the basis that the bundesbank was not buying all the issues, that there was a limit on the number of bonds they can buy. now we know that is being questioned. there's another emergency brake coming your way. guy: thank you very much. we're minutes away now from the open. next, we will look at the central corporate movers. and some m&a. details next. the market opens in seven minutes. ♪
caroline: six minutes from the open. let's get your stocks to watch. here in berlin we are still talking about deutsche bank. there is much debate about the political debate, the socialist democratic party here in germany raising their concerns about deutsche bank, called down 1%. and you like a bit of notepad action -- it's called up 10%. you can see how much the shares have been volatile up to this particular ipo back in 2013. today, you can see a pop of 10%. guy: i do like it. i sat next to somebody who likes it even more. she's coming up later. mike ashley will take over as ceo of sports direct.
guy: good morning and welcome. you are watching "on the moon. -- you are watching "on the move." caroline, what is the morning brief? caroline: doubting caxto deutsc, guy. it has lost nearly half its value this year. will berlin take action? president says based they will continue to drive rates lower. and are entering the post central-bank world? the boj is already struggling to control the yield curve.
the week promised much, but delivered little. guy: it was a big day yesterday. you are absolutely right, caroline. we are eight seconds away from the market open. you can see that we had a huge today very clearly on our bloomberg here. you can see, we are beginning, i expect, to fade down a little bit. i think we are going to see something given the strong data we have seen -- sorry, the central banking story and how that has translated into the property market. let's just quickly talk about what is happening on the imap, just to give you a quick heads up there, and then we will break some data for you. portugal, a gainer. denmark, spain, france, the losers on the stoxx 600.
nejra what is happening with the sectors and gilts? nejra: yields have been ticking higher in europe. in asia, they were lower across the region. the 10 year yield in the u k is two basissome points. that is how the gilt market is opening up. in terms of the sectors, it is energy and material stocks that are very much underperforming. energy stocks, down .5%. material, down by about the same. we are seeing lower commodity prices today. the bloomberg commodity index, which does measure returns, has dropped for the first time in about a week. we are seeing a weaker oil price and weaker industrial metals as well.
that explains why we can see this trend in the sector on the stocxx 600. real estate look like the only one that is hedging at the moment. in terms of stocks we're watching, here are three i am focusing on. we have had change at the top here. the founder mike ashley will take over as ceo, putting the billionaire in charge of the profits. the business has been reeling from accusations of slack corporate governance. it is really moving up, despite the controversy that has surrounded the company recently. moving on to this danish drugmaker, it was said after the market close yesterday that the alzheimer's disease drug failed in a final stage study. so, we're waiting for that to
open. but that stock was called by some pretty big moves by analysts. this is an insurance update on this. the insurance cover has been confirmed. the stock was called higher and it is moving higher, up 2.2%. caroline? caroline: thank you very much. mario draghi expressed concerns about some of the business models happening within ithe ba nks. outhese affects tends to tweigh the net interest income in the short-term. in the broader context of generalized overcapacity, and technological innovation, some banks will need to review their business models to bolster profitability. bank concernssche
are mounting. sn a closed session, the bank came up during a debate regarding financial rules. that is according to two people familiar with the matter. for more, we are joined by bloomberg's bureau chief. this is part of the coalition, but it is coming up in a political debate. it is something to focus on in deutsche bank. >> lawmakers are putting this on their reader screen. they have seen the news come from deutsche bank. in particular case, it was a group of social democrats. they are part of the bundesbank. they had a discussion about this potential $14 billion fine in the u.s. in the closed meeting, they expressed their annoyance that the u.s. came out with this information. they feel the end result will be a lot less than this $14
billion. what they did not do was talk about what comes next. it was really sort of an opening discussion of where things stand with deutsche bank. he wants a fair outcome. $14 billion.alking what do you think "fair" actually means with wolfgang schreiber. reporter: that is a difficult question to answer. he does not want to do anything that will cause additional problems for deutsche bank. you told us in an interview a few months ago when we asked about deutsche bank, he said, everything is fine and i have no worries. he spoke to this finance committee of the bundesbank earlier this week about a range of topics. he did not bring up deutsche
bank. you can see the government is trying to be fairly tightlipped. they don't want to cause any additional problems for the bank. guy: is there a sense in berlin that people believe would you bank is caught up in some -- that deutsche bank is caught up in some transatlantic tit for tat? >> they don't is a anything that will cause additional problems for the bank. we look at how things played out the both volkswagen in u.s. they agreed to pay a fine that was a lot less than the original number. they hope there is a conclusion that will come together. hopefully, it will be a lot less than the $14 billion the u.s. came up with. caroline: we will see how this unfolds. thank you, chad thomas,
bloomberg's bureau chief in berlin. our guest is still with us. the banks, one of the worst performers today, down by .8%. how much more pain does this lower for longer make it, particularly for the likes of deutsche bank jennifer lawrenc? >> we are waiting for a turn in the interest rate outlook. until then, the sector will remain under a great deal of pressure. i think we should lock up globalization. the has been one of the key th emes going back several decades, and why inflation is so muted. every time there was a the economy, the in central banks were able to keep cutting. my concern is anti-globalization populism is coming thick and fast. we don't know where the next
brick in the wall is. brexit is the first example. it could be trump, or in italy, or in france next year. but it is coming. i think that will upend the entire fiscal status quo. that will lead to a very large increase in the issuance of bonds, that even central banks won't be able to cope with. in my opinion, that will see a complete turnaround. guy: so, what do you do? >> that is a very good question. i think a number of deutsche bank's competitors, like ubs and morgan stanley, have taken a different approach, such as slimming down. bank hashat you lin deutsche got to take a hard look at the business model. the cake is getting smaller. revenues areing not anywhere near what they once
were. so, the ability for big, universal banks -- brexit is another big headache. the ability for those banks, like deutsche bank, to continue without questioning the business model has to change. guy: thank you very much indeed. caroline: coming up, assessing post brexit britain. our do not want to miss interview. and then president erdogan tells us that turkey's central-bank should continue to drive rates lower. and central banks take centrist er stage. we recap all the major action this week. this is bloomberg.
guy: welcome back. you are watching "on the move." today we are marginally off, but considering the gains we saw yesterday, that is not a bad performance, folks. let me run you through on the bloomberg grr function. u.k. house builders are up. on the down side, it is downesting to ap miller, by 2.73%. the news is driven by the split.
details on that. let's get the bloomberg first word news now. reporter: yahoo! says the personal details of at least half a billion people were stolen in a 2014 hack. the information might include names, phone numbers, passwords, dates of birth, and security questions. users are being contacted. the revelation comes ahead of verizon's $4 billion acquisition of yahoo!'s assets. an agreement could be announced within weeks, though no final decision has been made. this comes just five months after they went public. the shares surged more than 24%
in after-hours trading. protesters have taken to the streets in charlotte, north carolina for a third night, though this protest has been marginally peaceful. this is after police refused to release video that could settle very different accounts from the fatal shooting of an unarmed black man this week. the release of the video of the killing of keit keith scott cou limit the investigation into his death. shelbyp with theiofficer betty is charged with first-degree manslaughter of terence crutcher. shelby claims he ignored her commands. footage shows crutcher walking away with his hands in the air. the philippines have said the audit in the mining industry will carry the full force of law
. the announcement from the environment secretary reinforces the government's tough message see showdown that could mass suspension. nickel is the best performing commodity this quarter. there is concern that the philippine audit could disrupt shipment and prices. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries around the world. this is bloomberg. caroline? caroline: thank you very much. now, blackrock executive larry spoke to us yesterday and highlighted the political concern in europe. >> you suggested the italian referendum. this is serious for europe and italy. if the referendum goes against the prime minister, they will be greater uncertainty with prime minister renzi, which in itself, is destabilizing.
we witnessed in germany, chancellor merkel losing some of her power, though she has regained it within the last few days. but obviously, her coalition has changed quite a bit through these elections. i would argue we are in more dangerous water in europe than we have been four years. isoline: stephen isaacs still here with us. we were talking u.s. politics. i how much of this backlash is a concern to you from an investment perspective? >> absolutely, this is the core thesis. we reached a high water fmar mak for liberal thinking. i am concerned that going forward, we are not quite sure where the next big crack will come, whether it will be italy, france, germany, or one of the
smaller nations in western europe, but we do know it is coming. that means they will do longer be the ability to trade, the free movement of labor and hence, for markets that have dined out on this low-inflation liberalized cocktail for a long time, there are many challenges coming. guy: why is the market not pricing it in? >> i think people are still in denial here. there is a sense from the political elites that surround them that somehow, this is going to go away. fink was claiming the german coalition would change. that it hasn't. the protest party in germany barely got 12% in the berlin elections 10 days ago. we still have not seen a big breakthrough yet. i think it is going to come. we don't know when it is going to come or how it is going to come, what i think it is not being properly discounted.
caroline: i was at an event yesterday. wolfgang schaeuble was talking out there. he said, we did not ask for many of these policies that call for quantitive easing. >> at a time when they your group members were discussing, i think it is called qe, i don't know what that stands for. i said back them, i only want to tell you this today. if you implement this policy and you as a banker independent and we can't criticize this, if you implement this, we will automatically increase german surpluses and he will make me the responsible. i said from a star, don't do it. now they did it. and now i am hearing, that germany's surplus is europe's biggest problem. that is not the problem, by the
way. it is not exactly a great vision for europe. that is why such comments won't shake us. what can germany do? does it come down to fiscal spending? what can they do to pull the rest of italy and france up? >> germany was against qe. wo former bundesbank associates resigned over this issue. your clip is a fascinating one. we have got this constitutional case going for the court now, which is making the point that one of the ways of getting round that specifically prevents the mustmonetization is there the limit of the amount of bonds that can be hot. this is a very hot potato in
a very feeble atmosphere in germany with the refugee crisis gathering steam. i don't know how it will end, caroline, but i can see it ending very well. how are they going to justify class,ng in an asset where many places, yields negative rates. guy: many people are probably of the view that the risk is too high. regulatory issues get in the way. stephen isaacs will stay with us. what is in store for post brexit britain? we will talk to xavier rolet about the deutsche bank merger. get ready for the next big event stateside. trump and clinton are preparing for their next big debate. this is bloomberg.
e-mail? i wish we could just play that over and over and over again. that was democratic presidential money hillary clinton appearing -- nominee appearing on "funny o r die" yesterday. someone argue, a political mistake. she is still alive and kicking. maybe it is a message. speaking of politics, hillary clinton and donald trump have been locked in a battle for months now. the first debate is coming up on monday night. stephen isaacs, our guest, says the debate will be like having a ringside seat at the coliseum. this will be got a tou gladiatorial, right? >> it will be an absolute theatre.
crucially, for deciding the election, possibly 40 million viewers will have not had an opinion. most people in their day to day lives have barely glanced at it. so, this is the big one. what can they both get out of this one? hillary has got to look robust. she has to look like she can stand under the spotlight for 90 minutes and handle the pressure. let's hope she can. trump, he is got to control himself. can he be presidential? can he avoid any misogynist remarks? if the two of them can achieve that, they might land a serious blow. i think it will be crucial. i am watching it. caroline: crucial for markets? will we see any particular reaction if any particular candidate comes out on top> -- on top?
if donald trump comes out on top, will we see a sell off? >> a few weeks ago, the prospect usedtrump presidency was as one of the main reasons why stocks came off. i don't think it will make a difference to the markets just yet. the presidential election will, though. guy: are you in favor of a trump win, right? >> i am not an american voter. i think it is going to happen. guy: is that a disaster for global trade? >> i'm not sure. for the american economy, and markets that surround it, i think it will actually be very positive, very positive for the dollar.
anna: welcome back to "on the move." let's bring you more news in terms of pmi data. is stronger than expected, 54.3. this is a per luminary september reading, guy. -- this is a preliminary september reading, guy. it is weaker for germany and stronger for france. ist's look at how the euro trading. it was indeed moved by the french number. the euro is coming off of previous highs. that send the euro-dollar higher.
services really do fall short of expectations. it does seem like a little bit of a mixed bag for the september readings of the economic data in europe. let's get to our top stock stories now. nejra: caroline, i and starting with two of the biggest losers on the stoxx 600. this stock has fallen as much as 17%. this danish drugmaker says the alzheimer's disease drug failed in the final stage study. it missed the main and secondary goals and a study. 's studyy, lundbeck found the patients on the drug did no better than those on a placebo. two additional studies are expected for the first quarter of 2017. plunging on this news as well. moving now onto polymet
al, has dropped the most since 2014. holders were to place about 25 million shares. today, we get the news that they are selling 30 million shares each at 975 pence a share. we have seen the share price drop. this stock is falling on the news today. u.k.mmon, we have got homebuilders gaining in general, but it has been upgraded to a buy. as i said, homebuilders were some of the best performers on the stoxx 600. these are certainly the best performers on the ftse 100 as well. guy: investors that global investment bank in london are expecting that u.k. to be stripped of its $575 billion in trade. they are trying to deal with the fallout.
xavier rolet is with us to discuss what brexit means for london as a hub. good morning to you, sir. >> good morning. guy: we do hear increasingly that the expectation that euro clearing will be moved out of london. you have indicated in the past that you think that will be difficult to do. what are your clients telling you? are they preparing for this to happen? >> obviously, you were right to point this out. this speculation pronouncement by so many stakeholders, including political stakeholders. this business is driven by customers. we are an infrastructure company. i would add that last year, our clearinghouse in london, the london clearinghouse, cleared euro320 trillion euros of denominated securities. so, this is a rather large business.
but i would also highlight what i have said already and this is a technical comment, that we do not clear euros separately from other leading securities. in fact, our people fund clears the world's 17 leading currencies, whether you look at interest rate products or others in the same default fund. last year, the london clearinghouse was able to compress, to the benefit of clearing all these currencies, all these interest-rate swaps, in the same default fund. it was able to compress $320 trillion across the 17 currencies. that saved the investment banking and investment management industry $25 billion of regulatory capital through the physical elimination of $110 trillion worth of risk.
this is the power of central clearing. clearly, the economic incentives to customers to keep those benefits, to keep this business together in a single location, are extremely compelling. we think this will remain the place in the future. you cannot separate euros from dollars from asian currencies that are cleared in this central default fund. caroline: we know from the brexit debate that sometimes, economic arguments come secondary to political arguments . how many jobs might be on the line if we did indeed see the french have their way? >> again, i can't comment on what politicians are saying. ultimately, the process of the u.k. leaving the european union is a completely complex one.
i would draw your attention to a very interesting study published by the house of lords. thisublished on may 4 of year, prior to the outcome of the referendum. it highlighted the incredible, legal complexity of the process itself. i will put this aside. all i will say is ultimately, customers are driven by what makes sense economically for their business. otherare indeed, locations -- caroline: but our jobs on the -- but are jobs on the line? >> certainly. in the past i have expressed that if you look at the real economy, this is about helping the banks relieve their balance sheet of a lot of exposure. we estimate conservatively, that had a very minimum, 100,000 jobs in risk management, compliance,
middle office, back office, support functions -- not just in london, but up and down the country -- are implicated in supporting this business and clearly, could be at risk. the point is, there are very few financial centers around the world that could accommodate such a global business. the notion of separating, for example, the clearing of euro denominated interest rate swaps from the u.s. dollar-denominated interest-rate swaps does not make any sense. and it cannot be achieved, even from a regulatory or legal standpoint. guy: cannot be achieved. let me paint another picture for you. there are such affinities that surround this clearing. but, we could lose the lot. we all remember what happened und contract moved
overnight. these things happen fast and can take a lot with them. we talk about moving euro clearing, that would and it therefore, be logical if that is the political direction, for everything else to go with it? >> is the possibility. what the point i am making is that you cannot separate the euro from dollars. is it possible the whole thing could move? of course it is. i believe it could be the only logical alternative to london and that came to pass, the new york market. as we have heard already from clients, the physical possibility of moving, as well as the economic consequences, are rather complex. this is, in fact, a very complex industry and business. and in a simple pronouncement on
the basis of changing political realities, of course, carries some weight, but the situation on the ground is in fact, far more complex. customers today derive a substantial benefit from the efficiencies that have been created by our ability as the london clearinghouse to clear the world's 17 leading currencies in the same default fund. so, of course, anything is possible. over the coming years, there will be, no doubt, a extensive amount of discussions and negotiations involving politicians and regulators. the situation on the ground though, the nature of this business, it is a very sticky business. caroline: give us a sense of the progress of your own ongoing merger discussions. this is of course, something thrown into the spotlight with the brexit repercussions as well. are you still optimistic about that deal? is there a plan b if they are
not happy with the central location, the headquarters being in london? >> first of all, i will reiterate that as these transactions operate under the u.k. takeover rules, i am not in a position to comment beyond a public disclosure that has already been made. it is clear that at the time this transaction was considered, the possibility of brexit existed. so, this is not news in a sense. and i will also highlight the point that we frequently make. the terms of these transactions are set under the legal framework. they are not subject to substantive change, whether it is governance, topical arrangements, or other arrangements. but i do believe that the to ourc results
customers to offer a globally competitive headquarters based in europe, offering very significant savings and our customers to offer a globally competitiveefficiencies -- exam, like cross marketing between listed derivatives and otc derivatives --and many other substantive improvement to the current conditions, in which financial structure and infrastructure countries operate provides a very powerful incentive for our customers to support this transaction. in the end, this is what really matters. forthe ability for us to operae competitively and globally. so, yes, i am optimistic for the future of these transactions to succeed. guy: the ceo of the london stock .xchange group, anna xavier rolt up next, erdogan says credit ratings are political. we will bring you our interview with the embattled president, coming up next. this is bloomberg.
are outperforming. they dominating the leaderboard on the stoxx 600. on the downside, your biggest loser, par the pharmaceutical company that is concerned about u.s. competition. they say they will defend themselves against a civil complaint. filingre 35 civil complaints. let's get to the bloomberg business flash. thank you, caroline. the billionaire founder and majority shareholder of u.k. retailer sports direct has taken over as the chief executive. ceo move comes after the resigned yesterday. the company has come under heavy criticism for the way it treats its workers. detailsays the personal of at least half a billion people were stolen in a 2014 hack. the hacker was a
"state-sponsored actor." the stolen information could include names, phone numbers, dates of birth, and the three questions and answers. -- and security questions and answers. this revelation comes ahead of verizon's $4.8 billion acquisition. to group has agreed collaborate on projects with sony's film unit. this is part of an open-ended partnership. this is as the chinese tycoon builds on his ambitions to expand in hollywood. this is your bloomberg president/. caroline -- this is your bloomberg business flash. caroline? caroline: turkish president erdogan says the country's central bank was right to cut rates again yesterday and will continue to do so. this came just hours after the
overnight lending rate was lower for a seventh straight month. erdogan told our editor in chief that lower rates are needed to get credit. cutssee the central bank as they study, careful, and balanced cut. because it is not right to make sudden moves, up or down, that could contain some violence that could create a tremor in the economy. the officialt to to continue this steadily. right now, this demonstration of the central bank, they have been carrying out cuts, taking into consideration the special interest rate policies of the government. and i think this is an important signal, especially for investors. bankse is that the other
will take the signal that the central bank has given, theat heded.so h in a country where there is no investments, we can only talk about the movement in a country where there is investment. i am pushing this issue, but we still have not seen the speed and stability in investments that we wish to see. if interests were low, investors would get credit immediately and start to invest. when interest-rates are high, they cannot invest. ourt now, despite this, investors are making investments.
i say, let's look at america as an example, europe, japan, and accordingly, let's bring interest rates as low as possible. caroline: now, a quick note. earlier this morning, one of our graphics said the turkish president hoped for a week or aeaker lira. that is not the case. guy: let's stay with bloomberg and we will bring you more of that interview with turkish president erdogan. let's turn our attention to politics in the united kingdom. boris johnson expects there will be an article 50 letter in the early part of next year. he spoke with bloomberg. nejra joins me in the studio. what did he say exactly because this is causing confusion? nejra: the stephen he made -- that statement he made, this what he saidadicts
when he spoke to the italian foreign minister in florence. timingnot just the of the triggering he mentioned. he said it could be carried out in less than two years. the timeframe is the clearest signal given yet of any member of theresa may's government. previously, they have limited themselves to saying this will not happen before the end of 2016. theresa may's office has responded to his comment, saying trigger will not happen before the end of 2016. she says she needs time to build up a team of advisers, form a negotiating staff. angela merkel has not really opposed that. before meeting her, he said, she should not wait too long. caroline: it is interesting. in bratislava, tusk let the cat
out of the bag. it seems like it will be early 2017. talk to us about u.k. politics. the labour party will announce the results of the leadership election tomorrow. nejra: that is right and that is ahead of a party conference happening on monday. this vote happen on wednesday and we get the results on saturday. jeremy corbyn is very much the favorite winner of this leadership contest. although he has had a lot of opposition within the party, he lost a confidence vote. he had a number of his shadow cabinet resigning around the time of brexit. there is a a lot of grassroots support, which is expected to carry him through. we have an exclusive interview with anna edewards and jeremy corbyn. he said, "we reserve the right to impose article 50." it will be interesting to hear
if we get any more comments on that front. guy: by monday, the leadership battle will be over. we will be live at the u.k. labour party conference, which is taking place in liverpool. we will be in you our weekly next?"brexit: what is today, we are going to speak to and founder, key brexit supporters. up next, the central banks take center stage. we will bring you the chart of the hour, next. this is bloomberg. ♪
guy: welcome back. you are watching "on the move." this week promised us much in the way of central-bank policy, but it delivered little. from a market perspective, we have seen some fairly big swings, but perhaps not what the central bank was looking for. let's start with this chart. this is the boj blitz. that was the weakening, which did not last long. you can see the flattening of the curve as well. this signals to the markets that the monetary policy has run out
of steam. that is the way people are taking it. caroline: just cannot manage to drag that yen lower. i have this nice little chart here. i love the headline here. check out this surge we have seen over the last efew months. february, up 200% in terms of share price. the commodities outlook has been hurting. we have seen a rally in metals this week am helping angela merkel. they will be having a man on board who can help cut that debt pile all the more and make anglo american great again, maybe not everybody's favorite phrase. guy: let's talk a little bit. the central bank there, donew with cutting rates. let's show you what is happening here. you can see this lead we are seeing there.
francine: we round up big week for the world's central banks. tellsent erdogan bloomberg that turkey's central bank should continue to drive rates lower. our exclusive interview. what have we learned about how and when the u.k. will leave the e.u. we speak to the cofounder of lansdowne. welcome to "the pulse" live in