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tv   Bloomberg Daybreak Europe  Bloomberg  November 3, 2016 2:00am-3:30am EDT

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that a stronger hint december could be the time for a hike. fears about the election continue to weigh on markets. the dollar heads for its largest losing streak in two months. silly in the spot -- selling in the spotlight. how will the bank of england react? earnings from credit suisse and socgen. the headusively from of the second-largest lender in
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france. >> we have seen in the longer the same policy for the coming election whether it is in the western europe. we try to limit the amount of risk. very warm welcome. and manusd by yousef: cranny. yousef has the numbers coming through from ing. have underlying net results coming in at 1.33 6 billion euros for the third quarter. underlying profit at 1.3 4 billion euros. at net income is coming in
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1.35 billion. the underlying profit beats the estimate my the expectation which was at 1.15. this is undergoing an ambitious investment plan in terms of moving toward a more tech centered outlook and at the same time, cutting back in terms of the cost efficiency. they're looking at cost reduction of $1 billion by 2021. you looking to get more details on that. is -- we will have the cfo from ing group live from amsterdam in 15 minutes time on bloomberg: daybreak europe. suisse delivers a net loss.
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this time last year they made under 800 million swiss francs. the net income continues to be the capital ratio. themselveso get pegged with ubs. what we're saying at the end of june, the capital ratio tier one was 11.1%. it is ripping up the rulebook and putting this tank to basics. if you think about it, he has been in a -- in the job for a year. they wrote off $1 billion in terms of risky securities over six months. this is a restructuring story. you've got everything going on. the editors are joining in, the commentary from the marketplace is available. the banner headline for credit suisse is the third quarter, 41 million swiss francs have been lost. the market had estimated a loss of 150 million swiss francs. we will bring you to our
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conversation with the credit suisse ceo at 6:50 a.m. london time. [inaudible] 131.8.imate was for there is a share buyback, this is the critical point. that is what they are going to start doing and they have a strong net income, 3 billion swiss francs for the first nine months of the year to date. in terms of breaking down the business, the share buyback my will focus on that, the maximum they will buy up to one billion swiss francs of their own shares. in the buyback and the beat for them. those are the two, a beat for both. the cfo joins us for his first interview of the day at 8:45 a.m. london time.
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make sure you stay tuned for that. anna: the numbers coming through from dsm. let's get to those numbers. they have beaten from continuing operations excluding various items. first an estimate of 307 million so beating it. the revenue side asked me broadly in line. the revenue from continued operations, 2 billion euros. an estimate of 1.98. overhare price was roiled trading data. taking this recommendation down a few notches, they have further downside. also little m&a possibility. we are talking about what the materials cost the company as well. no doubt will -- all that will feature in our conversation at
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6:30 a.m. u.k. time yesterday, we continue to do with nervousness around the u.s. election and you have the risk rate up. >> there is angst and uncertainty. let's take a look at what is dominating those lines there. the bloomberg dollar spot index, down .25 of 1%. investors piled more money into the safe haven trade. upo gold continuing to ramp of side currently, up for a six-day, $1301 an ounce. on the rebound that we are seeing in brent crude, up 1.1% but bear in mind it was down as much as 2.7% on wednesday after we got numbers out from the eia which showed the biggest gain in terms of crude inventories since
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1982 when the estimate was for a gain of 2 million barrels last week. we have got a lot more to get through. anna: let's get to more of the business news. boost hedgesors against the possibility that donald trump wins in the presidential election. --l suggests the candidate polls suggest they are tied but clinton leads trump and projected electoral college votes. president obama has made his most direct comments on the clinton e-mail probe, calling the investigation a political diversity but stopped short of criticizing fbi chief james comey. societe generale has reported third-quarter profit that is -- that went over estimates. how the lendered
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is dealing with negative interest rates. magnitude the kind of based on the business which is around a billion euros. when you look at what [indiscernible] it is in hundreds of millions of euros and not dozens of millions. we are able to post revenue profits. we have benefited from the good credit which means low risk. angie: it is super thursday for the bank of england. since they are last quarter reporting, the holy picture of the economic reaction to the referendum has emerged with growth cooling less than expected but inflation picking up following the town's depreciation. governor mark carney and company
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will have to reassess their assumptions as they prepare for the start of formal brexit negotiations next year. a panel of senior judges will roll this morning on a challenge to prime minister theresa may's plan to begin britain's exit from the european union. the ruling will be issued at london's high court at 10 a.m. u.k. time. may wants to control over how and when the country leaves europe challengers say she must initiate a vote in parliament before she can trigger article 50 which does begin a two-year countdown to brexit. fans of the late music legend prints are a step closer to finally being able to listen to his song on streaming services. universal music publishing groups has acquired exclusive rights to his entire catalog including hits purple rain and kiss. his recordings will be dealt with separately and deals for both are needed to make the music more widely available.
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--versal could help rocher broker to license those tunes. it is the chicago cubs winning their first world series in 108 years. atng the cleveland indians 10 innings in a game seven thriller, ending the longest title drought in baseball. last time they won the world series was 1908. global news toy for hours a date howard by more than twice etc. journalists and analysts in more than 120 countries. you can find more stories on the the website.tha guy: in asia, julia has the details. >> we have a stronger yen and bonds in asia rising and a lot of money going in, that gives you a picture of what we have seen in asia today. certainly a lot of risk of
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sentiment. ,ost markets are lower australia and new zealand closing lower but there has been some upside coming through in china. the shanghai market in late trade up .9 of 1%. they beat expectations so we have seen some upside coming through in that market. and korea also doing quite well. won sold off quite significantly. on concerns it has come back today, also some profit taking in the dollar. that has sent the company higher. japan closed for a public holiday. just looking at new zealand it is in correction territory at a four-month low. continuing losses on that market . australia closing flat, they had trade data released. the trade deficit was narrow on higher commodity prices. having a quick look at the end, it has pushed through two 103.
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30 day a look at the chart, you can see that the yen is holding back to levels we have not seen for about a month. really holding at about the one-month high against the dollar. gold also in focus. the gold price up by .3 of 1% in asian trade. the back of what the fed did overnight. we have seen a lot of investors a bit shy to take on too much risk today. manus: you are right, it is all about risk and how much you propose to take. expectations are for the december u.s. hike increasing even further after the federal reserve let -- left rates on hold. there was no press conference. but the fomc statement said that only some further evidence on inflation and employment was needed before the move. officials three
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dissented, they stuck to their guns. they opted to support the decision. joining usow on daybreak, the global head of x -- of ethics strategy. strategy. we are near a 12 month high. my question to you is much what have you penciled in for rate hikes next year, what is -- what does that do to the dollar story question mark the market reckons we will see 1% in three years, a terminal rate of 1% in three years. there is still this connection, isn't there? guest: good question. all the interest rate hikes as far as the fed is concerned, we have the december high which is pretty much everyone else's estimate as well. and then we have got another couple of rate hikes going into 2017. as far as the dollar, let me just stress and i go back to my
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previous story that we have been pushing for about a year now. and that the dollar has priced comparedre aggressive to the rates market. in that respect i do not think the october rally that has seen the dollar being sustainable, i expect that we will revert to a month-to-month depreciation because the dollar is way ahead of differentials. >> is that because you do not see inflation on the horizon as much as some? this is the average of what we have seen. this is not managing to get back, they wanted -- where they wanted to be printed inflation has increased somewhat. guest: i think this is a fantastic question. over the past couple of years our understanding of the town between inflation and the extreme -- exchange rate has
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been extraordinary. inflation is bad for the exchange rate. it ruins the value of your currency. to the extent this leads to higher nominal interest rates it gives a boost bit of her in the -- over and above that, it is a bad thing for flow. and for the exchange rate. inflation will pick up in the u.s. but the thing is that there are two things playing out. we are still living with the and is still5 quite high. secondly the fed is feeling -- which means that nominal rates will not move as fast as inflation over the next year. guy: what happens after december? at december seems to be pretty much set. and how -- how many hikes do you expect in 2017? hikes we expect to rate
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in 2017. i think that is largely, on our notion of an ongoing recovery but at the same time, a cautious stance. --o back on my [indiscernible] against the trade weighted dollar. in order to justify the dollar at current levels i would have to be far more aggressive. i do not think that is happening. you. thank plenty more to discuss with her guest. some highlights for your day ahead. we get a snapshot of britain's dominant service sector with pmi data. then the bank of england with a policy decision along with growth and inflation forecasts. that is at midday. half an hour later, governor mark carney holds a news conference.
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at the same time, u.s. initial jobless claims coming a day for the for nonfarm payrolls following 90 minutes later by factory and are bowls. -- durables. yousef: we will see if market share holds up as markets break. we are getting pounded with u.k. inflation expectations at their highest level in nearly three years, all eyes on the bank of england. we are live on wednesday. and bullish on bullion. the u.s. presidential election is keeping a floor under gold prices but what happens after november 8? .e speak with the ceo of stay tuned. this is bloomberg. ♪
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manus: ing group said their
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profit rose 23% for the third quarter. it was helped i higher interest income. we are joined by the ing cfo. always great to welcome you on daybreak. you and i caught a couple of weeks ago. the numbers are good and you have a 22% rise in your third-quarter profit. income is rising. you have -- a very simple question. how sustainable is this trajectory for ing? guest: good morning, good to be on your show again. i think you have seen when we stronghat ing has a martial momentum. our strategies clearly working. it is translating into growing primary relationships with customers. able to continue to grow. we will be able to deliver
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earnings per share growth in a low rate environment. with the momentum we have and the program we announced yesterday. yousef: how much progress are you making in getting that? announced them a month ago. we will invest 800 million in the digital transformation across three main pieces, creating a digital channel, digital bank. which is the biggest part. we're also going to invest in what we call [indiscernible] it will take a number of years for that to come to fruition. prepared.well
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yet another program on the same trajectory. that is why our -- this quarter has touched 51%. manus: that is an envious -- enviable cost. we were chatting about the landscape and you made a point, we have no branches in germany. i going to pick up business on the bank -- back of deutsche bank's rumbles, restructure, what level can you grow the german business to? what are you doing in italy because that is the same market, it is dislocated and there is an opportunity. clarify me on both those, one is the current market and the other is the opportunity. guest: you're right. we are growing strongly in germany. probably where our model is most developed.
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branches, strong commercial amentum generating over billion of profitability. italy is a market as well where we should do well. perhaps we would have liked to but an opportunity for the future. another market where digital proposition does stand out as being something that would resonate. we see that as an opportunity to develop along with other markets. not just italy but spain is one of our strongest markets. other markets like poland and romania where we are also investing, where we do see strong growth potential as well. there are number of markets outside germany where our digital model and growth, economies are growing. potential toy of succeed in go further. what can that rise to going forward? year we grew 20 plus
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percent in profitability and exceeded one billion. we are not talkingmall numbers. we are talking very significant branches. probably the second biggest franchise we have. with a strong commercial momentum. onbranches, totally based the digital platform. we think that is the future. i confident about the ability to continue to develop that franchise. manus: there is a shift in these yield curves, shift in the bond market. do you buy into it or do you think it is a five by night moment in the bond markets? small uptick, that is good. would not claim victory yet. we are looking at a sustained low rate, we're planning on sustained lower rates after
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2020. we set ourselves up to be able to grow earnings per share in a low rate environment. we believe we can do that by virtue of the country and investing into the future. i think that is a powerful proposition. we are delivering returns and equities. here we are an 11%. we will grow earnings per share to a low rate environment and we will achieve returns above the cost of capital. to tempt youl have to come into the studio. with a cost income -- to income ratio like that. thanks for being with us. about some oflk the earnings. credit suisse posted an unexpected third-quarter profit. that is one of the highlights we have had. the ratio rising as well as the credit swiss third quarter. the estimate had been a loss of
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150 million. market activity remaining influenced. we will talk vitamins by dsm. this is bloomberg. ♪
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anna: welcome back. more appetite for the japanese yen this morning as investors give an anxious wait for the u.s. election. let's just what it that way. a lot of appetite for safer havens in today's trading session over in asia. we are waiting for numbers coming through from various corporate's we had a host of earnings from the banking sector in particular, looking for numbers out of a number of corporate. you got some numbers from them. in as wehey're coming speak. adidas confirms fiscal year forecast, third quarter growth
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coming in at 47.6%. a reminder that adidas is in the middle of a turnaround that has reignited north american sales and boosted that profit. at 575sees net income --lion euros to one point 1.0 billion euros. underscores third quarter operating profit, 560 3 million euros versus an expectation of 554.9. that is a mess on the third quarter operating profit. before the earnings came out, the consensus rating was 23 by --out of the 41 had a buy. daybreak never far from a
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brexit issue. hitting the that is top of the addition. what am i talking about? it is the cover story. they will decide today whether theresa may can trigger britain's exit from the eu without a parliamentary approval. to get into that action, you want to be able to object from the back benches in parliament. it is the way they work down there. anna: we will practice. if next story, yesterday's one seed decision very much a current issue for the markets. the committee left rates on hold while backing the case for a hike next month. from up to $.78 yousef: we focus on earnings from some of europe's biggest banks.
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the ceo continues to cut costs and illuminate jobs. such an also beat estimates with trading gains cushioning the sle at the french consumer bank. anna: let's talk over earnings. we have dsm standing by, they have maintained the outlook for the company after third-quarter revenue beat estimates at 2 billion euros. joining us, the ceo. thank you for joining us once again. only recently you raised your guidance for the market. seem toe today but you be indicating you could come into or the top of the range. is there upside risk in terms of the performance at dsm for the rest of this year? guest: good morning. you're absolutely right. i am happy to announce a strong third-quarter upon which we were able to reaffirm our for your guidance. we started the year with low guidance at the half. growth in thee of
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low to mid teens. now that we have nine months under the belt we were able to fine-tune that. it is the same outlook which is what we expected to deliver at the midteens growth level. manus: very good day too. you spend money on promotions in the u.s., what them a graphic is the pick up on and how is that doing and is that going to contribute to this situation? absolutely right. we have been spending a bit more this quarter on marketing. to the omega-3, what is important is you have different qualities of omega-3 out there supplements, we launched this week a brand-new product, a three see higher concentration which enables you intake a make a three smaller capsules than the large ones we had to swallow. that will be helping us in due
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course but currently, there is the strong momentum across the board. this is only one portion of it. the: can you tell us about rising of vitamin a and vitamin d? jpmorgan cut their recommendation on your stock just last week from overweight or underweight. talk about weakness in that pricing and i wonder where you see it going and how much chinese competition is affecting the market? guest: absolutely. what we are saying since the start of the year, a very positive background momentum among vitamins overall. we are the biggest producer in the world and therefore there is lots of different moving parts. what we're seeing is the markets are generally quite firm. it will overtime feed into her results. we have a time lag between the prices that move out there and what is reflected in the contract we have with their clients. it is overly positive momentum. it is a spot market.
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there can be a bit of turbulence short-term overall. manus: it has been a huge move in times -- in terms of m&a .ctivity in the chemical space what is your perspective in terms of the implications for your business on the consolidation that is going on in terms of the input side of your business? i presume you are making reference to some of the deals [indiscernible] space. on focusingation is on our operational efficiency, on delivering our three-year strategy and the ecosystem around us is, one aspect that is not having a great consequence at this time. as you can see from our results, we are continuing to the --
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deliver in line with our strategy and ahead and that is our key focus going forward. the ecosystem does what it has to do in the meantime. when jpmorgan published that note just last week, when they downgraded due to underweight from overweight, i am sure he will give me the message you let the share price take care of itself. is there anything that you want to point out that you think they might have missed in terms of the business, they said the valuation premium you had was not justified. : the best thing i can do is point out if you look at the quarter where we are, we have had excellent momentum throughout the year. it continues during this quarter. we have growth coming out of our nutrition and materials. it is translating in a 13% plus good cashta
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generation. we can always, a lot of people focused ande, we're delivering on our strategy and that is the key message i would like to share this morning with you. and a: thank you for your time this morning. we appreciate it. dsn.eo over at yousef: the latest comments coming from the central bank owner. he is saying the central bank liberalizing the exchange rate and the current exchange rate determined by supply and demand. he is trying to tie down this front in terms of being able to put the pound on either a free flow or a dividing -- evaluation to secure a $12 billion loan from the international monetary fund. it is not going to be long until she expects more progress on
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that front. we will await more details from the central bank in terms of how the new regimen could look like. anna: let's talk about what is happening in the u.k. we get the bank of england's rate decision. the decision comes at 12 noon london time with mark carney's press conference. are due to rule on a challenge to prime minister teresa play -- theresa may's plan. the ruling will be issued at london's high court it 10:00 a.m. u.k. time. with more, joining us from the a very goodand, morning two. economists not expecting a rate cut today. let's do with the bank of england first. >> that is right. economists expecting the bank of england to keep its rate and changed at 0.25%. they are expecting them to you -- vote unanimously.
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they also signaled we could get further rate cuts this year. what has changed since august is we have had a better than expected growth in the u.k. and also sterling, 18% drop since brexit has fueled inflation expectations. you have higher inflation but if you look at the 10 year break, those inflation expectations at a three year high. that is likely to keep the bank of england on hold today. in terms of what happened next year, what bloomberg intelligence is saying that we are probably going to get a wait-and-see with a bit of a dovish i.s.. the bank of england will want to give its actions -- options open. that is the sort of expectation we will get. economists are expecting the boe to upgrade its inflation and growth forecast. anna: before we hear from the bank of england we will hear a
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report, possibly significant. we will be watching the pound to see if there's reaction. a court ruling on theresa may's process. >> at 10:00 a.m. u.k. time, three judges are going to roll whether they has to be a vote in parliament before theresa may, the prime minister can trigger article 50 and therefore start the brexit process. the thing with today is the losing side is likely to appeal sometime in the beginning of december. we are not going to get a final decision until january. the reason that today is rulesant is if the court against the government we could see a little bit of a rise in sterling on expectations of a softer brexit but also the whole process is likely to be delayed. we could see delays of months of not more. it will be important to watch sterling, the ruling coming at 10 a.m. and it is likely to come
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in about 30 minutes after that. it will be a binary ruling. the answer will be very clear. much myank you very joining us from the bank of england, a lot to watch out from the u.k. front. we will bring you the decision at 12 p.m. london time followed by mark carney's press conference. we will bring you everything we hear after 10 a.m. this morning. we have been through a lot of earnings but let's return to this topic of what is happening here. it is hard to work out with this ruling might or might not need for the a process of brexit. few people suspected this court ruling could stop brexit but there are many who believe it could delay it. uncharted territory. way to make a any
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reliable assessment. is -- it is all about u.k. isre that the going to take. i go back to the beginning of may'sr on the back of speech. it was not just about the access to single markets, it was about whether the u.k. is going to divert away from what it stood for for a number of decades. that is why you have seen the lowering in sterling. from here, i think we will see some volatility. has proven to be a strong support level. it will -- we will see deterioration. manus: i want to bring a couple of headlines coming in from the egyptian central bank governors.
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rates, egypt raises it by 300 basis points. the governor says the rate will be determined by supply and demand. forooks like we are going [indiscernible] it takes trump to go in the white house and europe to cause a substantial rally. everyone else -- is that the case? guest: i struggle to see any poundnable rebound in the going forward. i think it is pretty clear. we have had an outside surprise in the u.k. and gdp data. the market looks through that. the assumption that the market goinging is that we are to see some deterioration further down the road. even if we do not see that, there is still 20 of political
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and economic uncertainty for the next couple of years. the big question then is, you have a country with a significant deficit that has been financed by [indiscernible] over the past for five years. what happened when the flows stopped coming in? i think this is all worrying the market. you're still staying with us, we have plenty to get through on the program. a surprise profit. we bring you our conversation with the bank's chief executive officer. this is bloomberg. ♪
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yousef: welcome back. we are more details and now the number is out for to what extent the central bank is going to be
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valued. 13 egyptian pounds to the u.s. dollar and we put this up on a chart see you can get some context as to where we stood and where we stand. you are looking at the white line, that is your egyptian pound spot rate. we charted the non-deliverable forward. how traders expect the currency to trade 12 months are now which tracks closely the rate in the egyptian market. you can see it is a little over the midpoint. also the central bank raising interest rates by 300 basis points. also the decision aiming at ending the black market that egypt has injured in terms of the dollar shortage. manus: you have a look at this. the is the return in [indiscernible] credit suisse is down. and delivering a surprise profit of 41 million swiss francs. 39%, theisse is down
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market had penciled in a loss of 150 million. management delivered 241 million. you are seeing that litigation charges come through but it is not a big issue for the bank according to a spokesman. take a listen. >> it has done very well, it is the fourth quarter of year on your progression in switzerland. profit has been above the same quarter. portt point. that is deliberate because we have been exiting a number of relationships with asset managers. we're focused on quality, not just growth at any cost. we do not hesitate to slow down the growth or eliminate relationships if we think they
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do not meet our standards. that is a deliberate exercise where we are making sure that the external asset managers we work with me dollar standards particularly our compliance standards. that is what you see in the numbers. there's good progress. >> you're confident that the ipo is the best solution despite making their capital targets without it. it is part of our plan, we are working [indiscernible] we have set up legal entities with switzerland which should go live in a few days. withe pleased [indiscernible] who has agreed to chair our swiss business unit. he is a real heavyweight of this was financial sector.
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we are working hard to be ready are swiss unit in the second half of 17 but that is market dependent. we are always very careful to say that. is market conditions permitting. >> you have said that there would be more cuts to come in global markets. where, how, how much? been rightmarket has sized, we are functioning well billione ceiling of 60 which is where we want it to be. we want it to be there quickly. now the message to global markets is focus on what you do best which is to serve your clients and there have been some good spots in the quarter. 59%.edit where we ended up we cut down the rwa. we held our rank in equities in
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america which is up in strong,' very performance. we have been under pressure in a equities. [indiscernible] it is challenging. it is dominated by political uncertainty, we have the u.s. election in a few days, we have the italian election and the french and german election. it is going to be a time when political events will have a major impact on behavior of investors. we are in a very cautious stance. of course ready and able to take
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[indiscernible] a very cautious stance. >> does that mean you are expecting a lot more volatility to lead up to this uncertainty? guest: that is what we have been seeing the last trading days, you have seen volatility spike. it is quite likely but there will be unexpected events and that always leads to an increase in volatility. volatility is a scenario we are prepared for and we think is quite likely. >> over the weekend, you said you would be willing and it would be a great idea to cost share with other banks. we have had a lot of investors asking details on that, can you give us any detail on your thinking of how you would share costs with other banks? idea that is not new. i'm not the first one to talk
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about it. it is clearly difficult which is why there are not that many examples. we are looking at that area among many other things we do to drive costs down from wholesale front to back restructuring. the possibility where we do not is a good ideae when he can be implemented but we do not want to make any big announcement. it is just an idea. where looking for proof of contact so working closely with seetank to see -- bank to if this is a candidate for implementation. we saw the one quarter phenomenon, that happens over many quarters. we think it is an avenue worth exploring. let's get the
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conversation on what is weighing heavily on the shoulders of investors. talk us through your currency calls for the election. guest: right. there is some uncertainty but there are some get that clinton victory. in that scenario i would suspect we would see a knee-jerk reaction higher in the dollar but there is going to be a refocusing of fundamentals. i think the dollar returns to a multi-month depreciation trend. in case we get a trump victory, our call is that we are in the near term until we get mor clarity. we will see some risk off. and on the back of it, i would expect low yielding currencies against the dollar to rally. i would expect the ill effects to come under severe pressure. we like the canadian dollar largely because we think it is
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very much undervalued and in case we get a clinton victory it is going to rally. anna: thanks for staying with us. supported by that nervousness around the election. we will talk more about that. ♪
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yousef: the fed holds fire, but gives a stronger hand that december could be the time. fears about the u.s. election continue to weigh on markets. the dollar hedads for its longest losing streak in four months. sterling, in the spotlight. how will the bank of england react to higher expectations? and could a ruling at the high court delay the brexit process? and banks are back in focus. aedit suisse's ceo cites
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challenging outlook, despite a profit in the fourth quarter. generale follow suit. oudea tells us about the biggest risks on his radar. >> the same policy for the coming elections, whether they are in the u.s., or in europe to limit the market risk. yousef: welcome to "bloomberg daybreak: europe." i'm alongside anna edwards in london and manus cranny in dubai. manus: a little bit of breaking news for our viewers. a popular product down here, the third-quarter profits net profit $65.6 million.
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that is up from $42.3 million. e,e total cash costs per ounc this is efficiency personified, $663 million. the gold output rises on a quarterly basis to 300-1000 ounces. welcome to daybreak. you must be a man who sits there and says, manus, my glass is half full. can you take the cost down any nce?her from $663 an ou >> our target is to get down to $630 by the year end, and we are certainly on track for that. it is pleasing to have all of the arrows pointing in the right direction. ad we are well set up for
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good finish to the year. anna: let's talk about the gold price because that is very typical at the moment. a lot of nervousness in the market as we are a few days away from the u.s. election. i am sure the thoughts do not cross your mind, but it affects your business to have the nervousness in the market. what are your expectations for the gold price once we get through this nervousness around the election? mark: we are going to have a bumpy ride for the next couple of quarters. this promise of an interest rate hike, and of course the u.s. elections come all short-term on the gold price. at the medium to longer term things look very good for gold. the production is coming down. the new gold supply into the market is definitely under pressure and people are now forecasting as much as 1/3 lower production by 2022. anna: even without the election
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nervousness, you think the prices are sustainable? mark: i think they are. i think we will see some price, but the gold over the longer term, definitely a much stronger weset of fundamentals. yousef: you have been pursuing both mma and production growth. where are you on that front? mark: today is really setting up the market ufor our investor days in november. we have highlighted the significance of having $1000 as our long-term price, for which we allocate capital. the, 600,000 ounce in blend. and ameline is five half to six years. we have exciting new projects taking place. we said to the market, our target is to get three projects defined by the next five years.
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that really addresses the replacement and a new base on which to grow the company. and we have the money to invest. times no matter how many we get together, you tell me you want to bring the average cost down to $630. what new technology are you bringing in to deliver on that? can we expect you to spend more on capital expenditure? give us an idea in terms of capex,ou are with the relative to your growth trajectory? mark: you can see the benefits of the capital that we spent. we are the only gold company that has not compared. we make a real return on that capital and you know, we are looking for the next phase in the development of randgold resources. it has been around for 20 years
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and it is a profitable business. we have made enough money to invest in our own future. we do not rely on any shareholder equities. that makes us quite different from most of our peers in the gold industry. anna: mark, you are just setting out for you expect the production to come from. how much are shareholders putting pressure on you to come up with this plan to maintain production, to keep getting the gold out of the ground? is that one of the big conversations you are having? mark: i think we need that conversation because we are all about creating value, not only with our shareholders, but with all of our stakeholders. we make the contributions to the countries in which we invest. and again, the gold industry is quite quick to follow fads, new whims. we have never done that. we have a clear long-term plan and we have stuck to that.
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our shareholders are more like owners than traders. whereas traditionally, gold stocks are really a trading opportunity. yousef: when you look at the operating environment, what would you cite as the biggest risk to future growth? mark: finding new mines. there hasn't very little exploration since the turn of the century in the gold industry. &d company. but the industry itself is short, because it has been consuming its resources on the back of a rising gold price. we are starting to see the impact of lack of expiration and lack of investment in the industry as a whole. yousef: isn't there a way of resolving the situation, in terms of buying up other companies or merging with them? mark: sure, but in the gold industry, you alys tra a
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on a premium. there is great little evidence of value creation through mma. we do mma, but opportunistically. anna: you dig, not buy. manus: can i pick your brains? we have a growing situation in south africa with threregards to zuma. what are your contacts telling you? are we getting closer to the end of jacob zuma? what would that mean for africa, your opinion? mark: i think you see the democratic process at work in south africa. i am very hopeful that that will prevail. there are a lot of really good people we have seen, a group of business leaders all stand up against this you know,
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unacceptable behavior and i think we are going -- it is good for south africa. it is a great example for the continent. you know, watching the south africans exercise their rights as citizens and actually, the real politic in the country, rather than leaving it to a bunch of you know, politicians as we watched them behave in the last while. yousef: mark bristow, always a pleasure having you on the program. let's check in on the futures and see how markets are set to react. currently looking over there for 50, downtoxx almost .5%. the cac, again, a lot of the anxiety feeding through to european trading today. anna: a lot of inside the in the market. we spoke a lot about that word
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yesterday didn't we, manus? manus: we did indeed. the markets can see that the clinton lead is dissipating faster. of 1% there.y 1/3 don't forget, the dollar is at or near the 12 year hike. the dollar-yen, this is the real benchmark of risk off. money is coming out of the dollar. you can see there below the 50 day moving average. the yen is depreciating against all major currencies. we are breaking that $1300 level for the sixth day in a row. what happens next with the fed is important. oil managed to rebound from the longest losing streak in two months, even though u.s. crude supply rose to 14 million barrels, the most since 1982. but the import but of the
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equation jumped the most in 20 years, which is what i call it equidistant risk off personify. anna: we can see more appetites for fixed incomes and sovereign debt. people are nervous about the u.s. election. seeing an bund, also little bit of weakness in the yield there. we had numbers from the insurance sector at the start of this hour as well. the u.k's number from the nine-month net premium, 4.8 billion pounds. premiums yearn to date, up 6%. we will talk about the comments they have to make about brexit. brexit offered an attractive tailwind, according to rsa.
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what are the broader impacts of brexit on that business? we will talk about that next. in another few minutes, we will be talking to the cfo of rsa. he will be joining us here on set. ♪
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manus: you are looking at a live shot of the city of london. it is a bright and cheery november day. there is a slight bounce in the market. it is super thursday at the bank of england. it is 7:15 in london. good morning, anna. anna: let's talk about the insurance sector. rsa says it is on track for a strong operating earnings boost. the reporting numbers this morning. joining us in the studio, the first interview of the day, scott egan. a real pleasure to have you in
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the studio. tell us a little bit how the business is doing. you said the q3 premiums are up 7%. tell us the story behind the numbers. scott: i am actually delighted to be announcing the performance lament and we see in the organization over the last year has continued. we have an incredibly strong set of results in terms of profitability. also, we are announcing this morning that our balance sheet has remained incredibly resilient during what has been quite a tough time. those are the key messages we are making this morning and i think that has been will received by the market over the last nine months. the stock price is up between 25% and 30%. we are the best performing stock in our sector. yousef: let's take up on the state of the market in terms of pricing and how much progress you are making in your turnaround strategy.
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scott: the turnaround part of the strategy is over. we have a very clear strategy for the future. the ambition of the organization is to be the best in class provider. that is the target we have set ourselves for every single one of our business is in the u.k., canada, and scandinavia. we're focused on three specific levers. we want to improve the customer experience because happy customers means a happy bottom line. the second thing we're focused on is the underwriting performance of the organization. it is incredibly important to remain disciplined. the third thing is we are going to focus on efficiency and effectiveness. we have announced twice already increased costs packet for the organization and we are on track. anna: tellabout the balance sheets. you have been decreasing the capital required in various parts of it. what opportunity do you see to return cash to shareholders?
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what is your strategy around that aspect? scott: we of easley announced a ratio this morning -- we obviously announced a ratio this morning. given the turmoil in the market, it is an incredibly resilient performance. we are at the top end of our management range, which is between 150% and 150%. as an organization, we are focused on generating profits. at the right time, we will return those profits to our shareholders. anna: he just do not know when that is yet? scott: our ambition is to have the best in class performance by 208. a-- in class performance by 102018. yousef: at the moment, you are looking at 75% coming from abroad, which has shielded you from the domestic weakness.
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is that going to stay, or will you diversify further away from the u.k.? scott: the financial conditions with sterling weakenin is a help to our business. we have seen an increase in our profits as a direct consequence. we are very happy with the mix of our business, which is the u.k., canada, and scandinavia. i am very happy for that makes to move around as the u.k. return to profitability. anna: tell us more about the brexit and the impact that has. mentioned the attractive tailwind, but is that the whole story>? what do you see as the downsides of brexit for your industry, or a partnever that much of the story, passporting for example as part of the insurance sector? scott: again, we have said that
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brexit is a tailwind and that is because 2/3 of our earnings have come from abroad. i think because we do not actually have much of a business relying on passporting, therefore, it is not really a big deal for us. we have separate regulated entities. bringingrexit, whilst financial uncertainty, and that is definitely the headwind we face from an earnings perspective. anna: so, the grexit might not matter in terms of exporting your services from the u.k.? >> we have some passporting, but it is very minor. yousef: what additional information are you waiting for to make decisions regarding whether or not you need to move your operations or reduce your exposure in the u.k.? >> we are not waiting on
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anything. we have a very small part of our organization relying on the passporting rules. we are very happy with the operations that we have left with in the u.k., scandinavia, and canada. what we will be most focused on now are the three levers, the self-help levers. in other words, we are not relying on any market conditions to drive towards our best in class positions. we are absolutely focused on pulling those leve as hard as wrs as hard as we can. anna: what are your ambitions within those younger fees you geographies you mentioned? markets, yourse biggest players in them. >> we do not want to do growth for growth. the second lever i refer to is
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about underwriting, and that requires discipline. over the medium-term, our aspiration is to grow in those markets, but we are not going to grow for growth sake. that is incredibly important and you can see from the results that we are remaining disciplined. we want to be best in class, meaning delivering the best returns for our shareholders, delivering the best products for our customers, and delivering the best environment for our employees. that is the ambition across every single market. yousef: would you be taking into consideration downsizing or cost-cutting? at the moment, we are looking at a volatile operating environment for your industry? scott: we have set out very clear cost plans for the organization. we want reduced costs by over $350 million by 2018, and we have increased that target twice. that was a direct consequence of investments we have made in the business.
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we want to be $250 million through that journey this year, and we are on target. we are focused on reducing costs, but providing the right service for our customers. anna: scott, thank you for spending time with us this morning. scott egan, the rsa cfo in studio this morning in london. lots going on in london today, manus. manus: i just want to check on sterling because it is an interesting day. inflation expectations are rising. what does this mean for super thursday? later on, the bank of england's rate decision, and the latest growth and inflation forecasts. the decision comes thaat noon. the mark carney press conference starting 30 minutes later. then, penn of judges are ready to -- then, the panel of judges are ready to rule this as the front page of "daybreak" today.
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the ruling will be issued at a.m.n's high court 10:00 u.k. time. nejra joins us now from the bank of england. talk me through what the economists are expecting in terms of rates. nobody is really expecting a rate cut. if anything, the market is more focused on the inflation issues for next year. nejra: absolutely. good morning. economists, the are expecting to keep the rate if anything, the market isuncha. they are expecting a unanimous vote on that, 9-0. but what they are also expecting is an a great to the inflation -- is an upgrade to the inflation forecasts. the mpc was signaling we could
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see further rate cuts this year. but we have had better than expected growth data. the inflation expectations have been rising as well. if you look at the 10 year breakeven rate, we are at the highest in almost three years. that puts less pressure on mark carney and the bank of england to cut. however, bloomberg intelligence says that although we are expecting a wait and see today, we could see the bank of england wanting to keep its options open for rate cuts in the future. the challenge as well is the impact of brexit and how that could hit productivity. that could make the bank of england less likely to look through higher inflation. and so, we are going to have to see how mark carney balances that in that press conference. the market in the second half of 2017 is pricing in more likelihood of a rate hike than a rate cut. mark carney will have to balance
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that prospect for the u.k. because of brexit. yousef: arguably more significant than the boe decision is a court ruling on theresa may triggering article 50. nejra: absolutely. he will have three judges rule at 10:00 a.m. london time on whe ther there needs to be a vote in parliament before theresa may triggers article 50. the reason it is significant is because if we get a ruling against the government, we could in sterling,e or the triggering of brexit being delayed. whatever decision we get today, the losing side is likely to appeal. the decision that could come in january, if the government is ruled against, we could the lawmakers take that vote for months, are even more than a
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year. anna: a lot more is to come. stay tuned for coverage of super thursday. we will bring you the press conference at 12:00. this is bloomberg. ♪
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manus: good morning and welcome to "bloomberg markets." i have the first trade of the day. or, caroline and i have the first trade of the day. caroline hyde is over in berlin. what are we watching? summing up the fed's holds fire. will december see a hike? brexit gets its day in court. at


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