tv Bloomberg Best 2016 EMEA Year in Review Bloomberg November 26, 2016 8:00am-9:01am EST
>> coming up on bloomberg best the tories that shaped business am europe, middle east and africa. >> market are pricing in we are staying in. prospects for u.k. outside the e.u. are incredibly bright. understand that the decision with seismic consequences. and there has to be regret taking back control. >> the economic consequences of brexit will be more severe. business is a pro government. >> the financial sector suffered considerable pain.
is bad, ntiment evaluation is bad and the results are really bad. >> it is unacceptable. bank europe's central tried to ease the region into growth. domestic truly demand. >> it was a year of turmoil in up and down for oil and controversial and regulation and transformation for saudi arabia. >> we are talking about the economic shake since the kingdom was founded in 1932. for a look back at bloomberg best. > welcome on this special edition of bloomberg best we will review the most important
in ness review and analysis europe, phaoefrpmiddle east and 2016.ught to you in we start with one of the biggest brexit. this year, britain announced it would hold the june 23 referendum on union membership mark arkets reacted and a fierce debate began. >> the prime minister answering uestions from lawmakers in the house of commons. he's been making a case for take in the european union. is the brexit risk exaggerated? serious ms to be a risk. it is not a central case but we an argue for many months investors need to take notice. and is really uncertainty have a big impact on the market it was recognized and said they are going to make plans. chancellor outlined the devisedor great britain
down growth and warned of conomic risk of leaving the european union. >> it had a whiff of preelection is a because it prereferendum budget. the central bank voted unanimously to keep rates and highlighted uncertainty around the so-called brexit. > this is the first time that the bank as a whole has expressed an opinion about how will affect the economy. >> markets are pricing in that currency ying in markets certainly. here could be extreme volatility if we vote. > i believe we have a big turnout and people understand the decision with seismic particularly economic consequences and i an't believe that people will shuffle this one off. although i do think there's a large number of british people are still struggling to come to terms with what it is all bout and find the claims and
counterclaims confusing. >> if the lead campaign lying to british public of the risks staying in the e.u. is the spectacles for the u.k. -- aspects r the u.k. outside the u.k. are incredibly bright. four budgets the last year and everyone of them wrong. >> investors pull out money. is what the government -- i'm not making this up. his is what the government has alluded to. >> a nice impartial man. dave cameron k regrets calling the referendum > i think some close to him regret it. i think he thinks it is something you have to deal with nd i have some sympathy with that. they are set to leave the e.u. following a vote on the next week.june 23 which number shouldn't we believe and which numbers
shouldn't we? it seems pretty clear the numbers have moved toward leaving. it is around 48.5 to remain and 51.5 for leave. not a large movement but clearly there. >> the u.k. is still digesting the labor m.p. both sides of the brexit debate a second day. how much do we know when the campaign will resume. know. the moment we don't both campaigns have taken to the sidelines today. report is delayed until tonight on brexit. due today are ls tomorrow. >> the pound surges and campaign resumes as we enter the final days ahead of the referendum. bookies and forecasters have been more confident the case than the the polls but the last 48 hours the camp does seem to have turned back a bit of momentum
week.st them last >> on june 23 the u. voted to leave the european nion and shocked some and thrilled others and rattled currency and financial markets. how bloomberg at television covered this landmark global business. >> we are waking up to a whole new reality. is brexit. they have been trading since :00 p.m. last night and they started to see ticks down in ticks downutures and in u.s. futures. at midnight it accelerated at a.m. after it started coming out the lead camp was remain.more than the >> financials will be absolutely front and center this morning. david cameron is making depart ment he will not
straight away but the next three months. that is the most significant fact that article 50 will not be traded instantly but before the next prime minister does it. >> stocks are plunging and pound at a 45-year lee and break away - low and break away from the 50 and a little bit of retrace with the g to do safety blanket of the central brutal move for banks and home builders. we re seeing losses since have not seen since the financial crisis. it has been at least since 2008. they have under the margin requirements so they were trying a lot of it but most investors were wrong going this. guessing and betting and investing in the fact that the remain camp would win. they had to unravel those. we are talking about margin calls and stop orders setting
and everything was limit down this morning. >> one man is steering the ship markets it is mark carney. to 2013 he ran the central bank of canada. many say he was responsible for avoiding many disruptions others had. he phrase he used the bank of england will not hesitate to take action a quarter of a trillion pounds is available. is pounds. you can see how it was crushing the financial crisis. know banks are not systemic nd there is a safety blanket from central bank but you can ee the movement and panic of traders analyzing the results at 3:30 a.m. this is chaos. as bad as 2008? >> it is difficult to understand hy a lot of smart money was beggibe betting on remain we the result
is substantially in favor of brexit. i'm not surprised by the hectic market this morning. leaders are ropean in crisis mode after this vote locking themselves in emergency meetings probably across the region. lead to a more fractured europe? > the exit is the worst possible scenario. much worse nestly for the u.k. than for the european union. the this the beginning of end of the e.u.? >> there's no doubt i have been many years t this the european union n a state of disintegration. is a monumental event in years story breaking 40 of integration into the e.u. project. > there won't change fundamentally the special relationship between the united states and britain. in t is a terrible outcome all respects. do we have to have it?
>> that was just the initial moment of europe's new reality. the program we will look at how the brexit story has played out since both politically. and in the year when uncertainty was he dominant theme we will retrace the roller coaster look es of oil market and at volatility and instability in turkey. banks were battered. our review continues. is bloomberg.
carrying. it will address the italian banking system and need to by to raise capital and level of reduce the nonperforming notes. >> italy said to consider injection. it wants to save the banks and may not has ruled you be able to do that. >> jpmorgan said the italian anding issues are political not financial. is this a realistic assessment? to some extentis but you have been the constitutional vote coming up needs this deal to be placed and against that you have state aid is impossible under the e.u. laws. >> the struggles of italian of a were one aspect difficult year for the european financial industry. bute were some bright spots overall much more pain than gain. let's look back at some of the
challenging moments for some of europe's biggest banks. >> it slumped after it became four years lender in to reassure investors had has to pay debts. t was triggered by a note that questioned deutschebank's ability to pay off bonds. if s a type of debt that things go badly at the convert into shares. > it is more about cash than financial difficulty. it was a matter of did they have pay them and to that is why they got the note to i was vestors because getting calls saying are they going to need more capital. suisse has announced t has savings of 1.7 billion swiss francs cutting 2,000 jobs. strugglingf a number to pwa boost profits.
ill hreuliquid y positions when did you find out? >> january. >> why was it not clear before? >> it was not clear to me or my who said it on the record and many in the bank. that is where i said it. >> what will it take for nvestors to rerate european banking stocks? a view that we now have predict believed and how the regulators will deal with going forward. that is probably the most important thing. we need to believe we are at at the beginning of the end of the regulatory environment for european banks going forward. deutschebank says second quarter profit was almost wiped deutschebank set aside money to cut jobs. is bad and evaluation is bad and results are bat so we were expecting there is a cause restructuring and turnaround and it is painful but the rewards in
and balance tal sheet strength are not there. pair pwa of b.n.p. and lloyds all falling after announcing cost cuts. shares beat. it was a tale of lowered expectations and they beat lightly against the lowered expectations but there are still issues across the board. 1% and lloyd's under 10%. won't pay the $14 billion assault by the justice settle a to investigation into mortgage backed securities more than could be at estimated a worst case. the 14 billion they have been we are not going to be certain of an outcome until we are there. the settlement ends up anywhere close to the 14 billion deutsch's t great for capital position. jpmorgan will a note yesterday
would g over 4 billion need additional litigation reserves and additional capital. >> the european central bank eventful year as the economies were slug igish a program launched in 2015. continued to c.b. refine policy two kits to get growth going. its e e.c.b. has caught of interest rates q.e. boosted to euros a month. they have increased the assets n lable to buy to include nonbank corporate debt. few ay i read it the last months or year it has been an epic scheme. it is weakening the currency and changing number one they are buying nonfinancial correspondents so they are going
help that sector and really importantly they are and even maybe egative rates for banks it borrow. effort to an external domestic demand lending game. >> the european central bank has into the corporate bond market. ome of the initial purchases vary from several european tility companies to ab in-depth. it leaves all three main interest rates unchanged and purchase program unchanged to 80 pwhrlg euros. they say they are ready, willing and able to act in the vote.ath of the brexit what signal would it send to arkets if they announce changes? >> if he announces something more meaningful that would impact of the e u.k. decision to leave e.u. was
lready being felt in the european economy. >> the rate decision comes down in line with expectations rate is zero and negative 40 basis points and marginal facilitys zero.25. they say q.e. will run through 2017 or beyond. what do you make of that? >> there is little volatility in allowing him breathing space. he wants to keep his powder dry. the major estimate is for rates to remain unchanged and unchanged 0 ough with a deposit rate negative 40 margin lending facility 0.25%. no big surprise. what they didn't discuss is extension of q.e. beyond march. didn't discuss that horizon at all. hey did not discuss taper iing leaving the market wondering what they did discuss in the
meeting meeting. >> despite legislation picking because of the contribution be from energy surprises there is no convincing evidence that underlaying inflation is on an up swing. that is the bottom line. go back to the mission. my main take away is nothing at this stage. wait for the forecast and projections. ecember is where we are going to discuss. coming up on our 2016 year in eview turkey has been a financial and political hot spot. we will revisit a volatile year visit with the president. this is bloomberg. ♪
we have to gium and try to understand the scope of are we understand coordinated attacks. >> there is really the first cale terrorist attack the largest in this country since world war. >> our top story terror returns extended a state of emergency and members of the after bastille day attack at least 80 killed. the conditions to remain the center of european european terrorist thre threat. criticalng to get to a mass among people who to attack and i think that is the conditions for that are not likely to change. with violenceries in brussels and nice
instability. one nation that faced many 2016 of instability in was turkey. political upheaval came to a attempted y with an coup against the erdogan government. we look back at turkey's turbulent year. >> turkey's prime minister is expected to step down this month power struggle with president recep tayyip erdogan. at the top has tumble.ir stock market how worrying should it be? >> the contract erdogan made investigators is unraveling a little. he promised them stable economic and they are not policy makers. in return investors have turned his nd eye to some of geopolitical activities in that
and we are world seeing part of of that contract comi coming undone. news out of eaking turkey reports of shots fired and helicopters over medicine prime minister saying that was because of an uprising in being y ranks that was quelled. the prime minister saying it has been thwarted or is in the thwarted but it is not a coup. erdogan's y it is chance to galvanize power more so in a presidential system. erdogan mass t anted for -- has wanted and he changes the parliament from a parliamentary system to a where he is system the dominant person. >> given the level of unseventh there. repercussionsn turkey following the failed coup. its rating onaded b toountry from to double
it double b plus. rdogan taking further action chairing a three-month state of emergency. in is it like to invest places with the rule of law? doesn't that apply to turkey? applies to the extent the government wants to apply it at this point. > let's move to turkey's central bank which is moving to add more stability to its economy. overnight lenning rate for a six months by 25 8.5%. points to many expect them to keep cutting rates as long as the global permits.ent >> earlier today the central bank cut interest rates. with the current rate of interest rate? it as a steady careful and balanced cuts. because it is not right to make
or down that p could contain some violence that tremor in the economy. but i believe it to be continue this steadily. and right now this new the central n of bank since they took office they cuts,been carrying out the taking the concentration especially the interestte ra government. the is an important signal especially for investors. "bloomberg come on best" year in review we go to the middle east. guy johnson will follow the of opec and markets and move the30 overhaul to kingdom away from its dependence more on the repercussions of brexit and bloomberg a
>> welcome back to this special edition of "bloomberg best: year in review" in business across europe middle east and africa. on the middle east. the year began with optimism that the oil market would middle of 2016 and early on producers found themselves facing a supply glut price plunge. more than 100 million wiped bloomberg company world oil and gas index as it hit the lowest level in more a decade. crude at 12-year low.
close to throwing in the towel? hedge funds have cut their lowest in to the 2010. where we close to that point or not? >> we are starting to see the a bottom. for but we are not there yet. >> what kind of oil price do you break even? >> at 60 we can balance the books effectively. if you had to put your money on a number. >> hopefully we don't. >> the price at the end of the year would be what? >> 48. and kill me back because i'm sure i will be wrong. >> the energy ministers of saudi russia agreed to freeze oil production in a meeting. disappointed.re > the market wanted a [inaudible] for the first meeting of these two publicly in a month. oil e meeting of top producers ended with failed agreement. no deal. crude and brent
testimony believing. happened in doha and are we ever going to have an agreement between the two countries? is going to give in first? degree of require a trust and there are many things between saudi arabia and iran be on the list. >> it is about to 50 bucks a stockpile in u.s. spurring the latest with the drops.ic >> the catalyst seems to be the stockpile data we got from the showing a much higher than expected cut in stockpiles 4 million ike barrels. however you have to wonder how much further that rally can go the opec meeting next week. seems at least from the gulf ide we are seeing a continuation of the strategy of maintaining market share. falling today and opec oil ministers failing to output limit. one thing they agreed on is new secretary general.
that is a positive. . they have been bickering about decided four years and that is muhammad the nigerian front-runner. the estimate of oil oversupply seeing the markets and cut the 17 estimate of oil oversupply. kevin temp is still and we are talk -- conserve temp a conservative. >> it is on a trends up. it was a bear market three weeks ago. incredibly short and we have had a complete turnaround. what has happened? people including the audis are talking about a production freeze. >> they have agreed to ensure il market stability for the leaders of the two biggest crude producers stopped short of offering detailed producers. they need to cooperate to have stability. what it will come down to is iran because the russian made it clear that iran should be exempt from an
reaches its il it pre-sanctions level of output. productioneed to cut for the first time in eight years. managing the it is a surprise and very big change for the oil market. world energy congress getting under way in istanbul and vladimir putin says he is to consider freezing or in cut being oil output cooperation with opec. resilience of non-opec supply a headache for opec. they had to bring russia to the table to carve something out. past when opec has been effective it is because of saudi arabia. they have driven it. the ey still have wherewithal and power and influence to drive a deal? two-way street. it is not clear-cut how it will questionbut there's no saudi arabia can't survivor on
$50 oil. >> against there back drop of certain future the kingdom of saudi arabia began a transformation of the economy with programs and reforms called vision 2030. ultimate goal to reduce ependence on oil and single late domestic and foreign investment and diversify revenue. of the plan ts began it surface in late january to surface in late january. >> saudis retain considering an the saudi oil company. selling off a s stake in the downstre operation that is code in the for refining. the other would be selling a stake in the parent company. both options still on the table. >> saudis retain has big plans of eal with declining price oil. create a two trillion dollar
mega funds. a situation with the crown on howwe got the details saudi arabia wants to evolve its economy. an obsession about moving the saudi economy away basing it around something new. this funds into which aramco go is an amazing thing. it is enough to buy google, and the alphabet a lot of them. warr buffet. and they would still have change to spare. >> what is the latest on the i.p.o.? >> it seems to be going forward. there's been a lot of skepticism saudis are forhe real about there. hey are bringing in jpmorgan what seems to be the lead banker on this and underwriter and longtime energy and industry banker, investment and this is a strong team and more evidence that the
serious about doing this. 2017.bly before the end of >> all eyes on saudi arabia fficials unveiling a blueprint diversifying the economy of the country. > we are talking about the biggest economic shake-up since the kingdom was founded in 1932. they will list the country's oil ompany and take that money and drive sovereign wealth funds to oil.o diversify away from they will roll back subsidies an increase taxes. they have approved a plan to cut public sector wages and 2020.ies by the strategy aims to curb public ebt which the kingdom sees surging to 30% of g.d.p. > the nuts and bolts two numbers 7.7 and 30% and debt of the nation employed by the government to
40% employed by the nation. cutting subsidies and boosting the nonoil revenue. to this deal.y >> saudi arabia will hold london, lostings in angeles, boston and new york first s it prepares the foray into the international bond market. economy is the largest in the middle east mapping to come to -- planning to come to to 15 billion 10 dollars making it the largest bond issue from the middle east after qatar's 9 billion. going on a bia is ales spree to raise $17.5 million to shore up the finances after the slide according to of the ith knowledge offering. saudi receiving bids for as much $67 billion beating in ntina's $60.5 billion april. >> there bond issuance is very
uch like an i.p.o. of saudi aramco because the economy is based on oil. his is the first step and aggressive step into diversifying outside of the oil bonds themselves re really just sort of a faint for saudi aramco that they will go to in order to increase their capitalization or recapitalization of oil asset. "bloomberg best: year in review" the thorny business of regulating e.u. complex task of steering the u.k. toward and brexit. >> identification of the goal and time line would be helpful. is -- this is bloomberg. ♪
another shot at a tech shot over android software saying google's restricted contract and makers of tablets phonesment we are seeing the european commission looking at them to d could order change things. they have ordered microsoft and amount of fines and we have seen billions. >> truck makers agree it pay regulators a record $3.2 billion fine for fixing prices 14 years. it is a very big fine but we are damaging out a very cartel. >> the european competition ordered apple to pay a record bill. they is apple responding? >> there is a massive shock this figure. >> it is because we don't accept hat the irish authorities did anything improper or illegal.
140,000 employed by u.s. tech companies. jobs start to se be put at risk and ceases to be he automatic place where american companies might go. >> an unusual moment u.s. saying to collect and ireland doesn't want to collect and e.u. saying you better do it. more than welcome to be successful to grow to be big and we will applaud you all the you ut the thing is if start to misuse your dominant position to prevent others from the same success then we get concerned. has been busy year for commission petition and with political populace trade the shaping commission will play a 2017.icant role in
now back to brexit. after the sudden shock of the investors and policy makers found themselves in uncharted territory. a look at some of the market action and ensuing reaction from the second half of year. 27, 1985, that is how long you have to go back to find at these levels a fresh rate atlow on the cable 129.80. investors seek to dump real estate holdings in photo.e of the brexit three have suspended trading in 5.7 billion pounds. >> the panic is spreading. more than half of the real estate fund in the u.k. by view frozen in four days. it is incredible. >> how much will commercial drop?rty assets can it touch the 2007-2008
level? >> i don't think so. >> britain's prime minister is pulling up to 10 downing street her fort home. 59 and the second woman to be in the job. 9 -- the atcher was first. secretary er foreign has been appointed chancellor of the ex-checker the finance been in the he's parliament in the u.k. the last good 20 years. a few days ago if you asked what boris johnson will do i of 10 verybody outside downing street would have been scratching their head yet he is foreign secretary. >> the new brexit czar david davis. it applies and always been they are all from the liberal the brexit movement and
all people who one of the main brussels wastching they wanted to think britain survivor as an independent nation. >> what is the path you can take prime minister may to move the united kingdom forward in their negotiations with and europe? execution, identification of the goal and time line would be very helpful. england cut rules 60 .25 and expanded q.e. by billion pounds. bonds. l by corporate >> why would they overdeliver out the t brought sledgehammer. >> the economic outlook has case orated and a central is it could be a mild recession type of environment so it makes act as quickly as possible and as they have done overdeliver.
>> import cost jumping and that is the story in the data this morning. >> unva vasvase -- unsurprising 3.4% and no surprise given what we have seen post the plummeting.ound >> so far this week we have seen prices and jobs and we got retail sales that july as british consumers seem to shrug off the brexit anxiety. it has gotten in the mindset thought would be the poundd and we see going up. >> the u.k.p.m.i. released we from 47.4 from 52.9. >> i just don't know whether i have learned anything. tells me the effect of the eferendum will come through as a result of long period of uncertainty why we hash out a not expect should
anything that helps the first three or four months to tell us anything about anything. to push brexit through. any regrets? >> no, none. regret taking back control of your own life? take five or six years, 10 years to leave the e.u. that. for the e uncertainty -- that is a lot of uncertainty for the markets. > there's no reason it should do that. >> it you see a reason to vote against the triggering of if you didn't know enough what you are stepping into? our positioneserve and rights to oppose. not that we don't expect the result of the referendum. do. but i want to set out those lines that wae maintain market access. >> my raw view is we should be softer brexit a than a harder brexit and economic consequences of a will be more severe. >> the pound is down to a a year low as they brace for
hard brexit. we trade this morning around 127. lower would we go? bumpy ride.e a spooked.s are getting >> they listened to may's speech and heard a voice that sounded critical of business than pretty much anything we have heard a long time. government that is antibusiness? >> absolutely not. it is a pro business government supportive of open markets, free markets open economies, trade. nd -- but we have a problem of -- and not just british problem -- it is a developed world in keeping out populations engaged and our market f capitalism economic model. u.k. numbers.e it is the biggest piece of sinceic data since brexit
the day after brexit. whoa a bit of a surprise. the up side. the economy continues to .5%.rise growing by >> breaking news last six hold for k. must countdown e two-year brexit ruled a panel of uphills setting up a confrontation at the supreme court. is significant but we could ends up with a situation where harder brexit. >> could lead to a harder brexit straddled withbe this and teresa may could push parliament. >> what does that mean? mayhem for the markets? >> it is more uncertainty. short statement big headline number out of this is owngraded expectations for growth next year.
his didn't feel like the big stimulating budget many predicted they would need post brexit. >> we are not talking about a economy in recession. t is much better than many economis economists predicted would be the case after the brexit vote ut that was just the brexit brexit vote and not brexit. ahead to ll looking march of next year which is we article pected to see 50 triggered.
it is 11.5 million from the fourth largest offshore law firm. read anything related to mr. putin directly. >> in europe the middle east and year in which a the un spebgtexpected seemed to a matter of routine. let's wrap up our review of the year with a conversation with the world's most unpredictable political figures. editor iner bloomberg chief sat down for an exclusive russian with the president vladimir putin. have you yet decided if you will run in the presidential election of 2018? > we will have the
parliamentary election and hold election to see the result. be after this it will another in almost two years so it is too early to speak about this. rapidly changing world it is damaging to talk about this. sure d to work to make stocks will set themselves completely. develop the country and increase the country's business and capabilities. depending on the solutions to tasks then we can see how to organize the presidential and ion campaign in 2018 who should take part. i haven't yet made decision for myself. >> do you think russia is run or harder?to
when.depends on time?as ii had a terrible > in your time has it gotten more difficult? > i think it is more complicated because despite all the criticism about western developing are domestic ability. elections will be significant and improve it year -- imparagraph -- improve year. >> we see the rating of our and many people re wondering what is going on, what happened? it is a pro active election they are taking part. the media and
newspapers. what do they have to offer? th it make things better find it e] would totally unfeesable. they look great on the elevision and criticize and pour on the ruling party but i to t think they are ready take on somebody very popular. >> that concludes our special "bloomberg best: year in review" in europe, middle east and africa. stories and more analysis and interviews in 2016 on bloomberg.com and all the business news 24 hours a day. thanks for watching.
david: do you think you would ever lead a large company like pepsi? it is a dream come true. david: you get advice do you it listen to indra: you never know if a nugget can translate. long ago an activist showed up. indra: my job is to make sure company is performing very well. david: suppose somebody has a product from a company that is and you see nta them in their refrigerator what do you do? it be known i'm very unhappy. wouldn't recognize me if my tie