tv On the Move Bloomberg January 9, 2014 3:00am-4:01am EST
with different challenges. how dare they question the efficacy? that is a challenge as well. what the fed does as you said, they have got to fight together. >> it certainly makes mario draghi's point little more difficult. >> it does. on the momentum side, the reduction of stimulus looks like steady as she goes. really, how though effective is that bond buying program? they are starting to question that now. >> caroline, you're watching retailers. >> all of them disappointing this morning. we really are seeing the winners versus the losers at the moment on the u.k. high street. tesco, marks & spencer's, both seeing declining sales. we are going to be at the bottom range of our profit guidance.
it is doom on the high street at the moment. tesco, every second took more than 2000 pounds. still a dog or not. fax that is quite a statistic. let's turn it over to ryan chilcote. you are sitting in a rolls- royce. >> record sales at rolls-royce. i like to do my market research so i am in the backseat of a phantom. they did very well with the phantom this past year. i kind of fancy driving myself as much as i like today pampered. later in the show, i am going to be back at the helm of their brand-new car. nice, i like the overhang. withoks like a skylight little lights. we will have to get more on that. thank you so much, ryan. ryan chilcote with the latest on that rather fancy car. let's have a look at some of
what the pharmaceuticals are doing. novartis, this is what it is doing, down some 0.3%. it is discussing a swapping of units with merck and astrazeneca is gaining 0.8% after a diabetes pill that it developed won u.s. approval. a little bit of corporate news, we are all of a rolls-royce. anything else we are watching? >> keep an eye on initial jobless claims. you have the adp report yesterday which came in much better. we are waiting for jobless claims. keep an eye on china. consumer prices declining in china as we get concern about what is going to happen there in terms of the tightening. there is a three-way shot of chilcote and myself in the back of that area [laughter] holdingoing to get a
pattern before the european central bank and the ecb. more so to do with the european central bank. dandy with you very shortly and we will talk about the percentage of the possibility in the u.k. who is on the move? william hunt down over six percent. arm holdings down over two percent. there are some main market movers. change the branding and if you blink you missed it. david jones steps down as ceo, going it alone. the chairman steps up. nothing to do with earnings. 2014 is very positive in terms of budget. that is the third ceo in three years. marks & spencer's down 1.7%. clothing mrs., food mrs. -- clothing misses, food misses. i have looked at some of them
trying to buy some of their pieces. 437 is where we are at the moment. mild weather held shopping back. we go from retail up to something slightly left of center, seismic mapping. oil companies are pulling back in terms of the amount of cash they are spending. these guys are one of the biggest norwegian players in terms of surveying and they say they saw a nice low boost going into the end of 2013 into 2014. those are the three main market movers. in terms of currencies, i think what you have got here is -- it is euro/sterling. what you have got here is sterling making it to a level we haven't seen since january of last year. that is one of the pressures for the bank of england. one of the pressures for mario draghi is where is the euro? the value of the euro, the export-focused recovery. today, cif big names
ti says the euro is going to peak in the first quarter. commerzbank says it is going to drop to 1.2755. that would be good news for mario draghi because this is his challenge to create a peak, a cap and a fit on the euro that -- euro/dollar. i bring that to you live from bloomberg at 12:45. >> manas, thank you so much. our next guest says it has been a bumpy ride for european stocks. joining us to explain whether this portends a more bearish 2014, the chief investment officer at rmb wealth management. great to have you on the program. happy 2014. what is it going to bring? uncertainty? is there a danger that we are too complacent? think 13 was such a good year in stocks, we are not going to get the same again. the key is what happens with the fed.
the fed is quite quickly moving away from quantitative easing, looking to cut back as soon as they can. maybe they will up the pace of it if the economy behaves itself. they're looking to get away from quantitative easing. inhout liquidity going stocks around the world are going to struggle a bit. we are also looking at china where they are looking to liberalize their markets. they have said they are not looking to increase their fx reserve. liquidity is tightening quite quickly throughout 2014. we think that is going to have an impact around the world. em stocks and currency could be vulnerable in that environment. >> what are you buying? >> in terms of currencies, we see some good potential in the u.s. dollar against emerging markets. we are looking to buy against the euro. we think that could be a good trade for 2014.
in terms of the equity markets, for the moment, stocks have upward momentum in the u.s.. we were kind of ok there. europe, without any signs of growth coming through and reduced with go today -- reduced liquidity, top of the range at the moment. we have to be a lot more selective this year. japan probably the topic for the moment. >> central banks today, anything expected? >> probably a bit boring. we are expecting no change in policies from bank of england or ecb. maybe something in the press conference from draghi. we are not expecting any statement from the bank of england. >> it is better than a bobby ryan. stuart richardson, thank you so much. aming up on the program, tough christmas for two of the uk's biggest retailers. we breakdown the holiday sales scorecard for marks & spencer and tesco.
move come a one of the biggest losers, a supermarket chain here in the u.k. morrison's down 6.2%. this is after we had some figures from morrison's. they said the christmas was actually very challenging with slowdown in market growth. it was also hurt by online and targeted couponing. they didn't paint a very easy picture. morrison's down some 6.3%. that head over to jonathan ferro for the details of the fed minutes. >> of course this was the color from the big meeting back in december. the fed finally passed ago. one word stands out, efficacy. a majority of participants judge the marginal efficacy of purchases likely to be declining. we have heard a lot of noise around the fed on the continued effectiveness of bond buying. how much does it indeed help the economy? or is the speculation in plain english. many were concerned about the marginal cost, the potential for
excessive risk-taking. many investors may tell you that vote has already left. hints on how any fast they might reduce stimulus? >> not quite. i had two questions, one was on the momentum. by how much would the fed the reducing stimulus? they took baby steps into this. we had six months about food -- of absolute noise. the approach remains cautious. the lack of market reaction suggesting a consensus is intact. the second question i have is a conundrum we face in the u.k. what happens when unemployment comes below the threshold? we are getting close to that level. do they push back on those expectations? there has been reluctance to change the threshold. that reluctance does remain. the episodes remains on -- emphasis remains on inflation. exceed as it doesn't
2.5%, rates could stay this low. if you want reinforced rates to stay low for longer, perhaps the emphasis shifts away from employment to the inflation side of the mandate. john, thank you so much for that. still what us is stuart richardson, chief investment officer at rmg. before the break you were telling me that 2014 investors have to be more selective because 2013 was easy money. >> independent markets, equity markets, it was far too easy. opinion, fed qe and japanese qe -- japan will probably continue the pace or increase it if they have to. the key here is dollar liquidity around the world. the fed is looking to rain this back. to openly talkng about the cost and benefit of qe. a speaker last week was talking about how they weren't sure of
the benefits of qe $4 trillion later. they are almost had it confused. they are talking to try to market down rather than explain. they want to try to get away from qe as soon as possible because they are unsure about the cost and benefits. they are very happy to stay at zero rates for a longer time. it is going to take a long time to see what the role of qe is going to do to markets, the economy. we have got potential overseas issues to deal with in terms of a slowdown in china, a move towards liberalization. uneasy calm as it were for us. the fedl problems for overseas. >> this is a year where we have central banks pulling in different directions. what does it mean for investors? view itmy point of opens up interesting possibilities. everyone is driving in roughly the same direction at the same speed. the ecb is looking to maybe
expand their easy policy. -- easing policy. strong possibility in q1 or q2 over the summer. england, the u.k. economy appears robust. either they are going to have to lower their threshold and guidance on unemployment or maybe say, this is a great success story. unemployment is now a lot lower than we thought it was going to be. we are closer to raising rates and that is a good story. that could drive currency returns and bond returns. >> you mentioned some of the high street names. we're looking at morrison's, down six percent this day. it seems like you either do really well in this environment or you offer too many sales or coupons and you disappoint investors. >> clearly in the u.k. and around the world, consumers' wages aren't going up as fast or as people would want.
consumers are being very selective and looking for bargains. appear that many names on the high street are struggling to come to terms with how consumers are moving around in terms of spending patterns. if you have a strong brand name, it appears that you can weather the storm or you're just in the right place and the right time enough to benefit. be increasingm to in number. it is a bit of a spotty performance. >> so what are your favorite industry groups for 2014? >> we are more macro, not really stockpicking. we look at a few industries. u.k., look at the construction seems to be getting a bit of a tailwind behind it. aside from that, i think you just have to be -- in terms of macro, the u.k. pound is quite strong.
u.k. stocks are probably going to underperform. aren't that exciting at the moment. i think the macro story for stocks remains. >> the u.k. has a whole set of problems if the pound keeps shooting up. thank you so much. stuart richardson. slow christmas for two retail giants in the u.k.. we have your retail roundup next. ♪
>> welcome back to "on the move ." i am francine lacqua in london. here are some companies on the move. no participant is said to be in talks with merck to trade its axioms unit for merck over-the- counter products business. the two drugmakers may each trade $5 billion in assets. for would fit strategies both companies to focus on core strength. japan's health ministry is seeking criminal investigation. the complaint accuses novartis of exaggerating the effectiveness of its hypertension drug. is one of novartis's bestsellers. danone canceled a supply
contract with new zealand. they are seeking competition from last year's product recalls over a contamination scare. protein used in baby formula may have been tainted with botulism, causing bacteria. for more, let's head over to paris. danone very much in focus. >> exactly. it is a very big deal because baby products represent about one percent of their revenues. it all started about six months theseen they warned about av products potentially causing botulism bacteria that could potentially cause death. obviously danone immediately called all -- recalled all the timein asia but at the problem didn't seem to be such a big deal. companyzealand-based only put $12 million provision for that. things started to get bigger because danone published third-
quarter earnings and said that organic sales in the past 16 quarters were the lowest in the third quarter. they had to adjust their profit forecast. that is why danone is now seeking damages from fontera. it says it may have lost 300 million euros of free cash flow. millions of people use their baby products and they don't want consumers to be confused or uncertain about their baby products. danone is the world's biggest yogurt maker and one of the biggest french companies, 30 billion market cap. assess what the real impact on danone earnings is. >> caroline, thank you so much for that. we are tracking the u.k. retail sector. we had numbers from sainsbury
yesterday. today it is tesco and marks & spencer. caroline hyde is here with a roundup. you are either doing really well or really well but i offering cheaper prices. in the middle, you're kind of stuck. >> the dig for we have been looking at, tesco, morrison's, all those players, they have been crashed by the upper and lower limit. you have the discounters eating into your market share. sales up, we are all going for luxury. spencer's,s & morrison's all disappoint on the high street today. comparable sales fall across the board. growth ass in on the far as tesco, morrison's, tesco's sales down 2.4%. sales down in asia and europe as well. despite tesco investing one billion pounds to upgrade their
stores and get us all back shopping there. if you look at morrison's, they are showing a profit warning. sales down more than 5% overall, they say it is very disappointing. they are particularly hurt by online competition. players -- ife elected marks & spencer's, the biggest clothing retailer in the u.k., clothing sales down for a 10th straight quarter. they aren't managing to draw in the shopper. they slashed prices up to 50% on kashmir and it still didn't make people go buying. >> the crucial thing is you have to get online right. this is even more so in christmas shopping season. >> you are right. the winners of this season have been bullied by the online plane. john lewis did particularly well by getting online quickly. next as well help to ramp up their sales. tesco is still a huge player online and when you put it in perspective they are still
taking more than 2000 pounds per second in the five days before christmas. online does seem to be where it is winning. 3 million online grocery deliveries, a third of that from mobile. , this& spencer's too said is where they are being hurt. they still haven't got online. they say, we are almost ready. but they weren't there and they say, will we are massively underrepresented online. >> morrison's, one of the biggest losers today down 5.6%. tesco want to get back into india but a lot of sales from asia were disappointed when a company. >> they did. even u.k. was disappointing. in asia, the slowdown continues. interesting that they are going back into india of all places. they are going to be the first major retailer selling multi- brands in india after india opened up its market to foreign retailers. they are investing more than $100 million to go in and open
some three to five stores per year. they pulled out of the u.s., they pulled out of japan. they are lowering their investment in china. this is a big bet on the emerging markets. maybe they want to try to get a piece of what could be an $8 billion market. we are going to see how that risk works out. >> caroline, thank you so much for all of that. art and fashion often go hand- in-hand and product hold out all the stops on wednesday when it celebrated the opening of its second flagship store in florence. it cosponsored the restoration of a painting. coincided shop openings in italy with restorations of local artworks since 2010. after the break, we look ahead to the ecb decision. in the meantime, you can follow me on twitter. i will see you in just a couple of minutes. ♪
>> welcome back to "on the move ." i am francine lacqua at bloomberg's european headquarters in london. we're 30 minutes into the trading day so of course it is the right time to do a market check. this is the picture for the market, a little bit of downside. these indices are pretty much unchanged. what are investors waiting for? the european central bank decision. we are expecting them to maintain the interest rate at 0.25% but we did see a big improvement in bond yields. this is what we are focusing on. does this movement in bond yields -- is at the latest proof
of draghi's success? this is a picture for currencies. anything that happens in central banks will also play in on currencies. england also announces its interest rates policy meeting at noon london time. these are the bloomberg top headlines. the federal reserve officials saw the vanishing benefits from their bond buying program according to the minutes of its december meeting. they also voiced concern about the risks of additional appurtenances -- purchases. they will meet later this month. china became the first country in which more than 20 million vehicles were sold in any given year. automakers like toyota, gm and volkswagen delivered a record number of cars there. while china's motorization has been a boon for foreign carmakers, pressure is mounting on the government to tackle the country's worsening air quality. the ecb is competing with europe's banks for staff.
the central bank is rushing to hire 1000 people before it begins supervising lenders in november. while the ecb may not match bankers' salaries, perks just tax breaks, subsidized childcare and pensions may make positions attractive. ratell be getting decisions from the ecb and bank of england later today. for more on what we can expect, let's bring in manus cranny. >> apart from my application for one of those jobs at the ecb, holidays -- we love them. mario draghi have a problem. inflation is below par. 11 months in a row. he has got lending declined for the 19th straight month. he has cause and effect. he's going to take over the guardianship of the banks in europe expecting them to hold more capital. they are not going to want to lend as much. the issue is not so much that you get a rate change but we want to hear the rhetoric that comes from him.
and where that rhetoric is towards. disinflation is the keynote that has been written about this week by stephen king over at hsbc. pimco says, they have got to fast-track the cleanup of the banks to get them to lend. the options that are on the table, negative interest rate on deposits for banks? that is one possibility. certainly not one that is embraced very well. the other one is long-term loans with contingency. essentially what that means is possibly giving long-term financing to the banks. getting them to agree to lend, that is a big -- this inflation and a man who has got to walk a tightrope. >> it is a completely different set of challenges for the boa -- boe. >> i think this is what is being discussed. , the first meeting
of the mpc of 2014 to give a statement, some people are saying it is just 30% possibility. no changes expected in terms of rates. we know qe is more or less finished in this country for now. it is whether forward guidance is buckling. would they run the risk of doing any statement here in the very first month? really pushes toward that 7% level earlier than the market expects. credibility is key. the likelihood of a statement would undo the credit ability. the market already thinks that rates will be at 1% by march of next year. it takes your mortgage to about 3%. >> thank you so much. manus cranny with the latest on central banks. we will bring you the bank of england decision my on bloomberg at noon london time. at 12:45, we will bring you the ecb decision followed by mario draghi's press conference live and in full at 1:30 p.m. joining us to look ahead,
riccardo barbieri, chief european economist at mizuno international. expecting from mario draghi? we don't expect much from the interest rates but q&a will tell us what investors are looking for for the next couple of orders. >> i think today it would be the ideal time for them to surprise the markets. the consensus is they want to do anything. there is not a single forecaster who is calling for a rate cut today. if i could provide a recommendation to them, i would say cut rates. to 0.10% for the refinancing rate. i would wait to got the deposit rate but i would inject more liquidity into the system by releasing the s&p liquidity, perhaps part of it. obviously all these options have drawbacks.
>> this would be basically to preempt anything. bonds are doing great this week. this would be to shock the markets. developments in the markets are very encouraging. things are moving in the right direction. the economy is still very weak, the on employment rate still at 12.1% in november. we still have very low inflation. there is a risk that once we are past -- inflation could fall further and get much closer to zero. some policymakers may view that as a danger. others may view it as a justification to do something that they need motivated by financial stability. inflation can come in different ways.
i think you always have to look at which indices are following -- are falling. low inflation is not necessarily bad. it means consumers will have a bit more purchasing power moving forward. >> the problem is that in certain countries it is almost at dangerous levels. is france the ecb's biggest headache? >> probably not yet. europe, it is clear that there is a divergence between france and germany. the french indicators, the pmi's have been quite week. i think we get a slacking picture if we look at the surveys.- insa it is a bit mixed at the moment. my impression is that what we are seeing is growth rates close to zero probably. for the foreseeable future. there has been a loss of competitiveness.
need to turn is a a little bit the direction of economic policy towards competitiveness, towards flexibility, towards making france again competitive. i think the signal at the end of the year, a turn in that direction. we have seen -- we will see if they do change course. they have taxed high earners. that has not created any feel- good effect. it is time now to focus on making the economy work. i wouldn't be totally has a mistake because france retains various strengths. it is obviously a high-tech economy, high education economy. i think there is still a great potential for changing economic policy. >> ricardo, thank you so much
>> i am francine lacqua in london. this is "on the move" on bloomberg television and streaming live on bloomberg.com. teva has named a new ceo. he will succeed jeremy 11 who left following a spat with the board. elliott gotkine has more from tel aviv. vigodman would take over next month. >> yes, february 11 is when he is due to take up the role. he is currently a board member anyway. he is also chief executive of the world's largest agrochemicals maker. andurned the company around the board of teva hoping that he will be able to repeat the same trick at the world's largest manufacturer of generic drugs. at the same time in terms of positions at teva, you have had -- or, acting ceo who will go back to being chief finance
officer. vigodman has a lot of challenges to deal with. share prices hovering around a six-year low. their blockbuster drug things in $4 billion worth of sales each year. it could face generic competition as early as this year. a lot for him to get a grip on. a naming that is we were expecting. republic -- we reported on the select couple of days and it has been confirmed. >> teva is a big player in the generics market. you also have your eye on another drug marker, novartis. >> we have got what looks like a monopoly trade in. perhaps strengthening the position in one place. that seems to be what novartis and merck are in talks about doing. itsrtis is looking to swap animal nutrition and human vaccine business for mark's over-the-counter health care
business including things like coppertone sunblock. that deal worth about $5 billion. each of those companies are looking to build their strengths in areas where there were already market leaders and distance themselves where they are not so big. this would work out for both of them. it seems to make sense. >> thank you so much, elliott gotkine with the latest on the pharmaceutical sector. it is a snapshot for professionals, the new app con nfide launched yesterday and it promises a self-destructing message to ensure they are off the record. hans nichols is here to explain. i am addicted to step chat. -- snap chat. self-destructing, it is very mission impossible, how does it work? wax for those of us that sent a lot of indiscreet messages to colleagues note that you have ever done that, would you want
is to have confidentiality. this offers it. it is a new app you can download. we are going to give you a quick demonstration. the interesting thing about this is you have to be -- there it is -- >> you have to be very quick otherwise it self-destructs. let's see if this opens, hold on. so we drag our finger across. and you read it. >> how much time do you have to read it? wax i am doing it wrong. then it is gone. clearly i am not qualified for this yet. need to send more indiscreet messages. it is quite easy just to drag your finger across and then you get -- i guess you can go really fast the second time. >> and then it self-destructs?
>> and more important, regulars can't get at it. if you and i were hypothetically doing insider trading and stalking stock tips, there would be a way to potentially hide it from regulators and that is why we don't know whether or not this will ultimately be approved. if colonies adopt it, is that a presumption of illicit activity? or is this going to enter the mainstream where it is ok to do? some people want to have private conversations electronically. >> this will also come in handy for a boardroom coup. >> not that we have ever try to plug one of those. yes, boardroom coup. -- ldl>is dld >> let's discuss live. they see all these e-mails. which stands for "let's discuss live." you have an indiscreet discussion by the pantry. --samsung is also in thing
pinking about introducing scanners. think the new phone is going to come out march or april. it scans your iris and that is your security. >> i love that. it is great. --fidentiality, data privacy there you go. thank you so much for that. "the pulse" is coming up in about 15 minutes. i am joined by guy johnson. a little bit of mission impossible security. >> he is going to have to crack that my "the pulse" isn't he? he needs to go away and practice and get it right. >> he is practicing as we speak. >> good. the kind of stuff we have to talk about in "the pulse" is the ecb and the bank of england. we need to discuss the implications of that. they are significant. mentioning,just ryan chilcote got the rolls- royce big this morning. we are going to be talking about that. i think that should probably be the top headline, ryan in her
roles. rolls. we were talking to a guy who said you are a mug if you pay full price. we are going to be looking at whether you should just wait a year. wait one year, buy a secondhand one. you going to save a lot of money over the course of that year on depreciation. we are talking about the samsung story. we have mnaus in a cody -- manus in a hoody. the wearable technology story is something we didn't -- we need to discuss as well. the business of fashion founder and editor joins us on that subject. there is a lot to get through. free withfully hands- his new samsung phone. >> he is practicing.
all right, thank you so much. here are some companies on the move. samsung will release its galaxy s5 by april and it is considering using iris scanning technology for the first time. it will be paired with another wearable device that will be an update of the galaxy gear smart watch. samsung hopes the new handset will compete with apple's latest iphone. what is in a name? michael eric anderson legally won a marketing contest i left on the. he was chosen -- by lufthansa. audi is going mainstream. cheaper models in the u.s.. audi joins the likes of mercedes-benz and bmw as german brands pushing cars that cost last than their flagship cars.
rolls-royce tops its sales record for the fourth straight year in 2013. let's get straight to ryan chilcote who is going inside rolls-royce, literally. what do you have for us? in the driving seat. >> i have never heard somebody colleagues so envious. [laughter] guy johnson, this is why rolls- royce at a record year and when he 13. they introduced this car. it is a two door. they just started deliveries. they sold a couple hundred of them. let's give it a whirl, i have driven these before. if you believe that. there you go. it is a keyless car. what could possibly go wrong? we are going to go for a little spin. there is another rolls-royce over there. the only thing worse than crashing in this car would be crashing into one another rolls- royce. here we go. because is interesting
it is really all about quite frankly targeting people like myself, though i have to say that i don't have the 230,000 pounds that it starts at. i was speaking with the chief executive earlier in the day in the backseat of a phantom. ,hat is what he was saying talking about the phantom. i figured out how to use the shifter. there we go. have a listen. >> the car brought us lots of new customers we have never seen before. bury much younger customers who love sports cars. that is excellent. also, it opens up a new segment for us. that is ofon for course because this is a two door, this is a performance car. it goes zero to 60 in 4.5 seconds. it has a 624 horsepower engine. it is quite a different experience.
making an suv in the same vein that they did this -- again, record year. fourth straight record year. more than 436 cars sold. >> ryan, thank you. how is the ride? i am so impressed. not only are you giving us a rundown on rolls-royce, you are also driving a rolls-royce in london. i am so impressed right now. >> i was thinking about doing some doughnuts here. what do you think? [laughter] driving is really nice. it is a bit unexpected. it is such a big car, you think it would be much more sluggish. because it has that the 12 engine and all those horsepower, it drives more like a maserati than a phantom or my kia. we are going to continue to drive around the block. >> i am stressed out for you.
on today's best stories, manus cranny is here. we are focusing this week on men's fashion, one to watch out for if you want to make a bit of money. it is rising by so much. >> absolutely. i went to the burberry fashion show yesterday afternoon. it was incredible to see the size of that fashion show. there was a brand that caught my eye just before christmas. it is this, the hood. >> it is very cody meets wall street. it is -- >> it has the little napkin there. these are italian zippers and this is portuguese cotton designed by british boys. i think it is just the most incredible piece. to get me to part with my wealth -- it is a $300 hoodie.
>> the retail casualties of christmas. investors punish tesco and morrison's. holiday sales slide. >> mario draghi and mark carney take center stage for their challenge -- but there challenges are very different. the ecb battling inflation. >> samsung eyes new security features. be newest phone could equipped with iris scanning technology as soon as this april. >> good morning. you are watching "the pulse" live from bloomberg's european headquarters in london.