tv On the Move Bloomberg January 28, 2014 3:00am-4:01am EST
expenses from 2014 back into 2013 numbers. it brings up two huge issues, one, the people who are going to receive a bonus. that issue still very much there. who is getting a bonus? we'll talk about that. the second issue is capital. will they have time to sell their u.s. assets or might they have to be more expedient in terms of raising capital more quickly. those are the pressures. >> we'll see how it plays out. jon, you're watching all things tech. >> all things related to apple. iphone sales disappointed even though they were a record for the quarter. we could have revenue drops for
apple. the arm down 2.5%. you can see this playing out in the markets. >> let's move to another company that reported. that is siemens. hans, you're watching details there. >> they have a strong future but revenues down 3% from the year before. the first full quarter of a report card for the new c.e.o. we'll see how the it reacts through the day on the trading floor. >> jon, let's come to you on the broader market picture. emerging markets, things looking a little calmer perhaps? >> the calm after the storm. u.k. g.d.p. which manus is on and the federal reserve meets today. very interesting.
you're looking at futures. fairly flat through the morning. the ftse had its biggest drop yesterday. here in london on the ftse 100 where it takes a bit of my interest this morning because we get u.k. g.d.p. the best year for growth since 007. this is interesting because it is how it shapes monetary policy at the bank of england. what will they do with forward uidance? likely to move f.x. heading back towards the highs of may 2011. u.k. g.d.p. and you also have the federal reserve meeting beginning today and finishing tomorrow.
looks like another reduction in quantitative easing. >> we'll keep an eye on what's happening stateside. economists from deutsche bank say pain will be limited to a few economies. let's welcome in a managing director and investor. some economists are saying the pressure we're seeing is going to remain contained within emerging markets and we're going to start distinguishing as investors more than those that are facing trouble and those that are less so. is that correct? >> i think it is too early to say. over a number of years we have seen emerging market currencies come under pressure. the self-corrected forces of better exports should have resulted in lower account
deficits. the reality is that has not happened. we're not at level where is current deficits are. >> why? because of a lack of growth in the developed world or because everybody was chasing the export model? >> yes. absolutely. there has not been enough internal reform focus on growth. we also don't know what the transition in china is going to be with their reform program. i think it is way too early in the year for people to say it is contained. we're seeing underperformance now. this is not a new thing. it is a continuation of the same. people are hoping the growth mod realize is changed but they have not yet. is it china that is worrying
or some of the credit issues? >> i think it is a combination. the two are interrelated. once we see the proactive sort of credit resolution, they are beginning to embark, we have seen a bit of a setback with the most recent trust fund bailout. what we have to see is defaults happen in on orderly manner. we don't know what the investor impact is going to be. plus tightening bringing down refocusing of growth that has uncertain consequences on economic growth. it is challenging now. we don't know how deep the slowdown is. markets can only speculate where it is going to be. we see one bad number and --
>> let's talk about more developed markets and the tapering conversation surround pg federal reserve. that is one of the reasons we have seen turmoil in the markets at the start of the year. is that going to change the ed's thinking? are they able to think only about what is right for the u.s. economy and make that their focus. >> i think they would love to be able to say that but inevitably there is going to be some feed-through to their thinking. one economist said the fed these stop digging a hole for themselves because at some point they have to get out of this q.e. >> $10 billion per meeting according to estimates. >> but it is still growing.
the q.e. is still going on. at some point they have to reduce their amount of debt they hold. we have to go the full circle here. the first thing to do is stop digging. i don't think they should stop that process. they should carry on tapering which they probably will do. >> is the market fallout around the taper story? is it the amount the fed is utting back on stimulus? >> it is eventually outcome. we have been moving towards stimulus since 2009. growth momentum is slowing and we have had a lot of stimulus. >> thank you. here is a look at what is
here is a stock on the move. the apple readings sent stock eaker. you can see the stock is down .2%. this company has twice increased its q 4 sales outlook. let's move to banking. r.b.s. is on track for its largest pretax loss after setting aside 3 billion pounds for legal and compensation claims. we know the legacy issues. the bonuses and capital are also on the agenda here. >> when you look through the
roll call of additional charges, it moves on to that. jamie dime deon got a pay raise of 74%. -- jamie dimon got a pay raise of 74%. >> this is the team that is leading our organization and when you making the losses we're about to make, the team believes they should not accept the bonuses this year. >> this is probably one of the most socially politically contentious issues. for me what is interesting is when you go behind the bonus story, they are going to lobby for a 200% bonus and pay for some of the staff. it is the people at the top who are not excluded from receiving a bonus. have a look at this. the roll call which makes for interesting viewing.
eler nielson will be -- -- peter nielsen will be allowed to have a bonus. ory cullinan leads the bad bank and he will be able to have a bonus. he applied for c.e.o. job which mcunion went for. when you're running a bank which is difficult to hold it all together and keeps the programs in place that are delivering, i can tell you from the sources i spoke to, in the the american and european offices at r.b.s., it is a tough environment there. people are war weary. there is not a great sphere.
people -- atmosphere. it is not a good place on a whole variety of levels. >> if you're trung part of the bank that is the bad bank, what does it say on your business card? >> it is probably going to come own to 8.1% to 8.5%. this is going to put pressure on mcewan to accelerate the downsize of the bank. can you time to go for an ideal? do you to sell the assets? disposing of some of the assets would relewis your risk-weighted assets. let's see what he delivers in
2014. > thank you. let's get the thought of our guest. i know you like some of the financials. is this tied to a global recovery story? there are so many legacy ssues. are we going to see financials respond the same they might have done in previous upturns? > it is an improving position. a lot of the capital-raising issues hopefully are behind us with some of the u.s. and u.k. banks. europe will have to wait and see.
housing is giving us a bit of a -- as is reducing credit spreads for a lot of the european peripheral bonds. hat is the real tail wind. i think we're way away from that. that credit channel is still in place. >> do you stay away from it because they have the asset quality reviews? do you wait before you review whether you want to be involved in those kinds of banks? >> there is no need to jump the gun on this. we have u.k. banks that we like and u.s. banks. we like to be more cautious.
>> let's talk about technology now. there was some disappointing news out of apple. jonathan ferro has more. >> it is all about the iphone. record iphone sales but they disappoint. expecting just at 55 million 51 million.at a significant part of the? apple's market share is declining. large screens, low prices and that is where the trend is. the other side of this story are the forecasts apple released last night. revenue for this current quarter, even with the tieup could well decline for the first time since 2003. >> this could be the quarter
that we're in could be the first quarter of sales drops that we'll see apple report since 2003. let's talk about what this means in terms of product category. does this come down a lack of new products from the business? >> yeah. the discussion comes back to exactly that. apple hasn't released a new product since 2010. no new product since steve jobs. people will come back to this issue, a lack of innovation. maybe a push into mobile payments. something tim cook says increegs him. sensor has been uilt in. how global apple is. you see how this is impact
european markets. the likes of arm and dialogue, you see them down in early trading. >> let's continue our conversation with our guest. we had a more disappointing set of numbers from apple. what does this tell you about technology? the trend that many are talking about is the move towards a lower price hand set. is that something you're interested in as an investor? are you focused elsewhere? >> i guess it is not surprising. this is because we have new and sets that are cheaper. we want to play it through micron that builds flash memory chips. pricing power has returned to
the sector. ry to get nine times earnings. that is the stock that will benefit from proliferation. >> away from -- partially sticking with the hand sets you like google, don't you? >> google is a complete dominance the online ad spending space. they are building momentum. hey are the dominant player. we really like to company. in this market where growth is hard to come by, this is one company that is growing. >> there are not many company names that -- thank you so much for joining us today. coming up, a good report.
breaking news out of ukraine. he prime minister azarov has resigned. it is not the resignation that protesters in the streets have been calling for. ryan chilcote has been following this story for us over the last few weeks. let's get his thoughts. a resignation but not the one the protesters were looking for. >> yes. we had some hints that it might appen. he was prepared to install one of the opposition leaders into his job. he declined the offer so it seemed as if the issue was sort of closed though we did get a hint there might be a discussion about government
responsibility for the violence we have seen during protest and the violence from the police and whether that was appropriate. ery interesting. this happened about -- just about 10 minutes ago. immediately after the announcement, they switched away. >> interesting. the announcement going on to say with the intention of opening the way for political compromise. the government in the last few days offered this position to the opposition. it was rejected. now they are opening up this discussion again and think perhaps they can revisit there. redshirt appears there is an irreconcilable problem. the president wants to stay in power until march. the protesters want him out.
the president and his government are the problem. the prime minister is a technocrat in this country. the power is consolidated at he presidential level. whoever is offered the prime minister's job, if that is omebody that is palatable to the opposition. would they be given any real power. what we have seen in the last 48 hours has raised concern for the government. particularly the protests outside kiev. they want to see that stop. this is a real concession. obviously the cynics will say strategizing is, and politicing. >> thank you very much.
we saw emerging market currencies under pressure at the start of this year. the r.b.i. in india, the central bank there actually moving on interest rates to stem the fall we have seen in the rupee. things different than how they have been over the last couple of trading sessions. let's get to top headlines for you. ukraine's prime minister icholas azarov has resigned. they are expected to hold a no-confidence vote in the government. r.b.s. is on track for its biggest pretax loss since 2008. they set aside 3.1 billion
pounds more for legal and compensation claims. a surprise rate increase from the reserve bank of india. they raised their bench mark to 8% from 7.75%. u.k. g.d.p. figures for 2013 come out in about an hour's time. there are signs of a pickup in growth. questions we main how sustainable it is. manus cranny joins us with a look at these numbers. >> a good 2013. the ability to replicate that is going to be tough. it is the question of whether t is widespread. production slipped a little in november.
the view is we're going to get momentum continue through 2014 and into 2015. 2.6%. we're in a sweet spot. that is phrase being used. there was one cracking quote. a natural momentum that a self-reinforcing cycle, people spend, companies rise, companies hire. that is the key. it is about that level of confidence. do you feel more confident bout doing innovation. do we feel more confident to spend? >> some key analysts have been adjusting when we see the first rate hike. >> it was in the latter part of
last week. have a look at this. city and barclays. they are pulling their view forward. first rate hike will come this quarter of 2014. pair ba says it is the end of the afair. barclays says we're going for a gradual process. i think what you have here is a definite shifting. said 1% by the end of the year. economist enior u.k. ross walker joins us. we were going through range of
expectations. you're towards the end of the range. when do you see the rate hike happening and why? were we're still third quarter 015. in august we had the first hike. we were one of the earlier banks looking for an early rate rise. the consensus has shifted. i'm concerned about the medium term sustainability of growth. i think we'll have a decent gleer 2014 but some of the props may fall away in 2015. particularly relations of the housing market and credit. i think you need to keep an eye on what's happening in the u.s. and euro area. i don't think they will be raising rates too far ahead of
the fed or e.c.b.. >> if the u.k. economy is in a sweet spot, should we sit back and enjoy it? >> no, i think they are reasonable questions. it is -- i would say in the short-term, it is certainly threw unbalanced growth is better than no growth because at least if you develop a bit of momentum, we could see the recovery broadening out. but really that is -- we have only seen partial rebalancing of the economy. in today's numbers we'll get only an output breakdown which is not the best way of exposing the fragilities. we have had no boosts to growth from net exports since the recovery began and the level of investments is below where it
as at the cyclical trough. i think we need to see growth bronged out. that is big question for the year ahead. >> how do sue see broadening out impacting on employment data? the markets were caught off guard at the pace at which the unemployment rate is coming down in the u.k. do does this mean they will adjust forward guidance because it is tied to the speed at which unemployment comes down? >> the guidance will have to be adjusted because we're closing n so fast on the 7% threshold. carney seems to be hinting they will make an announcement in february in the inflation eport.
hinting they may ditch this unemployment threshold and move to something else. it is still vague what that might be. >> inflation on the other hand perhaps giving the bank of england a little breather in terms of the outlook for interest rates. where do you see ip nation heading in the u.k.? does that continue to give the u.k. and bank of england some time to breathe? >> the unemployment rate has fallen faster than forecasters expected. the game change is how quickly ip nation has fallen back to target. when the bank of england launched guidance in august, they thought inflation today would be at 2.9%.
it is actually at the 2% target. they have only one target, the inflation target. that is the key thing that is going to allow interest rates to be held for longer. if we have this conversation of falling unemployment and higher, stickier inflation they would be in a more difficult position. >> fascinating to watch the interplay between inflation and unemployment numbers in the u.k. thank you. we'll take a short break here at "on the move." after the break, we'll speak with the chief executive on europe's largest semiconductor maker. keep it here. we're "on the move."
carlo. great to talk to you. your business is in the middle of restructuring. you delivered losses but they are narrowing. what is the big headache for you? what is the big challenge ahead? carlo, do you hear me? > yes, now i can hear you. >> you delivered losses. they are narrowing. what is the big challenge ahead for stmicro? >> we moved into at least from an operating point of view to a small positive. it is now second quarter in a row that we have a small profit. if i compare with the situation that we have in q 4, 2012, it
is much, much better. he turnaround was -- for 2012, the loss to st was negative and moving into positive territory. what is done -- it is clearly not enough. e want to move on. we want to gain share. like 2013. the markets that we serve declined and we grew. this year we are more encouraged by the markets projection information that we ave. the target is 4% growth. we want to do better than the arket.
the growth margin will improve. we will continue to drive down our expenses. in q to 4 we reduced them by 4%. >> carlo, can i ask you about what customers are buying now? some technology industry analysts are talking about how consumers are moving towards lower priced hand sets in the smart phone space. what are the key trends in tech technology that you have insight into that we need to be aware of? >> absolutely. i think there are some important trends. i would say at the very, very -- al -- general trend is i would like to mention this. there are plenty of energy saving applications in many
different areas from industrial to automotive to data centers. his is a common denominator. power management, in the area f energy saving is crucial not nly for equipment but also for sophisticated systems like data server. this is an important trend. another important trend that we ee is in automotive. it is very moderate. it is about 80 million growing a little year after year. the semiconductor is increasing significantly. driven by new things like safety and fuel consumption. this is another important trend and finally eled like to
mention one that is -- i would ke to mention wearable products. this is another area where you ow, the application is a smart censor where -- sensor where you sense important characteristics to have body and then you read it and you manage it and you connect into a smart phone for various applications starting from, for instance, you know, fitness, including healthcare. >> we saw it at the consumer electronics show. carlo, thank you very much for joining us today. the chief executive of stmicro electronics. "the pulse" is coming up. guy johnson joins us with a
preview. what is coming up? >> the india central bank raises rates. a bit of a surprise. the turkish bank potentially about to raise rates. how big a threat is it? we'll talk with the former governor of the argentinean central bank. he has had many jobs, both at the i.m.f. and in argentina and elsewhere. he has been there, seen it, done it. he will tell us what's happening now. and we'll talk about the fallout from apple's poor iphone numbers. will we see more innovation coming through from this company? we'll be looking at the apple numbers and what they tell us about the future of this usiness.
we have a company that is changing nature of the way we construct our big skyscrapers. it is an eclectic show. we'll cover it all. back to you. >> here are some of the companies "on the move" this morning. in talks to build advanced manufacturing facilities. oxconn is the maker of apple iphones. than profit more doubled. they are focusing on cutting costs. they had warned they would not meet the goal for 2014 profits. and stock files last eight ooksprment -- eight weeks.
let's get back to that siemens story. the first full quarter under the new c.e.o. of that business. hans nichols is in berlin with details. >> we saw orders beat. revenues missed. revenues down 3%. orders up 9%. almost a forward looking story. some of the drag on the first full term -- first full quarter as c.e.o. had to do with currency. uite a bit of fluctuation. strong euro dampening sales. it looks like the stock is up a little bit, under 1%, trading this morning, last time i checked and we have here, moving forward in terms of
orders. they are delivering trains. they delivered four trains and have another 12 left in an order of 16. when we look at overall revenues, it is still down a little bit. income was down a little bit. they show strength in the variety of their units. on this key issue of profitability, they came in at 10% this year. of course the goal was 12%. that's why the last c.e.o. left this summer. >> which units have been doing well for the business then? are they still having flouble the infrastructure and city sector? >> it seems like we have seen a little increase here in the infrastructure cities. let me give you the numbers. jumped to 330 up from 141. the other trouble spots are their energy sector where they had a 67 million euro write-down.
>> welcome back to "on the move." i'm anna edwards in london. 8:54. for a recap on the biggest market movers, jon ferro is here and ryan chilcote and manus cranny as well. manus. talk to you. >> lloyds raised -- it could be investec. push for the liable, $200 billion and change. >> just briefly, ukraine. an update. the prime minister offered his resignation about 40 minutes ago as the parliament began an emergency section.
he could remain the acting prime minister. somebody has to take the job. the opposition said they would not accept the post. you would expect instability and bond yields to go up. they are interpreting this as a concession to the opposition and yields are falling. >> jon, let's focus on the technology sector. the read from the apple numbers. >> apple projecting the first quarterly decline for revenue since 2003. the big supplies for likes of arm and dialogue falling. >> arm down by 2.6%. that is a wrapup of what you need to know in terms of the market moves this morning. "the pulse" is up next. don't miss guy's conversation with the former oorge tine bank governor. that will be taking place just after a very short break.
>> ukraine's prime minister resigns. he steps down in a bid to and more than two months of violent protest. shaken to the core. iphone, itsle's biggest source of revenue, missed estimates. bad news dragging european tech stocks lower. and a surprise rate hike from india. we will talk to a former central bank governor from argentina about the threat inflation poses to emerging markets. good morning, everybody. you are watching "the pulse."