tv On the Move Bloomberg May 11, 2015 3:00am-4:01am EDT
to remain at an all time low. three of the things i am watching i had of the open. futures pretty much dead flat. dax it down. looking at cac 40 a little higher. a lot of stocks. let's get to manus cranny. manus: equity markets a little bit flat. will greece get a good report card from the finance ministers meeting today? when you talk to our colleagues that seems to be the complexion. airbus is one of the big decliners on this market to this morning. andrea we will talk to them later. they had the accident on saturday over spain. the plane is grounded. the u.k. and german air force have those aircraft.
the project was 25 billion euros in of the making. 5 billion euros over budget. a human tragedy and of course another substantial issue for airbus to deal with. lend -- london, from the euphoric highs on friday. continuing its rise higher. stocks in europe up 1.4% last year, the best week. china's rate cut has had very little impression so far. it seems to come down to the discourse in germany. especially and number will administration. support for the merkel position ticket greece at any cost. -- especially the envelope merkel administration -- angela merkel administration. job cuts last week but earnings came out of this morning.
what we saw was underlined at $8 million. tyinb b -- tying back in is what the market is looking at. the big news with ahold are they in preliminary merger talks? one of the newspapers say that spoken to several sources and no price discussions and it will come down to shareholders which is mainly the family. and will they reach an agreement or work in unison? i want to take you back to the map. i saw this story which i found interesting. the dax, we are waiting for it to un-frost. almost $600 million going to the dax. this is an equity index at a five-year high in terms of valuation. if valuation drop precipitously last month and the valuation,
the dax is nearly 6% below that stoxx 600 and money flowing at the fastest rate in nearly a year at the dax. ubs quite likes it. less open doesn't let's open italy. i leave you with this. telecom is down. -- let's open italy. decidedly in the red. back to you. jonathan: of that is the market open is this monday morning. a big day on friday. the biggest day for european equities this year. even what the chinese cut-rate down 16 points. the dax joel -- dropped by 33. the big story of the last 24 hours has been the china rate cut for the composite gaining as the people's bank of china cuts interest rates for the third time in six months. the country economy struggling to meet growth targets.
we are joined by kevin hamlin in beijing. great to have you with us. why do policymakers act on a random weekend? and they seem to do all the time can we expect more? kevin: i think it is increasingly clear that the economy was struggling and the growth target of about 7% was probably jeopardize and that showed up in recent export numbers, inflation has been we. -- weak. real interest rate is high. last week, the stock market pulled back a bit. perhaps it gave a better window for policymakers to act without being seen as adding the flames of further price increases. jonathan: as far as you are concerned, i look at a rate cut in ac -- and eyes ca reaction.
has it really moved the dial? -- and you see the reaction. -- has it really most the dial? kevin hamlin: no indeed. many economists expect the deeper cuts. some say they have profound challenges. overhang of debt and out of the indications are further rate cuts will be needed and further cuts and the bank reserve. the requirement will be needed to provide support to prevent growth from slipping lower. jonathan: as far as the people's bank of china is concerned stimulus is one thing. what about the chinese government? do they need to match? kevin hamlin: yeah, i think most economists leave that additional
measures will be needed -- believe that additional measures will be needed and break reserve ratio requirements are good probably more fiscal support is needed and more targeted support from other measures will all be needed to shore up growth and prevent it from slipping below 7%. jonathan: kevin hamlin a big thanks. the shanghai composite pushing higher overnight, up 3% as i speak. shanking is up. -- saint king is up -- hang seng uis up. carrying into monday markets. the european equities let's switch up. the ftse 100 even with a rate cut from china, there we go. lower down by 10 points. cac 40 down by almost 1%. airbus is the big loser.
we will bring you more on the crash of the weekend. shanghai on your screen. switch of asset classes and a check on fx. euro-dollar down by 0.1%. sterling with a 1.5420. the gains for the election for the labour party. hanging onto the gains. yields unchanged. it was vicious for german bonds last week. let me check for you. i'm looking at the german on my terminal right now. german 10 year. up by not even a basis points. 65 bucks a barrel on brent. coming up we will deal with greece after the break. gridlocked. meeting the eurogroup. greece versus everybody.
another. finance ministers meeting for further talks on the potential to get a breakthrough with the deal and leaders are playing -- downplaying chances of success. not just for greece versus credit is but a breakup with an creditors themselves. we have reporters across of the story. we have one in brussels. and markets has it -- marcus has it from athens. tom, the guys in the meetings setting expectations low, what are you expecting? reporter: pressures are mounting on ie number of different fronts. and the positions if they could be more divided they are now in the mood is turning sour. alexis tsipras holding talks with his cabinet members. officials calling doubt they will take a tougher line. you have the creditors and the eurogroup led up by mr. bluefly
bloom and said they need to get a deal. you have shui blinn saying the greece is running out and warning both of a possible accidental default. this send a precarious stage. -- it is setting an precarious stage. they wrapped up early. they soweto do what we wanted. the sticking are pension and all of the things that have moved forward. the eurogroup saying we need more details. greece saying we need agreement we have made some progress and we wanted that and the statement tonight. that's what the greeks are saying. that is key. the ecb's role is central. if there is a positive statement, the ecb gives a bit more in a bit more ease and liquidity to those great banks that are propping up for the past few months. if the tone doesn't change, the
ecb may likely restrict further access to the liquidity. they may also increase the discounts on greek collateral increasing pressure on the greek banking system. the tone is crucial. well several .2 billion euros the greek are looking to get for data we have seven point 2 billion euros the greeks are looking to get. -- we have 7.2 billion euros the greeks are looking to get. it will be a tough call. jonathan: tom mackenzie a busy man. the look from athens, marcus standing by. we talk about home and tom mackenzie talking about the town. what is the tone like in athens right now? marcus: the emphasis is getting a statement from the eurogroup a meeting.
one thing that is interesting is when talking about this for mark -- months and deadlines and what is the next eurogroup and getting a deal. this time around, nobody is talking about getting a deal from this eurogroup. that's how far expectations are being paired back. they just want a statement indicating, the prospect of an agreement this month. now as they have seen a lot of progress made in talks over the last week, the greeks say. on the brussels side as well. the creditors side as well. there is for much talk of progress in terms of the tone of the talks. the process is itself since the reshuffle of negotiating team. the greek say actually is not just the process, you have had talk about red line. when it comes to the details of those red outlines actually there has been some stepping
away from a them. for example owns eight sales is seems the greeks have made concessions there. the red line always receiving. this why the greeks are saying we do need a statement of progress. because otherwise we will not be with to hold our banks together. jonathan: marcus, and a word will they have the money tomorrow? marcus benasson: they have the money, yes. that is the feeling will understand anyway. the finest are very tight, but yes, they should have the money. we have been talking for a long time about an exit. for months, we had to this discussion with interior minister. then he caught a bit of a fuss when he said we should pay wages and pensions ahead of the imf.
and a faction within the governing party that advocates is that. we do not know if they will gather that way tomorrow. does prospects of the deal. the stronger it because. jonathan: marcus benasson great work. and a big thanks to tom mackenzie. we are joined by a chief investment officer. welcome to the show, johnny. now, you and i know it is not a greek move. some way does remind finance ministers when they go to the table the market is not immune to outside pressure? guest: these are trading markets. even if you look at the spread between bonds and bgp's which is the peripherals, these are speculative even in fixed income and so while the move has been
in the bond market, a magnitude higher than we have seen in a long time prior. i do not think it the sort of thing that will affect of the current negotiations happening today and tomorrow and next week as the week after as they go along. i do not think they will be focusing on a few days of volatility when trying to work out house structurally viable and cast in stone this membership is going to be. johnny bank we talk about the similarities -- jonathan: we talk about the similarities between 2014 and it now. with your clients, do they worry about greece? johnny mehta: we had this conversation a few months ago and nothing has changed, nobody seems to mind. there are bigger issues. a lot of people are worried more about how they view major asset allocations going forward. review and the view of four and
investors has been property and equities has been the 2 places where money is best placed. the underlying driver for that to be the case seems to be in place. there are signals and discussions taking place maybe there will be a time when it is not so straightforward. probably more material decisions being made that the outcome of what happens to greece. jonathan: in brussels, they will sit around the table, creditors first of greece and greece versus everybody. on the creditors' side, is the split just as big is on the greece side? johnny mehta: i do not think it will pan out to that way. there will be a clear resolution one way or another. it can not a drag on forever and ever. if you listen to rhetoric from
both sides, it seems like it can carry on for years. it cannot do that. all of the creditors will sit down and draw a line is a this is what we can live with and what we can not. you get to this. jonathan: where would it be? johnny mehta: i think tomorrow is not an issue. they will find a way to model through tomorrow. a 20% or 30% chance of a grexit. jonathan: how does this cascade through the financial system? i asked a guest last week. with the likelihood was a casualty before we get an end deal? in the shape of one of the greek banks? johnny mehta: that is an interesting question. the probability is quite high. any other groupings are in any fixed state to continue. i think if you take schauble word, one or two of the greek banks really falling by the wayside.
at no resource a bell them out. just whose job to build amount -- jonathan: whose job is it to build them out? s the picture the markets. the ftse 100 positive territory. you see a right there up 0.3%. cac is down. air france one of the biggest losers. we'll bring you more on the server after the break. shanghai, biggest gain in weeks. coming back with a vengeance. up 3%. china cut the benchmark rates for the third time in six months. join us in two. we will do it all again. ♪
jonathan: good morning and welcome back. 23 minutes into the session. the top stories for the people's bank of china easing once again. they cut when your lending rate by 25 basis points from sevcon the benchmark interest rates three times in six months. error forces across europe suspended flights of the airbus -- air force across europe suspended flights of the airports after a crash killed 4.
the price of oil has a gains after rising for an eight week. we caught up with the cfo of stack oil whose that the current oil market has created interesting opportunities. >> it has created opportunities within m&a that is fair. and lower oil prices. it might be cheaper. we are monitoring very closely. jonathan: talking rates. no relation to mine. corporate news. a big fold and japanese stocks today. one stock in particular is toshiba down by almost 17%. caroline hyde has the latest.
caroline: $2.8 billion profit a market capitalization was a big move from toshiba. drilling to exactly why to a certain extent the earnings forecast. they had to arena back. you know to sheba for many brands. it makes television set laptops and printers and it is also a conglomerate and makes nuclear. it has been projects. this previous fiscal year of 2014 was down. it might have to reestimate what a made in 2013 and 2012. all of these may have to be revised. there are canceling their dividends. they are concerned about not only earnings but dividend and actually get a full picture of at least until june, next month when we got full disclosure of what to their earnings were. this is why. it is down to accounting pretty it could've gone slightly wrong. they're investigating improper calculating.
it is an industrial company. they make nuclear power plans and wind turbines and hydroelectric and air traffic controls. these practice are difficult to made -- measure. big data. there could been improper underestimation. several projects could have under estimated cost. this what did they have put out in a statement. overall they are investigating third-party has been formed. since april the third is when they first started to highlight to the market of these issues. the company began investigating possible accounting problems as of april 3 through same in glee, they are developing the seriousness of the investigation. at one point, the shares plunged 17%. we are not seen a since the earthquake and tsunami and japan. many are trying to work a how they value the company and we do not know what to the earnings are.
jonathan: welcome back to "on the move." i am jonathan ferro. 30 minutes into the trading day. losses across europe. dax down by 0.3%. cac up. one of the biggest losers is airbus following a crash over the weekend. that stock is down by 3.5%. the ftse 100 is all 0.5%. 32 points higher. this index adding almost 40 billion pounds on to the conservative majority win. let's keep the equities
preempted surprise election victory, david cameron's party has a majority in the house of commons. it is not very big and could be problematic when it comes to the referendum question. out to anna edwards. strong position. in some ways it makes a little bit more harder when you should make things easier. anna: good morning. yes, the tory party has allowed itself to be divided on the subject of europe. those in some cases are fairly eurosceptic. david cameron will need to take them on side to enable him to pass reforms and the loss. -- laws. he has the majority which compares to 19 92. we saw the tory party torn apart by the subject. may we see a rerun?
it will be on the minds of many in the tory party as they get ready for the next five years in government. they are not held back by the liberal democrats in their eyes and today can make some points and key cabinet appointments by themselves. that's a first job at hand. we have seen a whole will get the top jobs. george osborne has re-does reappointed -- reappointed. web not seen too many comings and goings. chris greatly -- graley will be leader of the house of commons. we saw him going in a few minutes ago. all eyes will be on the door behind me. jon? jonathan: all eyes will be on the bank of england's decision. every single economists surveyed by bloomberg expects the rate to
remain at a record low. why did the majority and the effect on fiscal policy could have an impact on what the bank of england can do, what is the take away? anna: it is interesting. the market has a reappraising were key interest rate will go on the back of the conservative majority pretty if the government is going to run a fiscally tight ship, does it mean the bank of england has to keep rates lower for longer to allow the economic recovery to continue? the markets to some extent haven't adjusted and are factoring in the first rate rise of 2016. mark carney is going to be speaking on wednesday. will he take the opportunity to push back of when a rate rise will occur or will he decided you are getting complacent at a rate rise could happen before that? that will be key. and a pass, he is taking the
opportunities to say the market of what he thinks is out of step in where policy will go. in april, we saw the mpc going to an exceptionally slow place -- pays. we will see walmart carney says. the most pressing matter is the rate decision that comes around lunchtime today. jonathan: thank you. the grexit question -- how will a conservative victory affected? moody's say it without consequences on all. we are joined by mood'y's vp, marie. my first read on friday and moody's, mine was a conservative majority, would actually be credit positive, it is that the mood? guest: two big questions.
the general policies in terms of fiscal and the big question of the you membership. what we want to stress is the opportunity and maybe uncertainty that is gone now. but that you membership question has really coming to sell for front and back at half implications. the jonathan: what type of numbers are you crunching? marie diron: it is too early to crunching numbers. whether the referenda will take place and has not been formally announced or the terms. and what about the outcome? how businesses will respond to it? what we highlight is it you as it -- bux and the referenda will create uncertainty for businesses with the rest a europe.
-- rest of europe. jonathan: when you look at the political tea leaves the clear vote for the conservatives especially in england means they are voting for no change. on the one hand you have that. on the other, how do you guys read the political tea leaves? marie diron: there was a lot of commonality when we look at the manifesto. a lot the commonalities across parties on housing and fiscal and direction. i think really that provides the base for the new government to work with. and also specific policies it that will affect specific sectors. jonathan: talk to me about the banks. on friday, a strong rally. i saw the movies -- moody's
note. marie diron: the have been underway fory quite some time. really increasing regulation and the requirements and a particular the bank levy in march that it will weigh on income for banks. there is also the conservative manifesto some strive to crate competition and the banking sector and it could create margins. jennifer: is it a note -- jonathan: is it a note you would've written on friday? marie diron: it is commonality. there were some negative and the banking sector. jonathan: on a comparative note given who won? marie diron: the increase in
jonathan: good morning and welcome back. this is "on the move." the fuzzies starting to turn higher up 0.4%. glencore and bhp after the china rate cut. -- the ftse 100 starting to turn higher of 0.4%. caroline: the grocery story. m&a could be in the air. check that out. 15% higher. the delhaize. we had reports of their preliminary talks between the companies to merge. back to 2006 they tried before and do now workout. it is reported. a belgium and french newspaper that several sources are disclosing they are once again discussing. not as far as to painting a price or structure picture just yet but to the own nonfactor is at the delhaize family and how
much of they would aback such a deal. can they make it work this time? together they would have a 25 billion euro capitalization company. those stocks are on the up on the talks of m&a. on the downside, and airbus crash. a400m, i know you will dig into this story. it is suspended for the moment. it crashed and it is down when you are looking at the stock repercussions. it is a human tragedy. jonathan: thank you very much. the cause of the crash is unknown. andrea joins us. what do we know exactly? it is hard to read. what are the details so far? reporter: it was a plane that was going to go to turkey. it was the first time it had a
loan. it crashed 15 minutes after it went up. it was an emergency. they accidentally hit a power line and there were reports that there were survivors saying they had multiple engine failures. if it turns out the betrayal there will be a lot a focus on the engines. jonathan: the engines is one part of the equation. but for airbus, what does it mean for airbus and their customers? andrea rothman: it is way too early to say what it means for airbus. when you look at airbus and the plane, they make any given a model, thousands of airplanes. they deliver 10,000 of these. when you look at -- i am sorry. when you look at the a400m there's only 174 plane that has been open. it is relatively small compared to their output.
it depends on the investigation and whether this airplane is in trouble or something specific to this one plane. with policy 12 deliveries. they" very slowly. -- we have only seen 12 deliveries and they come very slowly. some other countries will take further. the bottom line is it is a fairly small number of airplanes. 12 out there. we were have to wait to see what the problem is and if the company decides to slow down on the manufacturing or stop until they address the problem. jonathan: as far as the investigation timeline, when do we expect to know more? andrea rothman: as soon as the black boxes get to the investigators something to give us an initial indication. the black boxes, the flight recorder and cockpit recorder
are under the control of the spanish judge who will decide soon where to send in the black boxes. either to the spanish authorities are one of the other exports -- experts in france germany, and u.k., they have advanced facilities for reading these boxes. once they have a read him at the flight data recorder, that can tell us within a two or three days at lee's where the problem is. -- at least where the problem is. jonathan: thank you for joining us. no. you will bring us of days when you have them. bloomberg's andrea rothman i want to turn to russia. flexing their military muscle with an $8 million tank during ve celebration. making an appearance was angela merkel and she paid tribute to russian victims of world war ii.
her visit raise questions to a commitment to economic sanctions against russia as a conflict control in eastern ukraine. ryan chilcote joins us for more. merkel's the visit, whenever you get a western leader meeting with putin, we asked the question for what does it mean? ryan: anytime she meets with putin, it is important to pay attention. the answer is her trip doesn't mean there will be any relaxation of the sanctions. she went on sunday and did not go during the victory parade on saturday. she did it to send a message for you yes, we want to remember the russians killed and our responsibility as germany for that. but no, i will know when is a military parade as celebrate militarization of russian and what russia has done in ukraine. you know, it is been three months since at the 2 have met
for you if you look to hurt us often, you would been disappointed. take a listen. angela merkel: the criminal elite -- illegal annexation of crimea has led to a serious setback for this cooperation between russia and germany. we see this as violation of the fundamentals other common european peace framework. ryan: she does not minutes her words. criminal and illegal. that is something to say that sitting next to the russian president in front of the russian audience. it shows our commitment to the sanctions. it is clear. they will last at least until the end of the year. she will not allow any other countries to do fact. jonathan:: let's get to the fun stuff a show of military power. $8 million tank.
ryan: it is called the t-14 it will be the main that'll. it will replace the t-90. product of engineering prowess. they rolled it up for the first time officially on saturday. there it is against red scare -- going across red square. it is hugely important to the russian military, their first in 40 years. the idea of exports. the t-90 is in india under license. saturday was face-saving. they brought the same tank out earlier in the week and one stalled in front of the mausoleum. the poor soldiers in the tank and raise the red flag. they engine kept running but the tanglewood not go. half an hour later, after trying to tow unsuccessfullyit, if
found its way. a big worry so moment. this tank which is arrival to the u.s. tank is unique in that it has a turmeric that is remote-controlled. -- touret that is remote-controlled. they can send in a different section. the idea is 10 or 15 years down the line, you could robotic tanks. you sit in your living room like you have with drones and you are operating that tank. the jury is out on the tank. it stalled earlier. they made it through saturday. when it star shooting and we get live fire, we will know more. jonathan: you remember "robot wars?" it is a u.k. reference.
where almost 15 minutes into the session. up to's read where equities are. daschle we are almost 50 minutes into the session. -- let's get you up to speed where the equities are. a little bit stronger through the morning on the index on the back of a rate cut in china. shanghai comp having its best 2-day gain in weeks. one of the biggest losers is airbus. we will break down the markets for you and what is coming up in another busy week. join us in two. ♪
jonathan: welcome back to "on the move." i am jonathan ferro. up to speed on top stories. the people's bank of china take the headlines even once again and the central bank cut of the lending by five basis points. they have cut rates three times. stocks in china surged. japanese electronics toshiba. the company with injury forecast pending a probe into improper accounting. the price of oil has gained
after rising for an 8th week. we can't do with the cfo of statoil saying there are unique opportunities. >> there are unique opportunities within m&a that is fair. and with a low oil prices, it might be cheaper. we are monitoring very closely. jonathan: "the pulse" is coming up. we are joined by guy johnson. good morning. guy: greece, clearly what happens next? payment tomorrow is what happens next. does it not get made? the language is it gets made. just the start i would argue of a difficult summer for greece.
today's negotiations have been downplayed in terms the expectation of delivering a deal. very excited about it but i am sensing the tempo is picking up. jonathan: we have lost our faith in the political deadlines. last week last friday the best day of the year. bonds. the interview i'm looking for two is the big guy from pimco. guy: do you say is inflation the back? is that what the market is pricing in? was it a blip? you have to star by the big story of what is happening in greece right now and the u.s. economy and the latest issues need to get factor in. and the u.k. as well. today is a non-event. it will not deliver much. wednesday, i think listening to mark carney will be generally fascinating.
when does this guy raise rates? jonathan: and tighter fiscal policy? do you think it will be 15? do think it will be 16? the market seems to be pushing. guy: at the end of the year, talking about that was a meaningful impact on a pickup. jonathan: do not miss "the pulse " coming up in four minutes free a busy day and a busy week. a reminder of what we will watch. the bank of england non-decision, the rate decision later. nobody expecting any action today. later on at 2:00 p.m. the u.k. time, the eurogroup versus greece over in brussels. tomorrow, greece has to make the payment to the imf. a lot of people expecting they can. then of course on wednesday, bank of england decision to forecast the report.
guy: greece's future. with the country due for a big payment, finance ministers need to discuss releasing funds. francine: stepping up stimulus. china lowers rates for the third time in six months. we look at the impact on debt and property prices. guy: cameron's cabinet. we are live in downing street as the u.k. prime minister prepares to announce his new business secretary. good morning. you are watching "the pulse." we are in london. i'm guy johnson.