tv On the Move Bloomberg May 29, 2015 3:00am-4:01am EDT
some of the big economic things we will be talking about. we are looking ahead to the presidential election. we will speak about what it means for the ad world. the only thing that matters is the market open. futures are pretty much flat. manus cranny the market open. >> we get a little more support from the center of europe. he does not sound optimistic. it is friday. it is all about money supply. money supply data will be delivered. money supply is expected to come in at just under 5% of the whole of europe. the average money supply is expected to show growth of four and a half percent.
they are preparing for a new offer of 500 swiss francs. we are trading below the current did. the market -- current bid. the market is a little bit unconvinced to do a deal at that price. they got tenants to stay. he is calling the bottom of the euro. it is going to base out around 104. you have quantitative easing. you have to really move on the machinations of greece.
it really reinvigorated itself. you had yellin saying to get ready for higher rates. 12 year low. will it get to 132. >> you enjoy the weekend. spanish inflation month on month. the preliminary reading comes in at 0.5%. -.2%. the inflation numbers better than expectations. we get the final reading followed by inflation of italy.
the bank of japan says the falling oil prices are going to boost spending, and that is going to push up inflation. households actually cut spending for the 13th month in a row. no influence the rest of the economy is going to start working to create inflation as needed. not a good sign. >> you and i have gone back-and-forth. the economic data is showing a completely different story. does the government have to think about doing something themselves? >> to boost inflation the bank of japan has come out and said clearly they think prices aren't moving as they should be. unless the inflation does pick up, someone has to do something.
the government has been pushing countries. if the bully pulpit is enough -- is not enough, maybe the government will have to do something and hope that will increase spending. >> thanks. joining us live from tokyo. let's get to richard in hong kong. you and i have talked about this a couple times now. today it is real estate. is this another example of the risks that line these markets? >> the similarities there definitely are some.
it had a rather mysterious and huge rally. it was up 120% three yesterday, making it one of the best-performing stocks in hong kong. it wants to share cells to raise cash. they ended up having to reduce that by 20%. the amount they raised is not enough to offset huge debt the company has. at the same time for this company, a 20% discount on a share that has risen 120% is a lot better than they would have been at the start of the year.
this is not a small company with a huge amount. >> i ask this tongue-in-cheek. it is a great question of forgetting about greece. here is a question for you. is that because people are too busy gambling on stocks and not the casino? >> i think that is definitely part of it. a couple years ago had we been talking on tv, the huge rise of macau, the wealth of the casino operators now those companies are down 50% from their peak. macau reported a 11 straight months of declining revenue from gambling. this is a huge part of what was a former portuguese company famous for crumbling architecture and interesting
dishes. now it has got huge casinos, but people aren't coming. why would you? look at the roulette table compared with a virtual guaranteed win. the other thing is the government has been cracking down on people going to macau. they have been discouraging gambling. the stock market they have been allowing greater margin lending. it's clear which market they might see gaining. they want macau to move to other areas. it's unclear what they can do. the only edge is it is the only place to allow gambling. it is unclear when it is going to get its edge back.
>> thank you for joining us throughout the week. let's get more insight on japan and china as well. it is not the first time we have talked about economic data and a market that tells us something else. are you in the nikkei? >> we do like some of the smaller companies. the industrial companies in japan. many of those are in very good shape. they have got cash balance sheets. they have leading technologies and chemicals, so they are going to benefit. all of the data suggests the bank of japan is going to have to push the bank of japan down further.
jonathan: dollar-yen is one story. the euro yen tells me something different. how critical is it going to be? >> yen dollar you have seen depreciation. it is doubling again. a couple points. the best-known japanese multinationals most of them are diversified. they are insensitive to movements in the yen dollar. exports and u.s. dollar terms have been falling since april, 2011. i think the environment is much tougher for the reason you mentioned.
the domestic-based exporters have to look out for a more competitive europe. our expectation is the japanese export earnings going forward are going to start disappointing. export prices are falling rapidly. >> a lot of people say we are long japanese equities because we are long dollar yen. a lot of people are talking about a change in corporate culture. is that giving more money back to investors? is that going to offset the stabilization of the dollar yen? >> i think the change in corporate culture is a great story. it is not going to make any difference on a one quarter perspective. over the medium-term, getting japanese companies to address
some of the large cash piles many of them have on their ballot sheets in some cases you get companies trading at the value of the cash they have on their ballot sheets. the nonprofitable is mrs. are not ones in distress. that will be a long-term driver. it is not going to drive things quickly enough to make the next quarter look better or worse. >> the japanese politics used to look incredibly volatile. at what point do japanese consumers and the japanese electorate become as exhausted as some investors might become? >> i will say they are totally exhausted. a banal makes -- abenomics is a failed experiment.
one was to raise inflation above 2%. the thinking is it would encourage companies to boost forward. the second was to deliver an export rebound by restoring competitiveness. that clearly has not happened. you are talking about an aging disabling economy. you are driving down the real rate of return. that has negative consequences. you have seen the biggest fall in real earnings in 25 years. you saw a real consumption growing at the fastest rate. that trend continues. neither companies nor consumers are convinced at all.
>> not so optimistic. thank you very much for joining us. andy lynch is going to stay with us. a quick market check. i have the ftse 100 pretty much had flat. coming up the fee for meeting in zurich kicks off as the embattled organization plans to go ahead with their election. we speak with martin soros next. then prime minister cameron touches down in germany today for what should be an interesting conversation. those stories and more coming up. this week elections will go ahead as planned despite the arrest of several key officials. mark barton is in syria, where today's vote will take place.
mark barton, over to you. >> i certainly have. as the rain comes down i am joined by the founder and chief executive and he has brought a guest with him. we will discover who is the expert. let's cut to the chase. you were a nonexecutive director for the england team for the 2018 world cup. were you aware of any of these allegations of corruption that seem to have been endemic within the world of football back then? >> if you look at the timeline some of the situations were apparent as far back as 2010 and
2011. there has been discussion. there have been fingers pointed historically. not to the degree you see in the indictment that was issued a day or so ago. the answer is there were suspicions. there were accusations being made, but not to the level and the degree there are now. in relation to the english bid, i think the key was not the relationship with fever. the issue was the relationships. jonathan: did you ever encounter corruption or wrongdoing or not? >> no, our focus was trying to mobilize the resources we had in the u.k. or england for the bid. the answer is no.
a lot of people ask questions about that bid in the relationship with fee for. i think the central answer had nothing to do with the external relationship with fee for. it had to do with our ability to mobilize. >> is the bid francaise -- process flawed? >> it can be improved. there have been excesses. clearly, there has to be an open and transparent investigation of what went on. jonathan: we mustn't forget the former federal prosecutor's report criticized the fa for flouting rules. they say he was sharing it with inappropriate requests. they offered accommodated rules.
was it not whiter than white? >> that will depend how deep the investigation is. it will have to be looked at over the coming months. i think the issue was a critical issue. the failure to publish the report i think exacerbated the problem and made it even more severe than it turned out to be. >> you are at the center of the biggest olympic scandal. marketing was one of your roles. 1999. compare then and now and how both bodies dealt with it and are dealing with these scandals. >> it was 15 years ago. many people are saying the
crisis surrounding the games and the inappropriate bidding was going to bring down the ilc. the sponsors have been forced to say to withdraw your support. it took what was the worst crisis in 100 years and used it as a catalyst for reform. i think the challenge is when they were the first inklings of a real problem, they didn't dig deep enough to clean out the system. this has been tracking on for a few years. the latest round is clearly tiring the patience of some of the multinational corporate -- corporations. jonathan: i will start with you. are you surprised with how the sponsors have reacted? there have been strong statements. why haven't any pulled their partnership with fee for?
>> i'm not surprised at all. the companies are in the spotlight, and they can't ignore what is happening. they are the sponsor of the world cup. the department does make a separation with the actual event. >> i disagree. i think that is the issue. the public fails to make the distinction. i think what you see coming out doesn't make the distinction between the world cup and fee for. when it -- any of the sponsors sponsor the event, they are between a rock and a hard place. we don't know what the clauses are or the details. the reason the sponsors can't go
further is because you don't want to be fined. i think there is a bit of an issue. the extent to which they can go. >> they are running scared. if they did with draw, the competitor would likely step in. >> we may be getting to a stage where companies try to look at the downside. jonathan: what is the downside? >> risk. >> why do people respond to the world cup? you have the olympics and then formula one.
those are the big live sporting events. the world cup is the most powerful. all the noise we are hearing -- >> this is a palestinian conflict, just so you know. >> having said that, i think we are getting to a stage where people are trying to assess things on a different basis. all the social issues we see, people are starting to say, look at it in broader, intangible terms. we have seen people not renew their contract. >> this is the most televised event in the world. >> all the focus is on the sponsors. they represent 25% of the revenue.
the major revenue comes from broadcasters. >> you're in this too. >> tommy me what he is like. >> -- tell me what he is like. tags he is very focused. he is very determined. they said performance is important. when you look at what fee for has done, up a third from previous cycle so his performance from the point of revenue generation, there are also other important issues to think about. people in glass houses shouldn't throw stones. there may be other issues you have to think about. who supported qatar?
what other forces took place. >> this is a bigger issue. >> you have politicians jumping on the bandwagon to say this is terrible. it is terrible. the politicians need to look at their own involvement because governments have been using billion-dollar trade deals to influence. to influence votes. no one is talking about that. if you are going to have a debate about how these major events are selected, the government should look at how they leverage. >> it has to be a transparent process.
you have to look at that. it is something like three quarters of the income comes from broadcasting. >> we have talked for 10 minutes . i could talk forever. it is the palestinians protesting behind. more on the studio. >> let's get you up to speed on where markets are trading. the dax is heading for weaker losses, down by another 29 points. let's check out the fx market. the dolly and is the big story. the headline generator hitting a 2002 high. the euro is dead flat. and down by a 10th of 1%. up next, the g-7 wraps up today
oh! i can't believe it! [cheering] hi, grandma! ♪ jonathan: good morning and welcome back to "on the move." let's bring you up to speed on some breaking headlines. ukraine creditors said to offer coupon cuts and a 10-year extension. a lot of talk about how ukraine is going to restructure its debt. we are getting a headline that says ukraine creditors are set to offer coupon cuts and a 10-year extension. we will bring you more details on that. we will catch up with ryan chilcote. just to get up to speed on the
markets, the ftse 100 back into negative territory. cac 40 in paris about 0.5% lower. the dax nearing session lows and heading for a week of losses. let's keep the lid on these indexes and get over to the big stock movers this morning. nejra: let's start with one of the big gainers on the stoxx 600. that is syngenta. you remember that projected takeover offer from monsanto. thinking the offer was too low, execution risk too high. it is now building up its defenses as it prepares for a higher possible bid from its u.s. rival. these people say that syngenta expects monsanto could come back with a bigger bid as soon as next week. that is syngenta. deutsche bank is declining today. we've heard that it might boost
the number of assets and wealth management staff in asia this year as part of this revamped strategy to boost growth and what deutsche bank said is that it might make some bold moves to take asia into the next growth phase. wealth management is one of the few areas where deutsche bank is expanding. it is cutting back on consumer and investment banking. finally, vodafone, another gainer. investors shirking off the fact that its debt rating was lowered by standard & poor's. the reason, slower return to growth and the prospect of more spending on spectral licenses. vodafone has been rated the third lowest investment grade at moody's and fitch. they downgraded vodafone last year. as you can see stock gaining this morning. back to you. jonathan: thank you very much.
let's get to the movers and shakers in dresden. the g-7 meeting wraps up today in germany. the greek government optimistic. scoffed at by european officials. let's get the latest from hans nichols in dresden. hans, the latest? michelle seven on the wire saying we need a deal within the days or weeks. hans: especially if you a 1.5 billion to the imf. the emerging consensus is that minor progress is being made but the speed of the negotiation isn't happening. when i spoke to pierre moscovici, he repeated his claim that time is running out. have a listen. >> time is running short. we need to speed up to get to this agreement that we all want.
although there are progress there is still a way to go. there is still some more progress to be done and substance tension -- and substantial reforms that need to be done. hans: the background call this is that madame lagarde in an interview last night acknowledged the potential of a greek exit. early in the evening, it was reported that she said the greek exit was a possibility. they walked that back. the imf sent us a transcript. it looked like she said it was a potential, not a possibility. the fact that we are arguing over those words gives you a sense of how tense negotiation is and how concerned everyone is. these negotiations haven't seemed to accelerate. jonathan: that's it, hans.
we go into june. they need to find 1.6 billion euros to pay back the imf. as we know, it is not -- politically, there is a decision to make. are they going to take the right one? hans: if there is a political agreement and you see a way that some money could be unlocked, the delivery of the cash on june 5 isn't firm and fast. there is an obscure role that says you can make all your monthly payments at the end of the month when your last payment is due. that could give them a little buffer. but that will only hold if the agreement is inked signed, and dried by june 5. otherwise, you see some banking situations. the other issue we have is what
sort of effects what capital controls have on greece? you had capital controls in cyprus, but that was an island. what you have here in greece is obviously not an island. how much leakage would you have if you imposed capital controls? jonathan: thank you very much. let's get over to athens. what is the view over in athens considering that greece wasn't even on the official agenda? >> expectations were not really high in the first place, jonathan. expectations will be high for next week's meeting between merkel, hollande, and juncker. if we take into consideration what happened yesterday, negotiations have broken down. tsipras' administration once again focus is on having a
political solution to the problem. if greece sticks to its guns, mainly because they are saying that grexit is not manageable forget what everybody is saying. forget what the big banks are saying. listen to the ecb. there might be contagion. we might have a loss of 1.8% of gdp by the end of 2016. that is why they are sticking to their guns saying we have to bring a political solution. the technical agreement, that will come in due course. jonathan: you, by nature are an fx man. what are the chances of a deal and do you hear a lot of strategists say the contagion risk is low, but then see the euro rally? is there an fx impact? vassilis: well, in the case of a
deal we might see a knee-jerk reaction but that will be -- most investors are looking as u.s. dollar is improving. the focus is mainly on next week's employment numbers. whether we see a grexit or a missing payment to the imf or a continuation of ping-pong we will see knee-jerk reactions. in the case that we see a grexit, i don't think in the short-term, the market will turn its back and say it is fine. i think the euro-dollar will be under pressure. jonathan: vassilis karamanis great work. thank you to hans nichols in dresden as well. andy,. we could have had this
conversation in 2011, 2012. we are having it again right now. when the ecb tells you there is a contagion risk, what do you say? andya:: we have never been here before. the first thing investors will do is try to protect themselves from anything like that happening in the future. this will move around the mediterranean. that contagion risk is probably containable. we've got the quantitative easing programs in place. we've got other stability messieurs -- stability measures if those bonds start spiking sharply. but there is going to be a contagion risk. if things get down to depositing greek banks, then we will see people say, it happened in cyprus, it happened in greece.
if it has happened twice, it could happen a third time. that undoes the whole premise. jonathan: i'll give you four options. an unprecedented exit, classic european can kicking, or a cyprus situation, or none of the above. andy: probably the european can kicking. everyone knows deep down that there needs to be some kind of solution, some kind of formal word to allow mr. tsipras to say, we've met some of our objectives while still satisfying the creditors. sadly, it is going to happen at about 11:58, minutes before things go out of control. that is the history of these european negotiations.
things never happen far in advance. things have to get really bad before everyone says, we don't like the look of that. i think short-term, probably a lot more headlines, things get worse and that can gets kicked. jonathan: groundhog day, groundhog month, groundhog year with greece. look at your portfolio. have you taken into consideration that greece couldn't exist? what does that mean for your portfolio right now? andy: we are -- we don't hold anything in greece just for that kind of tail risk. in terms of the potential contagion risk, if we actually saw interest rates moving up in spain, in italy our best guess is that would be controlled. it wouldn't have any major economic consequences. you wouldn't see them get back
into recession or anything like that. so we are still -- jonathan: the ecb? what is the proxy? what is the proxy to trade a grexit? andy: i think the easiest way is to make sure you don't own greek assets. it is a negative that. -- a negative bet. rather than being positively engaged. the euro could weaken a bit. it wouldn't collapse. i can't see it going below parity or anything like that. this isn't new news. everyone is on top of the fact that that might have been an accident. jonathan: andy lynch great to
get your insight this morning. a busy year for us so far as well. yanis varoufakis says greece creditors have agreed on most issues. the g7 and the officials there saying something different. after the break, cameron continues his euro tour. how will his negotiation go with angela merkel later today? we are looking at that after the break. ♪
jonathan: good morning and welcome back. i'm jonathan ferro. this is "on the move." breaking news in the last 15 minutes or so. ukraine's creditors of the to be offering the country an easing of repayment conditions. ryan chilcote, what do we know, and is it going to be enough? ryan: it won't be enough, but here's what we know. the creditor group says they are prepared to offer coupon cuts and an extension of maturity to the tune of 10 years. that would give ukraine about $16 billion worth of savings over the next four years. is this a game changer? not really. what it doesn't offer is the opportunity for the haircut. the ukrainian government has always maintained that there's going to have to be a haircut.
they've already responded to this offer in the last 60 seconds saying, there is haircut, we won't agree to it. it is interesting because we have more detail about what this creditor group is offering but clearly it has now been rejected by the government and the two sides still have a little time. they have until the middle of june to sort it out. that is the imf deadline for the next tranche payment. in addition to that, on june 20, the ukrainians have to pay the coupon on the $3 billion that the russian government let them just before viktor yanukovych was kicked out of office. no major developments but interesting detail. they are talking and they are at least tendering some kind of proposals. jonathan: blackstone now saying that the ukraine proposal is an olive branch. you follow this situation very
closely. where is the russian money that was meant to ukraine among this story? ryan: it is a tricky one. what the ukrainian government is saying is that the russian money that was lent to ukraine will be treated just like all the other bondholders. the russian government is saying, we are different. that was a sovereign loan. we want to be treated differently than this group. that really holds things up. the russian government is saying they won't accept -- that we don't know they are party to this deal. we know that they won't accept any kind of major haircut either. it is sort of a can of worms that we are waiting to have untangled between russia and ukraine. jonathan: ryan chilcote, thank you very much. let's take it to the u.k. prime minister david cameron
continuing his european tour. today, he visits poland and meets with the person who support he needs the most to renegotiate britain's relationship with the eu angela merkel. let's get out to alan crawford in berlin. what kind of reception is cameron likely to get? >> actually, i think his reception will be far warmer in berlin than his other destinations in paris last night, and certainly in warsaw today. we just had comments from the polish prime minister's chief economic advisor, pouring cold water. poland, a lot of polish immigrants travel to the u.k.. he said cameron won't get by in warsaw. jonathan: just to bring you that
great quote from the foreign minister in france it is like they have joined a football club and you can't say halfway through the match that it is rugby. the french don't seem to be tolerating this so much. how far do you think merkel will go to keep the u.k. in the eu? alan: that's a big question. if the german chancellor wants the u.k. to remain in the eu apart from anything, there are huge economic things. german car sales to the u.k. are worth something like 18 billion euros. that said, we know that the chancellor may see this referendum as a bad idea. remember that merkel is a very busy woman. she has crises on the eastern front. sanctions, the renewal is coming
up. she's trying to run a g7 summit. she has greece, where she's a key player. then there's the eu referendum. so how fast she will go, i think she will come up with some kind of -- something that appears good for the british electorate, but not today. no actual proposals. jonathan: never any substance not much substance behind these talks. alan crawford, thank you very much. 51 minutes into the session in london. blanket red across equity markets. after the break we will wrap up these markets for you and look out for the rest of the day. ♪
jonathan: good morning and welcome back. i'm jonathan ferro. that's almost it for "on the move" but its been a fascinating week for markets. i want to bring you a couple charts. here's the qatar exchange index. closed today, but check out what started on wednesday and spilled over into thursday. the biggest two-they selloff this year after swiss authorities said they are probing the fifa vote that
awarded the country the 2022 world cup. here's the shanghai composite showing what a real drop looks like over this week dropping more than 6% yesterday. in the last month, the shanghai composite suffered some of its biggest losses since 2009. some uncertainty creeping into these chinese stocks. they are the charts to watch this week. what is coming up later, the final reading of italian gdp followed by inflation from italy, and a final reading of greek gdp as well. then you've got growth data out of brazil, canada, and the u.s.. as we head to the break, about 55 minutes into the session, a day of losses across much of europe. the ftse 100 down by 0.1%. the dax down by 0.7%. the cac 40 down by 0.5%. the dax heading for a week of losses. have a look at the fx markets.
dollar-yen hits a 2002 high then falls back pretty briefly. the nikkei stringing together what i believe is an 11th straight day of gains, the longest winning streak since 1988. quite a remarkable run for japanese equities. sterling-cable, erasing almost all the postelection gains. nymex crude wti, high today but poised for his first drop since march. here's a picture of euro-dollar or the session today. one euro, what are you buying me? $1.09, pretty much dead flat on the session. if you want to talk about these markets, you know where i am. i'm on twitter. good luck for the rest of your day. have an awesome weekend. ♪
francine: fif votes. a will sepp blatter get the backing to survive? deal or no deal, greek leaders name a debt agreement. and as the g7 meeting continues in dresden, we will hear from pierre moscovici. welcome to "the pulse" live from bloomberg's european headquarters in london. fifa members will set