tv On the Move Bloomberg September 4, 2015 3:00am-4:01am EDT
one year. by 64 with futures down points in the dax futures off i 125. a bit of a route in asia. the nikkei open this friday morning with caroline hyde. the euphoria from the ecb, the chair for more stimulus fading fast. we are expecting the markets on the downward trajectory after significant rally on the ecd talking about potentially more stimulus to come buying up more upments of particular bonds to 33% and also saying we can expand the bond buying past 2016 and it could be more than one point one trillion euros. then everyone starts to absorb the downward side of the fact that global growth will be lower. there will be lower inflation than had been predicted before the bond buying, before qa
wasn't veiled. these are dismal outlook's from the ecb, dismal when you are looking at the equity market. and the euphoria from the ecb fading in the u.s. as attention turns to the all-important nonfarm payrolls. jobs data -- how much should we care? is it aeration a matter what? 217,000?pass -- is it a bearish market my matter what? as global market falling off a cliff? in damnedesty do they don't. the euro staying pretty flat. damned if they do, damned if they don't. we would get an update for you. it was up by almost a percentage point and today we are r emaining at the lower level. a look ato having
whether dollar is trading ahead of nonfarm payroll. on a two-day basis we were up yesterday and just correcting ever so slightly. let's have a look back at the one day chart. the euphoria is seeping out of the commodities market but yesterday we saw them all moving higher in today all off by more than 0.15. islly the risk aversion spilling into the commodities market as we get concerns about growth globally and, indeed, whether the u.s. could really raise rates. we're seeing money going into u.s. debt, german debt, risk bondion good for the market in seeing german debt and italian debt being higher as we could see more bond buying. let's have a quick look at some of these stocks to watch. they expect a higher bid in this is all about ingo, online gaming. basf are going ahead with the gas swap with guys problem --
gazprom. we get the go-ahead that they will be spinning off their plastics unit and an ipo to come fourth quarter of the market stays stable. >> three minutes into the session and european equities are erasing some of the draghi-fueled pops. over in asia, we will go to julia in hong kong. what an ugly week. talk me through the news. >> absolutely. one way to describe it. on the nikkei to defy today closing down more than 2% and in that sailing that we saw despite from thosegain comments coming through from mario draghi. we had china close again today in hong kong coming back online.
they are down by zero point 41% but ubs coming through saying they have cut the targets for the hang seng index by 25%. that did not add to the already downbeat move we had in the region. most markets lower and the australian asx did get a boost from some of the mining players that have really off yesterday raising by about 0.25%. this is the picture of the overall asian benchmark region. today, not really anywhere for investors to hide. every other sector heavily sold off and we have house teen the benchmark index closing lower for the seventh straight week, the longest weekly decline since june 2011 and its worst weekly decline since september 2012. also looking ahead to what will happen in china when the shanghai market reopens. ainese stocks moving to
two-year low. the hang seng china enterprises index being heavily sold off. nowhere for investors to park their money apart from some of the currencies. the aussie dollar and look at the japanese yen, a flight to the safe haven there actually stronger against the u.s. dollar. back to you. have a greatiet, morning. we are looking forward to the monday morning opening back in china. that's with happening in markets this morning. on the show today, job he gives qe a facelift lifting stocks -- curate a facelift. falling on deaf ears in asia. counting down to the most important piece of data in the data ever -- the u.s. jobs , the last before the fed september meeting. more crude, or problem.
of all, that's yesterday. mario draghi unveiling some changes to his qa program. the question we were asking how dovish will mario draghi be? >> they decided to keep the key ecb interest rates unchanged. the council decided to increase the issue share limit from the initial limit of $.25 -- 25% to 33% subject to case-by-case verification. hasoutlook for gdp growth been revised down. we may see a negative growth in the coming months. is that inflation? -- deflation? these arel thinks transitory effects. they guardian council wanted to emphasize a discussion we had today. it's a willingness to act,
readiness to act, and capacity to act. the headline event pretty dovish. let's bring in the head of european asset allocation at barclays. great to have you with us. if you just listen to that you would think the world is a pretty upbeat place. >> it deals bad, but i think i would qualify that especially in china and asia. we need to see the weakness onto the major economies. we think the u.s. is more protected. it is probably more exposed family equity markets have been thinking and europe is somewhere in between. external story out of matters for what the markets for all of us sitting here is what it will mean for the ecb eventually internally.
no big red flashing lights or alarms going off for drag what would it take for him toh pull the trigger and do more? i. they are concerned because of the tightening financial conditions we're seeing in the market. all see you have inflation expectations falling pushing real rates up. the euro is appreciating and that's a clear concern. that translates into business and consumer confidence and it could have major implications. there are no concern with inflation, the point he was making. jonathan: a new from 25% of a single issue to 33%, is that a move to i lay any concerns that they will run out of assets to buy a increased program? way forare paving the potentially doing more and they are clearly approaching some constraints, but i think they still have room in plenty of tools to adjust.
to us what it means is they are paving the way for potentially doing more and we think they will buy the end of the year. jonathan: the dax is down one full percentage point in the dovish rebound yesterday has not fed through today. the qe fueled gains of the first quarter, will we see them again? see other bits of information for the markets to be more comfortable. of the is only part puzzle here. unfortunately many to see what happens with the fed, boj, and the poc. to me when i look at the world, this is really a concern about china. we need to focus on what's happening in china. to the extent we have stability in the date of the market will be more reassured. the ecb'swe heard concern and we are likely to hear more from the g-20 financial heads that are in ankara.
ryan chilcote is there. what is on top of the agenda? yan: certainly china and we just heard from the deputy governor from the central bank of china saying that the fundamentals of this country's economy are fine and the currency as he put it is more or less stable. china's currency in the moves as well as the slowdown in the chinese economy are two big issues for the countries here. in addition, particularly among the emerging market members, and there are many, they will be concerned about the u.s. raising rates. we got our hands of a draft of the communique and there is a reference to the need for clear communication and collaboration globally when it comes to raising rates and tightening -- a not-so-subtle reference to the united states -- and a lot of the members of the g-20 concern about the rate hike. a lot agree with what no real
roubini just told us that the -- that theyff may hold offnouriel roubini -- a lot agree with what roubini just told us. those are the big issues. interesting they are talking about them in turkey because it is in the middle with china on the one hand down the u.s. on the other. jonathan: it fascinates me. some soothing words about the fundamentals and you look elsewhere whether it south korea or australia on the numbers speak for themselves. the slowdown in the used by the fuse -- induced by the fuse in china. you spoke to the treasurer. how concerned is he? says the concern about china is overblown. two days ago there were pretty weak economic data from australia with the economy growing quarter over quarter at
about 0.2% but he says that's ok . he says it's a fact that australia is the most dependent economy in the world on china, but they are not the only game in town. have a listen. much more a diversified economy then people appreciate, therefore we will be able to cope with whatever china or more particularly other parts of the world so long as it's not a global phenomenon. watch the aussie dollar it's interesting. in speeden about 4% chinese currency was devalued. it's at a six-year low today. the treasurer of australia made it clear to me that he thinks that the devaluation -- if you look at really what he was saying -- of the aussie dollar is helpful and welcomed at east
in terms of making their exports more attractive. jonathan: ryan chilcote, thank you very much. let's bring back in guillermo of european asset allocation at barclays. i go to the raw data and a bring up your chart of the percentage of exports that china accounts for. australia, 30 5%. we have talked about korea. the eurozone less than 5%. icg been at about 15%. if that is a dovish mario draghi and a lot of that was about china, what on earth does correct to say -- korota say from the boj? is worrisome for japan and he and i think one has to it knowledge the risks here. haveisks he spoke since
increased. we still think they will keep the program but clearly monitoring the risks very closely because things are clearly changing. they may change quickly in the next few months for japan. g-20han: officials and the are concerned. ecb president mario concerned. why is it that different ahead of the september fed meeting? fed, they are clearly seeing a significant improvement in the round economy particularly in the labor market. they were getting to a position hiking rates and then you have concerns of that china. fed, financial conditions matter of luck. clearly this sharp drop has been a matter of concern. they will need to wait for a bit
and we have changed our call from september to march of next year for the first hike. jonathan: why? >> they need a bit more time to how it responds to this in financial conditions and the fundamental links between the u.s. and china, the asia andthe region, emerging nations in particular. i think they will need a bit more data points to make a decision. jonathan: they are going to get one today. it's jobs day and everyone will be watching with a keen eye. everything you need to know about what you might call the most important jobs report ever since the last one and until the next one. join us in two. ♪
inflation dropped 1.4%, a bigger fall than forecasted. u.k. prime minister david cameron is expected to announce that britain will net thousands more refugees according to a person familiar with the matter. this fall is pressure from european allies and domestically where more than 300,000 have signed a petition pressing the u.k. to take in more asylum-seekers. welcome back. 20 minutes into the session and let's get you up to speed where markets are trading. this is yesterday's close. let's get that screen off. tax by 1.55% in the percent. those of you into the cross on the death dax, the 50 day moving average below the 200 day moving average. are those of you not into the tech goals, it matters to someone.
ahead of a very important jobs day. unemployment near seven-year lows but one thing not reflected in this number, local market turn off. let's go to caroline hyde for more. caroline: does that mean it's the longer the most important data point in the world? talking earlier about a citigroup note that said previously it would factor in about 70% of what they felt would be dictated in a september left off or not and know they curtailed it inking nonfarm payrolls as a data point is only important to the tune of 40% because of the global market it has transpired since the data august and if he was collected. this is why the market is really under cited how much to take or make of this data point.
we are expecting 217,000 jobs to be added and an unemployment rate just a tick. interesting the average hourly earnings is set to remain as we were at the previous month. as they say, bloomberg intelligence puts its wonderfully. making less of a make or break moment or the september lift off because the report looks increasingly stale. financial market developments have happened since the august factoredt survey was in and effectively up and the almighty global route. after member what mario draghi was saying yesterday. threatening global expansion and warning about consumer prices intentionally barely growing this year. low inflation, the global market instability, this will be looking at the federal reserve. there's a question how much we can really take from this number
but certainly the market is bracing itself turning lower amid the run-up has the isn number was better than had been expected. if a number is significant a good, there will be questions. jonathan: like a political debate, you go into the spin room in people try to turn it. caroline: everyone panic set the market is strong enough to see a rate hike that the u.s. market feels that could be supportive. some of the equities will turn sour because they could see a rate hike at the market is much weaker then suddenly that could even be a concern. if we see that number coming and shy of 200 house and, does that actually mean the global economy
is really in the doldrums and it could send equity markets even lower? it could be a bearish comments even no matter what. it's fascinating as well that perhaps it's not 130 we should be looking at but 10 past one where we will be hearing from a fed man himself. jonathan: jeffrey lacher. one, jeffrey lacher will deliver a speech called the case against further delay 20 minutes before the jobs report. assuming someone is already made up their mind about what the federal reserve should do. let's welcome back in guillermo felices from barclays. are we seriously going to believe that there is a federal reserve official out there that will decide whether to move on september or not based on today's figure alone? >> i don't ring so. having been a policy maker myself, we look at an array of data and some clearly carries more weight than others but i do
not take this will be determining it for men -- for then. it's going back to neutral whereas policy rates are at zero. there's clearly an imbalance there. they want to normalize that overnight. jonathan: fed chair janet yellen comes on board. everyone said janet yellen would be the dove. slack in the labor markets and participation rate is far too low. have things changed that much since she came on board? when you look at the commentary coming from larry versus janet, janet yellen looks like a hawk now . >> i would say a lot has changed in there's been in movement with other indicators. very subdued.till that's what's making some of the
members uncomfortable and fisher is one of them. he's been very up front with the inflation not seeing but it's a lagging indicator. we should not really be talking about doom and gloom here. but they are always going to forecast ahead in the medium-term and say we do not have to wait for it to move our target. words of vice chairs stanley fischer. have they already decided whether they will move in uillermo? are not, gille >> i think there are different views in the committee. some would be happy to move in september. whatll have to see decision they make as a committee. jonathan: does the g-20 have a cost of the concern if the fed goes on a tightening cycle to
begin as soon as this month? on how theit depends market would take it. if they go in september, i think the risk is that financial conditions deteriorate further and that actually increases the nervousness in markets and it puts more pressure. jonathan: final question, if they go in september, you're predicting march but if they move in september does it increase the possibility to move back within a year? how thenk it depends on data will move. i've seen enough in the u.s. economy for growth to continue and for them to go back. jonathan: guillermo felices thank you for joining us this morning, head of european financial asset allocation calling for a said march 2016 hike. the relationship is not what it
jonathan: good morning. happy friday. jonathan terra live from london and 30 minutes into the trading day. a lower session down by 1.5% and we were a racing the mario draghi pop from yesterday putting you down lower 1.33%. by dax the death cross down 154 points. with hang sengch down now 0.3%. the black sky scenario applying a downside from here on the hang seng. the risk off in asia quite
clear. dollar-jan down -- dollar-yen. streak.ay losing .5238.o $1 it's get over to caroline hyde for the stock movers. get to theet's retailers. off by more than 3.5%. the reason? bdo aumbers coming out of financial analysis company. like sales in the u.k. dropped more than we have ever seen since november 2008 down more or percent. worse than the doldrums of the financial crisis because they overfled the high streets august. bad weather. we have spent it abroad as well. poor numbers expected for august
like for like sales. meanwhile, focusing on a few greens far end few between. up 2% because they have accepted a higher bid. they have been fighting it out to get their hands on this online gaming company. has offeredsmaller 1.1 billion pounds some coming and a loan from a private equity company cerberus. neopost is up 12%, the best day for the mailing and shipping equipment maker since december 2000. the reason? it seems their numbers have optimism. infuse some they are upgrading shares because second-quarter sales gained although organic revenue
did not look too pretty that the improvement comes in mail solutions. that's the industry for you. jonathan: caroline hyde finding a vague gainer on a down day like this. investors nervous ahead of the jobs report. politicians around europe closely monitoring the situation in china and its knock on effect on the least spain. francine lacrosse spoke to spain's economy minister. here's what he had to say. the g-20 is coming out and investors are nervous. i'm not sure what they are nervous about. is it china? are they worried about china falling off a cliff? how do you perceive the world right now? discuss thewill situation index depth and the different drivers of growth. my opinion is that the growth is
uneven and fragile. it always creates jitters in the markets. my perception about china is that china has been one of the .ain sources of growth globally china grew at a rate of above 10% or a very long time and now they are converging toward a growth rate that will be in the area of five percent or 6%. this has to be sustainable over theirnd china could make contribution. a will not see the impact of 10% growth rate on the chinese economy. >> 5% this not bad. we're not talking about 3%
growth or looking dark. >> you have to bear in mind that this is a transition and it covers the action of the public hours. the chinese authorities have taken the is ocean to interfere less in the private sphere and economy. something that is happening with the evolution of the interest rate -- exchange rate. this will have effects on the risk in emerging markets. you have a transformational move on such an important economy, the chinese economy, will have a global impact. in the short-term, markets overreact and overshoot. that will be a positive for the global growth and overall trade. >> what does it mean to the
spanish economy? in particular the price of oil, you've benefited. when it goes down it's very difficult to read. we have the majority of our economies imported in the case of energy. in spain, we have had very fromtant savings derived the decline in oil prices we have saved more than $10 billion. spain and itlt in will have an impact on the headline of inflation, affect the income of households and will cost corporations. i think this is behind the acceleration of spanish growth we have in over the last quarters.
there are other elements that are not so positive. for instance, our exposure to china is not very relevant because it is less than 2% of the total volume of spanish exports. you have to look a little wider. the slowdown of the chinese economy will have it acts on emerging markets -- will have effects on emerging markets. and that exposure is quite relevant. the detrimental part of the slowdown of the chinese economy. with respect to commodities, i think the impact will be positive and it's something we have seen in terms of both rates now. jonathan: a bloomberg exclusive with the spanish economy minister. let's go to charles and see in
madrid. speaking about mixed blessings from the volatility of markets. it means for what the region. we usually only talk about germany. how vulnerable are the likes of spain? >> good morning. the ministers said in our interview that spain is not directly affected by the situation in china because trade links are not that direct. spanish exports to china are .elatively limited he also mentioned the caveat. spain could be affected through the impact of the chinese slowdown on latin american .conomies they are heavily reliant or have an on commodity flows to china. latin american economies are's forces of finish investment and destinations of spanish trade.
there could be some detrimental effect there. jonathan: we will be playing much more on that interview through the morning. charles will join us know doubt throughout. coming up the show, an exclusive interview with former secretary general of opec. where he fixed the price of oil is heading and how unhinged us market is, whether opec is dead. ♪
jonathan:jonathan: welcome back. today, the saudi king pays a visit to the white house. the relationship is not what it used to be. favorite -- the reason -- oil. when the u.s. relied on saudi for creative. the demand for saudi oil has been cut in half. does this change me to saudi and it's ok workers? let's ask the man used in charge. now. shihab-eldin joins us great to have you with us this morning. first question -- this dreaded strategy of -- the opec. push down shale. is the strategy working? >> i think the way you characterize it is not quite accurate. what opec wanted to do is have a fresh look at structural changes that are taken place in the oil market with the advance of u.s.
shale and other producers. a very high price they will be able to bring in foreign demand the growth and therefore it was situation andble opec basically said we have to take a very serious look at the prices. they are not sustainable. opec will do their part but others will have to whether they are countries or companies. let me follow up very quickly. if the strategy is not failing, u.s. total production has not dropped. that will tell me it's not had the effect it's meant to have. when will i see you as production start to roll over? -- when will i see u.s. crude production start to roll over? >> we have seen some flat again drop but it will probably not last.
the companies themselves have adjusted. what would be the u.s. production today if opec minister for production and keep prices at $100? we would see after million barrels extra coming-out of u.s. shale. i have improve their efficiency and productivity. they have moved their productions of the most lucrative shale plays that they can run out of it. whether they can be able to reduce costs and improve productivity is a big question. i do not see that lasting for very long. jonathan: when we talk about
opec, for many we're just talking about saudi arabia. other partners would potentially like to have a meeting and agreement with non-opec countries. what are your thoughts on that particularly? well, i think it's not a secret that discussions have been going on since early november of last year and earlier between some major non-opec and oh, russia in , saudi arabia, venezuela. talking is not enough. with the gulf countries would like to see is a very serious commitment on how we are going to deal with these new structural changes in the oil market. at the same time, commitment between opec and non-opec would have to seek clarity on what's happening and non-opec producers are difficult to bring to the
table. shale is mostly small companies and we need another few months probably to see if that will settle down. ultimately, there'll probably be in agreement when the fog has cleared up. some critical eyes are looking at opec wondering if it even needs to exist. do you think it still has a role to play? should it still exist? >> definitely. look in the next 10, 20, 30 years. it's expected opec companies -- countries will have to come up with most of the growth and supply to meet demand area if opec did not exist it would be needed in the future most worth in the present or past. jonathan: i want to get your thoughts on prices. we've gone from north of $100 on brent to down around $50.
a lot of people thought we would see a rebound but it has not happened crude has rolled over again. do you think $50 per barrel, lower for longer scenario, will stay with us? >> for the time being, it looks like $50 is what people are seeing. the rebound that took place earlier in the year was kind of on the expectation that the u.s. shale production has released -- reached its maximum and will plateau. we have seen the cost improvements in the chinese demand slowing down and the expectation that demand will not be so strong for another few months, perhaps six months or one year. when you put these together, it explains the softness and prices we have seen. 2016, i see a very strong possibility that prices will not
go to $100. the margin of oil in the united states and canada does not allow for $100 oil. even in 2011 when prices headed to $100, the market was around adjust$70 so we have to to the marginal cost which may rather than what people said before. $60 is not a bad bet. jonathan: countries and companies taking a multi-decade view of the world, but in the last few weeks we saw a three-day surge in crude the biggest since saddam went into kuwait. ve,just had this massive mo 8% higher, five cent lower. what do you make it a volatility and these huge price swings we are witnessing at the moment?
>> whenever you have a market that's not very clear, any small piece of information can be misinterpreted or misread and cause these large swings in the market. this is not new. we've seen's miller events in the past -- similar events in the past. i think the discussion about and the non-opec premature expectation we are about to see an agreement. discussions are going on but the agreement was not in sight and the expectation in u.s. shale thed on reports coming from energy information agency that we have seen a drop in the u.s. production between july and june. when people these things together they enter that in a certain way. jonathan: final question. if you were the head of opec
again and the iranians said they wanted to boost output file million barrels per day, how would you get all sides to recognize their differences and had a target all sides met in they made other opec members? -- and they made space? to comea fair request to go back and say we are now pastor problems and we need to come back to our share. discussion would have to be started at the technical level. i would basically bring the parties together on a technical level and try to sort out what are the practicalities of the armenian increase. i heard about iranians trying to bring back about one million barrels. the question comes from opec to sit down and say, how practical is that? when let it come into the picture? how can we really absorb it in a
structured, organized, orderly plan? that's what i think is currently happening in the secretariat. ,onathan: adnan shihab-eldin former secretary-general at opec, thanks for your insight this morning. we await the most important piece of data in the world, the most important job state ever since the last one until the next one. a live picture of new york -- labors. market and the market data. join us after the break. ♪
>> i believe the fed will not hike interest rates in september. beyondy postpone september because of three factors. global market instability, is creatingrowth uncertainty. there is one option, evaluating. they will have the direct impact on growth in emerging markets, advanced economy, impact on u.s. economic growth. the tightening of financial conditions will slow down economic growth in the united states and create more slack in markets. and then you have a slowdown of inflation because you have a fall in all energy, commodity prices, a rise in the dollar,
and a slack in the economy will create a further slowdown in wage growth. dr.than: nouriel roubini, doom, talking about when the fed will move depending on the big labor market report today. if there's a fed official has not decided maybe the report today will put them over the line. let's bring in a man who's not dr. doan. he is the opposite. manus cranny. manus: a discussion on what you were saying before. i love nouriel. he did not waver through that. it is all doom and gloom. jonathan: with a tie like that? manus: we have an interesting lineup. we have a former ecb lead, jean-claude trichet. jonathan: another thing about
policy mistakes -- who cares about mistakes that you've made. i would like for him to answer questions. jonathan: all 15 major central banks have hiked rates, the ecb being one of them, had to reverse course. up to one third who have raised rates have reversed and that is the risk the fed runs. the fed is looking up policy for the united states. i was corrected on the pulse. it sets policy to the united states and exposure to china is limited. correct, ig to the will have a go at correcting you. upathan: manus cranny coming after the break trying to correct me. mario monti and great guests coming up in the pulse. it is job state. north of 200000 and we will talk about markets and payroll.