Skip to main content

tv   On the Move  Bloomberg  September 16, 2015 3:00am-4:01am EDT

3:00 am
away. ftse futures are higher. a big surge in china to discuss. let's get the european market open first. echoine: like that rally -- yeley -- why the rally? two months of growth in the u.s., that seems to be tempering some of the risk taking or is it just that people are short covering and are getting in and trying to get out of their short bet ahead of the federal rate reserve. are trying toy understand what is behind the rally at the moment. 40 up zero point percent. whatever the case, volumes are lower. u.s. equities thin trading ahead
3:01 am
of the all-important decision tomorrow. this is the second to last that we will bore you with what the federal reserve will or won't do. still staying a little bit higher today but we saw the dollar weakening ever so slightly after ticking higher up,erday to you had dollar just yesterday. you had dollar up and gold lower. we start to see the supply issues and concerns about inventories just waiting as they slightly slip. let's look at what incomes are doing. a big move in u.s. treasuries yesterday. we are now seeing just a slight reversal. it is just rallying slightly today. you see the money moving out
3:02 am
since germany to the tune of nine basis points. let's look at equities. we had some big market moves. glencoe up 4%. a slight relief that they are managing to shore up their balance sheet to pay for the new equity. 1.6 billion pounds of shares. helps to protect their credit andng to a slight discount we see in rally today up to 132.6. morning,he calls this on the back of glencoe protecting its balance sheet. sales look good. beating estimates, asia they say is extremely challenging and
3:03 am
mainland china picked up a bit to the world's largest clothing retailer with a 26% jump in profits. minutes into the session, equity markets are higher here in london. if you're sitting here in london and thought you'd get a cup of tea before the market opened, he probably missed quite a big rally on the shanghai composite. let's head out for your asian market wrap. feels like you can never take your i off the market it is all happened in the last hour. the shanghai composite on track for its biggest one-day gain since march 2009. the rest of the agent region was doing quite well but we were not seeing too much movement. the last hour of trade after japan after korea and us trillion ahead closed we saw this big surge coming through.
3:04 am
the shanghai composite closing higher with tech stocks really leading the gains. like the shanghai composite has closed. the hang seng index up 2.5% so getting a rally on the back of that. it was already pretty positive session due to the fact that we did have that big rally coming through and investors here in asia also awaiting the fed but as you mentioned we had two days of losses. it was its biggest today loss in three weeks. in the last hour of trade, text -- tech stocks leading the buying. buying is coming through on that speculation of government intervention.
3:05 am
we have seen tech stocks really leave the game. the shanghai composite up 4.9% on the close. jon: thank you for joining us and enjoy your afternoon. coming up, new shares for sale. glencoe made the move yesterday after shares touched a record low. gold goes quiet before the fed decision. why volume is the lightest we have seen all year and later on in the tech is benefiting from a stronger dollar. the swiss national bank as the warm-up. later in the day it is the big one. will the federal reserve told the trigger and raise rates for the first time since 2006 that decision is at 7:00 p.m. u.k. time.
3:06 am
>> i think the risk is that they thet and the reason is international events are overtaking the u.s. fundamentals here and i think if they were to hike for september it will be a mistake. thehe question is, is it right time to move off of zero when clearly you are closer on employment and you can still make a very reasonable argument that some remains. you're quite far away. >> i don't think they should do a trickle out hike just because they want to start hiking. i think it would be poor judgment. we have minimal inflation. the jolt -- the dollar has been too strong. portable growth is too slow away from just china. jon: please welcome our guest for the next 30 minutes and great to have you with us.
3:07 am
you listen to some of those names and the one that stood out for me is goldman sachs. injury -- you can nobody including the two of you can agree with the fed should do tomorrow. there are some very concerned what the fed rate rise means. impact thet really borrowing costs significantly for the whole range of the economy but what is important is what signals down the line and there are concerns that perhaps the u.s. economy is not as strong as people had thought. you have to remember that the federal reserve sets interest rates for the u.s. economy and it is just about growth and gradually holding inflation on monthyside if not this than the end of the year. next chapterto the
3:08 am
and we look at monetary policy tightening areas when you look at things, you question whether we are entering a bear market and historically one of two things needs to happen you either a recession or fed tightening so why aren't we entering a bear market? if i is that big concern there is a risk that was occurring in china has some negative feedback loop that can build as it damages confidence perhaps therefore less capital deployment in the real economy. as of today the data is not suggestive of that even with a slowdown. jon: how much time are you spending with the credit guys getting that credit led the route coming into the summer? when you look at the last six at sentry bond has turned
3:09 am
up to be an incredibly bad investment, what does it mean for equity and how much time are you spending with those guys. >> what is different this time is the strength of proper balance sheets. so it really becomes a question of issue by issue rather than an overarching view. about a year ago people's are getting quite nervous about how the markets work moving. industryd of -- energy given how significant energy is off high-yield credits. so there the deterioration of high-yield was effective of the weakness in the oil and gas market. so these are very important especially now but it is hard to be general. jon: for u.s. equities specifically, when you look at margins you note margins at a
3:10 am
record high. you can't really squeeze the balance sheet anymore to as far as you see things playing out are we going to get the top line growth? >> this is what i talk about with the negative feedback loop. growth is clearly tepid. tothe there is question as whether it is built on solid foundations or sand foundations. we are quite nervous whether it is the federal reserve or whether anything can bloat the engine off course and this is the real concern because without this there is room for costs to come out further and margins are it record highs. so that is when we are debating the interest rates it may not be that significant but in the fragile context it could be
3:11 am
might significant. , youfor this segment standing in front of your bloomberg terminal tomorrow night here in london. the red line drops with no hike is that bullish or bearish effort people say both things. >> i don't know. if you see how markets are reacting today and yesterday it is all about positioning. term wein the longer all know that the rate hike is coming so that we can position our portfolios accordingly but in a long date view it is hard to call. jon: turn in to tv tomorrow for the special report on the fed. and then janet yellen will take to the podium 30 minutes later.
3:12 am
3:13 am
3:14 am
jon: in the first of the fed's two-day meeting economists are divided about whether the u.s. central bank will raise for straights for the first time since 2006. traders have a 32% chance for an increase tomorrow up from monday to technology stocks rallied
3:15 am
more than 9% among industry groups and the securities rebounded more than 8%. this comes as the president was being investigated for insider trading. merkel says those who have no perspective to remain and enter country. headlines 15 minutes into the session. we opened high this morning on the ftse 100. i want to pull out some of the movers looking at glencoe up by 3%. they raised the money and get it away at 125 pence per share. i'm also looking at sab miller. rallying again today up by 2%. i do not subscribe to rumors that people are talking once
3:16 am
again about them being taken over. me $1.12. brent is still south of $50 a barrel. i said earlier, glencore is a big stock in focus this morning. sold $2.5 billion of new shares to pay down debt to protect its credit rating. here with the headlines is caroline hyde. ofoline: the worst performer the ftse 100 had to sell shares and managed to raise 1.6 billion pounds. overall. 125 pence is as you mentioned close
3:17 am
to a record low share price. asterday it sunk as low 1.18. today a sigh of relief. rallying ase shares they managed to get the share sale away in the management backing it. chief executive and many members of the board are sucking up these new shares. so they therefore remain the number two shareholder with an 8.4% stake when it comes to the biggest shareholders of glencore. morgan stanley and citigroup are the guys who were helping the underwriter to the tune of 78%. recent management was taking these drastic actions and the reason there buying up some of these shares is because of the
3:18 am
credit rating. it was all part of the grand plan that was unveiled just last week. very quick movement. their plan to cut debt to the tune of $10 million. the way they're doing that is through the share sale. they are closing down those mines in africa the coppermine trying to ease the supply glut and justwith copper stalling on some of their production. already come has out saying they provide clarity to the tune of $7 billion to that 10 million land but there are some? 's remaining about streaming agreements as well as the reduction of longer-term loans but all in all this is a company moving very quickly and it is helping rest of the mining sector get a little bit of a bump.
3:19 am
it question is will resurrect itself from the dramatic decline we have seen overall. we have seen a huge selloff. over the past 12 months 62% decline. rating is triple be. very close to junk. preservation help pick up the overall risk and indeed overall share price. our, the chairman of bloomberg news is a senior independent director at glencore. beasley is still with us. yesterday, when court trading at a record low. if you told me they would get this away, i would have said that is a tremendous success.
3:20 am
>> this could be viewed as a fairly positive result. investors really support the stock being level. 34 years ago they sold shares at 530 pence. this is the kitchen sink approach they have had to take with the dramatic route in commodity prices. seriously.peek you are an equity investor and the stock has been pummeled all year. i offer the stock at discount on the tuesday close to .4% does that do anything for you. >> points of the desire to short but the buy side is very under owned by european investors.
3:21 am
considerable decline this year were want to cover us on the way it with the lack of exposure and start nipping at the edges of a company like glencore despite the challenged environment in which it operates. >> ivan was sent to shell out about $2.10 million to participate in this and maintain is also looking at fairly chunky payments to maintain their holdings. fairly chunky commitment to the cause. balance sheets to one side talking about the quality assets are we any where near the strategy on what they will do? >> they made a big decision on
3:22 am
copper is caroline said the shutdown two of their copper operations to pull out 400,000 pounds from the copper market and had a short-term impact on the copper price. they're looking to sell assets theh is another key point key assets we are talking about is the agricultural business and a precious metals royalty stream which could attract a fairly positive valuation. as an equity investor in the mining sector you can draw comparisons between this and energy. look at rio and bhp doing a very similar thing. is it starting to work in the mining sector. are these strategies is trying to claim their victims now? x yes and this is an encouraging
3:23 am
sign to some degree. au're seeing some signs of balance sheet repair and intention to be more aggressive in sweeping up the last -- less strong competitors. but there is a priced everything but clearly asset prices are not any cheaper than they were to but sometimes it's about really understanding the true outlook and if it's having the cost base appropriately realigned. yes this is the stock that is the worst performer but they're having a time of it at the moment. the question still remain. you have negative outlooks on these credit rating steve keep them? >> i think that is what they're aiming for and i think
3:24 am
they're very much hoping it will put a floor under the share price. once they that complete the asset sales they should be ok. jon: when you look at minors, you don't have a price you don't like it anyone structural changes is that the same for energy? >> energy is still a bit earlier than the mining sector. and people are still very heavily influenced the dollar. brazil and if you have had some tremendous currency movements to deal with that means to some degree your economy is less strong but it is cheaper for you to ramp up production and sell the oil. weekme degree this currency is maybe not helping production the way that you might think it is so as an investor becomes hard to have a true handle on where you think the numbers might be next year.
3:25 am
so that leads to global gdp and it is a very complicated situation and that is why it is not just this about price. jon: matt beasley, head of global equities. thank you very much. coming up in this show, mobile gold. the precious metal has been in wait and see mode. how will it react tomorrow. by 0.9% in the dax up by 1.28% this morning. checking in on brent we are higher. cable at $1.53 31. we will break down the metals market for you
3:26 am
3:27 am
3:28 am
3:29 am
3:30 am
good morning, welcome back to bloomberg tv. the foot to 100 and positive territory. some of the movements for you. glencore's up by 2.5%. dax is also higher in frankfurt germany. let's get some of the stock movers with caroline hyde. the luxury sector is interesting you don't see that often considering the route we continue to see in china but richemont is one of the best
3:31 am
performers today. overall we are seeing the world's biggest jewelry maker. month sales accelerating. it was higher than had been estimated. asia-pacific, extremely challenging is what they are saying. hong kong and macau is where it hurts. but mainland china they say is starting to improve weathering the storm. we are seeing many luxury providers today. glencore up almost 3%. the relief rally. they had 1.3 billion shares about 10% of the outstanding capital to support the balance sheet. that's a relief for glencore. down 17%. this is the worst move for the
3:32 am
stock since 1999. one of the world's largest makers of airline seats. iny have been having lays terms of providing them for the new big airliners. they say that production delays have hit them higher. profit and% slump in they are saying the revenue is in line with the outlook and is shocking. commodity markets copper dropping. as china expects low downs and faxing -- affects the global supply. am pleased to say it we can welcome in this he and lloyd. great to have you with us. i'm looking at the copper market and i bring glencore into that discussion. we finally saw a flush out or impact of oversupply and minors
3:33 am
making adjustments so at what point would you say we made enough adjustment to tip the balance away from oversupply? >> with copper and things like zinc we believe we are moving to a more positive phase. we are set for some time that copper is actually not very tolerant. we saw adequate proof last week. we are seen a number of other smaller operation so we've actually seen 700,000 tons of production coming out of the copper market somewhere moving from a somewhat balanced market to a decimated market next year. jon: at the moment i'm looking at copper we've just creaked back into positive but since 2011, where are we? >> we certainly see a lot of negative
3:34 am
sentiment in this does hold metal back and we see some fairly tepid chinese economic lengtheningre was a in the positioning next week and a lot of people think perhaps it went too far. at 53 or 850.ding sharen see that glencore factor has been tracking fairly close. jon: we talk about these big names and when you look at some of the domestic supply and aluminum specifically with an output near record highs. we underappreciated the impact it could have boosting capacity? >> that is the key thing for metal they're all being impacted by a weaker demand environment
3:35 am
but some have supply weakness with aluminum, you are correct that we feel a lot more cautious about that. on the global basis it is a surplus market. demand obsess over the picture but what do you see with the supply picture? movements seen tepid and i would say we are becoming a little bit concerned by the emerging markets picture and some week data points for brazil and russia. jon: everyone has an opinion on the commodity market. trade fx, you are now an expert on commodities as you look at the debate, what are people
3:36 am
getting wrong? >> i think there's a lot of sentiment they think sometimes it is purely a function of supply and demand but there is panic -- using on the way up and panic on the way down. metals have been hit a little bit too hard on the way down because of bearish sentiment toward china. jon: thank you for joining us. coming up, the world's largest clothing retailer reports of 26% rise in net income. and hewlett-packard announced it will cut more than 30,000 jobs. whitman's turnaround strategy after the short break.
3:37 am
3:38 am
3:39 am
get you up to speed on bloomberg's top stories this morning. economists are divided over whether the u.s. central bank will raise interest rates for the first time since 2006. traders give a 32% chance of an increase. chinese stocks surged in the last hour of training. the biggest gain among industry groups. being investigated for insider trading.
3:40 am
she says those who have no perspective to remain cannot stay in the country. merkel called for an emergency summit of eu leaders next week. let's get you up to speed on the equity market. gains across europe blanket greece. ftse 100 up by 10%. , glencore up by 2.8%. switch up the board very quickly and we will get a check on the fx and commodity markets as well. a weaker euro this morning down by about 1/10 of 1%. but look at the volume. tradee looking at gold evaporating ahead of the fed. the lowest this year ahead of
3:41 am
the federal reserve decision. let's talk retail, the world's largest clothing retailer has reported 26% rise in net income. they benefited from a strong dollar and an upturn in retail markets becoming the only spanish company to surpass a 100 billion -- 100 billion euro the you wish and last month. good news for intertec. how much was just about the fx market? >> in sales not a huge percent but how they source it has probably helped them out on the margin. byhink they have been helped buying in euros and selling in dollars. jon: we talked about u.s. retail
3:42 am
sales not growing in the way many had anticipated. when you talk about same store sales we are at levels we have not seen since the financial crisis. when you look at those numbers is it fair to say it has recovered? successfuler big retailers we were seeing sales for their year flat. this is a great performance. --have seen same sort same-store sales up 7% which is something to be proud of. jon: is there a message? >> one of the things that was interesting is that into tech in general is very strong in asia and to a certain extent the americas, flattering the rest of europe and spain. so contrary to some of thee other people it seems a
3:43 am
mass-market is working still in asia. jon: we track h&m very closely as well. resultslook at these and think about what it means for other companies in the sector? works to a degree but, it is surprising even now how the overlap isn't so really and. germany is h&m's most important company and is not that big for intertec. the weather in the short-term makes a difference as well. it was very hot so autumn clothes did not sell. is not a huge amount of overlap but a little bit. jon: thank you for joining us this morning. the market changing rapidly. hewlett-packard is trying to keep up. asthey are cutting as much 33,000 jobs. let's get more on their
3:44 am
restructured planned with ryan chilcote. >> that is a lot of jobs. us is a company that had as recently as 2011 350,000 employees. aroundl is to take it to 250,000. the majority of those jobs over on the enterprise side of the business delivers high-tech to corporate. of thes the other side business weather will be job loss as well. the second thing need to know is they are not going to result in a $2.7 billion restructuring charge. the company already signaled it expected to charge about $2 billion in the found another 700,000 more in savings. jon: it's part of the -- in terms of the wider strategy how does this fit in? >> effectively you have one of the oldest technology companies in silicon valley. hewlett-packard was founded in
3:45 am
1939 so it is one of the oldest out there but it needs to get lean and mean and did do that it is splitting into two companies which has long been the plan and that is going to happen in november. the idea is to get the house in order before that happened so these job cuts will happen just before that so that the company says they hope when they're both publicly traded come november they can do much better than they have done. jon: thank you for joining us in breaking down the story. coming up is the count down to the fed. why goldman sachs thinks the markets are not ready for a move. more with our interview with the chief economist after the break. the ftse 100 trading harder this morning. glencore is the biggest winner today very more after the break.
3:46 am
3:47 am
3:48 am
3:49 am
jon: as the market fomc begins today, say the markets are vulnerable. towe switched from september december because it seemed to us that the message sent by chair yellen was more of a december then themessage and customer did things after that coming in stronger than she expected at the time. on the economy, fairly close to expect haitians but in the natural environment clearly weaker. fed looks at the economy now it's as we are not there yet, what will it see between september and december that would give it more confidence? >> two things.
3:50 am
one is continued labor market improvement. you six and other measures of liver market slack, that would give them pause. but if you get continued improvement it could get you closer to the mandate and right now, we are on the lowest level of demand in four years. falling that would be bad from a perspective of lift off and our expectation is that would be a little bit higher. >> many say the argument is transitory. but you -- but your work tells you something different. >> we want to dispute the idea that the dollar and commodity prices have had some impact but it is a good start. it is low but not that low.
3:51 am
aboutyear on year is only 40 aces points less than the average. 40 basis points is only worth about 1/10 of a percentage point. it has contributed but it seems like most of the undershoot is due to other factors. some of that maybe labor market slack but it doesn't seem like you can explain all or even most of the weakness. but i do agree it will be more temporary. >> you hear it a lot among traders that the fed should get on with it. just bite the bullet. to the idea merit that the fed should get on with it? >> i don't really see a justification for that. some are more patient and others more impatient. clearly there are impatient
3:52 am
people but i don't think it is really that relevant consideration. is, is it the right time to move off of zero at a time when clearly you are closer you can still make a very reasonable argument that slack remains and you are quite far away on the inflation side so, my answer would be no. >> people who look back at history note that prior to previous tightening cycles there was a lot more consensus to the fed telegraphed the first rate hike more. some think it will be the middle of next year and some think right now. there is so much disagreement among the economists and market community. >> back in 2004 through one had fallen into line by the time they hike in june of that year. this time, that has not been the case.
3:53 am
i think that is probably an additional argument because i do think there will be some concern that the market is not prepared for it. is the risk of an adverse market reaction. that is obviously not the only consideration that would lead me to the view that they don't but i think it has been the case. >> does that bring into question what docredibility? they need to telegraph? is their credibility an issue? >> a lot of people say they kept pushing back this lift off and what credibility to their statements really have? i take a more sanguine view of that because they have pushed back the liftoff in response to weaker inflation numbers
3:54 am
relative to their expectations. error sharedcast by many people. so, responding to new information and changing the date of your liftoff seems a rational response to something that you learned in the data. jon: that was young speaking to bloomberg tv yesterday evening. ray will be joining bloomberg and tom king for an hour long uninterrupted conversation. here in london it is 11:00 p.m.. that is almost it for this hour of bloomberg tv. the pulse is coming up after the break with francine blackwell. where are we yucky -- where are >> john mills doesn't mince his words. he will talk about the
3:55 am
repercussions for the bank of england. if you're an exporting cup be that is what you care about. we will his view and currencies and all that but we also look at shale. we have this task force that is slightly controversial because it was funded by the industry they came out with a report that said shell gas fracking should go ahead in the u k but they should not get tax breaks a we will look at that. noticeableetail, a point in that data out of the u.s. was u.s. retail. when you look at the data out of yesterday arguably are some evidence that it did not impact retail sales. and in the tech is still doing well. francine: i think that is part of the global consumption story but it is also a spanish story.
3:56 am
it has significantly boosted sales. in the tech is a record profit if you strip out currency fluctuations. this is a story that needed to be told and different to luxury they disappointed in the we talk about china. jon: for the trading day here is the data that you need to watch out for. just a few minutes before the government presents is 2016 budget. 9:30 u.k. employment data and jobless claims are out. look out for that. that is the data and that is it from me. of 1%.e 100 up by 6/10 best of luck for the rest of your day. if you want to talk markets i am on twitter.
3:57 am
3:58 am
3:59 am
4:00 am
francine: the fomc prepares for its crucial september meeting. is the world economy about the strengthened by the fed? the new labor leader prepares for his first comments clash with the prime minister and we speak to a top labor donors urging people to stay loyal to the party. welcome to "the pulse." i am fran


info Stream Only

Uploaded by TV Archive on