tv On the Move Bloomberg September 23, 2015 3:00am-4:01am EDT
.alance at volkswagen let's have a quick peek at what futures are indicating. futures a little lower, caroline is here with the touchscreen. caroline: after the worst three-day rout cents august and we were concerned about china's growth trajectory, it is really started to ramp up the heat back then. market back in bear territory. we are waiting to see how french pmi data breaks later today. to be contraction once again for manufacturing. it could be an improvement for services as well as rising when you look at services.
slightly better than expected. 48.6 is with the estimate is for. we want to see how the euro will be reacting. the dax up, and we have seen the euro trading higher against the dollar. it is moving, and improving as we see french data beating expectations. the dollar is just a little bit flat. is the dollar overvalued? that is what the management is asking. the yen should go weaker against the dollar, but the opposite viewpoint is being taken commonly could see the dollar being overvalued. with the euro than rise against the dollar? we are seeing that as french pmi
is beating expectations. companiese on the oil today. .3%, but over a two day trajectory it has been painful but we have been seeing. back and theally front and center of invested minds this morning. we see china, their manufacturing data missing. contractionhere was for the sixth straight month in china. let's look at how glencorp opens up. again on, volkswagen the downside. the chief executive looks at his fate later today. auto currently lower -- mark: third year of decline for
volkswagen. french manufacturing is going -- growing once again. you planarian september figure. the estimate was 48.6, the previous figure 48.3. of 51.4, which is up from 50.2, it is not all good news because private sector employment is declining at the fastest pace in 10 months. factory orders fell also, so the economic recovery in france remains lackluster, you would have to say. let's go over to david inglis in hong kong. david: high mark, a good morning mark, good morning to you.
think started slowly, then midmorning we got the china data which, long story short, we basically see a worsening of the situation. that is a smaller server compared with beijing conducts. now, the reason i bring this up, the first time in over two years the index is trading close or below 5000. we talked about china's demand for things like commodities. the pmi data suggests, and you look beneath the hood, new export orders all declining at a fairly significant pace. it shows you that external demand for china's exports seems to be waning as well. scaleeing said, that is a that wraps things up with a look at how asia is trading.
it is not a pretty picture, %.'re down to the 5% -- 2.5 is whatanks a lot, that is happening in market today. data, andchinese pmi the president xi jingping's first official u.s. visit. wheel, chiefthe terkorn's martin win future hanging in the balance as volkswagen executives are meeting today. later, we give you german pmi data ahead of mario draghi's speech this afternoon. ♪ china is falling to the
lowest in 6.5 years with contraction for the seventh straight month. what is this telling us about the state of the world's second-biggest economy? >> there are a couple of things if you drill down into this data, you see that inventories are rising and the jobs are being shed. for thesn't bode well economy going ahead. this will only add to concern at the fed when they decided not to raise rates recently they cited concern about the chinese economy and government leaders deftness in handling the slowdown. this will only add to the pressure possibly making the fed think twice when it meets again in october. certainly, the latest in a long line of bad data confirming the narrative that we have seen in recent months about the
challenges china's leaders face to maintain a growth target of 7% this year. mark: chinese president xi jingping, he of course is on the road in the u.s.. we heard they signed a deal to buy 300 boeing aircraft. was this a surprise? nick: we had heard rumblings in isent days, the big thing how you have 300 aircraft, what boeing is going head to head with airbus envelope in a completion center following airbus. it emphasizes a both of these playmakers see china -- plane makers see china as a key to their growth. it explains a lot of what we had ,een with knowing, -- boeing there had been some phantom orders on their backlog.
his answers questions about the keys to owings growth -- boein g's growth. mark: just a day or so after xi jingping heralded the chinese economy, we have had the private beige book saying the same thing. more disappointing private data, this time a manufacturing. have a lot of telltale signs that the economy has been slowing. if you look at all the hard indicators, the import export transport hasade been falling. it was running at nearly 4% plus-minus, so the hard side has been slowing for some months and
is is continuing downward. the services side has been holding up the growth weight. part of that boost has come from the big bubble we had in the stock market and the expansion of the banking. with that correction taking place, the growth rate that was getting a boost from the consumption is now going to abate. you're looking at nonreal drivers back to 7%, which is the target they want to get for. mark: we need more stability of some kind? >> we would get it from all fronts. including fiscal spending, and more direct craving and expansion of bank credit. use the whole array of whatever is available. that includes devaluation. mark: i further devaluation?
the currency hasn't moved big-time like the euro swiss franc did in january. >> i think it is a start. it is situation with a corridor peg and now it is getting changed. i think it is the start of a long journey. another words, it is very authorized, and over the next few months we should see a continuation of downturn in it. i think, in tandem, the economy is doing quite well that means there reason to get on with it and probably less objections from around the world. mark: make sense of its equity markets, they for the global
selloff. was the fed,orry they did nothing, then for fed officials paved the way for a rate hike. let's talk about the fed, we happy they did not hike? ok: it is very confusing, if you look initially at what they were looking at was the theoyment situation in cross index. all of them are getting to a stage where it is time to begin to think about doing something because if you don't it is a week indicator. side, look at the other they keep an i on the inflation rate. the fall of the commodity prices, that continues falling, then the stronger dollar has an impact on inflation. they are not making that's target, but i think the economy is in a far better shape. it is time to begin the journey
of normalization. of course, the onset in china and emerging markets is cause for caution. mark: did they need to add on this extra layer of uncertainty by citing china? yes, because you had cause from the imf to be more cautious and think about the second and third round impact. indebtednesst of for the next five years, in europe they headed back into the dollar as effectively. that will cause a lot of increased volatility, and we're talking about constantly emerging markets that will drift down at one of the faster paces. we offer more difficulties for now, but remember, it is larger than five or 10 years ago. it is important to take that
speed with some of bloomberg's top stories today. agreements have been made to shelter refugees from the middle east. that is the plan for compulsory quotas which was imposed by hungary, the czech republic, and romania. chinese manufacturing data missing analysts estimates today, falling to its lowest level in six years. has remained in contraction since march. commodities fell on the data. french pmi beat estimates meanwhile, we await german figures later. according to china's official news agency, the nation as a deal to buy 300 aircraft from boeing. that comes from the president xi jingping's first official visit to the u.s. he underscored china's
commitment to opening its economy. let's chat about volkswagen's chief executive facing a showdown with its board of directors. hans, good morning, winterkorn has worked at volkswagen for over three decades. he is part of the machinery that led to this scandal. the obvious question, can he keep his job? dr.: what we know is that winterkorn wants to keep his job. thiswe did no heading into was that when i spoke to him last week, he was pretty hisident about having contract renewed on friday. listen to how -- contemplate for a moment how much things have changed. my contract has not been
extended, the executive committee has been proposed to be extended by the supervisory board. chairman, is to the have been working to go closely and he was focusing on business matters. it is an excellent corporation. this is a good, sign for the group. hans: he may not have an opportunity to run the company going forward. that he has lost the confidence of the board. let me just want you through that, tonight is a meeting winterkorn will have they five person board. on friday, we expect the full 20
and theyard to meet usually take the recommendation of the executive board. in some ways, tonight's meeting is key. it looks like there is a labor leader, and the premier of lower saxony. we will be seeing what they do. mark: thanks a lot, we bring back our guest to chat about this. 35%, that is the three-day decline. how do you catch a falling knife? k: you don't, because it level of uncertainty continues to rise. we don't really have the full picture of the litigation in the u.s., so i think you are looking at a very uncertain outlook for s with thewo year
department of justice getting involved. this could go on for one or two years. gradually, as things begin to tighten up, -- mark: is it strong enough to withstand all these fines? ok: it is the world's largest manufacturer, a very strong company, very high cash flow generation, but those levels are now quite low. in that sense, the fundamental structure is very strong. the business model is under attack, but far more important is the failure of corporate governors. change in management to gain market confidence.
what gives an overnight is at the five year of jumped up for about 75 basis points to 220 basis points, but it is probably already beginning to be downgraded if not a bit more. it has incurred a strong balance, and it will take a long time before we get any kind of normalization. we should expect a lot of short-term volatility in the hedge funds and the long-term players coming in. in a way, i think watching it from a distance is probably more devise a ball than engaging -- advisable than engaging right now. mark: coming up, this next gentleman is stepping down as chief executive of smith's group. it is his first interview of the day. do not miss this interview. ♪
capitalization of more than 100% by 2018. it was 9.8% in june of 2015. , they seepping it dividend growth as well and expect to increase their earnings per share which could reach double-digit growth by 28 team. bullish noise coming out of santander now led by ana botan with an exclusive interview coming with us tomorrow. they are updating the market, and it looks like strong words coming from them. caroline, thanks. posting revenue of 2.9 5 billion pounds the share price is getting a boost today as well.
today is his penultimate today of the ceo of smith group. some of the last fiscal year. p: the decline in oil prices is not done us any favors. the results were robust, clearly aftermarket business group fell growthwith good revenue for medical. that was your my our investment. mark: you made some initiatives, would you stabilize? philip: we entered the current with delivery both and 2016 and beyond. i think the tech is moving forward. they are still facing tough
trading decisions. if you look at the u.s., clearly att is very focused on the acquisition of directv, there has been a number of issues over there. we should see some improvement this year. but overall, a fairly tough environment. mark: china is 4% of your revenue, this push is part of this engineer for growth program. you're prioritizing results. china is a buzzword, isn't it? do you have any doubts about your push into china? think long term it is the right thing to do. i think any economy goes through cycles, clearly china is going three. of adjustment which was inevitable. mark: what are you hearing on
the ground? ip: lower levels of investment and oil and gas, what we see in medical is good growth in the market. china has one of the largest new airport construction projects in the world. mark: you had this new program, the cross divisional program, engineered for growth. you focus on some main priority areas, how is it regressing? p -- progressing? trying toll, we are go across all of them. quality ghosts the heart of everything we do, not only is the is atst -- but the -- quality is at the heard of everything we do.
that leads to some costs. this is it for you, you've been of the job for a long time. you will be hanging around until the end of the year. smith's is a said track record of delivering turnarounds. is it a turnaround story? my perspective, it is a portfolio story. we have struggled to change the portfolio over the last seven years because of the scale of legacy liabilities. after an enormous amount of work, the injection of 750 million pounds into the pension scheme make this finally at the point for the pension scheme is no longer a+++
impediment to restructuring the shape of the business. that, to my mind, has been one of the big challenges. we've been very focused in de-risking the pension scheme as at the end of july, after offsetting the escrow account, we built up an association. we have an accounting surplus for the first time in seven years. mark: what are you planning to do? philip: i will travel, then figure out what i can do next. mark: some would say, those seven years are probably the toughest. what is been the big take away, for possibly them most volatile. for a chief executive within the global economic environment? philip: it is been incredibly tough, and someone looks at this and says one way a conglomerate has given us some degree of stability, but it is very difficult to manage in the sort of environment.
dipping down a little bit. we have to put that in perspective. it is still expansion, it is still above 50. mark: david powell is here, a reflection on those figures. they are not as strong as they were for manufacturing. it shows growth, but not as strong in germany. what's more is that tell us about the area's biggest economy? vid: it means germany is starting to feel the pinch from the slowdown in china. the german economy accelerated in the second quarter, and the pm eyes for the previous two months suggests some
acceleration, while that is slowing down, it is in a relatively robust position. mark: it is heavily reliant on its auto sector, and this has been an industry across europe that has been pummeled in recent days because of revelations out of volkswagen. how important is the auto industry to germany? is a headwind at this stage for the german economy. it is germany's largest export. 20% of german exports, it is a major industry for germany that has the potential to add to the headwinds economy is facing. mark: good news on french manufacturing, but beneath the data, it is a fairly lackluster economy.
david: we just have the final numbers come out this morning, and they confirmed the french economy fell and did not expand in the second quarter. is not suggesting much improvement for the third quarter. they were a little better than expected, but not that much. mark: does that suggest more qe? vid: if you look at what happens in the euro zone's two largest economies, they will be leaning in the direction for stretching out their qe. let's get the conversation on europe, jonathan ferro joins me on the line from vienna where he will speak to the ecb board member later. john, a very good morning to you. what is top of the agenda? jonathan: if you look at the
last couple of weeks, whether it is president mario draghi they are talking about sources of outside risk. we talk about that, front and center is china and that dreadful pmi this morning. the question, how does it shake ecb policy. do you wait? or, do you do more? a consensus is building, they will do more. john, what are the policy options available to the ecb? nathan: you can increase the size of the program, and become an asset program and you buy more sovereign debt. can extend the program that
is supposed to end in september 2016. the problem with increasing expanding the program is that it is being priced into the market. will they have any kind of decent effect if you want to increase the size of the program, then the question arises once again do you have the will of assets available to availablel of assets to do that? rates, hasgative monetary policy been exhausted? the bottom line, i hope to come out the other side with a little bit of currency. mark: we look forward to hearing about that, see you later. commodities rout, seeing a sell off slumping, chinese pmi hitting a low, glencore shares
hitting a low, but they are slightly up in this session. caroline: asia is where the rout is still continuing. asic -- theheb basic resource area hit worse than expected. no manufacturing improvement in six months. a downward they in asia, and europe we look a little better. focus on the basic resources and mining, still down .4%. key among the fallers was glencore, a record low when you looked at asia and the united
kingdom. mining have done this. you see miners down overall today. there is concern about global growth, and that has been weighing on copper in particular. you are seeing aluminum selloff. this is what is weighting on glencore. over the two days, let's check it out since ipo.ouch. down 69%. this has been a painful bet. the reigning in of copper production, still, we are down
mark: let's bring you up to speed with some of the top stories, interior minister to the greed to shelter 20,000 refugees. western european nations backed the plan for compulsory taking of refugees. china's manufacturing missed at stomachs -- estimates. german manufacturing fell slightly. according to china's official news agency, the nation will buy 300 aircraft from boeing. last night in seattle, xi address toe an
underscore china's commitment to opening its economy. let's get a check on markets today, european stocks are actually rising, albeit by a small margin. still, the stocks up 600. frankfurt,gains in and gains in paris. let's get to our top stock story. caroline: i am still looking at the cars, the auto industry is still being hurt. volkswagen falling, still up by losseshere near the huge for the last couple of days, but it has slashed market valuation by more than a third. today, it continues to fall. deutsche bank goes negative on the stock, lexus lexis-nexis
cuts under the stock as well. thatly some concerns remain at their lowest since 2011. how widespread could this go? seeing why you are sellers falling this morning. lekta is one of the best performers this morning, it produces medical products. the fight neurological disorders, and an executive told comfortablevery with a crosscutting plan and could go better than the current target of 450 million swedish krona. overall, they can improve their margins as well. this coming from the swedish press. lastly, an interesting theme today, a couple of private equity houses selling out their
portfolio companies. company is%, this buying a company of equivalent size. shares on a downward trajectory, but we hear -- mark: they agreed to by carlyle group for more than $2 billion for that meanwhile, china 300ning a deal to buy aircraft from bolting. -- boeing. what is the significance of this deal? >> it is about the business jet market in the u.s.. landmark has tremendous strength, bba is the biggest operator of business worldwide. you put the two together, and you have a mammoth operation serving the business jet sector. that part of the aviation market has been flat at the best since
remember we had people turning against the business jet sector because of the use of jets driven at that time. we saw carmakers using those to go to the negotiations at washington. the flyingeduced hours in business jets markedly. now the economy is back up, and the growing strongly. topisle was able to get dollar for this. this is a $2 billion deal, it is itself,e value of bba hence the rights issue they're having to in bark on to fund it. it is the biggest deal we of seen in this sector -- it is a vote of confidence in business jets. mark: that this am only aviation news, china is snapping up a load of boeing jets.
at least $30orth billion in their own right. twin to that is an agreement to open a completion center in aina which will give boeing facility matching air buses facility. now both are competing to tap the chinese market that both manufacturers expect to be huge in the coming years. tens of thousands of planes required over the next few decades. to chinaeries already from boeing so far. they are investing in the hope that will help them match airbus which is taking the lead in china. for what to compete
pictures of the swearing-in ceremony of greece's new government. alexis tsipras sweeping back into power in last week's election. he was sworn in a couple of days ago, he is there and you can see him on the side in his traditional jacket, shirt, and no time. that is the rest of his coalition being sworn in today. let's have a look at what is happening to equity markets, we had a sort rebound today. chinese stocks slumping on the back of manufacturing data which slumped to the most since 2009. euro. are rising in the basis, itstry group ?s been about the
hans: it is dr. martin make hisn's chance to case for staying. to rebuild trust, and find a technical solution. one thing we should remember, he is the highest-paid ceo in germany. core,an engineer at the his first instincts seem to be how do you fix the problem from an engineering standpoint. he has a board issued to face. he had a showdown in april with the board, he won that round,
but he got crucial support from saxony, it of lower is unclear whether that support is there this time around. in fact, he has been calling for transparency and an explanation from dr. winterkorn on what he knew. they will be meeting later on today. we believe -- last night they had a surprise meeting, that was -- we will see where this is. volkswagen is headquartered invokes berg and lower saxony. .4%, aolkswagen down by big come back from an 8% decline just an hour ago. we get euro zone pmi data later, we've had data out of france and germany. his quarterlyolds meeting.
we get manufacturing pmi data out of the debt it states, busy day in a busy couple of hours coming up. "the pulse" is next. news, there's to investors and this is the chairwoman that took charge when her father passed away last september. she is been in charge for 12 months. we have seen turmoil in emerging markets. she had a huge increase in january. today, she is saying the look to increase capital share and that include some dividends. it is a tough time, but she seems to have a good handle on it. i also spoke to the union leaders, this is part of a sustainability program. we have a show that is pegged to ceo'sws because we had
in new york for climate week. the timing could not get more getect, because no one can sustainability right. mark: we look forward for that, that is in five minutes. we will have an ecb member to chatting to jonathan ferro. draghi prepares to speak to the european parliament. a bit of a rebound today, and the global basis stocks are declining for a fourth consecutive day, but european stocks are rising today. chinese manufacturing data falling again. that sets the tone, still uncertain for when the fed will
raise interest rates. having a peek at the currency markets today, those are falling on the back of the chinese data. especially those currencies linked to commodities such as the aussie dollar, the new zealand dollar. thedollar is up against yen, and you can follow me on to their -- twitter. itl martin winterkorn make to the end of today? left to explain what he knew that this defeat device she did. that is a big question that winterkorn faces today. francine: we have an exclusive coming up, then the ecb.
pulse.e: welcome to the these are our top stories. china slowdown. contraction continues for the manufacturing sector with pmi falling to its lowest level in six years. asian stocks and commodities fall on the news. china is open for business. the country's official news agency says the nation will buy 300 boeing planes. the future of martin winterkorn hangs in the balance as the carmaker's executive committee meets today.