tv On the Move Bloomberg December 18, 2015 3:00am-4:01am EST
by 41 points. let's cross over to caroline hyde for your market open. caroline: it might be a few heavy heads. a hangover-ish on the stock market. euphoria that we saw in the stock market after the finally federal reserve did hike, we are now seeing a downturn. -- theted states report united states now erasing all of their post hike gains. at the moment. where expecting germany to turn in. clearly risk aversion coming into the stock market at the moment. we fail to get festive cheer coming out of japan. not enough to drive up hikes. we saw volatile trading in japan.
we'll dig into the asian trading much more. stocks are trading lower. more focus on the strength of the dollar and the weakness in commodities. the chinese-based book not helping. we're seeing a bounce in terms of the euro rising. the dollar down by .5%. the dollar is on track for its best weak overall since the beginning of november. where up more than one percentage point. oil might be trading up a little bit higher. copper, a bit of a bounce back today here at -- bounceback on the day. i think that will be the focus. we are seeing a slight dish money you -- money moving into -- money moving into u.s. debt. jonathan: ftse 100 lower.
juliette sally standing by. a difference a day makes. the euphoria dissipated in the asian region today led by these falls coming through in japan. the bank of japan keeping its , ¥80l stimulus policy trillion purchase program. also announcing a purchase program. governor kuroda clarifying that something investors had worked out, forming an initial spike on the announcement that this is not additional easing. he was saying they are confident the following commodity prices rate see that 2% inflation target. on the closing shanghai, pulls coming through there. --saw the property develops property developers do quite well in hong kong.
rising in 32 out of the 70 cities tracked by the government . a different story according to the china a's book which shows it was a pretty disturbing deterioration -- chinese beige book which shows it was a pretty disturbing deterioration. we saw the yen fall and the markets rally. as you can see, that was sold off. the nikkei to 25 underperforming in the region. closing down 2% today. djokovic juliette saly, what a session in japan. the nikkei 225 down 1.9% of the close. with close lower. we're down across the board. that is what is happening in the early part of the session. here's what is happening in today's program. a qe facelift. the bank of japan gets a facelift.
we had out of the week with some $35 crude. momentummeron claims in eu reform talks. we take a closer look at what exactly happened in brussels. ♪ story in back to the japan. the bank of japan kept its main monetary stemless packet unchanged today governor kuroda did -- did suppress the market. jodie snyder joins us from tokyo. run us through those changes. the target for the asset purchase has not changed. bertram governor kuroda himself in a news conference. he kept making that point saying these were technical changes.
they don't change the overall size of the program. by.inue to stand quantitative easing. we will continue to do it as long as it makes sense. also that they continue to stand by 2% inflation target. they will do their utmost to reach that target. he was making it clear that the program, they are tweaking the program. he knows of the changes are confusing. jonathan: will get to the potential for a move in 2016. but i want to talk to you about is the inflation target. he did mention crude. on brent. what is the risk of that inflation if it gets pushed back once more? give me more color. jodi: he was very firm about standing by the target.
the drop in prices recently has made that more complicated. that will be a big issue. that is one of the things economists are talking about. about whether they are going to be able to make that target. how much a part of that picture? jonathan: in 2016, we talked about it all morning, we have a central bank that owns about one third of the jgb market, half of the japanese etf market. is it just to be technical changes. does the bank of japan have any room to alter the size? jodi: one would have to think that making operational changes is necessitated by something. at the same time, there is a real split among economists about whether they are going to continue to ease. whether they are going to increase the size of the program next year. half of the analysts we surveyed
say they do not see any more easing in the foreseeable future did another have says they see it by april. another person we talked to expect to seey easing by january here it jonathan: jodie snyder, always great to have you with us. thank you for joining us. let's bring in tim heyward. , for some on crude people it does not make sense. a central bank is focusing on crude so much. they react to a lower crude price with more stimulus. with more stimulus than a bigger asset program. i want to ask the most flippant question, if it matters that much, why don't they buy crude futures? indeed. don't they this must be great for them.
you can imagine all the people whenan down the reserves oil prices were four times the price, they were rejoicing and replenishing. the short-term supply is huge a number of boards off galveston. they have a lot of short-term availability. jonathan: is not a recordation to any bank should buy crude futures. it underlines the issue. tim: why should you buy bonds with a negative yield. why not buy that storage? why should qe be limited to fixed income? why not? jonathan: the risk associated with that though is pretty big. countries are going to need
energy to keep themselves warm. i don't see philosophically a reason why central bank should not i things that society needs -- should not buy things that society needs. jonathan: are we at that point, qe exhaust? more stimulus, oh no, no more stimulus. is that the focus for 2016? tim: qe works in its early stages. you talk with the facelift in japan. , asset managers want to be up to buy something which have genuine value and does not rely on stage intervention. you're seeing a little fatigued here. who are the new buyers? jonathan: good question. tim haywood. he's got to stay with us.
.3 .5%. nejra: the bank of japan kept the main -- longer maturity bonds, longer etf's. the end stronger against the dollar. a private survey of china's economy shows disturbing deterioration across the board. the china beige book shows national sales revenue, volumes, borrowing and capital expenditure were all weaker. u.k. prime minister david the bid to change britain's relationship with the -- that ision is your bloomberg's first word news. for more on the stores, head to bloomberg.com. big headline in the commodity market, crude headed for a third weekly decline did
and worsening u.s. supply glut. south of $35 a barrel. is over again. the folks of the market today, we had the continuous slow drying lower as oil goes down. the dollar depreciates. the story for today, what is it? ryan: where watching the count. last week we learned there are 25 rigs. that is down threefold over the last year. the number of rigs drilling is a dwindling. we have to say production is still ok. exxon has a report out today saying big oil, their next move is going to be m&a. gett of guys don't want to
into places like north dakota because the cycle is really short. where watching hedge funds. we learned that hedge funds were shorter than they ever have been before the oil price. do they remain as short as that? it isan: tim haywood, eaten into high-yield. that contagion, is there any from high-yield exposure? from the triple c's? all the way into investment grade. tim: limited. financials have behaved pretty well. .here is some linkage the problem is the way it is held. liquidity story should've been talked about a year and a half ago. jonathan: we were. i promise you. tim: we were watching. butliquidity is not great
it has not suddenly worsened as of late. what is interesting, the refinancing really is a couple of years away. ? you'vethe incentive got to pay the debt off. you katrina front -- you got to refinance those loans. today's decision is keep pumping. $37, $35, keep pumping. jonathan: let's talk about sovereign debt. oil keeps going lower. justave seen the long and the long and. it makes treasury start look like high-yield. you were talking about convergence, is that we you anticipate? tim: maybe over the next 12 months. when the u.s. and european economy is measured by inflation , and basically the future forecasts are pretty close.
history has shown the long end of the blonde market converge. clearly where the center banks -- the final metrics of the economies are quite similar. eventually long-term yields should be similar to. jonathan: we're checking 2.9% at the moment. how much lower can that goat? fedsit can go lower if the might have made a mistake in six months time. rally, itg is good to is really the only u.s. market that is left. it is not supported by a current qe program. rally, it is the u.s.. jonathan: tim haywood will stay with us. -- we ask ofan ask spain's economic recovery has
glencore up 2.5%. bhp up 2%. that the ti below $35 a barrel. we pushed through $35 a barrel. for the markets, we're going to take you to the politics. today's until spanish voters go to the polls with a new generation of politicians demanding power. let's can more. tom mackenzie is in madrid. a's desks this such and a certain election? anwhat makes this such uncertain election? tom: we are looking at a rewriting of the political story here in spain. -- a return tod democracy by the socialists and the popular party on the right. the two upstarts in this election that are creating so
much excitement is the austerity party and the systems party. they look to make significant gains in the election. it is a generational divide as well as an ideological divide. they are looking for change. a fresh face in both parties led by young charismatic leaders. the situation in greece which is been compared. the support has picked up in the last few days because the leader seems to have done very well in his tv debates. 14% of people in spain say they are undecided. they still not know who they're going to be voting for. that can be crucial. jonathan: tom mackenzie, a busy man. joining us out of madrid.
let's welcome our guest, role rebel while -- role, first you. risk of 2015. it was democracy in spain and greece. it never quite developed in the way people thought it might. >> it is put down to the spanish recovery. people are starting to feel that in thinking maybe some of the radical options do not look so attractive. we're seeing the effects. they dropped the idea of restructuring spanish that. we are seeing a little resurgent -- resurgence. they are far from the peak. jonathan: people feeling where unemployment is. the -- elected a protest party.
they would what? no thank you. >> they showed that is hard to make the promises that the dame us is making. antiestablishment , anticorruption, the fresh face but with a more centrist economic policy. this is what is happening already. spreadn: we have seen a between spanish debt. we have this political risk premium come in. spain over italy. do you expect that to go of the way once people realize the political risk factor is not going to materialize? >> i think you're right. is good2015 performance
to stand up across the world. high youth unemployment. the prime minister missing in action. happened is there that some of the strongest growth driven by credit impulse. it was never as bad as people thought. it is not as good as people think now. the best of spanish growth phase has passed. for me it is not a difference of spain and italy, it is a fact that the euro is lower than the u.s.. jonathan: where would you belong in europe? that is a very difficult question. if you had to belong sovereign debt in europe, which country? and where on the curve? buy a tenure germany. it is a temporary thing. we set the ecb might be making moves now which with they --
which they would come to regret. we don't think there's going to be a european crisis, particularly if the euro continues to weaken. european debt is a temporary by. haywood, joining us in the last 60 minutes. have a fantastic christmas. cameronon this program, claims momentum. grievance is on hold for now. we take a look at what exact we happens in brussels -- what happened in brussels last night. dead flat on the session right now. .he dax bouncing in the commodity market, brent crude trading at $37 a barrel. wti, $35 flat. ♪
jonathan: good morning. move." back to "on the the ftse pretty much dead flat on the session. let's get to your other movers this morning. bring up the equity markets very quickly. in the red in london, only just. the dax was down much more than that 25 minutes ago. still lower by about 0.5%. switch up the board quickly. the dollar just a little bit weaker this morning. brent crude, $37 a barrel.
wti, a drop below $35 a barrel. towardeeping backt positive territory. dollar-yen up by 0.6%. if you want to see what it looked like overnight, bring up the intraday chart. a lot of excitement around japan. a focus on the technical side of things. initially, when the headline came through, a pop higher in dollar-yen, then the reality that they hadn't done much at all. a bit of a facelift. no change. dollar-yen lower. let's cover your market moves. let's get your top stock stories. nejra cehic. nejra: thanks, john. some of the best-performing stocks on the stoxx 600 now are miners./ we've been seeing copper rebounding. even though gaining
it has been put on review for a ratings downgrade at moody's. moody's put out a statement today saying the review was prompted by the decline and weakness in commodity prices. moody's doesn't expect a significant shift in commodity prices next year. still, bhp billiton moving higher. glencore too. glencore had been suffering, but its aggressive approach to shrinking the industry's biggest debt pile is fueling optimism today. in the past three days, credit default swaps ensuring glencore's debt for five years have been falling. down, casino taking its two-day drop to 15%. down 2% at the moment. this started dropping yesterday after a short seller named this short, as his latest saying it is using financial engineering to mark a sharply deteriorating core business.
casino did come back and basically said these allegations were misleading and erroneous. i can tell you that jpmorgan has also come out disagreeing with carson block. still, casino shares trading lower. jonathan: thank you very much. let's talk about the political moves. u.k. prime minister david cameron said his did the change britain's relationship with the european union is gathering momentum. he conceded that the move was unprecedented. >> we are attempting something very difficult, that hasn't been tried before or by another country. that is to renegotiate our position inside this european union at a time of our choosing with the mandate of the british people. jonathan: for more, let's head out to hans nichols. he joins us from brussels. the cynics out there think it is just orchestra. nothing happens.
got a bit of fuel after last night's meeting. we can have a debate on whether or not it is orchestra, opera, or something entirely more theatrical. we have david cameron vowing to live and fight another day. he didn't get the agreement he wanted. he didn't even fight through the night like he promised to. his's how donald put it in way of engine toward progress. >> i didn't want to sound too traumatic before the meeting, but i do believe that tonight was a make or break moment. jonathan, in some ways, i'm struggling to reconcile the atmosphere. it is all very positive. the actual fundamental lack of concrete progress on those areas david cameron laid out -- they spent most of the time limiting
his proposal to the sort of benefits, no progress there. perhaps if you really want to be optimistic, it was angela merkel's failure to sort of say there will be no treaty changes. she didn't say that. you could maybe finis this diplomatically, have some solution, and after a vote in the u.k., potentially have treaty changes. everyone is aware of the difficulty. hans, i think everyone watching this have already formed an opinion despite whatever happens in brussels. when do we find out whether there are any concessions? on the timing, it looks like february. in terms of the timing, we have sort of disjointed views.
francois hollande came out saying that david cameron said it is going to take place in the middle of 2016. david cameron denied that coming out. we do have some clarity that david cameron is using poll numbers, talking about how the pressure he's under domestically, using that to leverage and make his best case. jonathan: hans, stay with us. i want to bring in rauououl. otherituation to them people is farce, orchestra. you go to brussels, kick up a fuss, an orchestrated argument, come back to london, told the u.k. that you tried. is there anything in that argument? >> i can see why some people think that, but i'm skeptical. the eu has tried to do so many things that often is a complete shambles. they are not very orchestrated. there might be some truth in
that. but getting 28 leaders to agree on some kind of united line is always difficult. but maybe there is some truth to it. jonathan: hans nichols, make or break, we've heard that so many times. why is this any different? what is on the agenda today? jonathan, our first rule of brussels deadlines, there are no brussels deadlines. we learned that with greece. that is just as true to the debate about the u.k. trying to change these rules. jonathan: great to have you with us. oul, you listen to this argument, here's a question. difference what he comes home with? there are a lot of people on both sides of the debate that have hardened their stance. they know what they want. the in-between, can they swing it?
>> i think they can. we did some polling and it showed that if david cameron doesn't get certain safeguards countries,ozone doesn't get anything on migrant benefits, it can swing the vote possibly up to 10% towards leave. other polls have shown similar. a poll this week highlighted that while we have 20% on either side that had made up their mind, there's a huge swath in the middle who can be influenced. also, migration, the economic climate, a whole number of things. there are people who don't have categorical views yet. jonathan: for a lot of businesses, for the economy, at the very least, you want the u.k. safeguarded from any spillovers from the european monetary union. that is the very minimum you
would expect. let's pretend they don't even have a referendum. they should have been doing that anyway. >> good question. how much of this would have been happening anyway? i think very much on the safeguards, that has been a long-standing issue even before the referendum was announced. we saw the european banking authority. i think that's a fair question. up isy it's being dressed a big reform, change in position, and people going into referendum will take count of these issues. jonathan: the business world, if it is orchestrated, a farce, at the same time, it's uncertainty. what does this mean for the economy? >> the longer it drags on, there will be uncertainty, but i think we are seeing people not know what to do until they have time.
once we know the dates, markets can react. at the moment, we are not seeing any reaction. once we have this announcement, then markets and business will begin to react. that could be an intense period of uncertainty. but there's not much that can be done to avoid that now. the closer it is, the more uncertainty there will be. reforms might be important to give a lead. jonathan: always great to have you with us. thank you for joining us this morning. deal why a u.s. tax credit is keeping solar shining. 40 minutes into the session in london. let's get you an update. ftse 100 lower by about 0.1%. the docs off by 0.6%. the majors on the ftse rallying this morning. in the commodity market, wti down to $35 a barrel. ♪
degree. we are going to begin to see wage inflation. i don't see there's a recession unless there's more problems in china. we may have a recession from other problems in the world but i don't see it emanating from the united states. jonathan: that was larry think talking about what a fed hike and what it could mean for the u.s. economy. this morning, it means a stronger dollar. let's cross over to nejra cehic. nejra: thanks. morgan stanley plans to cut up to 5% of its equity trading staff according to "the wall street journal." it says the unit would eliminate about 100 jobs in early 2016 and replenish its ranks over the year. li, an shkre pharmaceuticals executive, has denied securities fraud charges. he has been released on a $5
million bond following his arrest yesterday. u.s. traded oil has fallen below $35 a barrel, headed for a third weekly decline. that is your bloomberg business splash. for more, head to the bloomberg terminal and bloomberg.com. jonathan: thank you very much. now onto energy. the range of subsidies and tax breaks from both sides of the atlantic have energize wind and solar stocks. wind gained almost 20%. joining us now is bloomberg intelligence's james evans. great to have you with us on the program. if i told you that crude was at $35 a barrel, wouldn't think these renewable companies were doing so well. why are they? james: there's always a market sentiment that people assume renewables go down as a result of that.
fundamentals, the crude is typically used as a transport fuel, not for generating power. jonathan: some of the measures that have been introduced clearly stimulating demand for these stocks. how will they make a difference? james: we've seen a big shift this week in stock prices. we call it the solar coaster because stock prices are more volatile in this industry. it is very much reliant on subsidy support from governments for future growth. whenever we see new policy measures that surprise us, we see a big shift in stock prices. we saw that in the u.s. with the surprise inclusion of the investment tax credit for solar. it looks like it might go through. this is obviously going to secure demand for these companies over the next 4-5 years. jonathan: the free-market purists will be thinking, when
you get a heavily subsidized market, you never get an efficient market. talk to me about this business model that is so heavily subsidized. what does that mean for the industry? james: the costs have come down significantly. solar module prices have come down about 20% are year over the past five years. got to consider is that the fossil fuel industry, nuclear power, they've had 50 years of subsidies to get their cost down. arerenewables industry trying to play on a level playing field with fossil fuels. jonathan: james evans, thank you for joining this program. another busy week for markets. we wrap it up with the charts that matter. all about a latin american currency. pain in the crude market. and the decisions from a certain central bank. guess which one i'm talking about. ♪
ms. yellen: the federal open market committee decided to raise the rate by one quarter percentage point, bringing it to one quarter to one half or sent. this marks the end of an extraordinary seven-year period during which the federal funds rate was held near zero to support the recovery of the economy from the worst financial crisis and recession since the great depression. >> the fed basically is living in an old age as it goes to a new age that is reflective of high leverage and globalization and certain other factors in terms of demographics that are pushing down inflation. >> i think she nailed it. too hot, nots not
too cold, just right. i think it was a very well scripted conference. i think she nailed every answer very well. >> the fed is having a real problem implementing its new monetary policy. but at least they finally made the right decision. jonathan: welcome back. a busy week for markets. here are your charts. under a, you've been rock somewhere if you don't know this. there was a central-bank decision this week. the federal reserve began its tightening cycle. the markets reacted pretty calmly. it did push the yield on the u.s. two-year over 1% for the first time since 2010. next up, argentina's currency began trading freely this week as the new president took a
first step towards a criminal -- towards economic overhaul. dollar surging more than 30% against the argentine peso. last but not least, crude. no end insight to this plunge lower. withok at a week ending some $35 wti. one reason for that, u.s. stockpiles climbed to their highest level for the first time for this time of year since 1930. that and a stronger dollar. with us now, richard jones. i've got to say, fed has hiked, theet is gyrating, like most exciting thing happening is the premier of "star wars." am i right or wrong? richard: i think you've nailed it. we will see windowdressing, portfolio closing, risk trim, and i think the real reaction to what the fed did this week will
probably start to play itself out early in january of next year. year,an: january of next the ecb meets again. how does this develop over the next 12 months? everyone talks about divergent monetary policy. in 2016, does it look any different to that? is it continuing to the divergent light? hate the term, but i think the currency wars continue. i think in the near term, the ecb will be pretty happy with the dollar exchange rate. andid before, between 1.05 1.10 is the sweet spot for them right now. they won't want to see it appreciate back to 1.15 or higher. i don't see the ecb getting too excited, but if the exchange rate starts to push higher, i think they will push back on that. if you look at market pricing
for the deposit rate, we are pricing in another 7, 8 basis points already by the end of next year, early 2017. that is still in play, but it doesn't strike me as something immediate. jonathan: you talked currency war. going into 2016, china in theify to market forces, you would see a depreciation. that is to be expected. does that add into the mix of the currency war? what does it mean for every currency? richard: for me, china is the wildcard next year. i think the narrative is that we get decent growth out of china, maybe the worst is behind us. the whole e.m. wobble that we had is over. i think the fed referenced it. they said, we feel that is being contained or we see those pressures of dating. abating.res
jonathan: richard jones of bloomberg, thank you very much. that is it from me in 2015. i will see you in the new year. guy johnson will return on monday. he's got a sore throat. if you want to talk markets, you know where i am. 56 minutes into the session, the ftse 100 pretty much dead flat on the session. the dax hitting session lows again. in the commodity market, brent crude at $37 a barrel. $34.94. best of luck for the rest of your day and have a fantastic christmas and happy new year. ♪
francine: the u.k. prime minister sees halfway to our form deal. european meters -- european leaders meet to discuss terrorism. the chinese bank book tells a tale of worsening conditions while other data suggest recovery. the force to be reckoned with is the franchise looks to make $2.4 billion for the studio. so, welcome to "the pulse" live in london. i'm francine lacqua.