tv On the Move Bloomberg December 21, 2015 3:00am-4:01am EST
100 is down.se >> we sub hundred billion euros what out from the market. expecting a down day across the board. stability is mixed with concerns about the ongoing oil lows. we are likely to see a little bit of risk aversion today as we digest the political instability in spain. ibex is nothe yet open. that will open later today. oil continues its decline, down 2% today. we have 11 year lows for brent.
oil continues to be a concern. the euro is a little higher today. a coalition has it to be fulfilled in spain. we have no certainty on what the coalition will be billed, pushing yields up 17 basis points. we are saying italian income stocks. have a clear underperformer in the spanish debt market this morning. we're looking at spanish utilities and how they will fair. what will this mean for the likes of the subsidies hydro? keep an eye on the spanish
stocks. seadrill is down 1.4%. due to the up 1.5% deal from china. anna: it's good to david ingles in hong kong. asian trading session did look much better from how we started out the week. look at what happened in japan. i know it is down, but it was much lower. at onecloser to 2% or 3% point. investors picked up where they left off friday. many equities were drilled down in value in japan. the yen weakened. he overall benchmark closed
5/10 of 1%. a close look at some of these major markets. you can see, mostly bring. -- mostly green. they were of closer to 2%. there was expectation that we may get a break, something tangible to trade on, from this ongoing central economic conference taking place at the moment. index on the. an taiwan is up one third of 1%. is managing to erase the earlier losses, despite the weakness of the oil prices. monday turned out to be ok here in asia. back to you. anna: thank you, david.
that is what is happening in markets. oil hits precrisis lows. where's the bottom of the barrel? we look at one of the reasons why 2015 was a year of the fairs. a scandal rocks toshiba. the company faces the press in 15 minutes time. right now, brent crude has fallen to its lowest level in more than one decade. the drop comes amid speculation that arab producers will exacerbate the supply glut. we are joined now by elliott. are fightingtries for market shares. that has been the story of 2015. what did the arab producers have to say? they were certainly
trying to talk up prices. the oil minister said we should not be so pessimistic about oil prices. he said the fundamentals are strong. that is just talk. he markets are looking for action and there simply is not anyone it comes to the move to reduce output and the supply glut to stem the oil prices. they are meeting over the weekend in cairo. brent crude prices fell to their lowest levels since 2004. the oil minister says rather than focusing on how to boost prices in terms of the sales price, they are trying to find ways to cut costs to boost of their margins on every barrel they sell. in that way, they to be less effected by the current low level of prices. earlier, u.s. producers have been adding to the supply
glut. does that look like it will continue? elliott: it does, anna. began toes from opec open and shake out these high-cost producers in the u.s. it did seem to be having an impact and we saw over the past year, over half of the rates in the u.s. being idled. .here was a surprise increase the u.s. deployed over 540. some say this is a blip. charts suggests things may have bottomed out in the u.s. global stockpiles are still rising at demand from china. then, you have got the u.s. lifting its 40 year moratorium on oil exports. it is not hard to see how there could be even more oil coming into the market, adding further to the supply glut and
pressuring prices even more. anna: thank you, elliott. story.tick with the oil we had the chief energy analyst. great to see you. we have interesting comments coming from the iraqis and the aqataris. they are talking about not being pessimistic about prices. you got that message from both of them. what will opec do to change the amount of pessimism around oil prices? reporter: i don't think they can do very much. i agree that these are just words. ththe focus is on market shares. i don't think prices are down because of the couple meeting. this has been the the story of 2015. the key element behind the oil prices drop is really to do with diesel. it has been a phenomenally warm
start to the winter. the u.s., there has hardly been any december because of the el niño effect. europe was meant to be cold, but it has not been in england. demand for crude oil has been very strong this year. but productying, demand has been strong. these will demand is weakening so quickly. don't have that mechanism of why or how crude can appear in the short-term. anna: how does that change for 2016? do you see that picture you described being maintained? or do something shift and do we see a higher oil price? reporter: i don't think we will see higher oil prices for the next six months. od to cutn no mo production. the rebalancing process is
beginning with the non-opec suppliers. because cautious about reading too much into this. pounds don't correlate very well. there is a time lag of six months. we've seen the u.s. production fall from 9.7 million barrels. that should accelerate into the new year. it probably bottoms out in q3. but then it becomes an issue. torture billion dollars between 25th -- we have seen about $200 billion between 2015 and 2016. that is when we see the rebalancing kicking in. that will occur most likely in q4. it will take a while to round that inventory down. overhang isventory
massive. what do we know about the storage story at the moment? what is being stored globally, onshore, or even offshore? what is that tell us about the dynamics of the oil market? reporter: the u.s. inventories reported very wisely, they are about 70% full. there is still some space in the u.s. shell storage in the rest of the world is full. we have estimated about 85%. even chinese pr is pretty much full in terms of the highest levels ever. i am not saying we have front out of space, but we are getting there quite quickly because diesel is building quickly. we have seen floating storage in europe with diesel and we have seen crude being floated off singapore. that points to the fact that the glass is pretty large and we are going to take more than six mo nths to round this glut out.
anna: where is the excess going to go in 2016? you said in 2015 much of it was being refined. in 2016, much more might be stored. reporter: this is the first quarter because of the lack of heating demand. i think the second half of the year, the rebalancing comes from the supply. this year has been about demand and next it will be about supply. just to give you one number, the non-effects apply group was 2.2 billion. it is actually now just 300,000 barrels a day. we have slowed down tremendously. a more that slows down at the opec suppliesnore we see non fall down. anna: thank you very much. blain.ring back bill
i have been looking at what has happened with the trading this morning. the euro stocks are down by 3/4 of 1%. 2.4%.ex is down by there is a lot of momentum around this story with the inconclusive this of the election. bill blain: it is the same with the bond market. with the spanish stock market, there are implications. i am a bonds man. what happens in a stock markets is quite frankly, what happens in stock markets. there has to be a serious look at what the government that is struggling to make policy is going to do to move some of the initiatives. remember, we are in this particular week when it is all about tinsel and sleigh rides and holly berries. the volumes will be very thin
today. many people are on the holiday the number of red dots besides people's names sums it up. anna: just looking at some of those big names in spain. bill blain: the energy story is completely separate and i think it is worth saying. you have also got the political situation that some economies cannot afford to continue producing. that means everybody else is behind them. the saudi's and the russians are the people who have to keep producing oil, the matter the price. anna: bill blain, stay with us. money managers are having a hard time picking winner, but they sure can pick losers. ♪
the spanish government the slid this morning. are down 50%s this year. movie hastar wars" smashed ticket sales records in america. the seventh film in the millione collected $238 during the weekend. that tops the $208 million in jurassicen by "drasti world." be speaking to the disney chairman and ceo at 1:00 on bloombergime tv. for more on these stories, go to the bloomberg terminal and bloomberg.com. anna: i understand there are
already five "star wars" films in the mix. rosier ending up much than it started. supporters stock joins us now. bill blain is still with us. "the year?"year reporter: a lot of things are going on. own s&p is heading for a dwo year. another is the era of zero interest rate policies is coming to an end. we will see these overly indebted companies, the chicken will come home to roost for them. anna: you are a credit man, bill. bill blain: we keep a close eye on the corporate sector.
one of the fascinating things i have observed has been the distortion costs by qe pushing up asset prices. another one has been the failure to invest. we reckon that u.s. corporate and global corporate's have raised around $13 trillion in debt since the crisis. does that go out and buy new factories and create new jobs? no, almost all of it was used for stock buybacks or was pumped into corporate pension schemes. anna: you quite like of the red flag raising from some of these guys? bill blain: absolutely. i think it is absolutely fascinating. it shows where the market really is, once you strip out the distortion effect of the qe. anna: financial engineering seems to be something they don't like. told me: carson block
he will not have to short a lot of companies. they will blow up on their own. bill blain: i think we will not see the kind of crisis some people think we might. rates will remain remarkably low. as we have seen in high-yield bond markets, people are getting suspicious of certain sectors. that plays into what we were talking about earlier, be selective of your sector picks. i do think companies have been raising money to boost their stop prices. those are the ones you have to watch. if they do run into trouble, they will find it relatively easy to raise money in it the debt market. anna: we will return to that in a moment. on the subject of these short-sellers, there are people that say, what right do these people have to defame a company? and send the share price
tumbles and they make a lot of money. it depends if what they are saying is true> a lot of people have the ability to move share prices. some of them might be very well-informed and others, not. reporter: i do think anybody has the magic wand. people say these people on twitter are causing the market to crash. i don't think i could do that or you could do that. it would take quite a good investor to do that. all it takes is somebody to ask a very sensible question about any stock. a lot of people have the ability to move share prices. some of them might be very well-informed and others, not. reporter: i do think anybody has the magic wand. for instance, is that stop developing what it should be? i think you can ask that question of so many prestige stocks today. is that bank rightfully managed? his corporate doing the right thing? anna: i think he was making a
distinction between europe and the u.s. reporter: it was an interesting comment. he said investors here are a lot more deferential than the u.s. investors. for leaves a big opening targets. anna: thank you very much. up next, trouble for toshiba. the company forecasts more job cuts and a record loss. the company executives face the press. we have the details. ♪
anna: welcome back. forecasts a record $400 billion loss. reporter: those shares fell the most since may in tokyo trading before the announcement. what announcement? toshiba forecast a $400 billion loss in the current fiscal year. they cut thousands of jobs. they will shut and sell their research facility. they are narrowing the scope of their business after an accounting scandal. the accounting probe began more than eight months ago. the reason that toshiba did this was partly to conceal the waning performance of its pc operations. anna: a great chart here.
toshiba's bad news drip. nejra: in july, it revised more than six years worth of earnings , lowering its profit by 152 billion yen. in october, they agreed to sell its image center business to sony. and finally, the regulator recommends a 7 billion yen fine. we have seen the stock plummet over the past eight months and half its lost market value. anna: it will not be the same business. it is sharpening its focus on memory. thank you very much. , uncertainty in -- up next,
and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. anna: welcome back to "on the
move." this is a live shot from the london skyline. is ons where they 5100 the trading day. are of the mining stocks getting a boost in the european session, despite the weakness we saw in of the oil price. this is the broader picture across europe. this does not tell the one of the big stories with spain. onestoxx europe 600 is up fourth of 1%. some of the banking names are
put under some pressure as a result of the inconclusive results of the spanish election. let's get to some of the other metrics in the market. the crude is down 9/10 of 1%. brent is down about 2%. anybody who was hoping the opec meeting in cairo over the weekend might help oil prices, that has not happened. 1.086.o dollar is at to four resulted results of the spanish election. howhe spanish markets just long it might take to put together a coalition and how stable it will end up being. let's go to caroline hyde. we are in uncharted political territory in spain. this is pulling down spanish
stocks. we are focusing on one. across the board, the ibex is having its worst day in more than three months. that political instability affects this significantly. to the past few decades. nearly every single stop is lower in spain this morning. --ng the bonds fall and now you have seen the bombs fall and now these stocks are falling. we have u.k. speculation in the air. giant,, the u.s. pb could be weighing a bid.
that considerations could be going on, but comcast is a huge player. it has to be taken seriously. up 7%.le, ericsson is with thell to do dispute over the mobile device patents. cane two juggernauts cooperate and work together. that is boosting ericsson shares this morning. it is all about the downward trend in spain. anna: thank you, caroline. that is an update on the stock movers. let's go to madrid. we have the latest on the spanish election story. you have a guest with you? i am joined by a man that predicted one year ago that we would see the uncertainty we have seen on sunday.
thank you for joining us this morning. what we are seeing in spain, the market and the ibex, is a justified? >> financial markets don't like uncertainty. it is only natural to see this movement today. they couple months ago we saw the same in portugal. with the uncertainty in markets there and eventually adjusted. we will see a similar course of events taking place here. tom: we spoke about some of the coalition scenarios. shed some light on where you think things might go from here. antonia: there are two possibilities. a government led by the people's party. it is going to be very difficult.
it is not like there is a lot of support from other parties. there is another option, a government led by the socialist party. it will also be a difficult negotiation. tom: it seems to be marginally more likely at this stage. there are some pretty big sticking points there as well. antonio: the referendum will be a very sticky point for the parties. the socialist party will be affected. the parties come from the south and people in the south, people who voted for the socialist party, don't want a referendum. rajoy has managed to do
well, sticking around the political scene in spain, but his position is looking difficult. what do you think his chances are of staying on? survivor, but a it looks difficult for him. he doesn't have any suitable partners in parliament that will allow him to be reelected. he will have a very hard time being reelected. tom: are there economic challenges facing any new government as well? antonio: unemployment remains high around 20%. we have the same growth motto that we have had in the past and that is not sustainable. the last government was good at adjusting the economy. a certain response has to be implemented to get sustainable growth back in the equation. we have big challenges that need
to be tackled by the next government. the next government will probably not be able to tackle those challenges. before we managed to get the budget deficit down to some degree, how much should we be focusing on that? of the 3% target brussels wants. antonio: it continues to be a concern. markets think it is growing well, but it takes only an economic shock from the outside to effect us. we need to have a government in place that will be able to face these challenges. : the ecb will still be in
play with this. antonia: it is par positive for the eurozone. the only actor with significant power is the ecb. at some point, qe has to stop. and the problem is that then, governments would have to adopt reforms. it is going to be much more difficult to respond to any potential shocks. o, the mania, that predicted the situation one year ago. we will obviously, watch how things will play out in the weeks ahead. anna: thank you, tom.
he reminded us what happened in portugal. just to reiterate, we are seeing the spanish market underperforming. the spanish market is down by 2%. let's get to some breaking news. both have been banned for eight years. platini are banned for eight years by fifa. that is pretty much as expected. platini means he is blocked for running for the presidency.
sygentia's last closing price. that is 5% higher than the previous offer. shareholdersgroup will vote on their proposed merger. the oil and gas producers got clearance from antitrust authorities this month, removing the final regulatory hurdle to their deal. the takeover was valued at $70 billion in april. since then, oil prices have dropped 40%. it is poised to sell less than its projected 5 million vehicles this year. that is your bloomberg business flash. for more on these stories, go to the bloomberg terminal and bloomberg.com. anna: now over in the non-renewable energy sector, the
continue toal has squeeze rivals. russia has no intention of succumbing to the pressure. we are joined by the bloomberg oil strategist. it is good to have you on the program. let's talk about if russia can contain this story. they pumped more in 2015 than many thought they would. reporter: at the start of the year, a most all analysts were expecting russian output to decline in 2015, but it has not. it has set new monthly records this year. the expectation for 2016, they are already starting to change. two months ago the international energy agency was forecasting a 90,000 barrels a day. last month, it revised that to flat. it now has very modest growth in russian production for next
year. are very faint signs of optimism among analysts, but nothing like this year. anna: it seems these russian businesses are seeking the weakness in prices. are they going for prices in market shares? julian: it wants to be the big dog on the block. it is much more difficult to ist wells in russia than it in the middle east. a lot of water comes out with the oil. if you shut in the well, you may never be able to open it again. the value of the ruble has them to a certain degree. most of their revenue is in dollars. the tax structure on russian
exports favors the companies. it is very much the government that has taken the hit, as it took the profits when oil prices were $100 a barrel. anna: many people said the energy industry in russia will suffer because it want to get the financial investment from the west needs, but they seem to have managed. julian: most of the oil production in russia is carried out by russian companies. fromgenerate cash flow their operations. there is relatively little that is dependent upon foreign investments. some of the exploration is in the arctic, but what we are seeing in russia and but we cannot walk away from is the big fields in west siberia are in thdecline. have of the new fields now plateaued.
they're going to have to watch, what they can bring on stream to upset this. anna: thank you for joining us, julian. let's stick with the russian story. if you'd between ukraine and ukraine- a feud between and russia could play out. ukraine defaults on a bond owed to russia. we are joined by antony from the moscow office. this deal between russia and ukraine, this default by the ukrainians. what does london have to do with it? bonds were euro drafted under english law's. any dispute would have to be heard in an english court. routeay be the preferred particularly for russia.
it is a quicker way of resolving the dispute. anna: what are the prospects for some sort of out-of-court settlement? definitely going to happen this way or could happen behind closed doors? the stronger chances are for an out-of-court settlement. both sides have an interest in avoiding the court. ukraine wants to reach an agreement. terms tooffer better russia than it would to commercial predators. russia's position has always been that this is a foreign debt and should be treated differently. russia does to want to get into court arguments with ukraine, particularly when it is in dispute over crimea. germany has been acting as a mediator until now.
we can expect that to continue as well. it is unclear whether it will be a quick settlement. there is a 10 day grace period 30, when itmme december russia can start court action. anna: thank you, antony. next, no clear political direction in spain following the elections. we will discuss how that is affecting the bond and equity markets. ♪
anna: welcome back to "on the move." richard jones joins us this morning. we are continuing to talk about the oil price and of course, the spanish story. it is interesting. i was looking at the spanish 10 year yield and the italy 10 year yield. basis points now. a pretty big reaction in the market so far. that has been exacerbated by the lack of liquidity. i think that will continue until the end of the year. the knee jerk reaction has been to move that spread.
anna: some of the scarier things in markets can happen when liquidity is poor. that is not necessarily mean things don't develop. 20 basis points between the spanish and the italians. does that suggest people are trading from one into the other? saying there is too much political risk in spain? is that the thinking investors might be going through? richard: i think there could be some spread trading, but i think there is a lot of outright justng forrom spain, aced on the political uncertainty. it does not look like this look at results in a quick and clean fashion. uncertainty is the investors biggest enemy and it feels like this uncertainty could last for a while. anna: some of the banking stocks in spain are coming under pressure. investors are nervous.
selling stocks as well. there is some specificity to this being a spain story. it could leak into some of the other periphery equity and bond markets. the euro dollar exchange rate is pretty quiet. i think investors are reserving judgment on that for the near-term. that might be more of a 2016 story. recentf you look at the elections in portugal where things looked inconclusive, we saw investors selling initially and it did not last very long. perhaps we will see some followthrough from that story. is this something you think is going to -- it depends how long they will take to hammer out a deal. richard: what does it mean for the rest of europe as well?
we potentially will have a thisendum by 2017 in country, maybe as early as next year. what does the uncertainty in spain tell us about the u.k.? this is just another bit of negativity from the eu. anna: it ties in, as you are suggesting. there are many voting arenas where we have seen this move away from establishment parties and towards the more antiestablishment viewpoint. that is not just in europe, but in europe, it has manifested itself many times. richard: look at the united states with mr. trump doing so well. i don't think any political forecaster would have thought him to still be at the top of the polls. it is a broad theme. anna: when we look at oil prices, it continues to be really in the market's side
right now. low. is at an 11 year we continue to watch the oil prices trakc lowack lower. richard: since we have had the recent sharp selloff in oil, all of the little bounces we have seen are in contrary action to the selloff. they have been shallow and short-lived. it seems to me that any of those bounces, market participants have been looking at them as selling opportunities. i think julian lee is one of the smartest voices in oil. i think you want -- you are little bit nervous right now. anna: thank you very much, richard jones. stay with bloomberg television. we will be speaking to the disney ceo at 1:00 p.m. london