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tv   The Pulse  Bloomberg  March 1, 2016 4:00am-5:01am EST

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guy: barclays confirms it is selling its african business. the share price down more than 5% this morning. glencore posts a 69% slump in profit. -- stock reverses its commodity prices have hit bottom. fresh figures from china paint a picture for the world's second-largest economy. alan greenspan tells us that china's economy will slow further.
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" live here"the pulse in london. i'm guy johnson. francine lacqua will join you from new york in the next hour. let's check in where the markets are now. we started off down. barclays is the standout story for the ftse 100 which is up, but barclays is down. the stock 600 up by half of 1%. we have reach raced 10% of the losses we made at the start of the year. we are now up 10%. brent is up .7%. some of the energy stocks are on the front foot as well this one. here is first word news. gauge hasna's factory fallen for a record seventh straight month. dropped to the weakest in seven years.
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the dater underscores the challenges for policymakers as they seek to cut overcapacity. the japanese government is being paid to borrow money as it sold $20 billion in debt at an average yield of -0.2%. u.s. presidential hopefuls are gearing up for super tuesday. delegates needed for a republican candidate to win the nomination are at stake. 1/3 for democrats. in a dozen states, donald trump, and democratic leader hillary clinton seem poised to win. global news 24 hours a day powered by our 2400 journalists in 150 news bureau around the world. guy: let's take you to breaking news. capturing -- ng manufacturing data is 51.0.
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the actual number is 51.2. a tale of two economies. disappointing data out from some of the periphery economy. germany more positive. let's get back to one of our top corporate stores. bad news for barclays. the bank reporting a 56% drop in profit. it plans to sell its africa business. the ceo spoke to manus cranny and anna edwards earlier today. >> the most important issue is franchise today, which includes our consumer business, our corporate business and investment banking, that core franchise generates a return in double digits today. that is a very important thing the street need to get its hands around. the investment banking industry right now is not covering its costs of capital. e world has that th
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learned we cannot rely on bank balance sheet to find economic growth. we need a robust capital market. i happen to believe that the investment banking industry will have to be itself financially healthy. and it will be. writtenme analysts have some report suggesting some radical action at barclays might like to consider. they said maybe you want to ipo the investment banking part of the business. sell barclay card in the u.s. what do you think of that research? >> we think we have a great business model. focused on the consumer corporate and investment bank. i do believe there is value in being large and value in being versa five. -- being diversified. financial the crisis, demonstrated there is a diversification -- and a safety
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and soundness of those large banks. we have portfolios of assets. we have a core franchise which is very profitable. orhave a non-core business businesses we are selling. what we need to do is to accelerate the wind down of that non-core business so we converge our group results with our core results and the stock price will take care of itself and barclays, the strength of barclays will become very transparent and clear and compelling to everybody. staley speaking earlier on. our next guest says investors are losing patience with the restructuring. onlineounder and ceo of wealth manager. good morning. he says he is making difficult decisions. you are punished as a bank at the moment if you have an investment bank. why not ditch it? >> he is saying there are diversification benefits. the problem is they are saying
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no pain, no gain. and we are seeing a lot of pain and what we have not seen is the game. they are doing the right things, restructuring the business and simple fine it. but here is the key question. how are they going to be able to grow? divesting their arm out of africa and fixing on the u.k. and u.s. but it's interesting that the best performing part of the business is the consumer. guy: lloyd's trades on a price of 1.25. barclays trades on a price-to-book of 1.46. why not just be lloyd's? recycle. going to certain parts he will have to have other parts of business that can weather the storm. i agree that focusing on the consumer is the growth driver. what's interesting is that the financial sector has moved from this era of pushing products to actually focusing on solving a need. need, thensolve a
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you have pent-up demand. on the consumer side -- value the consumer side which has better technology than lloyd's does. they've invested in the business which is going to be a big problem for a lot of high street banks. i can't value that because i have all this other competing stuff because i'm in the cycle. i don't know what barclays is worth. >> that is why they need to signify even more. and when we talk about technology, you look at some of the stats, 73% of all u.k. banking will be carried out via smartphone by 2020. they have to use technology. they are struggling with legacy technology on the whole and a way to reach the consumer. guy: and you have got syntax coming. mark carney is recognizing some of those threats as welker do want to make sure you have the bandwidth. it's a bigger threat than regulation. >> i thought that was so
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interesting. and the reason is if you think about it when you talk about regulation, regulation is more slow to be implemented. we can foresee what is going there. symtech is moving faster. either view them as disruptive or enablers. being able to work together. if you look at goldman sachs and jpmorgan, they are one of the biggest investors in symtech. they understand this is the way to grow. working together will add value. conclude, making difficult decisions but he is not making enough of them. he needs to go away and rethink it. >> he's slashed dividends. he is cutting as much as he can do without getting a sledgehammer out. has to get the balance right. and navigate shareholders as well. guy: plenty more to talk to gemma, founder and ceo of moola.
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a historically bad year for glencore. a 69% drop insaw profit. can i.g. trade its way out of this hole? then vw's audi rolls out the new suv in geneva. will it be enough? we're going to bring an interview with rupert stadler, ceo and argentina settled its debts. ofedge fund billionaire cuts $4.5 billion deal after a 16 years -- how soon before argentina can return to capital markets? ♪
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guy: welcome back. you are watching "the pulse." here is the bloomberg business flash. nejra: apple has won a crucial victory in its privacy battle of the u.s. government. a new york court ruled it does at have to help unlock drug dealers phone. apple is on capitol hill to testify before the house judiciary committee. it is not know if tim cook will be there. intercontinentalexchange has confirmed it is considering making an offer for london stock exchange group. no approach has been made and no decision has been taken as to whether to recuse such an offer.
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are tradingce higher this morning. -- in lse are trading higher this morning. negotiations are continuing and the company may have to buy back some of the 600,000 cars still on america's roads. matthew miller would not say whether vw would meet its deadline but says some progress has been made. >> the discussions are going on, and the constructive dialogue is, makes some progress. so, we will see what happens during the next weeks and months. nejra: that is your bloomberg business flash. guy: glencore has reported a 69% slump in annual profit. fel --l but income ahead of estimates.
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why did the stock bounce? >> we were having this discussion off air. they were the top end of the estimates for the marketing division. they were disappointed in the first half. they revise their forecasting came in at the top end of expectations. elps.always hhe they are mentioning the word dividend without making promises. they seem to be on target for their asset sales. more of less on target for their debt reduction. in other words, they seem to be making all the right noises. guy: trading out of the hole. >> that is the game plan. a hole in the sense they have a lot to deal with. of debt to deal with. the analysts of enjoying a contrast between what glencore has got up to and a lot of what of the competitors are doing. as bad as, is thias
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it gets? we've had a hell of a start to the year. miners have been leading the story could the pendulum swung too far? here: what we are seeing is reaction to the fact that the traditional growth driver, china, seems to be kind threatened somewhat. if you have got growth on the table, -- if markets fall nuc quality in the market and able to get it cheaper, that is when investors pile in -- and you see quality in the market. you want to be buying low and selling at the top. it makes it sound easy. when times are tough, a lot of companies have to streamline their operations. that will only be beneficial. if we look at glencore, they did within their organization and safe we cannot
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profit, if oil and commodity prices are falling, let's focus on the trading side. you're starting to see these restructuring, moving about being able to make the company more -- guy: should glencore be trading at a premium for the sector because of the fact it has these twin arms? in theory, the business model should be one or the other. >> there is no other business like it in the world. it is hard to know the current valuation. that's something a lot of investors struggle with. what is comparable? gemma: it comes back to expectations. we have got to separate -- which is hard to do, the fundamentals and actually what is training on investor sentiment. let's talk about china. ultimately, yes, china is slowing down but that was inevitable. the expectations were unrealistic. it was unsustainable.
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therefore, it is actually some of the shakeout is to do with expectations. and actually there still could be some strong fundamentals. in terms of the companies. there is an opportunity there. if you listen to one person would be the chair of pboc? is he the guy the pulse the strings? gemma: it is hard to decipher what is going on behind the scenes. guy: that seems to be the shift. the pboc has started to stabilize the market. we did not hear from them for months and months. now those statements -- cut here or cut there, starting to calm things down. did not do anything that was a huge concern. there is a lot of pressure on them to take action. after all these cuts, is the yuan going to devalue? is that going to cause more -- i they are in this catch-22 at
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the moment. guy: with this cross over into the rest of the sector? stuart: looking at the share price, glencore is one of the smaller movers. all of these are coming from a really low base. guy: why? what is it they are seeing in the glencore numbers? stuart: he comes out as appears to call the bottom of the commodities market. i would not bet against him. they read that across the sector. guy: thanks very much indeed. stuart wallace, executive editor for energy. our chairman of blumer -- bloomberg -- thank you very much, indeed. vw's audi unveils a new suv in the race for the number one luxury brand spot. we will bring you an interview with rupert stadler, the ceo. ♪
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are watching "the pulse ." nejra: china's factory gauge has fallen to a record -- for a seventh straight month. the measure of services has dropped for the weakest in seven
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years. beingpanese government is paid to borrow money for a decade for the first time. it sold $20 billion of debt at -.02%. u.s. presidential hopefuls are gearing up for super tuesday. half the delegates needed for a republican candidate to win the nomination are at stake. 1/3 for democrats. in a dozen state races, donald trump and hillary clinton are poised to win in landslide victories. guy? to geneva go back where the car show is underway. vw's luxury division audi and its biggest profit earner has just unveiled a new suv, the q2. ryan chilcote asked him what the
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business -- for the new model is. ryan: you are showing the q2. businesswise, i know it is going to attract young buyers. rupert: the car itself is very attractive. the urban mobility will go with that type of cars. if you attract new customers, we keep them loyal during the customer lifecycle. this is what we are going for. ryan: how many q2's do you expect to sell the share? rupert: we are not prepare for any fine. i would say there is everything possible. the markets will demand. 60,000, 80,000 cars a car. ryan: it is mighty tiny. would it make sense to sell this car in the united states, or do
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you think it is too small? rupert: i would say in the first generation, it will not come to the u.s., because we started with the q3, the bigger brother. this is the much better car for the united states market. we'll see in the next generation what happens. ryan: in the battle for leadership, we have got bmw in first, and mercedes i in second. you fall into third. now you have some mainstream cars. do you expect to close the gap this year? rupert: i think all of the three ,ompetitors, audi, bmw mercedes, we stay close together in the next 5-10 years. it is a matter of lifecycle. we had to renew 60% of our product portfolio, which is now underway in china. we will see what happens 2016, 107, 08 and 19. there are a bunch of new products coming.
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so we are pretty happy about what is coming. we are pretty up to the sick about the business. ryan: you mentioned china. what do you see coming in china? how many cars do you expect to sell their this year? rupert: last year resold 570,000 cars. it was a year of certain consolidation. it will depend on the economy, development. we will see. guy: rupert stadler talking to ryan chilcote at the geneva motor show. we will check more on those in a few minutes. let's check in on the markets and show you what is happening. every sector is higher on the euro stoxx 50 under. the reason why barclays, banks are down is because barclays -- the markets is seriously, thursday unimpressed with what -- seriously, seriously on impressed with what the ceo
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announced. the ftse trading north of 6100. 36.t crude is trading at 59. so, the markets -- but barclays absolutely battered this morning on the back of what stayey'ley's done. not going far enough. the market is looking for more. we're also going to carry on the conversation on cars. up next, we will talk about the high roller end of the market -- rolls-royce unveiling its plans to grow its business. we are going to speak the ceo. what are they going to be making down there? what is going to be the story they will deliver next? to get the consumer excited. we'll have that conversation. equity markets, maybe they need to bounce back before we start buying a few more rollers.
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we'll have that conversation next here on "the pulse." ♪
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guy: welcome. you are watching "the pulse" live in london. the pound is taking a beating because data is coming through on the manufacturing side. certainly a week part of the u.k. economy right now. u.k. manufacturing pmi for february, 52.3. actual 50.8. the pound is selling off a bit. you've also had some fairly
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ofappointin thig data out south africa. a crucialle has won victory in its privacy battle of the u.s. government. ruled it doesrt not have to help unlock a drug dealers phone. on capitol, apple is hill to testify before the house judiciary committee. it is not known if tim cook will be there. intercontinentalexchange was confirmed it is considering making an offer for london stock exchange. ice says no decision has been taken. shares in lse in merger talks with the german rival are trading higher this morning. volkswagen says talks with u.s. regulators on emissions may take months. the company may have to buy back some of the 600,000 cars with rigged engine still on america's
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roads. the ceo said progress has been made. >> the discussions are going on and the constructive dialogue is, makes some progress. so. we will see what happens during the next weeks and months. nejra: and that is your bloomberg business flash. guy: thank you. let's get to the markets. mark barton standing by on the bloomberg. mark: the msci all country world index fell for a fourth consecutive month in february. today investors choosing to ignore the disappointing and infuriating factory data which came out of china. and focusing once again on yesterday's cut in the reserve requirement rate. 10%,ays intraday down by
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biggest fall since 2012. it is selling its, down its stake in its africa business over the next two to three years. it's moving more assets into with non--core unit. fourth quarter profit missed estimates as well. the stock has fallen by 27% this year, extending a two-year slump which has left it trading less than 50% below its book value. these are how the mining stocks are trading today. look at glencore. bottom of the pile. shares down by 2.7%. net income falling byless prices for metals and oil have been tumbling. the commodities slumped meaning that glencore now generates most of its cash from trading as its mines and smelters around the world to struggle for profitability. saysrestingly the ceo commodity prices have bottomed
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and sales in china "pretty good." lse shares intraday price 7.4% higher. ice considering making an offer for lse, attempting to scuttle the planned merger between the , which deutsche bourche would create the biggest exchange within the european market. lse shares at a record high today. guy: thank you very much. now, rolls-royce is launching new versions of its ghost models, aimed at attracting younger buyers. let's get straight to ryan chilcote. he's at the geneva motor show and with the company's ceo. ryan: you gebet you are here no. yes, the new ghost. i'm joined by the ceo. thank you very much. this is the blac badge.
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you've spruced up the ghost. yearse one of these two ago. what is the difference between what i drove and what what we have right here? >> what you drove is also a remarkable motor car. this one is even better because it's very much purpose made for the self driver. so, what we have done is we increase power and torque. we have completely change the suspension settings. the whole driving is different and the cars more active. that is what i would call the whole cosmetics or the design features around the car. you might notice we have even based our chrome, which is lovely. she is now riding through the night as a dark vamp. we have also inverted the logo. silve or on black.
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it is all what i would call a more assertive, darker character for us. ryan: i was driving the wraith, the two door. i'm guessing you do not call these the hubcaps. in the interest of transparency, you like transparency, i have to reveal the last time i drove your car i did ding this. >> i remember this. ryan: this is not a hupcu bcup. >> this is a self centering hub. -- wheel so you always see the rolls-royce logo in perfect shape. ton: i heard you are going start making cars in the luminal. carbone wheels are
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now. try them again. ryan: we are going to check out the car itself. n't break i do anything. i have done this before. i drove one around fits very square. -- fitzberry square. you still have got the stars. very nice. but this is a little bit different. i was expecting to see a dashboard with a lot of wood antique. -- and teak. >> this is air graded aluminum. we warped it into carbon. that is an extremely complicated kind of thing that takes one week to really manufacture one of these lovely -- dashboards. the first time. ryan: let's talk turkey. one thing that is going on right now is you have equity markets thehat does that mean for
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high-end people that buyer cars? year, you saw a decline. what you expect this year? >> last year, we saw our second-best ever, don't forget. some markets contracting but you also see year by year, a remarkable amount of new people coming into the markets. our prognosis is that this is in an area between 3% and 5%, which is her markable. there are potentials in the market -- which is remarkable. even if some markets might falter, other markets will be booming. korea is a great market. united states is in good shape. europe is coming back on stream. it is not like the whole world is falling. ryan: the word is you're working on an all-terrain vehicle. give us the details. >> we confirmed that last year,
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finally for a good reason. if we do it, we bring a rolls-royce of suv's. watch this space. ryan: 2018? >> probably in that kind of time window. new aluminum structure. ryan: an electric rolls-royce? when will we see that? >> we think about what is in the future and what might happen and we are not yet fully decided. but rest assured, this will also come into the brand. ryan: that was the boss at rolls-royce. because i cannot drive this car because you cannot drive any of the cars inside the car show. i'll give it a spin the next time. back to you. guy: i was thought that hans nichols to the best rolls-royce interview. you have streaked past and
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easily. ryan chilcote talking to the boss of rolls-royce. not going to give ryan the final word. up next, can argentina finally come in from the cold as it settles its 15 year battle with paul singer? that next on "the pulse." ♪
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-- bank hasnda
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outperformed the sector. the ceo spoke to hans nichols and i. an these goods of interview about negative rates. he hates them. >> big question for us is if rates will go more negative. would be very difficult for us to pass it on to our clients. as an example, we have 30% of the deposit of the czech republic. you talk about low income people, probably have half the population has their savings with us. if we pass on negative rates to half the population of the czech republic it is just not doable. it is a real issue for us. guy: he is not a fan. he thinks that rates going high would have a more positive affect. berkeley shares just being halted in london on the
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volatility we're seeing in the stock this morning. an 11% at one point. not sure when we are going to restart that trading. jeff daly spoke to manus cranny and anna edwards earlier on. en plumbingas be since the get go the smarty. why? >> very simple response is there were such a huge expectation of something quite substantial. they did say there are going to divest from africa. when you break down the numbers, it's the investment bank. there is nothing radical on the investment bank. you dive deeper into the investment bank. cost to income ratio -- 109%. they do not expect a strong performance this particular quarter. the investment banking posted a loss in the fourth quarter. the return on average equity -- is negative. if you are deep into the businesses they run, investment
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banking income, the m&a business, down 13%. markets which includes equities, down 11%. there's huge pressure on the investment bank. the cost are rising. to that end, it's quite a substantial move, but the markets to move down by 10%, that is the biggest one-day move according to our terminal since june 28, 2012. 3 billion pounds has been wiped off the value. >> it is a very difficult decision. barclays has been in africa for 100 years. barclays africa is a great business. it has got a terrific team. we have enthusiastic colleagues. so, it is a very difficult decision, but as you noticed, we own 52.2% of barclays africa. on the other hand, in terms of how the regulators think about -- we own 100% in terms of the liability. so, we look at the capital
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charges, funding charges, etc., it is very hard to own 52% of a business where you have 100% of the liability. the returnses generated locally in africa when they are translated to returns for barclays in the u.k. we will of a period of two to three years, slowly reduce our state to a non-consolidated, noncontrolling position and barclays africa. it is a great bank. there are a lot of investors that are clearly interested in africa. clearly interested in barclays africa. we think there will be significant interest in over the next couple years as we move to a noncontrolling position. anna: have you had any conversations with -- bob dimon? have you had any conversation so far on that front? >> we're just announcing this decision today. there have been no conversations with anybody. this is just public now.
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as i said, we are going to give ourselves to-three years to do this in a way that preserves the share price of barclays africa and allow ss that franchise to continue to grow and excel. mark: 14% of your assets are tied up in the africa business. you going to relocate the capital and make it work better for the battered shareholders of barclays? >> you know, we are going to signify the bank. to be a transatlantic bank focused on our consumer and corporate and investment banks. we have a number of franchises within the transatlantic tank that are generating double-digit returns today. we have got an excellent credit card position in the united states. a great credit card -- the number one credit card issuer in germany. we have a tremendous business in the u.s. generating double-digit returns. what we are doing with technology in the retail banking business in the u.k., we think
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we are in the forefront there. we are generating great returns of growth there. so there are lots of places to deploy our capital, and we will be doing so in a way to enhance our shareholders right. mark: the devil is in the details. when it comes to the dividend, that was slashed. assets, they're going to try to get to 20 billion pounds by 2017. the whole world is selling assets. the whole world is moving back on costs. what the market was to see is that staley has got a grip on the investment bank. he's prepared to define what that i.b. is. guy: get rid of it. >mark: channeling lehman's? --y: lords trades at mark: they do not trade on book value. they trade on the fact the ceo has a strategy for the business. guy: i would say the book value
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is the.reflection of what the market thinks . just resuming trading, still down pretty heavily. barclays taking a battering. let's move on from barclays. argentina.about the country plans to raise 15 billion dollars to pay for deals reached with bondholders over the weekend. finally drawing a line under its record 2001 default. let's be to andrew barton. marker is thisy for argentina? talk about what is going to change for this country. andrew: i't's huge. i don't think you can understate it. i live in argentina in 2001. we have the default on 95 billion, the devaluation. we had five presidents in 10 days. things were going crazy.
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then you had the stalemate for 15 years. the administration will say they brought the country back from the abyss, but in terms of argentina for the rest of the world, nothing happened for 15 years. a whole generation grew up knowing what it is like to have hold outs, and had this albatross around their neck. guy: is it a done deal? it has got to go through the senate. of the the president senate came out yesterday and said he thinks they can get that done in four weeks. so, i think, they will get it done. guy: it is great to hear from you as always. andrew barden joining us on the argentina story. up next, super tuesday. could we see front runners for both parties presidential nominees come out u.s. politics next on "the pulse." ♪
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>> i do think that the 7.5% annual rate of growth is unachievable. i think that what is happening is as china's productivity edges ever closer to the level that exists in the united states, the gap closes and the ability to close the gap is more and more
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difficult, which means that you're going to get a convergence between productivity and the united states and productivity in china much more closely. and that means it is going to be a big slowdown in china. fed chair alan greenspan's look for china. you can see that interview coming up on bloomberg "surveillance." 10:00 a.m.. it's super tuesday. when 1/4 of u.s. delegates are up for grabs in the primaries. hans nichols. today?e we expecting it looks like an amazing story. whether or not donald trump is unstoppable on the republican side. it is the main story. you have got more than a dozen states of voting. most of this is proportional representation. no winner take all.
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to the a lot closer total you need. the one thing i will look at is georgia. how well rubio does. does he get about 20%. if he gets more than 20%, he is delegates.are and how badly or how good ted cruz is going to do in texas. a lot of delegates at stake in texas. if ted cruz does not win his home state, he has a difficult challenge kind of explain how should he should be the republican nominee. rubio wants cruz to lose and trump to win in texas. run the fields to everywhere else and get close to second place to let everyone know that he can be the standardbearer that can be a trump-rubio matchup. march 15, we have bunch of winner take all states. guy: great stuff as ever. apologize for the poor quality of the sound. we are always in favor of more hans, but maybe not it a go. bloomberg-- not an echo. francine lacqua is in new york
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with tom keene. eurozone you figures out. great interviews lined up. the conversation with the former fed chair alan greensburg. we're going to have more on the the car show with the mazaratti ceo. a bit of news out of barclays. c if i can bring that up -- let me see if i can bring that up to you. ire bloomberg africa -- cha stepping down. from the barclays board. more details in a moment. later today, we have an interview with the u.s. attorney general loretta lynch. that is fascinating given the political story in the back shop backdrop. on with apple.ng
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the big story of the morning as barclays. the stock has been halted once. we will have more about that story in "surveillance." up next. plenty more still to come. ♪
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the investment bank barclays gives dividend cuts. the ceo says he is selling his agriculture division. drop in post a 69% profits, while commodity prices drop. the slowdowns deepens. fresh figures from china point to a bad picture of the mark et. this is bloomberg "surveillance." tom keene is in d.c >. it

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