tv Leaders with Lacqua Bloomberg March 13, 2016 6:00am-6:31am EDT
♪ ramy: coming up on "bloomberg best," the stories that shaped the week in business around the world. iron ore prices go berserk, rallying and plunging. u.s. presidential primaries keep surprising and the ecb reaches into its toolbox again for more easing. >> they are doing everything they can, and it is targeted as narrow as possible. to where the problems are, and where their mandate is. >> it is not firing blanks, but he also is not the only one who should be holding the gun. ramy: we choose the best from a bunch of powerful conversations. >> we have a lot to atone for. we have made a lot of mistakes. ramy: women's day.
>> it's getting better, but not it is not getting better quickly enough. >> especially among millennials and extras are getting opportunities earlier to lead. ramy: wall street mourns the loss of a foundational figure. it's all ahead on "bloomberg best." ♪ hello and welcome. i'm ramy inocencio. this is "bloomberg best." a weekly review of the most important business news, analysis, and interviews from bloomberg television around the world. our day by day look at the top headlines begins with a vigorous look at the rally in commodities. >> oil is continuing its run of gains with brent crude at its highest so far this year. that's above $39 per barrel. talk us to the latest development. >> i was getting these warnings, these alerts in my bloomberg terminal telling me that oil prices were below $30 a barrel.
we might have to go down to four -- two $40 a barrel as we are tantalizingly close with brent crude reaching that level there are a few reasons why this is happening. you have u.s. drillers in the united states, they have the least number of active rigs out there in more than six years. of you have the possibility opec meeting with russia over this deal to freeze out the current levels. i suppose, as oil prices have been gathering momentum, speculators, some speculators are rather laying down in front of the oncoming train and there are bets that oil prices is down. this is filtering through into the market. i suspect $20 a barrel oil has been banished for now. >> there is another rally going on in metals. iron ore is soaring the most ever.
chinese manufacturers are willing to boast economic growth. the market has gone berserk are copper is up following three straight weeks of gains. will the rally continue? >> prices are surging, as you have seen, but we have not seen any fundamental data to justify the price level. what i mean by that is during the month of february, the entire china country goes on holiday. we don't get a lot of data coming out of the country. i monitor china daily. i have yet to see at this that we have a hard turn it. >> the npc said it would help cut overcapacity in steel. you would think that would leave to a curbing of demand. but iron ore jumped by 18.6%, the biggest gain ever. what is going on? >> it must be me being here on bloomberg that caused the price to jump. i think what is going on is that
there has been a disconnect in the markets between the fundamentals on the ground and to be treating on a day-to-day basis. this is not an anomaly. it follows what has been several weeks of strong gains in the metals market. but again, i think it's a lot of trading on rhetoric. but it went comes to reality, reality does not have the higher prices yet. shery ahn: we had abysmal trade data out of china. exports fell to the lowest level since 2009. that was during the global financial crisis. >> this latest figure out of china for february, yes, there are seasonal distortions, but significant numbers are down. exports are down 25.4%. we were expecting the median 14.5% down. so it is significantly worse than that. january was down 11.2%. this is the eighth consecutive month we have seen falling exports year over year. >> because of the lunar holiday, we have to treat february with caution.
part of the issue is, not just of course that factories should end the week. the data is also skewed. last year, the holiday was at the end of february and there are rest to get trade down. there was a rush in exports. this year, the lunar holiday came at the start of the month. so with that distortion, i think there is a feeling the numbers feel downbeat. just goes to show you there is a challenge ahead. we have numbers like this, it will embolden those were calling for depreciation. this goes to show it will take really significant exchange rate devaluation for china to get anything for their buck on the export side of things. when you consider the commentary from the authorities, look for more on the stimulus side. look for more on the physical side, look for more from the
central bank, prime lending to get the economy going. they are not going to get a shot in the arm from exports. >> it was a big night for bernie sanders. he scored a surprise win in michigan. he was down as much as 20 percentage points. but in the race for delegates, he is still behind hillary clinton for delegates. he is down 21 points. on the republican side, donald trump step delegates. he had wins in hawaii. ted cruz pulled out a win in idaho. let's start with the bernie sanders. he has the minnesota win, it gives them some momentum. how far will that all his campaign? >> what we are going to be looking at is how much he can carry this into ohio which is voted next week, next tuesday. the demographics of michigan and ohio are very similar. very white, he did very well with working-class voters he did well with young voters. that is key for him.
he did better with african-american voters in michigan than we have seen them do. if he performs well that those voters, she still has a huge leap. he has a shot at eroding her support in the states in the industrial heartland of the u.s. >> donald trump won in michigan, he won in mississippi. does this stretch the ability of him to win across very different areas, across different demographics? megan: he has won in all areas of the u.s. that is the thing about donald trump. he has both a broad coalition of support. he has stitched together a broader support level than people expected. last night he showed real resilience, and i think the establishment will be looking at that carefully today and trying to weigh their next move in the stock trump campaign. >> the ecb has cut all of its
interest rates. qe has been boosted to 80 billion a month. they have also increased the assets available to buy to include non-bank corporate debt. >> the way i read it is the following. in the last few months, it's been an ethics game. whatever he said, it was about expanding the balance sheet to see about weakening the currency. this is changing in two respects. they are buying corporates. they are going straight out and trying to help that sector. and really importantly, they are now making money available at maybe even zero and maybe negative rates for banks to borrow. this has changed from an external game to a domestic demand lending game. >> this is about the fundamental economy and getting loans to corporations and individuals. >> absolutely, this is not just the exports. this is what they should have done. i think they did the right
thing. it is targeted as narrow as possible and to wear their mandate is. >> europe's biggest investment bank, deutsche bank, cutting by 11% has rising legal expenses that hurt earnings. you have heard them talk about this again and again and again. does this come as surprise when you got that paycheck? >> i don't think it is much of a surprise. it's 11% for the whole company. 15% for the investment banking division. that actually is not quite as severe as many expected. this is certainly not unexpected, and the company will be underpaying relative tapirs peers as they work through some legal issues. >> how does he think he's going to keep people in their seats there?
it is not like it is a culture led firm. >> they do have the historical repetition of paying pretty well. there is going to be a transition there. i think he is hoping to hold on and preach for things bouncing back in the next few years. but then again, they also said that trading revenue for the industry is probably going to be down in 2016 given the rough start to the year. there is not a lot of places right now that are on big hiring sprees. you always have risk, losing the one or two people. there's not a competition for hiring right now. it's more keeping your job. ramy: coming up on "bloomberg best," more reaction to mario draghi and his latest monetary moves. and a roundup of company news from around the world. ♪
♪ ramy: welcome back to "bloomberg best." thursday's ecb meeting it was the centerpiece of a dramatic week in european business and politics. from the migrant crisis to reaction on mario draghi's latest policy plans, there was plenty to discuss and analyze on bloomberg television. >> bank of england governor mark carney is testifying before u.k. lawmakers today.
on the economic and financial cost of a potential breaks it. in his testimony he said the boe will avoid telling people how to vote in the upcoming june referendum. mark carney: nothing we say should be interpreted as making any recommendation with respect to that decision. >> can the bank of england avoid swaying voters here? >> without actually thinking the boe with swing voters, what does not want to be seen as saying is brexit would be a disaster. he is trying to elegantly footstep the situation, but he almost lost his patience a couple of minutes ago, answering to one of the more conservative members asking him. he said, you have selective memory. there is risk to financial stability. it has the potential to end the fight previous risks.
>> the time to get a subsidy, or is it just political theater? >> it's a little bit of political theater. at the same time, people are trying to understand the implications of what a brexit would be. >> what's the dynamic you see in london? >> you see the political fragmentation, and you see people playing on the frustration and the anger of what is happening in individual countries and people play on it. you see what's happening here with the rise of, say, donald trump, playing on the anger against him. the same thing is happening in europe. >> the concept of free movement across borders within europe was central to the original eu. let me give you some numbers. until last autumn, 2.4 trillion a year moved across borders within europe without people interfering. 700,000 people a day moved across borders without interfering. now just a slowdown that will come from any kind of
enforcement doesn't just affect refugees, doesn't just affect people like that, it affects daily commerce. my guess it will take 0.1 of a point off eu growth. the very fact of the intra-border problems. >> the ecb pushed beyond expectations with its relief. oreit's release of m stimulus. is it fair to say draghi dazzled? draghi delivered? he brought out the bazooka. >> he certainly put something through the market. he announced all the qe package and the rate decision. 45 minutes before the press conference. but you are right, one of the key focuses was that comment where he said we don't see the need for any further reduction in interest rates. that signaled the floor being hit. he went on to qualify it and said things could change. >> i think it's dominated by
that signal, that phase of negative interest rates and using negative interest rates as a toll has come to an end. he has given the signal that the tool is exhausted. >> what about the decision, andrew, the decision to buy noncorporate debt? it wasn't predicted by many. has that taken you aback? is that a game changer to some extent? >> we are not surprised by it. it takes the box on the baseline expectations. it came a bit sooner than we thought. but it's a logical extension of, you know, and closing this chapter on interest rates. opening the new chapter on creative easing. i would push back a little bit on this view that monetary policy is running out of ammunition. there is a lot that can be done in the credit easing space. once you start purchasing
corporate bonds, nonfinancial bonds, it's not a far step to go into equities in the future if there were ever to be needed. francine: is this draghi pushing a panic button? or is this a carefully thought-out plan? catherine: i think it represents not a panic button, but a tailored approach to the problems facing europe. the issue is getting credit to the banking system to borrowers. that is what is essential to getting europe back on track. he has matched the negative deposit rates. to try to promote the flow through of credit to the borrowers. that is what is necessary to get europe growing again. we all know that he can't do it alone. he needs the fiscal policy. and structural ones. francine: want to show you a quote, he is firing blanks.
draghi is effectively throwing good trade money after bad. you don't believe that's right? catherine: he is not firing blanks. look at the markets. he is not firing blanks. he also isn't the only one who should be holding the gun. paul: are we getting closer to the point where these policies become ineffective? >> ineffective in the effects market, but looking at the credit channel, it was clear yesterday that that is where he wants the rochus -- where he wants the market to focus now. can he make that away from the credit channel? do you think it may actually just take a lot more time? >> it certainly takes more time, but as the u.s. is finding out, it could be like pushing on a spring. while he is pressing the accelerator, the regulators are also pressing the brakes. that's why you don't get the impact on credit that you expect. the u.s. is lucky. it has other engines of growth. whereas europe does not.
>> this may be the key question for central banks, can they affect demand? >> it's not probable. demand is being held back. by lots of things. first, we have the ability to spend from the spender. more importantly, we are lacking a number of structural reforms and give confidence. third, it is the companies that are not responding. i look at this and it's another attempt. good for him. good for the ecb. they should have done it. but i hope that behind closed doors, they are coming to the end of the road. ♪
♪ ramy: you are watching "bloomberg best." i'm ramy inocencio. let's take a look back at some of the week's most important company news, starting with the sweeping deal that links a pair of money giants. >> this is after the announcement of the biggest iron ore miner, valet. what was behind this decision? >> this is a memorandum of understanding that lies at a platform for the two companies to work together and explore opportunities to create value.
the key one of those is blending of our ores together for our customers in china that will provide a blend ideally suited to minimize the cost of their supply chain. secondly, to buy a potential stake in his shares on a market, a minority interest, and that is at valet's discretion. >> tell us a little bit more about this decision and the benefits of all of this. >> if we are able to forge a long-term relationship with valet, that it provides an opportunity for us to lower our costs further. most importantly, it allows us to better match our products to our customers' needs and china. scarlet: dick's sporting goods timed the fitness trend better than most.
they are interested in sports authority's real estate. they filed for bankruptcy protection last week. >> of the 140 stores that a sports authority plans to close, maybe there are about 40 that are potential to play for them. they could take over the lead and some sort of acquisition of the property. scarlet: do you have any ideas? any modeling? >> we've done a bunch of work. the stores that they closed are i think it is going to be five to 10. i think it is going to be nothing. they are closing them for a reason, lousy locations and so on. there are some they may come out. i think there is more to come with sports authority. i think that if they survive, they are going to get sold and closed another 100 stores before that happens. by the end of april, if they don't figure it out, they could go away completely. that is where it could get very interesting for dick's sporting goods. >> u.s. authorities are turning
their focus to tim, questioning if funds were misappropriated. we are talking about one mdb, a malaysian funds. how is goldman involved? keri: essentially goldman was a conduit for this fund, which was supposed to be used for infrastructure in investment projects and development in malaysia. and so he was the investment banker. they raised over $6 billion in bonds, and the key point is, was any of the money went back into let mdb, embezzled, use for illegal purposes are moved around without permission? >> and what does this mean for goldman sachs? is this a return of the reputational issues, or is this separate? keri: it is something they are
going to deal with. they are looking into it. you see this happen with banks a lot when you work with emerging markets. sometimes they have issues with their client and sometimes they are blown back. it is important to note, it is not really clear at this point if goldman did anything wrong. >> cafe for civic, the largest international airline, has has a jump in income of 90%. that beat elements -- that beat estimates. that the on savings, but they were partially offset by hedging losses. give me a sense of your hedging position. >> we never had 100%. bielby have some hedging losses, the net fuel cost to us has gone down by $7 billion hong kong, which is like 18%. so on the whole, the business benefited on the whole situation, and the low fuel to do is it strong passenger market and strong contributions by companies, all help you
contribute to a better result. francine: do you want to have figures that make your modeling a lot easier? or do you think it is because the price of oil may go back up? >> we have positions to protect the operation. and protect the earnings of stability. we do take those positions. we will take hedging gains when the price is high. but we would rather have hedging losses because the business benefited. scarlet: a showdown is underway at united continental. two investors are nominating six directors to the board. among those is the former continental airlines ceo. he was credited with turning around continental after bankruptcy. this is all coming after the current united's current ceo returns from medical leave after undergoing a heart transplant. >> apparently some investors
were just upset and didn't think the company was making, doing the things they needed to do to turn around, so they had gordon to shake things up a little bit. scarlet: what do you help to a -- two accomplished? >> they haven't said what they want to accomplish. they are more talking about the problems united has had rather than what they want to see going forward. what they have said about united in the past is that the company just has a languishing stock price. it hasn't performed as well as delta or american. and i think these new investors just want to shake things up. they want new blood on the board, and they think that will help a turnaround quicker. >> revenue is rising 40% in the squares first full quarter as a company, for profitability may be the real concern.
what do you think about sales growth combined with the lack of profitability? >> they had a huge quarter, they grew 60% in the quarter. there clearly firing on all cylinders on that front. they are expanding to other categories. square capital division is something people are really looking at, and they have offered loans to merchants with just the first year. that is exciting cross sale opportunity just in the first year. emily: how strong is their product pipeline? chris: it is amazing for the ecosystem, it will accelerate the use of mobile payments, if you look across merchant locations, the actual places you can use android play or apple pay, they are quite limited. to think of them rolling it out to the 2 million merchants they use is a great development overall for consumers. angie: bridgewater has hired jon rubinstein as co-ceo.