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tv   Countdown  Bloomberg  May 19, 2016 1:00am-2:31am EDT

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anna: the fed seeing a selloff in asian stocks in crude after minutes show officials want to raise interest rates in june. strategies success, awaits oil minister -- kuwait's oil minister says crude will in the year at $80 a barrel. making a move for monsanto, germany's buyer makes a move. and egypt airplane headed to cairo from paris, has disappeared from the radar, 66 passengers and crew are on board. ♪
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a very warm welcome to the program. this is counting. waitingm london, we are for a host of corporate earnings this morning, particularly from corporate spirit we have been asking for a couple of days now when we will see markets adjust expectation. we heard a lot of hawkish commentary over the recent weeks, we got our answer. fed a show you what the fund reaction was the reaction, we have a chart that shows that for you. last night in the minutes, they said that depending on growth and the labor market and inflation, judging appropriate to increase rates in june. this is a chart we saw in terms of the fed fund futures. the function on the bloomberg, adjusted very quickly. hike in 4% of a rate june on monday. and now we are 32%. a big adjustment.
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let us go to the risk radar next. tell you what has been happening overnight in those markets. this is all linked of course. 2/10 of aex of percent. up in yesterday's trading session, near a seven-week high. speculation about a june increase in rates. it breached the 110 dollar yen mark, still holding around that mark. treasury still holding around 0.9%. mitsubishi tokyo showing the pain. yield a, as you expect. day,di down for a second u.s. crude stockpiles unexpectedly increased, also hopes that the canadian fires are going to be slowed down by ranger on that weighing in on the forecast. a quick word from the german corporate. forecast,irming 2016 3.7 billion euros in net sales
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in the first quarter. that is in line with the estimate. the items for the first quarter, 1.1 billion euros, all in line with the estimate, if slightly ahead. still seeing four-year organic sales growth, relatively new ceo of this course of the business, took over at the german conglomerate. he has been restructuring for some eight years. has not lost a new drug since a decade. they make smart windows to lipstick pigments. more on the german orbit scene later on. let us get the bloomberg first word news. lowering --ies is moody's is lowering the forecast, before all of this really accounting for the week first quarter. up to a more pronounced slowdown in china is a big risk. and the outlook across countries
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remains uneven and largely weaker over the past two and egypt airplane headed from cairo to paris has disappeared from the radar. fromt ms804 took off charles de gaulle airport local time last night. they lost mitigation with radar around 2:45 a.m. cairo time. search and rescue operations are now underway. monsanto says it has received an unsolicited takeover opportunity from germany, zynga proposal is nonbinding but has not offered any more details. the market value is about $42 billion. early this month, bloomberg reported they were exploring a potential deal to become the world's top farm pharma. examiningcutors are or said to be examining an alleged transfer of hundreds of thousands of dollars from a former employee of malaysians
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investment fund. he was then a senior banker at goldman sachs. a person familiar with the matters of the transfer was an investment, backing across the board. prosecutors are looking at goldman sachs is role in the investment fund. must drastically lowered the stock market, if it wants to preserve the ability to one day unwind the massive position. that is according to opposition lawmakers, formally a derivative traders of the democratic party. the approval rating says to manage liquidity and stop distortion they must stop the etf buying and loan ownership of the funds it does actually buy. global news each day, every day powered by 2400 journalists in 150 bureaus around the world. go to top go if you're a terminal user. salamat there in
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hong kong. let us check out the market action in hong kong. haidi lun as details. what the fed said, weighing on asia markets them? haidi: that is right. it seems like a session for soul-searching here in asia. as they getmselves, overnight in the u.s., did we really drastically miss price expectation for june? the event.align with we are seeing downside across the region. did have a early gains coming through from japan. strong when it comes to machine orders, a very good gauge for cap x. that was very quickly gone. we had again strength creeping up, down by about 1/10 of 1%. had some as well, we deepening numbers in terms of jobs for april. but still, the extending of the losses to the afternoon by 9/10 of 1%. in southeast asia, a sea of red.
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gdp first quarter coming in at 6.9% or the philippines. a very strong number, but philippine stocks are off by 1%. they did hit a nine-month high earlier just this week. a lot of of the selloff is being concentrated in the emerging market space. you do have central-bank activity coming through. malaysia down by -- the central bank decision coming from the governor. later today not expected to move. rates of been on hold since july 2014. indonesia also not expected to move either, down by 7/10 of 1%. a little bit of a bright spot from shanghai, 4/10 of 1%. taking a look quickly at some of the biggest losers today, they are unsurprisingly in the commodity space. we are seeing oil producers and japan down, at one state the bygin energy in state down
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the reversal of course. just a broad-based selloff across the goldmine. extending losses. city the worst of the lot, down by over 8%. as gold prices come down as well, we have the adrs falling overnight in the new york session. they are also being a little bit, over 5% -- rather closed at 5%. so far, anna? anna: haidi lun in hong kong. federal reserve officials want to raise rates in june. it is up to the u.s. economy to confirm the view that slow growth in the first quarter was temporary. minutes of the april meeting use the word due six times in the policy context. that follows several beaches by regional fed bank presidents warning bankers not to dismiss a midyear hike, after the odds of such a move as to close to zero. let us bring in our guest host for the next 45 minutes. david owen, chief european
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economist international. great to have you on the program. how live is due in your mind? david: absolutely consistent that the fed would try to grow w twice this year. the market was thinking something different. now back that june on the agenda, the end of the day, you also still have the brexit decision which happens just after the fed decision in june. so if we get high market volatility, enough momentum, they will not go in june, but brexit is not seen as an issue. anna: what i am trying to wrestle with this morning is, when i go to the work function on the bloomberg, that tells me there is now a 32% chance of a hike in june. a big adjustment where it said 4% the start of the week. it is not over 50%. it is not a 90% or 99% certainty they will do this.
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given what we have heard from the fed, are you surprised they did not react more? david: it is possible they delay it and go to july. the u.s., it does not seem to be picking up. the rate rise will not happen, but it could be pushed back. their mailing be one rate rise. at the other day, they want to get as fast as a can. the markets will continue adjusting. and at the moment, the brexit decision seems to be off the radar. it makes it easier for them to raise rates. and that helps the ecb. but also helps the bank of england as well. raising is good in a sense. anna: we will touch on the brexit subject and is a moment because things have been changing a pace this week. you mentioned they could do it in july. there is no press conference in july. what is it about these press conferences to make people think you cannot do it without one? and therefore suggests there were very few meetings in the calendar. david: they could go in july, hold a press conference, saying
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this is why we are doing it. and the brexit decision, out-of-the-way, now we can basically raise rates. that is certainly possible. nothing is written in stone, but it is certainly easier for the fed to guide with a press conference. markets like timetables. i think things like consumer spending or inflation, particularly the real economy. anna: david owen from jefferies international stays on the program. opec strategy to defend market share is working. so says kuwait's acting oil minister. manus is in the oil-rich capital to get that exclusive. good morning to you. tell us more. will the seven-month high in oil price hold there? manus: well, he seems to think the market will rebound. $50 is quite reasonable. withurse i had this man three ministers on hiis
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shoulder. when it comes to the older market, it sounds to me that he believes the russians would get on board. the challenges of course is iran, what happens to the oil price? take a listen. >> the market share is really feeling that was implemented by opec, in the last -- coming down from 2014. to me, i believe it has been working well. now, we see a better price in the market. i think demand has been increasing. production,ge of and nigeria and canada and the shale oil, it seems that over 3 million barrels per day is a glut already. to maintain 92 million barrels a day you have to have strong investments. and it seems that, over the last two years, 30% of this amount
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has been divested or canceled. demand willou that be picking up. and this is the forecast everybody has been talking about. so, probably we would see more stabilize markets, the meeting of june 2 is coming up in opec, to have a dialogue is very important. to determine our steps forward. manus: would you agree that the market is rebalancing? i hear what you are saying on demand and capital investment sides. would you use the phrase rebalancing? and by the end of this year, or the first quarter of next year -- outages ofme of the production are temporary of course. so, but it helps the price now. forecastink the everybody has been talking about, heading towards the end
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of 2016, should be the balancing of markets between demand and supply. it came only because of these, you know, the fires in canada and the issues and nigeria and elsewhere. manus: you say you are getting ready for the opec meeting. the world that we all thought there was good to be dramatic news, but never came to us. i must ask you, what is the probability, what you think is the proper ability, of the successful freeze of the june meeting? not readot -- i have sot before or seen a meeting much opec numbers. in the dialogue itself, i think it is a positive sign. it is a huge positive sign. this is why we started to see
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many people anticipating the drop of oil prices, after that it would be much more sharply. it did not do that after all. it went down a number of days, then we saw the rebalancing. so, that takes us into june's meeting. in the june meeting, if the market price is as is, you would probably see a good understanding and dialogue between members of opec. and that will continue on deciding how to go forward. manus: so what does it take to get iran to agree to a freeze? >> in iran's case, they believe any to come back to this production, before the sanctions. many other countries believe that you cannot do a freeze, if not everybody freezes as is, as of the day. if i'm freezing today, then i will lose market share. it is not easy to lose a client
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and get them back again. so, if it is a market share thing, we, as kuwait, are sticking to the market share strategy. we are planning our production, we are investing heavily, come heavily, heavily and oil investments. and to manage our strategy of production in 2020. course aat was of nation that is going to go for the own market share of. 40 million barrels of oil. $60 million on upstream markets by 2020. there are refineries in china and oman. that man is a reformer. yet the six-point plan. much more to come in 45 minutes. what is happening at the kia, it is a beast of a sovereign wealth fund. where is the money coming? that is to come. hop inside, it is a little bit hot. anna: i can only imagine. manus cranny breaking the heat
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in kuwait. some of the highlights of your day ahead. deutsche bank executives will be bracing themselves to face investors at 9:00. as the company holds the annual general meeting in frankfurt. we will talk to investors later. at 2 p.m. u.k. time, a rate decision from the south african bank. at the same time, russia will update us on the gold and foreign exchange reserves. and an hour and a half layer, the new york fed william dudley will talk about macro economic trends. they will be watching fed speakers. is it even possible more than they were, following those minutes from june from the last meeting? up next, unemployment, sovereignty, and home repossession. that is what alastair says make the important, if the country votes to leave the eu. more on that, next. ♪
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anna: welcome back.
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this is countdown. 6:20 in london. 7:20 in paris. let us get the bloomberg business flash. >> anna, tesla is to sell $1.4 billion in stock to help pay for an expansion that includes the forthcoming model three electric car, and boosting annual production to help one million vehicles in 2018. the total sale will be about $2 billion in with the rest of the chair to be sold by elon musk to cover stock options he is exercising. suzuki has recovered some of the losses it suffered yesterday, on the admission of improper fuel economy testing methods. after yesterday, markets closed, and the issue statement saying they retested models using appropriate method and found the data to be with an acceptable range of deviation. it also told the government if found no evidence of data minute later.
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and mark zuckerberg has met political conservatives who had accused facebook of liberal bias in the newsfeed. tea party figures, a report last week claimed that facebook had deliberately downplayed conservative sources on trending news features. zuckerberg says he wants to do everything he can to make sure his team uphold the integrity of facebook's products. that is your bloomberg business flash. anna: in singapore there. a british vote to leave the european union might lead to a surging youth unemployment. businesses, and home repossession. that is according to the former chancellor alistair darling, speaking at the british industry annual dinner in london. he says economic institutions are queuing up to warn of damage and credit rating of the pound. collectively, these warnings should sound alarm bells. david owen, chief economist is
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with us. yet another voice adding, a political one clearly, but a voice adding his thoughts and his experience to what you think would unfold. and he is right. we have had a loss of big institutions, outlining the risks that would face the u.k. economy if there were to be a brexit. david: i think that is absolutely right. no one disagrees with the idea we would be economically worse off. and so forth. for the problem cannot be just for the u.k., but more about the eu in general. the risk for brussels is that you get this cascading effect, where it leads to more question marks about what is going to happen to the eu as a whole. that is what would concern them. at the end of the day, sterling would fall. that would cushion the blow somewhat. but i think the bank of england would end up cutting rates. the timing of the first rate rise would be pushed back for a considerable period. the ecb, i think that then poses
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a huge issue. because their next meeting of choice in september, and if we choose to leave in june, i think in september we cut into the rate game. and taking it even more negative. they will be doing more qe even longer. not this issue for the u.k., more european more generally. anna: we see markets reacting to a series of paul's this week that look increasingly leaning toward on the remaining cider. not just the paul's, but the bookmakers, and the function on the bloomberg. now forecasting below 20% probability. this is the number crunching score. we have seen some of these moves in the polls as well. but when you look at them, we think the breakup towards the remain side, every time we have come back to this sort of 50-50 split once again. how does it feel as we get closer to june? onlinethis issue of
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polling. let us be clear. there are too many. the online polls are basically 50-50. and the other ones are more like 67% on balance in favor of remaining. that has been the case for the last few weeks. and basically what you're looking at, these move around, depending on whether it is telephone-based or the online ones. anna: which one do you hold more right? david: like most people, i do not really know. but i think the thing the telephones are more reliable. and people more generally go with the status quo. i assume it will be remain, and at the end of the day you'll be absolutely right. but there is still a risk. who knows? and the polls have not just been wrong recently. they did a major announcement since 1992. and they have been underestimating the samples, conservative support. anna: as the ceo told me in a recent interview, the pollsters
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hated following the money. but how much global consensus would this be then? moody's talks about immediate concern in the context of global growth story. david: it is. but we just do not know. that is the whole thing. it would also throw us into the mix of more uncertainty. obviously, we would not impose what is required to get negotiations. and for a little while, for every period going into the third quarter were nothing really happens, and the u.k. may go back to recession, the bank may cut rates in august. and you get the scenario in september were the ecb is forced to cut rates again and do more qe. but again, not everybody wants it to happen. in terms of brussels, in terms of the imf quite clearly. anna: david owen stays with us. chief european economist at jefferies. buyers take root
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for monsanto? that is next. part of a global consolidation story in this sector. we will have some analysis. ♪
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anna: welcome back. x: 30 in london. seven: 30 in brussels. breaking news, corporate profits beating estimates on strong beauty care demand. that is the headline coming through from this is ms., the maker of schwarzkopf shampoo. reporting first-quarter profit that beat analysts estimates. laundry and beauty care products, specifically in emerging markets. the profit beat is going to be helpful for the ceo, who took over the business on just may one. he inherited a four-year sales previoust is
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predecessor had a minute was too ambitious. headwinds have been hurting sales. making the target difficult to reach without the help of acquisitions. going into these numbers, people interested that they would meet that for your forecast. they have done that today. which will be interesting to investors. q1 adjusted net income 529 million euros, ahead of the 530.7 asthma. let us get the bloomberg first word news. here is haslinda. haslinda: and egypt airplane headed from cairo to paris with 66 on board disappeared from the radar. the flight was operating an airbus, taking off from charles de gaulle airport at 11:09. in lost medications with radar around 2:45 a.m. cairo time. search and rescue operations are now underway. federal government officials
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want to raise interest rates in june. it is now up to the u.s. economy to confirm the view that slow growth in the first quarter was temporary. minutes of the fmoc april june"ng use the word " six times in a policy context. that follows from presidents warning not to dismiss a midyear hike, as we edge close to zero. lowering the growth forecast for the u.s. economy this year to just 2%, down from 2.3%. that is to account for a week first quarter. the ratings company sees gdp rising in 2017. moody's says the more pronounced slowdown in china is a big risk. and of the outlook across the country remains uneven and largely weaker that over the past two decades the bank of japan must drastically lower the presence in the nation's stock
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market if you want to unwind the position. that is according to an opposition lawmaker, was formerly a derivative trader. the government partners is to manage liquidity and large price distortions they must stop the $40 billion in ownership of the funds buys. underwear blue diamond has set a new record at christie's in geneva. it went for $58 million, well above the estimated price. it weighs 14.6 carats. and is named for oppenheimer, the family controlling it for 80 years. the previous record was held by hong kong billionaire, who paid almost $50 million for blue moon last year. local news 24 hours a day, powered by 2400 journalists in more than 150 bureaus around the world. you can find those stories on the bloomberg at top . anna: as linda, thank you.
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bring you the latest on the egypt airplane the missing one. bloomberg customers can head to top live where we have all of the information. it will take you to a list of live events we are monitoring. you will find this is the top one of those. this is what it looks like on your bloomberg terminal. the latest coming through is that egypt has deployed naval ships in a rescue effort. the military egypt says it is cooperating with greece on the flight rescue. you have had earlier conflicting reports about where exactly the airplane was where it stopped appearing on radar. egypt air saying it was about 280 kilometers off the egyptian coast. we will bring you the latest, throughout as well. the world's largest seed maker monsanto said it received an unsolicited offer from germany. nejra, tell us more about the statement from on center.
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nejra: we got this today, saying that monsanto received this unsolicited nonbinding offer from a buyer. what we do not have is any financial details. monsanto is reviewing this offer. and we do know about monsanto, that it has a market cap of about 42 billion dollars. if this does go ahead, it would be the latest in what so far has been a record pace of deals in the global chemical sector. seeing $84 billion a deal just this year alone, as low crop prices have been encouraging mergers. we have talking about china's offer for syngenta and dow chemical and dupont planning to merge. according to bloomberg data, with the premium, a takeover of monsanto could surpass syngenta to become the largest acquisition globally this year. anna: how likely is this deal to go ahead? we have seen composition at
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other sectors. nejra: not just in this sector, but in other industries. we have seen a number of deals really stopped in their tracks the past couple of weeks because of the increased scrutiny on competition. in the statement of course, monsanto says no guarantee of the deal. but what is interesting is that bloomberg has been speaking to analysts who say that monsanto, at the point it is now, is really ripe for a takeover. it has a number of challenges, share price down some 90% in the past year. it had to cut earnings forecast, not only that but locked in disputes with governments in argentina and india. and yes, analysts are saying the management would probably resist a bid. it is the world's biggest seed company. but if it did merge, what that would allow it to do is diversify in the industry. anna: thank you very much joining us with the latest on that merger and acquisition wave
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of sweeping across that sector. let's move to deutsche bank. investors gathered this morning, amid plunging revenues and the news of capital mounting. last meeting, shareholders vented frustration. wasin weeks, the co-ceo out. what is in store for his replacement? it takes place today in frankfurt. we are joined from frankfurt by bloomberg's matt miller who has a guest for us. matt? actuallyh, i am here at the annual general meeting. it has been referred to in the german press as the annual general feeding, because deutsche bank as been really taking it on the chin. i am here with hans-christoph hirt. thanks a lot for joining us this morning. you are going to hold a speech, voting to take part in a vote of confidence for the board and the supervisory board. let me ask first how you are
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going to vote? a lot of people are not going to give their vote of confidence to this board. hans-christoph: we are splitting, saying the people responsible for the formal opposition, voting against the chart. but we are bolstering confidence in the new management board. matt: so the new management board, he has a lot on his plate. what do you think he can do? this is a company that is losing clients, posting bigger losses then volkswagen. and that is looking at even more fines for misconduct. is there any way to turn this bank around? hans-christoph: the very positive thing is that we have a management goal addressing many of the problems. that is a very big change from where we were last year. we also have a strategy now in place, and the issue of reducing cost, reducing complexity,
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boosting temperature. and the targets for 2020 are encouraging. but very difficult. matt: john gets off at this meeting. cozzi is new and has a fresh take on what is new, the chairman, who was not only here before but has been involved in german finance for decades, the still is going to run the company. does that make you comfortable? hans-christoph: he does get some credit for overseeing the trades we are seeing. the shareholder, we have seen enough of the old co-ceo. we want a new management. it was unprecedented, but the old management board has changed. he has concerns about the supervisory board. yes, the new system that we disagree with. we think it is the wrong time. there is too much discussion, too much increase of base salaries over the past five
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years. there has been some discussion over the supervisory board. but overall, there is confidence for the time being. 50%: shareholders have lost of their holdings in the last year, as the shares have fallen. how are they even talking about a bonus system at all at this meeting? hans-christoph: i think that is right. if you make a record loss, why do you start talking about remuneration of the management board? the positive thing is that they have goals for 2015, but at the same time coming back to shareholders saying we have a new remuneration system. and we want you to prove it, that it does not override the sensibility. that there was not enough presentation to seer holders. and i think that is very obvious in a meeting here today. hand: they other are axing a ton of staff. there is real brain drain. anybody worth anything at
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deutsche bank is looking for a job anywhere else. doesn't that present a huge problem for business? is there anything for a client to use deutsche bank investment services for now? hans-christoph: it is a delicate balance from naming the problem and talking about it, starting to address them, ensuring that you do not lose your clients, or the motivation. that is actually another topic we will talk about, the behavior and the sentiment amongst the employee of deutsche bank. from our perspective, the key issue that john and the rest of the management board need to focus on. matt let me ask you, hermes represents a lot of other clients. e present b there. this is a company that has gone through catastrophic issues with the emissions testing scandal, the entire industry now involved in that. what do you see as far as the
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future of volkswagen? how can they turn this around? they still have the porsche family as kind of the main actor in this drama. hans-christoph: the key is you from our perspective is that you didn't think about what are the underlying problems, the underlying governing problems? the key stakeholders at porsche, the state of lower saxony, some of the funds, these are on the supervisory board composition. saying they are not moved by experience. if they are not knowledgeable about u.s. markets, chinese markets, we think they really need to look a little bit deeper and try to understand the fundamental problems, then starting to address them. hirt,hans-christoph cohead of hermes. i would possibility you in london. anna: matt miller live at the deutsche bank at in london. m in frankfurt.
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us.d owen is still with you made the link between the brexit vote and what the ecb does next. are we not only on hold in terms of bank of england but in terms of ecb? david: we have the meetings published today. a lot of the investors we me, i was in asia last week, a lot of them talking about the new corporate buying program and how it will work? that will be useful. and the interesting thing about paltrow, it is june 24. that is actually the date whether we know if the u.k. has left. anna: targeting the banks? david: and they can roll the old ones into the new one. and the total they can take down for the next four programs is 1.6 trillion euros. so we could have a very risk, where the u.k. those to stay within the eu. and on the very day that we know friday,e 24th on that
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we get a big take up. suddenly everything is rallying. that will be interesting. that will follow a fed rate rise. anna: and the timing, when we get the -- david: it will be interesting. we will not really know brexit, but we have exit polling, we should know broadly overnight. and then hopefully no earlier than the morning. roughly the same time, been morning maybe. and the risk is gone. everything rallies. the ecb, they had data published prints.y, the final cpi if you break that down, and we did this last night, basically 60% of the core basket, over 70 components of the core basket, over 70% saying a rise of less than 1%. that is a record number. and that would indicate to the chief economist at the ecb that i have an inflation issue. it is not stuck at 1%. it is going below 1.5%.
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there are still probably more biases. anna: are you kept awake by lack of inflation or by greece and how that could develop? david: greece is containable. greece can be solved. it is not a systemic issue anymore. it is a major problem in greece because they have not recovered. something needs to be done about it. before the ecb, they have extended qe beyond that smart. that is almost a given. they will not talk about that initially, but that will happen in september. anna: david owen, chief european economist at jefferies international. we are continuing to follow what is happening in egypt. we will keep you up-to-date with all the latest news we are getting through from that. we understand that president francois hollande and the president of egypt will speak about the egypt air crash this morning. the french prime minister is
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speaking on radio and the moment. saying that 15 french were on board that egypt air like a that is consistent we heard from the airlines himself. and there are 15 french passengers on board, other nationalities as well. we will keep you updated with the latest developing there. up next on the program, we take a look at the dilemmas facing south africa's central bank governor ahead of a rate decision later today. we talked gold and other precious metals. analystef commodity will tell us. ♪
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anna: welcome back. 6:49 in london. 7:49 in paris or berlin. here is has linda. haslinda: tesla is still about selling stock to help pay for an expansion that includes the forthcoming model three electric car and lifting annual
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production to have a million vehicles in 2018. the total sale will be about $2 billion. with the rest of the chairs sold by ceo elon musk to cover obligations and stock options he is exercising. suzuki has recovered some of the losses it suffered yesterday, improperadmission of fuel economy testing methods. after yesterday's market's close, the carmaker issued a statement saying it retested models using appropriate methods and found the data to be within acceptable range of deviation. it also told the government if found no evidence of data manipulation. mark zuckerberg has met with political operatives regarding bias in the fee. he met with broadcaster glenn back. they have deliberately downplayed conservative news and the trending feature.
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mark zuckerberg said he was do everything he can to make sure his team upholds the integrity of facebook product. and that is your bloomberg business flash. anna? amin joining us there. announcing the latest rate decision this afternoon, amid a credit rating downgrade which looms of course. let us go to johannesburg. more about the difficulty facing the government. good morning to you. what can we expect them from them today? good morning. does seem like a large part of the market is expecting the central bank will keep on change at about 7% per day. we have seen inflation numbers coming out yesterday, that inflation actually slowed in april as well as the market. however economists are sewing
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this as temporary. 3.6 are still up by the yesterday great coming in at 6.2% year per year. so we do expect the central bank will keep rates unchanged. of course, the central bank was really hard hit with a policy dilemma. high inflation a missed slowing growth. the economy is expected to grow at the slowest pace since the global financial crisis, hard hit by a drought, and also hard-hit by the drop in commodity prices. anna: thank you very much. fromlang during is there johannesburg. the london bullion market association has been in platinum week. here with us to discuss all things precious metals is james steel, he is the chief monti analysts. great to have you with on the program. let us talk about the immediate moves on the gold price. a lot of people talk about the negative correlation between
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gold and what happens with the dollar, obviously last night we got minutes with suggested that june is more above live meeting for the fed then we previously thought. the dollar went higher. you see downside risks as result for hire dollars? james: i think you have to look at the weakness, even the year before, which was predicated on to rate rises last year. and the expectations of four rate rises this year. we have had a pretty substantial rally. we'll he had one rate rise last year. and down from four to two to maybe just one. the gold market has recalibrated. i think there is a little wiggle room. they can adjust to at least, one possibly two rate rises without going down significantly. but i do accept the notion in general that higher rates are negative for gold. but when the fed starts the
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tightening cycle, the history of gold is actually that there is weakness going into the cycle. and then it rallies, once the fed cuts. anna: is that because of the inflation hedging qualities? i have a chart here that, shows the measure of rate growth the atlanta showing gold futures in blue. suggesting that higher rates may not derail gold's rally. typically, they have have the sort of inflation fighting qualities as well. that is why rate hikes are higher. why you see gold being resilient. james: that is a large element. and the gold market is very sensitive to events, be a political or economic. and very often, the gold market is a little bit ahead of the fed and sees the rate right coming, adjusting, for it. so when it does come it does not have the negative effect. anna: what are your expectations
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looking next year? do you have estimates where we go? james: we have been bullish for quite some time. and the market has moved in our favor, police in the way we are thinking. next year we are looking for a higher price as well, possibly a slightly wider range. we think of the dollar will weaken. and the key metric there is dollar euro, and we are looking for that to get to 120. and that would support gold prices at 1300, may be slightly higher as we are going into next year. anna: and is that dollar euro number, the fx department domain, is that based on a couple of fed rate hikes this year? james: it is actually based mostly on recent work that the fx department has done on the
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currency wars. that has appreciation, upwards appreciation on the yen. and the euro will leave the dollar weaker this year. it is more from appreciation of the two other major currencies. anna: there is a lot of experiment in going on at the moment with negative interest rates. what we know yet about what that does to your wealth in precious metals? james: that has been a key factor. if you look at the gold market, it bottomed in the middle of december, around $1000. that is actually when negative rates began to take off, just a couple of weeks before that. if you actually look at a chart of the percentage of bonds with negative yields, compared to the gold price, you will see a very close correlation there that we have about 25% or so of the issued global bonds have a negative rates. that has increased as well. anna: james steel, cheap commodity analyst. timebefore we go to break, to update you on the egypt flight that we have in bringing you all morning. egypt air pilots make a distress
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call for communication was lost. this is a flight from paris that left last night, was heading to cairo, and that is the latest on that. wait faces the faces the first deficit, in years. ♪
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working ased is selloff in asian stocks in crude after minutes show officials want to raise interest rate in june. kuwait's oil minister tells bloomberg opec's action plan is working as th crude will end at $60 a barrel. germany's buyer makes it unsolicited bid for the world's largest seed maker. and an egypt airplane headed to cairo from paris has disappeared. the airline says the pilots made a distress call just before communications lost.
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welcome to the program. this is "countdown." i'm anna edwards. let's get to the futures and see where we will open up this session. it seems as if we might be moving lower in europe, down around half a percent. ftse has sizable losses, down just try of 1%, is the early indication coming through. a handover from asia is a negative one, the msci down around 1% in their trading day. of course, a lot of the conversation in the markets overnight has been about the fed, so let's talk about that. theyve been asking when will react to the hawkish comments and last night we got the answer. the fomc minutes are spelling out that, depending on growth, labor market, and inflation data, they will think it appropriate to increase rates in june.
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let's show you have things adjusted. the dollar moved up by a tenths of 1% in terms of the dollar index, and today we see it on the move again, a little stronger at 95.3%. .09%.o-year note at bank of tokyo mitsubishi describing this as a pain move in on markets, 10 year yields of eight basis points from yesterday, the biggest increase in more than two months. day, u.s.or a second crude stockpiles unexpectedly increasing, also continuing around the canada oilsands, guiding the price as well. that's how things are moving and how the markets have reacted to the commentary in the fed minutes. let's get the first word with haslinda. an egypt airplane
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headed to cairo from paris with 66 people on board has disappeared from the radar. off at 11:09 local time last night. the airline says the pilot made a distress call before communications were lost at around two gold 40 5 a.m. cairo time. search and rescue operations are now underway. hasy's investors service lowered its growth forecast for the u.s. economy this year to 2%, down from 2.3%. that's to account for a week first quarter of the ratings company, as they see jb rising in 2017. says asays -- moody's slowdown in china is a big risk, and the world is largely weaker. monsanto says it received an unsolicited takeover offer from germany's biggest seed maker, who says the proposal is nonbinding, but hasn't offered
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any details. monsanto's market value is about $42 billion. only this month, we reported that they were exploring a potential deal to make the world's top-seeded chemicals company. the bank of japan drops itstically lower aas tries to preserve the ability to unwind its massive position, according to a new opposition lawmaker who is formally a derivatives trader. he says to manage liquidity and avoid large distortion, the central bank must stop its $30 billion in annual etf buying and lower its ownership of the funds. and a british vote to leave the european union might lead to surging youth unemployment. insolvency, and home reposession.
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said economists and economic institutions were warned of damage to trade growth, investment, and credit rating, and that those warnings should sound alarm bells. global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. you can find more stories on the bloomberg at top . anna: thanks. breaking news -- a little bit of m&a news. thater space company constructs industrial facilities and factories that produce a process petroleum products, technip, and fmc are to combine.
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the new company will be called, imaginatively, technip fmc. it will have an equity value of $13 billion usd. it's expected to deliver $400 million in annual pretax cost energies in 2019, according to the businesses this morning. let's move on. federal reserve officials want to raise interest rates in june. now it is up to the u.s. economy to confirm the view that slow growth of the first quarter was temporary. minutes of the april meeting use of the word june 6 times in a policy context, following several signals not to dismiss a midyear hike. let's bring in our next guest, the chairman of the investment committee, joining us on set. were you caught off guard by what we heard yesterday? some people describe the moves as pain moves. >> yes, i was.
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i have a chat with one of your colleagues and said -- they won't say anything. but oh dear. yes and no. we have had this grand old duke of york, where we have been writing of the top of the hill and writing back down again. i suppose, having written down to the bottom of the hill in the sense of discounting that there was going to be nothing happening all this year, from various dovish comments, there had been a bit of crossfire about one or two governors they aremments, so trying to remind us that they haven't gone away. they're trying to have their cake and eat it. eats.all copav i think what we did this was that commodity prices have turned around pretty radically since the low in february. we are talking about 70%, up to
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$50 per barrel. so maybe the said has noticed that inflation has picked up a bit, and the free lunch we were earning from low commodity prices as well is perhaps off the table, and that is what has triggered the slightly surprising commentary. anna: the function on the bloomberg -- a 42% chance of a hike in june. it was 4% on monday. that's a big shifted market expectation. but 42% is still below 50%. it's not a certainty. >> i think it's pretty unlikely. if theyack to december, want to normalize rates, that gives her a lot of room to say, almost irrespective of the data, we are unprecedentedly low. when she started to do it, she saw the reaction. particularly in the transport market, which was pretty severe. i think that has made them cautious. danziger question, i think june
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is still unlikely. anna: can they do this into -- correct me if you don't think so -- a slowing global economy. it talks about what indicator of global trade, shipping costs down 30% from last year. we talked about the global trade story. can the u.s. do this, very much in isolation, dependent just on what's happening in the domestic economy? if you, they can do it, believe the normalization is the policy. low, soe surprisingly they need to be ratcheted back to normal levels. but i don't think they will do it. the last point about the dollar -- the dollar already started to turn around. we were shy on 116 a few weeks ago, and more importantly, emerging-market currencies are starting to roll over.
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i think that is a big headwind for the u.s. economy; many american companies are multinational, and make their money overseas. if that means lower earnings because of translation value, than i think that will leave the fed very cautious. anna: a long wait till june. thank you very much. stephen isaacs stays with us. for all opec members, oil, economics, and fiscal policy go hand-in-hand. ground,anny is on the where he has been speaking exclusively to the country's acting oil minister. good morning. kuwait is facing deficit for the first time in years. what is the government they're going to do about it? they are going to tackle it in the different way -- they have the sovereign wealth fund, we know they are looking at long-term investment structure. economy,omes to the the deputy prime minister announced -- he's a man utterly
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reform but wants to come to grips of the economy. the economic challenges, he will balance the books and five years. effect on our nominal gdp has been quite substantial. hope in five years, physical and economic reforms that were -- and recover nominal. plus close our deficit tremendously. manus: i know you're the advocate of your six-point plan. you are a man of reform will stop my question -- a brave man enters brave reform.
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you have six points -- it's a tough parliament, reducing subsidies. for you, sir, what is the priority? out of those three -- >> to focus on the two main andes, closing the deficit public financial deficit. diversifyb with more private sector coming in. to dok we are willing that. i believe some of the rating agencies that just issued their ratings, they realize this very well, and this is why we have nd tod on our existing -- a receive this news. long-term negative -- it
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is something that will have to do over the coming months to show reliable and determined level of doing those reforms. one of the biggest criticisms has come from the imf on fiscal restraint. down here in kuwait, they will spend $60 billion between now and 2021. this is a man that believes in reform, educated in the u.s., very much believes in avoiding the stagnation of europe. he is going to the bond market; he has the advice, he is going for the customs business and trimming the fat. yes they have a deficit, but they are prepared to spend it to avoid the error of your. -- of your. europe.
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wherel talk more about the money is going. $600 million is not a bad chunk of change. anna: thank you. stay out of the heat. let's move on and go back to one of our top stories. let's get the latest on the egypt airplane that disappeared on its way from paris to cairo. we are joined by the north african bureau chief. thank you for joining us. what can you tell us? i think the french president is going to have a crisis meeting this morning. what can you tell us? >> right now, it is still relatively early on. the airline hasn't commented on whether the plane has crashed or what might have happened.
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the french president is holding a crisis meeting and apparently the egyptian president has spoken with him. right now there are search and rescue operations underway. deployedian military naval vessels as well as aircrafts. apparently the plane disappeared from radar 10 miles into egyptian airspace. anna: in the early hours, there seems to be inflicting reports about where this aircraft had gone missing from. do we have any clarity? >> well, apparently egyptair, in the initial statements, said it disappeared 80 miles outside egyptian airspace. they have since posted on twitter that there was about 10 miles. anna: ok. thank you very much for joining us. joining us from cairo.
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don't forget; if you are a terminal user, go to top live. you will find all the breaking news. up next, the banking sector. deutsche bank drama. can the bank appease investors again this morning? we are live in frankfurt. ♪
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anna: welcome back. 7:19 in what looks to be a fairly overcast london this morning. futures will be down by around 6/10 of 1% at the start of the trading day. also from what the fed has to say. a: 19 in frank -- age: 19 in frankfurt. investors gather in frankfurt amid plunging revenue and the need, possibly, for new capital. last year's meeting saw shareholders event there frustration about the management. matt miller is in frankfurt for us with our german finance
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reporter. matt, let's come to you. what is in store for the co-ceo, john cryan today? cryan willnk john not have such a difficult day, since he is new here, he has got to be the guy. investors have to stick with him if they want any chance of survival. nick comfort is about to spend the next 12 hours with shareholders who have lost half their money in the last year. what are they going to be able to do about it? >> today they can voice their complaints to the previous management, the chairman. and -- and they're not so much voicing criticism of him as demanding that he deliver on his pledge, that he shrink the balance sheet, cut costs, and bring the bank back. matt: this is understandable
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because of the massive losses and the continued lawsuits, but if they are focused on just cutting staff and possibly even cutting remuneration, what does that leave for clients to use as a resource? why would you choose this investment banking few knew they were all leaving? >> good question. it's a clear competitive disadvantage to be restructured during the market rout. they are probably very unhappy. but it's a question of playing to their core strength. they will be looking at their .ole in europe deutsche bank is still a trusted name from any european companies. in asia as well, and selectively in the united states. it is a clear competitive advantage, but, they still have some areas of strength that they can leverage. matt: they have had three capital raises for a total of $22 billion. their market cap is less than
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that now, at $20 billion. are they going to need to raise capital again? >> that's a big question, and something weighing on the shares. the analysts say there is no way out; they have to sell shares. others say, if you look at the core earnings, don't you think they can, over the next three years, really set aside money and go to those levels? but a lot of investors are pretty unsure, and that is why the shares are doing so badly. matt: they do so much. he is going to go in there, and we will see you back here at 10:00 tonight. >> [laughter] back to you -- matt: back to you. anna: thank you. matt miller in frankfurt. stephen isaacs, chairman of the investment committee, is still with us. let's talk about oil. we heard earlier on from the kuwaitis about the reforms they
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are undertaking. big moves in oil prices, forcing many countries to carry out reforms, to look at the way they are doing things. where do you see oil price heading? >> i'd like to turn our attention to saudi arabia. the u.s. senate last night passed a law which allows the 9/11 victims to continue the legal action against the saudi state and i think this is one of many pressure is at all the middle eastern nations facebook particularly saudi arabia. they are trying to do in restructuring and privatize aramco. a lot of things going on. it means we have to keep pumping like crazy -- that is the only way out, keep the cash flowing. it seems like a long time ago but it was only a couple months -- some sort of oil production freeze, some orchestration of discipline, it wasn't the proper agreement but it managed to turn
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things around temporarily. i fear it is only temporary and oil prices will have lower. anna: we have bounced a lot since the end of last year. we are now at 48.15. you think we had lower again because the saudis keep pumping? a stronger dollar -- to some extent, stronger commodities are about retrenchment of the dollar of the ever easy policy although it's not quite are simple. anna: we cover a lot of the other stories around oil prices, things that have been helping you get higher, the nigerian canadian, the oilsands. we have seen wildfires near there. that could get under control and go away, but the nigerian production, you don't think it matters. >> it's a small difference.
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allegedly the market thought nigeria was producing 1.7 million barrels per day -- it is a very small amount of money in the bigger scheme of things. to me it is all about the dollar in the middle east, particularly savvy policy. anna: central banks around the world have been struggling to deal with a lack of inflation, trying to get inflation into their system. interest rate -- do you think we revisit that later on in the year? >> negative interest rates, as we see with deutsche bank and their share price, they have all sorts of perverse consequences with europe in particular, the impact on bank marches has been disastrous. it's a political hot potato in germany. there has already been a campaign that the ecb is a possible withdrawal of the bank note -- that's a very controversial subject. there was a front-page article about it a few weeks ago.
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anna: some are linking that as admissions to get rid of cash. >> negative interest rates are all about attacking savers. spend, or someto of their savings will be expropriated by negative interest rates. it's a very controversial issue and i think at -.4% i think we are at the limit. anna: thank you very much for joining us. good to have your thoughts. stephen isaacs. 7:26 in london. let's get the latest on what's been happening with the egyptair situation -- we understand the french president is meeting at 8:30 in the morning. coming up shortly. we understand that there were 15 french passengers on board, more egyptian passengers, 66 in total, disappearing off radar
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screens in the early hours of the morning. a320. an that is it for "countdown." more on "on the move." ♪
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guy: welcome to "on the move." 7:30 in london. we are counting it down to this european open. this is what we're watching. it's alive. following last night minutes, the market wakes up. the possibility that the fed might raise rates. deutsche bases its investors in frankfurt. shares are down more than 50% since the last agf. how rough the ride will management get? and egyptair airbus from paris to cairo is missing after leaving


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