tv Squawk Box Europe CNBC October 30, 2014 4:00am-5:01am EDT
>> announcer: the markets are open. this is "squawk realtime." >> how european markets will react to the announcement made yesterday evening by the fed in the united states? we were expecting this announcement the end of the qe3 which started in september 2012. market reaction was quite positive, if you can say that way. the united states was only a very limited decline for the main indices yesterday in the united states. start of trading, it's mostly green on the board. the stoxx 600 up 40% in the first few minutes of trading in
europe. plenty of sectors to watch this morning, but two of them, really important, the first one is the financial sector, of course, on the back of the fed and also with the earnings from barclay's. the other sector, the cost sector, again, earnings this morning. that was yesterday after the market close sector. with the chemicals up only p 1%. gold, utilities at the other end. the car sector, best performer in the first minutes of trading up 1.3% with renault trading 4.5% higher. we'll come to this in just a moment. oh, yes, and the banking sector up 0.9% at the start of trading. before we look at the details, steve? >> the third quarter preliminary gdp is coming up 0.51% quarter on quarter. that is in line with forecasts and slightly lower than the
second quarter. the second quarter has been revised on an annualized basis, 1.2 3% from the previous 1.2%. but in the third quarter, the year on year figure is up to 1 is.6%. the cpi number is in there, as well. there is no inflation in southern europe. we know this. paul, your reaction? >> it came at a cost and that cost is unemployment. so what we've now got is the improvement of the real economy. the problem with that, of course, is the government tax revenue, the debt gdp metric. so there's a definite improvement. it's a reaction to the competitive gain of lower labor unit costs, but there is a price
with that which is there is an awful lot of capacity in the economy. >> in terms of the unemployment numbers, everyone is thinking, great, it's moving in the right direction, bit still has a 20 handle. >> and that's the issue. and the real danger with having engineered the drop in the labor costs is that it had to have a very high increase in unemployment to get that competitive handle. are you going to be able to get these people in employment again? are they unemployed? are they long-term unemployment or permanently unemployed? that's what now needs to be resolved. these people need to fall back into this functioning economy. >> and we've got a lot of numbers hitting the wire today. one i didn't look at is alcatel lucent down 0.9%. but for now, let's go back to stephane, take a look at the london market opening. >> and it looks good, steve. the ftse 1000.3% higher as with, of course, a big focus on the banking sector. not only because of the fed decision yesterday in the united
states, but also because of barclay's. we have earnings. the bank is looking at more cash for the euro, trading as the british lender braces itself for free leverage ratio decision. the bank of england, barclay's trading 2% higher. helia. >> just on those barclay's numbers, just to make sure you know, the provision for interest rate head sg a redress cost that has been released rather than another cost to them. so yes, they have this extra ppi hit. they already put aside 900 million pounds in that secretary quarter. and they have the 900 million pounds for fx charges. not a bad set of results for group level. but, really, it's going to be
the investment bank that people will be looking at because at 38% drop in profit there and, of course, tomorrow, everyone will be looking at what the pra do in terms of leverage ratio because barclay's could be very hard hit if the leverage ratio goes up too far too high. >> thank you for that. >> two minutes of trading, slightly lower, down 0.2%. let's have a look, also. first of all, this analyst forecast in the third quarter with core earnings coming in at $5.8 billion. europe's largest oil company is also a top performer. as i was saying, market reaction, revenue misses trading
slightly lower. uk insurance company has seen new business jump 15% in the first nine months of this year held by a stronger balance in europe but also in asia. we are moving to the french market. almost 1% higher for the cac 40. with, of course, a focus on the car sector. overcoming weak performance with revenue rising 6.7%. renault -- the market would remain volatile for the rest of the year, but the car company raised its outlook by 2.4%. let's have a look at alcatel lucent, one of the best performers on the french market today. 10% higher. nearly a 6% fall in third
quarter sales during a net loss of 80 million euros, down from 200 million euros. that's the reason why we have such a positive market reaction according to the financial director of alcatel. the company is still planning an ipo of its cable business. that is on the schedule for the next year. spanish markets up 0.6% with the gdp numbers in spain. and also positive start of trading for the german markets. up 0.7%. lufthansa has lowers its guidance for the next year, the airline previously an operating forecast of 2 billion euros for the next year. expectations for this year include losses of 170 million losses market reaction negative,
not surprising down 1.5%. a 13% rise in third quarter net profits. the german group cited the strong growth in its divisions. market reaction up 278%. a third quarter net profit of 42 billion euros for bayer. the sector has done well today at the start of trading. steve, over to you. >> stephane, over to you. a morguace board of companies reporting on the european markets. around the desk, sheena patel joined us, chief executive officer of goldman sachs asset management and paul donovan, author, economist, managing
director at ubs joins us, as well. did i get that right? >> yes. >> how is the world of goldman sachs? i've been looking at the fund flows and it's extraordinary. the amount of money that came out of music, now it's backed, as well. u.s. based music attracting billions of dollars. were you fully invested or how is it going? >> clients are looking at the volatility in the market, saying where is there opportunity? rather than volatility being paralyzing, it seems to be empowered. they're willing to make decisions during a volatile market. >> i'm interesting to hear you
say that, raerchb debilitating power, it's empowering. i know a lot of people have had a really tough time over this.. maybe it would be something with props, but outside of the traditional investment banks, as well. you're talking about a different kind of customer, aren't you? >> i'm talking about the end investor. we just had our global annual event for investors in weeks. those thousand investors have been working on their allocation for years, two to three years. as they come to the point where they're making those decisions, the last month is not changing their decision of where to go. in some examples, they see it as a validation to some extent of needing to take a different approach in a marketplace where maybe their traditional approach to fixed income hasn't been
working. >> what happens happens the last couple of weeks, it's not affecting their long-term opportunities. >> what we're seeing, is downside volatility is almost seen as an opportunity for individual investors. they've sat here and watching the markets rise up. they haven't put the money in ponds because they thought it was overvalued on the dow. now it's at 16,000. oh, my gosh, a 17% decline. finally, this is not rational, but finally it's on sale. i'll bet that's what you're talking about. >> it's more like a red arrow sale. >> sure. >> i also think the moves we've
seen have created some new opportunities. one of the areas we've seen is high yield. but if you look at what happened in october, it could finally be attractive after some of the outflows and the moves that volatility has created in terms of the valuations. we see credit as a place where there are some opportunities. >> what about the argument, oftentimes there is a spread between the u.s. markets and emerging markets has never been greater. people are just petrified to go into emerging markets. >> i look at renault's figures. it's extraordinary. renault is saying europe is gaining traction. they're saying they're seeing increases net-net on growth. the world fund is full. isn't this part of the problem, though, that we're adjusting to a lower nominal world?
w all expect lower nominal gdp. we are in an environment where emerging market growth is converging to some extent with developed economic growth. but i think investors are still -- after 30 years of high nominal returns, nomat, not real, investors are now struggling to deal with the lower nominal return environment. perhaps that is why we get investors chanting in to try and get that. >> interestingly, one of the first areas of confidence for the u.s. recovery was from emerging markets decline. now that i live in asia rather than here in london, i've seen quite a bit of enthusiasm over the past two to three years
towards the u.s. recovery, towards the u.s. housing recovery, now towards the developments in the energy complex. so i think emerging market investors are right in the thick of it saying, the developed world offers some volatility. the center of the debate today is europe. >> go to china, talk to the wealthy, if you ask them where the best opportunity for success is, many of them are not going to say it's in china any more. >> yes, they're looking at europe and the united states and have for many years. now there's going to be ease of trade between these key areas. >> in terms of creating an environment for trading in particular, that's a big different. the hong kong shanghai connection is critical.
the planning it takes is critical. we're still waiting for details and information. so it's quite a bit of pressure on the organizers of connect so this can be a successful launch. but it's a great opportunity. it opens the markets to new investors. that may create volatility, but it probably will create some funds. >> when you're investing in u.s. zero percent growth and now you've got u.s. 3.2% expected in china coming in at 7.3 i think is the greatest figure, as well, the differential is not quite there, is it? >> the differential isn't as big. that is why you've seen this flow towards individual markets. we've seen some interesting european small caps. i think what we've seen happen with the fed now creates question as to whether the climb
in the euro will help the european economy. that is a place where we see asian investors focusing and saying, which do i pick. >> in tells of growth, i'm just going to say, that is a hell of a lot. >> growth hasn't always been returned. >> this is up 3% versus 7%. it's still a 4% gap. why aren't emerging market returns at least keeping pace with the united states? it seemed logical if you're going to grow 4.4% more that the return should at least be equal.
>> but the sector is not necessarily growing more, is it? we know this year it's all about president chi consolidating power between keeping unemployment low and building yet more -- >> do you know how much of that gdp is government versus private? >> we're talking chinese gdp here. let's not trech the numbers too much. >> and i think to be fair, the places that we've seen interest particularly in asia are outside china. vietnam, thighly, where you see investing opportunities, but are they always in the public markets? we've seen more interesting private equity in those markets in other ways to access surge and growth outside china. >> and talking about credit before, saying there's opportunities there again, is that on the short side or is that still going long on credit? >> high yield opportunities. >> you're not worried about
potential bubbles still being there. >> i think in high yield, we see opportunities on the long side because of what's happens in the last few months. incresters have been coming in and out at the same time depending on their world view. when you switch over to the unconstrained side, it's because investors are looking for ways to hedge interest rate risks, hedge interest on currencies. >> ladies and gentlemen, let's look at royal dutch shell after the numbers and the big figures, we are up 0.02%. >> we show you earlier the u.s. trading for a royal dutch shell. the stock is flat in europe. this one is the correct one. core earnings coming in at $5.8
billion. the largest oil company in europe has been announced before the market opened this morning. >> thanks very much, indeed, for that, stephane. let me move back to the panel. volatility. i want to talk about volatility, as well. i'm just not buying the empowerment argument. if we are -- let me change my question. are we set to remain volatile? we have had a stunning run of triple digit moves on the dow, 1% plus. it's calmed down a little bit now, as well. is that set to continue? if so, is it going to have ramifications and is it going to rattle nerves? >> i think it's hard to imagine a fashion in the market where we return to the roll tilt in the last few years.
do i think it remains sustained? no, i don't necessarily think so. within fixed income and within equities and by the die verging policy actions. and so that is one of the biggest unpredictable factors we have. >> what happens when you haven't got the markets rigged by qe, yeah? >> you go back three years, you get the banking system preparing. banks are prepared to try to find you a buyer if you want to sell. but look at the corporate bond markets. the inventory told held by banks is a fraction of what it was ten years ago. if there is a rush for the open, the banks aren't there to make all well again. it's every man for himself.
because of what? >> because the regulation means they're just not into mediating the way that they were. and i would add in a lower nominated world, you have another issue with the underlying investor, which is if you're in a 10% nominal world, losing 10% is unpleasant, but you make it back in a year. >> let's get back for a second. we have the fed, we have nominal, etcetera. my view is the world is going to be perpetually volatile. and the ropes are more structural and systemic rather than what's happening on the short-term. you have more investors entering the financial world because you have rising emerging market growth. you have rising standard of living in countries where people never have money to invest or make purchases. number two, you have technology.
so we can all pan ek now on a realtime basis. the earnings come out and in a nano second, oh, my lost, renault is up 0.11. so i think you're going to have an overall structure where the markets will be volatile. the big mistake i see investors making is they're sitting there saying, i'm not going to do anything until the world gets more stable. the world is never going to get more stable. people didn't invest in y2k. it's never got to get more stable. >> and a calm world is a place where you have opportunity. i think the interesting question about volatility, as well, is as it shifts some of the interest we've seen over the last few years and just goes passive. can you be passive any more? your opportunity comes from active choices in investing.
>> i think if you have a more volatile world, it depends on your investments. when i look at my investing for the next several years, we are prepared to buy, hold and clip coupons. so in some ways, almost back to the 19th century model, you have a group of investors who are there just for the yield. and -- but that's an constitutional investment perspective. i hear people all the time saying, you know, listen, i have no problem living with volatility. for the last two years, the s&p 500 lost 50%. everyone says they have no problem with volatility when the market is high. when the market goes down 20%, 30%, 40%, i bet you can count on one hand the number of investors
that can live with that 50% drop because they don't have the benefits of your wisdom and a something that's looking at it for a thousand years. they're saying, i've got 15 years, i've lost half my money. are you sure the future is going to be like the past? i remember fax machines and now we have e-mail. is the future really going to be like the past? it's important to invest based on not only time horizon, but how much ago need can they take? you don't want to invest in a portfolio strategy where people will emotionally ka pill late at the most difficult moment and people go, oh, great, it's time to get in. >> everybody talked about a great rotation into equities. where is it? it's because of that attach. to safety in income.
>> there is still more catch in the united states. the catch levels are still very high relative to what they used to be in 2007. >> that is part of the problem. as a risk and a moefkation to get out in the first line of trouble. part of the problem in the information age is you've got the blogosphere. nobody should talk about economics without a wleek outlook in the markets. >> we can be sensational, but financial news is not -- so we have to go when we see these big moves. >> but part of the problem is you're getting -- >> this is why people hire people like you. >> we do make our mistakes. what is the biggest make we're making in the media?
>> i think you get aer the infection that is created and that's it. ite becomes very, very hard for the stock. a couple of years ago, the treasury international system, it was incomplete data, there was a structural break. all of a sudden, everyone is looking at central banks increasing data. the u.s. weighed through the orders. >> the peat ya get it wrong. >> what a great show that is. >> it was prime time television. >> perhaps in a cage is the action you're looking for. >> i've already offered to do the box thing. >> i would simply suggest economists don't have the line on getting things accurate or completely analytically correct. >> we are always accurate.
the markets -- our view, but that's not the fault of the economists. >> i want to show you, the cfo on earlier, it's 3.3% to the good. we've had a statement, this is quite staggering that has had a statement out which hasn't included a change in the ceo. they're up 1.7%, as well. i've just got to ask you now, can you stay, helia, or do you have to go? >> i can stay. >> gaining your comment about technology, as well, is it us or is it machines? we'll discuss this and the role in the markets, as well, in a few moments time with stephane, michael, sheila, helia, we're all here. still to come, novonortis higher after a rise in profits.
and barclay shares opening in the green. it's a beat for royal dutch shell as earnings reach 5.8 billion in the third quarter and former bank of america charles holiday is tapped to head up the board. lufthansa sets a 2015 profit goal after a labor strike takes its toll on the top line this sends shares into the red. >> improving margins and now a
loss in the third quarter sends shares into the european stock market. once again, renault trades higher after the open into a solid set of numbers and a demand recovery in europe. and it's mostly clean in europe. the stoxx 600 up 0.6% after the saturday of trading with in focus today. one of them is the financial sector on the back of what the reserve announced yesterday in the u.s. back also the earnings from barclay's that we have this morning. and also the other sector, of course, the carmaker was once again both trading higher after
the start of the session. >> broadband provided a boost to bp. the uk telecom grew narrowly beast forecasts. the cfo told this show the company's other key television, tv, remains a growth area. >> in terms of what we bit for, we'll only bid where it makes commercial sense. >> shares are trading sharply higher. it played down any additional impact where the government is planning to convert foreign currency loans into foreign. i said earlier they were supposed to russia, as well.
and the company does not have asset necessary russia. so they to be pretty quick about that one. 29 million euros in the first quarter. >> luxottica has posted stronger growth thanks in part to emerging markets. the italian luxury eye wearmaker says growth went up to 1.8 million growth. the maker of rayban sunglasses lost two chief executives in the month. shares in the group are trading higher up almost 1.8%. bayer raised its full year earnings forecast as is reported a 13% rise in third quarter profits. from a group cited for growth in
its health care. >> a federal reserve has ended its six-year long quantitative easing program. a more hawkish statement sends the dollar higher. there has been substantial improvement in the stocks outlook. it intends to keep rates low. today's agenda, third quarter u.s. gdp released at 1330 cet. the first reading is expected to show growth of 2.2% with a weaker contribution coming from consumer spending. shoppers could snap back in the fourth quarter. they're expecting a very strong holiday season. check it out on our website back in the fourth quarter. paul, sheila and is we say, as well. sheila, i think peter oppenheimer came out with a
call, which a lot of us said, yes, that makes great sense. it was about, gosh, i think 18 months ago. it didn't happen at the time and bonds continue to rally, as well. i guess partly because we had all of this quantitative easing in the system. but now i can't help but think they might come home to roost a little bit. and maybe it was just the timing that was a little bit iffy on that. in a world where we're going to see more volatility, and we've talked about that in some fashion today, we are going to see a divergence of performance between bonds and equities or not. i guess it falls in the bucket of what paul said. economists are always right. as we catch up to peter's view, i certainly think we're seeing from our clients an interest in finally getting to a more appropriate in our view more aggressive place towards equities. they're interested in getting more specific, their interest in saying i don't just want the
u.s., i want small cap. even in em, a more selective view. or looking at different areas like fixed income like bank loans. it has really gone up. i think that's in part due though idea that a great rotation is a nice concept, but the specific matter in markets like this. >> how about the timing of that call? >> i think part of the issue we've got, we've got to recognize bond markets and -- >> which is my point now. >> i think we have to recognize this residual captive poll of investors. it's not going anywhere. >> they're buying less, but they're still holding. >> exactly. so there is -- absolutely. the margin investor does potentially rotate out. absolutely. no problem with that as a
concept. but that doesn't mean we go back to a normal yield. i think yields are below normal which, of course, causes a lot of equity valuation. well, the growth, i think, is we've got a structural reduction in the trend rate of growth. capital is lessee efficient, the globalization of capital has sharply reversed. i don't see that necessarily coming back. so you are lessee efficient economy overall. >> don't you think, too, that what's happening is as yields remain low, as investors have been perpetually waiting for rates to go up for years, and now all of a sudden we're at ten-year treasury at 2.2% or whatever it is right now, don't you think what's start to go happen is investors who are in cash making negative 3% from an inflation standpoint -- i'm sure when we see your books we'll know exactly what that means. but when we see the yields on a fixed income side, don't you think there's a new form of fixed income that's being developed in the mind of investors? that new form i would contend is
large, stable, global sort of companies paying dividends. because on one hand, you have catch. people are afraid to go into fixed income because fixed income is like a guaranteed loss as interest rates go up. you have the nasdaq and all the sort of exciting things out there. and then you have these kind of boring kind of 4%, 5% tax advanced sort of dividend assets. i would make the case that's the new fixed income. >> that's not boring any more, right? >> it's not so boring any more. >> makes you feel a bit like maybe the japanese had some ideas in there after all that you can copy. interestingly, two weeks ago, i was in australia. and that's a place where it's taken a while for the challenges of yields to catch up to investors. we still had attractive rates in banks, you still had a very interesting local market from a fixed mcperspective. now, as you've seen the rates come down on bank deposits and you've been forced out into the great big world the rest of us
have lived in of low yields, you're seeing the same kind of pressure to look at equities, to look at yield from equities, to look at different fixed income like bank loans. >> sorry to interrupt, we've got a cfo of novartis waiting for us. let's hold the thoughts, everybody. and you start getting on my words. stephane, take it from here. >> the spanish drugmaker novartis is forecast ago 10% growth in full year profits. however, sales are expected to come in just below the original expectations from the companies. speaking to us now is the cfo of nordisk. >> thank you very much for being with us. first of all, regarding this forecast, it shrinks slightly, the full year same target. the original target was a 7% to 10% growth. why are you looking at less?
>> there's two factors behind that. we're seeing a slightly weaker demand for the product which is with inhibitors and then we're seeing a marginal weaker demand in china, which basically reflects a marginal weak overall market demand in china. >> interesting comment regarding the pricing environment on the u.s. side of this market. you say that it's always been competitive. was that an answer to what the french drugmaker, sanofi, said earlier this week? >> well, i can't make specific comments about sanofi's situation, but what i would comment is, as i said in connection with the half year, we are seeing an increased price pressure also in the long acting segment we've previously seen price competition in the segment. now we're seeing it in the longer acting segment and basically, our focus has been to secure that we have equal access
for patients to -- in the leading product on the market from sanofi. and i think we have secured that for 2015 and that has had some degree of impact on the rebate that had to be offered in the market. >> you were given the data at the end of january regarding the ipo process, potential ipo process and in an ip business, what could change your mind? is it linked to the market conditions? >> yes, of course, we have to, in a company like that, assess whether there is market conditions which is relevant to the sprukzs of a new company. this is the danish i.t. sfrts provider, which we intend hopefully to take to the market. we'll have to await appropriate market conditions before that can be the case. >> now, i have a question for you on generic version of buy logistics. and what that's going to mean for margin compression. i know you can't really comment
on what's happening with sanofi. but do you see that margin compression through generics is going to be a significant issue? i know when the statement was made from novo the other day, the united states stock after hours went down 5%. can you give us more charity around that? i know you can't be absolutely specific, but more clarity as they go forward in that state? >> well, i think overall, you see an impact from the negative market. and what we're seeing towards 2015 is it's going to be more modest surprising impact in 2015 and that comment from more intense competition occurred in the long acting segment. it's a long-term, viable strategy to protect your prices as to introduce new products, we're on the way to bring a new
long acting blah seen ba into the u.s. market. i think that's a sustainable way of protecting your points. you have generics coming in, you have this long-term coming in. is that going to be an overlap in 2015, 2016? is there going to be margin compression until that product picks up pace? do you have any sense of that? >> i think there's going to be limited access for competition in 2015 for the markets. there is high uncertainty. i would prefer to defer to make statements about where the market is evolving until we have more clarity. >> yes. just a quick word, if i may. everyone is getting very excited about when this gets approval .how big it's going to be.
just give us an idea of what you're hoping for from this drug. a very important new product for you. >> it's interesting. we're trying to use our new product in a dose and is use that for treatment of people with obesity. we're currently in negotiation on the approval of that product. and potentially we can bring that to the market in the first half of 2015. it's a challenging situation. one has to be aware the market side from the products prescribed is currently only in the 150 million. so going out and making a large projection will have to require you to basically build a market. building market takes a longer time. so i would like to be cautious in making statements about the size of that market. i think we have to build a market. it will take time.
>> we'll look at this one with a lot of interest. thanks so much for your time, as ever. the cfo of novo nordisk. >> the fed is very confident to manage confident on track for 4%. that's key for regulations. >> good and well for him to make that statement on the call. as they say, 5 pirs by 20116, i think is bank is going to have a lot of problems. >> we'll discuss those ratios and the banks in a little more detail after the break. amongst other things. stay tuned for more on the earns report when closing bell here exclusively from the cfo of alcatel lucent. new york state is jump-starting business with startup-ny. an unprecedented program that partners businesses with universities across the state. for better access to talent, cutting edge research, and state of the art facilities.
down almost 6% year on year at 4.1 trillion yuan in line with guidance, but lower than the 4.9 trillion yuan local market consensus. revenues came in at 47.5 trillion yuan, a bit higher than the 49.61 trillion yuan they gave as guidance. this is samsung's fourth operating decline and the biggest year on year fall in the past five years. waeshg smartphone sales continue to be the reason for the drop in the numbers. revenues came in at 24.5 trillion yuan. this is a 4% drop from the same time last year. local analysts are estimating samsung shifted 76 million smartphones globally in the third quarter, which is more than a quarter before, but
because the premium line of sales were weak, this means the average selling price was much lower than the same time last year. the growth in the sale of its smartphones were mostly in the mid to low range smartphones. and also, another reason was that the galaxy 04 was released at the end of september, so we didn't get to see that model in the earnings. >> a rough increase of 62% in the third quarter, which is less than what analysts forecast. >> it has been spending more to attract new users. al by baba will report earnings for the first time since going public. six banks underwrote the company's listings initiated coverage of the stock with a
sale. not really. it's a buy or an outperform. goldman sachs gave us a new rating and a price target well below those of other houses. alibaba shares rose this week giving it a higher market valuation than rumored. >> mark, why don't we start off with you this time around. apple, we've had some bad samsung figures, enormous decline in their hand set division. apple holding the line. what do you think? >> i think samsung has more problems than apple. samsung's real problem is the fact that they're using a commoditized operating system. the other way you can differentiate that product is by the screen or the pen or
whatever it might be. >> because anyone can get ahold of android. >> anyone can. google is clearly going out and going next out into the product in the system. samsung has issues. now all of a sudden here essentially saying, we're kind of going to not really -- >> now we're many digits, however long, as well. it's difficult areas to get invested in. we mentioned buy due, alibaba, apple, as well. where do you stand on nasdaq tech stock only? >> i think from our perspective, clients are very interested in the space, but they're very challenged in saying where are the valuations and what is the opportunity set? i think in terms of particularly the institutional investors that we work with, they're a bit technology shy at the moment. and the places they're looking are around the smallest businesses and the smallest opportunities. >> a bit of trading at significant discounts from the
nasdaq, let alone some of the higher rate appears. >> ibm and in some cases you can make the argument they already have it. to the extent that you're generally invested, these stocks are ready. huge components of the indices that they're in. so where do i go from here? what does this mean? and i think the real question that's going on in all of these markets is what is the number r next killer of all of it? >> i think mobile payment is causing a lot of questions. clients are really interested in the next next. >> here is the danger in technology. that sector is all about creating efficiency. who is going to win in the cloud space? probably the one that is able to make the least amount of money for the longest period of time. is that necessarily a good investment?
>> i was just going to say, i think next issue in technology is capital spending. but it's capital spending not by companies. 30% of americans are self-employed freelancers. they go out and buy an ipad or whatever it happens to be. what they're using is capital equipment for them as a person and they may not downloading opportunities. >> it changes the way banks in the uk are able to prais operate. >> so a big complaint against leverage ratios, the simple backstop going up from 3% to 4% or even 5% is the very safe building societies like nationwide who have very big balance sheets, but they're very
safe mortgages that they've been offering which is what bank should be doing for consumers. >> certainly the reaction to what's gone on in europe was more positive even than i expected from clients. in the sense that they feel things have gotten out on the table. until the changing environment, do we see some change which is small and medium enterprise? >> that is the most dangerous
prospect for banks. the minute banks want to increase margins is the minute they start selling bad things to consumers. >> well, that's true. but it's a mart of whether you're looking at the bank or -- >> as a barrier to growth or is it going to aid growth now? they're going to aid growth in two years' time. europe isn't japan. europe is america for years ago. the problem is -- >> unadjusted jobless total to 3.7 million. the labor office in terms of the adjusted figures, seasonally adjusted change up 5,000. so the jobless total down 20,000. and analysis. >> who cares. the germans are never going to enjoy themselves.
>> meaningful economic view. who cares? >> german unemployment is not the issue. it's not doing anything exciting. the problem with germany is what we want to do is frankly do something about france, which scares me. >> the unadjusted jobless rate came in at 3% in october. paul done know voon wab lovely. thank you so much for joining us. mark, sheila, thank you very much, indeed, for joining us. from helia, stephane and myself, i hope you've enjoyed the show as much as we have. we will be tomorrow. have a good day in the markets. for all sorts of businesses. banking. loyalty. analytics. synchrony financial. bankinengage with us. ytics.