Skip to main content

tv   Countdown  Bloomberg  March 12, 2015 2:00am-4:01am EDT

2:00 am
mark: the euro dips below the dollar. as bond yields hit record lows. the ecb says bond yields are probably here to stay. >> we are looking of the territory of hiring placement -- higher inflation rates. that should translate into higher government bond yields. anna: former french president
2:01 am
tells us the u.k. is ripe for reforms in eu leadership but there is no reason for a breakfast. >> the u.s. fed gives failing marks to deutsche bank for their capital holdings. we bring you the latest on the second round of bank health checks. >> the country joins the global wave of monetary easing and lowers key interest rates to an all-time home -- low. we tell you what it means for the market. >> mark: get hopes of pulling the economy out of the brink. we will bring you the details on the loan program.
2:02 am
hello and welcome. anna: i am anna edwards. greece is running short of cash and time. we will tell you who is bringing in the billions with the greek economy on the brink. mark: this video shows flashing lights. we have reports that two officers have been shot in ferguson, missouri according to a local news station. we will bring you updates on that story throughout the morning. three days of sovereign bond buying from the european central bank in bond deals in the eurozone continue to make fresh all-time lows in germany. yields are negative even on 70. one councilmember does not think this distortion will last for long. jonathan ferro in frankfurt for an exclusive interview. >> this is an ongoing discussion
2:03 am
that we have. in principle, of course, the policy of central banks follows monetary policy aspects, not aspects of, let's say, profit maximization. so we have a clear priority but still, one has to be careful about the potential of future losses so that maybe also we see first as an indication of the structure where to buy and second also perhaps on the volumes and the future volumes to what extent we are prepared to get into this. jonathan: what do you mean by future volumes? ewand: we have this program [inaudible] we look at the territory of
2:04 am
higher inflation rates and higher expectations. that should translate or so into higher current bond yields. if we succeed for a longer time we still have a large part of the market's negative yield. this is something to think about. engaging in foreseeable losses is something that may come with risks for central banks. jonathan: when you consider scaling back on purchases between -- before 2016? ewald: it is too early to think
2:05 am
about that. we have had a good start and then we will see. jonathan: is that something we can roll out? ewald: we have this program and we're going to do it. we should not rule out anything. anna: i am pleased to say that jonathan has returned to the studio. good morning. what is the caution? jonathan: you sit there at your terminal screen and you look at these bond yields and do work out what you're going to buy determined by various different things but for them it is not about profit maximization but it is about risk as well. when you have so much eurozone sovereign debt that is negative and i am -- have a graphic here it is half of 1% in germany. in austria almost one third of government debt is negative. this is a cumulative losses
2:06 am
after losses. there is a risk there and if it stays negative, he did mention this, the word future volumes we're having a debate on whether the ecb can carry on the on september 2016. he did not want to get into that with me yesterday. there is a concern for ongoing losses. anna: we do not understand the impact of the losses. jonathan: we still do not have enough detail. it -- there is this thing called the gap where you get this price formation in the secondary market and they can buy. how long do you wait for when they are issued and you buy in the secondary market, we do not know how long it -- you have got to wait. there are a lot of unanswered questions. mark: the title of the less compelling title of the year award goes to ecb watches.
2:07 am
jonathan: you might say that about the attendees. mark: what was the takeaway? draghi did not talk about it. it feels like a victory lap from the european central bank. they feel like they are heading in the right direction. the forecasts are looking good and it is conditional implementing. for me, we are not their area. we have record low bond deals and the euro is declining but we have not seen it translate into gdp numbers and cpi numbers. best -- not bad seems to be the take away. anna: it would feel good for greece.
2:08 am
it would be a-rod to frame this as a currency war. jonathan: it is not [inaudible] mark: we are ringing you live coverage of a speech from the bank of england governor from 12:30 p.m. the second stage of the u.s. stress test results of common. the banks did not all pass with flying colors. notably it was the european units that let the side down. here with more is caroline hyde. what was the difference between last weekend this week? caroline: last week it was do you have enough capital. unemployment spiking to 10%, the property market something 25%, can you survive that with the required capital buffers? all 31 could.
2:09 am
now comes the qualitative part. where are your stress test -- warrior stress test -- were your stress tests good enough? suddenly we get some trip ups. most of the europe banks -- the u.s. banks were fine. they got a big take from the federal reserve. the rank of america got a rep on the knuckles. they were conditionally repute -- approved. you can do as you wish but you have to shore up your internal processes and resubmit i september so they have a bit of a issue there. the real failures with deutsche bank, both u.s. units fail and they have restrictions on paying dividends. significant deficiencies across aggregation processes and they have -- there were problems with
2:10 am
internal controls. sometimes there were widespread in critical deficiencies across their [inaudible] many things showing in the headlines. what are the next steps? >> they are limited for buybacks but that may not be significant. they were not planning that anyway. there are more roles that they have to make parts of the banks more solid. they have to inject capital. that was approved last year. they were not going to hemorrhage cash. their qualitative failure highlights meaningful work produced so they have things to do and they are going to reinforce the government and address the quality of concerns. deutsche bank says it was enhancing capital plan processes. there are two things that will change in their are at great plains -- they are at great pains to point out [inaudible]
2:11 am
they were a new addition to the club. if you look at the common [inaudible] they did do incredibly well. they are trying to show that they are improving. they are hiring 1300 employees. they are hiring 500 across the u.s. so they are making steps. i think what is interesting is the criticism that is leveled not just of them. jpmorgan, morgan stanley, wells fargo capital plans were moved -- were approved but at smaller margins. notably citi failed and it will raise its dividend and they are going to beginning back a lot of cash. are the stress tests good enough for the long term? anna: as the u.s. gears up for
2:12 am
its first rate rise in years asia is heading down a different path. korea did a rate cut after thailand did the same. let's go to yvonne man. why are these rate environments diverting like this? in what seems to be a global trend toward rate cuts. reporter: it is a world fighting against the rising u.s. dollar and one analyst put it quite simply here. it is a double-edged sword. you have these currencies pegged to the rising u.s. currency and those currents are going up and appreciating but the economies are not performing as well. on the other side you have got this threat of a fed rate hike. essentially, everybody else is playing defense in this part of the world. south korea to -- the latest to
2:13 am
join the bandwagon. they lowered to one point 75%. that is an all-time low. the bank of korea governor talking about inflation at the slowest pace since 1999. they said there was domestic demand. they have been fighting this relationship over the weaker yen affecting their export but the governor today mentioned the euro weakness and how that is also hurting their exports perhaps even more so than the weaker yen. he also mentioned that if the fed were to remove the word patients out of the statement essentially, more uncertainty to affect the global markets. that makes it more now than 20 nations that are losing policy this year. the fomc meets next week. anna: i was reading some analysis that was asking when the chinese were going to meaningfully step into this
2:14 am
particular phenomenon and with the chinese in mind the governor is holding a press conference later this morning. what can we expect from that? >> they will be talking about how this is going to be prioritizing its open market operation especially the ones about how it will spur liquidity. it was imperative that the pboc spurs lending. we are expected to hear from the chief in less than an hour. i will be listening in and let you know how things go at the top of the hour. anna: thank you. yvonne man joining us there. mark: there are reports that two officers have been shot in ferguson.
2:15 am
th suburbe that erupted in riots last year over the shooting of an unarmed teenager. these are live pictures from the scene. this latest development came after the local police chief resigned last night. he led the department since 20 and reached a mutual decision with the city to leave next friday. he will receive severance a and health insurance for one year. the international monetary fund has approved a $17.5 billion loan program for ukraine to help the war-torn country stave off default. the aid is part of what the imf and ukraine's government hope will be a $40 billion package including contributions from the u.s. and european union to financing offering the lifeline to the economy that the government thinks will shrug by 12% has the conflict in the eastern part of the country hobbles its industrial capacity. alibaba is planning to invest in a move that would value the tech
2:16 am
startup snapchat at $15 billion. they are plowing into hundred million dollars according to people familiar. snapchat is a mobile app that allows you to send each other photos and videos that then disappear. the greek prime minister and the secretary general of oecd will meet in paris to discuss reforms. greek authorities began talks in brussels yesterday. those continue today but some euro area central bankers are raising opposition to the prospect of any additional emergency cash for the country's banks. the former bank of scotland trader has waited guilty -- pleaded guilty. he agreed to cooperate with prosecutors and admitted
2:17 am
participating in a scheme to cheat customers through bought in sold bonds. anna: you can join in the conversation on twitter and let us know what you are thinking about this morning. i have in tweeting about the stress tests in the u.s. and was the bar raised high enough? you can find that on my twitter page. mark: i have yet to be in -- begin tweeting. weill we see parity with the u.s. dollar? that is next. ♪
2:18 am
2:19 am
2:20 am
>> we [inaudible] i think we are [inaudible] by the central bank. we should be more prudent. anna: that was the former french president. he would like to see a slightly
2:21 am
higher euro but the currency is taking another tumble toward parity with the dollar. it has reached one dollar and five cents. a12 year low that comes in the same week as the ecb begins quantitative easing. great to see you this morning. comments coming through from the former french president. he says it would be wrong to characterize the weakness in the euro as a currency war. do you think we are in a currency war environment? >> when does a currency competition become a currency war? local central inks are using their policy to address issues with glue -- growth and inflation but a byproduct is the value of the currency and certainly for those who are struggling, getting a little bit of an advantage is not a bad byproduct of is your monetary policy. you're seeing a lot of countries pursue that and you have quite a
2:22 am
competition going on. mark: and this is the 22nd central bank to cut interest rates. the fed seems very much on its own and wanting to tighten policy. what are the implications as we approach next week's meeting and as the dollar continues its ever upward climb? >> the story is a good news story. we have had a stronger pace of expansion. while oil prices are challenging we are probably closer to being at our target over the near term. the federal reserve has the luxury to begin thinking at least about starting to unwind what has been six years of very aggressive policy. the results have been fine. it is time to see if the economy can move on its own. anna: can he move away from
2:23 am
those years of aggressive policy because there are people who want to see a starter that process. can the u.s. move when the rest of the world is still playing catch-up? carl: the u.s. is or self contained in the sense that we are reliant. 70% of our own consumers for growth whereas another parts of the world they are reliant on exports. we have created a lot of new jobs and the incomes that go with them, that creates the income for spending and profits it leads companies to think about hiring and that way the economy can work without too much performance-enhancing policy. anna: if you look at what has happened to equities in the last few days there is growing concern on wall street that profits are going to be even into by the strength of the dollar and that could diminish companies' ability to export. there are going concerns about
2:24 am
what the strength of the dollar does to the u.s. businesses. >> we have been watching very closely and are sensitive to the suggestion that the only reason that we are in the territory we are is because it monetary holocene is we spend easily. if the central bank were to raise interest rates by 1% that is hardly an onerous level of borrowing costs for american companies. we do not feel that the stock market is too far off. mark: should the fed get cracking? richard fisher made some interesting comments a couple of days ago. he said the process should begin before the economy reaches full unemployment to avoid triggering a recession. are you in his camp of thinking or not? carl: there are always risks of going into pricing. creating an asset bubble that rages out of control. those things develop over time
2:25 am
and sometimes arrive without much warning. it is difficult to reverse them once they are there. that is in the minds of people like richard fisher. on the other side, the fed is very aware of the applications of its policy internationally. as for the tone of this ecology of markets you have a lot of borrowers overseas that are borrowing dollars. when interest rates rise that could put them on -- under some pressure. >> what is the new level if there is a new level? carl: we are still finding underage is. job creation has not all been that good. our feeling is that the fed may not be in as much as a rush to tighten. september would be the first suggestion for the rate increase. anna: is the economy -- with prices falling, perhaps that
2:26 am
provides a boost to the consumer. are we seeing recovery in europe ? >> there is a favorable tone that we have not seen in some time and part of that is the momentum established but i would not underestimate the psychological benefit of the announcement of quantitative easing which is a tangible symbol that if mario draghi was saying it -- you would do what it takes, now he is actually doing it for all the challenges and limitations of the program. that has the psychology -- grabbed the psychology in a favorable way. mark: inflation expectations will pick up and the bond market will reflect that. is that pending a rosy picture? carl: in the near term we're more likely to have more negative rates than fewer as the european central bank tries to find 50 billion euros of hans each month that -- bonds that are not easy to attract. anna: thank you for joining us
2:27 am
this morning. the chief economist at northern trust. mark: we will bring you full coverage of the speech by mark carney. that is at 12:30 p.m. today. ♪
2:28 am
2:29 am
2:30 am
mark: t video showsh flashing lightse. you're looking at a video of ferguson, missouri where there are reports that two officers have been shot. we will bring you updates on the story throughout the morning. we will continue to finance these live pictures for you. -- announce these live pictures for you. the two officers have been shot in ferguson, missouri. anna: breaking news from the tons of.
2:31 am
in terms of the numbers they reported, they are giving us a focus on 2015. that was 1.2 billion in 2014 so they're expecting that number to improve urine year. they're talking about yields falling. that is the amounts of money they get her seat -- per seat. lufthansa said that profit will fall but revenue may -- improved but revenue may fall. passenger load factor increasing slightly in 2015. averaging significantly negative. they are talking about unit costs excluding fuel being slightly reduced. fuel down by 3%.
2:32 am
they are talking about the contributions that their program is making to profit [inaudible] they are saying that the benefits is costs and yields decline. they are using words like significantly -- substantially in terms of the increase in net profit. these are the words they are using around their guidance. they have been subject to a number of strikes, 10 strikes in 2014 and the fallout with pilots as they try to bring about changes to that is this. we will bring you more as we go through the morning. mark: time for your foreign-exchange check today. we're looking at the south korean won. it is dropping against the dollar. this is dollar won. the country's central bank
2:33 am
becoming the fourth or second central package in another 24 hours to cut. it is the 22nd country to cut rates so far in 2015. only two out of 17 economists surveyed forecast the move today which is a move to counter slowing inflation. it is at its lowest level since 1999 create coupled with the weak economic recovery, the won is at its weakest level against the dollar since july 10, 2013. against its 11 major asian peers, the won is weaker against all but three. the singapore dollar, the malaysian ringgit and the rupiah. the filipino peso has fared better with a gain of 4.5%.
2:34 am
the bank of korea number 22 to cut rates this year. anna: let's take a look at some of the top stilley -- stories. this was national bank -- swiss national bank shows banks switched off electronic trading and some stopped temporarily providing price quotes. a surge in self-employment is down to structural shifts in the workforce rather than evidence of hidden unemployment. that according to a report by the bank of england. the large increase since 2008 reflects trends that began for the recession. the aging workforce and the rising female self-employment. the bank says it does not see the growth in self-employment as evidence of extra slack in the labor market and would allow it to wait for longer before
2:35 am
raising interest rates. house prices in london are moving for the opposite direction to the rest of the country. the capital is the only region where prices fell last month. the changes hardly due to the declining number of houses coming to market for sale in most parts of the u.k. mark: the imf approved a $17.5 billion loan program for ukraine to help them avoid default. christine lagarde outlined the plan for the disbursement. it is a much-needed lifeline for the economy. it is struggling because of the conflict in the eastern part of the country. let's get to moscow. how badly does ukraine need this money? tony: the answer is very badly. it is limping along in the
2:36 am
dictation of receiving help from the imf for some time. the government itself has said that the economy could shrink as much as 11.9% this year. the reason the local currency is taking a puddling -- pummeling and hitting an all-time low and reserves are down to below $6 billion. they very badly need the money. they say they will use the funds to support an economic reform program that will help turn the economy around. as you say, this is taking place against the background of conflict in eastern ukraine which ukraine's president said 20% of the productivity economy is struggling. help is viewed as a lifeline. mark: is this paving the way for much bigger aid package?
2:37 am
>> that is the expectation. the imf has hopes with other contributions and with negotiations but ukraine is about to embark with bondholders. overall the package could be worth something like $40 billion to ukraine. this is dependent on savings at the government needs to make in its negotiations with bondholders were they have to save something like $50 billion over four years. mark: how is the truth holding right now? we are getting varying reports on now -- how it is and how strong this cease-fire is holding. what are you hearing? >> it is perennially described as fragile. in terms of what says the other side is doing. they are complying with an agreement that was reached in belarus the middle of last month
2:38 am
. they were supposed to create a buffer zone and exchange prisoners. those -- there has been a lull in the fighting. people are talking about a sense of observation about the truce rather than breaches of the truce. mark: tony halpin in moscow today. anna: francine lacqua sat down for an interview. britain is right to want simplification and leadership. but that cannot solve the problem. >> the problem is not its excessive. it is the way it is handledelf. too many commissioners.
2:39 am
and [inaudible] each of them produced [inaudible] recommendations all the time. things must be simplified. the system resists simplification. when i was chairman 10 years ago there were [inaudible] after that you had [inaudible] this will not simplify the problem because they do not have a relationship with the other. for them not to be partners for the production of regulations [inaudible]
2:40 am
they could influence [inaudible] so not much to gain. for us to ignore the u.k. when is two hours from the capital [inaudible] >> the following video shows flashing lights. these are pictures of ferguson, missouri where police confirmed two officers have been shot outside the police department. this is the suburb that erected last year with riots over the fatal shooting of the unarmed lack teenager that police -- black teenager. ferguson is embarking on a bit of a shakeup as the justice department concluded last week
2:41 am
that the city fostered systemic racism. that is the back story. that is what is happening today. we will bring you updates on that story from this morning. anna: sadly, ferguson was again trending on twitter. you can join us on twitter. mark: 6:41 a.m. here in london. , how great shipowners have managed to weather the storm. in spite of the economy being on the rocks. ♪
2:42 am
2:43 am
2:44 am
mark: police have confirmed that two officers have been shot in ferguson. this was the suburb that erupted in riots last year for the fatal shooting of an unarmed black teenager. these are live pictures from the scene. the local police chief resigned last night. they reached a mutual decision to leave friday. he will receive a severance payment and health insurance for one year. alibaba is planning to invest in snapchat interview that would value the start up at $15 billion. china's company intends to plow into hundred million dollars according to people familiar. snapchat is a mobile app to send
2:45 am
photos and videos which then disappear. the oecd secretary-general will meet to discuss greece's reform. they began talks in brussels yesterday. those continue today but some central bankers are said to have raised opposition to the prospect of any additional emergency cash for the country's banks. a traitor has pleaded -- trader has waited guilty. he agreed to cooperate with prosecutors. he is accused of cheating customers through bought and sold ponds. -- bonds. anna: the great finance minister has accused the ecb of pursuing
2:46 am
a policy that could be as succeeding to the great government. despite economic turmoil greece's shipowners have managed to weather the storm. good morning to you. give us a bit of context. how big is the greek shipping industry because this is a very small economy but not so this particular contribution. tom: the greek economy is 0.4% of the world economy but in the shipping industry it is one of the major industries for greece. the helen a clean is worth 106 billion. in terms of the greek economy it is 7% of great gdp. and greek controlled vessels
2:47 am
make up 23% of all carriers. such a small population and a big outside achievement. mark: which families control the wealth? tom: names like analysis -- onassis is what people think of. now it is [inaudible] and these guys whether they are based in greece or not, their offices generally are. anna: how are these shipping magnate's managing to succeed despite the weakness of the greek economy? i am guessing they are tapped into the global trade flows. >tom: the shipping industry is
2:48 am
basically a global one. the greek shipper has always looked abroad. they're looking to china, australia, so there -- they are [inaudible] on the domestic side. how the succeed in such an industry, they will tell you it is skill and others might say look. -- luck. and picking the right moment in the market to buy ships. it is an incredible skill, picking that market and that is probably the biggest reason. mark: in an economy where they lost money 5% of its value -- 25% of its value since the paint, what is the attitude toward these shipping magnate' s?
2:49 am
tom: you can see the social and political problems that are out there. speaking to ordinary people in bars and taxis there are -- is a lot of anger but there is a pragmatism as well. there is no particular reason it has to be in greece and a lot of people have said itthere is not much the government can do. if the tax these guys there is no reason why they could not move to london or new york. oenne said he was not worried. anna: they had a beneficial tax rating that was introduced but it seems to be in common with international standards in terms of how shippers attack. -- are taxed. >> the industry is
2:50 am
constitutionally protected area that is protected. but recent years they call it sort -- solidarity so they have doubled the tax break. it is a hot topic. they were saying stuff like we would tax the more and they rolled back the rhetoric. they came face-to-face with the reality of the situation. it is difficult to tax them anymore. mark: reminders that the rivalry was in all sorts of matters like flaunting their wealth. >> they have some colorful parents from decades ago and they did stuff like -- they competed in terms of the fleet and buying islands, private yachts.
2:51 am
it was onassis who married jacqueline kennedy. anna: what are the new breed of billionaires like? tom: they are a lot more retiring. perhaps shy. before the crisis they were a bit more open and pretty proud of what they have achieved and recently they have taken a step back. when you go around you will see stuff like the onassis foundation making massive construction projects. they are taking a big step back and you do not feel their presence as much as someone like onassis. mark: have t what theyh willey said said what they are doing
2:52 am
with the greek shipping industry? >tom: the shipping industry is saying we have had good discussions and with the voluntary tax anna mentioned it will be business as usual. anna: between a rock and a hard place in international taxation. mark: we want to bring you some pictures. a warning to viewers, it does contain flashing lights. you are looking at live pictures of ferguson, missouri where police confirming two officers have been shot dead outside the police department. we will bring you updates on that story. the police chief of ferguson resigned. the suburb interrupted in riots after the shooting of an unarmed black teenager. we are hearing they are not dead but it comes after the police
2:53 am
chief resigned today. it happens as ferguson embarks on an administrative shakeup after the justice department concluded last week the missouri city had fostered systemic racism. anna: you can join in on the conversation on twitter. coming up we will be looking at our favorite stories including the engineer starting an energy revolution from their garages. ♪
2:54 am
2:55 am
2:56 am
mark: disney has a four prong film strategy. revived the classics and animation. this weekend it could open with sales of $95 million. anna: is that the fourth prong, angelina jolie? this piece is a great story. it visits a day trader who has taken the battle to reinvent the
2:57 am
energy industry. finding cheaper ways of storing energy which could change the map on renewables. it is fascinating. more when we come back on "coun tdown." ♪ . .
2:58 am
2:59 am
3:00 am
mark: government bond yields hit record lows. a bloomberg exclusive. nonegative yields are probably here to stay. >> the intention of the program is that we will get to the territory of higher inflation rates and inflation rate expectations. that should, of course, translate into higher yields. >> another bloomberg exclusive. the former french president
3:01 am
tells us the u.k. is right to want reforms in european union leadership and there is no reason for a grexiytt. >> there is no reason to leave. anna: stress test fails. the u.s. fed gives failing marks to deutsche bank for capital holdings. who will bring you the latest on the second round of health checks. -- we will bring you the latest on the second round of health checks. the ukraine is bailed out in hopes of pulling the economy out of the brink. we will bring you the details on the loan program. ♪ mark: welcome to countdown.
3:02 am
anna: i am anna edwards. greece is running short of cash and time. there is one bright spot in the economy. we will tell you who is bringing in the billions. mark: a warning that the following pictures contain flashing lights. you are looking at ferguson, missouri. two police officers have been shot outside of the police department. officers and protesters had gathered following the police chief's resignation last night in the wake of a fatal shooting of a black teenager last year that turned into rioting. anna: let's bring you up to speed was something that is breaking. the closing retailer -- clothing retailer is giving us sales in line with estimates. the u.s. business is better.
3:03 am
it is up. eu retail sales are up more strongly against the estimate. the rest of the world bracket retail sales are up a touch ahead of estimates. looking at the other metrics they expect a pre-tax for the full year to be in line with estimates. investment in the warehouse and i.t. platforms are on track. this is an online-only clothing business not listed on the ftse 100. it is listed in london. a lot of focus is on the gross margin and if we will see any drop in that because of investing considerably in price. some months ago, you may remember. that is the latest coming through on asos. we will speak later on to the
3:04 am
management of john lewis. a lot to talk about with that retail company. how much will they benefit from the strengthening u.k. economy? will bring you that interview. -- we will bring you that interview. mark: a company called talpa media. the maximum consideration is 1.1 billion euros. the cash consideration is one of $55 million. -- $11555 million. it is owned by a dutch billionaire. he created big brother. didn't he? he will be pushing into independent production and buying up production companies. content is king. anna: this is a deal we talked about at length with an analyst when we got the most recent
3:05 am
numbers. it will accelerate the studio growth internationally. that is the business we discussed at length. mark: three days of european sovereign bond buying and on yields in the eurozone continue to hit threshold lows. even on seven-year debt the ecb governing council member does not think the distortion will last for long. jonathan ferro caught up with him in frankfurt for an exclusive interview. >> this is an ongoing discussion that we have. in principle, of course, the policy of central banks follows monetary policy. it is aspects of profit maximization. we have a clear priority now. still, of course, one has to be very careful about the potential
3:06 am
for future losses. so, that may be seen as the indication of a structure and, second also future volumes and to what extent we have to look into this. >> when you talk about future volumes, what you mean? >> we have a program and the intention of the program is that we will get into the territory of higher inflation rates and higher inflation rate expectations. that, of course should translate into higher government bond yields. if we succeed for a longer span of time, we still have a large part of the market's negative
3:07 am
the use. -- negative views. this is something we would have to think about. engaging in the for siebel future is something that may come with -- in the foreseeable future is something that may come with risk. at first, i think we have not started it. i think we have a good start. we will see. >> is that something you can rule out? >> and monetary policy, -- in monetary policy we have learned to never rule out anything. anna: to the countdown studios, let's talk about the words of caution coming through. jon: epic rally in the bond market.
3:08 am
the concern about the accumulating losses by buying debt. the yield is in the seven year. you buy maturity and that is what they have been doing. you look at the 30 year and germany and the 30 year and it is 67 basis points. quite remarkable. the other thing that is interesting is what they are going to do beyond that and how they measure success. they will measure success by the yields going higher. you generate higher inflation expectations and sovereign debt yields should go higher. this is the difference between what the ecb is doing and what the fed and the bank of japan has been doing. mark: ecb watchers. anna: something like that. mark: either way it wins the award for exciting title of the year. you were there.
3:09 am
what was the take away? ljon: a victory lap similar to the speech last week. the forecast looks good and things are getting less bad. this requires full implementation of the monetary policy. we are not there. we are seeing record lows in bond yields and the euro. we are not seeing lower unemployment rate. how long will that take to feed through? that remains to be seen. anna: thank you very much latest on the interview. mark: breaking news from the luxury goods maker. the new chef executive -- chief executive. the creator would join on july 8. a few lines on the new chief executive he has held a number of senior roles at the brand.
3:10 am
he is currently one of the independent non-executive director's. he has -- directors. he has been a pointed. -- appointed. the current chairman and interim ceo will revert to the role of chairman. they have gone to some tough times. -- through some tough times. anna: lots of news coming from the retail sector. home retail. let's keep an eye on that one. they say they have seen the benchmark pre-tax profits towards the top and of expectations and guiding a little bit higher. mark: banks. the second stage of stress test results have come through. they did not all passed with flying colors, as was the case last week. european units let us down. caroline: this is all about
3:11 am
quality and not quantity. mark: exactly. caroline: banks were tested and they all had enough substantial capital buffers to survive the crisis. this is to prevent a 2008 repeat of a financial crisis and a taxpayer bailout. all of these can weather the storm of property market crashes. quality is being looked at and the quality of the measurements has been lacking. bank of america has been given a rap on the knuckles by the federal reserve. they have been told they conditionally pass the test, along with 28 other capital plants. they have to shore up internal processes to go forward with capital plants, as they currently have them.
3:12 am
they want to give back money to investors and do share buybacks. many want to give dividends. bank of america had a rap on the knuckles. deutsche bank's u.s. units failed. they have not been doing math properly. significant deficiencies across risk identification measurement, and aggradation processes. they are not identifying the risks. critical deficiencies, says the federal reserve. they are wanting. it is not the quantity. it is the way they are measuring it. they are not giving away dividends or share buybacks until they fix it. anna: what is the next step? caroline: they put out statements quickly and say look, we realize we have meaningful step to make and we are going to reinforce this to
3:13 am
address the qualitative concerns and change in both areas. they are forthcoming. deutsche bank says they are committed to strengthening. they are at pains to point out that the u.s. unit only 5% of the global assets. they are a first-time player and this is their sixth year doing the stress tests. new kids on the block. in the third stage of the test, they performed the best. they had 28% of a capital buffer. they are saying, the quality, give us a break. in terms of compliance, they have employees dedicated to this. 500 of them in the u.s. they have to get on it quickly. mark: thanks. anna: the u.s. years up for the first rate rise in years in
3:14 am
years and asia is heading down a different path. a rate cut one day after thailand did the same. let's get more. tell us about why the rates are diverting like this. -- diverging like this. you mentioned asia versus the u.s.. it seems to be everybody versus the u.s. >> you have the rising dollar and the rest of the world that is trying to bring down the interest rates right now. you have south korea. the latest one to join the bandwagon there. followed by thailand yesterday. 20 nations are loosening policy this year. the bank of korea is lowering the repurchase rate down to 1.75%. that is an all-time low. the bank of korea governor talks about the weaker euro as well.
3:15 am
it affects exports. again, the repurchase rate has cut. it was something economist were not expecting. domestic demand has fallen substantially. overall, they decided to act preemptively. if the federal reserve removes the word "patient" from the statement, it could at uncertainty. >> thank you very much. mark: want to bring you more breaking news. the u.k. regulator says they will review the telecommunications industry. that will hold its second major assessment of the sector. the first was in 2003 and ended in 2005. it will focus on right and sentence for private sector involvement and maintaining
3:16 am
competition, tackling obstacles and identifying any scope for deregulation. the first phase of the review is expected to end in the summer of this year. the second phase will conclude by outlining initial conclusions. >> interesting. many people who talk about consolidation in european telecoms and in europe, they talk about the need to consolidate to drive investments with the expensive infrastructure required in this industry. we will see if it has any bearing. mark: will take a closer look at the stories. -- let's take a closer look at the stories. the police are confirming that two officers were shot in ferguson. writes interrupted last year over the fatal shooting of an unarmed teenager. these are pictures from the scene. and police chief resigned last night. jackson reached a mutual
3:17 am
decision to leave next friday and will receive a severance payment and health insurance for when year. the imf has approved a loan program for the ukraine to help the war-torn country stave off default. it is part of what the imf and the ukraine government hopes will be a $40 billion package including contributions from the united states and european union. it offers a lifeline to an economy t. a move would value the startup at $15 billion. the e-commerce company is valued at -- sanapchat allows users to send
3:18 am
each other photos and videos that disappear. the greek prime minister will meet in paris to discuss the reforms. it comes after officials and authorities begin talks in brussels to unlock the bailout funds they started yesterday. they continue today. some central bankers have raised opposition to the prospect of any additional emergence of cash for the bank. the royal bank of scotland trader is guilty of a fraud scheme with a new threat of a government probe of the securitized debt market. matthew agreed to cooperate with prosecutors. he participated in a multimillion dollar scheme to cheat customers who bought and sold bonds. you can find more at anna: you can join in the conversation on twitter.
3:19 am
that is where we are. coming up on the program, the greek finance minister accuses the ecb of asphyxiating his government.
3:20 am
3:21 am
anna: let's talk about europe. greece searches for a bailout deal. equities are at a 10 year high. we are joined by kevin.
3:22 am
good morning to you. good to see you. u.s. investors might be stressing about a strong dollar and what it does to profits of u.s. companies that export a lot. does that mean that we will have a veritable of grade? -- upgrade? >> the currency has moved. if you look at the impact on company profit it should be significant, not just in translation. transaction, as well. this time last year, we were getting currency that was rising and depressing european growth to some extent. it will help european growth and exporters, leading to a rise in company earnings per share. it is forecast to be around 15%.
3:23 am
this is the first year that we are seeing any meaningful growth. those numbers are due for upgrades. analyst have to catch up. they are still catching up from currency moves. anna: it keeps on moving. mark: should the 15% gain in european equities since the start of the year relatives to u.s. markets concern us? >> it may be a little overbought, in the short-term. europe is outperforming a little bit and i think it is probably in the short-term. what europe has is upgrades coming through as the year progresses. do not forget that the movements in the currency and oil did not come until the middle of last year. the year on year impacts will start to be felt when we get
3:24 am
into the third quarter and fourth quarter of this year. because, also, in the latter part of last year, economists were depressed because of what happened with the russians and ukrainians. anna: let me ask about that. if the biggest concern for the european growth environment and the fly in the ointment is the ukraine crisis and what that does to german industrials and the exporters and exports to russia does that mean that when you buy cyclicals, you stay away from carmakers and typical areas? or, not? >> i'm heavily invested in retail. they will be beneficiaries. they are exposed to russia. it is in account with the evaluations. whether it is currency moves because they are exporters falling metal prices falling
3:25 am
interest rates for financing costs, at the end of the day, these companies are banks on wheels and make huge returns from financial service businesses. the financial service business is what analyst do not factor in that much. now, you get the gdp upgrades coming through and you have a situation in germany where you get real wage rewards coming through. it drives german car sales. there are lots of things in that sector. look at western european car sales. european car sales have been laggards. we have seen a surge in car sales in china and that is continuing. we have seen a surge in u.s. car sales. it was week last month because of weather. -- weak last month because of weather. mark: the laggards are banks,
3:26 am
oil, and utilities. why is that? >> because of all the gdp appraisals. in the last few weeks all of the big investment banks have upgraded forecast to western europe. now, the ecb has, as well. it is up from 1% a couple of months ago. the banks are the biggest beneficiary of the gdp growth. anna: do you like the spanish banks? >> only the domestic banks. not the international banks. they had their day in the past. they have big exposure to western -- latin america. i want the growing european market. anna: thank you very much. great to get your insight this morning. kevin, the manager of european equities. mark: checking the situation in
3:27 am
ferguson, missouri where two police officers have been shot. they are conscious at the hospital. stay with us. can the loan help the economy?
3:28 am
3:29 am
3:30 am
♪ mark: you are watching countdown. time for the foreign exchange check. another central rate has cut interest rates. the south korean central bank has cut rates. this is the last four days. the central bank in south korea unexpectedly, cut rates to a record low of 1.75%. south korea is the 22nd country to cut interest rates this year. thailand cut rates yesterday.
3:31 am
only two of 17 forecast fore -- economists forecasted the rate cut. the other issue is the yuan the weakest against the dollar since 2013. look at it against its 11 major peers. it is falling against them. the things that are performing worse are the -- the philippine peso has risen. south korea is the 22nd country to cut interest rates this year. it is an incredible year. anna: let's take a look at the top stories on bloomberg. the swiss national bank stops
3:32 am
counting the frank. electronic trading may cause shocks. they switched off electronic trading platforms as quickly as possible, staffing liquidity and adding volatility. -- sapping liquidity and adding volatility. that is according to a report by the bank of england. a large part of the increase since 2008 were trends that began before the recession, and aging -- an aging workforce and female-self-employment. it would allow the banks to wait longer before interest rates rise. according to a report by the royal institution, the capital is the only region where prices fell last month. the change is due to a decline
3:33 am
in the number of houses coming to the market for sale in most parts of the u.k.. mark: the imf has approved a loan program for the ukraine to help the former soviet republic to avoid default. christine lagarde outlined the plan. >> the plan is to disperse 10 billion -- $10 billion worth of financing during the first year. it should happen, of course, in the course of successive reviews during the one-year period. the ukraine has satisfied all the prior actions that were expected and required of it in order to start running the program. mark: the package is a needed lifeline for an economy struggling. for more, let's go to tony in moscow.
3:34 am
how badly does the ukraine need the money? tony: very badly. to have it hanging on for a long time for the aid. -- they have been hanging on a long time for the aid. the government has said that, on its reckoning, it could shrink by 11.9% this year. the currency has taken a pummeling for a long time and reached a record low last month before the central bank raised interest rates to 30%, the world highest. the reserves are down before the imf approved the package. they will use money for budget spending and reserves. it includes austerity measures raising energy prices for households, and a package for government and state enterprises. mark: does this preempt a bigger package?
3:35 am
tony: yes. it expects the overall assistance to be $40 billion, including loans from other organizations and $15 billion that the ukraine hopes to make in negotiations with bondholders on the debts. that will now take place. the government hopes to reach an agreement with bondholders. mark: meanwhile, the fighting continues in the east of the country. how would you describe the truce reached in minsk? it is fragile, about as good as we can say. tony: yes, that is the word everyone relies on. certainly, the level of fighting has decreased markedly compared to what it was before the truce. each side accuses the other of breaching the truce routinely.
3:36 am
while it cannot be said to be absolutely quiet it is better than what it was and people hope that the truce will take full effect. mark: thank you. tony in moscow. anna: let's go to a bloomberg exclusive. francine sat down for an interview. the french president said that greece would be better off with a national currency that is lower than the euro. >> the euro should be -- it is now $1.08. the valuation is too high. it was too high for some exports. airplanes and industrial sectors. now it devalues by 15%.
3:37 am
francine: would greece be better off outside the eurozone? >> can it work for the citizens? probably, with a currency lower than the euro. in a normal situation, they should have competition. to have tourism and a good industry for restoration. -- they have tourism and a good industry for western ration -- restoration. it is their decision. >> what does it mean for the rest of europe? >> nothing. the fluctuation of the euro has nothing to do with the greek situation.
3:38 am
sometimes, the euro goes up and it is up for the last two days even with the greeks. know. -- no. a few years ago, it was different. it was a contagion two great countries. -- to great countries like spain and italy. mark: up next, the bar chart. -- bart chart. stay tuned for that. ♪
3:39 am
3:40 am
3:41 am
mark: welcome back. it is time for the chart. nine is not the magic number for gold. i compiled the chart at 3:00 a.m. gold was trading lower. it has rebounded. it is a long day ahead. if it falls for the ninth consecutive day, it will be the longest losing stretch since 1998. during that period from that little circle there. and has fallen 5%. -- it has fallen 5%. even if it did not decline for a ninth consecutive day, it did decline for eight. the dollar is rallying. why is it rallying?
3:42 am
among the major central banks the fed is out on its own when it comes to tightening monetary policy this year. what i want to do is show the divert is between gold and the strong dollar. this is the year to date chart that i normalized to show the percentage moves. the green line is 100. any level above is a positive and any level below is a negative. gold is below 100. the yellow line is the dollar. it is measured against its major 10 peers. days heading towards a big quarterly advance. -- it is heading towards its biggest quarterly advance since 2008. according to the world's most accurate bullion forecaster, the
3:43 am
only thing that matters for gold is the federal reserve and that spells trouble for prices. he produces the metals outlook at latin america's biggest bank and says that gold will drop for a third year. he expects prices to fall 2.2% this year to $1100 an ounce. today we are at $1164. at ubs who had the second and third most accurate forecasts in our bloomberg rankings they predict it will be lower. goldman sachs forecasts $1000 by the end of 2016.
3:44 am
gold is on track, if it falls, for the longest losing stretch in 17 years. the world's most accurate forecaster forecasts further declines. why nine is not the magic number for gold. anna: let's bring you up to speed with what is happening in china. we have a story breaking on the terminals that says the pboc is telling some banks to cut deposit rates from the maximum. the central bank in china has said to tell some banks to cut deposit rates from the maximum. we will get more details on where the comment is coming from as we go through the morning. the governor is speaking live in china, as you can see there. those are pictures coming to us from china. he is delivering a speech at an annual event where he addresses the media. he says china it's the support
3:45 am
-- china should support medium and small banks. they are likely to remove the deposit rate ceiling another sign of liberalization that is taking place. china should have more details. there are privately-owned banks. a long statement and conversation coming. mark: 7:45. these are the top stories. we are starting with flashing pictures. the police have confirmed two officers have been shot in ferguson the st. louis suburb that interrupted with riots over the fatal shooting of an unarmed black teenager. the developments occurred after the police chief resigned last night. he reached a mutual decision to leave next friday.
3:46 am
he will receive a severance package and health insurance benefits for one year. china's biggest de-commerce company -- e-commerce company snapchat, allows users to send pictures and videos that vanish. the greek prime minister will meet in paris today to discuss reforms. they began talks in brussels yesterday that were intended to unlock bill up funds. those continue today -- bailout funds. those continue today. there remains resistance to the prospect of any additional emergency cash. anna: sticking with the greek theme the finance minister has accused the european central bank of pursuing a policy that is asphyxiating towards the
3:47 am
greek government. the shipping industry has managed to weather the storm. joining us now is the billionaires reporter. the billionaires have weathered the storm. run us through this. give us more perspective on the shipping industry, compared to the greek economy. >> it is one of the two big pillars of the greek economy. you have tourism and the shipping industry. you look at the helenic fleet. we are looking at banking figures. between them, they own vessels. that is at a time when the wider greek economy is in trouble. mark: who are they? >> the richest is john.
3:48 am
the new have george. -- then, you have george. the have of what is the media. -- they have avoided the media. george is colorful. he has a big our collection and ships people over to an island for an art collection party. even he has become more pressurized. he is not say, look at how wealthy i am when his countrymen are struggling. anna: people are at risk of poverty. with that as the backdrop, how popular are the billionaires right now? >> a mixed bag. there is a lot of anger. as an industry, it is a tough one to be an. you look at -- in. you look at the index.
3:49 am
these guys reach the top over a decade. they are hard-working and humble. they spent most of their days looking at shipping rates and being very studious and hard-working. they certainly earned their money. mark: they do not get taxed on money that comes from overseas. is that a problem in a country going through crisis? >> that is the anger. under the constitution, greek shippers do not have to pay any profits. -- any taxes. that is to keep the business in greece. if you own ships, you can move from country to country. it is a difficult issue. the government is being aggressive and are storing to realize that it is a little harder. anna: despite the cover from the constitution and the 1967
3:50 am
agreement not to tax international profits, they have been making moves to increase tax contributions. >> absolutely. they doubled the tax payment from 2014. that was after negotiations and a lot of trouble. the government wanted to trouble it. -- triple it. they doubled the. -- it. anna: 7:50 in london. let's turn our attention to the markets. the euro continues to slide, it seems. we are joined by michael. $1.06 was where we were. briefly. you are probably still in bed. parity. when? >> as soon as next month.
3:51 am
what has struck me about the slide is how sudden it has been. we were at $1.25 and now, we are at $1.05. politicians are cheering from the sidelines. it solves some of your problems. it does not solve all of them. anna: lots of people are saying going into the quantitative easing program starting, will the fx of the program continue to be felt? >> i underestimated it and a lot of people did. nobody expected the ecb to buy bonds with negative yields. that is essentially -- and i think john raised the point -- it is monetary financing. if you are paying the government to hold your bonds, it is monetary policy -- monetary financing.
3:52 am
within the euro area, it eventually gets rubbed out. that is where we are. the decline in the euro is another factor at play and will be happening next week with the federal reserve. mark: yeah. and the flip side of the coin is that the dollar keeps rising. do they take notice of that? >> the have to. the dollar index has risen 40% against a basket of currencies. that has to have an effect on u.s. company earnings. you cannot ignore that. we're not just talking about the euro. we're talking about the yen. we're talking about the yuan. payroll numbers were not good. i do not dispute that. there was no inflation. you look at the negative retail sales for the fourth quarter. we expect retail sales later today to come positive.
3:53 am
weekly jobless claims have started to hold abovee 300,000. anna: carl was with us and pointed out what many have said the u.s. is domestically focused and derives gdp from consumers. do not overestimate the effect of the strong dollar. >> they still have a whopping trade deficit and import more than export. the import oil and oil prices are falling. you cannot underestimate the effect the falling inflation rate will have on the decision-making process of the fed. it was said earlier this week that it is time to start raising rates. he does not have a vote. i do not care what he thinks. this committee is more dovish.
3:54 am
no fisher. they would be misguided if they raise rates to only have to cut them again because they send the dollar too high to o quickly. mark: if you are a u.s. investor in the dax and you translate your winnings into the dollar you are up 20%. it is the best-performing local currency. a big gap, 16%. >> it is. there is a potential for the dax to go higher. mark: you are saying 12,000. >> that was yesterday. what wonde -- 11500. anna: went to the markets start
3:55 am
to focus on the u.k. elections? -- when do the markets start to focus on the u.k. elections? >> i do not think anyone really understood -- there was the one poll that had the nationalists in the lead. this is similar. we are underestimating what we could get in may. that has not been respected -- reflected in the pound. that worries me. mark: the pound falls against the euro. are the factors stronger than what could bring the pound lower? >> i am concerned that we could go back to the 2010 lows. in the aftermath of the horse trading we saw between nick clegg and the democrats, my big concern is the labor coalition. anna: thank you for joining us this morning. mark: jon will be here with the
3:56 am
exclusive interview. stay tuned. -- stay tuned. see you tomorrow. ♪
3:57 am
3:58 am
3:59 am
jonathan: good morning and welcome to "on the move." i'm jonathan ferro in london. moments away from the start of european trading. let's get to your morning brief. a world of easing. south korea's central bank drops its key interest rate in a fight to contain lowflation and stimulate growth. the race to the bottom continues. china stocks jump to a six-week high. the chinese central bank is said to tell some banks in china to cut deposit rates. euro freefall. not quite. the single currency dropped below $1.05 for the first time since january 2013 before
4:00 am
bouncing back to $1.06. dollar weakness is the story this morning. i'm going to bring you that exclusive interview with ewald nowotny later on in the show. have a listen to what he's got to say about negative yields. for now, it is about equities. futures a little bit lower. down by four points. the dax pretty much dead flat. let's get the caroline hyde. caroline: let's check in. 12 seconds into the open and we are looking at stocks to gain a little bit. the ftse up 0.2%. france falling a little bit. the stoxx 600 7.5 year high. that is where we closed yesterday. there is room to go further, so says wayne bowers. he is head of investment ceo of the european element. almost $1 trillion of cash to


info Stream Only

Uploaded by TV Archive on