tv On the Move Bloomberg July 14, 2015 3:00am-4:01am EDT
the gdp data comes out tomorrow. of course, the future is here in london. it is not greece. >> iran and the nuclear deal. the biggest rally that we have seen since 2011. we are opening basically flat and a little lower in france. perhaps the euphoria is dimming. it is not all through, and terms of the parliament. there is a probability that greece will leave the eurozone.
we have the on market and the risk aversion in the 10 year. there are big moves yesterday and we're seeing borrowing costs rising 12% on the tenured that. we're seeing money and i do not think there is a risk aversion. there is a little bit of caution when it comes to borrowing. there is a spike after the deal and it is now trending lower. is it about the united states and fundamentals?
it is up by a quarter of a defense -- a percent. this is the asset you want to look at today. trade is $50.99 right now. it will take time. nevertheless, you know china calling on the demand side of equation and the supply side is ramping up. let's have a look at how that affects stocks this morning. you'll see less thing for the buck. we are seeing a deal in mergers
and acquisitions when it comes to chipmakers. the university in china offers $23 billion and this will be the biggest deal for a chinese company buying a u.s. one. this is a big play for other chipmakers on the move. the numbers are looking rather tasty. sales are up. >> thank you very much. the ftse 100 is down and if you look at the commodity markets, brent falls on the back of the deal with iran.
a deal was said to have been reached on the nuclear program. we're joined by elliott gotkine. if feels like we have been here before. do we have a deal? >> the official expects public announcements in the next couple of hours and this basically means a lifting of sanctions and iran will curtail the nuclear program. there is access to a military site that was shifted to a side deal. they conclude the investigation
of the nuclear work. it seems like anything -- the only thing that could kill it is congress. >> a lot to talk about. the markets are talking about crude. i found it intriguing. give me the implications for the oil market and this deal. the reaction is one of surprise. >> it has been planned for some time. in that sense there is uncertainty there. a deal has been done and it focuses on oil.
the second largest reserves have paid a visit to iran to talk about repaying money that they oh. they talk about the business opportunities when the sanctions have been lifted. however, we have goldman sachs and bank of america talking about boosting exports and it means half a million barrels coming and it could take investors getting ahead of themselves. it will not be flooding on the market. there is a capacity with the saudi's exposing record amounts
of crude and the oil is available and inevitably leads to more supply. that is what investors are planning on right now. >> let's get to the head analyst. >> i will talk about the process of the implementation with this deal and what the implementation is going forward. >> the subjects reveal that we can expect the exports of the volumes and it is produced
rather quickly. the supplies are concerned and iran has been stockpiling. it could be made relatively quickly. it may take some time. there is oil available sitting on ships. >> you look at it and you move the ship. it is unlikely that they are going to have the barrels and it would probably crash the market.
>> i want to talk about 30 billion barrels -- 30 million barrels a day and out pumping the record amount of crude. i look at the bloomberg terminal and where it is right now. >> the target that you are referring to is essentially meaningless. they decided that they are not going to produce that many aerials the day. of course can't behind all of that the objective with the high cost producers. the lowest cost captures and retains market share. i do not believe the policy will
change. >> you look at the u.s. and autumns out. it has not really dropped off at all. do think the effect is being had at the moment? >> the oil production is remarkably resilient and more resilient than most expected. look at it the other way and they decide that they need to cut back and all they will achieve his raising a price which provides a subsidy to the shareholders and produces more lower cost them with thought. i think that the saudi's take time to see what the impact is before deciding what changes
should be made. >> the hardest question is the direction of crude prices going forward, you look at the supply dynamic and you have a story going forward. mark the numbers last week indicate a surplus of oil supply through 2015. moving into 2016, what is striking about the numbers published is that they project a surplus through the first half of 2016. unless something changes and brings the market into balance, it is hard to see how they can
be anything other than a downward pressure. >> what has changed between last year when we traded north of $100 a barrel and 2016. the supply dynamics have not changed. the narrative has. >> we saw the growth and 2016 and oil demand growth has been sluggish. you have iraq and a tidal wave of supplies. demand has been sluggish. >> the final question of the
accord this morning. would they be happy with the deal? >> happy is not the word. with brent between $60 of arrow and $65 of the arrow, we have a new normal that provides something for everybody and lower prices for consumers. it makes a the barrel and i think they will take it in stride in the beginning of december. >> du expected to be more interesting than last one? >> even more interesting.
>> welcome back. it is time to get you with the deal. a statement will be made in vienna. >> the chief of temple 10ton will be replaced. he will remain chairman of the group. facebook shares climbed to a record high. it is the first time that they broke the market cap quickly. we get the first lines out of
he separates his own political future. he may resign after the vote. at the end of the day, a good chunk of his own party is saying that he has a trade the party -- betrayed the party. he could have a government reshuffle. there are a lot of options. important for investors is seeing the measures getting through. it has consequences. there is a new deal with the ecb for the >> the key question is
how quickly aid can be disbursed. >> it is tiny and it got paid. they have a it of money left. when will they get paid for the rest? >> you do not want to offend the samurai. here is what we have a technical problem with financing. is the technical problem a bigger problem? he was talking to reporters and saying that he had an agreement on the goal. none of these have the authority.
it looks like a new deadline. there is a payment to the ecb. never offend a samurai when you get notes in yen. >> i want to get out to you quickly with a simple question. if i am looking at this deal, i am looking at the atm. when will this be out? >> they do not know the answer to the question and it was kept exactly where it is. it will have to be expanded for the banks to reopen and let's
see what he does. we will have to wait until after the reforms get past. i found the issue to be interesting. how will they generate assets? think about how long it took for bp to sell. part of it is for the recapitalization and a big problem is with the deal and the analysts who say that the greg said -- the grexit is still a possibility. >> thank you very much. we are joined by the equity strategist at goldman sachs.
>> i look at the agreement as harsh. the measures would be needed. the measures have been made for a third bill program. >> it is tough notice and quite onerous. >> are we going to be sitting there? is that what we are facing in the next months? >> the parliament will be the one to focus on on wednesday and
we expect it to go through the parliament. there is uncertainty. over the next couple of days, the parliament will have to find some concern. there have been auto bailouts. >> there is another question that we will not get into. a run-up and we will focus on earnings season. >> it has been volatile and a lot of it has been playing a role. you are seeing a macro market and it correlates with the
index. they are tightly correlated and deflation and lack of growth in politics it is correlated and you need to talk to somebody like me. you should get the equity earnings. >> the quarter one was dominated by trade. you talk to the stock pickers now and it is going to be a stock ticker market. >> is dominated by a bit of a selloff.
there are lots of macro concerns. a data has been strong and it holds to economic data. better economic data is in europe. i think the second quarter will be based in this. the oil companies and the mining companies, there could be some risk. >> we will talk about those risks. will the next global recession be made in china? we will talk about it. the dax loses a little.
jonathan: good morning and welcome back told bloomberg tv. i am jonathan ferro. 30 minutes into today's trading. the ftse 100 pulling back a touch. down 0.1%. for a for, germany -- frankfurt, germany added to the benchmark. comes back a little bit. one headline in this market and the commodities market. brent, the news that i rent a world powers are said to have reached a nuclear agreement. -- iran and world powers are said to have reached a nuclear agreement.
brent falls on the news. that is the story to keep an eye on. the stoxx 600 and the movers with caroline hyde. caroline: not much of a change. big reaction with crude talking shipping up 4.5%. biggest gainer. the most since september 2011. people are more picky which contracts it will take now. all about countering the strength of the swiss franc group. that has been a had went. the company providing forecasts of the shipping market. -- and that has been a head wind. managing to weather the storm and keep the profitability and beat estimates up 4.5%. looking at michael page, a hiring company. profits rose 11%. constant foreign currency basis.
factor in the fx had once and profitability. -- headwinds and that's profitability. they said headwinds will up the gross profits. and in fact it will keep hitting for the entire year. fx is front and center for michael page. we are looking at seb/ up by 2.3% this morning. a swedish bank. second-quarter profits fell and not as bad as some expected. lower revenue from lending. the interest is falling. and a one-time charge from a swiss court ruled adjusted on a tax refund a basis. seb falling but not too much. the back of the news of iran.
jonathan: equity moves in london. the shanghai sale for the first time in four days as authorities slowly open the stock market. still suspended from trading down from 36% just yesterday. the stock market has been in the headlines but investors will turn to grow figures. morgan stanley said the next global recession could be made in china. >> china has been the single largest contributor to global growth since of the global financial crisis since 2008. and the stock market freefall last week really had to be corrected by some of the john carney and measures that could government -- george colony and measures that the -- draconian measures that the country is ever taken. >> you describe, there's a
chinese push out there. describe what you mean. ruchir: the view in china despite the massive buildup in debt over the past few years everything is different because of the government controls everything. even the losses investors take will be backstopped because there are much money to do this. if something spins out of the patrol car the government does not entirely control the situation, and questions the beijing court area of a similar concept in the u.s. with the 1990's and the last decade. it appears every time the u.s. would be in trouble the fed would do something until it could not until 7000 -- 2007. in china, the fundamental problem is no other developing countries has taxed on as much debt as china since 2008. betty liu: if it continues, what
are we talking about full-blown recession in china? guest: it is different but in china's case possibly growing at 5% rather than 7% we hear about looking at the other indicators. it could slow down in the next couple of years. historically, the u.s. economy has mattered the most. every single major global recession the last 50 years has been caused by the u.s. company -- economist on the link. the next couple of years, the next global recession will be made in china just like many of the things in the world today. jonathan: the view from stanley morgan. let's get a view on equities. sharon, you listen to the slow down in china. i want to know what it means for your and as an invest that
europe and -- europe and as an investor, for me. as we make this pivot toward a more mature economy, consumer-based economy, is that still the trade? guest: that is the view. i would not say there's no risk. we love consumer expose companies because we think china is moving that way. more consumption. there are dangers in there. a lot of turbulence and it might hit like luxury goods company and the short term. over the long-term, still like the view of more of a shift with patterns and away from infrastructure investing. indeed, it has worked. you have seen the em industrially expose companies take even more both of commodity prices and china growth. jonathan: semantically, it makes
sense from the beginning to the end. it is the middle i do not understand. i wonder and ask the question sharon whether consumer confidence will take a hit as the pivot from commodity fueled export base that china was to some extent and still is to the mature economy? can they make that without a hiccup along the way? sharon bell: that is the question. it is still underlying question and a lot of debt overall. the equity market as well. european companies which are the ones we like. we like the ones with consumer exposure and dislike with more infrastructure commodities holger. we would not be recommending europe with a lot a china exposure. we like generally more european exposure after the moment
particularly over the next few days. i think as i mentioned before the qt data was relatively strong. more domestic exposure in europe and would like more periphery to benefit from this improvement and growth. jonathan: another headline out of china. china is said to add one trillion yuan debt. more measures out of china and not a big surprise. to hear in europe where we have the stimulus and lower commodity prices, another big question for your maybe more so for the u.s. is the story of lower commodity prices whether a commodity story or slow down in china. we have not had this big boost. this consumption, why is that? sharon bell: if you have a strong price much weaker consumer.
i do thing in europe, a little bit of improvement in the consumer over the past couple of quarters. i think that is helpful. you are starting to see a lot of companies in a fit -- benefit and wage improvement and employment improvement. overall, things are getting a little better for the consumer. perhaps, it takes a little while. most of our economists love to look at how long it takes cuts in oil prices to floor month through an impact the consumer -- two come through that impact the consumer a usually it takes a month or so. q3, q4 of last year. it may be that taking an impact as well. jonathan: have we seen the data to extend already? consumers feeling good on the ground. the data, is in central already?
sharon bell: not substantially. we have seen a retail sales and u.s. pick up a little bit. you may not see some of it through. q2 earnings season particularly in the u.s. next lie in the first quarter, you do not really see whether they do in the second quarter. also, wage increasing for many and that may upset some. quite a crucial equation for the u.s. and europe work clearly falling commodity prices should be great for the economy particularly europe with affects and consumer and does not really produce oil. even the case with the u.s., it ought to benefit some of the lower prices for i think it has been a while. jonathan: we will take a look. the final question for you, benefits for the consumer is one debates.
but if it's to the equity market perhaps another. -- benefits to the equity mark perhaps another. is it plus, plus? sharon bell: i think it is a plus for the equity market. quite a large chunk of index with hundreds exposed. even the dax can be exposed. a supplier to those companies. a capital goods supplier and of equipment. they could all be impacted indirectly. having said that, it would be a benefit. it will have the consumer ultimately even though i agree will not seen it properly through. excuse inflation lower than what it would be. -- it keeps inflation lower than what it would be. that is capable policy easier
it is time to get you up to speed with bloomberg's top stories. i ran it world powers signing an story to deal -- i ran and world powers -- iran and world powers signing a historic deal. -- stepping down as the investment trust after trading suspended. he will be replaced on october 1. mobius will be chairman. greek prime minister alexis tsipras has returned home to instability within his coalition. two factions said they will not support the deal. tsipras gave vent to european -- gave into european concessions. ryan chilcote. over to you.
ryan: spiro's spent two decades running this country's borrowing program and gives us insight of what lies ahead. see why. you are a fascinating man. the question everybody wants answered it tomorrow, and the prime minister -- canada prime minister get this program and all of the austerity measures through? guest: the fact before you love to brussels, all the parties agreed to go ahead and sign an agreement. sign the agreement tomorrow night. ryan: does it mean it is implemented? guest: that is where have my doubts. whether it will be implemented fully. the program is tough and almost punishing and our behavior the
previous years and it is a more toward raising taxes and revenue instead of -- i have to say part of the measures is fair to what the goldman sachs reforms and organization. more important than revenue measures. that will allow the greek economy to somehow [indiscernible] give ability to mobilize what i think. and the public sector and focus more than private. ryan: if the prime minister does not need the entirety of his party in coalition to push these measures through does this mutiny, the people against a within his own party say they will not support him does it matter? spyros papanicolaou: it doesn't
matter. the mutiny is a harsh word. will not be up to govern without the support. what kind of support? support of allowing him to govern as a minority or join with general specific peoples or whatever national -- i do not know. national unity. and the party would take part and in that case of being able to implement most of these measures easier. it will depend on whether the measures are what kind of humanitarian aid to receive? that is important to alleviate the suffering of a lot of people of the past years. and avoid going under the fiscal pain of the greek society. it has been hard enough.
creates a and at the same time -- creates humanitarian aid and at the same time more general support of the measures. and then able to pass the measures. and it is actually false. ryan: week three of capital controls. banks are still close. where does the deal struck yesterday leave the banks? spyros papanicolaou: may be the end of the week they will remain closed. ride will they reopen next week -- ryan: will they reopen next week? spyros papanicolaou: no. how fast the seasons, give them the money to open and recapitalize. talking about 55 billion euros part of the bail out treaty. ryan: is 25 billion euros
enough? spyros papanicolaou: no, i do not know. ryan: it depends on how the greek people react. spyros papanicolaou: it depends on the greek people. ryan: to return all of the -- has been set aside for now. spyros papanicolaou: to me, it does not make sense. bringing it back would be catastrophic. even the [indiscernible] and the politicians in general. the devaluation and continuing [indiscernible] it would be disaster, in my opinion. wind bank could it be excluded -- ryan: could it be excluded? spyros papanicolaou: i do not know. i cannot say whether i hope it is excluded but i cannot guarantee.
ryan: thank you for your insight. maybe it is well, back. we do not know. a lot of uncertainty even with the deal. -- maybe it will come back. jonathan: whether they can implement over the coming years. ryan chilcote. thank you. coming up -- a busy day and a busy week. tomorrow, janet yellen speaks. and gross data out of china overnight and wrap it up and what you need to look out for after the break. ♪
jonathan: welcome back to bloomberg tv. i am jonathan ferro. it is never over. harris what's coming up. we will got inflation figures out of the u.k. area -- here is what is coming up. -- we will get inflation figures out of the u.k. and u.s. retail sales. earnings from banks and the u.s. jpmorgan and wells fargo reports an hour later. tomorrow is even visit your. -- is even busier. china gdp area -- china gdp. janet yellen.
on thursday, ecb rate to decisions. busy, busy, busy. the days ahead. after the show is "the pulse." manus: greece, where do we go? wrangling and dealmaking and we know the opposition party is ready to stand up against alexis tsipras is all about implementation. can he survive? is he a genius? he is the first one to -- he owns the reforms and austerity and has the mandate any small window of opportunity or is see operant -- orderly a battered and broken man and capitulated and every single turn? jonathan: you look at comments from the ecb this morning talking about whether it would've been a better idea or better solution for a grexit.
a lot of high-ranking officials still doubting to some degree this deal. and a rather cheeky point on the samurai point. when it comes down to it, when the country is run out of money and they pay, a tiny figure but they pay the private investors. manus: technically, they have not defaulted. how it happens and sort of up to speculation at the moment. we will have a guest who will join us and the man who advocated there should be a grexit. and citigroup will be with us area and also into by. -- in dubai to get his take on the you run a deal. jonathan: that's it for me. the ftse 100 creeping back up.