tv Countdown Bloomberg August 4, 2015 1:00am-3:01am EDT
it is just 6:00 a.m. in london. guy: commodity prices and what has been happening to the rba. dropping a critical line. it is focused on commodity adjustment and how it is feeding back into the aussie. anna: just a few months ago, the rba talked about needing further adjustments. the currency is down by 35%. now, we are seeing a little bit of adjusting. guy: this is the aussie dollar versus the dollar. you can see a nice little spike happening here. a little bit of context is required. let me show you some different time frames. this is the one year. to give you a sense of the declined we have been seeing. and the five-year. anna: it is a hurdle for any kind of further rate cuts. let's talk about this in a little bit more detail. the bank of australia has cut
the key interest rates. bloomberg juliet is standing by with an update in hong kong. tell us the latest. juliet: a nice surprise today from rba. rates are on hold. where carefully watching the language in the upcoming statements. bloomberg research indicates there could be a quarter of a percent had this year or next year. perhaps the biggest take away from the statement apart from the adjustment is that the governor says the australian economy is still growing but the rate of growth is below the long-term average. the rba is saying overall, the economy will be operating with a fair capacity for some time. they also alluded to the property management. also, indicating that those
commodity prices are hurting australia's chances of trade. guy: talk to us about what the view is on the aussie dollar. previously, there have been discussions about surrounding dust surrounding in need for an adjustment. are they comfortable where we are? juliet: the governor would like the aussie dollar to be weaker than where it is. he has been talking it down a lot. it is still adjusting to the significant declines we have seen in key commodity prices. the rba will be looking at the economy moving forward. hedging that there could be a potential cut. the aussie dollar did spike on these great decisions. it has had a significant decline. down about 35% from 2011 peaks. the governor and the rba hoping
that the aussie dollar will be weaker for longer because they need a week aussie dollar with australia's exports driving the economy particularly into china. the governor likes a week aussie dollar. we will see if he can continue to talk it down further. anna: thank you. guy: market movements in asia are tied in with commodities in china. this just does not seem to want to stop at this stage. >> you can see gold and copper continuing to decline today. i'm looking at the bloomberg commodity index. it is down about 13% this year to its lowest level since 2002. trading near that today. moving up slightly higher but overall we are seeing that declined significantly over the last year. this is a chart for this year alone. but the -- what i want to show
you is where the biggest drag it. in the last five days, it is brent crude that has been dragging this index down. crude oil following nickel as well. commodities account for roughly a third of the bloomberg commodity index which is twice as much as industrial metals. that brings me on to copper. heading for a bear market. you can see it is down again today. copper prices have fallen to their lowest levels in 13 years. a lot of this has big concerns over slowdown in china. china uses 40% of the world's copper. take a look at gold. down again today. near a five-year low. it dropped near that back in july. yesterday, we saw it fall again after goldman sachs said it may fall below a thousand dollars an ounce. we are looking at 1085 and
moving on to crude, moving higher a little bit today but it is in a bear market and it has dropped about 28% since its peak. guy: thank you. anna: chinese stocks climbed amid low turnover after authorities stepped up measures. measures. let's get over to david. what are the chinese regulators of two again today? david: the latest one today that is worth noting and this came out a few hours ago, the biggest brokerage pacific securities are saying that they are temporarily stopping shortselling activities at this point. they are offering those services while they implement these new roles. the big story has been the crackdown.
on suspicious trading accounts. i am hearing from a lot of my contacts on the chinese mainland that it does not necessarily mean you're doing something illegal it just means no one wants to stand out at this point and time. what we are seeing right now, is a rally towards the close of the shanghai composite and it is similar to what we are seeing right now. we are up 1.6%. things will get more interesting in the last hour of trade. we will continue to follow this very closely. the other market story today, you're looking at declines across southeast asia india is the last one to open. the nikkei is down as well. reading the spillover effect. you were just talking about this , copper is near a bear market. if you go back to 2010, we are down 43%. the usual suspects. the miners in ostrow you. oil refineries.
peripheral industries that support the commodities market. the big heavy equipment makers in japan. the flip side to that is that shipping stocks and airlines. most airline stocks in asia are on their way up. because of cheap oil. that is where we are for the moment. we are down overall for a second straight day. guy: great work. anna: the first person to stand trial for manipulating libel has been sentenced to 14 years in prison. the former ubs trader tom hayes was found guilty of conspiracy by a unanimous jury. suzy joins us with more details on this story. a fascinating one. a nine week trial. what is the significance of this? susie: this is a calamitous moment for the industry.
this is an example of that happening. libor has become the byword for a lot of the bad behavior and corruption that we have seen a merge and that was part of the industry before the crisis. tom hayes is the face of libor. he has a hefty sentence. this is significant and how the industry is changing. guy: a 14 year perspective. that was it expected? >> no. it is one of the longer sentences. he will serve probably half of it. or like seven years. still seven years is a long time. anna: some people are suggesting that the message is -- just because everyone is doing something.
you are referencing a previous trial. >> tom hayes was arrested in 2012. they were the first bank to see if sanctions should be imposed. he was arrested and wanted to avoid being sent to the u.s. within six months, here in a on the deal and decided he wanted to sit trial and put his fate in the hands of 12 individuals and he would be the political football that he saw himself as. you have to think, would you been better to take the deal. guy: thank you very much. that brings us to our twitter question of the day. is it the system or are individuals to blame? tweet us @annaedwardsnews.
anna: coming up on countdown, it is 10 minutes past 6:00, but after the break, talking about climate change. president obama remains focused on science. and he receives fire from his critics. president obama: the kinds of criticism you will hear our excuses for in action. they are not even good business sense. they underestimate american business. and american ingenuity. ♪
britain's biggest casualty of the financial crisis. anna: u.s. federal prosecutors are investigating billions of dollars of trade made by deutsche bank as recently as this year. it suggested that the justice department probe focus on nearer trade which may have allowed russian climate that client to move funds -- russian clients to move funds out of the country without proper authority. guy: the president that president obama said the new epa regulations would reduce emissions and that is the single was important step of the country has taken to address climate change. president obama: carbon emission from our power plants will be 32% lower than it was a decade ago. a nerdier way to say that is that we will be keeping 870 million tons of carbon pollution out of our atmosphere. anna: let's get more on
president obama's regulations to combat client change. nathaniel is standing by in hong kong. what are the broad strokes of the plan? nathaniel: the plan has been in place under way for quite some time. it is a piece of regulation we have known about and got initial rulings on in 2014. it is a way to limit emissions from various types of power generation plants. it is a way to limit things that are more point sources of pollution, not just carbon. it includes coal. we are also seeing an increase in the impetus for renewable energy generation. it is that a baseline of regulating coal firepower in particular that now we are seeing a little more emphasis on renewable generation. guy: if i am a power generator in the united states or i own
shares in a power generator, what does that mean for me? nathaniel: for a lot of institutional investors and asset owners and operators, most of this behavior was essentially priced in already. we have known about the regulation for some time. you may have a legal stake in preventing it from happening. you probably have known that coal firepower will be impaired or significantly made more expensive. love known for a long time that natural gas is coming down in price and is abundant. it has displaced coal at the top of the total generation mix for power in the united states. you are also looking at renewable energy. the big change that we have seen in this final ruling is that the further impetus on renewable energy might have an impairing affect on gas versus go cold -- worse is coal. renewable energy would force out
natural gas. in the near term term -- there is a tailwind behind desk for it to become a larger percentage of the generation mix. anna: what about the international context. where does that leave the united states in relation to other parts of the world? nathaniel: it is fun to explore that. not quite a year ago u.s. and china announced a bilateral agreement to do something about emissions in their own countries and about air quality in their own countries. it is not an international agreement per se but because it concerns the two largest power generators in the world it has a -- an impact. i think that there is a nonzero chance that it creates opportunity for some kind of agreement amongst other countries but the main thing to emphasize is that it puts some pressure rhetorical or optical
pressure on two countries that are also wealthy and well developed. and have an opportunity to make some transitions in the energy sector and are not doing it at the moment. we need to watch closely and see what happens. europe has been underway for a very long time. china has now announced along side the united states. let's see what happens in the other rich countries of the world. guy: we will leave it there. great updates. thank you. anna: let's carry on this conversation. let's get another perspective on it. travis is an analyst on power. you heard there the plan being set out. it seems like the impact on natural gas in particular could be complex.
is it clean energy or not as defined by the u.s. regulation? travis: it does seem to pave the way for carbon pricing in the u.s. that can have a big impact on power generation because you are penalizing the fuels that are going in. carbon may not be enough to change it. that is what we are seeing in europe. in the u.s., that is much closer. carbon could make a big difference. in some ways, i would disagree with your correspondent in the sense that it will have an impact. it continuously will make gas more affordable in power generation then coal is. guy: talk to me about the wider context in politics surrounding this. does it become reality? what are the litigation issues surrounding it? >> obama had climate as one of
the big things he wanted to do at the very beginning of his presidency that he sacrificed it for health care. he is coming back to it. he is not trying to do it through legislative efforts, and he is trying to do it through the epa because he knows he could not get it through congress. if you are going through the epa, you're leaving it up for litigation and there will be loads of it. there always is. there are also issues about, when you go through the epa, the individual states have to enforce it. many states have come out and said they do not want to enforce it. anna: you mentioned obamacare as a big battle that president obama has already presided over. will this be as divisive as obamacare? >> i think it could be divisive. you will have coal states in particular dealing quite aggrieved by this. there are things in the rules
that are trying to make it easier for those dates. -- for those states. you are quite a long time to get your house in order. guy: how much of this is pre-positioning the united states in advance for what will happen in paris later on this year? the u.s. and china are the big swing factor when it comes to those negotiations. >> the big thing in paris will be individual countries coming and saying this is what we are doing domestically. this gives them something to say -- we have these national targets. this is how we're going to meet the targets and we have a strong piece of legislation in place. he has already had the agreement with china but i think this is more for the australia's, the candidates, which are rich countries but falling behind in this area. anna: this also will impact the
next democratic candidate. >> hillary clinton has 30 come out on this. -- has already come out on this. anna: thank you very much. guy: greek investors spent their first trading opportunity in five weeks yesterday, selling. the stock exchange closed down 16%. it's worst decline in at least 28 years. creditors continue in athens as the august 30 deadline approaches. hans nichols is in athens. can you put yesterday in context and tell us where the leaves us? hans: traders are bracing for their second day and they do not know if it will get worse before it gets better. this is a hobbled exchange. it is not operating with complete fluidity. here is what one trader said.
without the x -- the restrictions, the drop would have been steeper. there are a lot of orders in the systems. the systems are not executable. it is you an indication that today we could see further drops. we did see a 11 companies and that 60 member fall more than 29%, more than half of them were financial services. the banks all hit that 30% trigger quickly. it was not all bad. you were a few bright spots. i mean stocks that were just down a little bit. aegean air. it had a lot of middle east exposure. it ended the day in just slightly negative territory. a were close to the breakthrough. one thing we heard over and over was that you will need to have a couple more days to get accurate pricing on the athens exchange. we did not see the overall markets in europe affected by what happened here because it makes just a small percentage of
the overall aggregate. another part of town, negotiations continue. the continue with the deadline potentially tomorrow to have at least the first round of talks completed between creditors and athens. we have some deadlines coming up. they have a payment due on august the 20th to the european central bank. 3.2 billion euros. it looks like august 18 may be more firm deadline on the front and from the greek side because they want to head out of town. guy: thank you so much. they are calling it the quartet. they are not negotiating with it institutions. it sounds nicer. anna: formally known as the troika. hans: four courses that carry a chariot. that's four courses -- four courses. just mentioned that this sits
atop the brandenburg gate. guy: just to improve german and greek relations a little bit more. anna: thank you hans. to bring you up to speed. rbs, the u.k. government is selling a 2 billion pounds stake in rbs. now, it seems like they are going to sell that. that will bring their share down to 73%. it seems the treasury is ok with that. they make a profit on the whole. guy: we can make a little bit of a loss on that. anna: the report out of rothschild. guy: what else will we talk about later in the show?
guy: it is 6:30 a.m. in london. 7:30 a.m. in brussels. that means it is 7:30 a.m. at bmw headquarters. anna: second quarter numbers coming from bmw. concerning their four your forecast. what are the takeaways. revenue is just ahead of estimates at 23.9 billion before textured looking broadly in line, pretax profit coming in at 2.8 5 billion. ahead of the estimates. guy: i think the theme we are talking about is china.
china has had a meaningful impact already on bmw. looking at the share price turkey this is the one your chart. it shows you the kind of -- what has been going on. a ramp up in the share price. the bmw company beneficiaries. china is stumbling. anna: bmw was one of the first in the china story. warning about the slow down. in january, that is when we started here about them of the negative taking place there. we have heard it from other carmakers since then. they were ahead of the pack. late july, they were talking about how their sales were going to drop in 2015 in china for the first time since 1998. it was something they were very early on. guy: i want to mention this. the indian central bank just put rates on hold.
the currency is reacting. it will be interesting to see how it feeds into this wider story. what is happening with the carmakers in china. everyone was seeking exposure to china. and now we have the china slowdown. the airlines have been one of the bigger beneficiaries come up carmakers not so much. anna: the former ubs trader tom hayes has stood trial and been sentenced to 14 years in prison after being found guilty of conspiracy to rick the benchmark rates. -- two rig -- to rig the benchmark rates. guy: puerto rico -- marking an escalation in the country's fiscal crisis. they make a payment of less than
$1 million. this is america's greece. anna: the lowest price since the company's ipo in november 2013. that drops twitter below the market value of $20 billion. the company warned last week it will be a while before it stems the slow down. guy: this is tied in what is happening in the commodities. the commodity route is not showing any signs of abating. >> i'm looking at our commodities dashboard. it is rebounding ever so slightly today. brent crude is in a bear market. it has dropped about 28% since its may peak and it is still trading below $50 a barrel. look at gold as well, trading near a five-year low. it is still declining.
investors are bearish on credit -- on these precious metals. we have goldman sachs say yesterday that gold may fall below a thousand dollars an ounce. at the moment, we are looking at $1084. analysts surveyed by bloomberg said prices would drop to $984 an ounce before january. that would be the lowest since 2009. gold is on track for a third annual decline. that would be the longest slump since 1998. i just talked to you about copper. that is declining for a fourth day. falling to its lowest level in 13 years. all of these commodities dropping for different reasons, with oil it is about oversupply in the market. with gold, it is about a stronger dollar and the prospect of the fed raising rates. it is about investors -- gold is falling out of favor with the
investors. prices dropped all through the greek crisis and the selloff with chinese equities. with copper, a lot of this is regarding concern over china because china uses 40% of the world's copper. anna: thank you very much. 6:05 a.m. in london. guy: looking to india again. this is one of the central banks that most people really respect. talking about the fact that due to inflation, the outlook for india's growth is improving. the liquidity conditions have been easy in june and july. interest rates less on hold by the r.b.i.. the r.b.i., and the rba, and the rbs. anna: this is getting very confusing. let's get some clarity. with our guest. allen higgins. allen, great to have you on the program.
we are talking about all things commodity and china related. that is one thread that is running through many of our stories. where do you stand on the commodity space right now? brent going down below $50. alan: modded are very difficult to get right. looking at oil. i can think of two managers that predicted this correctly. they tend to revert if they get too high or too low. it is not an area where you want to take any significant investments. investment equities and bonds and oil factor is hard to get away from. if you take a hint of from chevron's results, they managed to increase dividends over 25 years. they were resilient to many swings. that is how we look at it. rather than putting oil as a
commodity. anna: that will then be the sacrifice. despite everything, they still talk about how -- one of the italians suggested, that they are fiercely committed to the dividend. alan: there are certain companies that appear stronger on the balance sheet. the ability to issue very cheap bonds keep from their perspective. the us yields are so low. i think that is what we hear from the majors. guy: why aren't we seeing more m&a. the roll up's are not happening. in the oil sector or the mining sector. i would've thought we would see much more. is that because prices are expected to the lower? alan: it would be nice of them
to go countercyclical. the commodity companies unfortunately by their nature tend to do a lot of m&a. anna: shell and bg. alan: it is countercyclical. they have been told that bp is a great british company. that was one. exxon is the company with the firepower. anna: talk to me at about the relationship between what is happening in china and what is happening in commodities. we are trying to work out what is driving the chinese market at the moment. alan: stock market and economy are quite different. it seems to be going at the moment. last year, asus -- a huge surge in a shares. the economy has been week for years. -- weak for years.
the economy is weakening but that is not a new story. commodity prices have been week for some time. that is a discounted story. whereas, china asia can quite conceivably go up 30% despite their economy. it is a different market. i would add that they are very overvalued. bloomberg has an index. regarding a shares. it is at a 40% premium. we were in the a shares. in 2013, the used to train at a discount. anna: allen, thank you very much. guy: a series of hand of the expected. the voters go to the polls later this year. let us find out what we can
expect. maria is standing by. this is an election year. maria: what is funny is that this is a budget for 2016 by the time we get to 2016 he may not even be in office. we are expecting to see the government to use this as an opportunity -- if you vote for me, this is what you're going to get. pensions are going to go up. civil servants will get a 1% pay hike. the first one in five years. the money that goes towards social spending is also going to increase by almost four present during this idea that the government is trying to play up the social recovery that is working for everyone because that is the challenge for this later. he needs to convince people before the end of the year that this recovery that looks great on people actually works for people in everyday life. the economic side, we know the government expected the economy to grow the .3% this year and 2%
next year. this year, 2.8%. we are not expecting any changes on that front. if anything, the government would say we are very committed to hitting those targets. it is more about a political budget than anything else. anna: more on the political side, he has been shaking things up in the last 24 hours. what is madrid's response? maria: when he did that last night, he did that on live tell -- television. everyone was watching. he confirmed that date. september 27. catalonia says this is a yes or no vote on independence. madrid says this is just a regional election. what confrontation between madrid and barcelona. this is not new. what makes the selection of it
of a game changer is that all of the pro-independent will be running as one. at the same time, the regional president has said he will go with the big majority. he will be prepared to call for independence unilaterally which is never been done before. it is a 50-50 vote. there are still many question marks. catalonia has said they can separate from spain and madrid disagrees. there are a lot of question marks going into that september vote. anna: maria, thank you very much. guy: weighing in on all of the top stories including the twitter question. we have been talking about what has been happening with libor of late. is it the system or individuals that are to blame for the markets abuse?
guy: it is 6:46 a.m. in london. welcome to the show. anna: former ubs tom hayes is the first person to stand trial for manipulating libor and has been sentenced to 14 years in prison after being found guilty of conspiracy to rig the benchmark rates. the jury unanimously found him guilty. the sentence is among the longest for financial crimes in u.k.. guy: the u.k. government is selling a stake -- the world's
largest bank bailout. they will cut taxpayer holdings to about 73%. seven years after it became britain's biggest casualty of the financial crisis. anna: u.s. federal prosecutors are invest -- investigating the lancet dollars of trade with deutsche bank on behalf of of russian investors. it suggested that the justice department probe focus on your trade which may have allowed rushing client to move funds out of the country without properly alerting authorities. guy: quick check in on what is happening with the market story this morning. the big move this morning is the aussie dollar. this at the rba drops its more aggressive language relating to the aussie on the downside. over the last few meetings they talked about further false pickup. the language softening a little bit but as you can see, we seem to be making even further
headway over the last few minutes. it continues despite. i need to show you some context here. that chart looks very impressive. just to put that in context that is the longer-term chart. anna: down 35% since a peak in 2011. which is what the rba has an calling for. the second quarter earnings from bmw. second quarter profit came in line with expectations. chad thomas is in berlin. what are your initial takeaways from the bmw results this morning? chat: those results -- chad: the results are a mixed bag. they are in line with expectations. a 3% drop. you can attribute that slight drop to a couple of factors. the first and foremost is china bmw -- the chinese market is
normalizing. when they say that, they do not mean that positively. china had been a great growth market for luxury german carmakers in the chinese market is slowing in the profitability is not what it used to be. there is the china affect. and i might -- bmw has seen increased competition from its archrival mercedes-benz. they have a lot of new models out there. that is impacting bmw as well in terms of increased competition. the one thing that investors will be happy about today, bmw did stick with all of their targets for the full year. while there is a slight drop in second quarter profits, they are saying they are still on track to meet their full year target. guy: number set of the uslife may. that looks like -- numbers out of the u.s. less night. chad: the u.s. market continues to do well. analysts are saying they expect
this surging market there to continue through next year as well. the u.s. economy is doing pretty well. gas prices are low. that is getting people outline new vehicles. interestingly, i read this morning, if you think the suv craze is going away, it will not go away at least in the u.s. market. suvs and crossovers, they account now for 30% of sales in the u.s. market. those manufacturers, that is something the germans have done a lot of in terms of bringing out new suvs. those manufacturers that have the apples for that segment of the market will continue to do well. anna: thank you very much, chad thomas. guy: let's go from driving to drinking. gin and tonic. anna: in that order. guy: the world's most popular
drink. our chief food critic went to try and find the best. >> on the street in south london, i brought you appear because they have excellent gin. it is actually the atomic they do not like. they have a good selection of topics to experiment with. >> what you look for engine? -- in gin? >> when i am trying to help people find gin that they would like, i: in on one of those four. for me, i tried to focus on a good tonic. it is a shame to drown the good
gin and tonic. i like to drink it will most me. i encourage people to do that because you get to know quality gin. >> why you like this bar? >> i like the grandeur and the drama of the place. it is black and gold. it is wonderful to bring someone here for the first time. this is another one that they just found. it is made in london. it is 45% -- so it is pretty punchy alcohol wise. it does a good job of not hitting you over the head with how alcoholic it is. i give it a nine. it would be happy to come here as often as i could. >> here we are in london.
>> we like this place because soho is the historic heartland of gin. we like coming to soho to drinking. it feels right to me. it is a completely different mood and night out here. it is a good pitstop when you're out. it is very central and relax. the gin is light. you can try several. see which one you like. and carry on with the rest of the evening. there are 260 gin's here because -- i would give it an eight. guy: nice day in the office. anna: tough job. you can get gin and tonic flavored ice cream. guy: people are increasingly
doing popsicles and all kinds of things. anna: not for the kids. let's continue our conversation. from gin and tonics, we need to segue into a conversation about the russian ruble. somewhere in the middle is locked up. >> an interesting story for my colleagues this morning looking at how august traditionally is a terrible month for the ruble. consistently in the last eight years, august -- the ruble has done poorly. this year does not bode well when you think about how the oil price influences the ruble. we are subprime $50. guy: is that because people are on holiday? >> i have not been able to tell if it is coincidence or seasonality. the story looks back to 1990
eight. 10 years later in august, we had the war in georgia. and here we are now. anna: take us onto another story. hackers force carmakers to make changes. vehicles are now becoming targets for cyber criminals. the more high tech your car gets, the more at risk you are for a cyber attack. >> it is a reality check as to how vulnerable your car is. the scary thing is that it is much easier to do this than you might think. how to do it is really little more than a youtube video away. examples of people using the remote key fobs you can intercept that signal pretty easily duplicated, and drive away with your vehicle. guy: for any other car. we're not crime specific. anna: we will get to toyota, is the car industry interesting to you right now? >> no one will still my card.
i have a 1974 ford capri. anna: that sounds like a classic. >> not with i.t. anyway. the great barometers of the world economy, aren't they? we do not have enemy positions. it is interesting to look at bmw, and the chinese issue. and the strong demand in europe. anna: china normalizing. that is the bigger picture. guy: that makes it sound good. >> do you think high-tech cars is good or bad for the auto industry? >> i think it would be good because people like new. guy: you are our car company. how do you add value? via electronics, almost rightly yes. >> this is why the german carmakers were buying the nokia
guy: commodity crash. oil slides and copper heads for a bear market. anna: the rba fights rates as they are not adjusting to commodity prices. >> government selling a 2 billion pound steak. set to receive the world's largest bank bailout. looking to countdown. -- welcome to "countdown." anna: we are getting breaking
news from toyota this morning. they are raising their full-year sales forecast to ¥27.8 trillion. upgrading their full-year sales forecast. that is the forward-looking path. they are cutting their global sales target from 10.12 to 10.15 units. they are bringing down the volume forecast but raising the sales forecast. in terms of what they already produced, the first-quarter operating profit at ¥756 billion. a low estimate on the back of the operating profit number. guy: everything has a chinese theme related to it. you see that writ large through the commodity story and what is happening with the car sector. and the aussie dollar has
springs this morning on the back of the fact that they toned the language down a little bit. my sense is that the australians and glenn stevens are still very months -- very much biased. anna: we did get a quote from one economist at merrill lynch who said that the hurdle for another cut is a high one. interesting moves. we have seen a 35% fall in the australian dollar since 2011. we are getting a bit of news through rbs this morning. we've heard we would to the u.k. government selling part of its stake. guy: what a great steak it is -- stake it is. 330 pence versus 376 pence on
the morning close. just to compare that -- anna: just to compare that the breakeven would have been 407 pence. guy: definitely buy high and sell cheap. something we will not talk to our guest host about because he works for a company still part of rbs at the moment. i think what you will see in this case is an aggregate story. this is what the government spin is going to be. anna: was a rough child report that they could start to sell rbs at a loss. guy: let's talk about china. chinese stocks colliding with low turnover. the authorities are once again stepping up measures. but get more data from hong kong. what are they doing next time? >> as far as the markets are
concerned -- good morning to you guys. it looks like we are for another strong finish. it has been the case more often than not. you get speculation or intervention itself propping up the market store. we are up 3%. i get a feeling we will get something interesting over the next 60 minutes. volumes are very light today. about 18% of the shares are still halted in trade. the other reason comes down to incentive. it is very hard to figure out what the dynamics are for the market. a lot of people that managed to get out are waiting on the sidelines until the dust settles. overnight another fresh set of measures were announced. it will essentially be more
difficult right now to profit from taking a short positions. if you are a little more cavalier you run the risk of catching the attention of regulators. that is something you do not want to have happen to you. at this point the markets are doing very well. the other market we are following is the spillover effect from the continuing drop across commodity prices. 40% of the world's copper and 50% of the world aluminum. that is how asia looks. if you splice and dice this across center groups industrials are down by 1%. the miners are down one half of 1%. the flipside to the same coin is that you are looking at the airline stocks. travel and leisure and about 13
-- just doing the math -- 46? and the top three, air china and qantas airways all on the way up. let's bring you up to speed on what is happening in the region of asia. tuesday is looking a bit better. south korea and japan just closing out their sessions and australia is a bit surprising. up 4/10 of 1%. the rba keeping their cash rate at 2%. we are up now over 1%. let me leave it there for now. back to you guys. guy: thank you very much. david ingles in hong kong. the doors -- a nice little spike
with the aussie. anna: it is in line with what we have seen in the commodities market. a big fall in the australian currency. it had been the talking point do sure but now it seems -- du jour but now it seems less important. and we are talking about rbs. we will try not to get confused. guy: the markets of asia tied with what is happening with the commodities story. we are not stopping the selling are we? >> the commodity complex seems to be continuing. i have the bloomberg commodity index. this year it is near its lowest level in 13 years. i can tell you that today, the worst performers -- one of them is gold. over the past five dates, the past month in the past year am a the worst performer on this index has been -- the past year,
the worst performer on this index has been oil. seeing oil rebound a little bit today but brent crude is still below $50 a barrel. it has dropped about 28% since its may peak. gold is ever so slightly higher today but this is near a five-year low. it has really fallen out of favor with investors. the selloff and chinese equities and investors not seeing it so much as a safe haven asset. investment buying will keep dropping through 2018. goldman sachs says gold will fall below $1000 and outs. -- $1000 an ounce.
analysts that we surveyed said it would drop to $980 in january. gold is on track for a third annual decline and finally, i have to mention copper down today for a fourth day and headed into a bear market. it is at the moment the only of the six that is not yet there but it is getting close to it. anna: thank you. the latest on commodities. guy: let's bring in the ceo -- cio. for commodities turning around would that be a buy signal? >> it is all about china. i think it is important for the fed. the employment cost index was very surprising. surprisingly week. yellen consistently said it is
all about the employment market. we only have a couple non-perils to go now. so actually the number to look at on friday is probably not the usual. average hourly earnings. that monthly wage number after the shockingly low employment cost index. for us it just means it is a hard hurdle to tighten in september. anna: do you think the hurdle is already high? >> it was because inflation is so low but they were willing to look through this low inflation talk about commodity prices and talk about being ahead of the curve. if they saw continued and robust employment markets with wages continuing to be so steep it is hard for them. it could be the so-called
unreliable boyfriend, mr. carney. that could be maybe the surprise. we are already hearing that some of the members are likely to vote. so we will likely see a split. guy: the day before payroll. >> we will probably see a split there and then you can see a scenario where the u.k. goes first. anna: ifo to someone at the npc and he was suggesting that it could happen but he would prefer to go with the cover of the fed. >> wouldn't you. we will see what he is up to. >> allen hagan stays with us. >> lets you back to whatever other top stories. the first person to get sentenced for libel is sentenced. guilty of rigging the benchmark rate. he joins us now with more. >> what message does this send
out? >> it is a big sentence. a landmark moment. people did not think he was going to get as long as 14 years. the judge specifically said he was sending a message to the banking industry. that they will be held to account and they will be held to the same rules. that is the significance of the sentence and it everyone something to think about. anna: for some background, everyone members the scandal. it's been a few years since it was in the news every day, so how do we get to this point? >> this is the culmination of seven years of investigations. it first emerged that there might be a problem with the rate and authorities were investigating the various cases and in 2012 we had our first fine against barclays and since then they have tallied about $9 billion and i think there are 12 institutions now. 21 individuals charged worldwide. this is significant because it
is the first test of whether criminality has taken place. which the jury had decided it did. guy: more cases to come as well. >> two more trials in september and january. anna: what was the atmosphere like around these trials? there are some amazing quotes coming through. for example, thomas hayes saying just give the cash desk a mars bar and they will sit wherever you want. it is interesting to see -- that was taken from a transcript but all of this had been gone through. transcripts and phone calls and e-mails and chats and all of that in the public domain. >> he is a real character. the trial give us some insight into him. it wasn't your typical trader. they joked that they called him tommy hot chocolate because he liked hot chocolate.
he was not some boozing guy he was just a quintessential guy who was obsessed with the math. he could've been obsessed as well but that intelligence and obsessiveness went too far. guy: suzy, very nice. more to come on that story from the team here at bloomberg. anna: let's talk about the twitter question this morning. is it the system or are individuals to blame for market abuse? you will find us on twitter. guy: coming up on "countdown," greece and its creditors meet in athens ahead of the august payment deadline. the next guest says the most likely outcome is a september bailout. ♪
watching "countdown." here are the stories you need to know. guy: the u.k. government raise 1.2 billion pounds from selling scotland shares today. the sale of a 5% stake in to money managers will cut taxpayers. anna: u.s. federal prosecutors are investigating billions of dollars of trade made by deutsche bank with russian clients. that is according to people with knowledge of the situation. it is suggested the probe focuses on so-called mirror trade. it may have allowed them to move funds out of the country without alerting authorities. guy: barack obama has announced rules aimed at u.s. power plants. he has said that u.s. agency regulation have introduced regulations to address climate change. pres. obama: with this clean
power plan by 2030 carbon pollution will be 32% lower than a decade ago. the nerdier way to say it is that we will be keeping a hundred 70 million tons of carbon dioxide pollution out of the atmosphere. [applause] anna: creek investors spent their first trading opportunity for five weeks yesterday selling the athens stock exchange. meanwhile talks of creditors continue in athens. as greece's next ecb payment approaches. what were the takeaways from the first-day of trading? hans: the takeaway is that the decline could have been steeper but this is still very much a handicapped exchange. so traders still do not know if they are at the bottom or whether or not we will start
seeing more accurate pricing information today. here is what one of them said. without the restrictions the drops would have been steeper. there are a lot of orders within the system that are not executable. that is the equity sales trader at nbc security. that gives you an indication of how much fear there is in the market that when the banking stocks open today that they could drop even further. the trading was halted pretty quickly into the session yesterday after they were down close to 30% in the banking stocks were hit the hardest and they make up 20% of the exchange and 11 of the companies in the exchange our financial services. that led declines and it like sleep -- likely means we will see more declines today. they were up all the way to -1.5% and they were down in the
teens earlier. today we have conversations starting again and creditors hope to meet a short-term deadline tomorrow between creditors and athens on just where they are on that bailout. of course we have that deadline august 20. guy: let's talk about creditors. where our negotiations with the creditors? hans: it is still uncertain about whether or not they will require an additional vote here if a bridge loan is going to be required. a bridge loan would only be necessary if you did not have an overall agreement. if you have an agreement then you can start transferring money and you would not have a problem making that 3.2 billion euro payment on august 20. as long as talks are progressing
and its use like everyone says they are taking place in a positive mood. there's a difference between saying it and having their be actual deliverables but it seems like they are heading in the right direction. guy: what are we calling the creditors? hans: quite riga. quadriga. there are four truck of them. as you know quad always means for. we will not ask anna because she will give us the answer in greek and latin. she is far too educated for me. anna: you overestimate my education on a daily basis. guy: more on the greek story. our next guest protect a split in the syriza party followed by new elections at the end of september.
we are not done yet. >> by any stretch of the imagination there are ongoing talks with the quite riga. there is a question whether tsipras will have to pass by the russians. but whether it is a new bridge loan. and some of them will be more difficult than others to pass and then assuming that we get some sort of deal by september will need to get to the parliament by greece and a few other eurozone countries and then will go to congress and see a split between at least two sides and possibly three. then we will be talking about the election in the fall. anna: your thoughts on this stem from questions about private sector debt holders and how they will be treated as we see these continue. >> definitely.
i'm interested in the sovereign loans. are they going to get extended. will that be the deal for greece? with a get extended again with coupons and with a force the sale of the four-year bonds at 67. they are indicating that the market thinks there will be some extension risk here. >> i think the risk is very minimal. it comes into play if we are talking about the grexit scenario. when you talk to the greeks and the lenders there is no intention to go off in the private sector. the gains will be minimal and the aim of the program was to bring back and give greece market access. if you go after the sovereign bonds, it will make it even more difficult. that risk in my view is minimal and only becomes relevant
talking about a grexit scenario. anna: talking about quadriga how do we get past the imf. they sing to be on a different page on debt. >> that issue will be down the line. but it goes on until march 2016 so imf will remain involved in the talks it is a question whether they will be dispersing in the meanwhile. later in the year when it is time for the first review when greece has been promised some sort of debt relief is still very much in the air in terms of what we actually mean. then we will see the debate between the imf and the germans taking place again. this is another kind of open chapter in this saga. guy: who is the next greek prime minister? >> as of now there is only one name. guy: we carry on with the tsipras government but a different government. >> it will be a different
government. let's say that right medic wing of syriza led by tsipras -- the pragmatic wing of syriza led by tsipras. guy: can he form a government? he will not get the majority. the left if they take off most likely they will take away at least 3% or 5% of points. without this becomes impossible to win an outside majority so he will need to look for a partner and as it is now it is very difficult. at the end of the day in terms of the election, it depends the context. in a context where we have to pay salaries and pensions. what kind of deal between greece and the lenders. this will matter a lot. the advantage for tsipras is that he is the only game in town
guy: half past 7:00 in london and half past 8:00 in frankfurt. anna: the first person to stand trial formulating libel has been sentenced to four years in prison. jurors unanimously found that he worked with traders and brokers. the sentencing is among the longest for financial crime in the u.k.. guy: 3.1 billion pounds this morning. the sale of a 5.4% stake. money managers cut taxpayer
holdings around $.73. the u.s. federal prosecutors are investigating billions of dollars of trade made by deutsche bank on behalf of russian clients as recently as this year. it is suggested that the justice department probe focuses on mira trade which may have allowed russian clients to move funds out of the country without properly alerting authorities. guy: it makes tyres, it makes automotive parts. the only real takeaway i have is that it is slightly ahead of expectations, but they are raising the 2015 earnings forecast based on asian growth. anna: in the context of everything we have been saying that china and the commodities challenge and the slowdowns we have seen mentioned, we had bmw earlier today. they were something of a canary in the coal mine but the difficulties the automakers will face in china and now they are
talking about normalizing and china but that is not a good thing. on the one hand if we were to see slowdowns from any market from people by less tires but on the other hand you have a weaker oil price and some of things that go into it can get cheaper. the company is saying this morning that we proved how strong we are and we followed up on a good first quarter of 2015. guy: don't take our word for it. later we will be speaking to their cfo about the numbers at 9:45 u.k. time. looking forward to that conversation. anna: let's move in a related sense to the commodities more broadly. standing by with details of the route as it continues. nejra: the bloomberg commodity index near a 13 year low. if we look at individual commodities, and little bit of differentiation at the moment.
this is in a bear market. brent crude has dropped about 28% since may and we are still seeing brent trade below $50 a barrel. 49.75. both brent and wti are seeing an ever so slight rebound this morning. a similar story for gold. this is a precious metal that has really fallen out of favor with investors. it is near a five-year low and is on course for a third annual decline which would be its longest slump since 1998. at the moment we are seeing a trade at 1000 $87 per ounce. goldman sachs says it may fall below a thousand dollars an ounce. and analyst we have surveyed says prices will drop to $984 before january. i have to just finish with copper.
it is the only metal out of the six on the london metal exchange not yet in a bear market. it is at the moment just shy of 20% below its peak. it closes at more than 20% below it would be in a bear market by the close today. but metals and general have fallen to the lowest level in six years. this is where the chinese story is strongest. in terms of copper, it uses 40% of the world copper. anna: they are the biggest car market in the world now, too. guy: let's talk about what is happening in the oil markets. karen all he is joining us a you will -- european strategist at ubs. let's talk about oil and the direction of travel. we have seen brent sub 50, is the expectation to go lower? >> the demand side looks fairly weak. and obama's announcement
yesterday will not help. european demand is weak. then of course you have a run and maybe libya coming back online. it looks pretty weak. should it go up it will only be from geopolitical things like the yemen crisis flaring up again. guy: so get used to it. anna: when you look around you cannot see a part of the world that is really going to cut back on production. >> opec is not going to help either. with the new strategy they seem quite comfortable with that. guy: what does this mean for the equity story? >> at the moment you have norway and the u.k. market looking very cheap on the country scorecard. you have both countries expecting no earnings growth but there is no trigger. with oil price and free fault we
do not see what will stop it or arrested. if it does you did a commodity watch list at the moment we do not see the end in sight. a lot of it is supply driven so it is not just a global growth slowing. anna: anna: when we saw the first letdown it was and is positive for the consumer as many thought it might be. >> they are saving most of it. i suppose you are storing up some good news for the year to come. but it's the same in europe. oil companies cut their earnings by 50% almost every night but the consumer side has not come back as quickly. anna: what do oil companies need to make their business work? we talked earlier about how they have not seen as much m&a as people suggested. we spoke last week to the boss
of shell and he seemed somewhat surprised we had not seen more m&a. >> i think that you have to differentiate between outside the u.s. and in the u.s. in the u.s. you will have some consolidation because there is a lot of debt out there and the hedging contracts that a lot of american oil companies have are coming to an end. there is a lot of pressure but outside the u.s. i do not see it as much, also because there are a lot of big oil companies already. they do not have as much capital to take over one of their peers. in terms of oil price, look at the very long-term. for new fuel to come online and additional production you need an oil price between $70 and $90 per barrel. in the meantime, there are a lot
of companies that are actually coming to the end of an investment cycle right now and they are just reaping the benefits of high investments when the oil price was high. they will be able to hold out. guy: if i am an income investor he got away with these things. these big integrated oil companies with the big yield. how do i relate the stories? >> they do offer exceptional yield above average but the only thing is the payout ratio has more than doubled. it is higher than it was in the heart attack of 2009. some companies might have had 40% but now they are at 120%. so they hate to cut. they've gone through a bit of a script to save cash so i do not see the cuts coming through and
i think you will see that income. i do think it is a bit of a worry. >> it is a dividend sustainability issue. let's see where we go from here. guy: what is the flipside to that trade? despite the fact that consumers are not really turning it into something significant for the retailers. is it the airlines? >> you mentioned tires and chemical companies. unfortunately for the utilities it is more of a negative than a positive. i really think it is a tax cut. it is getting consumption going again. anna: i know you have been pondering what it is that has been driving the chinese slowdown and where it started pence how much credence to give to the official gdp numbers but is it the actions of the government to re-orientate the
economy away from investments in heavy industry and more toward the consumer -- is that all of the story? >> in general, and china they had a leverage-induced spurt of growth and now they are engaging all kinds of tricks. they no longer have the wage growth they had in the income they had. it is a game that will only work powerfully in the short run versus the long run. our head of fx said if the chinese government stops manipulative the economy you probably gets up and closer to 4% to 5% and the rest of the world doesn't know how to live with 4% to 5% gdp growth. if they do manipulate they get as much as 6.5% but nobody knows what the real numbers are. anna: bmw talks about that market normalizing. not something you hear talked about a lot with china, but it
guy: it is 7:44 and london and 8:44 and frank for and paris. anna: you can do that math. here are the stories you need to know this morning. the first person to stand trial for manipulate libel has been sentenced to four years in prison after being found guilty of conspiracy to rig the benchmark rates. jurors unanimously found he engaged with brokers.
his sentence is among the longest for financial crime in the u.k.. guy: the government here has raised 2.1 billion pounds for selling some banks of scotland shares. the sale of a 5% stake in money majors -- money managers cutting the taxpayers holding system he 3%. anna: u.s. federal prosecutors are investing in trade made by deutsche bank as recently as this year or in that is according to people with knowledge. it is suggested that the justice department's probe focuses on mirror trade which may have allows them to move currency without notifying authorities. guy: a quick look at how we think the european equities are going to open this morning. just out of touch. the ftse 100 closed just done around .03. bmw is probably one of the standout stories in germany.
let's delve into those stories in more detail. anna: in the second quarter earnings from bmw. it came in in line with expectations. let's get more from our reporter in berlin. chad thomas, good to see you have been digging a little further into the release. >> they mainly are. the bmw this morning is all about china. while they did reaffirm their targets this morning. the sobbing that investors can be happy about. we were looking further into that release and they had buried in there a warning for investors that said if china continues to be really challenging, they cannot rule out cutting their outlook. that is something that investors will be watching very closely today. bmw has really been sounding the alarm on china since the beginning of the year saying that the chinese market was flowing.
they also talk about the chinese market normalizing. they do not mean that in a positive way. china has been a source of huge profits for bmw and other carmakers. when they say it is normalizing they mean that their profits are coming down. guy: what is toyota saying this morning? >> toyota is not immune from these market drops. they also reported a drop in first half deliveries but toyota is a different story because of the yen. they have estimates on profit because of the yen against the dollar. the u.s. market is important for toyota and the u.s. market is doing well. toyota from the profit line is a very different story today. anna: chad thomas, joining us from berlin. guy: karen ali still with us
from ubs. these are subcomponent couple -- suppliers into subcomponents like bmw. they talk about asia being a positive. >> it must be that the competitors to bmw that are starting to emerge are using counterparts. they have such a specialized niche that the become a true growth player. they have to be because one of the best-performing european stock since 2007 over a period of eight years. anna: in terms of the valuation and how expensive? >> if you look at it it will look alright because they had great earnings growth. it has not seen a crisis in eight years but other things are looking a bit more stressed. as long as the growth carries on it is more of a safer autoplay. anna: isn't that a message more broadly. that is something you are looking for generally across the earnings season. you are not worried about
valuations as long as we keep getting these earnings. >> when you have not had earnings growth for four years. the bulk case for european equities is entirely down to having an earnings cycle. the earnings and credit cycle has been delayed by four years versus the u.s. and now is the time it has to come this year. guy: if it doesn't? >> europe will start to look expensive. the big issue now is, are we delaying the cycle or missing a cycle? the worst thing is if the u.s. economy starts to mature and we have not yet had our earnings cycle. anna: all of europe is not created equal and -- equal in this. you like some of the more beat not parts of europe -- beaten up parts of europe. >> some saying is the italian trade over or the spanish trade over -- but the average earnings
collapse where they were in 2007 is about 60%. they are 60% below the earnings they had eight years ago. i haven't even just stood still. so there is a recovery to come the still because they are so depressed. guy: rbs, the government is finally starting to offload some of our holdings in rbs. a little bit of a loss, but this is seen as acceptable. >> absolutely. it is seven years on since the bailout and a bit of a watershed moment in this was one of the biggest casualties in the financial crisis for the ukraine -- for the u.k.. it was the biggest bailout in the world. they are selling today at a loss. 330 pence was the price that they offered to institutional investors overnight in sale. the price which the government had said would break even is 407 pence so it is quite a significant loss. but for the chancellor george
osborne he has said that now is the right time to sell. that is the hope that they will increase liquidity in the stock and they will be able to sell it higher prices later on. >> the bank has reiterated today that they are happy with the development. we just heard last week some very straight talking from the chairman. talking about how it would be a good thing because the government is a reluctant investor and they would rather have a positive investor. so what work still remains to be done here. after stephen hester taking an ax to parts of this business. >> that is still yet to be completed. the bank is going through a heavy period of restructuring and it will cost around 5 billion pounds for the entire restructuring program at rbs and that won't be finished until 2019. the cost will come up quicker than that we should see profit. the bank has said they will not be able to pay a dividend until at least the first quarter of 2017. that disappointed some investors last week.
profitability is somewhere to go. >> that is not a great list. of why to own the stock. why would i want to? is it just because it is a long-term solution? >> never underestimate an investment bank's ability to reinvent itself. i don't know the exact are we at the moment but the are a wee today is still around 4.5% with around 18% to 20% in 2007. there is a big gap there and there is still money to be made. but it is a bet on normalizing and getting our mojo back in europe as a whole. anna: in the financial services sector is that generally of interest? >> we like it. last year insurance was kind of the chicken financials. banks are coming in and you one at q2 -- in q1 andq2 earnings.
they are beating them. that carries on. we think more than 100% of profit growth in 2015 comes on behalf of the banks because energy is such a negative. the banks become more than 100% of eps growth for europe and 2015. better growth. anna: thank you very much to karen ali joining us from ubs. guy: just a few minutes away from that european equity market open which means we are a few minutes away from "on the move." whatever got? jon: we can group a bunch of stories. you have crisis fallout in the first state sale from the government since they bailed out rbs. the other crisis is the greek crisis and the fallout into the athens stock exchange.
number three, the manipulation of libor benchmark reading of rates. the other group of stories, you said you can pretty much see how china touches everything. whether it is the commodity route and brent below $50 a barrel or whether it is the rba leaving rates at a record low 2%. of course australia is affected by commodities. the one-story i'm really interested in this morning is bmw. things i never thought i would read about a car company. a recovery and european car demand helping offset a sales slow in china. did you ever expect to say that two years ago? probably not. guy: let's face it, we have been waiting for a while the europeans to get back in gear. jon ferro coming up with "on the move." anna: that is terrible. the first day and you are saying
"getting in gear." guy: i have been waiting a while. anna: plenty in focus keeping an eye on rbs and those car stocks and car related companies. guy: let's quickly say what is happening with a european futures as we head into that market open. we work our fair value populations you can see these lines here. down by around 2% on most equity markets this morning. that will do it from countdown. we will see you again tomorrow. have a good day. ♪
jonathan: good morning and welcome to on the move here and i have done from pharaoh. europe's that's bloombergs european headquarters -- bloomberg's european headquarters. the commodity crash. copperheads for a bear market. brent trades for below $50 a barrel. the australian dollar spikes higher as the rba admits any reference to any further declines being necessary. the rbs sale. the u.k. government 1.2 billion stake in the royal bank of scotland.
those are three of the things i will be watching. futures down by 16 points. dexia just up by 15 points. never carriage is at the touchscreen. >> let's see if european markets have snapped. the markets that are opened seem to be moving slightly lower. cac 40 down point .4%. it will be instinct to see what happens today. yesterday we saw a drop 60% after dropping 20% -- after dropping 23% in the day. we will see if it continues to decline. today, we have been watching about commodities. we saw the asian markets earlier
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