tv On the Move Bloomberg August 4, 2015 3:00am-4:01am EDT
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 today.
although the big story is about this rout. we have the number commodity index near a 13 year low. 13% this year. if we look at individual commodities, and little bit of discrepancy. rent crude -- brent crude trading below $50 a barrel. gold recruits some of its losses from earlier. investors very bearish. goldman sachs saying it made below $1000 per ounce. copper heading into a bear market. let's take a look at our commodity currency. climbing from a six year low. after the rba held rates at a record low. back to you. mark: -- jonathan: let's get to
the asian market rout. >> thanks john. a very good morning. a look at the shanghai composite. that is what we are doing today. three clock p.m. in hancock -- and how kong. the .7%. that is a 4.5% swing. for any other market, that would be the best day in years. for shanghai, we know how wild things have been. that is the best day in three weeks. 3756. this is despite this new rule in play. making it harder for you to profit from short positions. another thing to mention, you have 18% of this market that has
taken a backseat. that is playing a part on why we are not seeing a lot of volume in this market. that's a spike up 1.2%. it looks big in the scale, rba practically unchanged. it is barely seen a flip. down 18%. look at the auctions market. we're looking at 18%. further rate cuts this year. we will see how that exchange. we saw a spike in the australian dollar. the other market story, very quickly. commodity, that is front and center. oil below 50.
jon, back to you. jonathan: let's get to the rba decision. the bank of australia holding rates at a record low. for the first time since march 2014, removing language that suggests further hold and the aussie dollar is necessary. michael, talk to me about this change in language. how significant was that? michael: it was very significant. it was a game changer. it was unexpected in the market. the rba has had a consistent job earning policy. depreciation is likely and necessary in order to rebound the economy away from mining. today, removing that. it is significant.
as you mentioned, it set the australian dollar higher. what is suggests is the central bank is comfortable with where the currency is sitting. it might suggest that they are thinking global forces our cleat -- our cleat -- are keeping a lid on the currency as well. if the united states raises rates, it narrows the rates and australia -- rates in australia. they are comfortable at this point. jonathan: i got research note after research note that cannot make up its mind whether the rate cut cycle had ended. or whether the hurdle that higher. what is the story? michael: on one hand, it has been called a bit. this keep easing monetary
conditions. it suggests monetary conditions are ok. we've got a slowdown in china. that is obviously going to impact us. although prices, which is australia's key export, it has rebounded slightly. australia's unappointed rate has a stabilized -- australia's unemployment rate has stabilized in recent months. the general trend seems to be that australia things are slowing here. the royal bank -- this is your bank, -- they are keen not to add to that. it's a case of seeing events
play out. with the dollar they are comfortable. global forces will keep that contain. that means it is not as strong as it was. jonathan: thank you for joining us. michael talking about the impact of oil prices on australia. it is been a cruel 24 hours for the commodity market. the bloomberg commodity index falling to a 2002 low. the brent at $50 a barrel for the first time since january. to wrap it up is philip sladek. what should we make of the oil prices and below $50 a barrel again? echo, made, we were expecting this rebound. is the low really entrenched now? philip: there is not a lot we can expect.
the data does not look very good. european data not great. we can only hope for some improvement coming from the supply side. to be honest, this might only be to political trouble. something like yemen prices. otherwise, fundamentally it does not look too good. jonathan: thank you for joining us this morning. to get the investment view chief market strategist for u.k. in europe at j.p. morgan asset management. stephanie, great to have you with us. i'm looking at the commodity market, brent is up 50. copper almost any bear market. seemingly, the world is ending. bring us reality here. is it all about supply? stephanie: what is happening to commodities and world trade, it
doesn't see much flash of red light. it does give you a? -- it does give you a question mark about the strength of the global economy. it is primarily an oil story. so far, you have seen all of these other routes and commodities. they say copper is the only one with a phd in -- there is a structural shift in demand. china is in producing the kind of momentum for emerging market economies that it was. we're not seeing america or europe take up the slack. there is a general softness which you see in reduced activity. the see the world trade growing slower. i will about the pulley clip? i
do not think so. you see strength in the u.s. you can see europe. the one source of positive surprise over the last few much. i don't think this is telling us we are headed for a crash, but i think it shows us we are not out of the woods yet. some of the things that helped us get by when things were difficult. particularly, australia or canada, you are able to come through on is crisis, because you had that support from other things. some of those supports are not there, because we are left to our own devices. countries are going to have to use their own domestic demand. jonathan: the world is not ending. when i look at the headwinds. whether it's apply a demand kvitova got the strength of the dollar over the last month that is pushed these commodities down?
stephanie: the beginning of the year, i think it was clear. i think what is interesting about the oil price, where good to have debates about whether it's the supply or demand side. increased demand in response to the fall of price. not as much as we had hoped. now you have it wrong. -- now you have iran. they were instrumental in changing the supply -- john: when you add everything up, we see commodities fallen off a cliff. you see wage pressures in the united states. that paints quite a deflection. now we sit here in q3, should we be worried about that dynamic? stephanie: i don't think we've gotten to that point yet. there has been this downbeat.
the data coming out of china. the lack of wage acceleration in the u.s. lots of different parts of the global economy. when you combine that with the commodity price for bringing that negative effect we know it is going to come down the track again. it makes you wonder, are we going to feel like we're in a different world? i don't think we're quite there yet, but if we continue to see all of these forces, they are going to have a headline affect on countries that would have been thinking about hiking rates. jonathan: if you're looking at payrolls coming here friday, that would be huge for whatever they do in september. whenever down data, for me seemingly there is a bigger case for the bank of england. nevermind the federal reserve
going first. stephanie: i remember we had -- they were looking at the same kind of data for each of their countries. the u.k. data was a stronger. u.k. data around wage acceleration. but also productivity. a lot stronger than in the u.s.. we keep getting provisions upward to the u.k. productivity numbers. why u.s. -- my u.s. colleagues do not believe me. where going on holiday in august. if you're just looking at those factors, the same one -- the same ones the u.s. are looking at the differences are key. the reserve bank of australia are dealing with. much more of a factor for the u.k. neckline and much more direct effect -- a much more direct effect on the economy.
this is a moving story. if you're just looking at the domestic economy -- jonathan: does the fed capitulate? stephanie: it is going to be hard for them. if we see the employment index like this on friday, that was a difficult number for them to swallow. a complete lack of wage acceleration, it becomes harder for the number. sometimes they say we get all excited around the september. your member what happened? i was sitting in new york waiting up for it to happen, it did not happen. then they didn't announce it a month later. the fed said they don't want to raise rates in september -- in december. jonathan: if he gets pushed to
2016, is it equities? stephanie: i think we are in a holding. -- i think we are in a holding period with equities. it doesn't feel like you can have another leg up in valuations. i think we are waiting for clarity in both directions, whether it is equities. jonathan: stephanie flanders, think you very much for joining us. coming up, china puts the brakes on bmw, the world's largest luxury carmaker, relies on europe. the greece battle, we are live in athens after a five-week shutdown. u.k. makes his first sale -- makes his first rbs sale. stocks are lower across europe.
$20 billion. the company warned that it will be a while before it stems the slump in user growth. -- one of its agencies defaulted for the first time. $58 million and printable is due. but futures -- prosecutors are investigating trades worth billions of dollars led by deutsche bank as recently as this year. that is according to people with knowledge of the situation. the justices that the justice department probe -- move funds out of the country without legal authorities. we heard second-quarter earnings from bmw this morning. results were in line with expectations. a sharp slowdown in demand from china maybe the desk may lead
the company to revise its forecast. the initial take away from the bmw numbers. >> that is right. the bmw shares are down after bmw said that while they were maintaining their forecast, they cannot rule out having to lower the forecast later this year. china continues to be a weak market. really, carmakers across the board have been saying that china is now becoming a weaker market. for expects the market to be down as much as 5% this year. audi last week, cutting their sales forecast on a wiki sales in china. -- on week sales in china.
jonathan: check thomas, thank you very much. bmw stocks down by 2.29%. head of market research at asi joins us. where going to talk about margins. i said early this morning, i never thought i would read this, at least twos ago i didn't. and recovery in european car demand. the strength becomes a weakness. the expect that to continue? >> firstly, europe is in a recovery. europe, consumers are coming back. we have become comfortable if not complacent with china growth. it is a straight line to 30 million. the market is flattening out. everyone is talking about a crash. .co bmw used the word "normalization." quite kill -- white clearly,
china has about this -- quite clearly, china has about this much room to grow. >> secondly, the market crash must have left the consumer sentiment. there are a couple of things coming together. we should keep in mind, receipt has been taking out the lights. jonathan: do i get a profit warning from bmw? >> that is not our forecast. they are confident that the second half will be flat compared to the first. i just look to the company early on, when you speak to them, it is not embedded in their forecast.
china will correct. they have a couple of new products coming. they have to say that in their statement, but i don't think it is going to happen. uncle -- jonathan: how disappointing where the margins? arndt: in bmws case, it was a .4%. guess it was 8.4%. the company is a 20 main dollar exposure. you see the full dollar impact in revenue. some of it is explained by that, but they are hoping that desk costs are cooking up. -- costs are creeping up. it is a quarter. i think it is a pretty solid number.
jonathan: to put it in context in the luxury sector, where are we compared to the rivals? >> bmw is in the third position when it comes to the germans. audi is number 10. they are all in different cycles. we see this is way up there. and his fleet. audi is coming with new product. for bmw, it is a 18 story. there currently at a low point. but they are accelerating. jonathan: looking at europe, my mom is happy because she fills up the car with petrol what does that mean for the car sales? d.c. the translation affect? -- do you see the translation affect?
>> it is very obvious with low financing rates fuel costs are low. consumers feeling happier. other prospects of getting a job. car demand is recovering. some consumers even save money when they buy a new car which is more fuel-efficient at a lower financing rate. that is driving demand here. jonathan: thank you very much for joining us here. greece's stock market reopened yesterday for the first time in five weeks. investors spent the session selling which is a moment away from a second day of trading. hans nichols is in athens. what are they expecting from today's session? surely not another 30% drop down. posco the banks could -- hans: the banks could drop again. that was about eight minutes from now. we open at about five minutes.
we'll see how long the bank stocks trade until they are halted. some stocks could start creeping up in the positive territory today. we do not know. the prices are inaccurate because of the restrictions there were put on greek retail investors. they have certain restrictions. they have to come up with new money. we are going to have to wait and see what happens. remember, 30% drop halted a lot of the trading. that is no longer in place. you can trade this morning. we do not have a bad bank set up. we don't have any clarification on what they're going to do. jonathan: hans nichols, thank you very much. what is in store today? find out in two. we're back after this break. ♪
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perks are nice. but the best thing you can give your business is comcast business. comcast business. built for business. jonathan: good morning. this is bloomberg tv. we are 30 minutes into the trading day. i am jonathan ferro. the ftse 100 in the red down by .5%. such of the board quickly. -- switch up the board quickly. a stronger euro this morning. and much stronger aussie dollar. we travel higher against the dollar by 1.2 9%. rates remain unchanged at the rba. feeling which in the statement, omitting the reference for the need for a weaker aussie. brent crude just below $50 a
barrel. the first time since january. oil higher this morning. copper, flirting with the bear market. big moves in the commodity market. let's get the big stock stories with neeraj che. nearest call -- >> the largest taxpayer owned bank in the u k. for the first time, the government has held shares since the bank bailout. it sold them at a discount low for just seven pence per share. -- 407 pence per share. 72.9%. bmw also one of the biggest losers on the stock 600.
stoxx 600. a sharp slowdown in chinese demand might need it to provides -- revised commodity goals. china is bmws biggest market. this actually is one of the biggest gamers on the stoxx 600. europe's second biggest makers of auto parts, but it has raised its target because of growth. lower commodity prices have helped it with low-cost. act to you. jonathan: of the big moves, greece is just opening up here that's after it slumped a percent in its first full day to of -- first full day of training and five weeks. he is the partner in group managing director of axial group. great to have you with us. opening a little bit higher this morning.
a big drop yesterday. as i commend, the second day of trading, the question is how do i price some of these chairs? can you tell me? >> it is hard to say yet. it is a matter of having a lot of sellers and not buyers. it really affects the situation. we have to expect -- it will prevail today. jonathan: can you be more specific about the restrictions that are exacerbating this move lower in the last 20 for hours? what would your advice be to the regulators? >> there is a big issue -- the restrictions only apply to the greek retail investors. they are not able to use fresh cash to buy into the market. they can only import new cash.
they can only use the cash available to the brokerage accounts. the restrictions affect the -- of the market. there are no researchers whatsoever as far as the foreign institutional buyers. jonathan: going forward i have concerns. as an investor, i have the economics. it looks ugly head i look at the politics. it looks unstable. the third one, the capitalization. i don't know what statement the greek will take. what do the bank recaps look like? >> you are absolutely right. those are the two major items in question. first, political stability will be determined in the futures market. it is a big credibility issue.
no other market has been closed for five weeks. this affects how the market reacts today and yesterday. going forward, outside of the bank recaps, nobody knows exactly how take shape. we know we have the a q ours where going to have a collective assessment that will be completed in september. recapitalization will take place and of october. this will determine as far as what we're going to do with equity. jonathan: a final question to wrap all of this up. density percent yesterday. 1% today. -- down 16% yesterday. 1% today. what is the future of the athens a stock exchange, considering this date it is an right now?
--considering the state it is an right now? >> it could be quite bright. i think the issue around the market is driven about political instability. as far as the banks are concerned if we go back to the framework that we should to recapitalize the banks this would be a very positive point for the bank and market overall. as long as there is some preservation of the existing equity. you have private investors been able to participate in one way, shape or form. i is what will determine the market in the next couple of months. jonathan: thank you very much for joining us and giving us your insight. dolly parton are in group managing director of ventures
group. onto spain, their government delivered its budget today. a series of handouts are expected. voters go to the polls later this year. let's go over to madrid where charles panty is standing by. any giveaways? charles: yes, good morning. it is a political budget. that is very clear. we have elections later this year. this is prime ministers chance to lay out his economic store before voters and investors. we are expecting higher pensions. tax cuts that are being brought forward. it is a package of the stimulus and impetus for economic recovery in spain. it is a way to return to voters some of the sacrifices they have made during the economic crisis here in spain.
jonathan: a lot of political distractions. they are distracted by greece and the rest of the eurozone. the president of catalonia calling an early election. this is a referendum on independence. what are they saying back to that? charles: the message form and dread is they don't believ government has the right under the spanish constitution to break up spain. to take this independence root -- this independence route. if they step outside of the constitution, and does anything beyond a normal regional election, they will take action to stop it. the head of the regional government explains there is a lot at stake now.
jonathan: chills panty -- charles penty, thank you very much. the world's largest bank bailout . details after the break. for now, eight minutes into the trading session over in greece. the asc, short -- trading lower again. a 40% drop over the past two trading days. you have to go back to 1987 for when things were this bad. ♪
jonathan: good morning and welcome back to bloomberg tv. i am jonathan ferro. let's get you up to speed with some of bloomberg's top stories here at -- top stories. the lowest price since the copies ipo back in november 2013. the drop pushing twitter to a market low. it will be a while before it stems a slowdown. puerto rico has suspended deposits of funds that pays -- one of its agencies defaulted for the first time. the company -- the country -- was due. u.s. federal prosecutors are investigating trades worth
billions of dollars made by deutsche bank made on behalf of russian clients as recently as this year. that is according to people with knowledge. the folk -- the probe focuses on trade which allowed russian clients to move funds out of the country without alerting authorities. the british banking sector the government is starting to sell some of its stake in the world bank -- and the royal bank of scotland. the $2.1 billion -- the 2.1 billion pound selloff. let's get more on the story with richard partington, suzy ring. first you, i'm looking at the rbs story. i'm looking at what they paid. we overpaid as a government. you get the argument about to be by them to cheap? or too expensively?
what stands out to you? richard: one analysts said that he is perplexed with the timing. that's because the shares were sold last night at 330 pence, the lowest price they have been this year. rbs is the worst performer among european banks outside of greece. down about 15%. that is a big downward trend for the bank. it is going to -- it is going to the desk is going through a big restructuring program. the chancellor here, george osborne, wants to make that money now. he is hoping this sale will spark interest. jonathan: if i am managing a fund i am managing the fund and the people that i am managing, would be saying to me what are you doing? what is he doing? what does it mean as we move
forward in the next 24 months? which: -- richard: they're hoping they get more liquidity. the bank has some very long-term holders. he is hoping that with the sale of the stake today, there is more stock being traded. more people may get interested in buying. as hopefully the price goes up and he gets more than what he sold for today. jonathan: someone would say that is wishful thinking. thank you for joining us. elsewhere, and the legacy of the financial crisis the first person to stand trial for manipulating libel. former ubs trader tom hays was confessed -- was found guilty of conspiracy by a unanimous jury. suzy ring has been very busy following this as it progresses.
the significance of the verdict, who was it for? who was the message for? the people who may think about doing this again? >> the message is for the banking industry that this conduct will not be tolerated or it -- tolerated. it is sending a message to the public that you will be jailed. where are all of the bankers who committed the wrongdoing. will the penalties be levied. this is sending a message that we are not afraid to go after people who commit wrongdoing? jonathan: is there a message about how you handled this as an individual? you'll say one thing and then going to court and say something entirely different? suzi: [indiscernible] he was later charged. he later backtracked on that. a 40 year sentence that was the
longest that we have seen in financial crime in recent years. jonathan: 14 years. it is huge. you compare that to what happened at ubs. suzi: hayes has gotten's double that. they decide whether he will be transferred. the hours a day locked up in a cell. it's no golf courses. jonathan: thank you very much for joining us. as we head up to the break check out greek markets. look at the asc, down by 6%. down 4.28%. brutal moves in the greek stock market. we will break everything down
hans nichols has been staying at the screen. what is the latest? hans: the banks are down. they are down almost 30%. their training will be halted. 59 stocks were halted on trading. we're watching today. they make about 20% of the weighted assets of the overall index. that is in the -- that is an indication that we will end up again and negative territory. a lot of market participants yesterday were saying they expect a few stocks to get into the green today, after they work through these pressing difficulties. we do have pressing concerns, because of the restrictions. jonathan: are we distracted by these moves, we look at these moves, and hardly any of us are exposed to them. we are exposed to the status of
the negotiations with creditors right now. where are we in terms of the status? hans: talks are proceeding. both sides are saying it is a positive environment. you have a fourth leg of creditors talks continue. deadlines loom. in some way, the story has i changed a lot. it seems as though everyone is on the same page on the goals they want to achieve. technically, it is going to be a challenge. we have a question on what sort of role international monetary fund will play. we have an august 20 deadline. that is when greece owes 3.2 billion euros to the bank. jonathan: hudson nichols live in athens. think you for joining us. the pulses coming up next. manus cranny joins us. manus: it is fascinating, the story.
the value of greece banks. how do you recapitalize them. a great note yesterday. how much capital the banks might need around the 5 billion euros. you need to get it done before christmas. unsecured depositors are also protected. our that really that many left in greece? for the polls, cars, banks and do not do anything wrong in london. we have david green. this is a man whose agency brought the case against hayes and one. --hayes and won.
there are some incredible quotes. go to my twitter account. " -- there are 12 quotes. get to go to my twitter account or fran's twitter account or yours. jonathan: what is manus cranny's view of global markets? twitter selling off. apple. there are red lights all over it. manus: i watch video just today of various guesses in the states . we have one who says -- he will be up to give us the global view of a banking. global view of how the world looks at him. he is -- this point trades robert. -- trades rubber.
his view is more relevant. i think we have more basis covered. the one thing that draws in my mind is 2% inflation by central bank. why does it bother? jonathan: we will leave it there. why do they bother? me that should be the twitter question of the day. you will be coming up after the break. the ftse 100 just pulling back. we have a five-day winning streak. we come back into the red. the text down. -- the techs down. i want to have a look at the fx market. european has been trading sideways. aussie dollar has been expensing a spike. and stronger euro this money.
up 1.35%. rates at a record low. unchanged at 2%. some adjustment for the statement. they did not say the aussie dollar needs to be weaker. they do not say that at all. we are at 1.35%. rent crude is the headline then. $50 -- brent crude is the headline then. up $50 a barrel. copper flirting with the bear market did making a little bit of a comeback. those of a big market moves you need to keep an eye on. spain will be presenting a budget for 2016. later in the u.s., keep an eye on the market open. twitter tumbling yesterday. that is it for me. follow me on twitter. best of luck for the rest of your day. ♪
francine: copper heads for a low and the global rout continues. manus: share selloffs. british government offloads its stake in rbs. why is george osborne willing to take a loss on the day? francine: as the first trader to be tried over libor rigging. we speak to the fraud office who brought the case against him. francine: welcome to "the pulse
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