tv Bloomberg Markets Bloomberg October 2, 2015 10:00am-11:01am EDT
pimp: good morning. let's get to the morning's headlines. the september jobs report is out and the numbers are underwhelming. we will go into the details of the data and discuss what this means for federal reserve policy makers. and then a meeting of global importance taking place in paris. vladimir putin sits down with french and german leaders to assess the situation in ukraine. and we continue to track hurricane joaquin. where is it headed and how hard will it hit? we will give you updates. julie hyman is here with an update on the markets and we are seeing a big selloff following that jobs report. julie: indeed we are. the jobs report so much worse than had been estimated. we're seeing the major averages selloff ready dramatically. if you look within them to see were the most pain is, it is financials. if you look at the imap on my
bloomberg terminal, very heavily cyclical. that is groups that are seen as the most vulnerable, if indeed there is weakness in the economy. financials at the bottom. technology also feeling some pain on the day. we have been watching very closely the movement in treasuries as well. very dramatic drop in the yield on the 10 year yield when the jobs number came out. you see very clearly, dropping below 2% and notable. two ways to look at this. on the one hand when the fed did not raise rates at its meeting in september and by some were pretty dramatically criticized for that, this makes that decision perhaps look a little better. also as you look at what the market is pricing in terms of rate increases, take a look at my terminal, this is the world interest rate of ability ratelator -- interest
probability talk you later. you want to look at the probability of move column on the left-hand side. at the december meeting, now falling to 29%. it was about 40% as of yesterday. you don't get more than 50% chance of a move until the march meeting. i want to take a look at commodities. the idea with the jobs report this morning is that the u.s. was seen as positioned relatively well in terms of global growth. now that draws that sort of into question. crude oil is trading down, copper is trading down. gold is catching a bit this morning. also as people look for what they perceive as more safe in this risk off environment. we are seeing people sell the dollar against other currencies. , he was the best performing currency of the fourth quarter, the dollar is trading lower versus the yen. the euro and british pound are trading higher versus the dollar. breaking news coming out
of bloomberg, the financial stability board, the global regulator led by the bank of england governor mark carney, they will phase in los observes the requirements for the world's biggest banks that starts from the low end of its purpose range in 2019 and this is according to three people with knowledge of the decision to stop we will keep you updated on this. once again, the financial stability board, the global regulator, will phase in those loss absorbency requirements for the world's biggest banks by 2019. now for more on the markets and reaction to today's jobs report, i'm joined by scott brown, chief economist at raymond james financial. petersburg,from st. florida. i wonder if you could give us your thoughts on the jobs, 143 -- that is not what everyone was expecting? >> not just the disappointing numbers for september, but the downward revision to july and
august. i would characterize it as disappointing, but i don't think it is a complete disaster. seasonal adjustment is always a factor in september you get the start of the school year, the winding down of the summer travel season. if you look at the numbers before seasonal adjustment, we added a little over 1.5 million jobs in education, both public and private, which is in line with the numbers we have had for the last couple of years. if you look at the non-education jobs prior to seasonal adjustment, they were down by 960,000 compared to about 800,000 drop the last couple of years. we're seeing evidence of a stronger summer hiring season for teenagers, young adults. and as they go back to school, you're seeing the natural falloff in those kinds of jobs. i take the numbers with a grain of salt. certainly, if you look at the private sector numbers can the last two numbers -- two months, a lot slower, but right now at a
pace that is consistent with the growth in the population. i don't think this is a horrible report, certainly, the headline number's are bad for the markets. the markets were early get beyond looking at those headline figures. for: given the targets inflation from the federal reserve, the decision not to raise interest rates in september, what do you think the federal reserve does with this report? >> well, it is kind of interesting. the fed i think cited global concerns as the main reason for holding off, not necessarily they're worried about the rest of the world, but the impact of the rest of the world on the u.s. economy. but since that meeting, we have had a lot of fed officials, janet yellen last week, making a strong case they are still likely to raise rates by the end of the year. this report may put that a little in doubt. i don't think the fed is entirely comfortable with holding off for too long. that maybe we will see the push it out into the early part of next year. and the idea here is simply that
we have had a lot of improvement in the recovery. the job market has improved. there's a lot less slack in the job market, but there is still some slack. if you look 12 to 18 months from now, there is still going to be less slack than there is now. the fed doesn't necessarily have to be at a neutral position, but it should be a little closer to neutral. the analogy that is appropriate is, there is no reason for the fed to hit the brakes but they do have to consider taking the foot off the gas pedal. the gas pedal is still all the way down to the floor at this point. pimm: are we going to see continued selloff of equities as a result of this report? a mixed bag.es is clearly, the rest of the world has had a big impact. it is been a double waning. slower growth abroad, but a stronger dollar. if you look at the dollar versus the major currency, which is the dollar index, that as more or less been range bound since
march. in the spring and summer we saw a big rally in the dollar versus these minor currencies. the minor currencies account for about 57% or so of u.s. import. we're seeing a lot of downward pressure on commodity prices, u.s. firms that do business abroad are getting that double whammy with the slower growth. whatever earnings they're making, it will be less in dollar terms. and that is in a big issue the last -- then a big issue the last three or four quarters and expected to be in the near-term. lotonals, yeah, there's a to be concerned about. but there is a lot to be excited about with the u.s. domestic economy. even though job growth has slowed down a little bit, it has still been very strong over the last year. we are seeing consumers been in being supported by the job growth as well as the drop in gasoline prices. pimm: scott, let me break in because you talk about lower gasoline prices, the
consumer perhaps having more money, but you're not seeing any wage growth in the united states. if you have 70% to 75% of the gdp coming from consumer spending, if they're not making more money, how is the economy going to grow? what are they going to buy and what are they going to buy it with? >> that is a concern. in the near-term, you have a lot of purchasing power. even though average wages are only up little over 2% year-over-year, inflation has been pretty close to zero. that is a pretty good increase. us in thewerful for near term. ultimately, the dollar is not going to rally forever, oil prices are not going to stay low forever. you should see inflation starting to move somewhat higher. a lot mores may be lengthy than the fed expects, the lack of wage growth is the widest channel for inflation pressures within the economy. cans not there, so the fed
comfortably wait a lot longer before really starting to raise rates. and when they do start, they can afford to be very gradual in that case of rate increases. long-term rates should be helped for the consumer. you're seeing the housing sector generally improve. domestically, think u.s. economy remains in very good shape. we will see probably wage growth pickup, hopefully, sometime next year. i don't think we really seen any sign. later this month we will get the employment cost index, which i think is the most important measure. i don't agree expect to see much wage pressure in there, either. pimm: thank you, scott brown from raymond james. today,eminder that later the federal reserve vice chair stanley fischer is scheduled to speak in boston at 1:30 eastern time this afternoon. bloomberg television will have these speech live. now let's take a look at what is making news right now. holies in oregon say a 26-year-old man had multiple
guns when he walked into a community college class and open fire. at least nine people were killed . the gunman was killed in a shootout with police. there is no word on the motive and when i witness says the gunmen demanded students religion before shooting them. no one after the killings, president obama sounded exasperated. >> there's another community stung with grief and communities across the country forced to relieve their own anguish and parents across the country who are scared because they know it might have been their families or their children. pimm: the president said congress is standing in the way. don't allow the government to collect data on how to reduce gun deaths. at least 11 people are dead after the crash of u.s. plane in afghanistan at a base in
jalalabad. six u.s. airmen are among those killed. an unknown number of american contractors were also among the victims. the taliban said they shot down the military transport, but offered no proof. u.s. officials say the militants often make false claims. a house republican they have enough support in order to force a vote on renewing the export/import bank. the banks authorization to make new loans expired in june. congressman stephen fincher of tennessee says he is confident he will get enough supporters even though many republicans are opposed. and a jpmorgan, they will pay the most or pay the most of the most settlement, $1.9 billion of a credit default swaps investigation. bloomberg news reports that jpmorgan will pick up one third of the settlement price in the case involving accusations that a dozen big banks conspired to limit competition in the credit to saw -- credit default swaps are cap. tires are knocking on the door of a slumping commodities
trader, interested in the agriculture unit of glencore. among the shoppers, singapore wealth fund, canadian pension fund, and a japanese trading house. glencore's stock has lost more than two thirds of its value this year. and those are your top stories at the moment. coming up on the next hour of " the bloomberg market day," it looks as if the u.s. east coast will be spared a direct hit from hurricane joaquin but the storm has are ready had a big effect on some stocks. we will tell you about it. and oil prices rising after russia launches airstrikes in syria after months of speculation about $20 a barrel oil, what is the latest forecast for crude? we will also introduce you to the chinese billionaire who has seen his net worth fall by 84% so far this year. all this and more coming up on "the bloomberg market day." ♪
onm: let's get you caught up what is going on in the stock market. stocks are falling after the weaker than expected jobs report. julie hyman is standing by in the newsroom with a look at some of the stocks that are leading the way lower today. julie: i mentioned a few moments ago that it was financials to endorse today. i want to highlight some of the stocks within the financial group. it is the brokers that are really taking it on the chin. some of the worst performing stocks in the s&p 500 including schwab, down by 7%. concern about what this means for the u.s. economy and what it means for stock markets and by extension, retail investors perhaps who use the products at these various companies. steep declines for those. in terms of the biggest weights on the s&p 500 in terms of the relative size of these companies versus how much they're down
today, these are some of those that are dragging the most on the s&p. you can see we have two financial stocks among them jpmorgan and wells fargo stuff bank of america also really helping drag down the s&p. apple is on the list as well. remember, apple fell yesterday after report that some of the company's chip suppliers were concerned about seeing laura orders, so that slump is continuing -- lower orders, so that slump is contingent. financials and technology definitely playing important role in dragging down stocks overall. pimm: one sector that is not dragging down the market has been casino stocks, gaming companies. julie: which is the opposite of where we have seen the stocks trade recently. look at wynn resorts, up 14%. got the monthly gaming revenue nfl by one third, but that decline was a little slower than it has been. down for 16 straight months. i have a graphic of the gaming
revenue. because back to late 2009. you see the huge declines we have had. there was a report in the macau newspaper that china may be taking steps to shore up the industry. just to put things in was down on 15nn of the 21 trading days and down 10 of the past 11 months. you, julie hyman, giving us that look at gaming stocks, particularly when resorts. let's turn our attention to the let's turn our attention to the weather. take a look at my bloomberg terminal. this is our function that shows the latest protected path of hurricane joaquin. this does not mean there won't be an economic effect from the storm. share prices of storm sensitive stocks rose and fell as the tide did with the changing forecast. it is interesting that
there's always at tradable moment in anything. in this case, a hurricane. investors who are storm watchers can trade or have traded, in fact, on stocks that are sensitive to the weather. in this case, home improvement stores, energy storage companies, and on the flipside, insurers actually saw some effects from hurricane joaquin, even though it didn't hit. i want to take a look at home depot and -- people stocking up, maybe getting plywood and so on. >> exactly. in preparation people were thinking, oh, we need to get ready just in case. since september 30 and over the dust fromays, we see september 30 over the next two days, it has risen and interestingly, what happened with hurricane sandy, home depot actually got nearly $300 million
in a sales bump in the fourth quarter of 2012 and the first quarter of 2013. something similar for lows. it's all .3 percentage basis point bump for the same timeframe. another thing to talk about, energy storage companies. when the lights go out, what do you need? pimm: power. >> power and flashlights. you can see energy holdings are the makers of batteries from september 30 also rose over the next few days, seeing that bump. also with sandy, can two-putted about $18 million -- contributed $18 million bump when the storm hit during that time a couple of years ago. pimm: home depot, lowe's as well as energizer. any other -- you mentioned insurance companies. >> that's right. insurers actually fell as the storm got closer. we saw that starting thursday
through friday. looking at allstate, even from september 29, you can see that fall over the last three days there. the one week, down by nearly 3%. allstate, lost $1.1 billion from sandy. you can expect, everyone gets a little more nervous as the storm gets closer. with brian sullivan in boston and he said, $15.7 trillion all along the coast is exposed and a potential risk of storms. pimm: flooding. it doesn't have to be the hurricane. >> and interestingly, one final thing to show you, take a look. over the past 30 years, the top three states to have had the most losses by insurance were florida -- which you can sort of understand -- texas, and new york. 9%. that is about $43 billion.
it surprised me when i saw that because we are so far north. at all told over the last 30 years, get this, almost half a tree in dollars has been incurred in terms of losses because of storm set of hit the country. -- half $1 trillion has been incurred in terms of losses because of storms that hit the country. pimm: thank you. still ahead, did the jobs report vindicates the federal reserve's decision to delay interest-rate increases? the bond market appears to think so. find out when traders are predicting the first rate increase. ♪
pimm: stock prices are falling, the dollar is falling and treasuries, there is a rally, following a disappointing september jobs report. the yield on u.s. ten-year treasury sinking below 2% for the first time since april. traders now say the federal reserve will put off interest-rate increase until mid-2016.
joining me now with more about the bond market and the reaction to the jobs reports is our bond market guru lisa abramowicz. you are telling me you have gotten a lot of back-and-forth en the internet blogospher about this decision by the federal reserve not to raise rates in september, and maybe being vindicated or not being vindicated by today structure report. question, doeshe this actually gives the clock -- fed more credibility for the decision to not hike last month? a lot of people are saying, maybe this was a policy mistake. people pushing back saying, no, they fought china, not slowing us growth. then after the statement, after this decision not to high, they said, no, the u.s. economy is wonderful, we still plan to hike by year-end. now in the futures market are saying, forget that, there are going to hike maybe in march, not in january. but the likelihood has been of when the fed will hike has now
moved back all the way to march based on futures trading. already in next spring. it is the spring collection for interest rates, right? the speech that janet yellen gave at the university -- you could use that. the university of massachusetts when she was at amherst, and the headline coming out was, "don't worry, just because we did not risen september doesn't mean we're not going to do it in december." lisa co they were still talkish .-lisa: they were still hawkish this jobs report today change that conversation. it was devastating on every level. it was that anyway you slice and dice it. there were as no wage growth. pimm: i think 2.2% year-over-year. lisa: maybe can make the argument we are reaching for employment, so that is why you're not adding as many jobs,
not as many firings. there are lots of arguments to explain it. but how do you explain no wage growth? that arguably is one of the most telling signs that there is very little momentum right now, and people are talking about qw4. pimm: qe4? than fedher credibility, have they been unsuccessful in their attempt to generate growth? pimm: can you please give your twitter handle? it is really catchy. pimm: thank you very much. lisa abramowicz. coming up, take a look at pensions in the middle east. -- tensions in the middle east. ♪
turmoil in financial markets. september jobs report was well short of expectations. employers added 142,000 jobs last month, the median forecast was for 200-1000. august figure was revised downward. the unemployed it rate remained steady at 5.1% as more people left the workforce. that jobs number has changed the way the bond market is looking at interest-rate increases. after the jobs report came out, traders pared their bed on an increase, pricing and just 29% chance the federal reserve will raise rates in december, more than half now bet that the federal reserve will not move until march of 2016. and more on the breaking news from a moment ago, bloomberg news has learned the financial stability board will phase in a loss observance a requirement for the world's biggest banks. this is starting from the low end of the proposed range in 2019. this is according to three people with knowledge of the decision.
the banks, led by hsbc as well as jpmorgan, it will need to have capital and debt available to take losses in a crisis in of theand to 16% risk-weighted assets in 2019. that will rise to 18% in 2022. originally ranged 16% to 20%. they bring together regulators and central bankers from the group of 20 nations plans to deliver the final rules for endorsement by the g-20 leaders in november. a spokesman for the fsb declined to comment. sprint is hoping it can cut its way back to profitability. the wireless carrier plans to reduce up to $2.5 million in costs over the next six months. that includes job cuts come although sprint isn't saying how many. japan's softbank owns more than 80% of sprint stop. and there has been another big hacking attack aimed at consumers. t-mobile says about 50 million
customers who filled up credit applications for the wireless carrier may have had personal data stolen. the hacker still names, addresses, social security numbers from a database run by experienced -- experion. and those are your top stories. increasing tensions in the middle east having an effect on energy prices. oil gaining after russian airstrikes in syria drew objection from the united states and its allies. the oil headed for a rebound after plunging to six-year lows in august? let's bring in francisco blanch. that is the question to you, what is your outlook for oil prices? >> thank you for having me. we think we're going to see a bit of a bounce in oil for year-end on the basis of incremental consumption heading into winter. also in portland, based on this study production declines we're
seeing in the u.s. and other parts of the world. inhink for the first time eight quarters or so, we will see a balanced global market this fourth quarter. and that will provide a little support to prices. we see bridge getting back to the mid-50's. back into the mid 50's. i think fears are driving oil prices lower today on the back of that jobs report you were talking about. push francisco, i want to you on the idea there is a production cut back. who specifically is pumping less oil? let's leave out the u.s. for a moment. >> we are saying production declines in some parts of south in the u.s., as you pointed out. the one part of the world increasing is the middle east. that is where you are seeing the growth. the flipside is, demand has been very strong. we have been running at roughly
of million barrels a day demand growth, which is the second strongest rate in more than a decade. that effectively is providing a little support to prices. demand is very, very robust year. well capital spending on production companies seems to tell a story that they don't think production is coming back anytime soon. your thoughts? >> i agree. i think the cuts have been deep. a lot of companies are in the intensive care unit, so to speak. frankly, with calendar 2016 prices for oil coming down for debbie ti, below $50 a barrel, they're not many companies that can make numbers work at this level. we are seeing a big change in discipline. companies are talking about maximizing returns, maximizing production and that is a big change -- rather than maximizing production, and that is a big change from a year ago were
covered is were just talking about relentless growth. it is about making money, not so much about growing production, and no will lead to lower output next year ,too. pimm: francisco, not to put you on the spot for the oil companies, but why have they waited will reaching $44 a barrel in order to do this? they're supposed to be the experts in this, aren't they? >> look, i don't think it is the job of oil companies to call the oil price. their job is to locals in the ground and get the commodity to market. to poke holes is in the ground and get the commodity to market. many decided to start slashing capex for 2015 and we've seen continued reductions throughout the course of this year as prices continue to go lower. but, you know, there is of course been a lot of investor optimism and the second quarter when oil rebounded to $60 a barrel, and that gave companies
a second wind of life. and some of them decided to postpone capex cuts. that has been one with wti heading back lower. it is a choppy market. i think we are in a seesaw type of market environment, and that is ultimately was finally leading companies to capitulate on higher prices and slashing capex now. we will see more of that. pimm: francisco, now turning to natural gas, trading around two dollars $.50 million btu. what is your outlook for net gas? >> it actually looks ok to us for next year. production is pretty flat at these levels. flatishbeen in a environment for quite some time. we think production will decline a little in the next year on the back of those associated gas production declines. effectively, the gas that comes from oil drilling activity in the u.s. will come down next year.
remember, demand for gas in the u.s. will be pretty solid throughout the next 12 months. we have exports to mexico, lng ramping up, a lot of petrochemical activity, ammonia plants coming online. and then we're going to see a big reduction in coal-fired generation capacity, which is scheduled to happen because of new regulations. so i think a lot of that is going to be felt gas consumption at a time production is flat, and that will help us get back about three dollars into the end of the year. oil supply the chain, energy supply 10, where is the best investment right now? >> as i said before, the market rally,y is looking at a including the short run. same for gas. athink gas has been taking big beating, so we'll probably
see a bit of a bounce. i cannot see that winter seasonal trade being attractive, but the most attractive commodity in the energy space is probably going to remember -- remained gasoline into next summer. that is our next idea going long gasoline, short heating oil as a trade for next summer. that is probably where i would have the highest conviction here. pimm: francisco blanch, thank you. gasoline prices on the nymex over 3%.t president vladimir putin's meeting with world leaders may be getting sidetracked because of his latest moves. we will look at how the agenda is changing. that is next. ♪
this is the bloomberg market day, i am pimm fox. time to get you caught up on the market action around the world. i want to begin in asia, posting a small gain, making it three days in a row for the japanese index moving higher. and china, the shanghai composite finished higher but almost half a percent. it was the big winner, up more than 3%. the big story out of the region, south korea september inflation figures remain close to zero, continually missing the target. david ingles fire old this report -- filed this report. quick south korea was the latest report subpart inflation. forecast for for a slight pickup. more important, it puts more pressure on the central bank for to finally revise its current target of 2.5% to 3%.
also not too low. they missed this target consistently for almost three years. their own forecast, .9%. they are due to revise estimates on inflation, october. let's say they do. by the way, they've said they're looking into it. when it comes to the ever elusive inflation target. pimm: now let's go to europe. before the or two release of u.s. jobs report, the stock 600 was up by 1.5%, near the highs of the day. after 1:30 p.m. local time, that changed. be honest. yesterday the same thing happen when u.s. manufacturing data missed estimates. earlier, stocks in europe taking their cue from hong kong. he rose -- it rose hang seng. now stocks are actually headed for the third week of decline,
the longest stretch of losses for a year. of course, it comes after the stock 600 sank by 9% last quarter. have a look at the euro after the release of the jobs report. now it's on track for its first weekly gain against the dollar in three. today's rise is the biggest in two weeks, traders pushing back expectations for the first u.s. rate hike until march. interesting moves in the euro against the dollar, the euro -- excuse me, the pound up by one quarter of 1%, rising to the highest level against the pound it's made. the thinking is, if the fed to expect when it will hike rates, the bank of england is going to to back when it is going hike interest rates. traders already principally in a rate increase -- penciling in a rate increase in november. the bank of england meets next week to decide on interest rates. that is what is happening in the bond market, very much -- have a
look at the portuguese bond market ahead of national elections this weekend. a bloomberg poll suggests whatever happens this weekend, because both major parties are pretty much similar when it comes to fiscal prudence. by the way, in january 2012, the yield on this note was 17.4%, nine months before the country received a bailout from the eu and the imf. it is all happening in portugal this weekend. julie: thank you, mark. back of the u.s. jobs report. the declines have moderated considerably from where they were after the jobs numbers came out. you heard mark saying woosh to illustrate the increase versus the dollar. bute was a woosh downward, holding up relatively well compared to where we were just an hour ago after we started trading this morning.
i know you heard me talk about financials this morning and worth repeating, however, since financials other worst-performing group in the s&p 500. accounts for pretty much all of the 10 worst individual performers. their brokers still doing very poorly. cme also on this list. if you look at some of the other banks and regional banks and trust banks, northern trust, bank of america, keycorp, it is pretty broad pain we're seeing within the banking group. take a look at my terminal. the movement we're seeing in the financial select fighter etf, here is the year to date chart. in big drop that we had august along with the rest of the market, and this etf actually made a new low on september 28. but then it broke the low that were today -- that low today. and also as we see yields fullback. if you take a look at the 10
year we most deftly saw a woosh sharply downward below 2%. the first time we've seen this since april. 1.93% is the yield on that 10 year as investors bet that this jobs report makes it less likely that we're going to see an increase of rates anytime soon. you, julie hyman. just a note of correction, the hang seng index in china was not trading today, it is closed. he will reopen october 8. last rate, it was up about 3.5%. ukraine,rs of russia, germany and france all meet in paris today to discuss ongoing issues surrounding ukraine. of those talks are being overshadowed by another country -- syria and airstrikes. the summit was planned as a follow it meeting to a peace agreement put together in february in order to end the conflict in ukraine. how will the conflict in syria affect the peace talks over
ukraine's future? eet's bring in ryan chilcot where the meeting is taking place. what can you tell us about this combing length of conflicts, syria as well as ukraine? you know, it is definitely not what the ukrainians wanted and not with the french and germans wanted as well. they want to focus the conversation on ukraine with russian president, that once you started bombing syria, all it had to be on the agenda. what they've done is the russian president met separately, bilateral talks with the french president because he is the host, that german chancellor, then they all sat down for four-way talks that will be exclusively about ukraine. that you can bet and we know that they did discussed syria when the russian said don't the leaders of france and germany. i'm wondering if you can describe what is the personal rapport between the leaders come if there is any, and whether
that is going to form the basis for any kind of mutual, at least, understanding of the situation? >> look, when it comes to ukraine, there's no rapport between the russian and ukrainian presidents. the last time i spoke with the ukrainian president, he said speaking with president putin is difficult. they always have other people with them. as for the leader of germany, german chancellor and russian president, you know, she is at a very difficult relationship with putin and thought of as the real pragmatists, the intermediate -- intermediary that could make if anyonek with putin could. but i believe six or seven months ago, she had decided she had been burned by vladimir putin and has not trusted him since. having said that, even angela merkel has been making some noise recently about the need to work with russia to find some kind of solution in syria, and to stickybe assad is
around longer than we were critically saying. with the french president, the relationship between him and putin is a bit warmer, but he is saying assad should go. pimm: i am sure you caught the interview with the italian prime minister talking about the working with the russians and looking to the future, but what will be russian participation in syria and perhaps as you just said, maybe keeping assad in power longer, what is that going to do for the future relationship? days, but it is an interesting one. when you hear the italian prime minister talk about the need not to alienate russia, italy has economic interests at play. the sanctions are costing -- extracting a cost on italy as well as they are russia. so when sanctions come up for renewal in january, european sanctions, there might be some voices that say that they should
be eased, at least. but as for the bombing campaign in syria, it is really too early to say. there is no similar position in europe on what to think about the bombing just yet. i think they're all very concerned. we are hearing the spanish prime minister today saying it is necessary temporarily to work with assad to deal with the islamic state, that the islamic state is the real enemy, that it is the real threat. in this country, hollande is not sayingthat, but some are ukraine is a strategic issue for friends, but the islamic state certainly is. that you could see the russian president working on this issue for some time, trying to change minds, trying to win over people on his strategy in syria. and you might get some traction. there anyway to make a connection between what is going on with russia and syria and russia's own internal issues related to chechnya and islamic
militants there? well, you know, one of the reasons that the russian president and the head of his presidential administration said they are hitting syria in its bombing campaign is there are 2500 russian citizens fighting amongst the terrorists, as they put it, against assad. they said it is better to hit him in syria then back at home. most people think that is probably not the genuine reason. there were plenty of russians fighting in afghanistan and iraq as well as to -- as well. pimm: thank you. at the side of the meeting twin vladimir putin and ahead of germany and france. still ahead on the bloomberg market day, quite a challenge to make $10 billion, but how hard is it to lose $9 billion in just four months? we'll hear the story of a chinese entrepreneur who has managed to do just that.
pimm: china's market troubles are having a broad effect on the world economy. they're also dragging down a number of personal fortunes, but none so dramatically as the billionaire telecommunications , estimated atg $10.2 billion in june, as of august 1, it had fallen to just $1.1 billion. blake schmidt has been covering his decline and joins us from são paulo. how did he manage to lose $9 billion in four months? >> well, mr. wang jing has a stake in beijing shen wei, the telecom company in china. the stock has plummeted since june, dropped 70%. at the same time, he has been pledging shares to take out loans. so he is dropped $9 billion since june. pimm: busy taking anyone with
him? -- is he taking anyone with him? >> good question. what we do know is he has also been using his own personal fortune to finance the initial nicaraguahe canal in he wants to build. it is a $50 billion project that can meet with canal in panama mopand he has been -- and a and he's been about $509 on the project so far. is or anye, likelihood he is going to have to seek even more money to support his endeavors? >> indeed. he is planning on potentially doing an ipo of his company called hknd, overseeing the canal project. he also says he has been in talks with investors that are interested in supporting the megaprojects.
you will definitely need more funding for the canal, which is a $50 billion project. to dois he going to have any layoffs, any restructuring based on the decline in his fortunes? we have not heard any news of that yet. the immediate impact has been that analysts and economists are questioning whether this will slow down the advance of the nicaragua canal project since he has been using his own fortune to bankroll the initial studies and impact studies. pimm: we have to leave it there. thank you, blake. we have much more coming up on "the bloomberg market day." ♪
pimm: good morning, i am pimm fox. matt: and i am matt miller. .t is, after all, jobs day what does this mean for the u.s. economy? expert analysis is on its way. an initial public offering. novocure'slk to chairman. and all the questions we have about drones but were afraid to ask. the chairman of the faa speaks to us as well. mm: let's go to julie hyman with a look at the markets right now. julie? we are seeing a pullback continue but it is not as sharp as it was earlier in the session.