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tv   Countdown  Bloomberg  October 15, 2015 1:00am-3:01am EDT

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o great to wow! only at a sleep number store. right now save $600 on the #1 rated bed, plus 24-month financing. hurry, ends sunday! know better sleep with sleep number. anchor: the bank of england to unveil financial industry reforms today. on whether britain's biggest lender will have to find capital. cards: chip-based credit might cut off subscribers. anchor: they are looking to re-energize the crunch to change britain's militia of the eu. -- membership of the eu. guy: welcome to "countdown." anna: welcome to the first hour of the program. interesting 24 hours in equity.
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bounds on bit of a the back of his vanishing suspects. guy: willoughby this year, next year? netflix is in focus. walmart as well. one way that.en a -- bet. expectations are so high. this is a chart going in one direction. we are not talking about pop stars, we are talking about netflix. we will get volatility. you will get some messes -- misses. anna: i am interested whether this will weigh on other big online retailers. any company that stores your details are a comes -- up against this. julie: a busy day in the united
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states. when all was said and done, stocks have fallen for the second straight session. the form came early in of retail sales in the united states, coming him and -- coming in lower than estimated. wholesale inflation also lower. that set things up with a negative tone. around midmorning we got the , a meetingom walmart they were holding for investors, the company saying that there earnings per share will fall by 6%-12%. this was unexpected by investors. the shares fell sharply, ending with the biggest one-day decline in 17.5 years. walmart says they will be spending more on buybacks, dividends, wages, and continued efforts to update stores. an update for bank earnings. jpmorgan coming out with estimate -- earnings that missed estimates. bank of america, the best
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performer in terms of bank earnings. beating estimates on expense management. wells fargo beat estimates with its earnings, but the shares fell. subscribers rose, but the company blamed a transition andhip in 10 cards -- ship cards, sod pin customer charges were interrupted. fairchild semi conductor was seeking a buyer, that stock rose. late in the day, bloomberg reported that analog devices and another company were in merger talks. none of these might bear fruit come in the meantime, all stocks performed well. it has been a record year for
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semi conductor, in ma here in united states. guy: and appointed out the disconnect between asia and the united states. yvonne man is standing by. yvonne: we have seen asian stocks on the way up. it's a rebound after two straight losses. is the growthy outlook, and back to this bad news is actually good news for equities. we learned about this overhaul in the telecoms industry. the nation's top three carriers creating what is called china towers. it is one central unit that will control all of the towers in the country. it will possibly help clean out these as oe's that are bloated -- soe's that are bloated.
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the kospi is up 20%. strengthening -- the one is strengthening. the bank of korea moves to lower growth and inflation forecast for this year and next. not a big adjustment for an economy that relies much on what happens outside of it to do this is clear reflection of these macro headwinds. jobsd see all the unexpectedly so. -- all the jobs so. offset what quite we have been seeing in mining. the 200re doing well in down under. i want to talk about macau casinos. they seem to be coming back. we also saw galaxy earnings that
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just came out. third-quarter profit beat estimates. sell from last year, we are seeing improvement from the previous quarter. it is up 14%. galaxy shares are up 5%. betting that the worst might be over for investors. yvonne man, joining us from hong kong. anna: that is the market update from asia, what will we be watching for today? we have u.s. consumer prices at 1:30 u.k. time. plenty of u.s. data to get. guy: always interesting. let's turn to the bank of england. we're not talking about interest rates or data, we're talking about the country's five biggest thanks. -- banks.
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britain'son whether lenders will be forced to hold more capital. caroline hyde is here. this document will be released by the pra, which is affiliated with the bank at around 9:30 this morning. caroline: this affects all banks in the u.s. that -- u.k. that hold more than 25 billion pounds worth of deposit. this regulation will be brought out in 2019. it never puts depositors under threat again. it has to do with 2011, they felt they should separate the way that deposits, the consumer and corporate lending -- the bread and butter of banking away from the riskier elements. today at 9:30, we are expecting the updated consultation. , how dotion will be
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they interact this reinventing -- ring fencing. we already know it could be some 3 billion pounds worth. it costs about 3 billion pounds for the five biggest banks. we're talking barclays, lloyds. potentially another 4 billion pounds per year on running test -- costs. barclays, they might have to separate into eight units. how do you do that? you also have the likes of hsbc moving a thousand london-based employees to birmingham. guy: the bullring. caroline: a new board as well. not only separating your assets, but you need new independent board members to look after the retail unit. is what lloyd has
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been looking at. they don't understand why they need an independent board. it is complex. the question is, how much? anna: it is multilayered as well. we could get europe having their say on how they want this environment to change. some of the rules that europe was trying to bring in since the financial crisis are on the books to be passed by the parliament. they have not come into force yet. it could get complicated. u.k. one thing to an axis by 2019, but also what is interesting is we could have the likes of insurers and payers also being made to along with some of this regulation. having bosses. taking responsibility if indeed we start to see insurers and brokers perhaps not telling the
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party line in terms of practice. guy: this is continuing to escalate the swiss finish. they are putting more requirements on -- it's interesting how this compares to the u.s. banks. anna: in europe there is another five. that is from the capital markets union legislation. they are trying to introduce something that is not seen as overarching regulation. he is trying to offer something that is trying to help get money to those businesses that need it. the banks in some cases seem to be confused as to where the regulatory push is coming from. caroline: and lloyd is saying look, we should swallow this. this could be positive for the banking sector. laura -- berkeley saying it will do a disservice -- barclays saying it will be doing a disservice. guy: a busy day for fed watch.
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york fed president, william dudley, london fed president james bullard and loretto mester speaking today. we try to understand this way the conversation coming from the fed at the moment. next, on win the hike will come -- on when the hike will come. goldman sachs and citigroup reported third-quarter results today, they are due at 12:30 u.k. time. citigroup is due at 1:00, u.k. time. guy: bank of america has the profit rebounding and the third quarter. in an interview with brian moynahan, they said the fed hike would boost earnings for the -- for the. >> in the u.s. it would be
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raised to 3% 10 year treasure rate. we make 4.6 billion pretext per year -- pretax per year. netflix gained lost ground. what does netflix blame for this ship credit card? -- chip credit card? ♪
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anna: welcome back. here are the stories you need to know. guy: walmart suffered its worst stock decline in over 20 years. the retail giant says earnings will fall the next fiscal year. analysts had estimated a gain of 4%. anna: david cameron will try to of his renegotiation of britain's the bishop of the european union onto the next phase today. he is heading to brussels for a
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second round of meetings with the parliament president. he will then join a full summit. tumbled flicks shares as much as 15% at one point after the video streaming service earnings missed expectations. blames chip-based credit cards. >> it is not consistently the case of people do not have the same account number. some issuers will replace the number when the issue that. for us, as a recurring merchant where we want to reduce the friction of renewal. the frictionduce of having interaction where you have to update your payment method, if we present an opportunity not to do that, that means there is more noise. we think it is a contributor. anna: for more on netflix, we are joined by paolo pescatore.
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great to see you. give us your thoughts on the subscriber growth. clearly they put emphasis on international business. their domestic numbers were disappointing. paolo pescatore: thank you for having me. the net adds have been declining. the competitive market in the u.s. has intensified. we are seeing a flurry of providers watch video services. everyone is trying to jump on the bandwagon. it is clear to see why. to now have a significant subscriber base. all of these people are spending money. guy: it's as good as it gets for netflix. everything looks like it is on the right track, is this as good as it will get? paolo pescatore: i think it will get better. they could possibly have 50
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million subscribers in the u.s.. the future lies in international expansion. anna: what are the barriers to entry? you mentioned the competitive environment. there might be rivals from asia. paolo pescatore: the challenge for netflix, because they are on an ambitious strategy watching globally, now in europe, quite an accolade within a short amount of time to be the first european paid tv provider. they compete with local providers as well. skype has been doing a good job defending their position in the u.k.. the asian region remains a challenge for netflix. you have the likes of alibaba. many of these guys are moving west as well with homegrown content, targeting local ethnic groups as well.
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guy: i was interested in your notes in a buyout possibility. why would you buy netflix? why wouldn't you build it yourself? paolo pescatore: for the likes of alibaba in google who have already had growing presence in video, they are struggling to monetize video. they lack a paid for option. netflix has clearly paid -- paved the way. others have jumped on the bandwagon. starting from that perspective, it makes sense if you want to have global reach. they have good presence in americas and europe. their market cap is around 35 billion. we are on that trajectory in terms of finance. for these guys, the great benefit would be netflix growing in original content and gets in closer ties with the studios. it is a great time to be a content owner. for inch --rious
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barriers for entry are sufficient enough you think this would be good to buy. paolo pescatore: look at google. they have more than a billion users to their site every month. he paid for options they have introduced network. they have announced a type of service, they fail to crack it. netflix is shown the way for everyone. guy: what about apple? wantse in that space -- in that space. paolo pescatore: i think you will see apple it into the space. -- become a big investor of premium content. anna: you mentioned the importance of content. what about the cost? paolo pescatore: that is an ongoing concern. three years ago netflix embarked on the ambitious strategy of
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investing in original content. everyone is following suit, trying to create the next biggest blockbuster. amazon is doing it. mobile services as well. clearly, if you can create the next blockbuster, make it available across -- your whole footprint will benefit. guy: why would you buy it, who would buy it? paolo pescatore: google, alibaba, or apple. guy: all those companies have a product they are trying to put in place. wouldn't it be cheaper to throw huge amounts of money at their products, rather than paying a big premium for buying netflix. paolo pescatore: netflix has become scribe or is. google has struggled to attract people. alibaba is moving to video, and now to the west. apple once a replicated strategy in video as it has done with music. and it: -- anna: these players in the east
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that are looking more to the west to do business, are they ever going to be big players in the media world and the west -- in the west? will he be serving a to killer -- particular ethnic group? paolo pescatore: in terms of intent, it is serious. they are a viable revenue channel for the content owners. they go to market and they are focused on a particular group, who knows. look at what google is doing beyond video. look at what amazon is doing. amazon is a big company. they acquired the rights to the keeper centers of the top gear show. there are rumors in the press that they spent 250 million pounds just to secure them. the whole ambition is to drive sales of amazon prime. anna: not the brand.
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guy: that sounds cheap. can they do more? netflix. does netflix become something bigger so it remains what it is now? paolo pescatore: it has been disruptive. they just offer it could be more disruptive by bidding for traditional shows on networks. guy: could they do music? you look atore: if flagship shows like expected, have been declining. onyou put those shows netflix, you could generate higher advertising yields. netflix knows its subscriber base. anna: that's live streaming. paolo pescatore: as long as you make the show available at a specific time, people will watch it at that time or later. anna: thank you very much for joining us.
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director from multi-play and media at ccs insight. guy: let's look at stories outside of media. bank of america reported better earnings than expected. billion.fits are $4.5 moynihan about the impact of a possible fed rate hike. if they go up 100 4.6 billion we make pretax per year. just for the first move. anna: he said the bank will continue to cut costs by reducing headcount further with some reductions coming through. >> the headcount come down because we are 60% people cost. the question is how to do that. for a while we had to do that fast because the cost for coming
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down fast. we had 50,000 down to 12,000. guy: goldman sachs and citigroup both reporting third quarter results today. that is expected at 12:30 u.k. time. citigroup,r ahead of with that do it 1:00 u.k. time. anna: time to check in on the market. we have the asian equities session, looking good. the u.s. seems like it was rained back by results coming through for walmart. the asian session is very much putting the fed any macro picture. -- in the macro picture. guy: quite negative after-hours. if you look at where fair value theat the moment we have
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u.s. opening up in positive territory. maybe looking forward -- this is the fair value calculation that tells us where we think the european and u.s. equity market as. -- is. this is what we think the u.s. markets will be later. this is very early. it is middle of the night. anna: it is. even though they looked gloomy yesterday, they could look different today. we should tell you what is coming up. let's focus on brussels, we will have hands in brussels later on this evening. "countdown" david cameron will head to wrestles with an eu reform agenda. what are his demands? we don't know. promisedhat a vote was on grexit, but we don't know what a renegotiation will click.
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-- will look like. -- tell us tell you what you want to see. the summit is meant to be about migration. can he hijack it? ♪
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guy: 6:30 in london. 7:30 in brussels. here are the stories you need to know. anna: walmart suffered its worst stocks declined in 27 years. the retail giant said earnings will fall 6%-12% the next fiscal year. tumbletflix shares failing as much of 15% at one point. fewer subscribers than expected find up, the company blames new chip credit cards.
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anna: the bank of korea reduced its forecast for inflation and cannot growth while holding its key rate of change at a record low. the yuan strengthens to a three-month high against the dollar. guy: where are we in the market? 1.5 hours in advance of the european equity market. there is a rebound going on in asia, that is after a significant l off we had seen -- we have seen. see how much value has been wiped off in the last three days alone. come onto my screen and you will see in the last three days we have lost 100 and 80 billion -- 180 billion euros in market. fears, concerns about global growth slowing. ,e have had chinese data factory gate prices showing the cell that -- slowdown.
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today a rebound, it seems the global growth is not so bad. we have pushed away the idea of a federal rate hike so far. therefore equities continue to rally. they are seeing yield tumble on the bond market. this of course happens when you think that we will not have a rate hike anytime soon. borrowing costs coming get down -- coming down. we are now down across the developed market your average yield being at .9% that is the lowest since april the 30th. bond prices rising. bonds back in vote because we are unlikely to see a rate hike until march. that is currently what the market is factoring in. we will not see one until march. i want to bring you into what is happening with gold. gold becomes more attractive because rates are not likely to go up.
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we are up most 5% over the course of this one month. clearly, we are managing to be in a three-month high gold prices. that seems to be people run happening with gold -- bull run happening with gold. with the stoxx 600 we could see a rebound. the s&p 500 fell below 2000 yesterday. we're likely to see it rise .5% this morning. it is trading up more than 3/10 of a percent. futures signaling an uptick. keep an eye on u.k. stocks. unileverer -- underlying sales growth could look better up 4%. why? because china was such a painful experience for them this time last year. the comparatives are pretty easy.
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the fact that last year in the second half of the year, they sell a slump of 20% when it came to chinese sales. we're likely to see a slight improvement on that. this is a company with significant emerging market exposure. particularly into india. we are likely to see underlying sales growth of about 4% today. burberry,nilever and which will not spare the chinese slowdown so well -- they are the chinese slowdown so well. japan -- a fascinating trend, the chinese are not spending at home anymore. they are tending to spend and japan and south korea, because the foreign currencies are weaker. guy: caroline hyde on what will be a busy day. anna: david cameron is headed to brussels today. he is hoping to reignite negotiations on the terms of britain's eu mentorship. hans nichols joins us.
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also george magnus joins us. good to see you. let's talk about what we will get. will we get clarity on cameron's position. the start of the conversation was about three change. -- treaty change. hans: the european union likes to hold summit. david cameron is not talking that much. he is not entering into direct negotiations. we saw some people making interesting comments about the failure of british partners to engage. here's what he said yesterday in brussels, he said come i cannot say huge progress has been achieved. to tango it takes two. the relationship between david cameron and the other side, are fascinating. what does merkel play? what is the role?
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she will be flying out to brussels. image ofve a horrible cameron and john claude. transport i am not suggesting the british press leaks comments the david cameron when jean-claude was running for the eu presidency. i am saying when david cameron arrived, the british paper said cognace jean-claude had for breakfast. that did not go down well with his camp. anna: relationships have been tense. george, give us your thoughts on brexit's. hans: cognac for breakfast. george: cognac for breakfast is perhaps having we can talk about. think -- i don't think it will be two years of this. of, thewe sort
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high-profile public summit is not a place where business will be done. obviously merkel was here recently with their cameron. -- with their cameron -- david cameron. they were watching dvds. according to reports. [laughter] the thing is, i think it is -- even inthere is france, certainly germany, there is a feeling in europe that actually we would rather have the brits in and out. we are not going to bend over backwards and compromise the future of the eu by pandering to david cameron. there will be several months of this. guy: what needs to be on the list? if you put the list together that said here is what the u.k. needs. what needs to get done for that
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to happen. george: the way i think about this is that there will be a potpourri of things including migrants, labor, corporate laws, the city, financial regulations. each one of these will have to up with a nice blue bow and tied neatly to make it look as though there has been progress. in fact, i don't think anything of substance change. has always said he wants to make a recommendation to stay in on the basis of his negotiations. it is a question of what fills the gap. a publics he need blowup to storm out of negotiations? george: no, i don't think so. i think that might backfire. guy: as we understand, the
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french and british agreed to a heavily choreographed fight. anna: i like that. it is interesting the politics around this. certain people have been drawing parallels between this and the scottish referendum. they are suggesting may long buildup to the scottish referendum allowed the s&p to build up and try and take ownership of the conversation in a way that people before had not predicted. , theonger they leave this polls can change. george: i think that is a problem. in 2017 the french and germans have national elections. will want that distraction. they want to focus on what is going on. i think it will be done next year. anna: there are other things on the agenda and brussels.
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hans: the refugee conversation and immigration. there will be a status check on greece. where they are, how they are filling requirements. uses this as an opportunity to look at numbers. the numbers do not coexist with reality. end --ow and in the interior ministry updates them. we will see what merkel does of her colleagues. she has put her chief of staff in charge of the refugee crisis. the criticism of merkel has been that she has been not bringing her colleagues with her. george: she is deathly giving push back -- definitely giving push back. is -- it is a massive party challenge for merkel. even with the cdu up north, she is facing challenges internally. how she glosses over this
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internally, and also asked and that on the international chain -- stage is a challenge. the numbers are shifting and changing. this define her legacy? she must be thinking that now. merkel has another two or three years. hans: maybe another term. of: read between the lines what is coming out of berlin, maybe that is not the case. is this for legacy moment? this could be the defining element. she has dealt with greece, that did not go well. she needs a win. hans: her legacy will be one of a journey. she started off a preacher's daughter in east germany. she became the first chancellor from the east. i don't know what her international agenda or legacy will be. i think domestically it will be presiding over a country that butgreat economic growth,
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potentially did not look at festering problems. -- what do you think of the french revolution, it is too early to tell. who knows if that was apocryphal or if kissinger made it up. it is a great quote i use a cocktail parties. what do you think of order? huevres?de anna: thank you very both -- thank you both. george will stay with us longer. guy: we are giving arnold schwarzenegger a total recall for vw. apparently germany will call that all of the cars. that story up next. ♪
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guy: 6:45 in london.
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let me tell you about the stories you need to know. its worstart suffered stock decline in more than 20 years after predicting a drop in annual profit. the retail giant says their earnings will fall 6%-12% next year. guy: netlist shares tumble after hours. after they said they had fewer subscribers signing up for the service. the company blames chip credit cards. tesla brings elements of autonomous driving to some cars. the new software could help drivers stay in their highway lane, change lanes, and it can also parallel park. guy: stay with cars. allill be forced to recall vehicles affected by the scandal.
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our international correspondent, hans nichols has been following the scandal. anna: he is still with us. we tried to get rid of him. he is clinging to the chair. how big a deal is this? hans: i think it is more important that bill is reporting it. i think it is important -- we all knew that the diesels would be recalled. the idea that germany is officially demanding it, give you a sense of friction between the state but also the transport ministry. that is a bad sign for vw. that germany is letting them know you need to write the wrong -- right or wrong. they need a software upgrade, that is no surprise. the fact that it is coming from
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a german government, if i were the company i would be concerned. guy: if you're are not there, would you not be concerned? is everyone else going to take advantage of this? i am curious about the dynamics in germany? hans: you mean with other automakers. everyone has gone down the diesel road. when you look at diesel penetration, it is probably about 80% in germany. everyone is committed to this foot -- fuel. they said it was not just a handful of engineers. scandal metastasizes, it was not just a few engineers, it was actually the institutional core of what they do, it is a huge challenge. will people try to steal market share? yes.
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we saw this in the audi numbers out of china, there main competitor is on the upmarket side. we're talking about the cities and bmw -- mercedes and bmw. because i wanted to know if it is a vw problem or germany problem. you look at the scandal and there are moments when you feel like the story symbolizes what is happening. is germany plodding along and every thing is all right? is germany facing a significant problem? is this a manifestation of that? or should we think about this a different way? this is a global story and represent -- germany represents one way of looking at it. george: this is not just a corporate story. i think it does have national implications.
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because of the role and scope of the german automobile industry. this is a double whammy. in a first-place it has an impact on car sales in germany. maybe there is a shifting around in terms of market share and dissertation. -- distributional. it will have an impact on the industry. also this thing highlighted by german exports over the summer, they have gone into a funk. a lot of that allegedly is down to sales to china. car sales have actually been disappointing over there. effects.wo on the other hand, i always have two. real incomes in germany are rising at the fastest pace in years. wages are up. inflation is on its back.
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anna: do you think when we lost the germany economy we watch too much on china? insignificant.ot there is actually an offset their. that will keep the german economy afloat. i don't get will slide off into a cliff. this is a shock it did not need. guy: why are we not seeing inflation pickup in germany? hans: as you say, real income is rising. am i missing something? george: that is the big question , not just germany, but all events developed economies, not all, but certainly the u.k. and u.s., there are early signs of wages picking up, but no signs of inflation picking up.
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i don't know if we have time for this. hans: should we? george: higher skilled, educated cohort of the labor force are getting increases and doing better. obviously there is this squeezed middle. ---paid people do not get except for you have higher national wages. we will same. -- see. these are early days. hans:'s -- and forth we are back to the french revolution. we have had divergent views on the u.k. story around wages recently. we have had views around his desk that conflict around whether we will see inflation or a pressures. whether the wages getting higher will result in higher wages in the u.k..
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george: you look at the labor market data that the u.k. published yesterday, on the face pay iss like average continuing to climb 3%. obviously, with no inflation that is a real income gain. there were a couple of stings. if you strip out bonuses. you look at regular pay, that slipped. the economy as a whole, but for private-sector workers as well. 2.9 22.6.wn from it could be one off, it might be temporary. my hunch is if the labor market is getting progressively -- if the tension in the labor market is increasing. labor is being progressively more utilized and the employment rate is as high as it has ever been.
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it should start to come through. lags and allable that. it might not be until next year. perhaps over the winter as consumer prices start to pick up. oil prices are dropping out of the index. maybe this'll will have an effect on salary wage negotiations between. guy: has the market price it right? it is late 16 early 17. george: right. in the u.k. and u.s. come in the markets have convinced themselves. guy: are you convinced? george: i am not. there is a strong feeling that we have become japan aside -- japanifide. we will have 10 years of no rate
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increases, i am not convinced of that. the imf was telling us in lima last week, we could be not completely -- not completely sideways by an intensification of the emerging market is possible. china is not collapsing. there is a risk that we could be torpedoed by an external shock. i do not think that is likely. i suspect a re-estimation of interest rate expectations -- turn of the year, early next year. anna: we're talking globally. there is a 27% chance of an increase in rates in the u.s. in december. that from the fed, who will change their view? george: december might be too early. reserve --he federal there are two or three defenders
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-- dissenters. governors don't usually do that. this is a tricky time. at the moment the market seems to be on the right side. i either don't expect a rate increase anytime soon. the idea that you can predict this through 2017, does not work for me. with yourrive in audi hands off of the will -- we'll -- wheel. anna: that is part of the legal problem. guy: would you be comfortable with your car changing lanes? hans: the changing lanes is easy. when cars get confused you're in the left lane and you need to get back to the right. some guy in a bmw is coming up flashing.
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it is not the be space to the right of you. we will not make any longer political conversations. anna: thank you very much. we will be back after a short break. ♪
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anna: grexit back in focus. to change re-energize britain's membership into the eu. break, the newal chip-based credit card -- anna: the bank of england will unveil finance show reforms today to focus on the biggest numbers. ♪ "countdown," i'm guy johnson. anna: and i'm on edwards -- anna edwards.
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caroline has the details. caroline: it looks as though it is a beat in terms of analysts estimates. we are seeing 5.7% underlying growth for unilever. the estimates have been for 4%, it is probably ahead of estimates. their volume growth is far surpassing what was anticipated. the analyst estimate had been for 2.6 percent, they are raising the price of their good stretch offset some of the currency weakness that we've seen in currency markets. aims to get most of its revenue from the emerging markets. they still need to scale that up. the estimates have been for 1.4%. clearly, this company is selling far more goods off the shelves like ice cream and a dog deodorant.
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company that sells an awful lot of ice cream, and that is been doing particularly well in europe this year. north america we expect to see an improvement as retailer adjustments, and latin america might a bright spot in the emerging markets even as brazil is weaker. they will continue to see soft global market. still it bit of a warning there to the challenges they face. guy: thank you very much. we are up to speed ice cream, and all the other things. what else do you need to know? spanish energy business getting an update, it is a strategy update. there was a lot of focus on capital expenditure and how much it would have to cut back. of course, anyone in the energy sector is struggling to make
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sense of this. they're saying this morning they will be seeing asset+++ reaching a four-year plan. they're talking about a drop in the upstream cap. some fairly substantial updates coming. they have to make assumptions, they will tell you there no idea more than anyone else about where prices are going. it is a million miles away from where they are these days. we went to give you a heads up on where these markets are going. remember, you have it at dividend thing to think about when it comes to london. strong, euro
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stocks expect to be up to 1%. up 1%, theected open banks a fairly strong. generally, you are looking at a fairly positive open for european equity markets this morning. -- open expected up in up a full 1%. to does markets going that way this morning. i will apologize for the pun, let's get back to caroline. caroline: a big mess. the iconic maker of the burberry trench, first half retail coming pounds.4 million you're seeing underlying retail 2%.s rise just a quarter of what analysts had been estimating. they wanted 8%, but no, they got 2%. the market wanted five times that, this is a poor number that
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environment, the particularly in china. hong kong has declined for the second straight quarter. you're seeing uneven growth in the united states. november, this is a company that is really not do well geographically place right now for where fundamentals are going. we are seeing significant uptick in growth in japan, because the chinese a compliment at the moment. seeing south koreans increasing, and it's in the japanese yen devalue tina fey the the japanese yen devalued significantly.
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they are also going to europe. europe is seen a lot of travelers, and therefore good numbers coming from continental europe. overall, this is a big miss for burberry. halfing the full year forecast. anna: caroline, thank you. the adjusted profit before tax will be falling. some newse getting from the japanese prime minister saying he wanted productivity revolution in asia, japan, what's going on? yvonne man is standing by. climbingsian stocks stockwith those u.s.
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indezes. 1%, we are these emerging-market currencies advancing on this unwinding of the bullish dollar story. more of a broad-based rebound here, slightly down from the session high, but that macro story we're talking about is the data coming out of the u.s. recently. retail sales white's appointment, but these figures reinforce that the monetary policy is not so much a threat at the moment. lots of news out of south korea today. the bank of korea left rates unchanged. surprises there, they did cut the growth forecasts for the aonomy for 2015 to 2.7%,
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minor adjustment. for the first time in three days, and of a couple of hits -- in japan a lot of news to digest here. we start with toyo tire, shares up 3% this is after internal investigations found the company failed to test the quality of some of their rubber products. the data was manipulated in other cases. story, ane construction surged 24%. april,gest jump since the stock tumbled yesterday after reports that an apartment building was based on falsified data. they admitted to altering that they will bear the cost to dropping 13.6% today. much, fromyou so
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hong kong. magnusn london, george is still in studio with us. viewusly, you take a macro of these things. interesting that you have a business this scale in the size of unilever giving such an upbeat forecast today. they have plans for another year of volume growth and ahead of where the markets had it. a fairly upbeat statement for business. particularly given all the bad press that emerging markets are getting. it is a consumer products company, it is everywhere. of course, what that signifies to me or symbolizes -- what is going on really, the crisis in emerging countries.
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becausegrowth crisis, the export model of selling goods to western consumers has basically is not working anymore. in some countries where credit is becoming excessive like .razil, turkey, china things are starting to go our ride -- awry. infamous emerging-market, i don't think that is really been affected. anna: it is just a model that they have had in place of the past 10 years of selling products to the west, you think that model is in the middle of being questioned? it is. or, not question, but the gone. that abest i would say lot of emerging countries are
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now in a. of hiatus. it may take 10 years to get out of this. if you don't think the western , and if is coming back we think there was something fundamental going on in world trade, emerging countries really benefit from that. the traditional relationship or 25 years was that world trade grew twice as fast as world income, now it is growing 10% slower. that is really bad news. that will not change for a while. that thegood news is oil prices are going into the models, the risk is that i can be a downside? george: so far as energy is concerned, we may well have reached the bottom. if you say what would happen if there was a real global recession, and world gdp went down to zero, oil prices would
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go in half again. absent that, we may have reached the bottom and energy. how long is the bottom? long time,could be a and my view. i don't see, at the moment, any kind of a real acceleration in global growth. remind us why we're having this conversation, why you felt the need to a dress this -- address this? recession usually means negative growth, that is not what we have been talking about on a global level, just very weak growth. reasonablece we had had forata, we have global recessions, 1975, 1982, 2001, and 2009. for the mild, but
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the other occasions they were all preceded by substantial increases in the price of oil, and all had global growth down towards 1% or 2%. that is a global recession. that means developed countries are in negative, and most emerging countries are going very slowly. i don't think we're headed for that's what of global recession, but we're going to a tricky patch at the moment. the emerging markets are centerstage in that. guy: to put this into cognac terms, is the glass half-full or half-empty? george: ha, uh -- anna: that is a big glass of cognac. it is half-full in the sense that it don't think it will drain. could stay half-full for a long time. >> yeah.
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if we look beyond the third quarter, the winter of 2015, i think the united states will be ok. the reason people are in a bad mood is really because of trade. and industries have gotten too high. domestic demand is ok. super stimulusat rate. what would normal rates look like in this world? george: we won't have that, willie? if and when the reserved us start to change policy, they will be like this and interest rate will raise very gingerly. peak wille a cyclical unless be much lower that is a normal pickup in inflation, which nobody really expects. up, spain's biggest opened his or has said it will
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break even at $50 a barrel. how aggressive is that call? you will find out, when we come back. ♪
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anna: welcome back, you're hear the"countdown," stories you need to know this morning. guy: david cameron will try to shift his negotiations. you can prime minister is heading to brussels for another round of meetings. he will then join a full summit of leaders. anna: stocks decline in more than 27 years after a drop in annual profits. the retail says they could fall 6%-to 4% in the next years. first f revenues trailed
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analysts estimates. -- first half revenues trailed analyst estimates. what does that mean for the company's bottom line? bloomberg's roderigo is standing by in madrid. good to see you this morning. we had a strategy update, the focus was on capital expenditure. what really surprises? i think the biggest surprise was the break even for oil. theyin december, when announced that were buying, the talk of an oil reaching $85 this year, and they miscalculated and. they're coming out with a really low breakeven price, anything above that will only give them an upside. there are two scenarios, one is the $50 scenario, and a base case which puts them slightly higher.
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they are kind of covering their backs, and that sense. guy: what does that mean in terms of company strategy. how does this reshape the business? roderigo: the key thing to understand is that they have a huge change over the last three years. in 2020 there were talking about a growth, now they are talking but stabilizing the company and being a company that generates cash. that is what the strategy aims at. they're talking about selling assets, we will see if that works. i think that is the key, it is a very cautious plan and that is what they want to tell the markets that they are cautious and financially responsible. anna: are they being aggressive than on the oil prices? that was a surprising part of the announcement. roderigo: it might seem like a
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contradiction, they are being cautious in the sense that they will not overspend and make big expenditures. they're cutting back on certain projects, but they are being aggressive with the oil prices in that they're being cautiously aggressive. they said it will work with is really low oil price forecast so that they don't mess up. cautiously aggressive, roderigo, thank you very much. guy: an oil man is conscious the aggressive, now to talk about and its biggest online clothing retailer, the company we thought would report around now it reported overnight and raised its growth forecast to 33%. with dr. but have the germans are feeling good about themselves, is this an indication? hans: not all germans to their shopping online. entirely a consumer sentiment index, but he gives you a sense that they do have confidence.
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they are close to 3 billion, germans are clearly shopping quite a bit online. i don't know if it is taking with other break and mortar stores, but one thing we stall -- saw with the q2 numbers, another indication that the is out thereer spending. the depressing side of the story to go with the cautious optimism are the aggressively cautious -- cautious, issively that you never really want to put you a favor -- faith in the german consumer. we talked all for the last decade about the psychology of retail spending around the germany. ,eorge: this hasn't changed which is that within the eu, the
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share of consumption and national income in germany is one of the lowest. certainly nowhere near as u.s.ted as the u.k. or the , or the anglo countries. that has not changed. but it is shifting a little bit. this is a cyclical phenomenon. she do for this year, for next year, and the collapse of inflation is also taking place. they should enjoy that while they can. >> this is my biggest complaint, you can't shop on sundays. south enough to get everything done by 1:00 will stop some bakeries are open. if and when that changes, that would be
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indicative of the fact that there may be something going on. : we have a solution to fix the german economy, have stores open on sundays. the german response is that they do spend quite a bit on the purchases like automobiles and spend more per capita on holidays. they aren't spending as much home purchases and there are more renters in germany. the argument is that distorts the numbers a little bit. anna: the british and the american consumer and the reliance those economies have on consumption is the holy grail. germany would benefit, the euro zone economy would benefit if the structure of the german economy changed a little bit away from exports towards domestic consumption.
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traditionally, balk at the idea that they are being lent on by people to do fiscal stimulus and cuts taxes when they don't want to do that. in an emergency, what they should do, but there isn't an emergency in germany. you might say there is in europe, and to what extent it what should they try to change the structure of the economy for? they are the ones who should be doing structural reform. guy: a lot of concentration risk in the german economy, and areas like that. george: you know, things like shopping on sunday, or just changing the structure of the housing market. goin, the germans will not for homeownership in the way that it is the holy grail. anna: a recipe for anglo boom and bust. george: that is not going to
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happen, but there are ways in --ch they can tilt change in mind ship, especially in ownership. you gives you an idea -- take the entire kitchen, light fixtures, oven, everything. moves into an apartment in germany, they believe they will stay there forever. this when we moved to germany, it is difficult to find an apartment that has a kitchen inside of it. that's difficult, because i do not travel with a kitchen. [laughter] anna: you left the kitchen sink behind. on a whole bunch of stories this morning. george, thank you for joining us this hour. guy: up next, we will talk about
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ice cream and airbus. there was an lot going on on the corporate front this morning. we will begin to work our way towards the market open. ♪ the only way to get better is to challenge yourself,
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what. you don't have a desk bed? don't be left in the dark. get proactive alerts 24/7. comcast business. built for business. guy: here are the stories you need to know this morning. anna: stocks decline in more than 27 years after predicting a drop in annual profits. fall, androfits will they will try to work around that. guy: this after the netflix had fewer subscribers than expected. some creditblames cards from renewing the netflix subscriptions. it is not consistently the case that people don't have the same account number.
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some people will replace that number, as a recovering merchant where we really want to reduce the friction arena will and the friction of having any sort of interaction where you have to update your payment method, it means there is more noise introduced into that. we think it is a contributor. anna: david cameron would try to movies renegotiation onto its next phase today. the u.k. prime minister is headed to brussels for a second round of meetings. join a summit of eu leaders. beginning toarkets wrap up today, what is going on, let's find out with the yvonne man. onne: looks like we could and the day on a good note after some losses. let's talk about what is going on in the nikkei, shanghai now
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seng also up about 2%. sayingcapital management that some stocks may not be as safe a bet as you think. if you look at the ratios of some of these stocks, they tend to hold up better during an economic downturn. food, beverages, and health scare, they traded a 91% premium . that is the biggest gap since 2008. most investors are only willing to pay about 7% for these types of securities. take a look at the chinese stocks in hong kong, shares rose to an eight year high. their restructuring the telecom industry. what is going on is there creating some of these big state owned enterprises to stem the slow growth. you can see the big three, china
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mobile, eunuch on, telecom, they were all sold it -- eunuch on -- also soldlecom, they today. there could be some good news and of the chinese economy. thank you very much. guy: right, let's talk to european markets. let's get a sense of where we think european equities will take us. we show you the numbers, we think it is just shy of 1%.
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the german market is up, the u.s. values are climbing as well. clear up a half a percent for the united -- we are up about a half a percent. wasing was down b --oeing 4%.oeing was down nearly there are some wide bodies coming onto the market. this could affect airbus as well. it has a meaningful impact on the new prices. growth in china is hitting luxury company cars. here in the big miss is caroline.
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caroline: it was a big miss clinic into underlying retailers. -- miss when it came to underlying retailers. now, they are even going to cut their profit guidance which has been expected by analysts out there. they're cutting it from 20 million pounds down to 10 million pounds. they largely attributive that's to the global challenges. notably, chinese customers. out of the china slowdown, burberry is one of the most exposed to when it comes to luxury spending. 30% of their revenue comes from china. other countries that are doing well, only 2% of their sales come from those places.
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it was a mixed bag, and a bad mix. 6%.-pacific down when you have the headwind of the economy, and r theout when when it came to the financial market. 16 concessions and a flagship in tokyo and and south korea. it is too little too late it would seem. guy: a tough time in asia, is the worst over? caroline: unilever had a big beat. it's side of the percent slump in their overall sales in china. getting off the shelves. very different this year, back to double-digit growth.
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4% estimate had been for growth. year,e very woeful last they say online is really ramping up. they are seeing online sales going great in china, that is an interesting track they have taken. innovationome new they are potentially selling. when it comes to europe, it is ice cream that is doing very well. summer on hottest record, so no wonder ice cream is doing very well. it is looking strong in america as well. the ceo is not sounded quite is up eight, however. -- the ceo did not sound quite as great, however.
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they seem to be outperforming, nonetheless. anna: caroline, thank you. other companies include netflix every reported earnings overnight. great to see you. let's see which of these companies has piqued your interest the most. which one did you really learn something new from? ana: they have the exclusivity when it comes to the content, and obviously the international footprint is growing. they are planning to launch in asia, singapore, and taiwan. portugal,, spain, and it is a great story. markets,ow in domestic
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however, international growth has beaten expectations. burberry is a great story as well because over -- although the company was hit hard, we do not expect any luxury to be immune to a slowdown in china. clearly, the slow growth in the emerging markets will continue. they're just about as a positive growth and brazil, and russia, hopefully next year. the company is trading at a discount. it is a leader when it comes to the digital market. it gets a bit cheaper this morning, if we see a selloff in terms of the disappointing update. ana: that would be great. they are very well-positioned with her their product. obviously, the price seems to be
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right. guy: does unilever have pricing power? of when you have pricing power is when you are in the right place. ana: they are in a different market settlement. they are not than a position to actually pass any lower input costs. they are not operating on the luxury markets. they are well done on the numbers in china, and the market is very competitive. ownedould you rather tesco or unilever? ana: if i were to invest i would invest in unilever because of the mass exposure to their customers were are benefiting
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from urbanization of china. the exposure to the consumer in asia is probably very admirable. anna: technology seems to be the thing that joins some of those together. that is a thing you are investing in. ana: absolutely. also, it is the price. guy: netflix fits the bill as well. ana: netflix is not trading at a huge discount. i don't think it is really the right price. very will have more from her and a moment. he will take a short break. ♪
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here are the stories you need to know this morning.
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guy: luxury goods makers, because is struggling he gets 30% of its revenues alone from chinese services. the ceo said the ice cream by successfullle innovation and good weather in southern europe. the company expects a sales growth of the top and of its -- top end of its forecast. the retail giant is earnings will fall next fiscal year. anna: caroline has a number of companies that could be on the move. caroline: future still signaling a higher day across the board. let's get to a stock that is
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going to fall, burberry, it could fall anywhere up to 10%. this is over the course of the lost a months, it has significant amount of its market value down from 16%. the reasoning behind this fall is on the back of results far worse than had been expected. retail sales coming in at a quarter of what had been expected. the reason was china. china is getting the headwind from the global slowdown. the iconic burberry trench coats that cost up to $2000, they are not flying off the racks at the moment because china is seeing a significant slowdown. spending inhey are countries like japan, and south korea.
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they are able to go and spend that much more in those countries. but, only 2% of sales of burberry come from japan. meanwhile, unilever -- just think ice cream, and it over deodorant, it to beat analyst estimates. online sales are doing very well right now. europe looks a strong, ice cream selling very well with a record heat in the summer. another retailer and want to keep an eye on, a french company. they have a lot of shorts, look at the share prices tumble over the last 12 months. beat ine see a slight their earnings. we are seeing them slightly
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ahead of estimates. will bearish bets around, and shares could rise 2% or 3%. guy: thanks, caroline. another company on the radar, there are plenty of them, air france, the prime minister was speaking this morning. he said air france must make reforms if they want the company flying our national colors to survive. as the company itself at risk of disappearing? and next essential threat, according to the president. anna: talking about the pilots, and what they need to do. industrial relations in france are touchy right now. guy: germany will force a recall of all volkswagen cars hit by
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the emissions scandal. hans nichols has been following this story. prescriptive response from the german state. you need to do this, not we will let you,. hans: we always expected that 2.8 million to be recalled. they need a fix, but we had not expected that the german state would be very clear that this needs to happen and the needs to be a forced recall. i think the optics matter, and the sins to it volkswagen may not have the raw support or blind support that they thought. anna: have you been playing in the sector as a result of tensions around vw? are you taking on some stock, perhaps? ana: we are continuing to take a vw stock, but we are staying
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away. what do think about bmw? hans: it depends on if you think this it is a crisis about a diesel engines in general. announced it will take their high market car and tried to make that electric. if you think the entire industry diesel,invested in other european carmakers will be affected. particularly bmw, because they have the largest penetration in terms of diesel sales. the head of a soda brand was supposed to be the head of north america. he will no longer be taking that position. it seems as though that the back story is that the news that the north american ceo did not like the new structure that the new ceo from porsche is really
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devolving a lot of power to the region. he did not like that. it is more turmoil at the top. this is an indication that he might -- curiosity,ut of let's go from playing strains and worked our way through that. you're getting on a train to get to brussels, cameron would like it to be his renegotiation. hans: clearly, there will be the brexit that will be part of the conversation. in about 10 minutes, we would let angela merkel preview what she wants the agenda to be. in general, when she says this is the agenda, that's turns out to be the agenda, but i don't want to take anything away from my friends in great britain. anna: let's talk more broadly
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about your investments right now. talked about some individual companies that you might not be exposed to, but what about your broad outlook? fromwe are staying away any long-term strategy at the moment. what we are doing is putting a cross-sectional momentum strategies which are long and short different parts of the market. any long view the european market would be very hard to make because they are very different things affecting the market. there are increasing correlations between the equity markets, if you look at the u.s. data, any bad news effects asian equities. the u.s. market is the best
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performing developed market in terms of economic growth, r andpi is declining. going tosee what is push those equity markets higher at this point. guy: everyone else seems to be loving european equities. we think europe is the place to be. ana: absolutely, because there is no other choice. they do look devalued, japan we have seeing -- are seeing the story. europe fares better can there do other equity markets. i believe that is based on some , and it could be a not ideal strategy. many companies are actually suffering from the poor data in asia. anna: do you see more qe coming? ana: i think absolutely, we are
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seeing that qe has it to materialize in the proper equity market rally. whether it is the refugee crisis, or the volkswagen crisis, outside of any external shocks, i think equities will be doing well. anna: thank you. just aim you minutes away from the start of trading, we should note is an update from the semiconductors. and anyeye on features businesses that could be focused on that. that was from 10 to 11. ,hey cut their budget again there are some concerns about assets right now. guy: watch burberry, looks like it will fall pretty heavy. watch airbus, watch air france,
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this whole roster that you need to pay attention to. the banks, cannot exclude those as well. we back across the banks, let me show you where the european futures are given what they are alleging. equities are bouncing back, this could be the fed's story. most of the other european forces look at your follow as well. anna: that will do it for "countdown." on assets onupdate that sector. we will see you tomorrow, have a good day. ♪
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jonathan: good morning and welcome to "on the move." . am jonathan ferro moments away from the start of european trading. let's get straight to your morning brief. luxury warning. burberry purse at retail sales coming below analyst asked him it's desk analyst estimates. trouble on main street. retail hits a speed bump. the dollar declines for a third day. fencing in the city. the bank of england is to unveil financial industry performance today. topics we will be talking about. this is what future markets is doing.
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7.1%.tures up by caroline hyde has your market open. caroline: to what -- before we get to what could be a lunch for burberry stocks. remember 100 billion euros -- 180 billion in the past three days. we are likely to follow asia higher. cac just owning to warm up. pushing our bets on any sort of federal rate hike. those alarm bells coming from data. the retail sales week. -- the retail sales from the united states weak. .c 40 up


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