Skip to main content

tv   On the Move  Bloomberg  February 23, 2016 2:30am-4:01am EST

2:30 am
move."ome to "on the we are counting you down to the european open. takes theity crunch hatchet to dividends. profits plunge 92%. down after asmack tug-of-war between the prime minister and the mayor of london. the governor had his chance to speak. ihg announces a special
2:31 am
dividend. we will speak to the ceo of one of the world's largest hotel companies in just a couple of minutes time. hans, good morning. a number of things going on. yen one of the big movers overnight. we need to pay attention to it. hans: we have this axis then show crisis by mr. kuroda -- e xistential crisis by mr. kuroda in japan. i think it's one of the main stories, not the only story, but one of the main stories driving this sentiment. uy: the market already got there and it seems to be increasingly ahead of the central bank. look at what's going on with the fed. we will talk about blackrock later on. right now.about this let me show you what's happening on the terminal. at ise are looking
2:32 am
probably markets coming up by about .8%. likeean stocks look they're going to open a little bit softer in around 29 minutes time. hans: we've got to take a quick look at the assets out there. sentiment inisk the treasuries, down to about 1.75. on the 10-year, pound continuing to weekend. -- weaken. let's get the bloomberg business first word. bhp billiton has made a larger than expected cuts to its dividends, lowering the payout for the first time in 15 years. world's biggest mining companies seeking a protective balance sheet and credit rating. tumbledarter profits 92%. over 40% over the last
2:33 am
12 months. david cameron's campaign to keep britain and the european union has been given a boost. 36 liters of the uk's 100 biggest companies have signed a letter saying staying in would be best for the economy. that came after the prime minister fought back against the mayor of london boris johnson. he said sunday he would campaign to lead the block. corbyn accuse mr. cameron of putting the interests of bankers above the british people. >> we see the influence of tory party funders on prime minister's special status. not for britain, but for this city of london's interest. it's the same incentive that caused his friend, the chancellor exchequer, to rush to europe with an army of lawyers to oppose any regulation of the grotesque level of bankers' bonuses. the necessary to protect rights of non-eurozone states, u-widet to undermine e-wi
2:34 am
efforts to regulate the financial sector. >> global news 24 hours or day -- 24 hours a day. >> intercontinental hotel plans to return $1.5 billion to shareholders in the form of a joineddividend. we are by richard solomons. good morning. the market was looking for one billion. why the exercise? richard: we completed our disposal program, effectively. we sold in hong kong. we have had a good year. prospects look good. we have increased regular dividends by 10%. we are returning $1.5 billion to shareholders, which will make about $12 billion in business. it's another step along the road.
2:35 am
ofyou keep along the road becoming more assets-like. give us a sense of what further disposals will mean for further returns. give us a trajectory here. this has been the model we have followed for some time now. we have demonstrated the success of that. our pipeline of hotels is about 15% of the total in the industry. last year, we signed more hotels that we had since 2009, more than one a day. it demonstrates the strength of the brand and the strength of the business. in berlin.nichols one a day, more sign-ups, but how about concerns about terrorism? how much of that is weighing on your projection and just the general tourism seamount there? -- theme out there? incidents,rrorist natural incidents around the
2:36 am
world, we have seen quite a few of those. long tonot take them come back. paris is affected badly at the moment. they tend to come back quickly. sadly, it's a fact of life. countries. in 100 we are worried about safety of employees and guests, but it does not have an daft -- does not have a big impact on business. hans: most hotel rooms are in the americas. a lot of your revenue is from there. at what point do you make a shift more to? china -- to china? 60% of our business is the u.s. now. the second-biggest market is not china. if you look at the overall growth we have seen, china is growing test as fast as the u.s., so we are happy to be in both. we are not mutually exclusive. concentrate our business. 90% of our growth will be in about 10 countries.
2:37 am
we concentrate our efforts. we are the largest hotel player in china and we plan to open more hotels this year than any other. we see a great opportunity there. in the unitedk states you have room to drive it higher? give us a sense of the outlook on that front. formal: we don't give forecasts like american companies do. 4% growth in 2015 after a very strong 2014. hotel revenues correlate to gdp. we are continuing to see gdp growth. duringinue to see growth the future. it might be a little bit slower, but growth is growth. you can see in our business how we can turn to the reasonable topline growth. we have a business model that really works. we think prospects are good. >> do you think u.s. growth is slowing? look at financial markets and the way they are pricing.
2:38 am
some say the u.s. is headed for another recession. is that your expectation? richard: we are a cyclical industry. as a company, we see ups and downs. we have a resilient business model, being franchise, predominantly mid-market. their industry forecasts from the experts. they are looking for continued growth and to 2016. we certainly don't see a recession on the horizon at this point. >> you said in the past you think the business is oversized and you can compete. we are seeing significant consolidation within the sector. rethink caused you to what you think you need to do on the m&a front? beefing up for the possibility that you could be a takeover target? richard: we kicked off the when weation round
2:39 am
acquired something that has performed well for us last year. we continue to out brand. we think they are very high quality. a enhanced the whole portfolio. that is much more likely. it is a major transaction. we have a lot of scale. of theeline alone is 15% global pipeline. we are opening and signing a lot of hotels. we are big enough. we would consider buying a brand or launching a new brand, as we did recently with hotels in the u.s. and in china. it really comes from what our guests want and how we grow there as opposed to getting big for the sake of being big. something in front of me has been published in "the times" from london. on it. see your name i don't see patrick's name on it, either. is there a reason why you decided not to sign the letter? richard: we think it is a decision for the british people. are 5%as a company, we
2:40 am
u.k., 10% europe. -- it's for the people to make their mind up. >> thank you very much for your time. andext, david cameron brexit. we asked how the uncertainty could affect things. that's next here on "on the move." ♪
2:41 am
2:42 am
2:43 am
hans: welcome back to "on the move." i'm hans nichols in berlin. let's get the business flash. >> fourth-quarter profit that beat estimates after a quiet here for natural disasters. net income in the quarter rose to $930 million. the company announced that christine will take over as chief executive officer on july 1.
2:44 am
noble group warned it will post its first full-you're lost in almost two decades as the commodity trader recorded $1.2 billion in impairments and charges. the price of coal may remain low for an extended period. shares have tumbled by about 65% in the last 12 months. shares plunge after forecasts missed estimates. the maker of wearable health tracking devices projected sales between $420 million and $440 million. they cited concerns about competition. of its value5% this year. that is your bloomberg business flash. guy: thank you very much. boris johnson threw his support behind the exit from the eu. david cameron hit back. >> this process is not an invitation to rejoin. it is a process for relieving.
2:45 am
-- for leaving. i have known a number of couples that have begun divorce proceedings, but i do not know any who have begun divorce proceedings in order to renew their marriage the house -- vows . guy: today, it is mark carney's turn. how will brexit risk influence the boe? of --e the head saidtime you were on, you you are expecting a bit of a bounce back as a result. what did yesterday due to your thinking? >> that certainly changed it. i would highlight in the short-term. if you go back to friday, you see what sterling did ahead of the deal that was done in europe. sterling actually rebounded
2:46 am
strongly. it was monday again that it was reversed. the key point is uncertainty. at the moment, we have uncertainty. paribas, the market shorts sterling. one of the biggest shorts since 2008. remember, the market is not going into this event with neutral positioning. it has a strong buy. there is a weakness as far as sterling is concerned. therefore, the buyer is more likely to rally on positive reduction of uncertainty. downside couldch there be, i guess is the question some people could be asking. we have a negative price going in. the market is positioned negatively. if you look at what is happening in terms of the volatility story, you can see clearly the markets have a strong buy for the downside. yes, you may get a symmetric pops to the upside, which could
2:47 am
be strong and magnitude, but on the other side, it is lower and it still looks well set up. steven: mentioned volatility. that is a key point to focus on. , extremelyng elevated levels. in fact, we are at higher levels now. it shows you how much on a knife edge the market is here. 1.i would highlight, what i think is very important is david cameron throwing his hat into to basically signaled he would prefer the u.k. to stay in the eu. that is significant from the impact it could have on polls. the point we would make now is we have not seen any polls come out since david cameron threw his hat into the ring. once that happens, we might get a bit more clarity on the issue. hans: hans nichols in berlin. we have seen the euro and the pounds down. are they trading in tandem because of brexit fears?
2:48 am
is what is driving the euro lower entirely different? the pmi numbers yesterday, or is the euro story also a raking story? steven: this is an interesting question. there are different factors. as far as the euro is concerned, the key focus of the market now is the upcoming ecb meeting in march. the markets have been burnt before, in december. super high expectations for ecb easing. we think this is coming back into the market again. himself has been talking. believes he will deliver in march. the key point we would say is for the policy-easing, probably this time on the deposit rate, we think it is likely to keep -- prevented the euro from appreciating if he delivers on that. you don't think there's a similar dynamic with the pound, where the expectation is for weakening?
2:49 am
disappoints, delivers 10 basis points, is the euro primed to fall the way you are saying the pound is primed to fall? steven: it's interesting. i think expectations are the key here. the market heels it was burnt in december when it had higher expectations tha then what was delivered. what was delivered. i think the point we would make is the ecb is going to be continuing to ease, but, big but, we have a market that is still stressed. financial conditions are tightening. the key point we would say here is we need to see the other side of the equation working. raisingean by that is, expectations, particularly in the united states. this is what is sorely lacking. there isn't any tightening for 2016 from the u.s. in that environment. it's going to be harder and harder for the euro-dollar to
2:50 am
fall without higher u.s. rate hikes. blackrock making clear they think the market is mi spricing. we will talk about the yen's story and whether mr. kuroda is having a change of heart. minutes away from the open. we will be looking at stocks to watch. the bhp reported earnings. the opening is in 10 minutes' time. ♪
2:51 am
2:52 am
2:53 am
mightore on what we expect from bhp when the european markets open. >> thanks, guy. atcourse, we get earnings 8:15 u.k. time. what analysts are expecting, revenue, $15.9 billion, expecting commodities to be a major talking point.
2:54 am
of course, we saw hsbc hit yesterday both by commodities and asia standard chartered, more exposed to both of those. you can see the share price is more than halved. ceo bill winters has been really trying to basically boost the banks, reeling from losses tied to bad loans, suffering from lower commodity prices, and suffering from economies slowing, from china to india. this stock said, down more than 40% in the last year if you look at the trading in sydney. it moved a bit higher. larger than expected cut to the dividend, lowering the payout for the first time in 15 years, but also, first-half profits tumbled 92%. really coming under pressure. weaker prices and higher volatility across commodity markets are likely. guy?
2:55 am
guy: stephen, commodity calls -- steven, commodity calls. what is the last one out there? we think a lot of this is driven by demand or the fact that we don't think china is going to be the buyer. we are targeting $.65 on aussie versus u.s.. -- u.s. seeouldn't be surprised to the dollar rising to 1.50 again. guy: we need to talk about what is happening in japan with kuroda as well. we are heading into the open. we are four minutes away. it looks like the risk sentiment has faded. we are looking like we are going to have a negative open at the european futures. it's a beautiful day out there in london. few and chilly for the next
2:56 am
days. that seems to be the forecast for the markets as well. .8%.down we will have a negative open. watch the miners on the stock trading in a few minutes' time. see you then. ♪
2:57 am
2:58 am
2:59 am
guy: good morning and welcome to "on the move." i'm alongside hans nichols in berlin. we are moments away from the start of european trading. here is your morning brief. the commodity crunch. profit plunges 92%. the sterling smacked down. after a tug-of-war between the prime minister and the mayor of london sense of hounds toppling, mark carney has the speech. he testifies before parliament. and a $1.5 billion special dividend. the ceo of one of the world's largest hotel groups says he is not worried about the brexit threat.
3:00 am
let's talk a little bit about where we think these will go. week,sk dominated last and now it looks like it is fading. european equities look like they will open a little softer this morning. let's get to the morning open. nejra: last week, we saw european stocks jumped the most in the year. we saw gains yesterday -- will we see them sustained? it doesn't look like we were openoing to, the ftse lower by 2/10 of 1%, cac off by 1/10 of 1%. we still waiting for the dax to open. some of the sentiment being driven by what happened in asia, because of course it concerns over the strength of the chinese economy, the pboc lowering the yuan reference rate by the most in six weeks. we saw that drive some of the trade in asia. looking at the yen, we have seen this game against all its major peers, partly because of a move to the safe haven, but also we
3:01 am
have heard from the bank of governoruhik that his view has shifted, and that a significant. the other move we are seeing is the pound, low against the dollar. we saw a drop yesterday, also weaker against the euro. sterling volatility at a 2011 high, and he keeps rising. according to signals of the options market, the pound is set to fall further against all tis jeter -- all its g 10 peers. that's the currency markets -- let's take a look at what is happening in the main rivers. equity markets are open, bhp billiton down almost 3.5%. we saw it move higher in sydney trading; first-half profits tumbled 92%. the company made a bigger than expected cut to its dividend, lowering the panels for the first time in 15 years. a lot of pain for this company because of over commodity
3:02 am
prices. standard chartered at the moment just off by 1/10 of 1%, but we are waiting for those earnings to come in. analysts say to focus on commodities and impairments; they will be the major talking points. swiss re off by 6/10 of 1%. it beat estimates after a quiet year for natural catastrophes. they also announced that a you see year will take over in july. guy: thanks very much . when they take you into the functions and show you what is happening in terms of rotation that we are seeing around the stock sectors. energy is down. we are seeing oil off this morning, materials being the big losers at the bottom. let me read you through some names. bhp billiton, anglo, rio. loser.e the league and that is interesting -- in a
3:03 am
world where we see this fervor, this expectation of losses out of singapore, a direct read into glencore. that is probably why it is the league loser on the london market this morning. ryan chilcote joins us now, to has been monitoring bhp in the story -- it's reading across very clearly into the mining sector/ ryan: what's interesting is that their earnings come in on thursday but today they are announcing additional charges. what i find interesting is that each of these commodities producers, as is the case here, traders are reflected in their own way. their revenue comes from coal, and what they are saying is that their press assumptions for coal contracts going forward were too high, and they are scaling them back for thermal coal in 2020, verus what they were saying earlier.
3:04 am
if you look at consensus brokers it is at $69, so they are getting a bit more conservative. that pretty much tells the story. there was a little bit of asset write-down as well. they own a stake in one coproducer, but if you look -- in one colal producer, but generally speaking, the traders i have been talking to -- all the traders need to come clean on their balance sheets, and this feels like it is part of that. guy: let's talk about billiton. -- is itweird question a materials company in a mining sector, or an oil company? this seems to track the oil price more than iron ore. ryan: it is more of an oil company and the other metals producers. their oil business has been valued at as much as $25 billion. the perverse aspect of them
3:05 am
having this will unit is some people say it could be good for their share price, because there is an anticipation out there that the oil price may head north. the interesting thing we saw with this share less and spend less strategy is that on the back of the dividend cut, which came in at 74%, investors thought they might have it. on the back of a spending cut over the next two years, they are shaping $3.5 billion for . they will have the money to buy more oil assets, which is quite a novel idea. they just wrote down $7.4 billion of their shale assets in the united states, and now they have money to buy more conventional oil assets as well as copper assets. they are looking at places like the gulf of mexico, because they see that as an interesting
3:06 am
space. maybe there is an opportunity. it seems like yesterday the story was very much broken into the psychological level, and today it seems we have had a psychological reversal just on the dividend story. my question is was yesterday the puncture, $50 for iron ore? was that overplayed, and today we are coming back to reality? ryan: you know, i think what we're seeing is a lot of the commodities producers and traitors out there saying that this idea of an ever greater dividend is just not sustainable, recognizing the fact that there is a commodities cycle, it is vicious, and you will have to cut. with bhp billiton, they will pay at least 50% of underlying earnings. we're not going to pay you more in terms of dividends every year. bhp was paying as little as 900 million dividends in 2003.
3:07 am
fast-forward, last year they paid $6.5 billion. it is really difficult in this climate, when you have very overe control. ove prices. jettisonning the policy with the iron ore price, particularly if you are in the iron ore space, is becoming an increasingly popular one. guy: great stuff. ryan chilcote walking us through the latest out of bhp. --phen is still with us read across for media oil story into your space. commodities, currencies, everything else. we're leaving a little bit of that today, nymex trading down 2%. if we do get a bounce in oil, what does it mean? >> i think this is interesting. the key point i would hire here is that we are seeing oil equities.d also
3:08 am
from that perspective, it is an improvement in the global risk environment, which usually should be was supported for the dollar. at the point we are highlighting at the moment is it's not translating to the market, pricing in higher fed rate hike expectations. the market has priced out any hope of a rate hike, and this is where the dollar is taking its lead. if you put that combination together, it is going to be difficult for the dollar to rally, even if oil continues to do well and equities continue to do well, because the market is not expecting a federate hike. guy: you guys don't have a federate hike priced in this year, nor next year. you can see what is happening in terms of this price move. this is the market pricing out rate hikes, and if you look at his deck 17 contract -- t really highlights to me the market move, and i hast been,
3:09 am
many would argue, the move of the year thus far. you've just got to watch this like a hawk. >> i think so. particularly foreign exchange for the dollar. that's a great chart you pull up -- you can see after the hike in s continuingrket to price in higher rates, but that reverses in january and february. this is the state of play in the markets, and we will have to see a big turnaround in terms of the fed to get the dollar to move. the dollar is going to really struggle to rally now in the first 3-6 months of the year, is for aink the bias lower dollar. dollar-yen, for example, should break around 110. guy: an interesting view chatting with u.s. and european clients. we'll talk about that a little later. steven stays with us. up next, earnings from standard
3:10 am
chartered. will we see another banking horror story? we will bring you the results live, next. ♪
3:11 am
3:12 am
guy: welcome back to " on the o "on the move."
3:13 am
we're down maybe 6/10, 7/10 of 1%. now we are down close to 1% on all the major indices. let's get to the bloomberg first word with nara change. h nejra chi -- after the prime minister fought back against boris johnson, who said he would campaign to leave the block. leader of the u.k. opposition party accused him of being in the interest of bankers above the british people. >> we see the influence of tory party funders on the prime minister's special status. not for britain, but for the city of london's interest. it is the same incentive that cost his friend to rush to europe with an army of lawyers
3:14 am
to oppose any regulation of the grotesque level of bankers bonuses. it's necessary to protect the rights of non-eurozone stakes, but not to undermine eu-wide efforts to regulate the financial sector, including the boardroom pocket stuffing in the city of london. pharmaceuticals says it will restate some of its earnings after a board committee reviewed the u.s. drugmakers relationship+++
3:15 am
pharmacy philidor. about $58 million of revenues previously recognized in 2014 should have been inputted and subsequent periods. guy? guy: thank you. standard chartered numbers are about to drop on the bloomberg. we're waiting for them to come in. let me tell you that the stock is softer in advance of the figures. i can show you the three-day chart. we did see something of a bid back in, friday into monday. the stocks held in rallied into the close, but we lost some of that. we're waiting for these numbers. credit quality will be a big we sawere, as is -- this very clearly in the hsbc numbers -- the exposure into the energy sector. that is one area analysts will be looking clearly at. that hsbc number was disappointing because of the energy feeding into the bad loan book. adjusted pretax profit of $834 million. in terms of the the tier one ahead ofey're well some of their european/asian peers. still in the 11
3:16 am
area, a pretax loss of 1.5 2 billion versus a 4.2 4 billion last year. --'s take it to the numbers i want to show you the share price. this is just before the numbers we are now extending those losses. -- this is just before the numbers. we are now extending those losses. this is the three-day line here in terms of the share price. hans, compare and contrast. the standard chartered numbers look a little disappointed, but compare and contrast for me. hans: well, the compare and contrast the deutsche bank, that tier one ratio -- which for them is a 12.1%, and 11.3% for deutsche bank. a better bank -- one number at want to look at, adjusted pretax came in at $143 million. the estimate was for 137 billion. a big miss on adjusted pretax.
3:17 am
they are not saying anything about their dividend, so think that is the story. guy: and i think a lot of people are paying attention to this as well -- annual incentive payments down by 22%. so i suspects there are plenty of people watching this program right now paying attention to that. a miss from standard chartered. the estimate was 1.37. the company is saying it will deliver future cost efficiencies over three years. the stock has from the little bit. we initially saw in knee-jerk reaction when the numbers came out. we have taken some of that back, but it is still reasonably volatile. let's get back to the currency markets. the yen has gained ahead of the yuan, driving investors to them as a haven. it's something of the story --
3:18 am
let's bring back in the head of fx strategy at bnp paribas. i'a number of things going on. the yen has done exactly what everyone expected it to do, i.e., it has strengthened. we also saw this interesting story overnight about kuroda, just a hint of the fact that maybe he is a little concerned that monetary policy isn't doing what he expected it to do. >> i think this is interesting. the point we would make is up until a few weeks ago the japanese strategy has been to focus on qe, the expansion of its balance sheet to achieve its inflation target, primarily through weakening the yen. but if you look at what other central banks have done, kicked off by switzerland, they have gone into a negative su-- and this is the change. when they moved a few weeks ago to a negative deposit rate, i
3:19 am
think they were knowledge and that there are limits of wanted to using alone. the point we would make going forward is that this is likely to be a trend, among many central banks. the have the swiss with the most negative, this weaves have followed, europe has gone down that road. we expect the ecb to cut further. now the japanese are coming to the party. this is a real change as far as central bank's focus on negative deposit rates. guy: hold on a sec. we he did talk about the fed. i want to take you back to standard chartered and show you what is going on, back to the initial ambivalence about the numbers fading. the stock is now down 6%, a very significant drop for standard chartered. we just need to update you on that, because we are seeing where the world's biggest banks under pressure. it seems to be something that is not much of a surprise these days. a wholeutsche bank,
3:20 am
series of banks around europe disappointed, in standard chartered continues in that club. hans, jump in. that i want to get back to yet question -- i don't want to call it an existential crisis that mr. kuroda had, but he didn't seem to have a crisis of confidence. is that a question about the negative interest rate, or about quantitive easing, or both? where is the less confident in the leverage they have? >> i think really the answer to this question is with the currency. ago he changed a few weeks to go to that deposit rate, i think you could argue pretty clearly the depreciation of the yen. that was great for three days, but look where we are now -- 10 figure's lower. i think this is the key issue here. the problem mr. corona faces of the bank of japan is similar to what mr. draghi faces at the
3:21 am
ecb. if you don't have to market pricing in u.s. rate hikes -- i.e. policy divergence -- it is very hard for central bankers on the other side to prevent their currency depreciating. it really is a catch-22 situation here, and i would argue that the best thing to we can the euro -- two weake the euro or thken -- guy: we are back with you in a couple minutes time. up next, don't underestimate the fed. that is the message blackrock is sending investors. we will give you the details, next. ♪
3:22 am
3:23 am
3:24 am
francine: welcom hans: welcome back. don't underestimate the fed it -- that is the message from black rock, the world's biggest money manager, as they warn bond traders that they are not ready to raise rates. futures are showing less than a 50% chance that they will act this year, down from 93% at the start of the year. steven, picking up on that
3:25 am
conversation we were having earlier on how this is all about other banks not being able to have the leverage because of the expectations of no rate hike in are we back to this key shooter argument? this peashotteoter argument? >> well, i think it is increasingly difficult for them. 1.i would highlight oone point t is that the perspective is different outside the u.s. if you look at the u.s. this por argument? economy, things are fine. the most recent employment was a new low, very consistent with conditions that would allow the fed to tighten. however, we have global uncertainty, and this is a key one, tightening of financial conditions. our view is that the latter
3:26 am
factor, the tightening of financial conditions, is not going to allow the fed to tighten this year. we agree with the futures markets. we think markets shouldn't be expecting any near-term rate hike. guy: let's talk symmetry. if beside goes even once this year, that will be a surprise. what would draw a market reaction based on the idea of know what, we're not worried about this. we're going to tighten. >> i think that is interesting. to weeks ago, janet yellen true our attention to some actual conditions in the u.s., and are merely the three factors were the dollar itself, equity markets, and credit markets. i think this is what the fed is looking at now. she will question if those factors did improve and the fed did surprise market with a rate hike. that would certainly be positive of the dollar, and it would probably help out the ecb and
3:27 am
the japanese would like to see a weaker currency. but we really need to see a sustained a permanent financial conditions for that to happen. guy: thank you very much. steven at bnp paribas. up next, we will take it to barcelona. ♪
3:28 am
3:29 am
3:30 am
jonathan: 30 minutes into the catch trading session here in europe. a tough session in the market. standard chartered getting absolutely pummeled. let's get the details with nejra cehic. nejra: thanks. this is one of the stocks i watching today -- you can see it down 9% at the moment, dropping the most since 2012. the company reported a surprise, full-year loss as loan impairments almost doubled to the highest in the bank's history. the pretax loss was $1.5 billion, down from a profit of $4.2 billion a year. that stock really getting punished. one of the biggest gameers is h
3:31 am
thalessa. record, anded a growth of military equipment deliveries led to a 44% surge in profit. the cfo said on a conference call that "we have come to an inflection point on defense spending." the company is feeling more positive about defense budgets going forward. bhp billiton -- one of the biggest decliners as well. first half profits tumbled 92%. the company made a larger than expected cut to its dividend, lowering the payout for the first time in 15 years. of course, this company came under real pressure last year with the drop in commodity prices. commodity producers are the worst performers on the stoxx are that year to date they the only industry group on the stoxx 600 gaining, and the stoxx 600 basic resources index is in the bull market. guy: thank you very much. oet's go from minus tw
3:32 am
mobile. over to you, caroline. caroline: nice, guy. i'm joined by one of the biggest chipmakers in the world. thank you for joining us. >> thank you for having us. caroline: you are in everything -- auto, mobile, connected devices. how worried should we be about the so-called saturation, the so-called slowdown we are seeing in the hiring of the mobile sector? >> i think we have all realized that the high-end smartphones aren't growing at the same rate. the key is the killer applications, the functionality. we think some areas like mobile wallet, which makes our life easier, is an opportunity to continue to seek growth in the smartphone area. we think the opportunity to have that security comes along with the convenience of the mobile wallet. it's really the key that we are
3:33 am
focused on trying to provide. caroline: we have facebook and mark zuckerberg, a call to arms yesterday. hey are trying to push forward connectivity, 5g. where are you in the 5g spectrum? i know you have strategic announcements, you are working with many -- >> we are. we are working on the processing capability. we think, as we look at the future, the so-called internet of things with 50 billion pieces by 2020, it will require different technology to facilitate that. want to be sure we can provide that not only on the endpoint, like on the mobile wallet or connected car, but also on the infrastructure, to be able to fill so take that. -- to facilitate that. francine: what investment is needecaroline: what investment s needed? >> it requires all copies to
3:34 am
work together, coming together to make sure we have a common platform that can support that, and provide the ability to move massive amounts of data in a very efficient manner. you add 50 billion pieces, think about the bandwidth able to support that. caroline: so from your perspective, what are you looking to invest to 5g? >> for us, it is about driving that infrastructure on the networking side, and on innovating technologies. we just announced yesterday the so-called nfc ring, where you can use your ring as your payment device, to start a motorcycle. ease of use, convenience. caroline: when we look at what is happening in the auto sector -- you were just talking about unlocking a motorbike -- you're the number one chip provider when it comes to the car side of the equation. when are we going to see the
3:35 am
first automated vehicle? >> the first devices will be shipped in the 2017 model year, which we shipped later in 2016. that will be a high-end general motors vehicle we are working with delphi to provide vehicle to vehicle communication. the other area is radar. if you look at the so-called google self driving car, with a shoebox sized thing, we just announced a month ago a posted solution that can do the radar capability. google was talking about putting this around the car, putting you in a safety cocoon where you have multiple radars to make your driving easier and for safe. caroline: you are working with general motors, with google -- who wins at the end of the day? >> we're kind of like switzerland. we want to provide the technology to everyone so that driving is safer and more
3:36 am
efficient. we can provide that fundamental capability. caroline: of course, an autonomous vehicle coming on the market next year doesn't mean we get autonomous driving. when do you think we hit that? >> i think the next half decade, it is more about to make driving easier. it's not about making it automated on a ubiquitous basis. i think a decade from now we will begin to see a significant percentage of cars that will be autonomous in japan. for the 2020 olympics, they are trying to facilitate autonomous driving, to have self driving cars to get you from the mass transit systems to the venues. that is one example where i think they have a fine idea of where will be of limited. but for us, it is just about making the car safer. radar combined with vehicle to vehicle communication and processing makes driving safer. if we can reduce the number of accidents, we can save lives, and reduce the cost of repairs. caroline: you were just telling
3:37 am
me -- in over seven years at the helm, it has changed a lot. has gone from 16th place to number five in the chip world, and you have done that through m&a. just announced that $11 billion deal. will we see more consolidation? >> i think we are continuously consolidating in this industry, because the industry is not going to grow as fast as it needs to. we are talking about single digit growth in this environment, so i think we will see consolidation. for us, it is continuing to accident on scale, and making sure we integrate successfully. if we do that completely and generate a significant amount of cash, then clearly we will be in the market and continue to be a leader in driving. caroline: what areas will it buy? >> we have to be careful talking aboutspecifics, but it is
3:38 am
additional capability, they be strengthening positions on connectivity. we think about 5g broadening that be on the processor side. caroline: always a joy to have you here. thanks for joining us. we could see autonomous vehicles going, and a little more m&a in the sector. guy: thank you very much. fascinating interview. i want to take you back to standard chartered. has had its first annual loss since 1989. let me show you the anr function. this is the price target the market had, and the white line below it is the price, do wn. there are only four cells on the stock this morning. thatould argue, hans, people could say -- why am i selling the stock after it has been so badly beaten? are feelingys
3:39 am
pretty smart this morning. hans: i'm glad you save yourself story, you look at the it seems to be an overall weakness in the banking industry. that is what we were talking about two weeks ago. the numbers are bad, but this does give an indication of how much concern there is. if you move respect the central bank conversation, to what extent is mario draghi wearing two hats? is he just worried about price stability? if he is just worried about price stability, the chapter starter, deutsche bank have a couple years ahead of them. guy: what is interesting as they ne, butup their tier o like hsbc, what we are seeing is right across from the energy sector in particular into the bank's numbers. i wonder whether it is a central banking story
3:40 am
. it's a saudi story, an energy story, shale story. stability in the oil price could begin news here. hans: yeah. it's two stores, right? it's a nonperforming loans story. that's in the energy space. we have this massive, theoretical question about shale oil, but this is the real application -- nonperforming loans weighing on banks. it is not necessarily weighing on balance sheets, and you make a good point that tear one capital is higher. but profitability i think is an important issue. , we will be staying with the standard -- up next, we will be staying with the standard chartered story. ♪
3:41 am
3:42 am
3:43 am
guy: 43 minutes into the equity cash session here in europe, and the london market is above 6000, down by half of 1%. one of the reasons for that , standard chartered taking it hard. we are seeing things picking up, but we are still down for now. the dax is the big underperformer this morning. standard chartered in london down by 9/10 of 1%. the ftse retaking that 6000
3:44 am
mark yesterday, but we are softer this morning. let me show you some of the other asset classes. the yen was fascinating as well dollar-yen, 112 right now. we are seeing the dollar weakening a little bit. that takes you back into the yen, which did affect the nikkei, we started ok. the u.s. 10 year -- keep an eye on that. on -- after the pummeling we took yesterday, the pound is flat after that big 2% drop, brent at $34. we have these fantastic liveblogs on the terminal. we'll be able to track it for you minute by minute, second by second.
3:45 am
bloomberg customers, it's an absolutely fantastic function, these live blogs we have. i'll show it to you a little later in the program. standard chartered is the bounceback, the stock really falling precipitously at one point, but beginning to recover for a little bit. seeingeless, we are quite a significant weakness in stock following the numbers, the first annual loss since 1989. let's get you across all the asset classes, with all the news. here is nejra cehic. nejra: thanks. intercontinental hotels have announced a $1.5 billion special dividend as the company posted 2015 operating profits before it's sectional items. that was a little ahead of analyst expectations. meanwhile, the ceo told us that he is not concerned about the threat of the brexit. >> we think it is a decision for the british people. they can make their own minds up. 5% u.k., a company,
3:46 am
10% continental europe. i think this would have a massive impact on us as a company. nejra: swiss re beat fourth-quarter estimates after a quiet year for natural disasters. net income rose to $938 million. the company also announced that a new chief executive officer will take over in july. orders reached a record after the maker of missile guidance systems solid growth in military quick deliveries that led to a 44% surge in profit last year. it became more optimistic as military budget is set to recover from cutbacks during the global recession. standard chartered shares have fallen sharply in london trade this morning as it reports a surprising $1.5 billion
3:47 am
full-year pretax loss as loan impairments doubled to the highest in the bank's history. the bank shares fell by 50% over the last year. guy? guy: thanks. let's pick up on that story, a bit more about standard chartered. not a pretty picture. michael joins us to walk us through the numbers. is this the winter kitchen sink we are seeing here? micheael: a little bit. i don't think it would have been good either way but it took that restructuring charge, so they are getting some of the mess out of the way. impairments, loan so there is a lot of messiness. how much of that iswe loo energy and commodity related, or is it too difficult to press it
3:48 am
down and assign it to specific sectors? michael: we haven't gone through the details yet, haven't seen all those charts yet, but yesterday with hsbc, you saw it with the u.s. banks, oil and gas leaving a lot of the loan impairments. guy: they kicks the tier one a little bit higher. quite a significant move from last year. that has got to begin news. what does that signal about where the bank is? when investors take a step back, do you think they will see the number called alm down? down, but from a year ago it is significantly higher. they're obviously trying to solidify the bank, because it is
3:49 am
going to be a bit of a rocky time period with emerging markets the way they are. if i could jump in and take you back to your old stomping ground in new york. we have this remarkable weather out, making his apology. what do you make of it, and what you make of the delay? why is he speaking out now, and what will the implication be in new york? michael: i have to imagine the delay is due to a lot of legal and regulatory issues, and there have certainly been a number of cases that were brought out of the london whale incident. as far as his letter saying -- lot of the e-mails show that it was not a rogue trader, that it was a bank trading strategy that went wrong. sayingon't think he is anything particularly controversial there.
3:50 am
you saw there was a lot of discussion of the strategy at the highest levels of the bank. guy: it just adds to the noise, these complicated institutions, the politicians and regulators increasingly concerned about -- we have heard from fed speakers talking about it, worrying about it. it will just make it harder for these banks to win that regulatory war. michael: right. a lot of times, too big to fail and two big to manage -- and too saw there was a lot of discussion of the strategy at the highest levels of the bank. big to manage our treated as the same thing, but really they are two separate things. i think those are two big issues, two different ones. too big to fail can be solved by regulators, but not manage. guy: interesting to hear what they said about that. thanks are bringing us some
3:51 am
analysis on that. tlive you to go to the function later on standard chartered. it will be a 10:00, and it will be on that function. if you want to figure out what is being said on that call, make sure that is the function that you go to. we will take a look at the business climate in germany, and ahead of the eco-survey at 9:00. ♪
3:52 am
3:53 am
3:54 am
guy: welcome bachans: welcome b. german export data came in a -0.6% year-over-year. in 10 minutes time, we will get the east coast numbers. the current idea is 101.6, way down. a long time since we have been south of 102. guy, what do you see happening here? richard, when you look at this data, is that yet another example that something funky is going on in the german economy? michael: i think you are absolutely right. we have the ecb in a few weeks -- this will be lost on them. and germany is meant to be the engine of europe. if it starts to folder, that
3:55 am
doesn't figure very what -- to falter, that doesn't figure well with the rest of europe. guy: and draghi will do what? richard: there is still an internal debate -- what do they want to do? do they just want to extend qe? it will make the debate that much more interesting. we have got about 10 or 12 basis points price for march, so should they choose to surprise the market, they might have the impact on the currency, which i think is one of the things that is their major concern. guy: what did they say yesterday about sterling? what to expect today? richard: big move yesterday. we are consolidating at lower levels. there is a feeling that this will be a very long campaign, and it will be choppy. but it will be interesting to hear what carney says today. up until now, the bank has been but youite on brexit, know that lawmakers will have some direct questions.
3:56 am
they will be interesting to see if they offer an opinion. guy: how witty phrase that question? it comes back to the financial conditions question. -- does that down make it easier for you to hike rates? that will be the question i would ask. the pound is now a lot softer. talk me through the implications. richard: if one of the things driving the pound is brexit concerns, and all the uncertainties it engenders occur, i don't think the bank will be quick to hike rates. i think the uncertainty will try ump everything else. if it is bank of england stuff, that's one thing. if it is brexit concern, that is another thing. guy: richard jones. i want to urge you to go to the top live section on bloomberg.
3:57 am
later, we have the saudi oil minister and the standard chartered. "the pulse" is up next. ♪
3:58 am
3:59 am
4:00 am
yen rallies but black rock warns that the markets are underestimating the feds resolve to hike. the opposition labor party prepares to unveil its position on brexit. and standard chartered the latest casualty of the commodities crunch. loansts a lose as impairment double to the highest ever. good mor


info Stream Only

Uploaded by TV Archive on