Transcripts For BLOOMBERG Countdown 20240622

A little more epic than it is now. There is plenty else going on. The outflow has continued, everyone else is can trying to reenact react. Laws the vietnam vietnamese, you see big things like that, you know things are happening. These are the two things for today. You have china going on, and he said and the fed. They are two big weights. Ways, they said is looking to move policy, and so are the chinese. People feeling that any stimulus would signify a worsening in the economy. The good news is we get Federal Reserve minutes. How much where they worried about chinese stocks then . We did not know how they were responding to the evaluation the valuation. Guy we have a great show. We will be talking about greece. One vote in the netherlands and another in germany, we will run you through those. Lets continue the conversation surrounding the asian market with juliet. Juliet good morning. Ride on the shanghai market. It is down by 2. 9 . Worth lossesn earlier in the session when it looks like we were getting a repeat of yesterday, the market was down by 5 . Still seeing the hong kong index is down 1 . You can see that investors foreign and china Retail Investors bailing out. It is all to do with the devaluation. That rely on exports are coming under pressure. Cosmetic companies are under significant selling pressure. Japan is being sold off, down 1. 3 . We had export numbers showing a slowing in july. Elsewhere we are seeing good gains in australia and new zealand, also malaysia coming back after a big selloff. Yesterday thailand had a 2. 6 drop following the deadly blast in bangkok. I want to show you some emerging market currencies, you mentioned the devaluation of the dong. Saw bigg falls falls. The u. S. Dollar is down a percent. The third devaluation either vietnamese dong, 22,390 against the u. S. Dollar. It is down to 5 almost against the u. S. Dollar. I big slump coming through in commodity and currency prices. Kirilenko caroline that brings us to the twitter question, is china still a longterm investment . Beerestingly, we will speaking about the norwegian wealth fund. They are not yet put off by china. Do you want to find us on the terminal . If you are on, you know where to find us. Probably not the best set of corporate results. Elliott joins us. Profit in line with analyst estimates, but the big carlsberg is expecting fullyear operating profit to decline. , previously they had expected to grow. Some analysts had been warning about this possibility. Now we have it from the company itself. Lets not forget, this is a company that gets a quarter of its operating profit from russia. The big headline from carlsberg, fullyear operating profit is expected to decline. Previously, analysts had expected it to grow. 9 decline in the russian market will be hitting them hard. That is a market you dont want to have a significant foot print on. Lets talk about what else we are watching. Germany is due to vote on the greek package today. We also have the dutch vote with hans nichols. What can we expect . Math looks good for getting this through, 60 vote lost last time. They just did a straw poll last , itt in the cbo cdu looks like merkel will push this through. Topassed in spain yesterday, 9720. It passed estonia, the committee, and austria. The big tests are germany and the netherlands. The European Central bank has actually lowered liquidity assistance, the First Time Since february. Me number came in at 89. 7 billion euros, it has return to normalcy on the banking side. We are still in interesting territory. What is going on the netherlands vote . They discussed how they could stabilize the government, a lot of mps are annoyed at the way this is being pushed through. In 2012e Prime Minister campaigned on what on not one more sent. The bailout will be 5 billion euros. The head of the rightwing Freedom Party only has 12 seats in150 Seat Parliament a 150 Seat Parliament. It does look like it will pass, the actual bailout package. After that you have a question whether or not the government is stable enough. Right now they have a 76 majority in a 150 Seat Parliament. That is a one seat majority. It is shared between the liberals and labor right now. We will see if that will stand the challenge from the rightwing. They gives you the sense why the dutch finance minister was one of the hardest critics and one of the hardest negotiating partners for greece. They always knew they had this domestic challenge at home. Guy as we learned yesterday, you are better at to god geography, maybe we are better at math. Caroline we break down the stories that matter. Commodity rises hit 13 your lows. They affect earnings in the largest commodity supply. We discussed the final hurdles of the bailout today. Why china stocks are not a dealbreaker for than netherlands. 6 it is 6 1 to in london 12 in london. Caroline the dong has been weakened by 1 . The concern for a federal iserve rate increase troubling. Guy dutch lawmakers vote today on an aid program for greece. A 3. 2omes a day ahead of billion euro greek repayment. They begin their debate at 8 00 a. M. U. K. Time. Kirilenko japans export growth is slowed in july, in a sign that foreign demand is failing to provide much support for the worlds thirdlargest economy. They are slowing from a 9. 5 gain in june. Guy police in thailand say they are confident in finding the man bomb. Sible for a he arrived with a backpack, but left without it. Hit the tourism aspect of thailand. The human cost of the devastating explosions and towns an have reached 1. 5 billion. It is the 10th biggest port in the world, much of it remains closed with importers seeking alternatives. The World Biggest Sovereign Wealth Fund reports earnings this morning, but with norways exposure to oil, and no sign of an end in a collapse in the commodities space could mean it is in trouble. We are joined from oslo. What are we expecting . The returns in the fund are in focus, what are we looking at . The turns to be flat for the second quarter. The fund is a good measure of what is happening in a global market. You can forecast on what they will come out with. Kirilenko what is interesting for us is the relevance when related to china. The Sovereign Wealth Fund remains committed to china in terms of buying off assets, despite the route we have seen. That is one of those things we want to hear more on. Now with onery out of the cios of a fund he was in charge of allocation strategies, he said as a longterm mostlyent fund it is looking through the volatility in china, the policy changes, they are sticking to their plans to bump up investments over the next couple of years in china. Guy why this focus on china . I get the sense of where the fund is, as it looks around the world and try to figure out exactly where the best investments will be, why the focus on china . They are out there trying to capture global growth. Couple of years ago they said they will start moving away from europe little bit him and going into emerging markets, which seem to be the growth motors to the world. Caroline that is a longterm debt. We potentially want to get it on our twitter question of the day. Thank you very much, indeed. Guy is china a good longterm investment . The timeframe for your investment, critical. You can find is on the terminal us on the terminal. Caroline the commodity crunch is continuing. Oil is in decline, and copper tumbles for a fifth day. The bloomberg Commodity Index is since 2002. Ast seen downthe route has dragged commodity giants like glencore this morning. And paulng in javier gait. How the air, lets look at the background for the foreground of , copper is being hit hard, and most of the complex down as well, how much of this is china . Javier it is a combination of both. If you look at copper, that has been the highlight of the last two days. That is suggesting we have copper prices below 5,000 for the first time in six years. China is 45 of the copper consumption. It is a china story. Thes not helping butluation is contributing, china is driving this drop in oil and copper. Caroline lets bring in paul gaits gate. Earlier we had production numbers from glencore looking strong. Production aside, the prices, are they doing enough to preserve themselves when we see this massive fall . Prices hit glencore, they hit all of the producers of industry metals. We are seeing it come under pressure. Is if theon you have level of production sufficient . If they took some off the market, with that move the price . If you look at the overall production, it is nowhere near rio tinto. They have taken tons off of the market in copper, they have a greater market share. That has had some impact, albeit not as much as they would have liked to have seen. Guy you still have an outperform rating on the stock . Are you comfortable with that . Paul if you look at the history of copper, relative to any is ane of economics, this exceptionally painful point. This is worse than 2002, this is about as bad as it gets. In. Tied to the deep slump chinese production and property. If china will grow at 7 , sooner or later they will need to bring build more houses. As soon as we get any kind of pick up in industrial activity in china, we will see the leverage of that in Commodity Prices. Theyine is this something feel this has to come to an end . Hobby are absolutely javier absolutely. Lets not forget about the supplyside. Producer,a big copper having problems with power supplies. Chile is also having problems with mines. Been a powerful metal because it has seen supply constraint. It that is something glencore had been saying. Think anyone else in the sector will be investing in this. , how do youmeantime want to hang onto this how long will you hang onto the stock . Is that triple b rating secure . Kenny Trading Division rely on that for a cheap credit and the Trading Division rely on that for cheap credit . Paul the trading business is critical. Certainly the one that they talk about delivering the earnings profile for the group. As we have seen from earlier in the month, showing a week level of performance, the people have jitters. It is difficult to see through that trading business. Worst are discounting the for glencore, they are saying they do not know how to value the trading business given the level of volatility in the commodity price. Itou think the numbers is hard to predict it is going to be as bad as they are suggesting . Look at the operating cost, it is about 1. 5 billion. It was 3. 6 billion last year. We are above that in terms of where we see the industrial and trading business delivering. It will be a big step down from last year, the question is how big that correction is. Then the question is, are you discounting that lasting perpetuity. A in the worst possible outcome is in perpetuity with no outcome insight. Caroline give us a sense of the rest of the Mining Sector . Are we seeing other analysts seeing the worst possible moment for the other stocks . Our people rebating them rerating them . Hobby are has been looked at. We have seen a recovery in iron ore prices trading close to 60 a ton. That will benefit valley, and bali and brazil. On that fence come a we have seen a bit of a Better Climate for those names. At the same time, you have copper down to 5,000. Aluminum is also down. It is difficult to see in analysts get excited about mining. Hannity screwed up so badly. Paul you are talking that the chinese domestic market. That is a bigger issue. Is he a smart guy . Yes, he is a billionaire, i am not. Lets assume hes smart. I dont think the fault can be if you look at the chinese domestic market that is 4 billion tons, a small growth in that grows a huge demand in the seaborne. Is cold a good longterm bet . Clearly that has to do with fossil fuels. Coal is still by far the cheapest source of energy in a world that is still short energy and is trying to develop an industrial world role. Caroline is he doing enough . We have seen glencore do things in terms of oil. Are we seeing them cut back in terms of production . They doing enough to tackle this . Paul the first thing we will see is what the operating costs are doing. Can they get the productivity up in their minds, are they able to get the operating costs down . Will they see relief, that will be the first task. The second is reinvestment, adding new supply. Rosenberg said he will not be anysting anything new in expensive projects that have characterized the Mining Industry previously. The next thing we should look at is, are they going to take tonnage off of the market. He has done that. Not been for that action, i think the question would be come out what will the coal price be . The question is, how much worse that it have been would it have been . He is taking responsibility. That is the big issue that has characterized value destruction in the Mining Industry. It is supplyside management. Guy thank you very much. Air gait, and hobby javier. Line we will be speaking to the senior at glazier. eeeeohmumohweh hush my darling. dont fear my darling. the lion sleeps tonight. hush my darling. man snoring dont fear my darling. the lion sleeps tonight. woman snoring take the roar out of snore. Yet another innovation only at a sleep number store. Caroline welcome back it is 6 30 here in london. Guy the emerging markets story the central bank of vietnam has devalued their currency. Devaluationed the and the possible impact of the u. S. Role reserve rate increase. Caroline german and dutch lawmakers vote on an aid program for greece. Spain, austria, and estonia all past a deal yesterday. German group begins their debate this morning. In japans growth grew july. Shipment values were up from an earlier year. It slowed in june. Caroline police in thailand to say they are confident of finding a man suspected of planting the bangkok long bomb. He arrived with a backpack, but left without it. Thailandsmay hit last remaining growth sector, to risen tourism. Guy the human costs of the devastating explosion in tianjin more. Ached fed expects most of that cost to affect shipments. Importers are seeking alternative facilities. Caroline lets check in with the market. Flowsis coming off of it was. Guy the market was down 5 . You can see the bounceback here. Dow is down 2. 5 . If you look at it q literally cumulatively you can see the extent of the drop. At one point we were down 10 over two days. Kirilenko yesterday we saw this margin are we back in the dark days of july when we see that selloff . We are breaking below that 200 day. The technical indicator means there will be a selloff, there has actually been a rebound. It seems to be that people are questioning whether the government and a central bank will continue to support the stock market. Many think they will step back. Guy lets get analysis and where we are going next. The cio of london and capital joins us. Good morning. What the make up guy what do you make of that . We need to separate the real and financial economies. The government has been letting this go for as long as they have because it wants to show the domestic market and the dangers of too much speculation. Stories, notose necessarily what goes on in the asian market, but rather the applications to global growth, to what extent this triggers what has happened in the last two years few years. A currency war would destabilize many smaller economies around china, and export deflation. Vietnam we have had devaluing the dong. Other think we will see comments react . I think so, i think korea is probably next. Guy what other region . On anotherll embark expansion of the Balance Sheet. The signs are not positive. Unstableeasonably political region which could nastynto a pretty Competition Among economists economies which are hearing the drones of war coming from the fed and higher rates and dollars. Stories. Ave separate the Asian Financial crisis happened, and greek banks were to react and knew it was a risk to the u. S. Economy. We have david mile, outgoing yes, but talking about a rate hike in the u. K. Happenings in happening soon. Can they sit sidebyside . Forget in theory, asian economies are much better equipped now. Guy in theory. In theory. I am sure that some of the data that we have been told about, how much i own in terms of reserves, or how much growth i am actually having, look at the data, im not saying it is wrong. It is positive to see 6 growth, and electricity consumption and zero both 0 , it does not make sense. Overall the main asian economies are better ,quipped to dealing with corporates in the reasons in the region are less dollar than they were before. It also has to do with what happens in the u. S. Caroline you are sounding pessimistic on what could unravel in asia. What do you do in terms of a portfolio . Has everyone gotten out of asia . Or is it get out . The good news with equity markets in asia is that people have seen the famous taper tantrum speech of two years now. Substantialt been influx into the equity side. The more dangerous area has to do with the debt side. You really have not seen a 2810ficant amount between 2013 2008 in 2013. In that sense i would be selective, stick to the quasistate owned dollar leverage players in china. Avoid some of the other regions which have a combination of and weakercommodity Balance Sheet payments. Caroline i am interested you ,aid because a state companies some would say that would be a pain, they are also looking to shake things up in the state areas, they could move the match the private market. No question they are inefficient, however ultimately holdersee how her asset , power asset holders, you will not see the debt side talking. Stick to those state champions. On the equity side, i think valuations are checked, do not try to be a hero and see what happens when yellen pulls the trigger. I think what is happening in china i do not think what is happening in china will change her view. She is focused on the labor market. Sudden all of a the decisionmaking process i dont say that would happen. Caroline thank you. Ive way you can weigh in on all of our top stories on twitter guy you can weigh in on all of our top stories on twitter. Is china still a good longterm investment . If you want to find us on the terminal, you know where to find us. Caroline do tweet us. Norways Sovereign Wealth Fund certainly thinks that china is the place to put money. It is prepared to increase investment into the country. We will have more on the fund, bloomberg speaks exclusively to the ceo this morning. Is a war brewing for the future of our highways. It is affecting tech companies. Requiring the most Detailed Digital maps to guide self driving cars. Cory johnson explains. Cory johnson there is a car , the finish line, getting self driving cars on the road first. Are the fuel in this race. We are transitioning from something visual to something inside the car. It will be something that helps you get from a to b and help to drive. Cory johnson it is also in real time. Audi, team up and to spend 3. 1 billion to acquire nokias map division. Mapsthe cars have have control equivalent to google. Google maps, tomtom out of amsterdam, and nokia has one. There was thought it could go higher. Corey the automakers landed a sweet deal. Cory johnson, bloomberg, san francisco. Coming up, carlsberg downright downgrades. Probably not the best set of numbers. Caroline will come back to countdown. Here are some of the top stories. Guy the central bank of vietnam value. Reased the dong we will get minutes later on. The human costs of the devastating explosions in tianjin has risen to 114 debts, and more than 70 are still missing. The Economic Cost could reach 1. 5 billion. Chinese Insurance Companies are expected to take most of the costs. The port remains closed for the most part. Linking up with investment presence, airbnb wants to woo china. Fastestgrowing group in china. Caroline lets stick with emerging market and corporate elements. Carlsberg earlier in the hour, missed estimates. Thomas buckley joins us for more. It has been a struggle. We knew russia would be difficult. The beer market is down 9 . Does that underlie these figures . Dealingcarlsberg is now with backing up from Strong Performance is time last year on the back of the world cup, and Better Weather than last year. It is interesting, the beer market is down 9 . Has an over 36 market share in russia. They aret closing a couple of breweries. The concern is the exposure with russia. There starting to see spread widen. Carlsberg is trying to take steps to fix problems in the region. The results are disappointing. Hard to read,r is we have been hearing this kind of rise in tandem with the currency. But that is spread significant. When you look at what management when you look at this business, and you think if i a am an investor, looking at this, all i can see his problems is problems. Makingink carlsberg is decent investments in the emerging markets. Myanmar will be a hugely promising offset. If you look at the emerging markets, it could mean the problems in russia have offset the investments they have made in partnership with local brewers. They have recently had a change in management. Someone who is hugely capable and who might be able to turn this around. Caroline the ceo coming out, strong asia performance. The concerns you are seeing in that part of the markets, not too much of an issue. Is this a company that you have analyzed . Are we trying to get out of any big european jumped of emerging markets . Do you have to be longterm . I think you have to be longterm. For the short term you have a perfect storm and a sense of weaker currencies. Let us not forget, this business cares about demographics. People are getting healthier, it is not a bad thing, but it is if you are trying to sell beer. People are getting older, younger people drink more beer. Longterm thing, the shortterm opportunities will arise, we are following closely what happens with these kinds of businesses, ultimately they will do well, but it is about entry point. The first half of 2016, the strong offset performance will not offset europe. As you said, people are healthier, the to the graphics with the Beer Industry in terms of where we go from here, very difficult. The guy has come from the milk industry . Yes. Guy what do you bring to a beer company . When you look at a beer company and their longterm trajectory, is it the emerging markets . Is that the only play . Is there something you can do this business that that on a level Playing Field . Can you change the demographics . Has there already been a lot of that . I think that the mna will focus on the ever evolving craft beer sector. Guy take the premium points up. Exactly. That is what they are doing here in the u k. Maybe if carlsberg head posed the same entry point, we might see more going forward. Kirilenko thank you thank you. Lets stick with the cio of london and capital. We have to be more longterm about the emerging market exposed sectors. Where are the areas that you see opportunity . If youre looking at the stock market at the moment and expecting me federal rate rise to come in september, where should we be . In europe or u. S. . Caroline either, where you see value you see value . It is a tugofwar. After so many years of rates , young, in terms of value see in the emerging market regions. The dangers of devaluing are evident. Some of theill consumer discretion stocks are more immune to what happens in the dollar then the dollar. They should continue to benefit from a reasonably healthy consumer story. They are not very much affected by u. S. Problems with stocks. In europe, stick to some of the quality names which are not super expensive. The problem with europe, quality, as in Good Companies that generate good cash flow are reasonably expensive. On the back of january with the ,wiss stock market falling emerging market regions, yes stick to these quasistate owned enterprises. Unfortunately, i would like to talk about devalue opportunities, but that is tough to find after some years zero being pushed up the risk of spectrum. Guy will carry on the conversation. Merkel story is one that caught my eye. It could go for a fourth she could go for a fourth term . The chances are very real. When you look at the numbers and how she is doing, she is at the peak of her game. 10 years on, a story is saying, stock market is up, unemployment is down, everything is in the right direction, in comparison to thatcher, she is killing it. Caroline you have a fascinating story on germany, corporate germany, but talk to us about that shops pet shops. It is amazing, the World Biggest pet store happens to be in germany. If you want a two code sloth, this is where you go two toes sloth, this is where you go. People go to the zoo, visit to the store, visit, and look at animals. Guy they see the fish, they are happy. How do they make money . If you have a euro, you can buy a box of cricket. Crickets. It is amazing. Guy i am glad the place i go to does not sell crickets. It looks as though, from the ashes of the rebel has sunlightt of a ray of because it is lehman brothers. Good. Interesting story about someone who was building a Solar Company lehman went bust, the brothers found new investors, now they are trying to build if they could finance it, one of the Biggest Solar Companies in the world. Caroline and new energy . The problem with new energy is as mrs. Had been reliant on government subsidies. My country, spain, is a good example. We were at the forefront, the Prime Minister was so happy because we were right there with cutting edge, and then of course we realized this was a business it was time to take a longterm view, i marginal cost perspective, this is a technology that cannot compete with more traditional sources of power generation. The cost is plunging for solar. In many places it is cheaper. Change. Future will taking it back to germany, that is one of merkels big legacy am a shifting from nuclear to renewable. One of the more difficult things she has navigated. Always a pleasure, bloomberg. Com. If you have a euro, you can buy one box of crickets. Caroline thank you. Stay with us. Reports their commodities and crisis. We will bring you those numbers as they break. Plenty more coming up. Caroline china and the german vote on the greek bailout, out later today. Guy we will take a break. Follow us on twitter. Find us on a terminal as well if you are on. We will see you in a couple of minutes. Guy emerging market outflows accelerate. Caroline seven down and two to go. Germany and the netherlands cast their votes. Guy we will weigh on glencores numbers. We speak to the ceo of glencore. I in guy johnson. Happy wednesday. Are at 4. 6 billion, just shy of the settlement. Guy we are starting to get a breakdown in the detail. We will work our way down in the next few minutes and bring you what you need to know. 1. 6. Versus the adjusted line looks like it missed. The income line looks like it is ahead of the level. The asian story, front and center. It is a related story, in some way. China is the dominant force in both of these stories. Glencore, what is happening in the equity markets, both related to china. Caroline they are traded at a low since 2002. We are still seeing the shanghai composite continuing to deteriorate. Guy we will show you how it is deteriorating. You. Od morning to we are in the last hour of trade in china, on the shanghai composite. It is down by 2 at the moment. It has been down by as much as 5 during the trade. It was at this time yesterday that we started to see the biggest selloff occur as a lot of funds started to exit out of their position. We will be watching the china market of very closely to see if we you discontinue. The Hong Kong Market is down by 1 in its last hour of trade as well today. It is continuing to add to those ninemonth lows that it saw yesterday. We have been watching thailand very closely because yesterday, the market was down by 2. 6 , in the wake of the blast in bangkok. I guess there is a little bit more coming in today. South korea was another one that really weighed on the overall asian region today. Factis mainly due to the we are seeing those weaker emerging market currencies. A lot of the pharmaceutical companies are really reliant on a strong goal on a stronger yuan. We can see that impact on the pharmaceutical stocks in korea. Much, alling, pretty of the pharmaceutical stocks trending lower as we see the close. Trades are coming in through new zealand that are closing as well. Lets take you back to thailand. Yesterday we were talking about the stocks that were heavily sold off in the wake of the blast. We are seeing some buying coming back in. Yesterday,own by 13 but today they are up by 9 . The tourism stocks in thailand were about were down by about 10 . They are back up by about 2 . I guess a little bit more relief coming into the thailand market. Looksanghai component like we will continue to see that selloff in the last hour. We will be watching very closely. Guy thank you very much. Juliet joins us in hong kong. Caroline playing into that is the commodity spectrum. Was a very commodity driven stock. Glencore is reporting earnings. We will get the top line. They say top metals, trading conditions, they also say Exchange Rate for the actual mining part of the business are down 6 . It is not as bad as what was expected. It is actually better than expected. The estimates were at 711 million. Waskey things for investors any word on the china. Commodities down to a 13 year low. Glencore has been trading two thirds of its value. They were down two thirds of the price for the ipo. It wass of the debt, actually down a little bit. It was a anyone billion dollars. Now it is down by 29. 6 billion. The big concern is how glencore will pay down on that debt. They have to pay half of that debt if they want to avoid a credit down play. We do have some word on expenditure as well. The range for spending in 2015, at the low end, would be 6 billion. They reduce that from six point 5 billion from 6. 8 billion, to 6. 5 billion. From paul gates earlier, talking about the amount of capacity that is out there. We have been looking at the share price that is out there. They have been pricing and the worst of all worlds in perpetuity. That seems to be the case. At 176. Are trading some investors are already calling it. We were reporting yesterday with stocks up. Activistot an position, it is for the longterm. They see plenty of upsides. Guy we will if that turns out to be the case. There is some inflows to be had in the phone calls that are being made. The trade side of things have been interesting. We see the collapse in the physical premiums. It is a much more open a business on the trading side of things. It is much more difficult to understand exactly what happened. In between, you can work out what is going on. How important is that trading business . How much extra volatility is it adding to the story. Exactly. Some people call it a black box, almost because it is impossible to decipher. Any the combination of the trading business, to gather with the mining business, to help glencore. That is another concern that has been weighing on the minds of investors. Selling down the share to these levels. A still believe there are compelling reasons. Certainly, for now, we are not getting any word on how they are breaking it down from what i can see from the headlines. It is not working out quite as well as they had hoped. Unit saw ahe trading drop by two point billion dollars 2 billion. Beingencore deserving of the most on the 5100 . It is deserving it due to the lack of visibility. We have two problems. He put himself in a difficult position. It is not going to be happening. Therefore, why would you want to put yourself in that position. The second one is that, this is a commodity. Sort of an old schoolhouse, attached to a very new school hedge fund, commodity hedge fund. Attach to that hedge fund, which is a trading operation, which is weighing on it. Over the next 12 months, i would probably stay clear of this. Guy it is the structure that you dont like, as much as the Commodity Exposure that it has . Correct. Effectively, the worstcase scenario, in terms of the long market, that is not going to happen forever. At some point, these shortages of investments will translate. That is not going to happen. It has to happen. According to glencoe, they have something on their back. Supply, andrstand he has been much more disciplined than other Mining Executives have been an understanding that you need to constrain the supply side of the business and the conscious and the conscious. He understands the other side of the story. At least you are buying into a guy that gets that. Correct. I am it is a trading operation. It is something that is a little bit more unpredictable. They have a longterm record of developing stable over these long interest times. I dont think that he compensates for the lack of visibility. Caroline what is your outlook in terms of time to buy, commodity exposed companies . Just wait. Lets see what happens with the emerging markets. Lets see what happens with caroline you will be waiting a long time. We will be waiting, but commodities go through cycles. Seeably now, it is time to a more choppy environment. I would not rush. Guy we will get more on your take on what is happening in the world a little bit later in the program. Thank you for taking us through what is happening with glencore this morning. One of our colleagues here at bloomberg has been speaking with glencore ceo about the earnings. We will talk to jesse a little bit later and get the inside track. Caroline of course, we have another good interview and a conversation you will not want to miss. Greases third of a lot goes before the german element today. He speak with valdis dombrosvskis. That is after a short guy 7 15 in london. Here are the stories in the to know. Caroline the human costs in tianjin have risen to hundred 14 deaths. The Economic Costs may reach as 1. 5 million. Chinese Insurance Companies will take most of the cost. Much of tianjin remains closed. Guy the commodity crunch is continuing. Oil continues to pump. A production boost is needed to meet the growing populations needs. Draggingading down, emergent market stock to a four year low. There are other factors in there as well. Caroline the company says it expects 2015 organic operating profit to drop as western europe and russia way in on sales. Weigh in on sales. Germany, due to votes on the greek rescue package begins at 8 00 a. M. , u. K. Time. Find hans nichols in germany. Hans he will be leading this charge and the efforts of the government. There are only 56 defections. Party has 311els seats. She will rely on her Junior Coalition partner. The overall outcome of this vote is not necessarily in doubt. Yesterday, it passed in spain 29720. It passed in austria. Today they be the biggest challenge with the vote in the netherlands. We do not know how that is going to turn out. We expect it will pass. Then, we have what is happening in rank for. The european interbank has lowered the amount the European Central bank has lowered the amount. Io eight has been dropped down to 89. 7 billion. Before, the number was 90. 4. This shows that banks could be going in the right direction. They will get 10 billion in terms of recapitalization if this passes. Its interesting to see who bears the burden. Thatine sticking with story, joining us for more is valdis dombrosvskis. He is Vice President of the European Commission. Thank you for joining us. Good morning. Valdis good morning. Caroline lets kick it off with the votes that are coming in today, germany and the netherlands. Are these concerning you at all . It could be a tough one from the perspective of the netherlands. We will find a solution with how to deal with the greek economic problems. We met last week in the eurogroup. It was strongly in support, especially by the german and dutch finance ministers. From the European Commission point of view, we hope it gets parliamentary approval. She is telling her at. Liamentarians th do you think the imf will be up for this as well . Valdis i participated in the thatssions and it is clear they have their own procedures. Will come to its own program in full in october. Certainly, we are also working mfs fullhe i participation in the program. Guy sorry, commissioner. You are convinced they will join the program . That is the working assumption you are going with at the moment . Valdis that is the working assumption. E know all of the difficulties we need more debt relief for greece, which is facing strong resistance from many finance ministers in the eurozone. Caroline meanwhile, the banks , but he will go in and assess the banks. What do you expect to find . Cb you interpret the to shrink the liquidity . Todis that is for the ecb comment. In the coming weeks, there will a stress test of the greek banks. Can any moreat, specific decision be taken. The do you think that depositors should bear some of the burden for the recapitalization of the greek banks . Or do you think the depositors a should be protected . Valdis we know that in the eurogroup statement, it is very clear that there is a possibility for a bailout for bondholders. The bailout depositors are excluded. The europeanly at commissions and ecbs insistence that this protection is an for depositors. For depositors. Caroline how will you bring in a bondholders . As i said, there is a need for the stress test before any further decisions can be taken. In any case, according to the principles of banking union, principal of bail is being applied. It is not the taxpayers who are first in line to pay for the banking problems, it is actually the shareholders who are first in line. Caroline what is your assessment and how long the Banking Sector will take . The Greek Economy is flat on its back because the Banking Sector is not happening. What is your opinion . Valdis at the end of the day, it depends on the greek authorities. Outs possible to carry them within a few weeks, but then, there are also further decisions lifting thegards capital controls. Controls, the capital it is the decision of the greek authorities by how exactly they are going to do it. Caroline most of the german population do not really the greeks will enact the reforms that are being promised. Cypruch to you believe in s and what is being promised him . A lot of trust and confidence has been lost another is a need to restore this confidence. That is my the new program, if what wehave have seen so far, in a parliament that has a strong necessaryor a program. To thest to take us back beginning of the conversation, how important do you think is the debt restructuring, reprofiling, college what you will, to giving the call it what you will, to keep the greeks on board . If that doesnt happen, it will keep the greek political story a lot more difficult to manage. That, can youat get a sense of what you think is going to happen . What kind of a profile we will end up with to make the greek debt sustainable . Clear, first, to be very the European Commission is not greeces creditor. E ecb who imf and th e are creditors. At the end of the day, it is for the creditors to decide. The eurogroup are looking into the conditionality after the completion of the first debut of the program. Basically, to see that the program is on track, and then, to return to the issue of debt conditionality and the easing of the debt burden, in line with a statement that provides guidance for last weeks eurogroup meeting. What needs to actually be done, apart from the two votes today . How quickly will greece get the money . Valdis after National Procedures are finished, it is a formal decision, which can also be done today. We expect this to take place as expected, tomorrow. Readine we very much up we very much appreciate your time today. Shanghai,ility in into the market close is itup. We will focus on the trading day when we come back. It will be an interesting session for europe. We will see you in a moment. The only way to get better is to challenge yourself, and thats what were doing at xfinity. We are challenging ourselves to improve every aspect of your experience. And this includes our commitment to being on time. Every time. Thats why if were ever late for an appointment, well credit your account 20. Its our promise to you. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Caroline welcome back. Here are some of the top stories you need to know about. Guy emerging markets are still in the focus. The devaluation of the u. N. And the concerns about the possible rate hike. Well get into that later today. The a 886 billion programion euro will be voted on today. The company said it expects 2015 a burning profit to drop as western europe and russia weigh in on sales. Caroline lets take a look at the asian market. In a reverse from yesterday, we can see accelerating declines in china at the end of trade yesterday. We seem to have a small technical problem with what is happening in asia. We will fix that. In the meantime, i want to take you to our next guest. The companys ceo is joining us. They give for joining us. Oil prices have gone down very sharply. How is it affecting your business . We are reducing costs. We trying to rationalize our investment program. At returns that are very different in terms of short paybacks, versus longerterm paybacks in the short term. Longterm, i still think we are seeing lows that we have not seen in six years. I think we are still hopeful and confident that things will come back to a more stable level. Caroline in terms of production, you are coming out with numbers around 29,000. 36,000. Et was 33,004 36,000. 0 to 29,600, ast half was you mentioned. We expect the second half to be higher. We are putting a new field on a stream. Caroline do we have a more specific dates . Going to havee significant production coming in in the second half of the year. The newspapers are full of stories about strikes. Would you be affected by that and what is your view of how labor is going to behave in this environment . Services willter not be affected. We had longterm contracts with that are not affected by this. We do use Additional Services that could be affected. Our main Baseline Services will not be affected. Guy what is going on . Were moving toward a more realistic rotation. We have gone from eight two weeks on and three weeks off from a two weeks on end three weeks off rotation to a three weeks on rotation. That is more realistic for the business. Is somey, there pushback. There is no pushback with in the company itself. Most of the workers are unionized. That is not the issue. Commodity the price the Commodity Prices have come down. Caroline where do you see that commodity price moving to . Where you willon be in the next year . In the short term, we can see the oversupply continuing. We are not sure. We are seeing demand coming back. The demand estimates were increased last week. We expect an increase of 1. 6 million this year. The supply is more difficult to predict. There is still significant supply in the u. S. It has been significantly strong. On the supply side, it is unclear. At 31. 6e been producing million. It is more difficult to assess when the supply caroline you are fine with where the prices are now . Think we are ok in the short to medium term. Longterm, all Major Companies are slowing down. Had 200 billion of investments that have been canceled. This is a cyclical business and you will see be supply side getting reduced in the medium to long term. The shortterm is the most difficult to predict. We fixed our technical problems. Caroline lets go to asia and see what is happening with trade. We see what looks to be a tiny bit of a downward trajectory on the shanghai stock exchange. Absolutely. In the last 10 or 20 minutes, the shanghai composite has gone up by 1. 3 . The peak the pboc may have put a liquidity injection into some of the banks. The reported liquidity injection means that chinese policymakers do not see immediate need for long term talks. See anly, i guess we intervention following the devaluation of the yuan last week. Becausea big turnaround yesterday, the shanghai market was down by 5 . Happening inall the last 30 or 40 minutes of trade. That is what is confusing investors. The shanghai market has done an amazing turnaround. The hang seng index is down by about 9 10 of 1 . We still see Foreign Investors bailout. Saw thekorea, we reaction to the devaluation of the yuan. A lot of the pharmaceutical companies and cosmetic companies came under pressure. Japan closed by 1. 6 . Thailand came back up from the 2. 6 percent drop yesterday in response to the deadly bomb blast in bangkok by 1. 4 . Hadshanghai market has liquidity injections. Injected liquidity into the banks. They are heading the 10 limits coming into the close. A lot of stocks are hitting that daily limit. As i mentioned, never a dull moment on the shanghai composite. Guy gives us something to talk about, doesnt it . Intoine we are feeding that. We are coming off of those lows. We are still seeing a down day in europe. Guy we are beginning to form up a little bit. Lets show you the numbers. Lets see how glencore plays into that story. 9 10 of 1 for the ducks this morning. Morning. E dax this we will have a slightly softer opening in europe today. Caroline it is wonderful to have you in. Take you for joining us. . Hat is going on are you of the negative persuasion . But we still see this volatility in the next week or so . I think the real problem with isna, in the short term, playing on the sentiment at the moment. The sentiment is extremely negative. For the european companies, they are more protected and are diversified. That is positive. I think the companies exposed to china have pricing power. A do have enough sales ultimately, that they can help offset that. I think china itself is a big question mark at the moment. I think not necessarily. I think it is going to be difficult for some time. I think it is difficult to know it is going to be. If you choose the companies that can ride through the cycle, this is a cycle. We are getting to the bottom end of the cycle. This feels like the time where there could be opportunities. Caroline where . Interesting. I think luxury companies. A lot of them have been hit quite hard by the weakness in china. Strongve an extremely Balance Sheet and a strong pricing power. They report quite high sales in china. That is not include hong kong. The market is a discounting mechanism. Is the market being very pessimistic about this . When you look at where prices are and how much prices have come down for these companies. They have been hit pretty hard. How much have we discounted, and happily we over discounted the reality of the story . These things always tend to overshoot on the upside. It is difficult to know how much they have done that until we see the earning sheet come through. Very difficult to call that, to be honest. As i said before, it does feel like we are at the point where share prices have alfallen. Are the fundamentals that much different from where they were six months ago . I have not sure. Caroline thank you very much. Uy coming up on countdown, greece has its third bailout. We think voting in berlin will start to happen. Where likely to see the start of a mopping the next new charge for this 8 45 in5 in london and paris. Here the stories in the to know. Caroline the central bank of the him has devalued the currency for the third time this year. The bank starts the devaluation of the yuan and the possible rate increase. The company says it increase015 costs to to 17 million. Caroline germany and dutch vote today. The comes a day ahead of 3. 2 billion payment due to the e cb. Glencore, does not seem to be able to catch a break. They have reported the first profit down by 56 this morning. Caroline we are going to take into the numbers. We just interviewed the glencore chief executive. Elliott, lets start with you. Your thing cause for the stock to rise 4 this morning. Stock riseeeing the 4 his this morning. In terms of expenditure, they are saying they will spend over 5 billion next year. This years expenditure will be at 6 billion. The other big number on the Earnings Report is not that net debt. The ceo says he will reduce that to 27 billion next year. That is not nearly enough, according to jpmorgan. He said glencore needs to half wants tois it cling on. For now, they are saying the . 6 per share. E there will be improvement in pricing, when it finally and inevitably, materializes in terms of commodity. Guy thank you very much. What did ig have to say for himself . He was surprisingly chirpy, considering the 56 billion profit decline. Read in the Chinese Market right now. It is impossible to get a read out of china. You would expect someone in his position to have a pretty good read on the chinese metals demand. It speaks volumes for the uncertainty and commodities in the world right now. Caroline to some extent, did he have any theories behind the slowdown in china . The crackdown in chinese allowed a lot of commodities to be delayed or push back. That impacted demand. On a positive note, he expects these projects to come back on stream with the crackdown of corruption. Guy why is it the tough on the trading business at the moment . 1. 1 billion is well below what they made last year. They have had to really adjust to as much as 3. 7 billion three months ago. Copper and aluminum trading seem to be the areas that have hurt them the most. Caroline they sounded more optimistic about the second half of the year. What made them think it is going to pick up . Agriculture is one of the key areas they thought they would pick up. Guy how concerning is this . I spoke to the chief and i put do him the credit ratings, the dividend. Ofsked him what he thought those things. He said, you have to be able to walk and chew gum at the same time. It will be a challenge, even they have 29 billion in debt. Caroline theyre trying to talk up their Balance Sheet flexibility, saying they have 10 billion and flexibility, should they need it. Did they talk about the share price in reaction to the debt load and what might happen to dividends . The share price has been absolutely hammered this year. Yesterday had a big low for the share price. The Head Associates come in and build a 4. 5 stake to quietly. Caroline why . We still are not exactly sure. To david on monday and his view was that it was an undervalued stock. We like it. We think it is going to bounce. But clearly guy that is not their track record. It will be interesting to see how that plays out and hopefully, we can speak to glencore later today. Guy great work. Let caroline said, it looks like the stop is going to have a little bit of a problem in few minutes time when we get going. Caroline were going to look at the german vote on the bailout. Lets go straight out to hans nichols who is in berlin for a breakdown. How will it unfold . Take us to the timeline. The measure will be introduced. It is being shepherded through. There will be about two hours of debate, they be a little bit more. It looks like there will be a robust debate and then a boat sometime before noon. To pass because they did a straw vote in the conservative caucus last night. Ofre were only 56 nos out 311. Merkel will not be that damage going into this. The vote in the netherlands is more interesting, not because it could fail it it looks like there will be a vote of noconfidence after that. The vote of noconfidence is more interesting. It doesnt look like it will pass, but if it did, there will be a collapsing government in the netherlands. That will be a ramification of this vote. After it goes through, moneys will be dispersed. Thanks will get 10 billion banks will get 10 billion. Then we have a discussion of what they have to do to get the Monetary Fund involved. They are insisting the imf will stay involved, that i have yet to hear that sort of affirmation from the Monetary Fund it self. Itself. Guy thank you very much. Caroline in just a few minutes, head of the European Market open, lets get over to mark. Give us a sense of what you are looking for. Mark i was getting ready to tell you about chinas plummeting stock market. Because thee case chinese benchmark, the shanghai composite, has rebounded. It is now actually trading higher. The effects are very apparent. The commodities industry is still declining. The 23 commodities have sunk to the lowest level since 2002. Ast forget china, as well vietnam, are devaluing the yuan because of the knock on effect of the chinese evaluation. The asset manager of jp morgan joins me, as does john mayer. We had glencore results earlier. A fascinating fact about glencore, it is the worst performer on the index this year, down by over 40 . Do todays earnings werent revalue of the profits . Slumped 56 . Ofit that is not as bad as the estimates. We have that with on the move in the matter of minutes. Because ofks like glencore, it is down by 7 10 of 1 . The dax will open at 1 soccer. Softer. Caroline they dont do one profit, but if they mark right here in the city of london, we are moments away from the start of european trading. Lets get straight to your morning brief. Seven down, two to go. The European Parliament on the greek bailout. The debate in the bundestag is about to kick off. Mining meltdown. Plunges 66 ofit amid the commodity around that drags prices to a 13 week low. We bring you highlights of bloombergs conversation with the chief executive. Devaluation jewel. The anon devalues its currency for the third time this year. Emergingmarket stocks slide to their lowest level since 2011. Watchingat we are today lets have a look at how futures are indicating stocks will open today. The indication is that stocks will fall. We have had two days of gains on the European Equity market. Glencore results are down by 9 10 of 1 as the bundestag the ginza greek debate. Begins the greek debate. Caroline we are waiting for live prices to open up on the dax, but i can tell you that it is already up by a quarter of 1 . Reason of this selloff interestingly, we arent really following china as he did yesterday, because china suddenly staged this Late Comeback in the late hours of trading